Seminis Vegetable Seeds, Inc.

Approximate date of commencement of proposed sale to the public: As soon as practicable after this registration statement becomes effective.


(1)	Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(f)(2) under the Securities Act of 1933, as amended.
(2)	No additional registration fee is due for guarantees pursuant to Rule 457(n) under the Securities Act of 1933.

The Registrants hereby amend this registration statement on such date or dates as may be necessary to delay its effective date until the Registrants shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information contained in this prospectus is not complete and may be changed. These securities may not be sold until the Registration Statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

This is an offer to exchange any of our 10 1/4% Senior Subordinated Notes due 2013 that you now hold for newly issued 10 1/4% Senior Subordinated Notes due 2013, which will be freely transferable. This offer will expire at 5:00 p.m. New York City time on , 2004, unless we extend the offer. You must tender your original notes by this deadline in order to receive the new notes.

There is no existing public market for your original notes, and there is currently no public market for the new notes to be issued to you in the exchange offer.

The new notes have the same financial terms and covenants as the original notes and are subject to the same business and financial risks.

We may redeem some or all of the new notes at any time at our option on the terms set forth in this prospectus.

Investing in the notes involves risks. See “Risk Factors” beginning on page 18.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

Each broker-dealer that receives new notes for its own account pursuant to the exchange offer must acknowledge that it will deliver a prospectus in connection with any resale of such new notes. The letter of transmittal states that by so acknowledging and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act. This prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of new notes received in exchange for original notes where such original notes were acquired by such broker-dealer as a result of market-making activities or other trading activities. Each of the registrants has agreed that, starting on the expiration date (as defined herein) and ending on the close of business 180 days after the expiration date, it will make this prospectus available, as amended or supplemented, to any broker-dealer for use in connection with any such resale. See “Plan of Distribution.”

Until , 2004, all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers’ obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with additional or different information. We are offering to exchange the notes only in jurisdictions where these offers and exchanges are permitted. You should not assume that the information contained in this prospectus is accurate as of any date other than the date on the front cover of this prospectus.

Unless we indicate differently, when we use the term “notes” in this prospectus, we mean the new notes and the related guarantees that we will issue to you if you exchange your original notes and related guarantees.

Each broker-dealer that receives new notes for its own account in exchange for original notes, where such original notes were acquired by such broker-dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such new notes. See “Plan of Distribution.”

The following summary contains information about Seminis and this exchange but may not contain all of the information that may be important to you in making a decision to exchange your original notes for new notes. For a more complete understanding of Seminis and this exchange, we urge you to read carefully this entire prospectus, including the “Risk Factors” and “Forward-Looking Statements” sections and our consolidated financial statements and the notes to those statements. Unless the context otherwise indicates, “Seminis Vegetable” refers to Seminis Vegetable Seeds, Inc.; “Holdings” refers to Seminis, Inc.; and “Seminis,” “we,” “our” and “us” as used in this prospectus refer to Holdings, Seminis Vegetable and its consolidated subsidiaries. Seminis Vegetable is the only direct subsidiary of, and is wholly-owned by, Holdings. When we refer to EBITDA, we are referring to EBITDA as defined in “— Summary Historical and Pro Forma Consolidated Financial Data.” We generally operate on a 13 week quarter closing on the Friday closest to the natural calendar quarter, except for our fiscal year end, which closes on September 30.

We are the leading worldwide developer, producer, and marketer of vegetable and fruit seeds. We produce more than 60 species of vegetable and fruit seeds and more than 4,000 vegetable and fruit seed products (which do not include tree and citrus fruits). We market our seeds through four full-line brands — Asgrow, Petoseed, Royal Sluis and Seminis — and five specialty and regional brands. Our 2002 net seed sales represented approximately 19% of the estimated $2.3 billion worldwide market for vegetable and fruit seeds (excluding tree and citrus fruits) in 2002.

We develop seeds designed to reduce the need for agrochemicals, increase crop yield, reduce spoilage, offer longer shelf life products and create better tasting vegetables and fruits with greater nutritional value for consumers. We have what we believe is the largest vegetable and fruit germplasm bank in the world. Germplasm is the library of seeds carrying genes that determine the characteristics of vegetables and fruits grown from these seeds. Our germplasm bank is our key strategic asset and has been developed through decades of cross-breeding to produce seeds known as hybrids that yield plants with enhanced characteristics.

We have established a worldwide presence and global distribution system. We market seeds in over 150 countries, have 48 research and development facilities in 17 countries and territories and production sites in 24 countries. Our worldwide presence allows us to remain close to local markets around the world, adapt our products to distinct, regional microclimates and meet the preferences of local consumers.

For the twelve months ended June 27, 2003, we achieved net sales of $466.4 million, net income of $14.4 million and EBITDA of $80.0 million.

We believe that demand for our seeds will increase based on increasing global consumption of vegetables and fruits and the favorable value proposition to farmers of growing vegetables and fruits relative to agronomic crops such as corn and soybeans. According to data provided by the Food and Agriculture Organization of the United Nations (the “FAO”), during the period from 1990 to 2000, vegetable and fruit production (excluding tree and citrus fruits) grew at approximately 3.3 times the rate of global population expansion. This growth has been driven by increased awareness of the health benefits of vegetables and fruits, greater per capita income, and enhanced product characteristics and product choices. According to additional data provided by the FAO, the harvested acreage dedicated to vegetables and fruits (excluding tree and citrus fruits) has increased approximately 3.2% annually during the period from 1990 to 2000, while overall agricultural harvested acreage has increased less than 0.3% annually during the same period. In addition, we believe the favorable value proposition of growing vegetables and fruits relative to agronomic crops is contributing to the greater growth in production by farmers of vegetables and fruits. Vegetables and fruits are among the most valuable agricultural crops. According to U.S. Department of Agriculture (the “USDA”) data, the average farmgate value per hectare for vegetables and fruits (excluding tree and citrus fruits) was approximately 11 times greater than the average farmgate value per hectare for corn in the United States in 2000. Farmgate value refers to the revenue generated by farmers selling their crops to

In addition to an overall increase in the demand for vegetables and fruits, we believe there will be a further increase in demand for hybrid seeds for which growers will pay substantially higher prices. Unlike commodity-oriented, open-pollinated seeds, hybrid seeds combine the favorable attributes of specific seed varieties through cross-breeding, delivering enhanced characteristics, including:


	•	higher yields per acre

	•	greater uniformity

	•	greater resistance to pests, diseases and environmental conditions

	•	improved quality, flavor and nutrition

Seminis is the worldwide leader in hybrid seed sales and hybrid seed sales comprised approximately three-quarters of our net seed sales in fiscal year 2002.

Successful participation in the global seed industry requires an extensive germplasm bank, significant research and development capabilities, global distribution, brand identity and economies of scale in production and processing. The development of a broad germplasm bank requires the accumulation of hereditary materials and extensive cross-breeding over a period of many years. Germplasm is scarce, expensive and must be refined to properly serve different markets. Product development cycles can last five to 12 years prior to launching a commercially viable product. Seed companies invest considerable resources in research and development to maintain a full product pipeline and require a broad distribution network and established brands to facilitate the successful introduction of new products.

Leading Market Position. We are the global leader in vegetable and fruit seed sales, with approximately 19% of the $2.3 billion worldwide market in 2002, according to our estimates. Furthermore, we believe that we are the leading provider of vegetable and fruit seeds in key regions including North America, Europe, Latin America, the Middle East and South Korea. In 2001 and 2002, we held a leading position in many of the regional markets for each of a wide variety of vegetable and fruit seeds, including tomatoes, beans, onions, watermelons, cucumbers, radishes, sweet peppers, lettuce, cabbage, spinach, cauliflower, squash and peas.

Global Presence and Worldwide Distribution. We have built a global presence through a series of ten acquisitions occurring between 1994 and 1998, enabling us to:


	•	gain access to key technologies, patents and germplasm collections

	•	add developed and proven products to our portfolio

	•	enter new and established markets

We believe that through economies of scale in our global production and distribution system, we will be able to leverage our brands and product lines to increase sales and streamline costs. We currently market over 4,000 varieties of vegetable and fruit seeds in over 150 countries with production sites in 24 countries. By geographically diversifying, we can develop and produce seed varieties on a year-round basis, maximize yield, reduce inventory requirements and better ensure adequate supplies of our products.

Diverse Revenue Stream. We have approximately 16,000 customers in over 150 countries and territories. No customer accounted for more than 3.3% of our net seed sales in fiscal year 2002. Our ten largest customers accounted for approximately 14.0% of our net seed sales in fiscal year 2002. Furthermore, our customer base includes growers, distributors and dealers and is geographically diverse, with North and Central America representing 38.3% of our net seed sales in fiscal year 2002, and Europe, the Middle East and Africa representing 39.7% of our net seed sales during the same period. Our product portfolio is also diverse, with no seed variety accounting for more than 1.3% of our net seed sales in fiscal year 2002.

Strength in Research and Development. We are a leading innovator in the global vegetable and fruit seed industry. We employ a staff of more than 620 research professionals, including 120 individuals with Ph.D. and M.S. degrees, who conduct a global research effort from 48 locations around the world. Many of these research professionals are located in the same offices as our marketing and production staff to facilitate collaboration between our research teams and our sales, marketing and manufacturing departments and allow us to tailor our development efforts to meet the unique needs of local markets. Over the past four fiscal years, we have averaged approximately $54 million in annual research and development spending, which we believe is significantly higher than the research and development spending of other companies that compete in the vegetable and fruit seed industry.

Strength of Germplasm Bank. We own what we believe is the largest vegetable and fruit germplasm bank in the world. We view our collection of germplasm as our key strategic asset. It includes over 1.5 million breeding lines developed from a combined 600 years of worldwide breeding activity. We believe that the combination of our germplasm bank and our research and development capabilities is a competitive advantage in developing and marketing better products.

Brand Strength and Long Operating History. We market full lines of seeds under the Asgrow, Petoseed, Royal Sluis and Seminis brands. The Asgrow, Petoseed and Royal Sluis brands have each been in existence for over 50 years. We believe that Asgrow, Petoseed and Royal Sluis are well recognized in the industry and in their markets for consistently developing and marketing high quality seeds for most major vegetable and fruit species. We also market seeds through five regional or specialty brands, which are targeted to respond to the demands of local markets. We believe that our brands rank among the leading brands worldwide in the vegetable and fruit seed markets.

Continue Leadership in Product Development. We intend to continue to produce innovative and value-added products to increase revenue and improve cash flows. We plan to achieve this goal by leveraging our germplasm bank and our research and development capabilities to develop products that are profitable and that cater to local tastes and preferences. We intend to continue to develop products that will meet the demand for a growing population under the constraints of a declining amount of arable land. In fiscal year 2002, we launched over 80 new products.

Increase Revenue and Profitability by Capturing Value. We estimate that the worldwide market for vegetable and fruit seeds (which excludes tree and citrus fruits) was $2.3 billion in 2002, which represented only 3.6% of the total worldwide farmgate value of approximately $65.3 billion in 2002, according to our estimates. In 2001, corn and soybean revenue represented approximately 13% and 11% of farmgate value in the United States, respectively. The greater percentage of farmgate value represented by corn and soybean revenue is primarily due to the significant consolidation of agronomic seed producers and their substantial investment in biotechnology to deliver differentiated products. We believe there is significant opportunity for vegetable and fruit seeds to capture a greater percentage of farmgate and retail value by employing the pricing strategies described below and by continuing to develop differentiated new products.

We are implementing the following product development and pricing strategies to capture additional farmgate and retail value:


	•	Comprehensive and detailed market and product analysis to fully understand existing product differentiation and market position

	•	Price adjustments based on product traits and competitive characteristics


	•	Focused research and development on differentiated seed products targeting high-value end markets

	•	New product launches at significant price premia to precursor products


	•	Development of new products that emphasize traits such as nutrition, convenience and taste in response to consumer demand

	•	Marketing directly to vegetable and fruit distributors, processors and retailers highly differentiated products with consumer-oriented traits

	•	Pricing model that includes a seed price increase to the farmers whose demand for the seed is dictated by the distributor, processor or retailer, and a contractual royalty agreement with the distributor, processor or retailer

Leverage Our Global Production and Distribution System. Because we grow and produce seeds all over the world, our portfolio of production facilities and our network of growers reduce the effects of adverse conditions in a given geographic region. We have the ability to shift production to utilize different seasons/climates throughout the world to accelerate product development. In addition, our global distribution system enables us to learn about and understand distinct farming communities throughout the world. This specialized knowledge allows us to monitor and understand the local markets and to develop products on a global basis for local preferences. We intend to continue to gather market information for new product development and expand our distribution system into new markets.

We have instituted a number of initiatives during the last several years to improve our operating performance in areas such as research and development, sales and marketing, production and operations and inventory management.


	•	Consolidated our global research facilities and operations

	•	Merged previously decentralized germplasm banks and developed a globally accessible proprietary database

	•	Created cross-functional teams to manage global research and development activities by species


	•	Designated market managers for various product markets and created a market intelligence center to launch more profitable, differentiated products

	•	Redesigned our sales forecast processes and developed proprietary sales forecast tools

	•	Restructured sales incentives for our employees to reward forecast accuracy


	•	Significantly rationalized our product portfolio

	•	Consolidated our global operating facilities

	•	Implemented new proprietary seed supply management systems, such as a product location index, which we have integrated with our SAP reporting system


	•	Optimized our product pipeline management in partnership with research and development


	•	Created inventory management and forecast accuracy teams, proprietary forecasting analysis and streamlined production systems

	•	Focused on quality assurance with improved field-level monitoring systems

These operating initiatives have resulted in a significant improvement in expense containment, margin expansion and increased profitability.

On May 30, 2003, Holdings and certain other parties entered into an amended and restated exchange agreement, a contribution agreement, an agreement and plan of merger, a stock purchase agreement and other related agreements (the “Acquisition Transactions Agreements”) pursuant to which Holdings would become a private company through a cash-out merger transaction in which the public stockholders of Holdings would receive $3.78 in cash in exchange for each share of Holdings common stock that they owned at the effective time of the merger. The merger was completed on September 29, 2003, and the original notes were issued on that date.

As a result of the merger, Fox Paine Seminis Holdings, LLC (an affiliate of Fox Paine & Company, LLC), together with its affiliates and co-investors, acquired approximately 75.1% of the outstanding shares of Holdings common stock. In addition, several entities affiliated with Mr. Alfonso Romo Garza (the current Chairman of the Board of Directors and Chief Executive Officer of Holdings) and nine other members of management of Seminis and Savia, S.A. de C.V., our former majority stockholder (together, the “Continuing Stockholders”), retained approximately 12.0% of the common stock of Holdings. Finally, certain entities (the “Additional Purchasers”) that are creditors of Pulsar Internacional, S.A. de C.V., an affiliate of Savia, acquired approximately 12.9% of the outstanding shares of Holdings common stock.

Holdings also sold $50.0 million of paid in kind preferred stock (the “PIK Preferred Stock”) to three institutional investors immediately following the merger. The PIK Preferred Stock matures in 2014 and represents an obligation of Holdings, rather than Seminis Vegetable, the issuer of original notes and new notes. In connection with the sale of the PIK Preferred Stock, Holdings also issued warrants to purchase shares of Holdings common stock representing approximately 3.7% of the shares of Holdings common stock on a fully diluted basis. For a more detailed description of the PIK Preferred Stock, see “Description of the PIK Preferred Stock.”

In connection with the merger and related transactions, we repaid substantially all of our indebtedness that was outstanding prior to the merger, repurchased the outstanding shares of Holdings Class B preferred stock, exchanged the outstanding shares of Holdings Class C preferred stock held by Savia and any obligations with respect to those shares for cash and shares of Holdings common stock, and purchased and retired certain shares of, and options with respect to shares of, Holdings common stock.

Throughout this prospectus we refer to the merger, the transactions pursuant to which Fox Paine and others acquired shares of Holdings common stock following the merger, the PIK Preferred Stock investment, the repayments, purchases and exchanges of Holdings capital stock, and the related transactions contemplated by the Acquisition Transactions Agreements as the “Acquisition Transactions” and we refer to the Acquisition Transactions, together with the financing transactions that occurred in connection with the Acquisition Transactions, including the offering of the original notes, as the “Transactions.”

The following chart illustrates our current common equity ownership and financing structure, without giving effect to the exercise of any co-investment rights or warrants to purchase shares of Holdings common stock, the exercise of outstanding options to purchase shares of Holdings common stock or the issuance of restricted stock units convertible into shares of Holdings common stock.


(1)	The Continuing Stockholders include the following: Banca Afirme, S.A., Institución de Banca Multiple, Afirme Grupo Financiero, as trustee, under the Irrevocable Administration and Payment Trust Number 167-5 (Fideicomiso Irrevocable Administración y Pago Número 167-5), a Mexican Trust (the “ARG Trust”), Conjunto Administrativo Integral, S.A. de C.V. (“CAI”), Park Financial Group, Ltd. (“Park”), Emprima, S.A. de C.V. (“Emprima”) and Mr. Romo and nine members of Seminis and Savia management.

(2)	Desarrollo Consolidado de Negocios, S.A. de C.V., a special purpose company that is an affiliate of Mr. Romo (“Mexican SPC”), has immediately exercisable co-investment rights to acquire approximately 13.8% of the fully-diluted shares of Holdings common stock, and unvested co-investment rights to acquire an additional approximately 15.8% of the fully-diluted shares of Holdings common stock. The second tranche of co-investment rights will become exercisable only if Fox Paine achieves a 26.0% rate of return on its initial investment in Holdings. Each co-investment right entitles the recipient to acquire one share of Holdings common stock at an exercise price of $3.40 per share. See “Certain Relationships and Related Party Transactions.” For purposes of determining the number of shares of Holdings common stock for which the co-investment rights are exercisable, references in this prospectus to the


	phrase “fully-diluted shares of Holdings common stock” mean the number of shares of Holdings common stock outstanding, after giving effect to the exercise of all of the co-investment rights, the exercise of outstanding options and warrants to purchase shares of Holdings common stock, the vesting of restricted stock units and the issuance of the PIK Preferred Stock.

(3)	Fox Paine also has unvested co-investment rights to acquire up to approximately 1.57% of the fully-diluted shares of Holdings common stock, which co-investment rights will become exercisable only if Fox Paine achieves a 26.0% rate of return on its initial investment in Holdings. Each co-investment right will entitle the recipient to acquire one share of Holdings common stock at an exercise price of $3.40 per share. See “Certain Relationships and Related Party Transactions.”

(4)	In connection with the Acquisition Transactions we entered into a new $250.0 million senior secured credit facility consisting of a $190.0 million term loan and a $60.0 million revolving line of credit. See “Description of Other Indebtedness — Description of Our New Senior Secured Credit Facility.”

(5)	Each of our current wholly-owned U.S. subsidiaries and each of our future U.S. subsidiaries that provide guarantees under our new senior secured credit facility will jointly and severally guarantee our new senior secured credit facility on a senior basis and the notes offered pursuant to this prospectus on a senior subordinated basis.

(6)	Our non-guarantor subsidiaries represented, in the aggregate, 58.1% of our consolidated total assets as at June 27, 2003 and 61.1% of our consolidated net sales, 78.1% of our consolidated net income and 40.9% of our consolidated EBITDA for the twelve months ended June 27, 2003.

Fox Paine & Company, LLC manages investment funds in excess of $1.5 billion that provide equity capital for (i) management buyouts, (ii) going private transactions, and (iii) company expansion and growth programs (referred to collectively as “MBOs”). Fox Paine engages exclusively in friendly transactions developed in cooperation with a company’s management, board of directors, and shareholders. Fox Paine was founded in 1997 by Saul A. Fox, a former general partner of Kohlberg Kravis Roberts & Co., and W. Dexter Paine, III, a former general partner of Kohlberg & Co., and includes 11 principal members with greater than a combined 100 years of experience in MBOs, private and public equity, corporate finance, business and tax law, commercial and investment banking, and mergers and acquisitions. The Fox Paine funds are managed on behalf of over 50 leading financial institutions. These institutions include public pension systems (providing for the health and welfare of state and municipal employees across the United States), Fortune 100 corporate pension plans, major life and property & casualty insurance companies, money center and super-regional commercial banks, investment banking firms, and university endowments.

Seminis Vegetable Seeds, Inc., a California corporation, is the wholly-owned subsidiary of Seminis, Inc., a Delaware corporation. Our principal executive office is located at 2700 Camino del Sol, Oxnard, California, 93030-7967, and our telephone number is (805) 647-1572.


		ties or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such new notes. See “Plan of Distribution.”

		Resales and transfers will continue to be subject to state securities laws and such transactions may be made only pursuant to an exemption from such laws.

People Excluded from the Exchange Offer		You may not participate in the exchange offer if you are:

		• a holder of original notes in any jurisdiction in which the exchange offer is not, or your acceptance will not be, legal under the applicable securities or blue sky laws of that jurisdiction; or

		• a holder of original notes who is an affiliate of ours.

Consequences of Failure to Exchange Your Original Notes		If you do not exchange your original notes for new notes in the exchange offer, your original notes will continue to have the restrictions on transfer contained in the original notes and in the indenture governing the original notes. In general, your original notes may not be offered or sold unless registered under the Securities Act of 1933, unless there is an exemption from, or unless in a transaction not governed by, the Securities Act of 1933 and applicable state securities laws. We have no current plans to register your original notes under the Securities Act of 1933.

Expiration Date		The exchange offer expires at 5:00 p.m. New York City time, on , 2004, the expiration date, unless we extend the offer.

Conditions to the Exchange Offer		The exchange offer has customary conditions that may be waived by us. There is no minimum amount of original notes that must be tendered to complete the exchange offer.

Procedures for Tendering Your Original Notes		If you wish to tender your original notes for exchange in the exchange offer, you or the custodial entity through which you hold your notes must send to Wells Fargo Bank, National Association, the exchange agent, on or before the expiration date of the exchange offer:

		• a properly completed and executed letter of transmittal, which has been provided to you with this prospectus, together with your original notes and any other documentation requested by the letter of transmittal; and

		• for holders who hold their positions through The Depository Trust Company, referred to as DTC:

		— an agent’s message from DTC stating that the tendering participant agrees to be bound by the letter of transmittal and the terms of the exchange offer;

		— your original notes by timely confirmation of book-entry transfer through DTC; and

		— all other documents required by the letter of transmittal.

Please review the information under the heading “The Exchange Offer” for more detailed information concerning the exchange offer.

The summary below describes the principal terms of the notes. Some of the terms and conditions described below are subject to important limitations and exceptions. You should carefully read the “Description of the Notes” section of this prospectus for a more detailed description of the notes being offered.

You should consider carefully all of the information set forth in this prospectus and, in particular, you should evaluate the specific factors set forth under “Risk Factors” in deciding whether to invest in the notes.

The following summary historical and pro forma consolidated financial data should be read in conjunction with our historical consolidated financial statements and related notes, “Pro Forma Condensed Consolidated Financial Statements” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this prospectus.

The summary historical consolidated financial data as of and for each of the fiscal years ended September 30, 1998 through 2002 have been derived from our audited consolidated financial statements. The selected consolidated financial data as of and for the nine months ended June 28, 2002 and June 27, 2003 have been derived from our unaudited consolidated financial statements. The summary consolidated financial data for the twelve months ended June 27, 2003 have been derived from our annual and interim consolidated financial statements. The summary pro forma financial data as of and for the twelve months ended June 27, 2003 have been derived from our unaudited pro forma financial statements included elsewhere in this prospectus that give effect to the Transactions. In the opinion of our management, the unaudited historical consolidated financial statements from which the data below are derived contain all adjustments, which consist only of normal recurring adjustments, necessary to present fairly our financial position and results of operations as of the applicable dates and for the applicable periods. Historical results are not necessarily indicative of the results to be expected in the future. The pro forma financial data does not purport to represent what our results of operations or financial condition would actually have been had the Transactions in fact occurred on the dates indicated or to project our results of operations or financial condition for any future period or date.

In February 2000, we initiated a Global Restructuring and Optimization Plan to streamline our operations, increase utilization of our facilities and improve efficiencies in our business. The key elements of this plan involved reorganizing our ten legacy seed companies into four geographical regions, selling and consolidating certain operation and production facilities, reducing headcount, rationalizing our product portfolio, implementing an advanced logistics management information system and divesting certain non-strategic assets. In connection with this plan we recorded pre-tax charges to our income from operations in fiscal years 2001 and 2002. These charges are noted below and are described in more detail in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this prospectus.


(1)	The income statement data and the other data are based on financial information from the income statement, which includes the operating results for acquisitions and other transactions from the date thereof. The historical results include the following business acquisitions: in fiscal year 1998, we completed the acquisition of two South Korean companies, Hungnong Seed Co., Ltd. and Choong Ang Seed Co., Ltd., and in November 1998, we completed the acquisition of the vegetable seed business of Agroceres, a Brazilian company. As a result of these transactions, the results of operations and consolidated financial position reflect the effects of purchase accounting.

(2)	Cost of goods sold in fiscal years 2000 and 2001 included inventory write-downs related to our Global Restructuring and Optimization Plan that were in addition to the inventory provisions that we take in the ordinary course of our business. In fiscal year 2000, we recorded non-cash inventory write-downs of $18.4 million in connection with the consolidation of our facilities and additional non-cash, non-recurring inventory write-downs of $24.5 million as a result of revised sales forecasts. In fiscal year 2001, we recorded non-cash inventory write-downs of $58.2 million as a result of the rationalization of our product portfolio from over 6,000 to just over 4,000 varieties of seed products and the implementation of more stringent quality standards.

(3)	Research and development expenses in fiscal years 1999 and 2000 included special breeder bonuses in the amounts of $4.0 million and $2.1 million, respectively, designed to retain the services of breeder personnel.

(4)	Selling, general and administrative expenses included the following items:


	(a)	asset impairment related to an intangible asset resulted in a charge of $6.4 million in fiscal year 2000;

	(b)	restricted stock award plan charges related to a 2001 executive incentive program established for the specific purpose of incentivizing senior management to meet performance targets. The plan primarily awarded compensation in the form of shares of Holdings common stock when specific targets were met over a period of six quarters commencing March 31, 2001. The impact of this plan resulted in non-cash charges of $1.8 million, $5.8 million, $4.4 million and $1.4 million in fiscal years 2001 and 2002, the nine months ended June 28, 2002, and the twelve months ended June 27, 2003, respectively. The impact of this plan also resulted in cash charges of $0.8 million, $1.5 million, $1.1 million and $0.4 million in fiscal years 2001 and 2002, the nine months ended June 28, 2002, and the twelve months ended June 27, 2003, respectively. The restricted stock award plan was terminated at the end of fiscal year 2002;

	(c)	severance charges related to our Global Restructuring and Optimization Plan impacted fiscal years 2000 and 2001 by $14.0 million and $12.0 million, respectively. A charge of $7.7 million associated with severance of an executive and other employees was recorded in the nine and twelve months ended June 27, 2003;

	(d)	facility consolidation costs of $3.1 million and $4.3 million incurred in fiscal years 2000 and 2001, respectively, were associated with our Global Restructuring and Optimization Plan;

	(e)	in fiscal year 2000, we recorded $2.0 million of consulting fees in connection with the development of a new management information and product analysis systems and software program that was terminated in that year as part of our Global Restructuring and Optimization Plan. In fiscal year 2001, we incurred $3.3 million in advisory and consulting fees. $2.0 million of these fees were paid to our lenders, their advisors and legal counsel and our advisors and legal counsel in connection with the restructuring of our credit facility, and $1.3 million of these fees were paid to several consultants who advised on certain aspects of our Global Restructuring and Optimization Plan. In fiscal year 2002 and the nine months ended June 28, 2002, we incurred $0.8 million of consulting fees related to our Global Restructuring and Optimization Plan; and


	(f)	in the nine and twelve months ended June 27, 2003, we recorded $2.4 million of legal and professional fees related to the transactions detailed in this prospectus, the majority of which represented payments made by us to the advisors and legal counsel to the special committee of Holdings’ Board of Directors formed to evaluate the Acquisition Transactions.


(5)	This management fee was paid for services rendered to us by Savia and its employees. This management fee was discontinued effective October 1, 1998.

(6)	We have ceased the amortization of goodwill due to our adoption of SFAS No. 142, “Goodwill and Other Intangible Assets” for fiscal year 2002.

(7)	Net loss included an increase in income tax expense during fiscal year 2001 primarily related to a provision of a valuation allowance against the deferred tax assets arising from net operating loss carryforwards. Net income included a decrease in income tax expense during fiscal year 2002 primarily related to a $5.9 million U.S. tax refund and the utilization of net operating loss carryforwards.

(8)	There was a deficiency of earnings to cover fixed charges for the years ended September 30, 1998, 1999, 2000, 2001 and 2002, for the nine months ended June 28, 2002 and the nine months ended June 27, 2003 and the twelve months ended June 27, 2003 of $200.9 million, $7.0 million, $114.7 million, $124.8 million, $1.8 million, $4.5 million, $8.0 million and $5.3 million, respectively. For purposes of calculating the earnings to fixed charges ratio, earnings represent net income before income taxes, minority interests in the income of majority-owned subsidiaries, cumulative effect of an accounting change, extraordinary items and fixed charges and less preference security dividend requirements. Fixed charges consist of:


	•	interest, whether expensed or capitalized;

	•	amortization of debt expense and discount or premium relating to any indebtedness, whether expensed or capitalized;

	•	one-third of rental expenses under operating leases which is considered to be a reasonable approximation of the interest portion of such expense; and

	•	preference security dividend requirements.

(9)

“EBITDA” is defined as net income (loss) before income tax expense (benefit), interest expense, net, depreciation and amortization and non-cash compensation charges. EBITDA is a non-GAAP measure and should not be considered an alternative to any other measure of performance presented in accordance with GAAP. You should not consider EBITDA in isolation from or as a substitute for net income (loss), cash flows from operating activities and other consolidated income or cash flow statement data prepared in accordance with GAAP, or as a measure of profitability or liquidity. We present EBITDA because management believes that EBITDA could be useful for investors in assessing our operating performance. Additionally, EBITDA is a measure commonly used by financial analysts because of its usefulness in evaluating operating performance. EBITDA, as used by us, is not necessarily comparable to similarly titled measures of other companies, because all companies do not calculate EBITDA in the same fashion. The table below presents a reconciliation from net income (loss) to EBITDA.


	Below is a table of certain significant items included in our historical operating results and their impact on EBITDA. These items are discussed in more detail in footnotes (2), (3), (4) and (5) above.


	(a)	See footnote (2) above.

	(b)	See footnote (3) above.

	(c)	See footnote (4)(a) above.

	(d)	See footnote (4)(b) above.

	(e)	See footnote (4)(c) above.

	(f)	See footnote (4)(d) above.


		A substantial portion of our EBITDA comes from subsidiaries that operate in foreign countries. Because of restrictions imposed by law in certain of these countries, including laws relating to taxes on dividends and distributions, as well as U.S. taxes that may be imposed on dividends or deemed dividends, the cash flow from these subsidiaries may be subject to substantial taxes if these foreign subsidiaries distribute their earnings to us, and we could be subject to additional U.S. taxes. As a result, a substantial portion of the funds represented by EBITDA may not be available for our discretionary use.

An investment in the notes involves risk. In addition to the other information contained in this prospectus, you should carefully consider the following risk factors and information under “Forward-Looking Statements,” which appears elsewhere in this prospectus, before deciding whether to invest in the notes.

As of June 27, 2003, after giving effect to the issuance of the original notes, borrowings under our new senior secured credit facility and the use of the proceeds therefrom and issuance of the mandatorily redeemable PIK Preferred Stock, we and our consolidated subsidiaries would have had approximately $466.3 million of outstanding debt (including the current portion of long-term debt and excluding obligations to trade creditors). Outstanding debt would have been approximately 78.0% of our total capitalization as of June 27, 2003. See “Capitalization.”

Our substantial level of indebtedness could have important consequences to you, including the following:


	•	our ability to obtain additional financing for working capital, capital expenditures, acquisitions or general corporate purposes may be impaired;

	•	we must use a substantial portion of our cash flow from operations to pay interest and principal on the notes and other indebtedness, which will reduce the funds available to us for other purposes such as potential acquisitions and capital expenditures;

	•	we are exposed to fluctuations in interest rates, because our new senior secured credit facility has a variable rate of interest;

	•	we may have a higher level of indebtedness than some of our competitors, which may put us at a competitive disadvantage and reduce our flexibility in planning for, or responding to, changing conditions in our industry, including increased competition;

	•	we are more vulnerable to general economic downturns and adverse developments in our business; and

	•	our failure to comply with financial and other restrictive covenants in the indenture governing the notes and our other debt obligations, some of which require us to maintain specified financial ratios and limit our ability to incur additional debt and sell assets, could result in an event of default that, if not cured or waived, could harm our business or prospects and could result in our bankruptcy.

The indenture for the notes and our new senior secured credit facility impose, and the terms of any future debt may impose, significant operating and financial restrictions on us. These restrictions, among other things, limit our ability and the ability of our subsidiaries to:


	•	incur or guarantee additional indebtedness;

	•	pay dividends or make other distributions;

	•	repurchase our stock;

	•	make investments;

	•	make capital expenditures;

	•	sell or otherwise dispose of assets including capital stock of subsidiaries;

	•	create liens;

	•	enter into agreements restricting our subsidiaries’ ability to pay dividends;


	•	enter into transactions with affiliates; and

	•	consolidate, merge or sell all of our assets.

We cannot assure you that these covenants will not adversely affect our ability to finance our future operational or capital needs or to pursue available business opportunities.

In addition, our new senior secured credit facility requires us to maintain specified financial ratios. We cannot assure you that these covenants will not adversely affect our ability to finance our future operations or capital needs or to pursue available business opportunities or limit our ability to plan for or react to market conditions or meet capital needs or otherwise restrict our activities or business plans. A breach of any of these covenants or our inability to maintain the required financial ratios could result in a default in respect of the related indebtedness. If a default occurs, the relevant lenders could elect to declare the indebtedness, together with accrued interest and other fees, to be immediately due and payable and proceed against any collateral securing that indebtedness.

In addition, the terms of the PIK Preferred Stock impose operational and financial restrictions on us. See “Description of the PIK Preferred Stock.”

Our ability to make payments on and to refinance our debt, including the notes, and to fund working capital, capital expenditures, acquisitions, development efforts and other general corporate purposes will depend on our ability to generate cash in the future. Similarly, the ability of the guarantors of the notes to make payments on and refinance their debt will depend on their ability to generate cash in the future. To some extent, this variable is subject to general and regional economic, financial, competitive, legislative, regulatory and other factors that are beyond our or the guarantors’ control. Neither Seminis Vegetable nor the guarantors can assure you that any of us will generate sufficient cash flows from operations, or that future borrowings will be available under our new senior secured credit facility, in an amount sufficient to enable any of us to pay our debt, including the notes, or to fund other liquidity needs. Seminis Vegetable and the guarantors may need to refinance all or a portion of our debt, including the notes, on or before maturity. If either Seminis Vegetable or the guarantors are unable to generate sufficient cash flows and are unable to refinance or extend outstanding borrowings on commercially reasonable terms or at all, we may have to:


	•	reduce or delay capital expenditures planned for replacements, improvements and expansions;

	•	sell assets;

	•	restructure debt; and/or

	•	obtain additional debt or equity financing.

We cannot assure you that we could effect or implement any of these alternatives on satisfactory terms, if at all.

A substantial portion of our EBITDA comes from subsidiaries that operate in foreign countries. Because of restrictions imposed by law in certain of these countries, including laws relating to taxes on dividends and distributions, as well as U.S. taxes that may be imposed on dividends or deemed dividends, the cash flow from these subsidiaries may be subject to substantial taxes if these foreign subsidiaries distribute their earnings to us, and we could be subject to additional U.S. taxes. As a result, a significant portion of the funds represented by EBITDA may not be available for our discretionary use.

We may incur substantial additional debt in the future, including additional debt under our new senior secured credit facility. As of June 27, 2003, assuming the completion of the Transactions, we would have had unused borrowing capacity of $54.0 million under the revolving credit portion of our new senior secured

The notes are subordinated in right of payment to all of our current and future senior debt. Senior indebtedness includes indebtedness under our new senior secured credit facility and all of our other indebtedness that is not expressly made subordinate to, or equal in right of payment to, the notes. The guarantees of the notes are subordinated in right of payment to all of the guarantors’ existing and future senior indebtedness. Subject to limitations in the indenture, we may incur additional indebtedness in the future, including senior indebtedness. By reason of the subordination of the notes and the guarantees, in the event of Seminis Vegetable’s or the guarantors’ bankruptcy, liquidation, reorganization, or other winding up of Seminis Vegetable’s or the guarantors’ business, or upon default in payment with respect to any of Seminis Vegetable’s or the guarantors’ senior indebtedness, or any event of default with respect to that indebtedness resulting in the acceleration thereof, Seminis Vegetable’s or the guarantors’ assets will be available to pay the amounts due on the notes only after all of Seminis Vegetable’s or the guarantors’ senior indebtedness has been paid in full. In these cases, Seminis Vegetable and the guarantors may not have sufficient funds to pay all of their creditors, and holders of the notes may receive less, ratably, than the holders of senior indebtedness. Furthermore, under certain circumstances, no cash payments with respect to the notes may be made if a payment default exists with respect to certain senior debt or for a period of up to 180 days (during each period of 360 days) if a non-payment default exists with respect to certain designated senior debt. As of June 27, 2003, after giving effect to the issuance of the original notes, borrowings under our new senior secured credit facility and the use of the proceeds therefrom, we would have had approximately $237.0 million of senior indebtedness outstanding on a consolidated basis.

Holdings has unconditionally guaranteed, on a senior subordinated basis, all payments of principal, premium, if any, and interest on the notes. However, since at present Holdings’ only significant asset is the capital stock of Seminis Vegetable (and that asset is pledged to the lenders under our new senior secured credit facility), if Seminis Vegetable should be unable to meet its payment obligations with respect to the notes, it is unlikely that Holdings would be able to do so.

Obligations under our new senior secured credit facility are secured by substantially all of our and our domestic subsidiaries’ assets, as well as by a pledge of the capital stock of Seminis Vegetable, the capital stock of our domestic subsidiaries and up to 65% of the capital stock of each of our first tier foreign subsidiaries. See “Description of Other Indebtedness — Description of Our New Senior Secured Credit Facility.” As a result, substantially all of our assets, together with the capital stock of Seminis Vegetable and the capital stock of a number of our subsidiaries, will only be available for payment of obligations with respect to the notes after outstanding obligations under our new senior secured credit facility have been paid in full. Accordingly, there may not be sufficient funds remaining to pay the notes.

You will not have any claim as a creditor against our foreign subsidiaries, which are not guarantors of the notes, and the indebtedness and other liabilities, including trade payables, whether secured or unsecured, of those subsidiaries will be effectively senior to your claims. As of and for the twelve months ended June 27, 2003, the non-guarantor foreign subsidiaries represented in the aggregate approximately 61.1% of our consolidated net sales, 78.1% of our consolidated net income, 58.1% of our consolidated total assets and 40.9% of our consolidated EBITDA. As of June 27, 2003, the liabilities of the non-guarantor foreign subsidiaries on a consolidated basis were approximately $135.2 million and after giving effect to the issuance of the original

notes, borrowings under our new senior secured credit facility and the use of the net proceeds therefrom, the liabilities of our non-guarantor foreign subsidiaries on a consolidated basis would have been approximately $91.9 million. Although our new senior secured credit facility and the indenture governing the notes impose limitations on our ability to incur debt, the non-guarantor foreign subsidiaries are able to incur debt in the future in addition to their existing debt. In the event of a bankruptcy, liquidation, reorganization or other winding up of any of the non-guarantor foreign subsidiaries, holders of their indebtedness and their trade creditors will generally be entitled to payment of their claims from the assets of those subsidiaries before any assets are made available for distribution to Seminis Vegetable.

If we experience specified change of control events, we will be required to offer to repurchase all outstanding notes. However, certain change of control events constitute an event of default under our new senior secured credit facility. An event of default under the new senior secured credit facility would entitle the lenders thereunder, among other things, to cause all outstanding debt obligations under our new senior secured credit facility to become due and payable and to proceed against their collateral. We cannot assure you that in those circumstances we would have sufficient assets or be able to obtain sufficient third-party financing on favorable terms to satisfy all of our obligations under our new senior secured credit facility and the notes.

In addition, future credit facilities or other agreements relating to indebtedness to which we may become a party may contain restrictions on our ability to offer to repurchase the notes in connection with a change of control. In the event a change of control occurs at a time when Seminis Vegetable is prohibited from offering to repurchase the notes, Seminis Vegetable could seek consent to offer to repurchase the notes or attempt to refinance the borrowings that contain such a prohibition. If Seminis Vegetable does not obtain the consent or refinance the borrowings, Seminis Vegetable would remain prohibited from offering to repurchase the notes. In such case, Seminis Vegetable’s failure to offer to purchase the notes would constitute a default under the indenture, which, in turn, could result in amounts outstanding under our new senior secured credit facility or any future credit facility or other agreements relating to indebtedness being declared due and payable. Any such declaration could have adverse consequences to us and the holders of the notes.

The provisions relating to a change of control included in the indenture may increase the difficulty for a potential acquiror to obtain control of us. In addition, some important corporate events, such as leveraged recapitalizations, that would increase the level of our indebtedness, would not constitute a “change of control” under the indenture.

The notes are guaranteed by all of our existing wholly-owned domestic subsidiaries and all of our future domestic subsidiaries that provide a guarantee under our new senior secured credit facility. The guarantees of our subsidiary guarantors may be subject to review under U.S. federal bankruptcy law and comparable provisions of state fraudulent conveyance laws if a bankruptcy or reorganization case or lawsuit is commenced by or on behalf of Seminis Vegetable’s or a guarantor’s unpaid creditors. While the relevant laws may vary from state to state, under these laws, if a court were to find in such a bankruptcy or reorganization case or lawsuit that, at the time any of our subsidiary guarantors that issued a guarantee of the notes, the guarantor:


	•	incurred the guarantee of the notes with the intent of hindering, delaying or defrauding current or future creditors;

	•	was a defendant in an action for money damages, or had a judgment for money damages entered against it if, in either case, after final judgment, the judgment is unsatisfied; or

	•	received less than reasonably equivalent value or fair consideration for incurring the guarantee of the notes, and that guarantor (a) was insolvent or was rendered insolvent by reason of issuing the guarantee; (b) was engaged, or about to engage, in a business or transaction for which its remaining


		assets constituted unreasonably small capital to carry on its business; or (c) intended to incur, or believed that it would incur, debts beyond its ability to pay as the debts matured (as all of the foregoing terms are defined in or interpreted under the relevant fraudulent transfer or conveyance statutes);

then a court could void the guarantee of the subsidiary guarantor or subordinate the amounts owing under the guarantee to the guarantor’s existing or future debt or take other actions detrimental to you.

The measure of insolvency for purposes of the foregoing considerations will vary depending upon the law of the jurisdiction that is being applied in any proceeding. Generally, a company would be considered insolvent if at the time it incurred the debt or issued the guarantee:


	•	the sum of its debt (including contingent liabilities) was greater than the fair value of its property;

	•	the present fair value of its assets was less than the amount required to pay its existing debts and liabilities (including contingent liabilities) as they become due; or

	•	it cannot pay its debts as they become due.

If the guarantees of the notes were challenged, we cannot be sure as to the standard that a court would use to determine whether any of our subsidiary guarantors was solvent at the relevant time. If a case of this type were to occur, the guarantor could also be subject to the claim that, since the guarantee was incurred for the benefit of Seminis Vegetable and only indirectly for the benefit of the guarantor, the obligations of the applicable guarantor were incurred for less than fair consideration. If the guarantor were also found to be insolvent, a court could void the obligation under the guarantee, subordinate the guarantee to the applicable guarantor’s other debt or take other action detrimental to the holders of the notes. If a guarantee of one of our subsidiary guarantors is voided as a fraudulent conveyance or found to be unenforceable for any other reason, you will not have a claim against that guarantor and will only be a creditor of Holdings, Seminis Vegetable or any subsidiary guarantor whose obligation was not set aside or found to be unenforceable.

The original notes that are not tendered and exchanged will remain restricted securities. If the exchange offer is completed, we will not be required to register any remaining original notes. That means that if you wish to offer, sell, pledge or otherwise transfer your original notes at some future time, they may be offered, sold, pledged or transferred only if an exemption from registration under the Securities Act of 1933 is available or, outside the United States, to non-U.S. persons in accordance with the requirements of Regulation S under the Securities Act of 1933. Any remaining original notes will bear a legend restricting transfer in the absence of registration or an exemption fro registration.

To the extent that original notes are tendered and accepted in connection with the exchange offer, any trading market for remaining original notes could be adversely affected.

The notes are a new issue of securities for which there is currently no market. We cannot guarantee the future development of a market for the notes or the ability of holders of the notes to sell their notes or the price at which such holders may be able to sell their notes. If the notes are traded after their initial issuance, they may trade at a discount from the initial offering price of the original notes, depending upon prevailing interest rates, the market for similar securities and other factors. Citigroup Global Markets Inc., CIBC World Markets Corp., Harris Nesbitt Corp. and Rabo Securities USA, Inc., the initial purchasers of the original notes, have informed us that, subject to applicable laws and regulations, they currently intend to make a market in the notes. However, the initial purchasers are not obligated to do so, and any market making by them may be discontinued at any time without notice. Therefore, no assurance can be given as to whether an active trading market will develop for the notes or, if a market develops, whether it will continue. We do not intend to apply for listing of the notes on any securities exchange or on the National Association of Securities Dealers, Inc. automated quotation system.

We will not accept your original notes for exchange if you do not follow the exchange offer procedures. We will issue new notes as part of this exchange offer only after timely receipt of your original notes, a properly completed and duly executed letter of transmittal and all other required documents or if you comply with the guaranteed delivery procedures for tendering your original notes. Therefore, if you want to tender your original notes, please allow sufficient time to ensure timely delivery. If we do not receive your original notes, letter of transmittal, and all other required documents by the expiration date of the exchange offer, or you do not otherwise comply with the guaranteed delivery procedures for tendering your original notes, we will not accept your original notes for exchange. We are under no duty to give notification of defects or irregularities with respect to the tenders of original notes for exchange. If there are defects or irregularities with respect to your tender of original notes, we will not accept your original notes for exchange unless we decide in our sole discretion to waive such defects or irregularities.

We have a history of net losses and we may continue to incur additional losses in the future. We had net losses of $4.4 million, $80.8 million and $134.5 million for the fiscal years ended September 30, 1999, 2000 and 2001, respectively. We had net income of $16.1 million for the fiscal year ended September 30, 2002. Our ability to achieve sustained profitability will depend, among other things, on our ability to increase our levels of sales, impose premium pricing for our seeds, continue our efforts to reduce expenses and manage our levels of inventory and accounts receivable. We cannot assure you that we will be able to create positive earnings in the future. Moreover, if we do achieve sustained profitability, the level of any profitability cannot be predicted and may vary significantly from quarter to quarter.

We monitor our inventory levels based on our own projections of future demand. Because of the length of time necessary to produce commercial quantities of seeds, we must make production decisions well in advance of sales. An inaccurate forecast of demand for any seed variety can result in the unavailability of seeds in high demand. This unavailability may depress sales volumes and adversely affect customer relationships. Conversely, an inaccurate forecast can also result in an over-supply of seeds which may increase costs, negatively impact cash flow, reduce the quality of inventory and ultimately create write-offs of inventory, any of which circumstances could have a material adverse effect on our business, results of operations and financial condition.

We have in the past made, and intend to continue in the future to make, significant investments in research and development in order to enable us to identify and develop new products to meet consumer demands and keep pace with new product introductions by our competitors. Our investment in research and development represented 9.8% and 9.9% of our net sales for the fiscal year ended September 30, 2002, and the nine months ended June 27, 2003, respectively.

The development process for new seeds is lengthy and costly. On average, it takes five to 12 years for a proprietary seed variety to reach commercial viability. Despite investments in this area, our research and


	•	accurately anticipate and properly identify our customers’ needs and industry trends;

	•	price our products competitively;

	•	innovate, develop and commercialize new products and applications in a timely manner;

	•	differentiate our products from our competitors’ products; and

	•	use our research and development budget efficiently.

The continuous introduction of new products is critical to our business. Our financial condition could deteriorate if we are unable to successfully develop and commercialize new products.

Our ability to commercialize seed products may depend on whether we have the right to use applicable technologies. We often use a large number of technologies to develop a single product. Obtaining the rights to use these technologies can be complicated because:


	•	technologies may be subject to proprietary intellectual property rights, many of which have been patented;

	•	pending patent applications, overlapping patent claims and litigation over issued patents makes ownership of technologies uncertain; and

	•	licenses for proprietary technologies may be unavailable on terms acceptable to us or because exclusive rights to use them are given to other companies.

Failure to obtain the rights to use technologies that are important to our business could have a material adverse effect on our business, results of operations and financial condition.

A substantial portion of our products are hybrid seed varieties which may be copied through the acquisition of very small quantities of germplasm, the hereditary information contained in our seeds. A competitor could obtain our germplasm or information identifying the origin of our seeds and produce seeds with similar or identical characteristics to the traits embodied in our products. Attempting to protect our intellectual property, through litigation or otherwise, can be time consuming and expensive, have uncertain results and, in some countries, be ineffective.

A change in U.S. law or foreign law protecting plant patents or plant varieties could take away protection for our patented seeds or protected plant varieties, which could have a material adverse effect on our business, results of operations and financial condition, and increase competition or reduce the value of our research and development efforts.

We face substantial competition due to technological advances by competitors such as other seed companies, pharmaceutical and chemical companies, and biotechnology companies. Many of these companies have substantially greater resources than we do. If a competitor introduces a successful product, it could take years to develop a similar seed variety, which could have a material adverse effect on our business, results of operations and financial condition.

In addition, we compete on the basis of pricing and financial terms. From time to time, our competitors may offer better pricing and financial terms causing our market share or profitability to decline, which could have a material adverse effect on our business, results of operations and financial condition.

Fox Paine currently owns approximately 75.1% of Holdings common stock and Mr. Romo and his affiliates own approximately 12.0% of Holdings common stock. In addition, Mexican SPC and Fox Paine have co-investment rights to purchase approximately 29.5% and 1.57%, respectively, of additional shares of Holdings common stock. Currently, Mr. Romo has the right, subject to certain trigger events, to nominate a majority of the members of Holdings’ Board of Directors for a period of up to five years from the date of completion of the Acquisition Transactions. Subject to certain veto rights held by Fox Paine with respect to specified matters, Mr. Romo is able to control our affairs. So long as Mr. Romo has the right to nominate a majority of the members of Holdings’ Board of Directors, Fox Paine will have the right to nominate a number of directors equal to the number nominated by Mr. Romo minus one. If Mr. Romo loses the right to nominate a majority of Holdings’ Board of Directors, Fox Paine will thereafter have that right and the ability to control our affairs. See “Certain Relationships and Related Party Transactions — Arrangements Among Fox Paine, Mr. Romo and the Continuing Stockholders — Stockholders’ Agreement.”

The interests of Fox Paine and Mr. Romo could conflict with yours. For example, if we encounter financial difficulties or are unable to pay our debts as they mature, the interests of Fox Paine and Mr. Romo as equity holders might conflict with your interests as a note holder. Fox Paine and Mr. Romo may also have an interest in pursuing acquisitions, divestitures, financings or other transactions that, in their judgment, could enhance their equity investments, even though such transactions might involve risks to you as a holder of the notes. In addition, Fox Paine or its affiliates and/or Mr. Romo and his affiliates may in the future own businesses that directly compete with ours.

Internationally, we provide seeds through subsidiaries in Argentina, Canada, Chile, France, Guatemala, Hungary, Italy, Mexico, New Zealand, Peru, South Africa, South Korea, Thailand and The Netherlands and through exclusive agents using our proprietary technology in Australia, China, the Czech Republic, Denmark, Ecuador, Germany, India, Israel, Italy, Japan, Latvia, New Zealand, Romania, Slovakia, South Africa, Taiwan, Tanzania, Turkey and Vietnam.

Our operations are subject to risks that are inherent in operating in foreign countries, including the following:


	•	foreign countries could change regulations or impose currency restrictions and other restraints;

	•	in some countries, there is a risk that the government may expropriate assets;

	•	some countries impose burdensome tariffs and quotas;

	•	political changes and economic crises may lead to changes in the business environment in which we operate;

	•	international conflict, including terrorist acts, could significantly impact our financial condition and results of operations;

	•	in some countries, our operations are dependent on leases and other agreements; and

	•	economic downturns, political instability and war or civil disturbances may disrupt production and distribution logistics or limit sales in individual markets.

We own production and processing facilities in numerous countries throughout the world and market our products worldwide. Although the majority of our sales are transacted in U.S. dollars, liabilities for non-U.S. operating expenses and income taxes are denominated in local currencies. In addition, fluctuations in exchange rates may affect product demand and may adversely affect the profitability in U.S. dollars of products and services provided by us in foreign markets where payment for our products and services is made in local currency. Accordingly, fluctuations in currency rates may affect our operating results and net income, which could have a material adverse effect on our business, results of operations and financial condition.

Seed production is subject to a variety of agricultural risks. Extreme weather conditions, disease and pests can materially and adversely affect the quality and quantity of seeds produced. We cannot assure you that these factors will not affect a substantial portion of our production in any year and have a material adverse effect on our business, results of operations and financial condition.

The seed business is highly seasonal. Generally, net sales are highest in the second fiscal quarter due to increased demand from Northern Hemisphere growers who plant seed in the early spring. We recorded 33.7% of our fiscal year 2002 net sales during our second fiscal quarter. We have historically operated at a loss during the first and third fiscal quarters due to lower sales during these quarters. Our results in any particular quarter should not be considered indicative of the results for a full year. For these reasons, a sequential quarter to quarter comparison is not a good indication of our historical performance or of how we will perform in the future.

Seeds may contain defective or undesired characteristics that are difficult to detect prior to their sale and use. The large number of seed varieties that we produce can result in deliveries of the wrong type of seed or contamination of one type of seed by another. Any defects that may be found in our seeds in the future could result in losses to growers. Losses claimed by growers may include the value of lost crops, which could greatly exceed the value of the seeds we sell. If we sell defective or contaminated seeds, large numbers of growers may experience crop failures during the same growing season. Further, growers may attribute poor crop yields or crop failure to perceived seed defects that may not exist, which could still result in claims against us. Any claims, whether valid or not, could result in negative publicity, which could have a material adverse effect on our business, results of operations and financial condition.

Defective seeds could result in warranty claims and negative publicity and the insurance covering warranty claims may become unavailable or be inadequate. We maintain third-party seedmen’s errors and omissions insurance covering warranty claims. However, these policies are subject to annual renewal and revision and have deductibles and coverage limits. As a result, we may not be offered continued coverage in the future. Even if coverage is offered, it may be at a price and on terms not acceptable to us. If claims exceed coverage limits, or if insurance is not available to us, the occurrence of significant claims could have a material adverse effect on our business, results of operations and financial condition.

Less than 1% of our sales in fiscal year 2002 represented genetically engineered products. The commercial success of any genetically engineered products will depend, in part, on public acceptance of the growth and consumption of genetically engineered plants and plant products. There has been much-publicized opposition in European and other countries to the sale of genetically engineered products. Claims that genetically engineered plant products are unsafe or pose a danger to the environment may cause

The field testing, production and marketing of genetically engineered seeds by us is subject to federal, state, local and foreign governmental regulation. Regulatory agencies administering existing or future laws may not allow us to produce and market our genetically engineered products in a timely manner or under technically or commercially feasible conditions. Regulatory action or private litigation could result in expenses, delays or other impediments to our product development programs or the commercial sale of resulting products, which could have a material adverse effect on our business, results of operations and financial condition.

Our products are subject to foreign, federal and state government regulations and controls such as:


	•	national certification requirements;

	•	import approval requirements;

	•	plant or seed health certifications;

	•	labeling regulations; and

	•	trade regulations and changes in tariffs.

Governmental agricultural programs that encourage or discourage the planting of crops may also affect seed demand. Failure to comply with these regulations could adversely affect our ability to deliver our products on a competitive and timely basis and have a material adverse effect on our business, results of operations and financial condition.

Our worldwide operations and products are subject to a broad range of environmental, health and safety laws and regulations. Among other things, these requirements regulate air emissions, wastewater and stormwater discharges, the use, management and disposal of hazardous and non-hazardous materials and wastes, product labeling, the cleanup of contamination and the use of chemicals in our agricultural growing operations. These requirements are complex, affect our day-to-day operations and tend to become more stringent over time. There can be no assurance that we have been or will be at all times in complete compliance with all environmental, health and safety requirements that apply to our operations or to our products. To maintain compliance with these requirements, we have been and may in the future be required to modify operations, purchase new equipment or make other capital improvements. Violations could result in penalties, the curtailment or cessation of operations or other sanctions, which could be material. Environmental laws also impose strict and, under certain circumstances, joint and several liability for the cleanup of contaminated property. The cleanup of contamination, including any potential contamination not yet discovered, could result in material costs or liabilities in the future.

Enactment of new environmental, health and safety laws and regulations, stricter enforcement by regulatory authorities of existing or new laws and regulations, or the identification of new information could result in significant costs and other liabilities in the future, which could have a material adverse effect on our business, results of operations and financial condition.

Our biotech products, which currently comprise a small portion of our net sales, are subject to additional health and safety regulations in the United States and other countries that allow the sale of biotech foods. Compliance with these additional health and safety regulations for biotech products can be costly. Sales of

The sale of seed products may involve the risk of injury to growers and other customers. These injuries may result from tampering by unauthorized third parties, the presence of plant contamination and disease, product contamination or spoilage, including the presence of foreign objects, substances, chemicals, other agents, or residues introduced during the growing, storage, handling or transportation phases. We have from time to time been involved in product liability lawsuits, none of which were material to our business. While we are subject to governmental inspection and regulations and believe our facilities comply in all material respects with all applicable laws and regulations, we cannot be sure that consumption of our products will not cause a health-related illness in the future or that we will not be subject to claims or lawsuits relating to these matters. Even if a product liability claim is unsuccessful or is not fully pursued, the negative publicity surrounding any assertion that our products caused illness or injury could adversely affect our reputation with existing and potential customers and our corporate and brand image. Moreover, claims or liabilities of this sort might not be covered by our insurance or by any rights of indemnity or contribution that we may have against others. We maintain product liability insurance in an amount which we believe to be adequate. However, we cannot be sure that we will not incur liabilities for which we are not insured or that exceed the amount of our insurance coverage.

An extended interruption in our ability to ship our products could have a material adverse effect on our business, financial condition and results of operations. Similarly, any extended disruption in the distribution of our products could have a material adverse effect on our business, financial condition and results of operations. While we believe we are adequately insured and would attempt to transport our products by alternative means if we were to experience an interruption due to strike, natural disasters or otherwise, we cannot be sure that we would be able to do so or be successful in doing so in a timely and cost-effective manner.

We use herbicides and other hazardous materials in the operation of our business. We may have to pay for the costs or damages associated with the improper application, accidental release or the use or misuse of these substances. Our insurance may not be adequate to cover these costs or damages or may not continue to be available at a price or under terms that are satisfactory to us. In these cases, payment of costs or damages could have a material adverse effect on our business, results of operations and financial condition.

Terrorist attacks, such as the attacks that occurred in New York and Washington, D.C. on September 11, 2001, and other acts of violence or war in the United States or abroad may affect the markets in which we operate and our operations and profitability. Further terrorist attacks against the United States or operators of U.S.-owned businesses outside the United States may occur, or hostilities could develop based on the current international situation. The potential near-term and long-term effect these attacks may have on our business operations, our customers, the markets for our products, the U.S. economy and the economies of other places we source or sell our products is uncertain. We do not maintain insurance for terrorist attacks or similar events. The consequences of any terrorist attacks, or any armed conflicts, are unpredictable, and we may not be able to foresee events that could have an adverse effect on our markets or our business.

This prospectus contains forward-looking statements within the meaning of the U.S. federal securities laws, including:


	•	statements, including possible or assumed future results of operations, in “Management’s Discussion and Analysis of Financial Condition and Results of Operations;”

	•	any statements contained in this prospectus regarding the prospects for our business or any of our products;

	•	any statements preceded by, followed by or that include the words “believes,” “expects,” “anticipates,” “intends,” “estimates,” “plans” or similar expressions; and

	•	other statements contained in this prospectus regarding matters that are not historical facts.

Our business and results of operations are subject to risks and uncertainties, many of which are beyond our ability to control or predict. Because of these risks and uncertainties, actual results may differ materially from those expressed or implied by forward-looking statements, and we caution investors not to place undue reliance on these statements, which speak only as of the date thereof.

In addition to the specific risk factors described in the section entitled “Risk Factors,” important factors that could cause actual results to differ materially include, but are not limited to:


	•	our future profitability;

	•	our ability to successfully forecast the demand for our seeds;

	•	volatility in the vegetable and fruit market due to market conditions and supply interruptions;

	•	the success of our research and development efforts;

	•	our ability to access intellectual property from third parties;

	•	changes in U.S. and foreign patent laws;

	•	competition and pricing in our market areas;

	•	exposure to fluctuations in foreign exchange rates;

	•	weather conditions;

	•	our ability to manage our long-term indebtedness;

	•	public acceptance of genetically engineered products;

	•	government regulations and enforcement;

	•	the favorable resolution of pending and future litigation; and

	•	general economic conditions.

All forward-looking statements included in this prospectus are based on information available to us on the date of this prospectus. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements contained throughout this prospectus.

On May 30, 2003, Holdings and certain other parties entered into the Acquisition Transactions Agreements pursuant to which Holdings would become a private company through a cash-out merger transaction in which the public stockholders of Holdings would receive $3.78 in cash in exchange for each share of Holdings common stock that they owned at the effective time of the merger. On September 29, 2003, the Transactions were consummated.


	•	Fox Paine, together with its affiliates and co-investors, acquired approximately 75.1% of the outstanding shares of Holdings common stock;

	•	the Continuing Stockholders retained approximately 12.0% of the outstanding shares of Holdings common stock; and

	•	the Additional Purchasers acquired approximately 12.9% of the outstanding shares of Holdings common stock.

Holdings also sold $50.0 million of PIK Preferred Stock and warrants to purchase shares of Holdings common stock to certain institutional investors immediately following the merger. The PIK Preferred Stock matures in 2014 and represents an obligation of Holdings, rather than Seminis Vegetable. For a more detailed description of the PIK Preferred Stock, see “Description of the PIK Preferred Stock.”


	•	Savia exchanged all of the outstanding shares of Holdings Class C preferred stock (Savia owned 100% of the outstanding shares of Holdings Class C preferred stock) and all obligations with respect to those shares for 37,669,480 shares of Holdings Class A common stock and a cash payment to Savia equal to $13,965,443 (Savia ultimately received proceeds of approximately $266.2 million in respect of the 37,669,480 shares of Holdings Class A common stock that it received in the exchange and the additional 40,615,619 shares of Holdings Class B common stock that it owned prior to the exchange);

	•	we refinanced existing indebtedness of approximately $274.2 million;

	•	on the date that we consummated the Acquisition Transactions, Holdings purchased all of the outstanding shares of its Class B preferred stock and pay all accrued and unpaid dividends thereon for $23.75 million plus accrued and unpaid dividends of approximately $6.5 million;

	•	Holdings purchased and retired 6,411,953 shares of Holdings common stock at a price of $3.40 per share; and

	•	Holdings purchased and canceled certain options to purchase shares of Holdings common stock for aggregate consideration of approximately $4.3 million.

Our current ownership, before and after giving effect to the exercise of co-investment rights that exist, is set forth under “— Equity Ownership.”

Pursuant to the terms of the amended and restated exchange agreement that Holdings entered into with Savia, Holdings issued to Savia 37,669,480 shares of Holdings Class A common stock and also paid to Savia an amount in cash equal to $13,965,443 million in exchange for Savia’s right, title and interest in and to its 16,688 shares of Holdings Class C preferred stock (which represented 100% of Holdings outstanding shares of Class C preferred stock); any right, title or interest in or to any and all accrued and unpaid cash dividends on the shares of Holdings Class C preferred stock held by Savia; any right, title or interest in or to any and all

Pursuant to the terms of the contribution agreement among Savia, Mr. Romo, Mexican SPC, the Continuing Stockholders and Seminis Acquisition LLC (“Seminis Acquisition”), Savia contributed 37,669,480 shares of Holdings Class A common stock and 40,615,619 shares of Holdings Class B common stock to Seminis Acquisition in exchange for membership interests in Seminis Acquisition. Savia’s membership interests in Seminis Acquisition entitled Savia to receive proceeds of approximately $266.2 million as further described under “— The Stock Purchases and the Distributions,” which amount was paid when the Acquisition Transactions were consummated.

In addition, pursuant to the terms of the contribution agreement, the Continuing Stockholders contributed all of their shares of Holdings common stock to Seminis Acquisition as follows:


	•	the ARG Trust contributed to Seminis Acquisition 2,157,361 shares of Holdings Class A common stock and 2,207,896 shares of Holdings Class B common stock, in exchange for membership interests in Seminis Acquisition;

	•	CAI contributed to Seminis Acquisition 42,000 shares of Holdings Class A common stock, in exchange for membership interests in Seminis Acquisition;

	•	Park contributed to Seminis Acquisition 1,000,000 shares of Holdings Class A common stock, in exchange for membership interests in Seminis Acquisition; and

	•	nine members of Seminis and Savia management (other than Mr. Romo) contributed to Seminis Acquisition an aggregate of 685,505 shares of Holdings Class A common stock, in exchange for membership interests in Seminis Acquisition.

The membership interests in Seminis Acquisition entitled each of the Continuing Stockholders to receive shares of Holdings common stock upon completion of the Acquisition Transactions, as further described under “— The Stock Purchases and the Distributions.”

Pursuant to the terms of the agreement and plan of merger among Holdings, Seminis Acquisition and Seminis Acquisition’s wholly-owned subsidiary, Seminis Merger Corp. (“Seminis Merger”), Seminis Merger merged with and into Holdings. Following the merger, Holdings was the surviving corporation.

In connection with the merger, each share of Holdings common stock issued and outstanding at the closing of the merger (other than shares held by Seminis Acquisition, Seminis Merger, Holdings and dissenting stockholders who have perfected their appraisal rights under Delaware law) converted into the right to receive $3.78 in cash. Holders of options to acquire shares of Holdings common stock (other than those persons permitted by Seminis Acquisition to retain their options) received, for each share of Holdings common stock underlying an option with a per share exercise price less than $3.78, an amount in cash equal to the difference between $3.78 and the per share exercise price for the option. Options with a per share exercise price greater than or equal to $3.78 per share were cancelled without any consideration being paid for those options. As a result of the merger, the former public stockholders of Holdings common stock no longer have any interest in, and no longer are stockholders of, Holdings.

Pursuant to the terms of the merger agreement, immediately prior to the merger, holders of shares of Holdings Class B preferred stock received a dividend equal to all accrued and unpaid dividends as of the dividend payment date immediately preceding the closing of the merger. The aggregate redemption value of the shares of Holdings Class B preferred stock that were outstanding prior to the consummation of the

Immediately following the merger, Holdings, Fox Paine, the Continuing Stockholders and the Additional Purchasers acquired shares of Holdings common stock as follows:


	•	Holdings purchased from Seminis Acquisition 6,411,953 shares of Holdings common stock for a per share purchase price of $3.40 and an aggregate purchase price of $21,800,640 and retired the repurchased shares;

	•	Fox Paine purchased from Seminis Acquisition 48,010,146 shares of Holdings common stock for a per share purchase price of $3.40 and an aggregate purchase price of $163,234,496;

	•	the Additional Purchasers purchased from Seminis Acquisition up to 8,256,381 shares of Holdings common stock for a per share price of $3.40 and an aggregate purchase price of up to approximately $28,071,695;

	•	the ARG Trust exercised an option to purchase from Seminis Acquisition 900,737 shares of Holdings common stock for a per share purchase price of $3.40 and an aggregate purchase price of approximately $3.1 million;

	•	Seminis Acquisition distributed 6,092,762 shares of Holdings common stock to the Continuing Stockholders in amounts equal to the number of shares contributed to Seminis Acquisition by each Continuing Stockholder;

	•	Emprima acquired the 4,365,257 shares of Holdings common stock initially distributed by Seminis Acquisition to the ARG Trust; and

	•	Seminis Acquisition distributed to Savia aggregate proceeds of approximately $266.2 million in respect of the 78,285,099 shares of Holdings common stock contributed to Seminis Acquisition by Savia immediately prior to the merger.

	•	Certain institutional investors purchased from Holdings 50,000 shares of PIK Preferred Stock and warrants to purchase 3,873,108 shares of Holdings common stock for an aggregate purchase price of $50,000,000.

Fox Paine now owns a majority of the shares of Holdings common stock, Holdings is a privately-held company and Holdings common stock is no longer listed on The Nasdaq National Market.

The ownership of Holdings common stock (expressed in percentage terms) prior to and following the Acquisition Transactions, before and after giving effect to the full exercise of co-investment rights, the exercise of outstanding options and warrants to purchase shares of Holdings common stock, the issuance of


(1)	Prior to the Acquisition Transactions, Holdings had outstanding two classes of common stock — Holdings Class A common stock and Holdings Class B common stock. Holdings now has only one class of common stock outstanding.

(2)	Mexican SPC has immediately exercisable co-investment rights to acquire approximately 13.8% of the fully-diluted shares of Holdings common stock, and unvested co-investment rights to acquire an additional approximately 15.8% of the fully-diluted shares of Holdings common stock. The second tranche of co-investment rights will be exercisable only if Fox Paine achieves a 26.0% rate of return on its initial investment in Holdings. Each co-investment right will entitle the recipient to acquire one share of Holdings common stock at an exercise price of $3.40 per share. See “Certain Relationships and Related Party Transactions.”

(3)	Fox Paine has unvested co-investment rights to acquire approximately 1.57% of the fully-diluted shares of Holdings common stock, which co-investment rights will be exercisable only if Fox Paine achieves a 26.0% rate of return on its initial investment in Holdings. Each co-investment right will entitle the recipient to acquire one share of Holdings common stock at an exercise price of $3.40 per share. See “Certain Relationships and Related Party Transactions.”

(4)	Includes Emprima, the ARG Trust, Park and CAI, which are entities affiliated with Mr. Romo.

(5)	Includes Mr. Romo and nine members of Seminis and Savia management.

For additional information regarding the equity ownership of Holdings following the Acquisition Transactions, see “Security Ownership and Certain Beneficial Owners and Management.”


	•	25,000 shares of Class A redeemable preferred stock are authorized but none is outstanding;

	•	25,000 shares of Class B redeemable preferred stock are authorized but none is outstanding; and

	•	400,000 shares of a new class of PIK Preferred Stock is authorized, 50,000 shares of which is outstanding. See “Description of the PIK Preferred Stock.”

As described under “Description of the Acquisition Transactions,” in connection with the Acquisition Transactions, all shares of Holdings Class C preferred stock were cancelled and cease to exist.

We will not receive any proceeds from the issuance of the new notes in the exchange offer. The net proceeds from the offering of the original notes, after deducting estimated underwriting discounts, were approximately $184.8 million. The net proceeds from the offering of the original notes, together with borrowings under our new senior secured credit facility and equity investments made by the parties to the Acquisition Transactions, cash on hand and other incremental indebtedness, in the amounts more specifically described in the table below, were applied to the uses described in the table as of the closing date of the Acquisition Transactions, which was September 29, 2003. Our indebtedness that was repaid included a term loan and revolving credit facility, certain equipment leases and certain subsidiary borrowings. Both the term loan and revolving credit facility had a final maturity of December 31, 2003, and both bore interest at an annual rate equal to the greater of the sum of the base rate then in effect and 3.5% or an interest rate that ranged from 9.0% to 10.25%. The equipment leases were entered into between December 1999 and March 2001, were for terms of between 36 and 72 months and carried interest rates of between 11.75% and 13.85%. The majority of our subsidiary indebtedness that was repaid matured within twelve months of the closing date of the Acquisition Transactions and carried interest rates of between 3.1% and 4.8%.


(1)	The revolving credit portion of our new $250.0 million senior secured credit facility provides for borrowings of up to $60.0 million.

(2)	This amount was borrowed pursuant to the term portion of this credit facility.

(3)	This amount includes (a) aggregate proceeds of $163,234,496 in respect of the 48,010,146 shares of Holdings common stock that Fox Paine acquired, (b) aggregate proceeds of $28,071,695 in respect of the 8,256,381 shares of Holdings common stock that the Additional Purchasers acquired, and (c) aggregate proceeds of $50.0 million in respect of the PIK Preferred Stock and related warrants.

(4)	This amount represents the value of shares of Holdings common stock and options to purchase shares of Holdings common stock that the Continuing Stockholders and Mr. Romo will be retained following the Acquisition Transactions.

(5)	This amount represents the aggregate consideration required to purchase shares of Holdings common stock and options to purchase shares of Holdings common stock from the prior stockholders, including Savia, and includes the value of the shares of Holdings common stock and the options to purchase shares of Holdings common stock described in footnote (4) above.

(6)	The shares of Holdings Class B preferred stock outstanding prior to the Acquisition Transactions had an aggregate redemption value of $25.0 million. Holdings purchased these shares on the date that we consummated the Acquisition Transactions for $23.75 million plus accrued and unpaid dividends of approximately $6.5 million.


(7)	In connection with the exchange of the shares of Holdings Class C preferred stock held by Savia prior to the Acquisition Transactions and the obligations relating to those shares, Savia received $13,965,443 in cash.

(8)	This approximate amount includes all fees and expenses incurred in connection with the Transactions, including, but not limited to, fees and expenses related to the Acquisition Transactions, fees and expenses paid in connection with the establishment of our new senior secured credit facility, and the estimated underwriting discounts and commissions and fees and expenses paid to the initial purchasers in connection with the offering of the original notes.

The following table sets forth our consolidated cash and cash equivalents and capitalization as of June 27, 2003 on an actual basis and on a pro forma basis giving effect to the Transactions. Since the exchange offer will involve an exchange of outstanding securities, it will have no effect on our capitalization. You should read this table in conjunction with “Use of Proceeds,” “Pro Forma Condensed Consolidated Financial Statements,” “Selected Historical Consolidated Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes included elsewhere in this prospectus.


(1)	Assuming the completion of the Transactions on June 27, 2003, on a pro forma basis we would have had approximately $54.0 million of unused borrowing capacity under the revolving credit portion of this credit facility.

(2)	This item gives effect to the sale and issuance of the PIK Preferred Stock. $39.3 million of the $50.0 million proceeds of the PIK Preferred Stock and related warrants was allocated to the PIK Preferred Stock and $10.7 million was allocated to the warrants. The value of the warrants is included in stockholders’ equity.

(3)	Certain charges directly attributable to the Acquisition Transactions, including the pro forma effect of purchase accounting adjustments, are reflected as a reduction in the pro forma total stockholders’ equity. See note (3) to the unaudited pro forma condensed consolidated statements of operations.

(4)	Total capitalization equals total debt plus stockholders’ equity.

The following pro forma condensed consolidated financial information should be read in conjunction with our historical consolidated financial statements and related notes and “Summary — Summary Historical and Pro Forma Consolidated Financial Data,” “Description of the Acquisition Transactions,” “Use of Proceeds,” “Capitalization” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this prospectus.

The following tables set forth pro forma consolidated financial information which have been derived by the application of pro forma adjustments to our historical audited and unaudited consolidated financial statements included elsewhere in this prospectus. The pro forma financial statements have been prepared giving effect to the Transactions.

The Acquisition Transactions will be accounted for under the purchase method of accounting. In accordance with applicable accounting guidelines, the purchase price paid by Fox Paine for the Holdings common stock plus related purchase accounting adjustments will be “pushed down” and recorded in Holdings’ financial statements. As a result, the purchase price and related costs will be allocated to the estimated fair values of the assets acquired and liabilities assumed at the time of the acquisition based on management’s best estimates. Once we have completed the valuation studies necessary to finalize the required purchase price allocations, the unaudited pro forma condensed consolidated financial data will be subject to adjustment. Such adjustments may result in material changes to the unaudited pro forma condensed consolidated balance sheet and unaudited pro forma condensed consolidated statement of operations to reflect, among other things, the final allocation of the purchase price. Accordingly, the financial information presented herein is preliminary and subject to change.

The pro forma condensed consolidated balance sheet gives effect to the Transactions as of June 27, 2003. The pro forma condensed consolidated statement of operations give effect to the Transactions as if such transactions were completed as of October 1, 2001, the beginning of our 2002 fiscal year. In addition, the pro forma financial information set forth below presents combined financial and other data for the twelve-month period from June 29, 2002 through June 27, 2003. These results were derived by subtracting the historical condensed consolidated statements of operations and other data for the nine months ended June 28, 2002 from the condensed consolidated statements of operations and other data for the fiscal year ended September 30, 2002, adding the condensed consolidated statements of operations and other data for the nine months ended June 27, 2003 and then applying the pro forma adjustments as if the Transactions were completed as of October 1, 2001.

The pro forma condensed consolidated financial statements are presented for informational purposes only and do not purport to represent what our results of operations or financial condition would actually have been had the Transactions in fact occurred on such dates or to project our results of operations or financial condition for any future period or date.

See Notes to Unaudited Pro Forma Condensed Consolidated Statements of Operations

(1) Reflects Fox Paine ownership percentage of 75.1% following the consummation of the Acquisition Transactions.

(2) Reflects the net change in cost of goods sold attributable to the following:

(3) Certain nonrecurring charges directly attributable to the Acquisition Transactions which will impact our statements of operations during the next 12 months have not been included in the pro forma statements of operations. These are, however, reflected in the pro forma balance sheet as a reduction to stockholders’ equity. See the notes to the unaudited pro forma condensed consolidated balance sheet. The charges are as follows:


	(a)	The increased basis in inventory will be reflected in the statement of operations as the related inventory is sold (expected to be approximately 16 months).

(4) Reflects the net change in selling, general and administrative expenses attributable to the following:

(5) Reflects a net decrease in amortization expense pertaining to the amortization of identifiable intangible assets related to the Acquisition Transactions on a straight-line basis as follows:


	(a)	Amortization expense may change upon completion of the final valuations of the net assets acquired.

(6) Reflects the elimination of interest income due to the assumed use of all cash on hand.

(7) Reflects the net increase in interest expense, including deferred financing cost amortization and commitment fees, as a result of the following:


	(a)	Pro forma as if the Acquisition Transactions had occurred on October 1, 2001.

	(b)	Calculation based on LIBOR plus 3.25%. LIBOR is assumed to be 2.0%.

	(c)	Calculation based on LIBOR plus 3.0%. LIBOR is assumed to be 2.0%.

	(d)	Calculation based on LIBOR plus 4.0%. LIBOR is assumed to be 2.0%.

	(e)	A 1/8% change in interest rates on variable rate debt would result in approximately a $0.3 million impact to net income for a twelve-month period.

(8) Reflects interest expense related to dividends payable on the preferred shares subject to mandatory redemption at the annual rate of 12%, compounded quarterly, and interest expense related to the accretion of such shares to the liquidation value of $50.0 million on October 1, 2014.

(9) The adjusted income tax expense does not change because offsetting valuation allowances are established against the resulting deferred tax assets.

(1) Reflects Fox Paine ownership percentage of 75.1% following the consummation of the Acquisition Transactions.

(3) Reflects the increase in inventory to fair value less costs to complete and sell, and a reasonable profit thereon.

(4) The allocation of the excess fair value of the net assets over the purchase price results in a pro rata reduction of non-current assets. See note (5) below for the allocation of excess fair value over purchase price. The reduction to fixed assets is partially offset by a $6.3 million acquisition of certain plant, office and computer equipment formerly leased by us. The allocation is preliminary and may change upon the completion of the final valuations of the net assets acquired.

(5) The Acquisition Transactions will be accounted for using the purchase method of accounting and, as a result, the purchase price and related costs will be allocated to the estimated fair values of the assets acquired and liabilities assumed at the time of the acquisition based on management’s best estimates as follows:


	(a)	Represents the fair value of 75.1% of Holdings’ net assets (corresponding to Fox Paine’s expected ownership percentage at closing. The remaining 24.9% of Holdings’ net assets is accounted for using carryover basis.)

(6) The allocation of the excess fair value of the net assets over the purchase price results in a pro rata reduction of non-current assets. The allocation is preliminary and may change upon the completion of the final valuations of the net assets acquired. Adjustments to other assets include the following:


	(a)	Included in allocation of excess fair value over purchase price in note (5) above.

(7) Reflects the repayment of short-term borrowings (other than by our Korean subsidiary).

(8) Reflects the repayment of the current portion of long-term debt (other than certain subsidiary indebtedness) and the mortgage on our global headquarters in Oxnard, California.

(9) Reflects the elimination of accrued dividends as a result of the exchange transaction in which Savia will exchange all of its Holdings Class C preferred stock for shares of Holdings common stock and a cash payment equal to $15.0 million plus interest through the closing date, less $3.0 million.

(10) Reflects an increase in our mortgage to acquire certain plant, office and computer equipment assets previously leased by us.

(11) Reflects the long-term portion of our new senior secured credit facility borrowings and the notes offered hereby.

(12) Reflects the adjustment to deferred tax liabilities as a result of the revaluation of net assets in purchase accounting.

(13) Represents the fair value of the preferred shares subject to mandatory redemption (the PIK Preferred Stock) issued in connection with certain warrants. The preferred shares subject to mandatory redemption have an aggregate liquidation value of $50.0 million on October 1, 2014. In accordance with Statement of Financial Accounting Standard (“SFAS”) No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity,” mandatorily redeemable financial instruments, with certain exceptions, entered into after May 31, 2003 are classified as liabilities. Prior year presentations have not been restated.

(14) Represents the retirement of Holdings Class B preferred stock and the payment of accrued dividends thereon.

The following selected consolidated financial data should be read in conjunction with our historical consolidated financial statements and related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” included elsewhere in this prospectus.

The selected consolidated financial data as of and for each of the fiscal years ended September 30, 1998 through 2002 have been derived from our audited consolidated financial statements. The selected consolidated financial data as of and for the nine months ended June 28, 2002 and June 27, 2003 and for the twelve months ended June 27, 2003 have been derived from our unaudited consolidated financial statements. In the opinion of our management, the unaudited consolidated financial statements from which the data below are derived contain all adjustments, which consist only of normal recurring adjustments, necessary to present fairly our financial position and results of operations as of the applicable dates and for the applicable periods. Historical results are not necessarily indicative of the results to be expected in the future.


	(1)	The income statement data and the other data are based on financial information from the income statement, which includes the operating results for acquisitions and other transactions from the date thereof. The historical results include the following business acquisitions: in fiscal year 1998, we completed the acquisition of two South Korean companies, Hungnong Seed Co., Ltd. and Choong Ang Seed Co., Ltd., and in November 1998, we completed the acquisition of the vegetable seed business of Agroceres, a Brazilian company. As a result of these transactions, the results of operations and consolidated financial position reflect the effects of purchase accounting.

	(2)	Cost of goods sold in fiscal years 2000 and 2001 included inventory write-downs related to our Global Restructuring and Optimization Plan that were in addition to the inventory provisions that we take in the ordinary course of our business. In fiscal year 2000, we recorded non-cash inventory write-downs of $18.4 million in connection with the consolidation of our facilities and additional non-cash, non-recurring inventory write-downs of $24.5 million as a result of revised sales forecasts. In fiscal year 2001, we recorded non-cash inventory write-downs of $58.2 million as a result of the rationalization of our product portfolio from over 6,000 to just over 4,000 varieties of seed products and the implementation of more stringent quality standards.

	(3)	Research and development expenses in fiscal years 1999 and 2000 included special breeder bonuses in the amounts of $4.0 million and $2.1 million, respectively, designed to retain the services of breeder personnel.

	(4)	Selling, general and administrative expenses included the following items:


	(a)	asset impairment related to an intangible asset resulted in a charge of $6.4 million in fiscal year 2000;


	(b)	restricted stock award plan charges related to a 2001 executive incentive program established for the specific purpose of incentivizing senior management to meet performance targets. The plan primarily awarded compensation in the form of shares of Holdings common stock when specific targets were met over a period of six quarters commencing March 31, 2001. The impact of this plan resulted in non-cash charges of $1.8 million, $5.8 million, $4.4 million and $1.4 million in fiscal years 2001 and 2002, the nine months ended June 28, 2002, and the twelve months ended June 27, 2003, respectively. The impact of this plan also resulted in cash charges of $0.8 million, $1.5 million, $1.1 million and $0.4 million in fiscal years 2001 and 2002, the nine months ended June 28, 2002 and the twelve months ended June 27, 2003, respectively. The restricted stock award plan was terminated at the end of fiscal year 2002;

	(c)	severance charges related to our Global Restructuring and Optimization Plan impacted fiscal years 2000 and 2001 by $14.0 million and $12.0 million, respectively. A charge of $7.7 million associated with severance of an executive and other employees was recorded in the nine and twelve months ended June 27, 2003;

	(d)	facility consolidation costs of $3.1 million and $4.3 million incurred in fiscal years 2000 and 2001, respectively, were associated with our Global Restructuring and Optimization Plan;

	(e)	in fiscal year 2000, we recorded $2.0 million of consulting fees in connection with the development of a new management information and product analysis systems and software program that was terminated in that year as part of our Global Restructuring and Optimization Plan. In fiscal year 2001, we incurred $3.3 million in advisory and consulting fees. $2.0 million of these fees were paid to our lenders, their advisors and legal counsel and our advisors and legal counsel in connection with the restructuring of our credit facility, and $1.3 million of these fees were paid to several consultants who advised on certain aspects of our Global Restructuring and Optimization Plan. In fiscal year 2002 and the nine months ended June 28, 2002, we incurred $0.8 million of consulting fees related to our Global Restructuring and Optimization Plan; and


	(f)	in the nine and twelve months ended June 27, 2003, we recorded $2.4 million of legal and professional fees related to the transactions detailed in this prospectus, the majority of which represented payments made by us to the advisors and legal counsel to the special committee of Holdings’ Board of Directors formed to evaluate the Acquisition Transactions.


	(5)	This management fee was paid for services rendered to us by Savia and its employees. This management fee was discontinued effective October 1, 1998.

	(6)	We have ceased the amortization of goodwill due to our adoption of SFAS No. 142, “Goodwill and Other Intangible Assets” for fiscal year 2002.

	(7)	Net loss included an increase in income tax expense during fiscal year 2001 primarily related to a provision of a valuation allowance against the deferred tax assets arising from net operating loss carryforwards. Net income included a decrease in income tax expense during fiscal year 2002 primarily related to a $5.9 million U.S. tax refund and the utilization of net operating loss carryforwards.

	(8)	There was a deficiency of earnings to cover fixed charges for the years ended September 30, 1998, 1999, 2000, 2001 and 2002, for the nine months ended June 28, 2002 and the nine months ended June 27, 2003 and the twelve months ended June 27, 2003 of $200.9 million, $7.0 million, $114.7 million, $124.8 million, $1.8 million, $4.5 million, $8.0 million and $5.3 million, respectively. For purposes of calculating the earnings to fixed charges ratio, earnings represent net income before income taxes, minority interests in the income of majority-owned subsidiaries, cumulative effect of an accounting change, extraordinary items and fixed charges and less preference security dividend requirements. Fixed charges consist of:


	•	interest, whether expensed or capitalized;

	•	amortization of debt expense and discount or premium relating to any indebtedness, whether expensed or capitalized;


	•	one-third of rental expenses under operating leases which is considered to be a reasonable approximation of the interest portion of such expense; and

	•	preference security dividend requirements.


	(9)	“EBITDA” is defined as net income (loss) before income tax expense (benefit), interest expense, net, depreciation and amortization and non-cash compensation charges. EBITDA is a non-GAAP measure and should not be considered an alternative to any other measure of performance presented in accordance with GAAP. You should not consider EBITDA in isolation from or as a substitute for net income (loss), cash flows from operating activities and other consolidated income or cash flow statement data prepared in accordance with GAAP, or as a measure of profitability or liquidity. We present EBITDA because management believes that EBITDA could be useful for investors in assessing our operating performance. Additionally, EBITDA is a measure commonly used by financial analysts because of its usefulness in evaluating operating performance. EBITDA, as used by us, is not necessarily comparable to similarly titled measures of other companies, because all companies do not calculate EBITDA in the same fashion. The table below presents a reconciliation from net income (loss) to EBITDA.

Below is a table of certain significant items included in our historical operating results and their impact on EBITDA. These items are discussed in more detail in footnotes (2), (3), (4) and (5) above.


	(a)	See footnote (2) above.

	(b)	See footnote (3) above.

	(c)	See footnote (4)(a) above.

	(d)	See footnote (4)(b) above.

	(e)	See footnote (4)(c) above.

	(f)	See footnote (4)(d) above.

	(g)	See footnote (4)(e) above.

	(h)	See footnote (4)(f) above.

	(i)	See footnote (5) above.

A substantial portion of our EBITDA comes from subsidiaries that operate in foreign countries. Because of restrictions imposed by law in certain of these countries, including laws relating to taxes on dividends and distributions, as well as U.S. taxes that may be imposed on dividends or deemed dividends, the cash flow from these subsidiaries may be subject to substantial taxes if these foreign subsidiaries distribute their earnings to us, and we could be subject to additional U.S. taxes. As a result, a substantial portion of the funds represented by EBITDA may not be available for our discretionary use.

The following discussion and analysis should be read in conjunction with the “Selected Historical Consolidated Financial Data” and our consolidated financial statements, including the notes thereto, appearing elsewhere in this prospectus. The following discussion and analysis contain forward-looking statements which are subject to risks, uncertainties and contingencies which could cause our actual business, results of operations or financial condition to differ materially from those expressed in or implied by, such statements. See “Risk Factors” and “Forward-Looking Statements.”

Seminis was formed in 1994 to consolidate various industry-leading vegetable and fruit seed brands into one consumer-oriented producer and marketer of vegetable and fruit seeds. Our core business was created through the acquisition of the Asgrow seed business in December 1994 and the subsequent combination of the Asgrow business with the Petoseed and Royal Sluis seed businesses in October 1995. Since our formation, we have been at the forefront of the consolidation of the vegetable and fruit seed industry and have completed ten acquisitions.

Our rapid growth through acquisitions created a highly complex operation that impacted our results. An increasing level of inventory as well as production and quality assurance difficulties resulted in severe financial difficulties over the past several years.

In February 2000, we announced a cost-saving initiative designed to streamline operations, increase utilization of facilities and improve efficiencies. The first phase of the initiative, which commenced in fiscal year 2000 and focused on our North American operations, was completed by the end of fiscal year 2001. In June 2001, we commenced the second phase of the initiative, which initially targeted our global operations and subsequently expanded to cover additional headcount reductions and to consolidate our facilities in Holland. The key elements of the Global Restructuring and Optimization Plan included:


	•	reorganizing our ten legacy seed companies into four geographical regions;

	•	selling or consolidating certain operation and production facilities;

	•	reducing headcount in connection with the reorganization and facility consolidation;

	•	rationalizing our product portfolio;

	•	implementing an advanced logistics management information system; and

	•	divesting non-strategic assets.

In connection with phase one of the Global Restructuring and Optimization Plan, we recorded pre-tax charges to operations of approximately $34.4 million for restructuring costs during fiscal year 2000 that included severance and other exit costs, inventory write-downs and costs associated with streamlining our product portfolio. Of this amount, $18.4 million was included in cost of goods sold for inventory write-downs. The remaining $16.0 million was included in selling, general and administrative expenses and consisted primarily of severance costs. The total phase one and initial phase two severance charges related to a planned 600-employee reduction worldwide in both operational and administrative groups.

In connection with the implementation of the expanded second phase of our Global Restructuring and Optimization Plan, we recorded a pre-tax charge of $12.0 million in selling, general and administrative expenses in the third quarter of fiscal year 2001. This charge primarily related to severance and associated costs resulting from an additional planned 250-employee reduction worldwide in both operational and administrative groups. In fiscal year 2001, we also recorded non-cash inventory write-downs of $58.2 million in cost of goods sold in order to comply with more stringent seed quality standards and to further rationalize our

To date, there have been no material adjustments to amounts accrued under our Global Restructuring and Optimization Plan. The remaining $0.6 million reserve balance is expected to be utilized in fiscal year 2003.

As a result of the implementation of the Global Restructuring and Optimization Plan, we have significantly improved our cash flows and established the basis for future profitable operations through:


	•	decreased operating expenses primarily achieved by reducing global headcount and consolidating production and operations facilities;

	•	improved collections of accounts receivable;

	•	reduced inventory purchases resulting from improved forecasting and inventory controls; and

	•	the sale of non-core assets.

Together with price increases that we implemented in April 2001, during fiscal year 2002, we:


	•	reduced our debt by $57.6 million;

	•	reduced operating expenses as a percentage of sales by 7.8%; and

	•	generated positive cash flows from operations of approximately $38.1 million.

The Acquisition Transactions are accounted for under the purchase method of accounting. In accordance with applicable accounting guidelines, the purchase price paid by Fox Paine for the Holdings common stock plus related purchase accounting adjustments are “pushed down” and recorded in Holdings’ financial statements and resulted in a new basis of accounting for the “successor” period beginning on the day after the Transactions were consummated. As a result, the purchase price and related costs were allocated to the estimated fair values of the assets acquired and liabilities assumed at the time of the acquisition based on management’s best estimates.

More specifically, the assets and liabilities of Holdings were adjusted to fair value as of the closing date of the Acquisition Transactions. Holdings increased its aggregate borrowings in connection with the financing arrangements that Holdings entered into in connection with the Transactions. Accordingly, our interest expense is expected to be higher in periods following the Transactions. The excess of the fair value of Holdings’ net assets over the total purchase price will be allocated to our non-current assets. The increased basis in our inventory is currently $65.2 million (which amount is preliminary and subject to change once final purchase accounting adjustments are made). This increased basis in our inventory will be reflected in

The table below sets forth Seminis’ results of operations data expressed as a percentage of net sales.

Nine Months Ended June 27, 2003 Compared with Nine Months Ended June 28, 2002

Net sales increased 4.1% to $352.7 million for the nine months ended June 27, 2003 from $339.0 million for the same period ended June 28, 2002. This increase was primarily due to $21.0 million of favorable currency fluctuations relating to the strengthening of the Euro and South Korean Won versus the U.S. Dollar during the nine months ended June 27, 2003, compared to the same period in the prior fiscal year, partially offset by a $2.0 million decrease reflecting the divestiture of a non-core business in January 2002. In constant dollars, stated at monthly average exchange rates of fiscal year 2002, and excluding the sales of the divested and phased out non-core businesses, sales would have decreased 1.5% from the nine months ended June 28, 2002 to the nine months ended June 27, 2003. Despite a general seed price increase in all the regions, sales were affected by volume decrease and product mix. This decrease was primarily due to weaker sales in the Far East that were attributable to a reduction of acreage for hot pepper varieties and demand for watermelon varieties and the decrease of certain carrot and hot pepper sales in the NAFTA region. Our business is subject to seasonal fluctuations and, therefore, the sales for the first nine months of a fiscal year are not necessarily indicative of those to be expected in any other interim period or for an entire fiscal year.

Gross profit increased 5.6% to $222.4 million for the nine months ended June 27, 2003 from $210.6 million for the nine months ended June 28, 2002. Gross margin increased to 63.0% for the nine months ended June 27, 2003 from 62.1% for the nine months ended June 28, 2002. The increase was primarily due to general seed price increases in all regions as well as an improved product mix.

Research and development expenses increased 7.6% to $34.9 million for the nine months ended June 27, 2003 from $32.5 million for the nine months ended June 28, 2002. The increase was primarily due to the

Selling, general and administrative expenses increased 4.2% to $138.0 million for the nine months ended June 27, 2003 from $132.5 million for the nine months ended June 28, 2002. The increase was primarily attributable to an expense of $4.4 million related to an executive severance package, the impact of an additional $3.3 million in severance expenses, the incurrence of $2.4 million of legal and financial advisory expenses related to the Acquisition Transactions and currency fluctuation impact during fiscal year 2003. The increases were partially offset by decreases of $2.9 million of expenses related to a divested non-core business, $5.5 million of restricted stock award expenses and $0.8 million of consulting fees related to restructuring during the same period during the last fiscal year.

Amortization of intangible assets decreased 5.0% to $11.9 million for the nine months ended June 27, 2003 from $12.5 million for the nine months ended June 28, 2002. The decrease was primarily due to the effect of latter stages of accelerated amortization of intangible assets related to purchase accounting. The decrease was partially offset by the currency impact from the fluctuation of the South Korean Won on South Korean based intangible assets.

The gain on sale of assets of $1.5 million for the nine months ended June 27, 2003 was primarily due to the sale of certain South Korean assets, a Salinas, California property and a company-owned house. The gain on sale of assets of $5.7 million for the nine months ended June 28, 2002 was primarily due to the sale of a non-core business and asset sales of our South Korean subsidiary.

Interest expense, net, increased 12.0% to $23.7 million for the nine months ended June 27, 2003 from $21.2 million for the nine months ended June 28, 2002. The increase was primarily due to amortization of increased deferred financing fees and higher interest rates resulting from the amendment of our existing syndicated credit facility in January 2003, offset by the effect of lower average debt balances.

We had other non-operating expense, net, including foreign currency gain (loss), net, of $0.3 million for the nine months ended June 27, 2003, as compared to other non-operating expense, net, of $1.1 million for the nine months ended June 28, 2002. Other non-operating expense, net, for the nine months ended June 27, 2003 primarily consisted of non-operating losses from subsidiaries in the United States, Guatemala, Chile, Brazil and Italy. Other non-operating expense, net, for the nine months ended June 28, 2002 primarily consisted of foreign currency losses of $1.5 million resulting from currency fluctuations in South America and a U.S. dollar denominated loan in The Netherlands.

Income tax expense was $6.0 million for the nine months ended June 27, 2003 compared to income tax expense of $5.9 million for the nine months ended June 28, 2002. The effective tax rate during the first nine months of fiscal year 2003 increased to 40.2% compared to 35.9% for the nine months of fiscal year 2002 and 13.3% for the fiscal year 2002. The increase in the period was due to the mix of worldwide income and the receipt of a $5.9 million income tax refund, for which no benefit was previously recorded.

Net sales increased 0.6% to $452.6 million for the year ended September 30, 2002 from $449.9 million for the year ended September 30, 2001. The result was impacted by $4.8 million of negative currency fluctuations relating to weakness in the European Monetary Union Euro, Argentinean Peso and Brazilian Real versus the U.S. Dollar during the year ended September 30, 2002, compared to the same period in the prior fiscal year. In addition, the year ended September 30, 2001 included incremental net sales of $10.7 million from a non-core business divested in January 2002. In constant dollars, stated at monthly average exchange rates for fiscal year 2001 and excluding the sales of the non-core businesses, net seed sales would have increased 4.0%. This increase was primarily attributable to higher sales of spinach, onion, cucumber, tomato, white cabbage, peas and bean varieties in the Europe, Middle East and Africa region. Also, the North and Central America sales regions benefited from increased sales of lettuce, spinach and sweet and hot pepper varieties. The sales increases were primarily attributable to price increases implemented in these respective regions. Overall sales increases were partially offset by decreases in the Far East region sales due to weak economic and poor weather conditions and in South American sales due to the economic instability in Argentina, which also affected other countries in the region.

Gross profit increased 28.9% to $280.7 million for the year ended September 30, 2002 from $217.8 million for the year ended September 30, 2001. Gross margin increased to 62.0% for the year ended September 30, 2002 from 48.4% for the year ended September 30, 2001. The improvement in both gross profit and gross margin was primarily due to a non-cash inventory write-down of $58.2 million taken during fiscal year 2001, related to the Global Restructuring and Optimization Plan. Excluding the non-cash inventory write-down, gross margin for the period ended September 30, 2001 would have been 61.4%. The increase was also due to seed price increases within the Europe, Middle East and Africa and the North and Central America sales regions as well as an improved product mix. Additionally, there was approximately $3.1 million of freight and handling charge revenue that was recognized in net sales during the year ended September 30, 2002 in compliance with EITF 00-10, “Accounting for Shipping and Handling Fees and Costs,” with the corresponding expense recorded in selling, general and administrative expenses. In the prior year, through June 29, 2001, such freight and handling charge revenue was netted against the corresponding selling, general and administrative expenses, other than $1.3 million that was recognized in net sales in the fourth quarter of fiscal year 2001.

Research and development expenses decreased 15.5% to $44.3 million for the year ended September 30, 2002 from $52.4 million for the year ended September 30, 2001. $4.2 million of the decrease was due to personnel reductions and $1.3 million of other expenses resulted from initiatives of the Global Restructuring and Optimization Plan. The decrease was also attributable to an approximate $0.9 million research grant received in Europe which offset research and development expenses during the year ended September 30, 2002. In addition, expenses decreased by approximately $1.6 million due to the impact of the divestiture of a non-core business.

Selling, general and administrative expenses decreased 8.5% to $174.9 million for the year ended September 30, 2002 from $191.1 million for the year ended September 30, 2001. The decrease was primarily the result of approximately $12.0 million of severance provision, $4.3 million of facility consolidating costs and $3.3 million of consulting fees due to restructuring initiatives incurred in fiscal year 2001 compared to $0.8 million of consulting fees for restructuring initiatives in fiscal year 2002. Additionally, the decrease was attributable to the elimination of approximately $8.9 million of expenses from a non-core business divested in January 2002, combined with the impact of further headcount reductions following the implementation of

the Global Restructuring and Optimization Plan. The decrease in expenses was partially offset by a compensation charge of $7.3 million related to an employee restricted stock award plan recorded during the year ended September 30, 2002, compared to $2.6 million recorded during the prior fiscal year. Additionally, the decrease in expenses was offset by approximately $3.1 million of freight and handling charge revenue that was recognized in net sales during the year ended September 30, 2002. In the prior year, such freight and handling charge revenue was netted against the corresponding selling, general and administrative expenses, other than $1.3 million that was recognized in the fourth quarter of fiscal year 2001.

Amortization of intangible assets decreased 39.1% to $17.1 million for the year ended September 30, 2002 from $28.0 million for the year ended September 30, 2001. The decrease was primarily due to the adoption of SFAS No. 142, “Goodwill and Other Intangible Assets.” The pronouncement requires that periodic amortization of goodwill be ceased and that annual reviews of the fair value of the goodwill need to be performed to determine if an impairment of the goodwill asset value exists. Upon completing our analyses, no impairment adjustments in goodwill and other intangible assets were required. Therefore, we recorded no goodwill amortization in accordance with SFAS No. 142 in fiscal year 2002, whereas approximately $9.0 million of goodwill amortization was recorded during fiscal year 2001. The decrease was also due to the effect of latter stages of accelerated amortization of intangible assets related to purchase accounting. The decrease was partially offset by the currency impact from the fluctuation of the South Korean Won on South Korean based intangible assets.

Interest expense, net, decreased 29.1% to $27.7 million for the year ended September 30, 2002 from $39.1 million for the year ended September 30, 2001. The decrease was primarily due to lower average debt balances and interest rates during fiscal year 2002 compared to the prior fiscal year. During the twelve months ended September 30, 2002, our bank debt balance decreased by approximately $57.6 million.

We had other non-operating income, including foreign currency gain (loss), net, of $1.8 million for the year ended September 30, 2002 as compared to other non-operating expense, net, of $1.6 million for the year ended September 30, 2001. Other non-operating income, net, for the year ended September 30, 2002 primarily consists of an approximate $3.9 million gain from the sale of a non-core business in January 2002, offset by foreign currency losses of $2.2 million resulting from currency fluctuations in South America and a U.S. dollar denominated loan in The Netherlands and a minority interest provision of $1.2 million. Other income, net, also includes gains from non-strategic asset sales in South Korea. Other non-operating expense, net, for the year ended September 30, 2001, primarily resulted from the loss on sale of fixed assets of $1.9 million and a minority interest provision of $1.4 million. The expense was partially offset by a foreign currency gain of $1.7 million.

Income tax expense was $2.5 million and $40.0 million for the years ended September 30, 2002 and September 30, 2001, respectively. The decrease in income tax expense was the result of utilization of net operating loss carryforwards in fiscal year 2002, the receipt of a $5.9 million tax refund in July 2002 in the United States due to certain changes in the U.S. tax law for net operating loss carrybacks, the mix of worldwide income tax rates and the establishment of valuation allowances for certain deferred tax assets in fiscal year 2001.

Total net sales at actual currency rates decreased 5.2% to $449.9 million for the year ended September 30, 2001, from $474.4 million for the year ended September 30, 2000. The decrease was primarily due to currency fluctuation and the divestiture of certain businesses. The weakness of the European Monetary Union Euro, the South Korean Won and Brazilian Real accounted for the majority of the $20.9 million decrease in sales from currency fluctuation in comparison to fiscal year 2000. The divestiture of the garden and soybean businesses impacted sales with a further decrease of $17.3 million. At a constant currency rate with fiscal year 2000, net seed sales increased 2.4% to $439.5 million for the year ended September 30, 2001, from $429.2 million for the year ended September 30, 2000. North America had the largest increase of $8.4 million with significant improvements in Mexico. At a constant currency rate with fiscal year 2000, South America had a sales increase of $2.8 million, despite unfavorable economic conditions in Argentina and Colombia; the Far East also recorded a net seed increase in sales of $0.6 million, even though Korea was negatively impacted by heavy snowfall and an economic downturn; Europe, the Middle East and Africa sales decreased by $1.5 million, mainly due to weather conditions in Southern Europe. Non-core business also increased sales by $3.4 million, at constant currency rates with fiscal year 2000, with Incotec, a non-core subsidiary that we have since sold, being the major contributor.

Gross profit decreased 8.2% to $217.8 million for the year ended September 30, 2001, from $237.3 million for the year ended September 30, 2000. Gross margin decreased to 48.4% for the year ended September 30, 2001, from 50.0% for the year ended September 30, 2000. Both gross profit and gross margin reflected total non-cash inventory writedowns of $73.9 million and $58.9 million taken during fiscal year 2001 and 2000, respectively. The writedowns in fiscal year 2001 included approximately $58.2 million of charges taken in conjunction with our Global Restructuring and Optimization Plan, whereby we rationalized our product line from 6,000 to 4,000 varieties and imposed more stringent quality standards. Gross margins in fiscal year 2001 were also positively impacted by price increases resulting from efforts of the Global Restructuring and Optimization Plan.

Research and development expenses decreased 10.1% to $52.4 million for the year ended September 30, 2001 from $58.4 million for the year ended September 30, 2000. The decrease was due to an approximate $2.0 million charge related to Seminis’ research incentive program recorded in the first half of fiscal year 2000, with no corresponding charges in fiscal year 2001. The decrease in expenses was also a result of headcount reduction from the Global Restructuring and Optimization Plan and currency fluctuations from research and development operations in Europe during fiscal year 2001.

Selling, general and administrative expenses decreased 14.2% to $191.1 million for the year ended September 30, 2001 from $222.6 million for the year ended September 30, 2000. The decrease was primarily the result of headcount reductions following the implementation of the Global Restructuring and Optimization Plan and, in part, the impact of currency fluctuations. Furthermore, the decrease was the result of the divestiture of certain non-core businesses totaling $6.9 million, the absence of a $6.4 million impairment charge recorded in fiscal year 2000 associated with our investment in LSL PlantScience, a joint venture engaged in the sale of long shelf life tomatoes in North America, and a restructuring charge primarily for severances of $12.0 million in fiscal year 2001 compared to $14.0 million in fiscal year 2000. The decrease was partially offset by facility moving costs of $4.3 million compared to $3.1 million and consulting fees for restructuring of $3.3 million compared to $2.0 million in fiscal years 2001 and 2000, respectively. Additionally, a compensation charge of $2.6 million for a newly established employee stock plan was taken in fiscal year 2001.

Amortization of intangible assets decreased 7.9% to $28.0 million for the year ended September 30, 2001 from $30.5 million for the year ended September 30, 2000. The decrease was primarily due to the effect of latter stages of accelerated amortization of intangible assets related to purchase accounting. Furthermore, the decrease was attributable to the currency impact from the devaluation of the South Korean Won on Korean based intangible assets. The decrease was partially offset by an increase in intangible asset amortization in a U.S. subsidiary.

Interest expense, net, increased 17.1% to $39.1 million for the year ended September 30, 2001 from $33.4 million for the year ended September 30, 2000. The increase was primarily due to higher effective interest rates in the fiscal year ended September 30, 2001 compared to the prior fiscal year. Furthermore, the increase was due to the acceleration of deferred financing cost amortization related to our credit facility. The acceleration was a result of the advancement of the maturity date of the term loan.

Seminis had other non-operating expense, net of $1.6 million for the year ended September 30, 2001, as compared to other non-operating income, net of $2.2 million for the year ended September 30, 2000. Other non-operating expense, net, for the year ended September 30, 2001 included other expense, net of $1.9 million, primarily from the loss on the sale of fixed assets, offset by a foreign currency gain of $1.7 million and a minority interest provision of $1.4 million. Other income in fiscal year 2000 included a $10.0 million gain on the asset sales of MBS, a soybean subsidiary, a currency loss of $5.4 million, primarily associated with Seminis Vegetable Seeds Holland on its U.S. dollar denominated loan and a minority interest provision of $1.2 million.

We had an income tax expense of $40.0 million for the year ended September 30, 2001, as compared to an income tax benefit of $24.6 million for the year ended September 30, 2000. The increase in income tax expense during fiscal year 2001 primarily related to a provision of a valuation allowance against the deferred tax assets arising from net operating loss carryforwards. As of September 30, 2001, our tax assets for net operating loss carryforwards primarily consisted of a Netherlands carryforward of $45.7 million that has an indefinite life and a U.S. carryforward of $94.5 million, which will begin to expire in 2020. Although a valuation allowance has been established on these tax assets, we have commenced certain initiatives in order to utilize these loss carryforwards before they expire.

The following tables summarizes the scheduled maturities of financial obligations and commitments on a pro forma basis giving effect to the Transactions as if they occurred as of June 27, 2003:


(1)	See Note 8 to our consolidated financial statements included elsewhere in this prospectus for information on our long-term debt obligations as of September 30, 2002.

(2)	See Note 12 to our consolidated financial statements included elsewhere in this prospectus for information on our non-cancelable operating leases as of September 30, 2002.

Our contractual obligations and commercial commitments are discussed in the “— Liquidity and Capital Resources” section below and in the footnotes to our consolidated financial statements included elsewhere in this prospectus.

Operating activities utilized $3.6 million in cash flow during the nine months ended June 27, 2003 compared to $2.4 million in cash flow provided during the same period in the prior fiscal year. The operating cash flow of this interim period was negatively impacted by approximately $5.2 million of restructuring fees, $4.5 million of severance and consulting fees paid to an executive, $2.4 million of fees associated with the Acquisition Transactions, additional interest incurred due to restructuring of our syndicated credit facility and other additional severance incurred.

As a result of our Global Restructuring and Optimization Plan, we made significant strides in the enhancement of our cash flow in fiscal year 2002. Operating activities provided $38.1 million in cash flow in fiscal year 2002 compared to $13.5 million of cash utilized in fiscal year 2001. These improvements in cash flows were primarily due to the positive impacts of: a decrease in the levels of seed purchases for inventory reflecting improved production planning over our inventory level; a decrease in both production overhead and operating expenses resulting from the successful implementation of the Global Restructuring and Optimization Plan; and an improvement in collections of accounts receivable. These working capital improvements were partially offset by severance costs in connection with the Global Restructuring and Optimization Plan and a reduction in the level of accounts payable.

Investing activities utilized $0.6 million in cash flow during the nine months ended June 27, 2003 compared to $34.0 million in cash flow provided in the same period in the prior fiscal year. This reduction was primarily due to $17.6 million of proceeds from the sale of a non-core business and $24.3 million of proceeds from the disposition of assets primarily related to an office building in Seoul, South Korea during the last fiscal year. Capital expenditures remained consistent between the two fiscal periods.

Capital expenditures increased to $14.8 million for the year ended September 30, 2002, from $14.3 million in the prior fiscal year. The increase was partly due to a $5.2 million investment that primarily related to a production facility, which is being utilized to consolidate our South Korean operations and to enhance our growth strategy in the Far East market. Additionally, $2.3 million of capital expenditure was attributable to the expansion of our Hungarian facility in order to consolidate large seed operations in Europe. Other investing activities for the year ended September 30, 2002 included approximately $28.5 million in proceeds from the sale of assets, primarily relating to the sale of an office building in Seoul, South Korea and $17.6 million from the sale of a non-core business.

During fiscal year 2001, we sold our properties in Saticoy (California), Filer (Idaho) and Vineland (New Jersey) as part of our efforts to reduce and consolidate our operation and production facilities. Other investing activities for the year ended September 30, 2001 included approximately $14.1 million in proceeds from the sale of non-operating assets.

Financing activities utilized $7.8 million and $40.3 million during the nine months ended June 27, 2003 and June 28, 2002, respectively. The reduction was primarily due to principal payment requirements of our old syndicated credit facility in the respective periods.

Our total indebtedness as of June 27, 2003 was $274.2 million, of which $216.6 million were borrowings under our old syndicated credit facility. We had $12.5 million, $10.1 million, $7.5 million and $21.4 million of borrowings by our U.S., Italian, Spanish and South Korean subsidiaries, respectively, and $6.1 million of borrowings by other foreign subsidiaries.

As of September 30, 2000, we were not in compliance with certain covenants of our old syndicated credit facility, which gave the lenders the right to accelerate payment of all amounts outstanding under the facility. In December 2000, the lenders granted a waiver with respect to these covenants that extended through April 30, 2001, at which time any defaults would once again arise. As we did not expect to be in compliance with our covenants once the waiver expired, all outstanding borrowings under the syndicated credit facility were classified as a current liability as of September 30, 2000. In connection with granting the waivers, the lenders agreed to reschedule principal payments within fiscal year 2001. The lenders also accelerated the final maturity of the term loan and the termination date for the revolving credit commitments to June 30, 2002 from June 30, 2004. We were obligated to deliver a financial plan through September 30, 2002, which detailed cash flow projections on a monthly basis as well as proposed alternatives for the refinancing of the syndicated credit facility or recapitalization of Holdings.

On May 31, 2001, our lenders consented to the financial plan that we submitted and agreed to restructure our old syndicated credit facility. Upon receipt of the amended syndicated credit facility, long-term portions of borrowings were reclassified from current liabilities to long-term debt. Among other things, the amendment extended the final maturity of the credit facility from the previously agreed upon date of June 30, 2002 to December 31, 2002, revised principal payment dates under the term loan, instituted a new grid pricing formula to determine interest on borrowings and revised covenant obligations. Interim principal obligations under the amendment included $16.0 million due in the fourth quarter of fiscal year 2001 and $19.0 million, $4.0 million, $31.0 million and $9.0 million due in the first, second, third and fourth quarters of fiscal year 2002, respectively. All remaining amounts were to be due in the first quarter of fiscal year 2003.

In October 2001, we completed the sale of an office building in Seoul, South Korea, which generated net proceeds of approximately $20.0 million. We used $19.5 million of the proceeds to make the scheduled $19.0 million payment on the syndicated credit facility in October 2001. We also sold one of our non-core businesses in January 2002, which generated additional proceeds of approximately $17.6 million. We used $13.0 million of the proceeds to prepay our old syndicated credit facility in January 2002 and utilized our operating cash flow to pay the remaining $18.0 million in June 2002.

We met all required principal and interest payments during fiscal years 2002 and 2001 and were in compliance with all of our financial covenants under our old syndicated credit facility at September 30, 2002. In October 2002, we paid an additional $5.0 million of principal as required by the amendments to our old syndicated credit facility; however, as of December 31, 2002, we had not completed a refinancing transaction in order to pay the remaining balance of $224.7 million. The lenders agreed to temporarily extend the term of the syndicated credit facility and in January 2003, a formal amendment was executed. Among other things, the amendment extended the final maturity of the syndicated credit facility from the previously agreed upon date of December 31, 2002 to December 31, 2003, revised principal payment dates under the term loan, instituted a new grid pricing formula to determine interest on borrowings and revised covenant obligations. We met all required principal and interest payments during the first six months of fiscal year 2003 and were in compliance with all of our financial covenants at June 27, 2003. As all remaining amounts under the

On May 30, 2003, Holdings and/or certain other parties entered into the amended and restated exchange agreement, the contribution agreement, the merger agreement, the stock purchase agreement and certain other related agreements pursuant to which Fox Paine, the Continuing Stockholders and the Additional Purchasers acquired all outstanding shares of Holdings common stock.

Prior to the consummation of the merger and pursuant to the terms of the amended and restated exchange agreement, Savia exchanged all of its outstanding shares of Holdings Class C preferred stock (including accrued paid in kind or PIK dividends) having a principal value of $120.2 million, additional paid-in capital (including accrued PIK dividends) of $46.7 million and accrued and unpaid dividends for 37.7 million shares of Holdings Class A common stock and cash equal to $15.0 million plus interest at a rate of 10.0% per annum from July 1, 2002, less $3.0 million.

On September 29, 2003, we consummated the Transactions, which included a number of financing activities, including the repayment of our old syndicated credit facility, the issuance of the original notes and the borrowing under our new senior secured credit facility. For a more detailed description of the Transactions, see “Description of the Acquisition Transactions.”

Our exposure to foreign currency fluctuations is primarily due to foreign currency gains or losses that occur from intercompany receivables and payables between Seminis Vegetable and its foreign subsidiaries. We did not have any material outstanding hedging contracts as of June 27, 2003.

Going forward, our principal source of liquidity will be cash flow generated from operations and borrowings under our new senior secured credit facility. Our principal uses of cash will be to meet debt service requirements, finance our capital expenditures and provide working capital. Based on our current level of operations, we believe that remaining cash on hand, cash flow from operations and available borrowings under the revolving credit portion of our new senior secured credit facility will enable us to meet our working capital, capital expenditure, debt service and other funding requirements for at least the next 12 months.

Our financial statements have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make significant estimates and judgments that affect the reported amounts of assets, liabilities, revenue, expenses and related disclosure of contingent assets and liabilities. We evaluate our estimates, including those related to bad debts, inventories, intangible assets, income taxes, restructuring costs and contingencies and litigation, on an on-going basis. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

We believe that the following critical accounting policies, among others, involve the more significant judgments and estimates used in the preparation of our consolidated financial statements.

We maintain allowances for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments. Many of our customers are located in foreign jurisdictions where payment terms and the timing of collections can differ from domestic transactions. If the financial condition of our customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required.

Our inventory is recorded at the lower of cost or market. The value of each seed variety in inventory is dependent upon various quality characteristics, which deteriorate over time. Write-downs of inventory to market value are based upon assumptions about future demand and market conditions, the success of our sales programs and the shelf life of the seeds. If actual market conditions and sales results are less favorable than those projected by management, additional inventory write-downs may be required.

We are subject to proceedings, lawsuits, other claims related to seedmen’s errors and omissions, environmental, labor and other matters. We assess the likelihood of adverse judgments or outcomes to these matters as well as the range of potential losses. A determination of the reserves required, if any, is made after careful analysis. The required reserves may change in the future due to new developments.

We have recorded reserves in connection with restructuring our business. These reserves principally include estimates related to employee separation costs, the consolidation or closing of facilities and the valuation of certain assets, including inventory. Actual costs could be different from those estimated.

In assessing the recoverability of our goodwill and long-lived assets, significant assumptions regarding the estimated future cash flows and other factors to determine the fair value of the respective assets must be made as well as the related estimated useful lives. If these estimates or their related assumptions change in the future as a result of changes in strategy and/or market conditions, we may be required to record impairment charges not previously recorded for these assets. On October 1, 2001, we adopted Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets,” which required us to analyze our goodwill for impairment issues during fiscal year 2002 and on a periodic basis thereafter.

The carrying value of our deferred tax assets is dependent upon our ability to generate sufficient future taxable income in certain tax jurisdictions. We established a valuation allowance against certain of our deferred tax assets due to uncertainties related to the ability to utilize these assets, primarily consisting of net operating losses carried forward and foreign tax credits, before they expire. The valuation allowance is based on our estimates of taxable income by each jurisdiction in which we operate and the period over which the assets will be recoverable. In the event that actual results differ from these estimates, or we adjust these estimates in future periods, the valuation allowance would change and could materially impact our financial position and results of operations.

SFAS No. 141, “Business Combinations,” was effective for us on July 1, 2001. SFAS No. 141 addresses financial accounting and reporting for business combinations and supersedes APB Opinion No. 16, “Business Combinations,” and FASB Statement No. 38, “Accounting for Preacquisition Contingencies of Purchased Enterprises.” All business combinations in the scope of this Statement are to be accounted for using one method, the purchase method.

SFAS No. 142, “Goodwill and Other Intangible Assets,” was effective for us for fiscal years beginning after December 15, 2001, but was adopted early as of the beginning of fiscal year 2002. SFAS No. 142 addresses financial accounting and reporting for acquired goodwill and other intangible assets and supersedes APB Opinion No. 17, “Intangible Assets.” It addresses how intangible assets that are acquired individually or with a group of other assets (but not those acquired in a business combination) should be accounted for in financial statements upon their acquisition. This Statement also addresses how goodwill and other intangible assets should be accounted for after they have been initially recognized in the financial statements. We have ceased the amortization of goodwill due to our adoption of SFAS No. 142 and no impairment was required in fiscal year 2002.

In June 2001, the FASB issued SFAS No. 143, “Accounting for Asset Retirement Obligations.” SFAS No. 143 is effective for fiscal years beginning after June 15, 2002 and requires an entity to record the fair value of a liability for an asset retirement obligation in the period in which it is incurred. Management has not yet determined the impact, if any, of the adoption of this standard on our financial position or our results of operation.

In August 2001, the FASB issued SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” SFAS No. 144 supersedes SFAS No. 121 but retains many of its fundamental provisions. In addition, SFAS No. 144 expands the scope of discontinued operations to include more disposal transactions. We will adopt SFAS No. 144 as of October 1, 2002. We do not expect SFAS No. 144 to have a material effect on our consolidated financial position, results of operations or cash flows.

In May 2002, the FASB issued SFAS No. 145, “Rescission of SFAS Nos. 4, 44 and 64, Amendment of SFAS No. 13 and Technical Corrections.” Among other things, SFAS No. 145 rescinds various pronouncements regarding extinguishment of debt and allows extraordinary accounting treatment for early extinguishment only when the provisions of Accounting Principles Board Opinion No. 30, “Reporting the Results of Operations — Reporting the Effects of Disposal of a Segment of a Business and Extraordinary, Unusual and Infrequent Occurring Events and Transactions” are met. SFAS No. 145 provisions regarding early extinguishment of debt are generally effective for fiscal years beginning after May 15, 2002. We believe this new standard will not have an impact on our business, consolidated financial position, results of operations or cash flows.

In June 2002, the FASB issued SFAS No. 146, “Accounting for Costs Associated with Exit or Disposal Activities.” SFAS No. 146 supersedes previous accounting guidance, principally Emerging Issues Task Force Issue No. 94-3, “Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (Including Certain Costs Incurred in a Restructuring).”

SFAS No. 146 requires that the liability for costs associated with an exit or disposal activity be initially measured at fair market value and recognized when the liability is incurred. In periods subsequent to initial measurement, changes to the liability are measured using the credit-adjusted risk-free rate that was used in the initial measurement of the liability recorded. The cumulative effect of a change resulting from revisions either to the timing or the amount of estimated cash flow is recognized as an adjustment to the liability in the period of the change and charged to the same line items in the statement of operations used when the related costs were initially recognized. Under EITF No. 94-3, a liability for an exit cost was recognized at the date of our commitment to an exit plan.

The provisions of SFAS No. 146 are required to be applied prospectively to exit or disposal activities initiated after December 31, 2002. We believe SFAS No. 146 may affect the timing of recognizing future restructuring costs, as well as the amounts recognized, depending on the nature of the exit or disposal activity and the timing of the related estimated cash flows.

In January 2003, the FASB issued SFAS No. 148, “Accounting for Stock-Based Compensation-Transition and Disclosure, an amendment of FASB Statement No. 123.” SFAS No. 148 provides alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. It also requires disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. SFAS No. 148 is effective for annual and interim periods beginning after December 15, 2002. As we have elected not to change to the fair value based method of accounting for stock-based employee compensation, the adoption of SFAS No. 148 will not have an impact upon our financial condition or results of operations.

In April 2003, the FASB issued SFAS No. 149, “Amendment to Statement 133 on Derivative Instruments and Hedging Activities.” This Statement amends and clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts (collectively referred to as derivatives) used for hedging activities under SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities.” The provisions of this Statement are effective for contracts entered into or modified after June 30, 2003 and for hedging relationships designated after June 30, 2003. The adoption of this Statement is not expected to have a significant impact on our financial condition or results of operations.

In May 2003, the FASB issued SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity.” This Statement establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. This Statement requires that an issuer classify a financial instrument that is within its scope as a liability (or an asset in some circumstances). The provisions of this Statement are effective for financial instruments entered into or modified after May 31, 2003, and otherwise are effective at the beginning of the first interim period beginning after June 15, 2003. Upon adoption of this Statement, we will have to restate the carrying value of Holdings’ outstanding mandatorily redeemable preferred stock to the present value of the obligation and reclassify the amount into liabilities on the balance sheet. Additionally, amounts previously accrued as

On November 25, 2002, the FASB issued FASB Interpretation No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees of Indebtedness of Others, Including Indirect Guarantees of Indebtedness of Others, an interpretation of FASB Statements No. 5, 57, and 107 and Rescission of FASB Interpretation No. 34.” FIN 45 clarifies the requirements of FASB Statement No. 5, “Accounting for Contingencies” relating to the guarantor’s accounting for, and disclosure of, the issuance of certain types of guarantees. The disclosure provisions of the Interpretation are effective for financial statements of interim or annual periods that end after December 15, 2002.

In January 2003, the FASB issued Interpretation No. 46, “Consolidation of Variable Interest Entities — an Interpretation of Accounting Research Bulletin (“ARB”) No. 51.” This interpretation clarifies the application of ARB No. 51, “Consolidated Financial Statements,” to certain entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. The provisions of this Interpretation are effective for all enterprises with variable interests in variable interest entities created after January 31, 2003. The adoption of this Interpretation did not have a significant impact on our financial condition or results of operations.

We do not have any financial instruments held for trading purposes and do not hedge any of our market risks with derivative instruments.

The currencies that experienced significant fluctuations in fiscal year 2002 were the European Monetary Union Euro, Argentinean Peso and Brazilian Real. Our primary market risk exposure relates to foreign currency fluctuations in connection with foreign currency gains or losses that occur from intercompany receivables and payables between us and our foreign subsidiaries and from the U.S. dollar denominated loan under our existing credit facility originated by SVS Holland, B.V., one of our foreign subsidiaries.

The fair value of short-term borrowings approximates cost due to the short period of time to maturity. The fair value of long-term debt was estimated based on current interest rates available to Seminis for debt instruments with similar terms, degrees of risk and remaining maturities. The interest expense would be impacted by $2.5 million with a fluctuation of 100 basis points. However, considerable judgment is required in interpreting market data to develop the estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts that Seminis could realize in a current market exchange.

The fair value of Seminis’ borrowing arrangements and other financial instruments is as follows:

We are the leading worldwide developer, producer and marketer of vegetable and fruit seeds. We produce more than 60 species of vegetable and fruit seeds and more than 4,000 vegetable and fruit seed products (which do not include tree and citrus fruits). We market our seeds through four full-line brands — Seminis, Asgrow, Petoseed and Royal Sluis — and five specialty and regional brands. Our 2002 net seed sales represented approximately 19% of the $2.3 billion worldwide market for vegetable and fruit seeds (excluding tree and citrus fruits) in 2002, according to our estimates.

Since our formation in 1994, we have built a global presence through a series of ten acquisitions. Through these acquisitions, we gained access to or ownership of key technologies, patents and germplasm that have enabled us to add developed and proven products to our portfolio and to enter new and established markets.

We use seeds as the delivery vehicle for innovative agricultural technology. We develop seeds designed to reduce the need for agrochemicals, increase crop yield, reduce spoilage, offer longer shelf life products, create better tasting foods and provide vegetables and fruits with better nutritional value for consumers. We have what we believe is the largest vegetable and fruit germplasm bank in the world. Our germplasm bank contains the hereditary information that determines the characteristics of vegetables and fruits grown from our seeds. This collection of seed characteristics is our key strategic asset and has been developed through decades of cross-breeding to produce seeds known as hybrids that yield plants with enhanced characteristics.

We are creating the foundation to capture value from all participants in the vegetable and fruit production and distribution chain, including growers, distributors, processors, and retailers. Our strategy is to capture value by marketing premium-priced seeds with quantifiable benefits and superior traits directly to the parties along the distribution chain that can derive the most value from these seeds. Participants in the field crop industry have successfully implemented this strategy with respect to crops such as corn, soy and cotton. In April 2001, we became the first vegetable and fruit seed provider to employ the value capture strategy at the grower level by successfully implementing price increases for our seeds.

We have established a worldwide presence and global distribution system. We market seeds in over 150 countries, have 48 research and development facilities in 17 countries and territories and production sites in 24 countries. Our worldwide presence allows us to remain close to local markets around the world, adapt our products to distinct, local microclimates and meet the preferences of local consumers.

We believe a fundamental driver of the increase in demand for vegetables and fruits is global population growth. The United Nations projects that world population will increase from 6.1 billion people in 2002 to 7.2 billion people in 2015. In developing countries, which will experience much of the growth, vegetable and fruit consumption increased 228% from 1980 to 2001. During the same period, worldwide consumption of vegetables and fruits increased 138%. According to data provided by the FAO, (i) during the period from 1990 to 2000, vegetable and fruit production (excluding tree and citrus fruits) grew at approximately 3.3 times the rate of global population expansion and (ii) the harvested acreage dedicated to vegetables and fruits (excluding tree and citrus fruits) has increased approximately 3.2% annually during the period from 1990 to 2000, while overall agricultural harvested acreage has increased less than 0.3% annually during the same period. As the global demand for vegetables and fruits increases, the demand for seeds to grow these crops is expected to increase as well. Vegetables and fruits are among the most valuable agricultural crops. According to USDA data, the average farmgate value per hectare for vegetables and fruits (excluding tree and citrus fruits) was approximately 11 times greater than the average farmgate value per hectare for corn in the United States in 2000. Farmgate value refers to the revenue generated by farmers selling their crops to distributors and retailers. Worldwide vegetable seed revenue is projected to grow at a 4.8% compounded annual growth rate from 2002 through 2006.

The health and nutritional benefits that vegetables and fruits offer further drive the demand for these products. Vegetables and fruits are valuable in meeting basic nutritional needs and in preventing disease. Vegetables and fruits have very little fat, are low in calories and contain vitamins and other nutritional components. It is believed that diets high in vegetables and fruits can protect against the risk of cardiovascular disease, stroke, diabetes, iron-deficiency anemia and cataracts and can significantly reduce the risk of cancer. Vegetable and fruit consumption has grown at a 4.2% compounded annual growth rate from 1980 to 2001, and we expect the demand for vegetables and fruits to continue to increase as consumers become more concerned with their own health and more aware of the health and nutritional benefits of vegetables and fruits.

The development of seed crops takes place in several steps. The process begins with trait selection — choosing plants that have desirable characteristics such as high yield, nutritional content, flavor, size or natural resistance to a certain disease. Trait selection requires an extensive pool of germplasm and significant research and development.

Seed companies produce both hybrid and open-pollinated seeds. Open-pollinated seeds are pollinated by natural means and produce progeny with no significant variation from their parent lines. These types of seeds maintain traits indigenous to a specific parent line. In contrast, hybrid seeds are the first generation progeny of two different parent lines. The progeny of hybrid seeds possess hereditary characteristics of the parent lines and also contain enhanced performance characteristics superior to the parent lines. However, second generation seed produced by a hybrid will not inherit the enhanced performance characteristics of its hybrid parent. Therefore, hybrid crop growers generally purchase their seasonal seed requirements from seed companies in order to maintain the benefits of hybridization. In fiscal year 2002, 80% of our net seed sales were hybrid seeds.

Because growers can realize increased yields and enhanced performance from hybrid seeds and because seed companies are the only source of hybrid seeds, seed companies can typically demand a premium for the hybrid seeds they produce. Virtually all vegetable seeds planted in the United States and Europe are hybrids. Moreover, developing countries are beginning to recognize the value of hybrids (including high yields and disease resistance) and are beginning to plant hybrid seeds as opposed to open-pollinated seeds.

In addition to an overall increase in the demand for vegetables and fruits, we believe there will be an increase in demand for hybrid seeds for which growers will pay a substantially higher price due to the increasing number of benefits that hybridization can produce. These benefits include:


	•	higher yields per acre,

	•	greater uniformity,

	•	greater resistance to pests, diseases and environmental conditions, and

	•	improved quality, flavor and nutrition.

We believe all participants within the production and distribution chain, including growers, distributors, processors, and retailers, will drive demand for hybrid seeds.

Growers: As the amount of arable land in the world decreases and the demand for vegetables and fruits increases, we believe growers will pay a premium for seeds that increase productivity. The vegetable and fruit growers’ input-intensive cost structure makes growers particularly receptive to new products like hybrid seeds that can reduce input costs such as fertilizer, pesticides, and labor.

Distributors: In the production process, products move from the grower to the packer/shipper to the distributor and to the retailer, or products move directly from the grower to the processor. Costs are added at each stage in the distribution chain, reflecting both profit margin and product shrinkage due primarily to spoilage. Reducing spoilage presents a clear opportunity for seed companies to achieve premium pricing.

Processors: Vegetable and fruit processors freeze, dehydrate, make into paste or can fresh vegetables and fruits into shelf-stable containers. Processors either produce their own vegetables and fruits or contract for their production with growers. A large portion of the costs associated with processing fresh vegetables and fruits is the vegetable and fruit itself and the energy required to freeze or heat the vegetable or fruit or to evaporate water. In addition, processing can result in the loss or neutralization of flavor components.

Accordingly, developing varieties of vegetable and fruit seeds with higher yields and reduced processing requirements while maintaining flavor components are important objectives for seed companies.

Retailers: Direct consumption by the end consumer of vegetables and fruits in the form that the farmer produces them facilitates premium pricing for higher quality products. Consequently, retailers continuously seek new vegetable and fruit products with desirable consumer qualities, including enhanced color, texture, sweetness, taste and nutritional benefits, which may command a premium price on the grocery store shelf.

In order to develop products in the seed industry, companies need access to a broad germplasm bank and adequate capital to develop products over long periods of time. The development of a broad germplasm bank requires the accumulation of hereditary materials over a period of years. Germplasm is scarce, expensive and must be refined to properly serve different markets. Furthermore, development cycles can last five to 12 years prior to launching a commercially viable product. Seed companies invest a considerable amount of capital in research and development to maintain a full product pipeline. Additional complexities in the seed industry include the need for global distribution, the difficulty of building established brands and the challenge of achieving economies of scale in mass production.

We are the global leader in vegetable and fruit seed sales, with approximately 19% of the $2.3 billion worldwide market in 2002, according to our estimates. We believe that we are the leading provider of vegetable and fruit seeds in key regions including North America, Europe, Latin America, the Middle East and South Korea. In 2001 and 2002, we held a leading position in many of the regional markets for each of a wide variety of vegetable and fruit seeds, including tomatoes, beans, onions, watermelons, cucumbers, radishes, sweet peppers, lettuce, cabbage, spinach, cauliflower, squash and peas.

We have built a global presence through a series of ten acquisitions occurring between 1994 and 1998, enabling us to:


	•	gain access to key technologies, patents and germplasm collections,

	•	add developed and proven products to our portfolio, and

	•	enter new and established markets.

We have approximately 16,000 customers in over 150 countries and territories. No customer accounted for more than 3.3% of our net seed sales in fiscal year 2002. Our ten largest customers accounted for approximately 14.0% of our net seed sales in fiscal year 2002. Furthermore, our customer base includes growers, distributors and dealers and is geographically diverse, with North and Central America representing 38.3% of our net seed sales in fiscal year 2002, and Europe, the Middle East and Africa representing 39.7% of our net seed sales during the same period. Our product portfolio is also diverse, with no seed variety accounting for more than 1.3% of our net seed sales in fiscal year 2002.

We are a leading innovator in the global vegetable and fruit seed industry. We employ a staff of more than 620 research professionals, including 120 individuals with Ph.D. and M.S. degrees, who conduct a global research effort from 48 locations around the world. Many of these research professionals are located in the same offices as our marketing and production staff to facilitate collaboration between our research teams and our sales, marketing and manufacturing departments and allow us to tailor our development efforts to meet the unique needs of local markets. Over the past four fiscal years, we have averaged approximately $54 million in annual research and development spending, which we believe is significantly higher than the research and development spending of other companies who compete in the vegetable and fruit seed industry.

We own what we believe is the largest vegetable and fruit germplasm bank in the world. We view our collection of germplasm as our key strategic asset. Germplasm is the hereditary information contained in our seeds that determines the characteristics of vegetables and fruits, including:


	•	input traits, such as resistance to pests and adverse weather conditions;

	•	system traits, such as long shelf life, reduced spoilage and enhanced processing capability; and

	•	output traits, such as crop yield, color, texture, flavor, ready-to-eat convenience and nutrition.

Our germplasm bank includes over 1.5 million breeding lines developed from a combined 600 years of worldwide breeding activity. We believe that the combination of our germplasm bank and our research and development capabilities is a competitive advantage in developing and marketing better products.

We market full lines of seeds under the Asgrow, Petoseed, Royal Sluis and Seminis brands. The Asgrow, Petoseed and Royal Sluis brands have each been in existence for over 50 years. We believe that Asgrow, Petoseed and Royal Sluis are well recognized in the industry and in their markets for consistently developing and marketing high quality seeds for most major vegetable and fruit species. We also market seeds through five regional or specialty brands, which are targeted to respond to the demands of local markets. We believe that our brands rank among the leading brands worldwide in the vegetable and fruit seed markets.

We believe that demand for our products will increase as world population and health awareness grow. The United Nations projects that world population will increase by 19.0% to 7.2 billion from 2000 to 2015. In addition, we believe that increased awareness of the nutritional benefits of vegetables and fruits will have a positive impact on the demand for our products. Vegetables and fruits are valuable in meeting basic nutritional needs and in preventing disease. We expect that the growing worldwide population and increasing health awareness will drive continued growth in the vegetable and fruit market.

We intend to continue to produce innovative and value-added products to increase revenue and improve cash flows. We plan to achieve this goal by leveraging our germplasm bank and our research and development capabilities to develop products that are profitable and that cater to local tastes and preferences. We intend to continue to develop products that will meet the demand for a growing population under the constraints of a declining amount of arable land. In fiscal year 2002, we launched over 80 new products.

We estimate that the worldwide market for vegetable and fruit seeds (which excludes tree and citrus fruits) was $2.3 billion in 2002, which represented only 3.6% of the total worldwide farmgate value of approximately $65.3 billion in 2002, according to our estimates. In 2001, corn and soybean revenue represented approximately 13% and 11% of farmgate value in the United States, respectively. The greater percentage of farmgate value represented by corn and soybean revenue is primarily due to the significant consolidation of agronomic seed producers and their substantial investment in biotechnology to deliver differentiated products. We believe there is significant opportunity for vegetable and fruit seeds to capture a greater percentage of farmgate and retail value by employing the pricing strategy described below and by continuing to develop differentiated new products.

We are implementing the following product development and pricing strategies to capture additional farmgate and retail value:


	•	Comprehensive and detailed market and product analysis to fully understand existing product differentiation and market position

	•	Price adjustments based on product traits and competitive characteristics


	•	Focused research and development on differentiated seed products targeting high-value end markets

	•	New product launches at significant price premia to precursor products


	•	Development of new products that emphasize traits such as nutrition, convenience and taste in response to consumer demand

	•	Marketing directly to vegetable and fruit distributors, processors and retailers highly differentiated products with consumer-oriented traits

	•	Pricing model that includes a seed price increase to the farmers whose demand for the seed is dictated by the distributor, processor or retailer, and a contractual royalty agreement with the distributor, processor or retailer

Because we grow and produce seeds all over the world, our portfolio of production facilities and our network of growers reduce the effects of adverse conditions in a given geographic region. We have the ability to shift production to utilize different seasons/ climates throughout the world to accelerate product development. Our global distribution system enables us to learn about and understand distinct farming communities throughout the world. This specialized knowledge allows us to monitor and understand the local markets and

We have instituted a number of initiatives to improve our operating performance:

In 2001, we focused on optimizing our global research and development organization by consolidating our research based on categories of breeding families. To implement this initiative, we:


	•	eliminated product redundancies,

	•	aggregated and leveraged our previously decentralized global germplasm bank,

	•	developed a single product pipeline per market,

	•	enhanced regional and global teamwork,

	•	eliminated brand-based internal competition, and

	•	strengthened linkage to market opportunities by enhancing cross-functional collaboration within our company from the development of new products to the marketing of these products.

These changes have enabled us to better align our research and development efforts with the needs of customers in our end markets and to implement our value capture strategy.

Inventory surplus resulting from competition and market changes, shelf life expiration and overproduction represents an intrinsic risk in our business. In 1998, we began to design and implement proprietary systems and processes to minimize surpluses and shortages, including the development of an in-house forecasting program that we have implemented at the salesperson level. Over the next several years we continued this design and implementation effort. In 2002, we initiated a seed supply management program in order to minimize both stock-outs and inventory surplus, and to optimize the location of world production based on quality, time, cost and volume. We have also hired inventory risk managers and a forecast accuracy team to ensure that our sales and production forces meet their seed supply management objectives. We believe these new tools and procedures have helped to reduce the forecasting volatility inherent in our business and will minimize the level of normalized annual inventory write-offs.

Through our customer-focused, brand strategy, we provide choices to growers with respect to product, price, promotion and service. We also provide information to enable growers to anticipate changes in consumer trends rather than reacting to them. We have four full-line brands, Asgrow, Petoseed, Royal Sluis and Seminis, each with its own identity and positioning. Each of Asgrow, Petoseed and Royal Sluis features important products in different regions and market segments, establishing highly valued brand identity, which we leverage through the introduction of new products. In North and Central America, we are marketing Asgrow, Petoseed and Royal Sluis under the Seminis brand. We also market seeds through regional and specialty brands, which are targeted to respond to local market needs. These needs are driven by dietary preferences, desire for local products, specialized farm growing practices and local environmental and climatic conditions. We believe that our brands rank among the leading brands worldwide in the vegetable and fruit seed market.


*	Includes seeds that are now being sold under the Seminis brand that had been previously sold under the Asgrow, Petoseed and Royal Sluis brands, respectively.

We reinforce the market positions of our brands and products through strategic planning, pricing and communications. We believe that strong brands provide an advantage in the marketplace when introducing new varieties. The reputation, reliability and trust associated with our existing brands can lend credibility to representations made regarding new products sold under these brand names.

Over the last year, we have reviewed our regional brand strategy in order to leverage our brand recognition and reputation, while optimizing our infrastructure in sales teams and breeding programs. This review resulted in the following:


	•	rationalization of our product portfolio from over 6,000 varieties to just over 4,000,

	•	consolidation of sales teams around the world to meet market needs, and

	•	establishment of teams of breeders focused on specialized lines of products and elimination of breeder redundancies in target markets.

These changes have enabled us to continue to provide new products that are responsive to market opportunities in a manner that leverages existing brand identity.

We currently market approximately 4,000 varieties of seeds within 60 species. In fiscal year 2002, we produced approximately 80.0% hybrid seed and 20.0% open-pollinated seed. The table below summarizes our 2002 net seed sales by product family:


	•	Hybrid Hot Pepper (North and Central America) — Represented 1.3% of our net seed sales in fiscal year 2002 ($5.5 million). This product is attractive to growers because of its resistance to disease and its propensity for higher yield and size uniformity.

	•	Hybrid Broccoli (North and Central America and Southern Europe) — Represented 1.2% of our net seed sales in fiscal year 2002 ($5.2 million). This product is attractive to growers because of its propensity for higher yield and size uniformity.

	•	Hybrid Tomato, Fresh Market (Northern and Eastern Europe, Middle East and Africa) — Represented 1.1% of our net seed sales in fiscal year 2002 ($4.6 million). This product is attractive to growers because of its resistance to disease and its propensity for higher yield.

We sell our products worldwide using a wide range of distribution strategies involving direct sales, dealers, distributors and importers. Largely driven by local market needs, our distribution strategy for each geographic region is designed to maximize the sales penetration of our products.

Our product sales are widely diversified geographically, with Europe representing the largest percentage of total sales outside of North and Central America. The table below illustrates the geographic diversification of our worldwide seed sales during fiscal year 2002.

While approximately 20.0% of our net seed sales in fiscal year 2002 were made directly to growers, we also foster close relationships with dealers and distributors. Where there is a market need, we use these dealers and distributors as an outside direct sales force. Dealers and distributors enable our products to reach growers in areas where there are geographic or other constraints on direct sales efforts. We are highly selective in choosing the dealers and distributors that represent our brands. We select dealers and distributors based on shared vision, technical expertise, local market knowledge and financial stability. In addition, we build dealer/ distributor loyalty through an emphasis on service, access to breeders, joint trials, ongoing training and extensive promotional material support. No single dealer or distributor accounted for greater than 3.0% of our total sales in fiscal year 2002.

We rely heavily on plant breeding supplemented with molecular and cellular technology to create new product innovations. We focus our internal product development activities on products that are likely to have practical market applications, create significant market value, command premium pricing and increase local sales penetration. Over the last several years, we have improved our new product pipeline management, resulting in fewer new product launches based on demonstrated end-market demand. This focus has allowed us to charge higher prices for new products as part of our value capture strategy.

We currently own 51 patents and have 81 patents pending in such areas as virus resistance, product quality, breeding technology, gene expression, cell selection and resistance genes. A total of seven patents were issued and 14 new patent applications were filed in fiscal year 2002. In addition, we have protected more than 382 plant varieties under plant variety protection laws and we have applications pending on an additional 196 plant varieties.

Our new product development efforts utilize plant breeding, proprietary technology, biotechnology, molecular and cell biology and plant pathology to introduce innovative products to the marketplace in an efficient and cost-effective manner. We augment our internal product development efforts through technological alliances with leading companies, research institutions and universities. We believe that our internal research and development capability and access to innovative technology, coupled with our extensive germplasm resources, position us to best meet the changing demands and preferences of growers and end-consumers and increase our penetration in the value chain in the vegetable and fruit industry.

During fiscal year 2002, new product sales represented approximately 5.0% of our net seed sales and existing products introduced into new countries or new markets over the last three years represented over 25.0% of our net seed sales during this period.

We conduct research and development activities in 48 locations throughout the world, including 16 in North America, ten in Europe, two in the Middle East, four in South and Central America and 16 in Asia. By diversifying our research and development geographically, we are able to take advantage of local breeding resources and many different microclimates. We are also better able to tailor our products to local tastes and preferences.

Each region of the world has particular requirements for the production of vegetables and fruits. These requirements are driven by local environmental conditions such as temperature or rainfall as well as local consumer preferences such as very sweet pink tomatoes in Japan or more acidic red tomatoes in Italy. We maintain an internally developed, proprietary database that contains information on local production and local consumer needs. We have compiled the information in this database to enable our plant breeders and marketing and sales personnel to more effectively design new products to meet the needs of local markets.

We incurred $44.3 million, $52.5 million and $58.4 million of expenses related to research and development during fiscal years 2002, 2001 and 2000, respectively. We have an extensive research and development staff with over 620 full-time people employed in research and development functions, including over 120 professionals with Ph.D. or M.S. degrees, including 79 plant breeders, 16 biotechnologists and 16

pathologists. Our plant breeding staff is structured by groups of related crops (families). Within each family, breeding is further structured by species to enhance product development efficiencies and effectively respond to changing consumer demands and preferences. All plant breeders have access to technology developed from our biotechnology, biochemistry and pathology laboratories. We provide incentives to our breeders to ensure that our new products are targeted at viable markets.

We own what we believe is the largest vegetable and fruit germplasm bank in the world, comprised of millions of our seeds. Our germplasm bank is our key strategic asset. Our seeds capture the characteristics of vegetables and fruits grown for our customers in different regions of the world, including input traits, such as resistance to pests and adverse weather conditions, and output traits, such as crop yield, color, texture, flavor and ready-to-eat convenience. Our extensive germplasm resource is difficult to replicate, having been developed through more than 150 years of research and development efforts.

The merger of the Petoseed, Asgrow and Royal Sluis germplasm catalogs, in combination with the germplasm from Bruinsma, Hungnong, Choong Ang and other acquired vegetable and fruit seed businesses, has created a very diverse germplasm resource. The strength of our germplasm is the extensive diversity of materials available and the wide variety of hereditary characteristics contained in these materials. Our breeders utilize our germplasm, as well as our proprietary technologies, to develop innovative products suitable to the needs of different markets and conditions. Our extensive germplasm catalog facilitates the continued development of innovative products and future growth.

Our product development technology positions us as one of the leaders in agricultural innovation. The time and capital required for the development of new products represent significant challenges in the vegetable and fruit seed industry. On average, it takes five to 12 years for a proprietary variety to reach commercial viability. We employ biotechnology, biochemistry and other technological processes to enhance our plant breeding programs and improve the efficiency of our new product development efforts.

Breeding: We maintain significant breeding programs for 28 major vegetable and fruit species that yielded more than 80 commercial varieties and more than 150 pre-commercial products in fiscal year 2002. Our breeding strategy is to create vegetable and fruit hybrids and varieties with combinations of traits that are superior to competitors’ hybrids and varieties and that meet or anticipate the changing demands of the market. These improved traits include more economical production, improved yields, superior disease resistance, environmental tolerance, longer shelf lives, superior processing characteristics and consumer benefits such as improved taste, appearance, nutrition, ready-to-eat convenience and health benefits.

Plant and Genetic Technology: Through the use of our proprietary processes, we enhance the efficiency of our breeding programs by enabling our breeders to identify and incorporate important plant traits into breeding lines, while significantly reducing the lead-time necessary to introduce commercially viable products. These proprietary processes include the use of tissue culture, dihaploid breeding, cytoplasmic male sterility, molecular markers, genomics and biotechnology.

Plant Pathology: Vegetables and fruits are susceptible to diseases that can affect yield and quality of the final product. In order for our plant breeders to identify and understand diseases that affect vegetables and fruits and to develop vegetable and fruit varieties resistant to these diseases, we believe we have established the largest plant pathology group in the industry. With 16 scientists in a network of laboratories throughout the world, we are currently working on more than 100 different diseases, targeting those that have the greatest impact on commercial vegetable and fruit production.

As a result of these efforts, we believe we lead the industry in providing the widest range of disease-resistant hybrids that require reduced chemical applications or no chemical applications while enhancing growers’ yield potential. Our plant pathology resources also enable us to maintain rigorous quality control

We actively seek access to technology applicable to vegetables and fruits from, and actively develop collaborations with, companies, research institutions and leading universities. We have over 100 technology agreements with leading universities, research institutions and private corporations that provide us with additional access to germplasm, genes, technology, patents and proprietary knowledge. We believe that our investment in technology agreements and collaborations reduces the cost and risk normally associated with new product development, as we utilize collaborators for most of our basic research. We typically share the value created as a result of our agreements and collaborations with our partners once a product reaches commercialization.

We typically contract with seed growers to produce 80-85% of our seeds. The balance of our seeds is produced on company-owned farms. We provide the producer with male and female “parent” lines for hybrid varieties and basic stock seed for open-pollination varieties, which are multiplied into commercial quantities. The grower returns the seeds to one of our operations facilities for cleaning, quality control, packaging and climate-controlled storage prior to sale to the customer. This process generally ranges from 9 to 36 months, underscoring the importance of a comprehensive and accurate forecasting system.

Our seeds are produced both domestically and internationally in 25 countries in the Northern and Southern Hemispheres to mitigate growing risks associated with weather or disease in any one region and to replicate local growing conditions. In the United States, we produce seeds in Arizona, California, Idaho, Oregon and Washington through contract production with high-quality, dependable growers. Seeds are produced internationally through subsidiaries in Argentina, Canada, Chile, France, Guatemala, Hungary, Italy, Mexico, New Zealand, Peru, South Africa, South Korea, Thailand and The Netherlands and through exclusive agents using our proprietary technology in Australia, China, Czech Republic, Denmark, Ecuador, Germany, India, Israel, Italy, Japan, Latvia, New Zealand, Romania, Slovakia, South Africa, Taiwan, Tanzania, Turkey and Vietnam.

By geographically diversifying our production facilities, we can schedule planting on a year-round basis, maximize yield, reduce inventory requirements and better ensure adequate supplies. In addition, we manage the availability of quality products throughout the world by maintaining production capabilities for each variety in at least two locations in each hemisphere. For example, a new variety with strong, unanticipated demand in the Northern Hemisphere can be supplied by using additional production from the Southern Hemisphere.

We control contract production globally by providing on-site management and technical personnel to oversee the production process. We supply producers with stock seed, specialized hybridizing techniques and specialized sowing and harvesting equipment to ensure product quality. Production is divided among numerous species, ranging from hand-labor-intensive hybrid crops such as peppers and tomatoes, to machine-planted and harvested seed crops such as peas, beans and sweet corn. Our planning department utilizes a specially designed logistics system, which integrates the planning functions in production, operations and sales. Product quantities are determined by considering a combination of factors, including long-term sales forecasts, product safety stock in inventory and production history for the region and product. The implementation of this system has provided real-time information about inventory at various stages of the production and distribution channel over a four-year time horizon.

We have main processing facilities in California, Idaho, Washington, Chile, Italy, Hungary, The Netherlands and South Korea and auxiliary processing centers in Brazil, New Zealand and India. The location of our seed processing centers is intended to facilitate the flow of seeds from production areas to major markets.

Our quality assurance (“QA”) group oversees an extensive program that is designed to build quality into the seed, beginning at the breeder level and continuing through production, processing and sale of the commercial seed. This group conducts extensive testing of our seed to confirm genetic purity and identity, both in the field and through molecular techniques, hybridity and identity analysis, as well as germination and physical purity evaluations. We also test the general health of the seed.

QA sets guidelines for the production and operations process, and monitors the correct application of procedures. In addition, this group interfaces with our customers to ensure their satisfaction with our products and services and gathers, analyzes and disseminates quality-related information to all our internal areas involved in the supply chain. As a result, we capitalize on the experience and historical information available to us across regions and functions.

We face direct competition from technological advances by competitors such as other seed companies, chemical and pharmaceutical companies and biotechnology companies, many of which have substantially greater resources than we do. To remain competitive, we expend approximately 10.0% of our revenue from net seed sales in research and development and strive to maintain technological alliances.

Our principal global competitors are Syngenta Seeds Inc., Sakata Seed Corp. and Groupe Limagrain. We also face local competition in each of the geographic regions in which we operate. These regional competitors tend to focus on fewer species and tend to concentrate on regional distribution only. We believe that the key competitive drivers in the industry are proven performance, customer support in the field, price and service. We believe that our global and local presence gives us a leading role in the industry and a competitive advantage. The economies of scale that we have and our ability to quickly introduce new products to market provide us with a superior advantage in the marketplace.

We use a wide array of technological and proprietary processes to enhance our germplasm and product development programs. These technologies and proprietary processes enable us to create novel product concepts and reduce the time to market by, in many cases, two to five years. In certain circumstances we file for patents on technology that is patentable. We currently own, co-own or have pending utility, utility model and design patents in such areas as virus resistance, product quality, breeding technology, gene expression, cell selection and resistance genes, including 204 issued, allowed and pending patents in Argentina, Australia, Brazil, Canada, Chile, China, the European Union, France, Germany, Hungary, India, Indonesia, Israel, Italy, Japan, Mexico, The Netherlands, New Zealand, Romania, South Africa, South Korea, Saudi Arabia, Spain, Thailand, Turkey, Ukraine, the United Kingdom, and the United States.

Intellectual property rights protect our products and technologies from use by competitors and others. Intellectual property rights of importance to us include utility patents, plant variety protection (“PVP”) certificates under plant variety protection laws, trademarks and trade secrets. The protection of our germplasm and varieties through patents and PVP certificates is focused on open-pollinated varieties, parental lines, traits and gene technologies related to hybrid varieties, novel traits, novel breeding technologies, molecular markers and disease resistance.

In the United States, the European Union, Japan and many other countries, plant varieties can be protected under laws which grant rights to plant breeders to protect their seeds, including the right to prevent third parties from importing or exporting, storing, processing, reproducing or selling protected varieties within the territory of protection. As of June 27, 2003, we have protected more than 365 separate plant varieties under issued plant variety protection certificates or plant variety right certificates in the United States, the European Union and other countries, with a total of more than 400 PVP certificates granted. As of this same date, we have another 194 applications for plant variety protection pending, mostly in the United States and the European Union.

Apart from obtaining patent and PVP protection, we have developed a corporate policy to protect our proprietary and confidential information such as trade secrets. New corporate policies specifically addressed to each functional area of Seminis and concerning the protection of our intellectual property are being implemented in each of the different functional areas. The objectives of the trade secret policy are to prevent disclosure of sensitive information and to protect our legal interests if our trade secrets are appropriated.

We have recently consolidated the registration and maintenance of trademark functions in our legal department. We own a large portfolio of trademarks, including 446 registrations and applications in more than 75 countries throughout the world.

We intend to continue developing comprehensive intellectual property and protection through utility and design patents (including with respect to key varieties and parent lines), PVP certificates, trademarks and trade secrets. We will also aggressively expand protection of our varieties and parent lines through plant variety rights. We will continue to aggressively enforce all of our intellectual property rights.

The development, testing and commercialization of seed products are subject to legislation and regulation in various countries. These regulations may govern genetic exclusivity, environmental concerns, product viability, performance and labeling. While regulation adds a cost of doing business to the industry, it also provides protection for research and development investment in new products, thereby encouraging continued new product development.

Variety registration varies from country to country, but generally each variety must be phenotypically unique. That is, the size, color, maturity and quality must be verifiably different from the varieties that already exist in the market. Once a variety is registered it cannot be changed. In the United States, the registration process is voluntary and determination that a variety is unique is left to the breeder. In Europe and many other countries, the registration process is regulated and determination of uniqueness is made in official trials.

The purpose of phytosanitary requirements is to prevent the spread of plant diseases that can be carried on seeds or other plant tissue. Each seed-producing country has agricultural inspectors that check seed crops for the presence of specified diseases. After these crops are harvested, laboratory tests are also conducted to ensure that the seeds are clean and free of impurities. Having passed the inspection and lab tests, the department or ministry of agriculture of the producing country issues a phytosanitary certificate stating that the seeds are free of specified diseases. Importing countries then allow the seeds to cross their borders on the basis of these certificates.

There are no worldwide, accepted regulations for genetically engineered products. Consequently, we are required to seek and obtain regulatory approvals in each country where such seeds will be sold or where the harvested produce will be exported. In the European Union and Switzerland, labeling of genetically engineered products is mandatory, whereas in other countries, such as Canada and the United States, labeling is required only if there is a compositional change or a health risk associated with the product. Japan, Australia and New Zealand now also require labeling. Other regions where we sell products either have labeling requirements similar to the United States or have no labeling requirements. We believe we comply with the labeling requirements of each country in which we conduct business. Less than 1% of our net seed sales for fiscal year 2002 were from genetically engineered seeds.

Our worldwide operations and products are subject to a broad range of environmental, health and safety laws and regulations. Among other things, these requirements regulate air emissions, wastewater and stormwater discharges, the use, management and disposal of hazardous and non-hazardous materials and wastes, product labeling, the cleanup of contamination and the use of chemicals in our agricultural growing operations. These requirements are complex, affect our day-to-day operations and tend to become more stringent over time. There can be no assurance that we have been or will be at all times in complete compliance with all environmental, health and safety requirements that apply to our operations or to our products. To maintain compliance with these requirements, we have been and may in the future be required to modify operations, purchase new equipment or make other capital improvements. Violations could result in penalties, the curtailment or cessation of operations or other sanctions, which could be material. Capital expenditures for property, plant and equipment for environmental control activities were not material during our 2001 and 2002 fiscal years and are not expected to be material in 2003 or 2004. Environmental laws also impose strict and, under certain circumstances, joint and several liability for the cleanup of contaminated property. The cleanup of contamination, including any potential contamination not yet discovered, could result in material costs or liabilities in the future.

Based on current information, we do not believe that environmental, health or safety laws and regulations will result in material costs or other liabilities in the future; however, enactment of new laws and regulations, stricter enforcement by regulatory authorities of existing or new laws and regulations, or the identification of new information could result in significant costs and other liabilities, which could have a material adverse effect on our business, financial condition and results of operations.

Although we are unable to predict which environmental legal requirements may be adopted in the future, we have not made and do not anticipate making material expenditures with respect to environmental protection. The compliance cost associated with environmental legal requirements, however, could result in future additional costs to operations.

As of June 27, 2003, we had approximately 2,800 employees. We believe we have good relations with our employees.

In fiscal year 2000, we relocated to our new worldwide headquarters and processing facility located in Oxnard, California. This facility is equipped with some of the highest quality, state-of-the-art, seed processing equipment and has been specifically designed for optimum storage conditions for vegetable and fruit seeds, to further ensure high quality seed inventory. Within the production process, we directly control significant, open-field production capacity in Chile, Mexico and Peru on land predominantly owned by us. Our main greenhouse production facilities are located in Mexico, on sites owned by us and in Chile, The Netherlands and France, on sites owned by us, but contracted out to third parties that grow seeds exclusively for us.

We maintain 25 facilities throughout the world, equipped to handle activities such as seed harvesting, cleaning, sizing, treating, testing and packaging. In addition to our worldwide headquarters, we own and operate production and processing facilities in Idaho, Washington, Chile, France, New Zealand, South Africa, South Korea, Thailand, The Netherlands, Brazil, Italy, India and Hungary.

As part of the formation of LSL PlantScience, a joint venture between Seminis and LSL Biotechnologies, LSL Biotechnologies contributed certain agreements between LSL Biotechnologies and a third party. These agreements contain provisions that permanently restrict the third party from engaging in the development or marketing of open field tomato seeds having long-shelf-life characteristics in certain areas in the world, including North America. In September 2000, the Antitrust Division of the U.S. Department of

Justice filed suit in the U.S. District Court for the District of Arizona against LSL PlantScience, LSL Biotechnologies and Seminis to delete these restrictive provisions. On March 29, 2002, the U.S. District Court dismissed without prejudice the action against LSL PlantScience, LSL Biotechnologies and Seminis. The U.S. Department of Justice has appealed this ruling and the appeal is pending in the Ninth Circuit Court of Appeals.

In January 2002, melon growers in Costa Rica notified us that our Dorado melon seeds were infected with Watermelon Fruit Blotch. Growers who purchased the infected Seminis seeds and growers whose crops were infected by the bacteria that spread from crops grown with the infected Seminis seeds have claimed damages against us. The claims related to those growers who purchased Seminis seeds have been settled for approximately $5.8 million, of which approximately $2.6 million was recovered under our errors and omissions insurance policy and the remainder of the settlement was paid by us by July 2002. The claims related to the growers with infected crops total approximately $4.7 million and we believe these claims are covered under our general liability insurance policy. We have finalized settlement of nearly all of these claims. Our general liability insurance carrier continues to deny coverage, and we are continuing to negotiate with them on this matter. In the event we cannot finalize the settlement with our general liability insurance carrier, we will seek all legal remedies and redress available to us against that carrier.

In early 2000, we filed a suit against Dietrich Schmidt, the former president of Seminis and the current president of United Genetics, a competitor of ours, United Genetics and two former Seminis breeders, Ken Owen and Wei Ouyang, for trade secret misappropriation and breach of contract. Mr. Schmidt filed a counterclaim for defamation against us. We were unsuccessful on our claims for trade secret misappropriation and breach of contract and Mr. Schmidt was successful on his counterclaim with the court awarding him $1 in nominal damages. The court subsequently awarded Messrs. Schmidt, Owen and Ouyang their attorneys’ fees. We have appealed certain aspects of the judgment, including the fee award. The appeal is still pending and is not expected to be decided until the fourth quarter of 2003.

On December 17, 2002 and January 4, 2003, four purported class action lawsuits were filed relating to the Acquisition Transactions. Three of these actions — Garry Firth v. Alfonso Romo Garza, et al., Civil Action No. 20085, Boris Pozniak v. Alfonso Romo Garza, et al., Civil Action No. 20097 and Pablo Herranz v. Seminis, Inc., et al., Civil Action No. 20105 — were filed in the Delaware Court of Chancery (New Castle County), while the fourth, Mark Rosales v. Seminis, Inc., Case No. CIV216255, was filed in California Superior Court (Ventura County). Since that time, a fifth case, Haven Capital Management v. Alfonso Romo Garza, et al., Civil Action No. 20140 has also been filed in Delaware. In February 2003, the Firth, Pozniak, Herranz and Haven Capital cases were consolidated into one proceeding entitled In re Seminis, Inc. Shareholders’ Litigation, Consolidated C.A. No. 20140-NC, and the Haven Capital complaint was designated as the operative complaint in the consolidated lawsuit. That complaint names as defendants Savia, Holdings and its Directors. The Rosales (California) complaint names as defendants Holdings and its Directors. Both the Delaware consolidated action and the Rosales action purport to be brought on behalf of Holdings common stockholders or their successors. Both of these actions — which were brought prior to the public announcement of Holdings entering into the Acquisition Transactions Agreements — allege that the Acquisition Transactions, when consummated, would provide insufficient consideration to Holdings’ common stockholders and allege that the defendants breached their fiduciary duties in connection with the Acquisition Transactions. The complaints sought a preliminary and permanent injunction to enjoin the Acquisition Transactions and, since the Acquisition Transactions have been consummated, rescission and damages. No provision for loss has been made in the accompanying consolidated financial statements, as the probability of an unfavorable outcome and the amount of loss, if any, are not determinable at this time. On September 24, 2003, the parties reached a memorandum of understanding that settled all of the alleged claims. At this time, the parties are preparing final settlement papers and will submit them for court approval in the near future. The proposed settlement does not affect the terms of the Acquisition Transactions set forth herein.

that had been tested, tested negative for the presence of the bacteria. Spanish authorities requested an analysis of all seed lots sold in the Canary Islands. On July 31, 2003, Seminis was notified that after analyzing 89 lots of Boludo seed, a single seed lot tested positive for the presence of the bacteria. Seminis believes that other factors that may cause the disease were present at the time of the infection, and could be responsible for, or contributing factors to, the presence of the bacteria and damage to the crops. These factors include, but are not limited to: poor sanitary practices in the growers’ fields (failure to remove debris from prior harvests); bacteria from sources other than Seminis that remained in the fields from prior seasons; the practice of grafting, which can magnify the effects of small outbreaks and weaken the crops; failure to properly rotate crops from season to season; and third-party isolates (different strains) of the disease that may have been present. Seminis continues to investigate this matter vigorously, in particular investigating the single positive test result, which is inconsistent with the findings of all of the other independent laboratories’ test results for Seminis seed lots. Seminis does not believe that its Boludo tomato seeds sold in the Canary Islands caused any bacterial damage. Notwithstanding the foregoing, tomato growers may initiate legal claims against Seminis alleging that Seminis seeds were the source of the bacteria and claiming significant damages and Seminis cannot predict the outcome of any such claim, if initiated.

We are involved from time to time as a defendant in various other lawsuits arising in the normal course of business. We believe that no current claims, individually or in the aggregate, will have a material adverse effect on our business, results of operations or financial condition.

The following table sets forth the names, ages and positions for each of Holdings’ Directors and executive officers as of the date of this prospectus.

Alfonso Romo is the Chairman of the Board of Directors, President and Chief Executive Officer. Mr. Romo has been the Chairman of Holdings’ Board of Directors since October 1995, Chief Executive Officer of Holdings since January 1, 2000 and President since April 1, 2003. Mr. Romo has been Chairman of the Board of Directors of Pulsar, a private holding company and an affiliate of Holdings, since 1984. Mr. Romo has also been the Chairman of the Board of Directors and Chief Executive Officer of Savia, a holding company and the majority stockholder of Holdings, since 1988, and the Chairman of the Board of Directors of Seguros Comercial America, S.A. de C.V. since 1989. Mr. Romo is also a Director of Cementos Mexicanos, S.A. de C.V., a cement company, and Gruma S.A. de C.V., a corn flour and tortilla producer.

W. Dexter Paine, III became Vice Chairman of the Board of Directors of Holdings upon the consummation of the Transactions. Mr. Paine was a co-founder of Fox Paine & Company, LLC and has served as President since its inception in 1997. From 1994 until founding Fox Paine & Company, Mr. Paine served as a senior partner of Kohlberg & Company. Prior to joining Kohlberg & Company, Mr. Paine served as a general partner at Robertson Stephens & Company. Mr. Paine has served as Chairman of the Board of Directors of WJ Communications, Inc. since January 2000 and as a Director of Alaska Communications Systems Group, Inc. since May 1999.

Bruno Ferrari became a Director of Holdings upon the consummation of the Transactions and continues to serve as the Executive Senior Vice President, Worldwide Commercial. Mr. Ferrari has been Executive Senior Vice President, Worldwide Commercial since March 2003, and was Executive Senior Vice President, Europe, Middle East and Africa of Holdings from November 2000 until March 2003. Mr. Ferrari was Senior Vice President of Legal and Human Resources of Holdings from January 1997 until November 2000.

Saul Fox became a Director of Holdings upon the consummation of the Transactions. Mr. Fox was a co-founder of Fox Paine & Company and has served as Chief Executive Officer since its inception in 1997. From 1984 until founding Fox Paine & Company, Mr. Fox was at Kohlberg Kravis Roberts & Co. or KKR. Mr. Fox was a senior general partner of KKR prior to retiring from the firm to form Fox Paine & Company. Prior to joining KKR, Mr. Fox was an attorney at Latham & Watkins, a law firm headquartered in Los Angeles, California. Mr. Fox has served as a Director of WJ Communications, Inc. since January 2000 and as a Director of Alaska Communications Systems Group, Inc. since May 1999.

Eugenio Garza has been a Director of Holdings since August 2002 and continues to serve as a Director. He is the Chairman of the Board of Directors and Chief Executive Officer of Xignux, a private group of companies specializing in manufacturing and distribution of electrical, automotive, metal works, chemical and food products. Mr. Garza is also Chairman of the Board of Directors of Xignux Yazaki, Grupo Primex, Qualtia Alimentos (a joint venture with Sara Lee Corporation), Prolec-GE (a joint venture with General Electric Company) and Tisamatic Internacional (a joint venture with Auburn Foundry, Inc.). Mr. Garza also serves on the Board of Directors of ING Mexico, Grupo Lamosa, Grupo IMSA, the regional board of directors of Banco Nacional de Mexico (BANAMEX), the Instituto Tecnologico y de Estudios Superiores de Monterrey and the Universidad de Monterrey. He is also a member of Consejo Mexicano de Hombres de Negocios (Mexican Businessmen Council).

Bernardo Jimenez continues to serve as a Director of Holdings and became our Chief Financial Officer upon the consummation of the Transactions. Mr. Jimenez has been a Director of Holdings since October 1995. He has also been a Director of Savia and Chief Financial Officer of Savia since April 2000 and Chairman of the Board and Chief Executive Officer of Bionova from October 1996 until November 2002.

Kevin Schwartz became a Director of Holdings upon the consummation of the Transactions. Mr. Schwartz has been a vice president of Fox Paine & Company since 2002. Prior to joining Fox Paine & Company, Mr. Schwartz worked at Fremont Partners, a private equity investment firm, from 2000 until 2002; American Industrial Partners, a private equity investment firm, from 1999 until 2000 and Goldman Sachs & Co., an investment banking firm, from 1997 until 2000.

Dr. Charles Edward Green continues to serve as Senior Vice President, Research and Development. Dr. Green has been Senior Vice President, Research and Development since November 1999. He previously directed new technology development at Holdings from 1996 to 1999.

Mateo Mazal continues to serve as our Senior Vice President, Human Resources and IT. Mr. Mazal has been Vice President, Human Resources and Information Technology since April 2003. He has been a Director since January 2002. He has also been a Director of Savia since 1985; was the Corporate Director of Marketing of Pulsar from 1995 to 2001; and was the Corporate Director of Marketing and Human Resources of Pulsar from 2001 to 2003.

Gaspar Alvarez continue to serve as Vice President, Finance and Worldwide Corporate Comptroller. Mr. Alvarez has been Vice President, Finance and Worldwide Corporate Comptroller since December 2000

Jose Manuel Madero continues to serve as Vice President, Supply-Delivery Chain. Mr. Madero has been Vice President, Supply-Delivery Chain since April 2003, and was Vice President of Holdings from August 2002 to April 2003. Mr. Madero was Managing Director of Pastelerias Monterrey, a food services company, from April 2001 to August 2002. He has also served in various management and project coordination positions for Pulsar since January 1997. Mr. Madero is the first cousin of Mr. Romo, our Chairman and Chief Executive Officer.

Our Board of Directors will direct the management of our business and affairs and will conduct its business through meetings of the Board of Directors and committees. The Board of Directors of Holdings has an audit committee, a compensation committee and an executive committee. In addition, from time to time, other committees may be established under the direction of the Board when necessary to address specific issues.

Seminis Merger, Mr. Romo, the Continuing Stockholders, Mexican SPC and Fox Paine have entered into a stockholders’ agreement that sets forth the terms of their relationship as stockholders of Holdings following the Acquisition Transactions. The stockholders’ agreement provides that Mr. Romo will have the right to appoint a majority of Holdings’ Board of Directors. The stockholders’ agreement further provides, among other things, that if Holdings fails to satisfy pre-defined financial targets over specified periods of time, or Mr. Romo is no longer employed as Holdings’ Chief Executive Officer or is no longer performing for Holdings the customary functions of a chief executive officer, Fox Paine will have the right to appoint a majority of Holdings’ Board of Directors; provided that Mr. Romo will continue to have the right to nominate at least three members of the Board of Directors of Holdings. In addition, at any time that Fox Paine does not have the right to nominate a majority of the Board of Directors of Holdings, Fox Paine will possess veto rights with respect to a significant number of corporate governance matters and business operations matters. See “Certain Relationships and Related Party Transactions — Arrangements Among Fox Paine, Mr. Romo and the Continuing Stockholders — Stockholders’ Agreement.”

Audit Committee. Following the consummation of the Acquisition Transactions, we formed a new audit committee. The audit committee will review our various accounting, financial reporting and internal control functions and make recommendations to the Board of Directors for the selection of independent public accountants. The audit committee will participate in the review of certain plans and the results of any selected independent public accountants, will approve the scope of professional services provided by such independent public accountants and will review the independence of the independent public accountants. The audit committee also will review the adequacy of our internal accounting controls.

Compensation Committee. Following the consummation of the Acquisition Transactions, we formed a new compensation committee. The compensation committee will be responsible for approving the compensation strategies for Holdings and for determining the compensation of its executive officers. The compensation committee will also administer Holdings’ equity-based compensation plan.

Executive Committee. Following the consummation of the Acquisition Transactions, we formed a new executive committee. The executive committee, while the Board of Directors is not in session, will generally have all of the powers and authority of the Board of Directors in the management of the business and affairs of Holdings.

Our outside Directors receive an annual fee of $25,000 and additional fees of $2,500 for each meeting of the Board of Directors attended and $1,000 for each committee meeting attended. Committee chairmen, in addition, receive a fee of $2,000 and a fee of $250 for each committee meeting attended.

The following table provides a summary of compensation earned by Holdings’ Chief Executive Officer and Holdings’ four other highest-paid executives during the last fiscal year, for services rendered in all capacities to Holdings and its subsidiaries for each of the last three fiscal years:


(1)	Chief Executive Officer since November 1999.

(2)	President and Chief Operating Officer from August 2000 to March 2003.

(3)	Executive Senior Vice President, World Wide Commercial since March 2003. Prior to March 2003, Mr. Ferrari was Executive Senior Vice President, Europe, Middle East and Africa from November 2000 until March 2003. Prior to July 2001, Mr. Ferrari was employed by Savia.

(4)	Senior Vice President, Asia from June 2001 to October 2003.

(5)	Vice President, Finance and World Wide Corporate Comptroller since December 2000.

(6)	Includes housing allowance, expatriate housing rental, other expatriate benefits and, with respect to Mr. Najera, the fair rental value of a home provided to Mr. Najera by us. Includes cash payments of $358,667, $627,667, $419,191 and $327,283, to Messrs. Romo, Najera, Ferrari and Velasco, respectively, related to the Restricted Stock Awards. Includes $130,387 in expatriate benefits for Mr. Alvarez.

(7)	Restricted Stock Awards under the Seminis, Inc. Restricted Stock Award Plan of 2001 vested over an 18 month period, from April 1, 2001 to September 30, 2002, and were based upon a level of achievement of performance goals related to EBITDA and reduction of inventory.

(8)	The Seminis, Inc. 1998 Stock Option Plan provided for grants of options at fair market value of Holdings Class A Common Stock on the date of grant and will become fully vested (if not already vested) immediately prior to the consummation of the Acquisition Transactions.

In April 2002, options to purchase shares of Holdings Class A common stock were granted to various individuals for services rendered during the 2002 fiscal year pursuant to the terms of the Seminis, Inc. 1998 Stock Option Plan. Awards of options made to the named executive officers, all of which became fully vested immediately prior to the consummation of the Acquisition Transactions, are set forth below.

No exercises of options to purchase shares of Holdings Class A common stock were made during fiscal year 2002 by our Chief Executive Officer or any other of our named executive officers.

The following table sets forth information concerning unexercised options held by the named executive officers as of September 30, 2002. Based on the closing price per share of Holdings Class A common stock on the Nasdaq National Market on September 30, 2002, certain exercisable and unexercisable options are in-the-money.

Prior to the consummation of the Acquisition Transactions, the members of the Compensation Committee of Holdings’ Board of Directors for the 2003 fiscal year have been Frank J. Pipp, Chairman, Christopher J. Steffen and Dr. Roger Beachy. No member of this Committee was at any time during the 2003 fiscal year or at any other time an officer or employee of Seminis.

Prior to the Acquisition Transactions, the officers, Directors and employees of Holdings held options to purchase an aggregate of 3,638,685 shares of Holdings common stock, all of which will become fully vested immediately prior to the effective time of the Acquisition Transactions. Holders of options to purchase shares of Holdings common stock (other than those persons permitted by Seminis Acquisition to retain their options) will receive, for each share of Holdings common stock underlying an option with a per share exercise

price of less than $3.78, an amount in cash equal to the difference between $3.78 and the per share exercise price for the option, less applicable tax withholding amounts. Options with a per share exercise price of $3.78 or greater will be cancelled without any consideration being paid for those options. The aggregate amount to be paid to the officers, Directors and employees in connection with the cancellation of options to purchase shares of Holdings common stock will be approximately $4.3 million. Mr. Romo and the Continuing Stockholders will retain options to purchase 1,738,072 shares of Holdings common stock following the Acquisition Transactions. For more information about the Acquisition Transactions and the treatment of existing options to purchase shares of Holdings common stock, see “Description of the Acquisition Transactions — Detailed Description of the Acquisition Transactions — The Merger.”

Upon completion of the Acquisition Transactions, we will grant restricted stock units to a group of Holdings’ senior executives, including Bruno Ferrari, Bernardo Jimenez, Mateo Mazal, Ed Green, Gaspar Alvarez, Jose Manuel Madero and other key executives. The restricted stock units will, upon the events described below, be paid in shares of Holdings common stock on a one-for-one basis and will vest over a five-year period depending on the continued employment of the executive and on Holdings’ performance and the performance of our executives relative to specified goals and objectives.

Upon completion of the Acquisition Transactions, each of the senior executives will be granted an aggregate number of restricted stock units calculated as 2.25 times the initial base salary of the applicable senior executive divided by $3.40. Each of the other key executives will be granted an aggregate number of restricted stock units calculated as 1.0 times the initial base salary of the applicable executive divided by $3.40.

If the specified goals and objectives are achieved and the executive is actively employed by us at each applicable vesting date, the restricted stock units will vest with respect to 10.0% of the aggregate award in each of the first two years, 20.0% of the aggregate award in the third year and 30.0% of the aggregate award in each of the fourth and fifth years following the time of grant. To the extent that conditions to vesting are not met and some of the restricted stock units do not vest, the portion of restricted stock units that do not vest will be permanently forfeited and will not be reallocated.

In the event that Fox Paine achieves a 26.0% internal rate of return on its initial investment in Holdings prior to the fifth anniversary of the completion of the Acquisition Transactions, all restricted stock units, other than those permanently forfeited due to a failure to meet specified goals and objectives, will vest.

Vested restricted stock units would be payable in shares of Holdings common stock upon the first to occur of:


	•	a change in control of Seminis;

	•	the executive’s termination of employment;

	•	the termination of the stockholders’ agreement among Seminis Merger, the Continuing Stockholders, Mexican SPC and Fox Paine; and

	•	upon vesting of the units, if the executive elects, on the date of grant or pursuant to another election, to receive shares upon vesting.

Seven key executives have entered into employment agreements with Seminis Merger (which became Holdings after the merger) that became effective upon completion of the Acquisition Transactions. The following is a summary of the material terms of the employment agreements and related benefits.

The employment agreements provide that each executive will generally retain his existing shares of Holdings common stock and options to purchase shares of Holdings common stock. The retained options will be 100% vested and exercisable as of the completion of the merger. Under the terms of the employment

agreements, the executives will have the right, exercisable during a window period each year, to require Holdings to repurchase retained shares of Holdings common stock and retained options to purchase shares of Holdings common stock, subject to the satisfaction of established performance criteria. The executives who currently have employment agreements with Holdings have waived, as of the date of execution of the new employment agreements, certain rights to receive severance payments under those prior agreements and have agreed that the new employment agreements with Seminis Merger will supercede the prior agreements as of the completion of the merger.

Mr. Romo has entered into an employment agreement that will become effective upon completion of the merger and have a five-year term with automatic one-year renewals unless timely notice is provided by either party. Pursuant to the employment agreement, Mr. Romo will serve as President and Chief Executive Officer of Holdings. Mr. Romo will receive an initial base salary of $1,000,000, which will be reviewed no less frequently than annually and may be increased, but not decreased, throughout the term of the agreement. Mr. Romo will be eligible to receive an annual bonus that will be based on Holdings achieving performance objectives, with a target bonus set at 100% of base salary and a maximum bonus at 200% of base salary.

Under the terms of his employment agreement, Mr. Romo will be entitled to participate in Holdings’ benefit plans and programs, and will be entitled to the perquisites and other fringe benefits generally made available to Holdings’ senior executives and commensurate with Mr. Romo’s position. Specifically, Mr. Romo will be entitled to receive benefits reasonably comparable to those provided to him prior to the Acquisition Transactions, including, but not limited to, membership in a social club, reimbursement of security and non-leisure travel expenses in an annual amount not to exceed approximately $2.4 million, use of company automobiles, and certain expatriate and other benefits and allowances.


	•	is terminated during the term of the employment agreement as a result of Mr. Romo’s death or permanent disability, or

	•	following a change of control of Holdings or following Fox Paine obtaining majority control of the Board of Directors, is terminated by Mr. Romo for “good reason” or by Holdings without “cause,”

Mr. Romo or his estate, as applicable, will receive, within 30 days following the termination, a cash lump sum payment equal to five times the sum of his base salary and the average annual bonus paid or payable to Mr. Romo with respect to the two fiscal years immediately prior to the date of termination (less any applicable insurance benefits payable during the severance period). In addition, Mr. Romo or his estate, as applicable, will be entitled to receive such other payments, if any, to which he is entitled under any applicable plans or programs, a payment in respect of accrued but unused vacation days, and continued coverage under any employee medical plans or programs provided to him and his family until the earlier of the fifth anniversary of his termination of employment or the date on which he becomes entitled to receive medical coverage under another employer’s medical benefits program.

Pursuant to the employment agreement, Mr. Romo will be bound by non-competition and non-solicitation restrictions during the term of the agreement and for a period of two years after the termination of his employment.

Messrs. Mazal, Ferrari and Jimenez have also entered into employment agreements that will become effective upon completion of the Acquisition Transactions and that will have a term of three years, and will be renewed automatically unless timely notice is provided by either party. Mr. Mazal will receive an initial base salary of $400,000 and will be eligible to receive an annual bonus that will be based on the achievement of Holdings and executive performance objectives, with a target bonus set at 65.0% of his base salary and a maximum bonus set at 81.25% of his base salary. Mr. Ferrari will receive an initial base salary of $500,000 and will be eligible to receive an annual bonus based on the achievement of Holdings and executive performance objectives, with a target bonus set at 75.0% of his base salary and a maximum bonus set at 93.75% of his base salary. Mr. Jimenez will receive an initial base salary of $636,000 and will be eligible to receive an annual bonus based on the achievement of Holdings and executive performance objectives with a target bonus set at 65.0% of his base salary and a maximum bonus set at 81.25% of his base salary. Pursuant to the employment

During the employment period, each of Messrs. Mazal, Ferrari and Jimenez will be entitled to other benefits on terms and conditions no less favorable in the aggregate than those in effect prior to the Acquisition Transactions, including, but not limited to, membership in a social club, use of company automobiles, and certain expatriate and other benefits and allowances.

In addition, Messrs. Mazal, Ferrari and Jimenez will be entitled to receive restricted stock units that will vest over a period of five years and will be conditioned on the satisfaction of Holdings and executive performance criteria. For a more detailed description of the restricted stock units that Holdings will grant following completion of the Acquisition Transactions, see “— Restricted Stock Units.”

Mr. Ferrari will receive an award of 1,091,577 shares of Holdings common stock on the effective date of his employment agreement, subject to all applicable withholding taxes.

The employment agreements for each of Messrs. Mazal, Ferrari and Jimenez provide that if the executive’s employment is terminated during the employment period as a result of death or permanent disability, is terminated by us without “cause” or terminated by the executive for “good reason,” the executive or his estate, as applicable, will receive a cash lump sum payment equal to three times the sum of the base salary and the average annual bonus paid or payable to the executive with respect to the two fiscal years immediately prior to the executive’s date of termination of employment, less applicable insurance benefits. In addition, upon any termination of employment described in the previous sentence, the executive or his estate, as applicable, will receive such other payments, if any, to which he is entitled under any applicable plans or programs, a cash lump sum payment in respect of accrued but unused vacation days, and continued coverage under any employee medical plans or programs provided to the executive and his family until the earlier of the third anniversary of the executive’s termination of employment or the date on which the executive becomes entitled to receive medical coverage under another employer’s medical benefits program.

Messrs. Mazal, Ferrari and Jimenez will be bound by non-competition and non-solicitation restrictions during the term of the agreement and for a period of two years after any termination of employment.

Messrs. Green, Alvarez and Madero have also entered into employment agreements with terms substantially similar to the agreements between Seminis Merger (which will become Seminis after the Acquisition Transactions) and Messrs. Mazal, Ferrari and Jimenez, except that the base salaries, bonuses and benefits provided to Messrs. Green, Alvarez and Madero are less than those provided to Messrs. Mazal, Ferrari and Jimenez, in accordance with each executive’s position. Under their respective employment agreements, Mr. Green will receive a base salary of $265,921, Mr. Alvarez will receive a base salary of $262,051, and Mr. Madero will receive a base salary of $200,000, in each case with a target bonus set at 55.0% of base salary and a maximum bonus set at 68.75% of base salary. In addition, severance benefits that may become payable to Messrs. Green, Alvarez or Madero will be based on a multiple of two times the sum of base salary and bonus instead of three.

During the employment period, each of Messrs. Green, Alvarez and Madero will be entitled to participate in the employee benefit plans made available to similarly situated executives of Holdings, and will be entitled to other benefits on terms and conditions similar to those in effect prior to the Acquisition Transactions, including, but not limited to, membership in a social club, use of company automobiles, and certain expatriate and other benefits and allowances.

Each of Messrs. Green, Alvarez and Madero will be entitled to receive restricted stock units that will vest over a period of five years and will be conditioned on each individual’s satisfaction of Holdings and executive performance criteria. For a more detailed description of the restricted stock units that Holdings will grant following completion of the Acquisition Transactions, see “— Restricted Stock Units.”

On May 9, 2001, we entered into an employment agreement with Oscar Velasco Martinez to serve as Senior Vice President, Asia. The term of the agreement is for two years beginning June 2001 and is subject to automatic one-year extensions unless either party provides notice of termination not less than 90 days prior to

the termination date. The seniority rights date of Mr. Velasco as set forth in his contract is May 1, 1999. Pursuant to the agreement, Mr. Velasco receives annual compensation of $330,000 and an annual performance bonus in an amount equal to at least 65% of Mr. Velasco’s annual base salary if he achieves certain performance objectives in each fiscal year. Mr. Velasco also receives other compensation including a housing allowance, one automobile, a social/sports club membership and other expatriate benefits. Upon termination of the contract, Mr. Velasco is entitled to receive at such time an amount equal to two years of base salary, plus the equivalent percentage of bonuses paid to Mr. Velasco in the previous two years. In the event of Mr. Velasco’s retirement following two years of employment, we will also be obligated to pay an amount equal to two years of base salary and bonus.

In connection with the Acquisition Transactions, Mexican SPC received immediately exercisable rights to acquire 13.8% of the outstanding shares of Holdings common stock on a fully-diluted basis. In addition, Mexican SPC and Fox Paine received a second tranche of co-investment rights to acquire up to 15.8% and 1.57%, respectively, of the outstanding shares of Holdings common stock on a fully-diluted basis. The Fox Paine co-investment rights and the second tranche of co-investment rights owned by Mexican SPC will become exercisable only if Fox Paine achieves a 26.0% internal rate of return on its investment in Holdings. Each co-investment right entitles the recipient to acquire one share of Holdings common stock at an exercise price of $3.40 per share. All of the co-investment rights expire on the tenth anniversary of the date of the consummation of the Acquisition Transactions.

Stockholders’ Agreement. Seminis Merger, Mr. Romo, the Continuing Stockholders, Mexican SPC and Fox Paine have entered into a stockholders’ agreement that sets forth the terms of their relationship as stockholders of Holdings. Material items covered by the stockholders’ agreement include the following:


	•	Transfer Restrictions. The stockholders’ agreement contains general restrictions on the rights of stockholders to transfer equity of Holdings. The restrictions apply during the first three years following the completion of the Acquisition Transactions.

	•	Sale Initiatives.


	•	The stockholders’ agreement establishes procedures, effective following the three-year anniversary of the completion of the Acquisition Transactions, for Fox Paine to offer for sale to Mr. Romo or to Holdings the shares of Holdings common stock that Fox Paine controls. In the event that Mr. Romo and Holdings decline the opportunity to purchase the shares of Holdings common stock that Fox Paine controls, Fox Paine and Mr. Romo will work together to sell 100% of the equity of Holdings at a price per share equal to the per share sale price proposed by Fox Paine to Mr. Romo and Holdings.

	•	The stockholders’ agreement establishes procedures, effective following the three-year anniversary of the Acquisition Transactions, for Mr. Romo to offer for sale to Fox Paine or to Holdings the shares of Holdings common stock that Mr. Romo controls at a price per share satisfying a 26.0% internal rate of return on Fox Paine’s initial investment in Holdings. In the event that Fox Paine and Holdings decline the opportunity to purchase the shares of Holdings common stock that Mr. Romo controls, Fox Paine and Mr. Romo will work together to sell 100% of the equity of Holdings at a price per share equal to the per share sale price proposed by Mr. Romo to Fox Paine and Holdings.

	•	If Mr. Romo and Fox Paine agree to sell 100% of the equity of Holdings, the stockholders’ agreement contains provisions requiring all of Holdings’ equityholders to participate in the sale.


	•	Fox Paine Drag Sale. If Fox Paine has the right to nominate a majority of the members of Holdings’ Board of Directors, Fox Paine may require a sale of 100% of Holdings’ equity:


	•	Mr. Romo is no longer Holdings’ Chief Executive Officer or is no longer performing for Holdings the customary functions of a chief executive officer, and


	•	on or after the three-year anniversary of the Acquisition Transactions, if Fox Paine agrees to vest the greatest percentage of the performance-based co-investment rights as would result in Fox Paine achieving a 26.0% internal rate of return on its initial investment in Holdings.

For a description of the co-investment rights, see “— Co-Investment Rights to Purchase Additional Shares of Holdings Common Stock.”


	•	Registration Rights. Following the three-year anniversary of the Acquisition Transactions:


	•	If Holdings proposes to register for sale under the Securities Act of 1933, as amended, any of its equity securities, Holdings will use reasonable best efforts to include in the proposed offering shares of Holdings common stock requested by its stockholders.

	•	Fox Paine will have the right, on six separate occasions, to require Holdings to register under the Securities Act, shares of its common stock held by Fox Paine, so long as the aggregate value of the offering is equal to or greater than $50.0 million (or in the case of an initial public offering, $100.0 million).

	•	Mr. Romo will have the right, on four separate occasions, to require Holdings to register under the Securities Act, shares of its common stock held by Mr. Romo and his affiliates, so long as the aggregate value of the offering is equal to or greater than $50.0 million (or in the case of an initial public offering, $100.0 million).


	•	Stockholder Tag-Along Rights. Subject to exceptions for sales to affiliates, registered public offerings and the sale initiatives and Fox Paine drag sale described above, on or after the three-year anniversary of the Acquisition Transactions, if Fox Paine sells a majority of the shares of Holdings common stock that it owns on the date of the Acquisition Transactions, Holdings’ other stockholders will generally have the right to participate in sales of their shares of Holdings common stock on a pro rata basis.

	•	Management Put and Call Rights.


	•	The stockholders’ agreement entitles Holdings to repurchase shares of Holdings common stock from its employees upon the termination of employment.

	•	The stockholders’ agreement entitles Holdings’ employees to require Holdings to repurchase their shares of Holdings common stock and options to purchase shares of Holdings common stock upon the termination of employment.


	•	Subject to specified trigger events, Mr. Romo will generally have the right to nominate a majority of the members of the Board of Directors of Holdings for a period of up to five years following the Acquisition Transactions.

	•	So long as Mr. Romo has the right to nominate a majority of the members of the Board of Directors of Holdings, Fox Paine will have the right to nominate a number of Directors equal to the number nominated by Mr. Romo minus one.


	•	Holdings fails to satisfy pre-defined financial targets over specified periods of time;


	•	Mr. Romo is no longer employed as Holdings’ Chief Executive Officer or is no longer performing for Holdings the customary functions of a chief executive officer; or

	•	the members of Holdings’ Board of Directors selected by Mr. Romo or Holdings’ senior executive management fail to enforce in good faith Holdings’ corporate policies and procedures,

Fox Paine will thereafter have the right to appoint a majority of Holdings’ Board of Directors; provided that Mr. Romo will continue to have the right to nominate at least three members of the Board of Directors of Holdings.


	•	Fox Paine Veto Rights. At any time that Fox Paine does not have the right to nominate a majority of the Board of Directors of Holdings, Fox Paine will possess veto rights with respect to a significant number of corporate governance matters and business operations matters.

	•	Romo Veto Rights. During any time that Fox Paine controls a majority of the Board of Directors of Holdings, Mr. Romo will possess veto rights with respect to fundamental corporate governance matters. In addition, if Fox Paine controls a majority of the Board of Directors of Holdings and Holdings has not failed to satisfy pre-defined financial targets, Mr. Romo will possess veto rights with respect to additional corporate governance matters.

Indemnification Agreement. Fox Paine, the ARG Trust, Mexican SPC, Desarrollo Empresarial Regiomontano, S.A. de C.V., an affiliate of Mr. Romo, Emprima, Park, Savia, Mr. Romo and Seminis Acquisition entered into an indemnification agreement relating to the transactions contemplated by the contribution agreement and the stock purchase agreement. Pursuant to the terms of the indemnification agreement, Mr. Romo and certain of his affiliates have agreed to indemnify Fox Paine for breaches of their representations, warranties and covenants contained in the contribution agreement and stock purchase agreement and for any liabilities relating to restructuring transactions involving Savia and certain of its affiliates. Fox Paine has agreed to indemnify Seminis Acquisition and its affiliates for breaches of Fox Paine’s representations, warranties and covenants contained in the stock purchase agreement.

In connection with the Transactions, Seminis Merger has entered into a management agreement that will become an obligation of Holdings following the Acquisition Transactions with Fox Paine & Company, LLC and Mexican SPC. Pursuant to the management agreement, following the Acquisition Transactions, each of Fox Paine and Mexican SPC will receive an annual advisory services fee of 0.5% of the revenue of Holdings during the prior fiscal year, in addition to reimbursement of reasonable, out-of-pocket expenses incurred in connection with the provision of advisory services. Fiscal year 2002 net sales of Holdings were approximately $452.6 million.

Upon consummation of the Transactions, we paid Fox Paine a transaction fee equal to $15.0 million plus interest at a rate of 10.0% per annum from July 1, 2002, less $3.0 million. We also reimbursed Fox Paine’s expenses incurred in connection with the Acquisition Transactions. In addition, we reimbursed Savia for certain expenses incurred in connection with the Acquisition Transactions.

In connection with the Transactions, Seminis Merger has entered into employment agreements that became obligations of Holdings following the Acquisition Transactions with certain of our executive officers as described under “Management — Employment Agreements.”

Certain Relationships with Savia and Affiliates. Pursuant to an agreement between Seminis Vegetable and Bionova, a biotechnology and fresh produce company and a majority-owned subsidiary of Savia, we paid Bionova for access to the results of Bionova’s biotechnology research. This agreement was terminated during the third quarter of fiscal year 2002. Research and development expenses included $662,000, $2,255,000 and $2,500,000 in fiscal year 2002, 2001 and 2000, respectively, in biotechnology research fees.

In August 2002, we also entered into two non-exclusive sales/royalty agreements with Bionova Produce, Inc., an affiliate of Savia, that provide Bionova Produce with the non-exclusive license to grow certain

seedless watermelon and specialty sweet peppers varieties. The agreement for the watermelon varieties is for a period of three years, with an option to renew. The agreement for the sweet pepper varieties is for a period of two years, with an option to renew. The agreements provide us with payments for the sale of the seeds and royalties from Bionova’s fresh produce sales.

In fiscal year 2002 and 2001, we had sales of $793,000 and $944,000, respectively, to Agrobionova, an affiliate of Savia, and a receivable of $355,000 and $617,000 at September 30, 2002 and 2001, respectively. We also had sales of $296,000 to Bionova in fiscal year 2001 and corresponding receivables of $296,000 at September 30, 2001. We had no sales to Bionova in fiscal year 2002 and no receivable from Bionova as of September 30, 2002.

In August 2002, we entered into a patent and technology license agreement with DNA Plant Technology Corporation (DNAP), an affiliate of Savia, that provides us with a license for the non-exclusive production of DNAP products worldwide and an exclusive license to commercially distribute certain DNAP products in Europe and Asia. The agreement is for a term of seven years, subject to a three year renewal provision. Seminis has the option to terminate the agreement at any time after the second year. We are required to pay a royalty advance of $2.0 million to be applied against our obligation to pay an amount per each one thousand seeds sold or a percentage of net revenue from seed sales for each quarter, and a percentage of the net royalty that we collect for the DNAP products (excluding seeds) for each quarter during the term of the agreement. The royalty advance is secured by the patent rights to the germplasm in the DNAP products in the event that we terminate the contract and DNAP is unable to repay a portion of the royalty advance.

Holdings issued 10,830 shares of its Class C preferred stock to Savia for a total purchase price of $108.3 million. These shares accrue dividends quarterly at a rate of 10.0% per year. In October and November 2000, Holdings received an additional $31.9 million and $14.0 million, respectively, of capital contributions from Savia. Holdings agreed to pay dividends on these contributions at the same rate as the Holdings Class C preferred stock. Through July 1, 2002, there were $25.0 million of accrued and unpaid dividends on the outstanding shares of Holdings Class C preferred stock and additional capital contributions. Holdings has also paid dividends of $12.7 million in the form of additional shares of Holdings Class C preferred stock, which are classified as additional paid in capital. On October 1, 2002, the Board of Directors of Holdings approved the conversion of the Savia additional capital contribution and the associated paid in kind dividends that totaled $46.7 million into 4,670 shares of Holdings Class C preferred stock. Concurrently, the Board also adopted a resolution authorizing and directing an increase in the number of shares designated as Holdings Class C Redeemable PIK Preferred Stock from 14,400 shares to 16,688 shares. In connection with the Acquisition Transactions, Savia will exchange all of the outstanding shares of Holdings Class C preferred stock (Savia owns 100% of the outstanding shares of Holdings Class C preferred stock) and all obligations with respect to those shares for 37,669,480 shares of Holdings Class A common stock and a cash payment to Savia equal to $15.0 million plus interest at a rate of 10.0% per annum from July 1, 2002, less $3.0 million (Savia will ultimately receive proceeds of approximately $266.2 million in respect of the 37,669,480 shares of Holdings Class A common stock that it receives in the exchange and an additional 40,615,619 shares of Holdings Class B common stock that it currently owns).

Certain Loans to Management. In June 2000, Seminis Vegetable sold residential real property, originally acquired on December 12, 1999 for $862,000, to Mr. Bruno Ferrari, our current Executive Senior Vice President, World Wide Commercial, for a loan at the appraised value of $875,000. The loan is evidenced by a promissory note signed by Mr. Ferrari and secured by a deed of trust for the purchase price. The note has an interest rate of 7.75% per annum and is payable in ten equal annual installments of principal, including interest accrued thereon, commencing December 15, 2000, and annually thereafter. Under a separate agreement, we pay a bonus to Mr. Ferrari that covers the interest on the loan. Since the beginning of fiscal year 2003, the largest aggregate amount of indebtedness outstanding was $700,000 and the amount outstanding as of June 27, 2003 was $612,500. All installments that are due have been paid in full.

In April 2000, we loaned $100,000 to Mr. Gaspar Alvarez, our current Vice President, World Wide Corporate Comptroller, to assist in the purchase of a family residence. The loan is evidenced by a promissory note signed by Mr. Alvarez and is secured by a second deed of trust. The note has an interest rate of 7.75%

per annum and is payable in ten equal annual installments of principal, including interest accrued thereon, commencing December 15, 2000, and annually thereafter. Since the beginning of fiscal year 2003, the largest aggregate amount of indebtedness outstanding was $79,083 and the amount outstanding as of June 27, 2003 was $69,083. All installments that are due have been paid in full.

In October 2001, we loaned $69,734 to Mr. Salvador Alanis, our current Vice President, Strategic Support, to assist in the purchase of a family residence. The loan is evidenced by a promissory note signed by Mr. Alanis and is secured by a second deed of trust. The note has an interest rate of 7.75% per annum and is payable in ten equal annual installments of principal, plus interest accrued thereon, commencing December 15, 2002, and annually thereafter. Since the beginning of fiscal year 2003, the largest aggregate amount of indebtedness outstanding was $69,734 and the amount outstanding as of June 27, 2003 was $62,760. All installments that are due have been paid in full.

In December 2001, we loaned $135,136 to Mr. Enrique Osorio, our Vice President, Treasury and Investor Relations, to assist in the purchase of a family residence. The loan is evidenced by a promissory note signed by Mr. Osorio and is secured by a second deed of trust. The note has an interest rate of 7.75% per annum and is payable in ten equal annual installments of principal, plus interest accrued thereon, commencing December 15, 2002, and annually thereafter. Since the beginning of fiscal year 2003, the largest aggregate amount of indebtedness outstanding was $135,136 and the amount outstanding as of June 27, 2003 was $121,622. All installments that are due have been paid in full.

The ownership of Holdings common stock (expressed in number of shares and percentage terms) following the Acquisition Transactions, before and after giving effect to the full exercise of the co-investment rights, the exercise of outstanding options and warrants to purchase shares of Holdings common stock, the issuance of restricted stock units convertible into shares of Holdings common stock and the issuance of the PIK Preferred Stock, is set forth in the table below.


(1)	Mexican SPC has co-investment rights to acquire up to 31,013,127 shares (approximately 29.5% of the fully diluted shares of Holdings common stock). Mexican SPC has immediately exercisable co-investment rights to acquire 14,453,036 shares (approximately 13.8% of the fully diluted shares of Holdings common stock), and rights to acquire an additional 16,560,091 shares (approximately 15.8% of the fully diluted shares of Holdings common stock), that will become exercisable only if Fox Paine achieves a 26.0% internal rate of return on its initial investment in Holdings.

(2)	Fox Paine has co-investment rights to acquire up to 1,651,129 shares (approximately 1.57% of the fully diluted shares of Holdings common stock).

Concurrently with the offering of the original notes, we entered into a new senior secured credit facility with Citicorp North America, Inc., CIBC World Markets Corp., Rabobank International, Harris Trust and Savings Bank and Citigroup Global Markets Inc. The information relating to the new senior secured credit facility is qualified in its entirety by reference to the complete text of the documents to be entered in connection therewith. The following is a description of the general terms of the new senior secured credit facility.

Structure. Our new senior secured credit facility consists of a $60.0 million revolving loan ($ of which is currently drawn) and a $190.0 million term loan.

We used the proceeds of the term loan to finance the Transactions. See “Description of the Acquisition Transactions.”

Guarantees and Security. Our obligations under our new senior secured credit facility are guaranteed by Holdings and each of our current and future domestic subsidiaries. The borrowings under our new senior secured credit facility are secured by a perfected lien on, and pledge of, all of our capital stock and intercompany notes and, subject to exceptions relating to foreign subsidiaries, all capital stock held by Holdings or any of our subsidiaries, and a perfected lien on, and security interest in, all of the tangible and intangible properties and assets, including intellectual property, of Holdings and its domestic subsidiaries (other than any property or assets with respect to which the lenders decline to obtain a lien or security interest).

Availability. The availability of our new senior secured credit facility is subject to various conditions precedent typical of bank loans including, among other things, the absence of any material adverse change in our business.

Interest Rate. In general, borrowings under our new senior secured credit facility bear interest based, at our option, on either a London inter-bank offered rate (LIBOR) or an alternate rate, in each case plus an applicable rate. The alternate base rate is equal to the highest of Citicorp North America, Inc.’s base rate, the three month certificate of deposit rate plus 0.5% and the federal funds effective rate plus 0.5%. The applicable rate for the term loan is 2.25% per annum in the case of an alternate rate loan and 3.25% per annum in the case of a LIBOR loan. The applicable rate for the revolving credit facility is initially 2.0% per annum in the case of alternate rate loans and initially 3.0% per annum in the case of LIBOR loans, subject, in each case, to adjustments based on our leverage ratio at the time. Subsequent to an event of default under our new senior secured credit facility, borrowings will bear interest at 2.0% over the rate of interest otherwise applicable and the LIBOR rate will not be available.

Maturity. The $190.0 million term loan matures six years from the closing date of the Acquisition Transactions and amortizes in quarterly installments equal to 1.0% per annum for the first five and 3/4 years. The first quarterly installment is due on December 31, 2003, and the balance of the term loan will be due in a single bullet payment at the end of year six. The $60.0 million senior revolving credit facility matures five years from the closing date of the Acquisition Transactions and does not amortize. The term loan facility and the revolving credit facility may be voluntarily prepaid in whole or in part without premium or penalty.

Mandatory Prepayments. Based upon formulas stated in the new senior secured credit facility and subject to certain exceptions, all or a portion of the proceeds from the issuance of equity interests or equity rights, debt issuances, asset sales, proceeds from insurance or condemnation recoveries and excess cash flow must be used to pay down the outstanding balance under the term loan facility of our new senior secured credit facility.

Fees. We will be required to pay the lenders under the revolving credit facility of our new senior secured credit facility a quarterly commitment fee based on the average daily unused portion of the revolving credit

Covenants. Our new senior credit facility contains financial covenants that require us to satisfy, on a consolidated basis, specified quarterly financial tests, including:


	•	minimum interest expense coverage ratio; and

	•	maximum total leverage ratio.

Our new senior secured credit facility also contains a number of other customary covenants that, among other things, restrict our ability and the ability of our subsidiaries to:


	•	incur additional debt;

	•	create liens on assets;

	•	engage in mergers or consolidations;

	•	make investments, loans, advances, guarantees or acquisitions;

	•	sell, transfer, lease or dispose of assets;

	•	enter into sale and leaseback transactions and operating leases;

	•	pay dividends, purchase shares of our outstanding common stock or make other restricted payments;

	•	engage in transactions with affiliates;

	•	enter into agreements that restrict the creation of liens or payment of dividends;

	•	prepay subordinated debt, subject to specified exceptions, or amend subordinated debt instruments or other corporate documents;

	•	designate any indebtedness as designated senior indebtedness;

	•	make capital expenditures; and

	•	otherwise undertake various corporate activities.

Events of Default. Our new senior secured credit facility contains customary events of default, including defaults based on:


	•	nonpayment of principal, interest or fees when due, subject, in the case of interest or fees, to specified grace periods;

	•	material inaccuracy of representations and warranties;

	•	breach of specified covenants;

	•	certain other defaults under the credit documents;

	•	cross-defaults to other debt;

	•	material judgments;

	•	Employee Retirement Income Security Act of 1974 matters;

	•	changes in control;

	•	events of bankruptcy and insolvency;

	•	dissolution and liquidation;

	•	invalidity of any guaranty or security interest; and

	•	certain occurrences relating to subordinated debt.

We have a mortgage on our global headquarters in Oxnard, California. In March 2000, Holdings issued a promissory note, secured by the Oxnard facility, to General Electric Capital Business Asset Funding Corporation. The variable rate of interest on the note is based on LIBOR plus 2.5%, adjustable as of the last business day of each month. As of June 27, 2003, the outstanding principal amount of this note was $11.9 million. In connection with the Acquisition Transactions, we repaid this mortgage, with the proceeds of a new mortgage on our Oxnard facility. The principal amount of this new mortgage is $17.0 million. The promissory note was issued by Seminis Vegetable to Wells Fargo Bank, National Association, and was secured by the Oxnard facility. The interest on the note is based on LIBOR plus 2%, adjustable on the first business day of each month. Simultaneously with entering into the new mortgage, Seminis Vegetable Seeds Inc. entered into an interest rate swap agreement with Wells Fargo to swap the floating interest rate paid on the mortgage for a fixed one. If prevailing interest rates exceed a certain fixed percentage, Wells Fargo pays a defined amount to Seminis, and if the fixed percentage exceeds prevailing interest rates, Seminis pays Wells Fargo a defined amount. The loan amortizes in scheduled annual payments of approximately $24,000 to $36,000, with a payment of the final remaining balance due on October 1, 2010. The new mortgage contains a number of customary covenants that, among other things, require us to provide copies of our Forms 10-Q and 10-K to Wells Fargo Bank on a quarterly and annual basis, respectively, maintain all licenses, permits and governmental approvals, rights, privileges and franchises reasonably necessary for the conduct of our business, maintain and keep in force insurance customarily carried by others in our line of business, maintain in good repair the facilities necessary to our business and promptly notify Wells Fargo Bank of any litigation pending against us with a claim in excess of $1.0 million.

Our South Korean subsidiary, Seminis Korea, has borrowings of approximately $ million, as of , under numerous loan facilities maturing from the end of fiscal year 2003 to 2012 and carrying interest rates of between 4.0% and 5.9%.

We will continue to have other subsidiary indebtedness outstanding. As of , we had outstanding indebtedness of approximately € million, € million and $ million under borrowings by Seminis Vegetable Seeds Iberica, S.A., Seminis Vegetable Seeds France, S.a.r.l. and Baxter Seed Company. The loans carry interest rates of between 0% and 13.0% and mature between 2006 and 2012.

Holdings issued shares of PIK Preferred Stock with an aggregate liquidation preference of $50.0 million concurrently with the offering of the original notes.

Liquidation Preference. Holdings issued shares of PIK Preferred Stock with an aggregate liquidation preference of $50.0 million.

Dividends. Holders of shares of the PIK Preferred Stock are entitled to receive paid in kind dividends (or in the sole discretion of Holdings, cash dividends) at the annual rate of 12.0% of liquidation preference per share, compounded quarterly, provided that after the occurrence of, and during the continuance of, specified events of default, holders of shares of the PIK Preferred Stock are entitled to receive paid in kind dividends (or in the sole discretion of Holdings, cash dividends) at the annual rate of 14.0% of liquidation preference per share, compounded quarterly.

Mandatory Redemption. The shares of PIK Preferred Stock are mandatorily redeemable on October 1, 2014.

Optional Redemption. In general, the PIK Preferred Stock is not redeemable at the option of Holdings prior to October 1, 2006. For the period from October 1, 2006 to and including October 1, 2008, the PIK Preferred Stock is redeemable by Holdings at a per share redemption price payable in cash equal to 102% of the liquidation preference, plus an amount in cash equal to accrued and unpaid dividends. After October 1, 2008, the shares of PIK Preferred Stock are redeemable by Holdings at a per share redemption price payable in cash equal to 100% of the liquidation preference, plus an amount in cash equal to accrued and unpaid dividends.

Change of Control Redemption. At any time prior to October 1, 2014, following a change of control or an initial public offering of Holdings, Holdings has the right to redeem the shares of PIK Preferred Stock at a per share redemption price payable in cash equal to 102% of the liquidation preference, plus an amount in cash equal to accrued and unpaid dividends. “Change of Control” is defined in a manner similar to the comparable term used in the indenture for the notes.

Change of Control Put Right. Unless the holders of a majority of the then outstanding shares of PIK Preferred Stock otherwise consent, Holdings may not approve a change of control unless, in connection with the change of control, Holdings is permitted to make and consummate a change of control offer. Upon the occurrence of a change of control, holders of shares of PIK Preferred Stock would have the right to require Holdings to repurchase their shares of PIK Preferred Stock at a purchase price equal to 101% of the liquidation preference, plus an amount in cash equal to accrued and unpaid dividends.


	•	certain events of bankruptcy relating to Holdings (or the principal borrower of the material indebtedness of Seminis); and

	•	the acceleration and satisfaction of certain material indebtedness of Seminis,

holders of shares of the PIK Preferred Stock have the right to require Holdings to repurchase their shares of PIK Preferred Stock at a purchase price equal to 102% (if the applicable event occurred prior to October 1, 2008) or 100% (if the applicable event occurred following October 1, 2008) of the liquidation preference, plus an amount in cash equal to accrued and unpaid dividends, provided, however, that Holdings’ repurchase obligation would be subject to the prior satisfaction of any and all obligations pursuant to Seminis’ senior secured credit facility (and any replacement financing) and the notes (and any replacement financing).

Negative Covenants. The PIK Preferred Stock contains restrictions substantially similar to the restrictions set forth under “Description of the Notes — Transactions with Affiliates,” “Description of the Notes —

Certain Covenants — Restricted Payments,” and “Description of the Notes — Certain Covenants — Incurrence of Indebtedness and Issuance of Preferred Stock;” provided, however, that the debt incurrence restriction governing the PIK Preferred Stock is based upon a ratio of consolidated cash flow to fixed charges instead of a ratio of indebtedness to consolidated cash flow.

Warrants. In connection with the sale of PIK Preferred Stock, Holdings issued warrants to purchase shares of Holdings common stock representing approximately 3.7% of the shares of Holdings common stock on a fully diluted basis.

The ability of Holdings to pay cash dividends on the PIK Preferred Stock or to redeem the PIK Preferred Stock is dependent on the ability of Seminis Vegetable to dividend funds to Holdings, which ability is limited by the terms of our new senior secured facility and the notes.

You can find the definitions of certain terms used in this description under the subheading “Certain Definitions.” In this description, the word “Company” refers only to Seminis Vegetable Seeds, Inc. and not to any of its subsidiaries and the word “Holdings” refers only to Seminis, Inc., the parent of the Company, and not to any of its subsidiaries.

The Company will issue the notes under the indenture, dated September 29, 2003, among itself, the Guarantors and Wells Fargo Bank, National Association as trustee, in a transaction registered pursuant to the requirements of the Securities Act. See “Notice to Investors.” The terms of the notes include those stated in the indenture and those made part of the indenture by reference to the Trust Indenture Act of 1939, as amended. A copy of the indenture will be available upon request to the Company and has been filed as an exhibit to the registration statement on form S-4 of which this prospectus is a part.

The following description is a summary of the material provisions of the indenture. It does not restate the indenture in its entirety. We urge you to read the indenture because it, and not this description, defines your rights as Holders of the notes. Copies of the indenture are available as set forth under “— Additional Information.” Certain defined terms used in this description but not defined under “— Certain Definitions” have the meanings assigned to them in the indenture.

The registered Holder of a note will be treated as the owner of it for all purposes. Only registered Holders will have rights under the indenture.

The Company may issue notes with an unlimited maximum aggregate principal amount under the indenture, of which $190.0 million will be issued in this offering. The Company may issue additional notes from time to time after this offering. Any offering of additional notes is subject to the covenant described under “— Certain Covenants — Incurrence of Indebtedness and Issuance of Preferred Stock.” The notes and any additional notes subsequently issued under the indenture will be treated as a single class for all purposes under the indenture, including, without limitation, waivers, amendments, redemptions and offers to purchase. The Company will issue notes in denominations of $1,000 and integral multiples of $1,000.

Interest on the notes will accrue at the rate of 10 1/4% per annum and will be payable semi-annually in arrears on April 1 and October 1. The Company will make each interest payment to the Holders of record on the immediately preceding March 15 and September 15. Interest on the notes will accrue from the date of original issuance or, if interest has already been paid, from the date it was most recently paid. Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months. The notes will mature on October 1, 2013.


	•	senior subordinated, unsecured obligations of the Company;

	•	guaranteed on a senior subordinated, unsecured basis by the Guarantors;

	•	equal in right of payment (“pari passu”) with each other and with all other existing and future senior subordinated Indebtedness of the Company and the Guarantors; and

	•	senior to all existing and future Subordinated Indebtedness of the Company and the Guarantors which by its terms is expressly subordinated in right of payment to the notes.

The payment of all Obligations on or relating to the notes is subordinated in right of payment to the prior payment in full in cash or Cash Equivalents of all Obligations on Senior Debt of the Company (including all Obligations with respect to the Credit Agreement). Notwithstanding the foregoing, payments and distributions made relating to the notes pursuant to the trust described under “— Legal Defeasance and Covenant Defeasance” shall not be so subordinated in right of payment so long as the payments into the trust were made

The holders of Senior Debt will be entitled to receive payment in full in cash or Cash Equivalents of all Obligations due in respect of Senior Debt (including interest accruing after the commencement of any bankruptcy or other like proceeding at the rate specified in the applicable Senior Debt whether or not such interest is an allowed claim in any such proceeding) before the Holders of notes will be entitled to receive any payment or distribution of any kind or character with respect to any Obligations on, or relating to, the notes (other than a payment or distribution of Permitted Junior Securities) in the event of any distribution to creditors of the Company:


	(1) in a total or partial liquidation, dissolution or winding up of the Company;

	(2) in a bankruptcy, reorganization, insolvency, receivership or similar proceeding relating to the Company or its property;

	(3) in an assignment for the benefit of creditors; or

	(4) in any marshalling of the Company’s assets and liabilities.

The Company also may not make any payment or distribution of any kind or character with respect to any Obligations on, or relating to, the notes or acquire any notes for cash or property or otherwise (other than Permitted Junior Securities) if:


	(1) a payment default on any Senior Debt occurs and is continuing; or

	(2) any other default occurs and is continuing on Designated Senior Debt that permits holders of the Designated Senior Debt to accelerate its maturity and the Trustee receives a notice of such default (a “Payment Blockage Notice”) from the Representative of any Designated Senior Debt.

Payments on and distributions with respect to any Obligations on, or with respect to, the notes may and shall be resumed:


	(1) in the case of a payment default, upon the date on which such default is cured or waived; and

	(2) in case of a nonpayment default, the earliest of (x) the date on which all nonpayment defaults are cured or waived (so long as no other event of default exists), (y) 180 days after the date on which the applicable Payment Blockage Notice is received, or (z) the date on which the Trustee receives notice from the Representative for such Designated Senior Debt rescinding the Payment Blockage Notice, unless the maturity of any Designated Senior Debt has been accelerated and such acceleration has not been waived. For the purpose of this clause (2), discharge or payment in full of Designated Senior Debt in accordance with its terms shall be the equivalent of a cure of an underlying default.

No new Payment Blockage Notice may be delivered unless and until 360 days have elapsed since the effectiveness of the immediately prior Payment Blockage Notice.

No nonpayment default that existed or was continuing on the date of delivery of any Payment Blockage Notice to the Trustee shall be, or be made, the basis for a subsequent Payment Blockage Notice unless such default shall have been cured or waived for a period of not less than 180 consecutive days (it being acknowledged that any subsequent action or any breach of any financial covenants for a period commencing after the date of delivery of such initial Payment Blockage Notice that in either case would give rise to a default pursuant to any provisions under which a default previously existed or was continuing shall constitute a new default for this purpose).

The Company must promptly notify holders of Designated Senior Debt if payment of the notes is accelerated because of an Event of Default.

As a result of the subordination provisions described above, in the event of a bankruptcy, liquidation or reorganization of the Company, Holders of the notes may recover less ratably than creditors of the Company

As of June 27, 2003, after giving pro forma effect to the Transactions, the notes would have been subordinated to $238.1 million of Senior Debt, excluding unused commitments made by lenders under our new senior secured credit facility. On the same date, as so adjusted, we would also have had an additional $52.9 million available to be borrowed under our new senior secured credit facility. As of the date of this prospectus, we have approximately $ million of unused capacity under the revolving credit portion of this credit facility.

The original notes are and the new notes will be guaranteed by Holdings and all of the Company’s current wholly-owned Domestic Subsidiaries and future Domestic Subsidiaries (the “Subsidiary Guarantors”) that guarantee Indebtedness under the Credit Agreement. Since Holdings is a holding company with no significant operations, the guarantee by Holdings provides little, if any, additional credit support for the notes, and investors should not rely on the guarantee by Holdings in evaluating an investment in the notes.


	•	will be a general senior subordinated unsecured obligation of the Guarantors;

	•	will be senior in right of payment with any future Subordinated Indebtedness of that Guarantor which by its terms is expressly subordinated in right of payment to the notes; and

	•	will be equal in right of payment to all existing and future senior subordinated unsecured Indebtedness of that Guarantor not so expressly subordinated.

A substantial portion of the Company’s subsidiaries will not guarantee the notes. In the event of a bankruptcy, liquidation or reorganization of any of these non-Guarantor Subsidiaries, the non-Guarantor Subsidiaries will pay the holders of their debt and their trade creditors before they will be able to distribute any of their assets to us. As of and for the 12 months ended June 27, 2003, the non-Guarantor Subsidiaries of the Company represented in the aggregate approximately 61.1% of our consolidated net sales, 78.1% of our consolidated net income, 58.1% of our consolidated total assets and 40.9% of our consolidated EBITDA.

The operations of the Company are conducted through its Subsidiaries and, therefore, the Company depends on the cash flow of its Subsidiaries to meet its obligations, including its obligations under the notes. The notes will be effectively subordinated in right of payment to all Indebtedness and other liabilities and commitments (including trade payables and lease obligations) of the Company’s non-Guarantor Subsidiaries. Any right of the Company to receive assets of any of its non-Guarantor Subsidiaries upon the non-Guarantor Subsidiary’s liquidation or reorganization (and the consequent right of the Holders of the notes to participate in those assets) will be effectively subordinated to the claims of that Subsidiary’s creditors, except to the extent that the Company is itself recognized as a creditor of the Subsidiary, in which case the claims of the Company would still be subordinate in right of payment to any security in the assets of the Subsidiary and any indebtedness of the Subsidiary senior to that held by the Company. As of June 27, 2003, the liabilities of the Company’s non-Guarantor Subsidiaries on a consolidated basis were approximately $135.2 million and, after giving effect to the offering, the liabilities of the Company’s non-Guarantor Subsidiaries on a consolidated basis would have been approximately $91.9 million.

As of the Issue Date, all of the Company’s Subsidiaries became “Restricted Subsidiaries.” However, under the circumstances described under “— Certain Covenants — Designation of Restricted and Unrestricted Subsidiaries,” the Company will be permitted to designate certain of its Subsidiaries as “Unrestricted Subsidiaries.” The Company’s Unrestricted Subsidiaries will not be subject to the restrictive covenants in the indenture. The Company’s Unrestricted Subsidiaries will not guarantee the notes.

These Guarantees will be joint and several obligations of the Guarantors. The obligations of each Guarantor under its Guarantee will be limited as necessary to prevent that Guarantee from constituting a

A Subsidiary Guarantor may not sell or otherwise dispose of all or substantially all of its assets to, or consolidate with or merge with or into (whether or not such Guarantor is the surviving Person), another Person, other than the Company or another Guarantor, unless:


	(1) except in the event such Subsidiary Guarantor is the surviving Person, immediately after giving effect to that transaction, no Default or Event of Default exists; and

	(2) either:


	(a) the Person acquiring the property in any such sale or disposition or the Person formed by or surviving any such consolidation or merger assumes all the obligations of that Guarantor under the indenture, its Subsidiary Guarantee and the registration rights agreement pursuant to a supplemental indenture satisfactory to the trustee; or

	(b) the Net Proceeds of such sale or other disposition are applied in accordance with the applicable provisions of the indenture.

The Subsidiary Guarantee of a Subsidiary Guarantor will be automatically released:


	(1) in connection with any sale or other disposition of all or substantially all of the assets of that Subsidiary Guarantor (including by way of merger or consolidation) to a Person that is not (either before or after giving effect to such transaction) a Restricted Subsidiary of the Company, if the sale or other disposition complies with the provisions described under “— Repurchase at the Option of Holders — Asset Sales;”

	(2) in connection with any sale of all of the Capital Stock of a Subsidiary Guarantor to a Person that is not (either before or after giving effect to such transaction) a Restricted Subsidiary of the Company, if the sale complies with the provisions described under “— Repurchase at the Option of Holders — Asset Sales;”

	(3) if the Company designates any Restricted Subsidiary that is a Subsidiary Guarantor as an Unrestricted Subsidiary in accordance with the applicable provisions of the indenture;

	(4) in connection with any Legal Defeasance or Covenant Defeasance of the notes in accordance with the terms of the indenture; or

	(5) if the applicable Guarantor no longer guarantees Indebtedness under the Credit Agreement. See “— Repurchase at the Option of Holders — Asset Sales.”

If a Holder has given wire transfer instructions to the Company, the Company will pay all principal, interest and premium and Additional Interest, if any, on that Holder’s notes in accordance with those instructions. All other payments on notes will be made at the office or agency of the paying agent and registrar within the City and State of New York unless the Company elects to make interest payments by check mailed to the Holders at their address set forth in the register of Holders.

The trustee will initially act as paying agent and registrar. The Company may change the paying agent or registrar without prior notice to the Holders of the notes, and the Company or any of its Subsidiaries may act as paying agent or registrar.

A Holder may transfer or exchange notes in accordance with the indenture. The registrar and the trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents in

At any time prior to October 1, 2006, the Company may on any one or more occasions redeem up to 35% of the aggregate principal amount of all notes issued under the indenture at a redemption price of 110.250% of the principal amount, plus accrued and unpaid interest and Additional Interest, if any, to the redemption date, with the net cash proceeds of one or more Equity Offerings; provided that:


	(1) at least 65% of the aggregate principal amount of notes issued under the indenture remains outstanding immediately after the occurrence of such redemption (excluding notes held by the Company and its Subsidiaries); and

	(2) the redemption occurs within 120 days of the date of the closing of such Equity Offering.

Any such notice may be given prior to the completion of the related Equity Offering, and any such redemption or notice may, at the Company’s discretion, be subject to the satisfaction of one or more conditions precedent, including but not limited to the completion of the related Equity Offering.

The notes will be redeemable, in whole or in part, at the Company’s option at any time or from time to time, prior to October 1, 2008, at the Make-Whole Price (as defined below), in accordance with the provisions of the indenture.


	(1) 100% of the principal amount of the notes to be redeemed; and

	(2) as determined by an Independent Investment Banker, the sum of the present values of (A) the redemption price of the notes at October 1, 2008 (as set forth below) and (B) the remaining scheduled payments of interest from the redemption date to October 1, 2008 (not including any portion of such payments of interest accrued as of the redemption date) discounted back to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate (as defined below) plus 50 basis points,

plus, in the case of both (1) and (2), accrued and unpaid interest and Additional Interest, if any, to the redemption date. Unless the Company defaults in payment of the Make-Whole Price, on and after the applicable redemption date, interest will cease to accrue on the notes to be redeemed.

“Comparable Treasury Issue” means the U.S. Treasury security selected by an Independent Investment Banker as having a maturity most nearly equal to the period from the redemption date to October 1, 2008, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities; provided if such period is less than one year, then the U.S. Treasury security having a maturity of one year shall be used.

“Comparable Treasury Price” means, with respect to any redemption date, (1) the average of four Reference Treasury Dealer Quotations for such redemption date, after excluding the highest and lowest of such Reference Treasury Dealer Quotations, or (2) if the trustee obtains fewer than four such Reference Treasury Dealer Quotations, the average of all such Reference Treasury Dealer Quotations.

“Independent Investment Banker” means Salomon Smith Barney Inc. or CIBC World Markets Corp. and their respective successors, at the Company’s option, or, if such firms or the successors, if any, to such firms, as the case may be, are unwilling or unable to select the Comparable Treasury Issue, an independent investment banking institution of national standing appointed by the Company.

“Reference Treasury Dealer” means Salomon Smith Barney Inc. or CIBC World Markets Corp., at the Company’s option, and three additional primary U.S. government securities dealers in New York City (each a “Primary Treasury Dealer”) selected by the Company, and their respective successors (provided, however,

“Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer and any redemption date, the average, as determined by the trustee, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the trustee by such Reference Treasury Dealer at 5:00 p.m., New York City time, on the third business day preceding such redemption date.

“Treasury Rate” means, with respect to any redemption date, (1) the yield, under the heading which represents the average for the immediately preceding week, appearing in the most recently published statistical release designated “H.15(519)” or any successor publication that is published weekly by the Board of Governors of the Federal Reserve System and that establishes yields on actively traded U.S. Treasury securities adjusted to constant maturity under the caption “Treasury Constant Maturities,” for the maturity corresponding to the Comparable Treasury Issue (if no maturity is within three months before or after the stated maturity, yields for the two published maturities most closely corresponding to the Comparable Treasury Issue shall be determined, and the Treasury Rate shall be interpolated or extrapolated from such yields on a straight-line basis, rounding to the nearest month) or (2) if such release (or any successor release) is not published during the week preceding the calculation date or does not contain such yields, the rate per annum equal to the semi-annual equivalent yield to maturity of the Comparable Treasury Issue, calculated using a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such redemption date. The Treasury Rate shall be calculated on the third business day preceding the redemption date.

The notice of redemption with respect to the foregoing redemption need not set forth the Make-Whole Price but only the manner of calculation thereof. The Company will notify the trustee of the Make-Whole Price with respect to any redemption promptly after the calculation, and the trustee shall not be responsible for such calculation.

Except pursuant to the preceding paragraphs, the notes will not be redeemable at the Company’s option prior to October 1, 2008.

After October 1, 2008, the Company may redeem all or a part of the notes upon not less than 30 nor more than 60 days’ notice, at the redemption prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest and Additional Interest, if any, on the notes redeemed, to the applicable redemption date, if redeemed during the twelve-month period beginning on the years indicated below:

The Company is not required to make mandatory redemption or sinking fund payments with respect to the notes. However, under certain circumstances, the Company may be required to offer to purchase notes as described under “— Repurchase at the Option of the Holders — Change of Control” and “— Asset Sales.” The Company may at any time or from time to time purchase the notes in the open market or otherwise.

If a Change of Control occurs, each Holder of notes will have the right to require the Company to offer to repurchase (a “Change of Control Offer”) all or any part (equal to $1,000 or an integral multiple of $1,000)

of that Holder’s notes pursuant to a Change of Control Offer on the terms set forth in the indenture. In the Change of Control Offer, the Company will offer a Change of Control Payment in cash equal to 101% of the aggregate principal amount of notes repurchased plus accrued and unpaid interest and Additional Interest, if any, on the notes repurchased, to the date of purchase (the “Change of Control Payment Date”). Within 30 days following the date on which the Company becomes aware that a Change of Control has occurred, the Company will mail a notice to each Holder describing the transaction or transactions that constitute the Change of Control and offering to repurchase notes on the Change of Control Payment Date specified in the notice, which date will be no earlier than 30 days and no later than 60 days from the date such notice is mailed, pursuant to the procedures required by the indenture and described in such notice.

The Company will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent those laws and regulations are applicable in connection with the repurchase of the notes as a result of a Change of Control. To the extent that the provisions of any securities laws or regulations conflict with the Change of Control provisions of the indenture, the Company will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under the Change of Control provisions of the indenture by virtue of such conflict.


	(1) accept for payment all notes or portions of notes properly tendered pursuant to the Change of Control Offer;

	(2) deposit with the paying agent an amount equal to the Change of Control Payment in respect of all notes or portions of notes properly tendered; and

	(3) deliver or cause to be delivered to the trustee the notes properly accepted together with an officers’ certificate stating the aggregate principal amount of notes or portions of notes being purchased by the Company.

The paying agent will promptly mail to each Holder of notes properly tendered the Change of Control Payment for such notes, and the trustee will promptly authenticate and mail (or cause to be transferred by book entry) to each Holder a new note equal in principal amount to any unpurchased portion of the notes surrendered, if any; provided that each new note will be in a principal amount of $1,000 or an integral multiple of $1,000.

The Company will publicly announce the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date.

The provisions described above that require the Company to make a Change of Control Offer following a Change of Control will be applicable whether or not any other provisions of the indenture are applicable. Except as described above with respect to a Change of Control, the indenture will not contain provisions that permit the Holders of the notes to require that the Company repurchase or redeem the notes in the event of a takeover, recapitalization or similar transaction.

The Company will not be required to make a Change of Control Offer upon a Change of Control if (1) a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in the indenture applicable to a Change of Control Offer made by the Company and purchases all notes properly tendered and not withdrawn under the Change of Control Offer or (2) a notice of redemption pursuant to the indenture as described under “— Optional Redemption” is delivered, unless and until there is a default in payment of the applicable redemption price.

A Change of Control Offer may be made in advance of a Change of Control, and conditioned upon the occurrence of such Change of Control, if a definitive agreement is in place for the Change of Control at the time of making the Change of Control Offer. Notes repurchased by the Company pursuant to a Change of Control Offer will have the status of notes issued but not outstanding or will be retired and canceled, at the option of the Company. Notes purchased by a third party pursuant to the preceding paragraph will have the status of notes issued and outstanding.

The definition of Change of Control includes a phrase relating to the direct or indirect sale, lease, transfer, conveyance or other disposition of “all or substantially all” of the properties or assets of the Company and its Subsidiaries taken as a whole. Although there is a limited body of case law interpreting the phrase “substantially all,” there is no precise established definition of the phrase under applicable law. Accordingly, the ability of a Holder of notes to require the Company to repurchase its notes as a result of a sale, lease, transfer, conveyance or other disposition of less than all of the assets of the Company and its Subsidiaries taken as a whole to another Person or group may be uncertain.

The Credit Agreement will prohibit the Company from repurchasing any notes pursuant to a Change of Control Offer prior to repayment in full of the Senior Debt under the Credit Agreement. Accordingly, if a Change of Control were to occur, there can be no assurance that the Company will have sufficient assets to satisfy its obligations under the Credit Agreement or, thereafter, to purchase any of the notes. Any additional credit agreements or other agreements relating to Senior Debt to which the Company becomes a party may contain similar restrictions and provisions. Moreover, the Credit Agreement will contain a “change of control” provision that is similar to the provision in the indenture relating to a Change of Control, and the occurrence of such a “change of control” would constitute a default under the Credit Agreement.

In the event that a Change of Control occurs at a time when the Company is prohibited from repurchasing the notes by the Credit Agreement or any other agreement governing Senior Debt of the Company, the Company will seek either to repay such Senior Debt or to obtain the requisite consents of the holders of such Senior Debt to commence a Change of Control Offer to repurchase the notes in accordance with the terms of the indenture. If the Company is unable to obtain such consents and/or repay all such Senior Debt, the Company would remain prohibited from repurchasing any notes and, as a result, the Company could not commence a Change of Control Offer to repurchase the notes within 30 days of the occurrence of the Change of Control, which would constitute an Event of Default under the indenture. The Company’s failure to commence such a Change of Control Offer would also constitute an event of default under the Credit Agreement which would permit the lenders thereunder to accelerate all of the Company’s Senior Debt under the Credit Agreement. If a Change of Control were to occur, there can be no assurance that the Company would have sufficient assets to first satisfy its obligations under the Credit Agreement or other agreements relating to Senior Debt, if accelerated, and then to repurchase all of the notes that might be delivered by Holders seeking to accept a Change of Control Offer. See “Risk Factors — We may not be able to satisfy our obligations under our new senior secured credit facility, the notes or other indebtedness upon a change of control.”

The Company will not, and will not permit any of its Restricted Subsidiaries to, consummate an Asset Sale unless:


	(1) the Company (or the Restricted Subsidiary, as the case may be) receives consideration (including by way of relief from, or by any other Person assuming responsibility for, any liabilities, contingent or otherwise) at the time of the Asset Sale at least equal to the Fair Market Value of the assets or Equity Interests issued or sold or otherwise disposed of;

	(2) the Fair Market Value is determined by the Company and evidenced by an officers’ certificate delivered to the trustee, provided, however, that with respect to any Asset Sale or series of related Asset Sales involving aggregate consideration in excess of $15.0 million, such determination shall be made by the Company’s Board of Directors and evidenced by a resolution of the Company’s Board of Directors; and

	(3) at least 75% (50% in the case of Specified Assets) of the consideration received in the Asset Sale by the Company or such Restricted Subsidiary is in the form of cash or Cash Equivalents. For purposes of this provision, each of the following will be deemed to be cash:


	(a) any liabilities, as shown on the Company’s most recent consolidated balance sheet or in the notes thereto, of the Company or any Restricted Subsidiary (other than contingent liabilities and


	liabilities that are by their terms subordinated to the notes or any Subsidiary Guarantee) that are assumed by the transferee of any such assets pursuant to an agreement that releases the Company or such Restricted Subsidiary from further liability;

	(b) any securities, notes or other obligations received by the Company or any such Restricted Subsidiary from such transferee that are converted by the Company or such Restricted Subsidiary into cash within 90 days of their receipt, to the extent of the cash received in that conversion;

	(c) any Capital Stock or assets of the kind referred to in clause (3) or (4) of the next paragraph of this covenant; and

	(d) accounts receivable of a business, retained by the Company or one of its Restricted Subsidiaries following the sale of such business; provided that (x) such accounts receivable are not past due more than 60 days and (y) do not have a payment date greater than 90 days from the date of the invoice creating such accounts receivable.

Within 360 days after the receipt of Net Proceeds from an Asset Sale, the Company or any Restricted Subsidiary may apply those Net Proceeds at its option:


	(1) to repay outstanding Senior Debt of the Company or any Restricted Subsidiary of the Company (including Indebtedness or other obligations under any Credit Facility) and, thereafter, repay any other outstanding Indebtedness of the Company or any Restricted Subsidiary of the Company, and, in each case, if the Indebtedness repaid is revolving credit Indebtedness, to correspondingly reduce commitments with respect thereto;

	(2) to make one or more capital expenditures to be used in a Permitted Business;

	(3) to acquire all or substantially all of the assets of, or a majority of the Capital Stock of, another Permitted Business; and

	(4) to acquire other assets that are used or useful in a Permitted Business.

Pending the final application of any Net Proceeds, the Company or any Restricted Subsidiary of the Company may temporarily reduce revolving credit borrowings or otherwise invest the Net Proceeds in any manner that is not prohibited by the indenture.

Any Net Proceeds from Asset Sales that are not applied or invested as provided in the preceding paragraph will constitute “Excess Proceeds.” When the aggregate amount of Excess Proceeds exceeds $10.0 million, the Company will make an offer (an “Asset Sale Offer”) to all Holders of notes and all holders of other Indebtedness that is pari passu with the notes containing provisions similar to those set forth in the indenture with respect to offers to purchase or redeem with the proceeds of sales of assets to purchase the maximum principal amount of notes and such other pari passu Indebtedness that may be purchased out of the Excess Proceeds. The offer price in any Asset Sale Offer will be equal to 100% of principal amount plus accrued and unpaid interest and Additional Interest, if any, to the date of purchase, and will be payable in cash. If any Excess Proceeds remain after consummation of an Asset Sale Offer, the Company may use those Excess Proceeds for any purpose not otherwise prohibited by the indenture. If the aggregate principal amount of notes and other pari passu Indebtedness tendered into such Asset Sale Offer exceeds the amount of Excess Proceeds, the trustee will select the notes and such other pari passu Indebtedness to be purchased on a pro rata basis in proportion to the respective principal amounts (or accreted values, as applicable) of the notes and such pari passu Indebtedness then outstanding. Upon completion of each Asset Sale Offer, the amount of Excess Proceeds will be reset to zero.

The Company will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent those laws and regulations are applicable in connection with each repurchase of notes pursuant to an Asset Sale Offer. To the extent that the provisions of any securities laws or regulations conflict with the Asset Sale provisions of the indenture, the Company will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under the Asset Sale provisions of the indenture by virtue of such conflict.

Certain agreements governing the Company’s other Indebtedness, including the Credit Agreement, contain prohibitions of certain events, including events that would constitute a Change of Control or an Asset Sale. In addition, the exercise by the Holders of notes of their right to require the Company to repurchase the notes upon a Change of Control or an Asset Sale could cause a default under these other agreements, even if the Change of Control or Asset Sale itself does not, due to the financial effect of such repurchases on the Company. Finally, the Company’s ability to pay cash to the Holders of notes upon a repurchase may be limited by the Company’s then existing financial resources. See “Risk Factors — We may not be able to satisfy our obligations under our new senior secured credit facility, the notes or other indebtedness upon a change of control.”

If less than all of the notes are to be redeemed at any time, the trustee will select notes for redemption as follows:


	(1) if the notes are listed on any national securities exchange, in compliance with the requirements of the principal national securities exchange on which the notes are listed; or

	(2) if the notes are not listed on any national securities exchange, on a pro rata basis, by lot or by such method as the trustee deems fair and appropriate.

No notes of $1,000 or less can be redeemed in part. Notices of redemption will be mailed by first class mail at least 30 but not more than 60 days before the redemption date to each Holder of notes to be redeemed at its registered address, except that redemption notices may be mailed more than 60 days prior to a redemption date if the notice is issued in connection with a defeasance of the notes or a satisfaction and discharge of the indenture. Any redemption and notice thereof pursuant to the indenture may in the Company’s discretion, be subject to the satisfaction of one or more conditions precedent.

If any note is to be redeemed in part only, the notice of redemption that relates to that note will state the portion of the principal amount of that note that is to be redeemed. A new note in principal amount equal to the unredeemed portion of the original note will be issued in the name of the Holder of notes upon cancellation of the original note. Notes called for redemption become due on the date fixed for redemption. On and after the redemption date, interest ceases to accrue on notes or portions of them called for redemption.

The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly:


	(1) declare or pay any dividend or make any other payment or distribution on account of the Company’s Equity Interests (including, without limitation, any payment in connection with any merger or consolidation involving the Company) or to the direct or indirect holders of the Company’s Equity Interests in their capacity as such (other than dividends or distributions payable in Equity Interests (other than Disqualified Stock) of the Company);

	(2) purchase, redeem or otherwise acquire or retire for value (including, without limitation, in connection with any merger or consolidation involving the Company) any Equity Interests of the Company or any direct or indirect parent of the Company;

	(3) make any payment on or with respect to, or purchase, redeem, defease or otherwise acquire or retire for value any Indebtedness that is subordinated to the notes or the Subsidiary Guarantees (excluding any intercompany Indebtedness between the Company and any of its Restricted Subsidiaries), except a payment of interest or principal at the Stated Maturity thereof; or


	(4) make any Restricted Investment (all such payments and other actions set forth in these clauses (1) through (4) above being collectively referred to as “Restricted Payments”),


	(1) no Default or Event of Default has occurred and is continuing or would occur as a consequence of such Restricted Payment;

	(2) the Company would, at the time of such Restricted Payment and after giving pro forma effect thereto as if such Restricted Payment had been made at the beginning of the applicable four-quarter period, have been permitted to incur at least $1.00 of additional Indebtedness pursuant to the Leverage Ratio test set forth in the first paragraph of the covenant described under “— Incurrence of Indebtedness and Issuance of Preferred Stock;” and

	(3) such Restricted Payment, together with the aggregate amount of all other Restricted Payments made by the Company and its Restricted Subsidiaries after the Issue Date (excluding Restricted Payments permitted by clauses (2), (3), (4), (8), (9) and (10)(y) of the next succeeding paragraph), is less than the sum, without duplication, of:


	(a) 50% of the Consolidated Net Income of the Company for the period (taken as one accounting period) from the beginning of the first fiscal quarter commencing after the Issue Date to the end of the Company’s most recently ended fiscal quarter for which internal financial statements are available at the time of such Restricted Payment (or, if such Consolidated Net Income for such period is a deficit, less 100% of such deficit); plus

	(b) 100% of the aggregate net cash proceeds and the Fair Market Value of Marketable Securities and other assets used or useful in a Permitted Business or the Capital Stock of a Person engaged in a Permitted Business received by the Company since the Issue Date as a contribution to its common equity capital or from or in respect of the issue or sale of Equity Interests of the Company (other than Disqualified Stock) or the issue or sale of Equity Interests of Holdings (to the extent the proceeds thereof are contributed to the Company by Holdings) or from the issue or sale of convertible or exchangeable Disqualified Stock or convertible or exchangeable debt securities of the Company that have been converted into or exchanged for such Equity Interests (including such cash proceeds received in connection with any such conversion or exchange) (other than Equity Interests (or Disqualified Stock or debt securities) sold to a Subsidiary of the Company); plus

	(c) the net reduction in any Restricted Investment that was made after the Issue Date resulting from cash payments of interest on Indebtedness, dividends, repayments of loans or advances, in each case to the Company or any of its Restricted Subsidiaries; plus

	(d) to the extent that any Unrestricted Subsidiary of the Company is redesignated as a Restricted Subsidiary of the Company after the Issue Date, the lesser of (i) the Fair Market Value of the Company’s Investment in such Subsidiary as of the date of such redesignation or (ii) such Fair Market Value as of the date on which such Subsidiary was originally designated as an Unrestricted Subsidiary; plus

	(e) the net cash proceeds received by the Company or any of its Restricted Subsidiaries from the sale of Restricted Investments that were made after the Issue Date, provided that the sum of all amounts added pursuant to this clause (e) shall not exceed the aggregate initial amount of all such Restricted Investments that have been made since the Issue Date; plus

	(f) the amount by which Indebtedness of the Company or any of its Restricted Subsidiaries is reduced on the Company’s consolidated balance sheet upon the conversion or exchange after the Issue Date of any such Indebtedness incurred after the Issue Date into or for Capital Stock (other than Disqualified Stock); plus

	(g) the initial amount of any Restricted Investment that was made after the Issue Date in a Person that becomes a Restricted Subsidiary.

So long as no Default has occurred and is continuing or would be caused thereby (except as to clauses (1), (2), (4), (10), (11) and (12), where such restriction does not apply), the preceding provisions will not prohibit:


	(1) the payment of any dividend or the consummation of any irrevocable redemption of notes within 60 days after the date of declaration of the dividend or giving of any such redemption notice, as the case may be, if at the date of declaration or notice the dividend or redemption payment would have complied with the provisions of the indenture;

	(2) the redemption, repurchase, retirement, defeasance or other acquisition of any Subordinated Indebtedness of the Company or any Guarantor or of any Equity Interests of the Company in exchange for, or out of the net cash proceeds of the substantially concurrent sale (other than to a Restricted Subsidiary of the Company) of, or capital contribution relating to, Equity Interests of the Company (other than Disqualified Stock) or the issue or sale of Equity Interests of Holdings (to the extent the proceeds thereof are contributed to the Company by Holdings); provided that the amount of any such net cash proceeds that are utilized for any such redemption, repurchase, retirement, defeasance or other acquisition will be excluded from clause (3)(b) of the preceding paragraph;

	(3) the defeasance, redemption, repurchase or other acquisition of Subordinated Indebtedness of the Company or any Guarantor with the net cash proceeds from an incurrence of Permitted Refinancing Indebtedness;

	(4) (x) the repurchase of Equity Interests of the Company or Holdings deemed to occur upon the cashless exercise of stock options, warrants, convertible or exchangeable securities or other similar Equity Interests if such Equity Interests represent a portion of the exercise or exchange price of such options, warrants, convertible or exchangeable securities or other similar Equity Interests; and (y) payments to fund the purchase by the Company or Holdings of fractional shares arising out of stock dividends, splits or combinations or business combinations;

	(5) the repurchase of any subordinated Indebtedness or Disqualified Stock of the Company or any securities of Holdings (including, with respect to the repurchase of securities of Holdings, by means of a dividend or distribution of cash by the Company to Holdings) at a purchase price not greater than 101% of the principal amount of such subordinated Indebtedness or Disqualified Stock of the Company or such securities of Holdings in the event of a Change of Control pursuant to a provision similar to the “Repurchase at the Option of Holders — Change of Control” covenant; provided that prior to consummating any such repurchase, the Company has made the Change of Control Offer required by the indenture and has repurchased all notes validly tendered for payment in connection with such Change of Control Offer;

	(6) the repurchase of any subordinated Indebtedness or Disqualified Stock of the Company or any securities of Holdings (including, with respect to the repurchase of securities of Holdings, by means of a dividend or distribution of cash by the Company to Holdings) at a purchase price not greater than 100% of the principal amount of such subordinated Indebtedness or Disqualified Stock of the Company or such securities of Holdings in the event of an Asset Sale pursuant to a provision similar to the “Repurchase at the Option of Holders — Asset Sales” covenant; provided that prior to consummating any such repurchase, the Company has made the Asset Sale Offer required by the indenture and has repurchased all notes validly tendered for payment in connection with such Asset Sale Offer;

	(7) payments to fund the repurchase, redemption or other acquisition or retirement for value of any Equity Interests of Holdings or the Company held by any current or former director, officer, employee or consultant of Holdings, the Company or any Restricted Subsidiary of the Company (a) upon the death, disability or termination of employment of such director, officer, employee or consultant or to the extent required pursuant to employee benefit plans, employment agreements or consulting agreements or (b) pursuant to any equity subscription agreement, stock option agreement, stockholders’ agreement or similar agreement; provided that the aggregate price paid for all such repurchased, redeemed, acquired or retired Equity Interests may not in any fiscal year exceed the lesser of (i) the sum of (x) $2.0 million and (y) the aggregate amount of Restricted Payments permitted (but not made) pursuant to this clause (7) in prior fiscal years following the Issue Date and (ii) $5.0 million; provided, further, that such


	amount in any fiscal year may be increased by an amount not to exceed (A) the cash proceeds from the issue or sale of Equity Interests of the Company (or from the issue or sale of Equity Interests of Holdings to the extent the proceeds thereof are contributed to the Company by Holdings) to any such directors, officers, employees or consultants that occurs after the Issue Date (to the extent that the cash proceeds from the sale of such Equity Interests have not otherwise been applied to the payment of Restricted Payments by virtue of clause (3)(b) of the preceding paragraph) plus (B) the cash proceeds of key man life insurance policies received by the Company and its Restricted Subsidiaries after the Issue Date;

	(8) the declaration and payment of dividends to holders of any class or series of Disqualified Stock of the Company issued on or after the Issue Date in accordance with the Leverage Ratio test described under “— Incurrence of Indebtedness and Issuance of Preferred Stock;”

	(9) payments to fund any payments that are made to consummate the Acquisition Transactions pursuant to or contemplated by the Acquisition Transactions Agreements (including, without limitation, payments made in connection with the exercise of appraisal rights under Section 262 of the Delaware General Corporation law);

	(10) the making of distributions, loans or advances in an amount not to exceed (x) $1.0 million in any fiscal year to pay the ordinary operating costs of Holdings (including, without limitation, directors’ fees, indemnification obligations, professional fees and expenses) plus (y) any other amounts of corporate overhead expenses payable by Holdings which were deducted in calculating Consolidated Net Income of the Company in accordance with the indenture;

	(11) the payment by the Company of cash dividends to Holdings in the amounts and at the times of any payment by Holdings in respect of taxes, provided that (x) the amount of cash dividends paid pursuant to this clause (11) to enable Holdings to pay federal, state, local and foreign income taxes at any time shall not exceed the lesser of (A) the amount of such federal, state and foreign income taxes owing by Holdings at such time for the respective period and (B) the amount of such federal, state, local and foreign income taxes that would be owing by the Company and its Subsidiaries on a consolidated basis for such period if determined without regard to Holdings’ ownership of the Company and (y) any refunds shall promptly be returned by Holdings to the Company; and

	(12) additional Restricted Payments not to exceed $15.0 million in the aggregate.

The amount of all Restricted Payments (other than cash) will be the Fair Market Value on the date of the Restricted Payment of the asset(s) or securities proposed to be transferred or issued by the Company or such Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment. The Fair Market Value of any assets or securities that are required to be valued by this covenant will be determined by the Board of Directors of the Company, whose resolution with respect thereto will be delivered to the trustee.

The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “incur”) any Indebtedness (including Acquired Debt), and the Company will not issue any Disqualified Stock and will not permit any of its Restricted Subsidiaries to issue any shares of preferred stock; provided, however, that the Company may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock, and the Restricted Subsidiaries of the Company (other than Seminis Korea or any of its Restricted Subsidiaries) may incur Indebtedness (including Acquired Debt) or issue preferred stock, if the Leverage Ratio for the Company’s most recently ended four full fiscal quarters for which internal financial statements are available (the “Reference Period”) immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or preferred stock is issued would not have exceeded the Leverage Test in effect on and as of the last day of the applicable Reference Period, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such four-quarter period.

Notwithstanding any other provision of this covenant, in no event will the non-Guarantor Restricted Subsidiaries (other than Seminis Korea or any of its Restricted Subsidiaries) be permitted to incur Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding in excess of the greater of (x) $30.0 million (or the U.S. dollar equivalent thereof) and (y) the sum of 15% of the book value of the accounts receivable and inventory of all of the non-Guarantor Restricted Subsidiaries (other than Seminis Korea or any of its Restricted Subsidiaries) as set forth at the end of the most recently completed fiscal period for which internal balance sheets of such non-Guarantor Restricted Subsidiaries are available.

The first paragraph of this covenant will not prohibit the incurrence or existence of any of the following items of Indebtedness (collectively, “Permitted Debt”):


	(1) the incurrence by the Company and its Subsidiary Guarantors of Indebtedness and letters of credit under Credit Facilities in an aggregate principal amount at any one time outstanding under this clause (1) (with letters of credit being deemed to have a principal amount equal to the aggregate maximum amount then available to be drawn thereunder) not to exceed $260.0 million (or the U.S. dollar equivalent thereof) (provided that such aggregate amount shall be reduced to the extent of any reduction or elimination of any commitment under any Credit Facility resulting from or relating to the formation of any Receivables Subsidiary or the consummation of any Qualified Receivables Transaction), less the aggregate amount of all Net Proceeds of Asset Sales applied by the Company or any of its Restricted Subsidiaries since the Issue Date to repay any term Indebtedness under a Credit Facility incurred under this clause (1) or to repay any revolving credit Indebtedness under a Credit Facility incurred under this clause (1) and effect a corresponding commitment reduction thereunder pursuant to the covenant described above under “— Repurchase at the Option of Holders — Asset Sales;”

	(2) the incurrence by the Company and its Restricted Subsidiaries of Existing Indebtedness;

	(3) the incurrence by the Company and the Subsidiary Guarantors of Indebtedness represented by the notes and the related Subsidiary Guarantees to be issued on the Issue Date and the Exchange Notes and the related Subsidiary Guarantees to be issued pursuant to the registration rights agreement;

	(4) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to refund, refinance or replace, Indebtedness (other than intercompany Indebtedness) that was permitted by the indenture to be incurred under the first paragraph of this covenant or clauses (2), (3) or (4) of this paragraph;

	(5) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries; provided, however, that:


	(a) if the Company or any Subsidiary Guarantor is the obligor on such Indebtedness (other than any Indebtedness between or among the Company and any Subsidiary Guarantor), such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations with respect to the notes, in the case of the Company, or the Subsidiary Guarantee, in the case of a Guarantor; and

	(b) (i) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary of the Company and (ii) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary of the Company; will be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (5);


	(6) the incurrence by the Company of Hedging Obligations that are incurred in the ordinary course of business and not for speculative purposes;


	(7) the guarantee by the Company or any Subsidiary Guarantor of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be incurred by another provision of this covenant;

	(8) the accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, and the payment of dividends on Disqualified Stock or preferred stock in the form of additional shares of the same class of Disqualified Stock or preferred stock, as the case may be, will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock or preferred stock for purposes of this covenant;

	(9) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness under (or constituting reimbursement obligations with respect to) letters of credit, surety, performance or appeal bonds, completion guarantees, escrow agreements or similar instruments issued in connection with the ordinary course of business, including letters of credit or similar instruments in respect of self-insurance and workers’ compensation obligations;

	(10) Indebtedness of the Company or of any of its Restricted Subsidiaries arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business, provided that such Indebtedness is satisfied within five business days;

	(11) the incurrence of the South Korean Loans in an aggregate principal amount (or accreted value, as applicable) at any time outstanding not to exceed $30.0 million (or the U.S. dollar equivalent thereof);

	(12) Indebtedness arising from agreements of the Company or any of its Restricted Subsidiaries providing for indemnification, adjustment of purchase price or similar obligations, in each case, incurred or assumed in connection with the disposition of any business, assets or a Subsidiary of the Company;

	(13) the issuance by any of the Company’s Restricted Subsidiaries to the Company or any of its Restricted Subsidiaries of shares of preferred stock, provided that (a) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the Company and (b) any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company will be deemed, in each case, to constitute an issuance of preferred stock by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (13);

	(14) the incurrence by a Receivables Subsidiary of Indebtedness in a Qualified Receivables Transaction that is without recourse (other than pursuant to representations, warranties, covenants and indemnities entered into in the ordinary course of business in connection with a Qualified Receivables Transaction) to the Company or to any Restricted Subsidiary of the Company or their assets (other than such Receivables Subsidiary and its assets), and is not guaranteed by any such Person; provided that any outstanding Indebtedness incurred under this clause (14) shall reduce (for so long as, and to the extent that, the Indebtedness referred to in this clause (14) remains outstanding) the aggregate amount permitted to be incurred under clause (1) above to the extent set forth therein;

	(15) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation or improvement of property, plant or equipment used in the business of the Company or such Restricted Subsidiary (whether through the direct purchase of assets or the Equity Interests of any Person owning such assets), in an aggregate principal amount, not to exceed $12.5 million at any time outstanding; and


	(16) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding not to exceed $25.0 million.

Notwithstanding any other provision of this covenant, the maximum amount of Indebtedness that the Company or any Restricted Subsidiary may incur pursuant to this covenant shall not be deemed to be exceeded as a result of fluctuations in the exchange rates of currencies. For purposes of determining compliance with this “Incurrence of Indebtedness and Issuance of Preferred Stock” covenant, (1) the outstanding principal amount of any particular Indebtedness shall be counted only once and any obligation arising under any guarantee, Lien, letter of credit or similar instrument supporting such Indebtedness shall be disregarded, and (2) in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (16) above, or is entitled to be incurred pursuant to the first paragraph of this covenant, the Company in its sole discretion will be permitted to divide and classify such item of Indebtedness on the date of its incurrence, or later classify, reclassify or divide all or a portion of such item of Indebtedness, in any manner that complies with this covenant; provided that Indebtedness incurred under the Credit Agreement on the Issue Date will be deemed to have been incurred on such date in reliance on clause (1) of Permitted Debt described above and may not be reclassified.

The Company shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly, incur or suffer to exist, any Lien (other than Permitted Liens or Liens securing Senior Debt or Guarantor Senior Debt) upon any of its property (including Capital Stock of a Restricted Subsidiary), whether owned at the Issue Date or thereafter acquired, or any interest therein or any income or profits therefrom, unless:


	(a) if such Lien secures senior subordinated Indebtedness, the notes or the applicable Subsidiary Guarantee are secured on an equal and ratable basis with such Debt; and

	(b) if such Lien secures Subordinated Indebtedness, such Lien shall be subordinated to a Lien securing the notes or the applicable Subsidiary Guarantee in the same property as that securing such Lien to the same extent as such subordinated obligations are subordinated to the notes and the Subsidiary Guarantees,

in each case until such time as the applicable Indebtedness is no longer secured by such Lien.

The Company will not, and will not permit any Restricted Subsidiary of the Company that is a Subsidiary Guarantor to, incur or suffer to exist Indebtedness that is senior in right of payment to the notes or such Subsidiary Guarantor’s Subsidiary Guarantee, as the case may be, and subordinate in right of payment to any other Indebtedness of the Company or such Subsidiary Guarantor, as the case may be.

The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create or permit to exist or become effective any consensual encumbrance or restriction on the ability of any Restricted Subsidiary to:


	(1) pay dividends or make any other distributions on its Capital Stock to the Company or any of its Restricted Subsidiaries, or with respect to any other interest or participation in, or measured by, its profits, or pay any indebtedness owed to the Company or any of its Restricted Subsidiaries, provided that the priority of any preferred stock in receiving dividends or liquidating distributions prior to dividends or liquidating distributions being paid on common stock shall not be deemed to be a restriction on the ability to make distributions on Capital Stock;

	(2) make loans or advances to the Company or any of its Restricted Subsidiaries; or

	(3) transfer any of its properties or assets to the Company or any of its Restricted Subsidiaries.

However, the preceding restrictions will not apply to encumbrances or restrictions existing under or by reason of:


	(1) agreements or instruments (including agreements or instruments governing Existing Indebtedness and Credit Facilities) as in effect on the Issue Date and any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings thereof, provided that the amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings are no more restrictive, taken as a whole, with respect to such dividend and other payment restrictions than those contained in such agreements or instruments as in effect on the Issue Date;

	(2) Credit Facilities, provided that the encumbrances or restrictions contained therein are no more restrictive, taken as a whole, with respect to such dividend and other payment restrictions than those contained in the Credit Agreement as in effect on the Issue Date;

	(3) the indenture, the notes and the Subsidiary Guarantees;

	(4) applicable law, rule, regulation or order;

	(5) Hedging Obligations entered into from time to time;

	(6) any instrument of a Person acquired or assumed by the Company or any of its Restricted Subsidiaries as in effect at the time of such acquisition or assumption (except to the extent such instrument was created, executed, incurred or assumed, as the case may be, in connection with or in contemplation of such acquisition) and any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings of any such instrument, provided that the amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings are no more restrictive, taken as a whole, with respect to such dividend and other payment restrictions than those contained in such instrument at the time of such acquisition or assumption, which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person, or the property or assets of the Person, so acquired, provided, further, that, in the case of Indebtedness, such Indebtedness was permitted by the terms of the indenture to be incurred;

	(7) customary non-assignment provisions in leases, licenses or other contracts and agreements entered into in the ordinary course of business;

	(8) purchase money obligations or Capital Lease Obligations for property acquired in the ordinary course of business that impose restrictions on that property of the nature described in clause (3) of the preceding paragraph;

	(9) any agreement for the sale or other disposition of the assets or Capital Stock of a Restricted Subsidiary that restricts distributions by that Restricted Subsidiary pending its sale or other disposition;

	(10) Permitted Refinancing Indebtedness, provided that the restrictions contained in the agreements governing such Permitted Refinancing Indebtedness are no more restrictive, taken as a whole, with respect to such dividend and other payment restrictions, than those contained in the agreements governing the Indebtedness being refinanced;

	(11) Liens securing Indebtedness otherwise permitted to be incurred under the provisions of the covenant described under “— Liens” that limit the right of the debtor to dispose of the assets subject to such Liens;

	(12) provisions with respect to the disposition or distribution of assets or property in joint venture agreements, asset sale agreements, sale leaseback agreements, stock sale agreements and other similar agreements entered into in the ordinary course of business;

	(13) restrictions on cash or other deposits or net worth imposed by customers under contracts entered into in the ordinary course of business;


	(14) Indebtedness or other contractual requirements of a Receivables Subsidiary governing a Qualified Receivables Transaction, provided that such restrictions apply only to such Receivables Subsidiary;

	(15) any Permitted Investment;

	(16) any mortgage financing or mortgage refinancing that imposes restrictions on the real property securing such Indebtedness; and

	(17) any agreement governing Indebtedness permitted to be incurred pursuant to the covenant described under “— Incurrence of Indebtedness and Issuance of Preferred Stock;” provided that (a) the provisions relating to such Indebtedness, taken as a whole, are not materially more restrictive as determined by the Board of Directors of the Company than the provisions contained in the Credit Agreement or in the indenture as in effect on the Issue Date and (b) such encumbrance or restriction is not expected to make the Company unable to make principal or interest payments on the notes, as determined in good faith by the Board of Directors of the Company.

The Company may not, directly or indirectly: (1) consolidate or merge with or into another Person (whether or not the Company is the surviving corporation); or (2) sell, assign, transfer, convey or otherwise dispose of all or substantially all of the properties or assets of the Company and its Restricted Subsidiaries taken as a whole, in one or more related transactions, to another Person; unless:


	(1) either: (a) the Company is the surviving corporation; or (b) the Person formed by or surviving any such consolidation or merger (if other than the Company) or to which such sale, assignment, transfer, conveyance or other disposition has been made is a corporation organized or existing under the laws of the United States, any state of the United States or the District of Columbia;

	(2) the Person formed by or surviving any such consolidation or merger (if other than the Company) or the Person to which such sale, assignment, transfer, conveyance or other disposition has been made assumes all the obligations of the Company under the notes, the indenture and the registration rights agreement pursuant to agreements reasonably satisfactory to the trustee;

	(3) immediately after such transaction, no Default or Event of Default exists; and

	(4) the Company or the Person formed by or surviving any such consolidation or merger (if other than the Company), or to which such sale, assignment, transfer, conveyance or other disposition has been made will, on the date of such transaction after giving pro forma effect thereto and any related financing transactions as if the same had occurred at the beginning of the applicable four-quarter period, be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Leverage Ratio test set forth in the first paragraph of the covenant described under “— Incurrence of Indebtedness and Issuance of Preferred Stock.”

In addition, the Company may not, directly or indirectly, lease all or substantially all of its properties or assets, in one or more related transactions, to any other Person. This “Merger, Consolidation or Sale of Assets” covenant will not apply to the merger or consolidation of any Restricted Subsidiary of the Company with or into the Company or any Guarantor or to a sale, assignment, transfer, conveyance or other disposition of assets between or among the Company and any of the Guarantors.

Notwithstanding the foregoing clauses (3) and (4), the Company may merge with an Affiliate incorporated solely for the purpose of reincorporating the Company in any state of the United States or the District of Columbia.

The Company will not, and will not permit any of its Restricted Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets


	(1) the Affiliate Transaction is on terms that are no less favorable to the Company or the relevant Restricted Subsidiary than those that would have been obtained in a comparable transaction by the Company or such Restricted Subsidiary with an unrelated Person and if in the good faith judgment of the Board of Directors of the Company no comparable transaction is available with which to compare such Affiliate Transaction, and such Affiliate Transaction is otherwise fair to the Company or the relevant Restricted Subsidiary from a financial point of view; and

	(2) the Company delivers to the trustee:


	(a) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $5.0 million, a resolution of the Board of Directors of the Company set forth in an officers’ certificate certifying that such Affiliate Transaction complies with this covenant and that such Affiliate Transaction has been approved by a majority of the disinterested members of the Board of Directors of the Company; and

	(b) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $15.0 million or with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $5.0 million as to which there are no disinterested members of the Board of Directors of the Company or as to which the Company or such Restricted Subsidiary otherwise chooses, an opinion as to the fairness to the Company of such Affiliate Transaction from a financial point of view issued by an accounting, appraisal or investment banking firm of national standing.

The following items will not be deemed to be Affiliate Transactions and, therefore, will not be subject to the provisions of the prior paragraph:


	(1) any employment agreement or employee benefit plan (including any incentive plan) or similar arrangement entered into by the Company or any of its Restricted Subsidiaries in the ordinary course of business with officers, directors or employees of Holdings, the Company or any such Restricted Subsidiary, including any issuance of securities (including stock options or similar rights), or other payments, awards or grants in cash, securities (including stock options or similar rights) or otherwise pursuant to, or the funding of, employment arrangements, stock options and stock ownership plans approved by the Board of Directors of Holdings or the Company, as the case may be, in the ordinary course of business;

	(2) transactions between or among the Company and/or its Restricted Subsidiaries;

	(3) transactions with a Person that is an Affiliate of the Company solely because the Company owns an Equity Interest in, or controls, such Person;

	(4) payment of reasonable compensation, fees (including director’s fees and benefits), and indemnities and insurance provided for by Holdings’ or the Company’s charter, by-laws and written agreements, to employees, consultants, stockholders, officers and directors of Holdings, the Company or any of its Restricted Subsidiaries in the ordinary course of business;

	(5) issuances and sales of Equity Interests (other than Disqualified Stock) to, or receipt of capital contributions from, Affiliates of the Company;

	(6) Restricted Payments and Permitted Investments that are permitted by the provisions of the indenture described under “— Restricted Payments;”

	(7) any transaction pursuant to any agreement in existence on the Issue Date, as such agreement is in effect on the Issue Date;

	(8) transactions (i) between the Company or any of its Restricted Subsidiaries and a Receivables Subsidiary and (ii) between a Receivables Subsidiary and any Person in which such Receivables


	Subsidiary has an Investment that in the case of (i) or (ii) above, in the good faith determination of the Board of Directors of the Company, are necessary or advisable to effect the Qualified Receivables Transaction;

	(9) payments, advances or loans to employees, officers and directors of Holdings, the Company, and its Restricted Subsidiaries that are approved by a majority of the Board of Directors of the Company or Holdings, as the case may be, in good faith in an aggregate amount not to exceed $3.0 million in an aggregate principal amount at any time outstanding;

	(10) provision of administrative or management services by Holdings, the Company or its Subsidiaries or any of their directors, officers or employees to any of their respective Subsidiaries in the ordinary course of business;

	(11) pledges of Equity Interests of Unrestricted Subsidiaries for the benefit of lenders of Unrestricted Subsidiaries;

	(12) consummation of the Acquisition Transactions, including but not limited to execution and consummation of the Acquisition Transactions Agreements and the payment of all fees, expenses, consideration and other amounts paid or to be paid in connection therewith;

	(13) payments by the Company or any of its Restricted Subsidiaries to Fox Paine and its Affiliates for any financial advisory, financing, underwriting or other placement services or in respect of other investment banking activities, including, without limitation, in connection with acquisitions or divestitures, which payments are approved by a majority of the members of the Board of Directors of the Company, and payments pursuant to the Management Fee Letter and any amendment or supplement thereto that is no less favorable to the Company than such management agreement as in effect on the Issue Date; and

	(14) the existence of, or the performance by Holdings, the Company or any of its Restricted Subsidiaries of its obligations under the terms of any stockholders’ agreement (including any registration rights agreement or purchase agreement related thereto) to which it is a party as of the Issue Date and any similar agreements which it may enter into thereafter, provided, however, that the existence of, or the performance by Holdings, the Company or any of its Restricted Subsidiaries of obligations under any future amendment to any such existing agreement or under any similar agreement entered into after the Issue Date shall only be permitted by this clause (14) to the extent that the terms of the amendment or new agreement are not otherwise disadvantageous to the Holders of notes in any material respect.

If the Company or any of its Restricted Subsidiaries acquires or creates another Domestic Subsidiary (other than a Receivables Subsidiary) after the Issue Date, excluding all Subsidiaries that have properly been designated as Unrestricted Subsidiaries in accordance with the indenture for so long as they continue to constitute Unrestricted Subsidiaries, and that newly acquired or created Domestic Subsidiary guarantees Indebtedness under the Credit Agreement, then that newly acquired or created Domestic Subsidiary will become a Subsidiary Guarantor and execute a supplemental indenture and deliver an opinion of counsel satisfactory to the trustee within 10 Business Days of the date on which it was acquired or created.

The Board of Directors of the Company may designate any Restricted Subsidiary to be an Unrestricted Subsidiary if that designation would not cause a Default. If a Restricted Subsidiary is designated as an Unrestricted Subsidiary, the aggregate Fair Market Value of all outstanding Investments owned by the Company and its Restricted Subsidiaries in the Subsidiary properly designated will be deemed to be an Investment made as of the time of the designation and will reduce the amount available for Restricted Payments under the first paragraph of the covenant described under “— Restricted Payments” or under one or more clauses of the definition of “Permitted Investments,” as determined by the Company. That designation will only be permitted if the Investment would be permitted at that time and if the Restricted Subsidiary

otherwise meets the definition of an Unrestricted Subsidiary. The definition of “Unrestricted Subsidiary” requires that all Indebtedness of an Unrestricted Subsidiary, whether in existence at the time of designation as an Unrestricted Subsidiary, or incurred thereafter, be Non-Recourse Debt. The Board of Directors of the Company may redesignate any Unrestricted Subsidiary to be a Restricted Subsidiary if the redesignation would not cause a Default.

The Company will not, and will not permit any of its Subsidiaries to, directly or indirectly, pay or cause to be paid any consideration to or for the benefit of any Holder of notes for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of the indenture or the notes unless such consideration is offered to be paid and is paid to all Holders of the notes that consent, waive or agree to amend in the time frame set forth in the solicitation documents relating to such consent, waiver or agreement.

Whether or not required by the Commission, so long as any notes are outstanding, Holdings will furnish to the Holders of notes, within the time periods specified in the Commission’s rules and regulations:


	(1) all quarterly and annual financial information that would be required to be contained in a filing with the Commission on Forms 10-Q and 10-K if Holdings were required to file such Forms, including a “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and, with respect to the annual information only, a report on the annual financial statements by Holdings’ certified independent accountants; and

	(2) all current reports that would be required to be filed with the Commission on Form 8-K if Holdings were required to file such reports.

In addition, following the consummation of this exchange offer, whether or not required by the Commission, Holdings will file a copy of all of the information and reports referred to in clauses (1) and (2) above with the Commission for public availability within the time periods specified in the Commission’s rules and regulations (unless the Commission will not accept such a filing) and make such information available to prospective investors upon request. In addition, the Company, Holdings and the Subsidiary Guarantors have agreed that, for so long as the notes are not freely transferable under the Securities Act, they will furnish to the Holders and to prospective investors, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act.


	(1) default for 30 days in the payment when due of interest on, or Additional Interest with respect to, the notes (whether or not prohibited by the subordination provisions of the indenture);

	(2) default in payment when due of the principal of, or premium, if any, on the notes (whether or not prohibited by the subordination provisions of the indenture);

	(3) failure by the Company or any of its Restricted Subsidiaries for 30 days after notice from the trustee or the Holders of at least 25% in principal amount of the then outstanding notes to comply with the provisions described under “— Repurchase at the Option of Holders — Change of Control,” “— Repurchase at the Option of Holders — Asset Sales” or “— Certain Covenants — Merger, Consolidation or Sale of Assets” (whether or not prohibited by the subordination provisions of the indenture);

	(4) failure by the Company or any of its Restricted Subsidiaries to comply with any of the other agreements in the indenture for 60 days after written notice to the Company specifying such failure from the trustee or Holders of at least 25% in aggregate principal amount of the notes then outstanding;

(5) default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Company or any of its Restricted Subsidiaries (or the payment of which is guaranteed by the Company or any of its Restricted Subsidiaries) whether such Indebtedness or guarantee now exists, or is created after the Issue Date, if that default:


	(a) is caused by a failure to pay principal at final maturity on such Indebtedness prior to the expiration of the grace period provided in such Indebtedness on the date of such default (a “Payment Default”); or

	(b) results in the acceleration of such Indebtedness prior to its express maturity,


	and, in each case, the principal amount of any such Indebtedness, together with the principal amount of any other such Indebtedness under which there has been a Payment Default or the maturity of which has been so accelerated, aggregates $10.0 million or more;


	(6) failure by the Company or any of its Restricted Subsidiaries to pay final judgments aggregating in excess of $10.0 million to the extent such judgment is not covered by insurance or is in excess of insurance coverage, which judgments are not paid, discharged or stayed for a period of 60 days;

	(7) except as permitted by the indenture, any Subsidiary Guarantee shall be held in any judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full force and effect or any Subsidiary Guarantor, or any Person acting on behalf of any Subsidiary Guarantor, shall deny or disaffirm its obligations under its Guarantee; and

	(8) certain events of bankruptcy or insolvency described in the indenture with respect to the Company or any of its Significant Subsidiaries.

In the case of an Event of Default arising from certain events of bankruptcy or insolvency, with respect to the Company or any of its Significant Subsidiaries, all outstanding notes will become due and payable immediately without further action or notice. If any other Event of Default occurs and is continuing, the trustee or the Holders of at least 25% in principal amount of the then outstanding notes may declare all the notes to be due and payable immediately by notice in writing to the Company (and to the trustee if given by the Holders) (an “Acceleration Notice”); provided, however, that if any Senior Debt is outstanding pursuant to the Credit Facility, upon a declaration of such acceleration, such principal and interest shall be due and payable upon the earlier of (x) the fifth Business Day after sending the Company and the representative under such Credit Facility such Acceleration Notice, unless such Event of Default is cured or waived prior to such date and (y) the date of acceleration of any Senior Debt under such Credit Facility.

In the event of a declaration of acceleration of the notes because an Event of Default described in clause (5) has occurred and is continuing, the declaration of acceleration of the notes shall be automatically annulled if the Payment Default or other default triggering such Event of Default pursuant to clause (5) shall be remedied or cured by the Company or a Restricted Subsidiary of the Company or waived by the holders of the relevant Indebtedness within 60 days after the declaration of acceleration with respect thereto and if (a) the annulment of the acceleration of the notes would not conflict with any judgment or decree of a court of competent jurisdiction and (b) all existing Events of Default, except nonpayment of principal, premium or interest on the notes that became due solely because of the acceleration of the notes, have been cured or waived.

Holders of the notes may not enforce the indenture or the notes except as provided in the indenture. Subject to certain limitations, Holders of a majority in principal amount of the then outstanding notes may direct the trustee in its exercise of any trust or power. The trustee may withhold from Holders of the notes notice of any continuing Default or Event of Default if it determines that withholding notice is in their interest, except a Default or Event of Default relating to the payment of principal or interest or Additional Interest.

The Holders of a majority in aggregate principal amount of the notes then outstanding by notice to the trustee may on behalf of the Holders of all of the notes waive any existing Default or Event of Default and its

The Company is required to deliver to the trustee annually a statement regarding compliance with the indenture. Upon any senior officer of the Company obtaining actual knowledge of any Default or Event of Default, the Company is required to deliver to the trustee a statement specifying such Default or Event of Default.

No director, officer, employee, incorporator or stockholder of the Company or any Guarantor, as such, will have any liability for any obligations of the Company or the Guarantors under the notes, the indenture, the Subsidiary Guarantees or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of notes by accepting a note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the notes. The waiver may not be effective to waive liabilities under the federal securities laws.

The Company may, at its option and at any time, elect to have all of its obligations discharged with respect to the outstanding notes and all obligations of the Guarantors discharged with respect to their Guarantees (“Legal Defeasance”) except for:


	(1) the rights of Holders of outstanding notes to receive payments in respect of the principal of, or interest or premium and Additional Interest, if any, on such notes when such payments are due from the trust referred to below;

	(2) the Company’s obligations with respect to the notes concerning issuing temporary notes, registration of notes, mutilated, destroyed, lost or stolen notes and the maintenance of an office or agency for payment and money for security payments held in trust;

	(3) the rights, powers, trusts, duties and immunities of the trustee, and the Company’s and the Guarantors’ obligations in connection therewith; and

	(4) the Legal Defeasance provisions of the indenture.

In addition, the Company may, at its option and at any time, elect to have the obligations of the Company and the Guarantors released with respect to certain covenants (including its obligations to make Change of Control Offers and Asset Sale Offers) that are described in the indenture (“Covenant Defeasance”) and thereafter any omission to comply with those covenants will not constitute a Default or Event of Default with respect to the notes. In the event Covenant Defeasance occurs, certain events (not including non-payment, bankruptcy, receivership, rehabilitation and insolvency events) described under “— Events of Default and Remedies” will no longer constitute an Event of Default with respect to the notes.


	(1) the Company must irrevocably deposit with the trustee, in trust, for the benefit of the Holders of the notes, cash in U.S. dollars, non-callable Government Securities, or a combination of cash in U.S. dollars and non-callable Government Securities, in amounts as will be sufficient, in the opinion of a nationally recognized firm of independent public accountants, to pay the principal of, or interest and premium and Additional Interest, if any, on the outstanding notes on the stated maturity or on the applicable redemption date, as the case may be, and the Company must specify whether the notes are being defeased to maturity or to a particular redemption date;

	(2) in the case of Legal Defeasance, the Company has delivered to the trustee an opinion of counsel reasonably acceptable to the trustee confirming that (a) the Company has received from, or there has been published by, the Internal Revenue Service a ruling or (b) since the Issue Date, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such


	opinion of counsel will confirm that, the Holders of the outstanding notes will not recognize income, gain or loss for federal income tax purposes as a result of such Legal Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred;

	(3) in the case of Covenant Defeasance, the Company has delivered to the trustee an opinion of counsel reasonably acceptable to the trustee confirming that the Holders of the outstanding notes will not recognize income, gain or loss for federal income tax purposes as a result of such Covenant Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred;

	(4) no Default or Event of Default has occurred and is continuing on the date of such deposit (other than a Default or Event of Default resulting from the borrowing of funds to be applied to such deposit);

	(5) such Legal Defeasance or Covenant Defeasance will not result in a breach or violation of, or constitute a default under any material agreement or instrument (other than the indenture) to which the Company or any of its Restricted Subsidiaries is a party or by which the Company or any of its Restricted Subsidiaries is bound;

	(6) the Company must deliver to the trustee an officers’ certificate stating that the deposit was not made by the Company with the intent of preferring the Holders of notes over the other creditors of the Company with the intent of defeating, hindering, delaying or defrauding creditors of the Company or others; and

	(7) the Company must deliver to the trustee an officers’ certificate and an opinion of counsel, each stating that all conditions precedent relating to the Legal Defeasance or the Covenant Defeasance have been complied with.

However, the opinion of counsel required by clause (2) above will not be required if all notes not theretofore delivered to the trustee for cancellation have become due and payable, will become due and payable on their maturity date within one year or are to be called for redemption within one year under arrangements satisfactory to the trustee for the giving of notice of redemption by the trustee in the Company’s name, and at the Company’s expense.

Except as provided in the next two succeeding paragraphs, the indenture or the notes may be amended or supplemented with the consent of the Holders of at least a majority in principal amount of the notes then outstanding (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, notes), and any existing default or compliance with any provision of the indenture or the notes may be waived with the consent of the Holders of a majority in principal amount of the then outstanding notes (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, notes).

Without the consent of each Holder affected, an amendment or waiver may not (with respect to any notes held by a non-consenting Holder):


	(1) reduce the principal amount of notes whose Holders must consent to an amendment, supplement or waiver;

	(2) reduce the principal of or change the fixed maturity of any note or alter the provisions with respect to the redemption of the notes (other than provisions relating to the covenants described under “— Repurchase at the Option of Holders”);

	(3) reduce the rate of or change the time for payment of interest on any note;

	(4) waive a Default or Event of Default in the payment of principal of, or interest or premium, or Additional Interest, if any, on the notes (except a rescission of acceleration of the notes by the Holders


	of at least a majority in aggregate principal amount of the notes and a waiver of the payment default that resulted from such acceleration);

	(5) make any note payable in money other than that stated in the notes;

	(6) make any change in the provisions of the indenture relating to waivers of past Defaults or the rights of Holders of notes to receive payments of principal of, or interest or premium or Additional Interest, if any, on the notes;

	(7) waive a redemption payment with respect to any note (other than a payment required by one of the covenants described under “— Repurchase at the Option of Holders”);

	(8) release any Subsidiary Guarantor from any of its obligations under its Subsidiary Guarantee or the indenture, except in accordance with the terms of the indenture;

	(9) make any change to the subordination provisions of the indenture that adversely affects the Holders; or

	(10) make any change in the preceding amendment and waiver provisions.

Notwithstanding the preceding, without the consent of any Holder of notes, the Company, the Guarantors and the trustee may amend or supplement the indenture or the notes:


	(1) to cure any ambiguity, defect or inconsistency;

	(2) to provide for uncertificated notes in addition to or in place of certificated notes;

	(3) to provide for the assumption of the Company’s or any Guarantor’s obligations to Holders of notes in the case of a merger or consolidation or sale of all or substantially all of the Company’s or such Guarantor’s assets;

	(4) to comply with the rules of any applicable securities depository;

	(5) to comply with the covenant described under “— Certain Covenants — Merger, Consolidation or Sale of Assets;”

	(6) to add to the agreements and covenants of Holdings, the Company and its Restricted Subsidiaries for the benefit of the Holders or surrender any right or power conferred upon Holdings, the Company or any of its Restricted Subsidiaries;

	(7) to evidence and provide for the acceptance and appointment under the indenture of a successor trustee pursuant to the requirements thereof;

	(8) to make any change that would provide any additional rights or benefits to the Holders of notes or that does not adversely affect the legal rights under the indenture of any such Holder (including, but not limited to, adding a Guarantor under the indenture);

	(9) to provide for the issuance of the exchange notes and the related Guarantees or additional notes and the related Guarantees; and

	(10) to comply with requirements of the Commission in order to effect or maintain the qualification of the indenture under the Trust Indenture Act.

The consent of the Holders is not necessary under the indenture to approve the particular form of any proposed amendment. It will be sufficient if such consent approves the substance of the proposed amendment.

After an amendment under the indenture becomes effective, the Company is required to mail to Holders a notice briefly describing such amendment. However, the failure to give such notice to all Holders, or any defect therein, will not impair or affect the validity of the amendment.

The indenture will be discharged and will cease to be of further effect as to all notes issued thereunder, when:


	(a) all notes that have been authenticated, except lost, stolen or destroyed notes that have been replaced or paid and notes for whose payment money has been deposited in trust and thereafter repaid to the Company, have been delivered to the trustee for cancellation; or

	(b) all notes that have not been delivered to the trustee for cancellation have become due and payable by reason of the mailing of a notice of redemption or otherwise or will become due and payable within one year and the Company or any Guarantor has irrevocably deposited or caused to be deposited with the trustee as trust funds in trust solely for the benefit of the Holders, cash in U.S. dollars, non-callable Government Securities, or a combination of cash in U.S. dollars and non- callable Government Securities, in amounts as will be sufficient without consideration of any reinvestment of interest, to pay and discharge the entire indebtedness on the notes not delivered to the trustee for cancellation for principal, premium and Additional Interest, if any, and accrued interest to the date of maturity or redemption;


	(2) no Default or Event of Default has occurred and is continuing on the date of the deposit or will occur as a result of the deposit and the deposit will not result in a breach or violation of, or constitute a default under, any other instrument to which the Company or any Guarantor is a party or by which the Company or any Guarantor is bound;

	(3) the Company or any Guarantor has paid or caused to be paid all sums payable by it under the indenture; and

	(4) the Company has delivered irrevocable instructions to the trustee under the indenture to apply the deposited money toward the payment of the notes at maturity or the redemption date, as the case may be.

In addition, the Company must deliver an officers’ certificate and an opinion of counsel to the trustee stating that all conditions precedent to satisfaction and discharge have been satisfied.

If the trustee becomes a creditor of the Company or any Guarantor, the indenture limits its right to obtain payment of claims in certain cases, or to realize on certain property received in respect of any such claim as security or otherwise. The trustee will be permitted to engage in other transactions; however, if it acquires any conflicting interest it must eliminate such conflict within 90 days, apply to the Commission for permission to continue or resign.

The Holders of a majority in principal amount of the then outstanding notes will have the right to direct the time, method and place of conducting any proceeding for exercising any remedy available to the trustee, subject to certain exceptions. The indenture provides that in case an Event of Default occurs and is continuing, the trustee will be required, in the exercise of its power, to use the degree of care of a prudent man in the conduct of his own affairs. Subject to such provisions, the trustee will be under no obligation to exercise any of its rights or powers under the indenture at the request of any Holder of notes, unless such Holder has offered to the trustee security and indemnity satisfactory to it against any loss, liability or expense.

Anyone who receives this prospectus may obtain a copy of the indenture and registration rights agreement without charge by writing to Seminis, Inc., 2700 Camino del Sol, Oxnard, CA 93030-7967, Attention: Vice President, Treasury and Investor Relations.

Set forth below are certain defined terms used in the indenture. Reference is made to the indenture for a full disclosure of all such terms, as well as any other capitalized terms used herein for which no definition is provided.


	(1) Indebtedness of any other Person existing at the time such other Person is merged with or into or became a Restricted Subsidiary of such specified Person, and in each case such Indebtedness was not incurred in connection with, or in contemplation of, such other Person merging with or into, or becoming a Subsidiary of, such specified Person; and

	(2) Indebtedness secured by a Lien encumbering any asset acquired by such specified Person.

“Acquisition Transactions” means the acquisition by the Principals, Alfonso Romo Garza and certain of his Affiliates, certain members of management of the Company and Holdings and certain other parties of Equity Interests in Holdings and the other transactions, payments (including the repayment of indebtedness) and agreements set forth in or contemplated by the Acquisition Transactions Agreements and as described in the offering memorandum relating to the issuance of the notes (including, without limitation, the repurchase or redemption of the Class B Redeemable Preferred Stock of Holdings and the payment of accrued dividends thereon through the date of repurchase or redemption, it being understood that if the Class B Redeemable Preferred Stock has not been redeemed or repurchased on or prior to the Issue Date, Holdings will mail a notice of redemption with respect to the Class B Redeemable Preferred Stock to the holders of the Class B Redeemable Preferred Stock on the Issue Date).

“Acquisition Transactions Agreements” means the amended and restated exchange agreement, an agreement and plan of merger, the contribution agreement, the stock purchase agreement, the stockholders’ agreement, the co-investment rights agreements contemplated by the stock purchase agreement and the stockholders’ agreement, the indemnification agreement, the voting agreement, the management fee letter agreement, the employment agreements and any other agreement implementing the Acquisition Transactions, between or among, as the case may be, Holdings, Seminis Merger Corp., Seminis Acquisition LLC, Fox Paine and certain of its Affiliates, Alfonso Romo Garza and certain of his Affiliates, certain creditors of an Affiliate of Savia S.A. de C.V., certain individuals that are or will become members of management of the Company and Holdings, and the other parties thereto, as in effect on the Issue Date or, if any such agreement is not in effect on the Issue Date, as such agreement may become in effect in accordance with the terms of the other Acquisition Transactions Agreements that are in effect on the Issue Date.

“Additional Interest” means amounts payable under the Registration Rights Agreement as described under “Exchange Offer.”

“Affiliate” of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, “control,” as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise. For purposes of this definition, the terms “controlling,” “controlled by” and “under common control with” have correlative meanings. Notwithstanding the foregoing, no Person (other than the Company or any Subsidiary of the Company) in whom a Receivables Subsidiary makes an Investment in connection with a Qualified Receivables Transaction will be deemed to be an Affiliate of the Company or any of its Subsidiaries solely by reason of such investment.

(1) the sale, lease, conveyance or other disposition of any assets or rights, other than sales or other transfers of inventory or germplasm in the ordinary course of business; provided that the sale, conveyance or other disposition of all or substantially all of the assets of the Company and its Restricted Subsidiaries taken as a whole will be governed by the provisions of the indenture described under “— Repurchase at the Option of Holders — Change of Control” and/or the provisions described under “— Certain


	Covenants — Merger, Consolidation or Sale of Assets,” to the extent applicable, and not by the provisions of the Asset Sale covenant; and

	(2) the issuance of Equity Interests in any of the Company’s Restricted Subsidiaries or the sale of Equity Interests in any of its Restricted Subsidiaries (other than directors’ qualifying shares or shares or interests required to be held by foreign nationals to the extent mandated by applicable law).

Notwithstanding the preceding, none of the following items will be deemed to be an Asset Sale:


	(1) any single transaction or series of related transactions that involves assets having a Fair Market Value of less than $2.5 million;

	(2) a transfer of assets between or among the Company and its Restricted Subsidiaries;

	(3) an issuance or sale of Equity Interests by a Restricted Subsidiary of the Company to the Company or to another Restricted Subsidiary of the Company;

	(4) the sale or lease of equipment, products, services, inventory or accounts receivable in the ordinary course of business;

	(5) the creation of Liens permitted by the indenture;

	(6) transfers of accounts receivable and related assets of the type specified in the definition of “Qualified Receivables Transaction” (or a fractional undivided interest therein) by a Receivables Subsidiary in a Qualified Receivables Transaction;

	(7) the sale or other disposition of cash or Cash Equivalents;

	(8) the exchange of assets held by the Company or a Restricted Subsidiary for assets held by any Person or entity, provided that (i) the assets received by the Company or such Restricted Subsidiary in any such exchange will immediately constitute, be part of, or be used in a Permitted Business by the Company or such Restricted Subsidiary; and (ii) any such assets received are of a comparable Fair Market Value to the assets exchanged as determined in good faith by the Company;

	(9) a Restricted Payment that does not violate, or a Permitted Investment that is permitted by, the covenant described under “— Certain Covenants — Restricted Payments;”

	(10) the surrender or waiver of contractual rights or the settlement, release or surrender of contract, tort or other claims of any kind;

	(11) the grant in the ordinary course of business of any license of patents, trademarks, registrations therefor, know-how and other intellectual property; and

	(12) any disposition of obsolete, worn-out or surplus property.

“Beneficial Owner” has the meaning assigned to such term in Rule 13d-3 and Rule 13d-5 under the Exchange Act as in effect on the Issue Date. The terms “Beneficially Owns” and “Beneficially Owned” have a corresponding meaning.


	(1) with respect to a corporation, the board of directors of the corporation;

	(2) with respect to a partnership, the Board of Directors of the general partner of the partnership; and

	(3) with respect to any other Person, the board or committee of such Person serving a similar function.

“Board Resolution” means a copy of a resolution certified by the secretary or an assistant secretary of the Company to have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification.

“Capital Lease Obligation” means, at the time any determination is to be made, the amount of the liability in respect of a capital lease that would at that time be required to be capitalized on a balance sheet in accordance with GAAP.


	(1) in the case of a corporation, corporate stock;

	(2) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock;

	(3) in the case of a partnership or limited liability company, partnership or membership interests (whether general or limited); and

	(4) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person.


	(1) securities issued or directly and fully guaranteed or insured by the U.S. government or any agency or instrumentality of the U.S. government (provided that the full faith and credit of the United States is pledged in support of those securities) having maturities of not more than six months from the date of acquisition;

	(2) certificates of deposit and eurodollar time deposits with maturities of one year or less from the date of acquisition, bankers’ acceptances with maturities not exceeding one year and overnight bank deposits, in each case, with any lender party to a Credit Facility or with any domestic commercial bank having capital and surplus in excess of $500.0 million;

	(3) repurchase obligations with a term of not more than seven days for underlying securities of the types described in clauses (1) and (2) above entered into with any financial institution meeting the qualifications specified in clause (2) above;

	(4) commercial paper having one of the two highest ratings obtainable from Moody’s or S&P and in each case maturing within one year after the date of acquisition;

	(5) money market funds at least 95% of the assets of which constitute Cash Equivalents of the kinds described in clauses (1) through (4) of this definition; and

	(6) in the case of any Restricted Subsidiary organized or having its principal place of business outside of the United States, investments denominated in the currency of the jurisdiction in which such Restricted Subsidiary is organized or has its principal place of business which are similar to the items specified in clauses (1), (2), (3), and (4).


	(1) prior to such time as there shall have been consummated a Qualified IPO of Holdings, the occurrence of any of the following: (i) the Permitted Holders shall cease to control the largest percentage of the voting power of the Voting Stock of Holdings (as compared to any other “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act and counting Alfonso Romo Garza (“Mr. Romo”) and his Affiliates as a single “group” as used in Sections 13(d) and 14(d) of the Exchange Act)) or (ii) the Permitted Holders shall cease to control at least 40% of the voting power of the Voting Stock of Holdings;

	(2) from and after the time that there shall have been consummated a Qualified IPO of Holdings, the occurrence of any of the following: (i) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), other than the Permitted Holders, is or becomes the Beneficial Owner, directly or indirectly, of 35% or more of the voting power of the Voting Stock of Holdings (counting Mr. Romo and his Affiliates as a “group” as used in Sections 13(d) and 14(d) of the Exchange Act) and the Permitted Holders cease to control the largest percentage of the voting power of


	the Voting Stock of Holdings; or (ii) during any period of two consecutive years, individuals who at the beginning of such period constituted the Board of Directors of Holdings (together with any new directors whose election to such Board of Directors or whose nomination for election was approved by a vote of at least 66 2/3% of the directors of Holdings then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute at least a majority of the Board of Directors of Holdings;

	(3) at any time, Holdings ceases to own, beneficially, 100% of the Voting Stock of the Company;

	(4) the direct or indirect sale, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the properties or assets of the Company and the Restricted Subsidiaries, taken as a whole, to any “person” (as that term is used in Section 13(d)(3) of the Exchange Act) other than to the Permitted Holders; or

	(5) the adoption of a plan relating to the liquidation or dissolution of the Company.

“Consolidated Cash Flow” means, with respect to any specified Person for any period, the Consolidated Net Income of such Person for such period adjusted as follows:


	(1) plus provision for taxes based on income or profits of such Person and its Restricted Subsidiaries for such period, to the extent that such provision for taxes was deducted in computing such Consolidated Net Income;

	(2) plus consolidated interest expense of such Person and its Restricted Subsidiaries for such period, whether paid or accrued and whether or not capitalized (including, without limitation, amortization of debt issuance costs and original issue discount, non-cash interest payments, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, commissions, discounts and other fees and charges incurred in respect of letters of credit or bankers’ acceptance financings, and net of the effect of all payments made or received pursuant to Hedging Obligations), to the extent that any such expense was deducted in computing such Consolidated Net Income;

	(3) plus depreciation, amortization (including amortization of goodwill and other intangibles but excluding amortization of prepaid cash expenses that were paid in a prior period) and other non-cash expenses (excluding any such non-cash expense to the extent that it represents an accrual of or reserve for cash expenses in any future period or amortization of a prepaid cash expense that was paid in a prior period) of such Person and its Restricted Subsidiaries for such period to the extent that such depreciation, amortization and other non-cash expenses were deducted in computing such Consolidated Net Income;

	(4) plus all one-time fees, costs, expenses (including cash compensation payments), in each case incurred by the Company and its Restricted Subsidiaries (or the company or business being acquired) (x) in connection with the Acquisition Transactions and (y) incurred in connection with or resulting from any other merger, consolidation or acquisition occurring after the Issue Date in an aggregate amount not to exceed seven percent of the total enterprise value of such merger, consolidation or acquisition;

	(5) plus unrealized non-cash losses resulting from foreign currency balance sheet adjustments required by GAAP to the extent such losses were deducted in computing such Consolidated Net Income;

	(6) minus non-cash items increasing such Consolidated Net Income for such period, other than the accrual of revenue in the ordinary course of business;

	(7) plus all amounts deducted in arriving at such Consolidated Net Income amount in respect of severance packages payable in connection with the termination of any officer, director or employee of Holdings or any of its Subsidiaries;

	(8) plus in the case of non-cash minority interest loss and minus in the case of non-cash minority interest income;


	(9) plus, in any fiscal year, payments of the advisory fees (but not expense reimbursement) required to be paid by Holdings pursuant to the Management Fee Letter, plus (ii) reasonable out-of-pocket expenses of Fox Paine (as defined in the Management Fee Letter) required to be paid by Holdings pursuant to the terms of the Management Fee Letter;

	(10) plus, to the extent included in Consolidated Net Income, non-cash restricted stock award charges incurred in Holdings’ fiscal year ended September 30, 2002;

in each case, on a consolidated basis and determined in accordance with GAAP. Consolidated Cash Flow shall not include the impact of any purchase accounting adjustments which may be allocated to (x) in-process research and development in such Person’s income statement and (y) inventory in such Person’s balance sheet to the extent such adjustments reflect differences between the historical carrying amounts and the fair market value of the inventory, and, consistent with such treatment, when the affected inventory is sold, Consolidated Cash Flow shall be calculated as if such purchase accounting adjustments had not been made.

“Consolidated Net Income” means, with respect to any specified Person for any period, the aggregate of the Net Income of such Person and its Restricted Subsidiaries for such period, on a consolidated basis, determined in accordance with GAAP; provided that:


	(1) the Net Income (but not loss) of any Person that is not a Restricted Subsidiary will be included only to the extent of the amount of dividends or distributions paid in cash to the specified Person or a Restricted Subsidiary of the Person and the loss of any such Person will only be included to the extent the Company or a Restricted Subsidiary funds such loss;

	(2) the Net Income of any Restricted Subsidiary will be excluded to the extent that the declaration or payment of dividends or similar distributions by that Restricted Subsidiary of that Net Income is not at the date of determination permitted without any prior governmental approval (that has not been obtained) or, directly or indirectly, by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Restricted Subsidiary or its stockholders, except that the Net Income of any such Restricted Subsidiary for such period shall be included in such Consolidated Net Income up to the aggregate amount of cash which actually has been or could have been distributed in cash by such Restricted Subsidiary during such period to the Company or another Restricted Subsidiary as a dividend or other distribution (by loans, advances, intercompany transfers or otherwise) (subject, in the case of a dividend or other distribution which could have been paid to another Restricted Subsidiary, to the limitations contained in this clause (2) with respect to such Restricted Subsidiary);

	(3) the cumulative effect of a change in accounting principles will be excluded;

	(4) the non-cash impairment loss of such Person or its Restricted Subsidiaries relating to goodwill or other non-amortizing intangible asset will be excluded; and

	(5) corporate overhead expenses payable by Holdings described in clause (10)(y) of the second paragraph of the covenant described under “— Certain Covenants — Restricted Payments,” the funds for which are provided by the Company and/or its Restricted Subsidiaries shall be deducted in calculating the Consolidated Net Income of the Company and its Restricted Subsidiaries.

“Credit Agreement” means that certain Credit Agreement entered into in September 2003, by and among the Company, as borrower, the guarantors party thereto, Citicorp North America, Inc., as administrative agent, Harris Trust and Savings Bank as syndication agent, and the other agents and lenders party thereto, including any related notes, guarantees, collateral documents, instruments and agreements executed in connection therewith, and in each case as amended, restated, modified, renewed, refunded, replaced (whether upon or after termination or otherwise) or refinanced (including by means of sales of debt securities to institutional and other investors) from time to time.

“Credit Facilities” means one or more debt facilities (including, without limitation, the Credit Agreement) or commercial paper facilities, in each case with banks, investment banks, insurance companies, mutual funds and/or other institutional lenders or debt investors providing for revolving credit loans, term loans,

receivables or inventory financings (including through the sale of receivables or inventory to such lenders) or letters of credit, in each case, as amended, restated, modified, renewed, refunded, replaced (whether upon or after termination or otherwise) or refinanced (including by means of sales of debt securities to institutional and other investors) in whole or in part from time to time, whether by the same or any other lender or group of lenders; provided, however, that “Credit Facilities” will not include the South Korean Loans.

“Default” means any event that is, or with the passage of time or the giving of notice or both would be, an Event of Default.

“Designated Senior Debt” means (1) Indebtedness under or in respect of the Credit Agreement and (2) any other Indebtedness constituting Senior Debt which, at the time of determination, has an aggregate principal amount of at least $25.0 million and is specifically designated in the instrument evidencing such Senior Debt as “Designated Senior Debt” by the Company.

“Disqualified Stock” means any Capital Stock that, by its terms (or by the terms of any security into which it is convertible, or for which it is exchangeable, in each case at the option of the holder of the Capital Stock), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the holder of the Capital Stock, in whole or in part, on or prior to the date that is 91 days after the date on which the notes mature, provided that if such Capital Stock is issued pursuant to any plan for the benefit of employees of Holdings, the Company or its Restricted Subsidiaries, such Capital Stock shall not constitute Disqualified Stock solely because it may be required to be repurchased by the Company in order to satisfy applicable statutory or regulatory obligations. Notwithstanding the preceding sentence, any Capital Stock that would constitute Disqualified Stock solely because the holders of the Capital Stock have the right to require the Company to repurchase such Capital Stock upon the occurrence of a change of control or an asset sale or upon or related to termination of employment, death or disability (or which right was otherwise created in connection with an employment arrangement) will not constitute Disqualified Stock if the terms of such Capital Stock provide that the Company may not repurchase or redeem any such Capital Stock pursuant to such provisions unless such repurchase or redemption complies with the covenant described under “— Certain Covenants — Restricted Payments.”

“Domestic Subsidiary” means any Restricted Subsidiary of the Company that was formed under the laws of the United States or any state of the United States or the District of Columbia.

“Equity Interests” means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock).

“Equity Offering” means a public or private sale or issuance of Capital Stock (other than Disqualified Stock) of the Company or Holdings or any capital contribution to Holdings; provided that, in the event of an Equity Offering by Holdings or any capital contribution to Holdings, Holdings contributes to the capital of the Company the portion of the net cash proceeds of such Equity Offering or capital contribution necessary to pay the aggregate redemption price of the notes to be redeemed pursuant to “Optional Redemption.”

“Existing Indebtedness” means the Indebtedness of the Company and its Restricted Subsidiaries (other than Indebtedness under the Credit Agreement and the South Korean Loans) in existence on the Issue Date until such amounts are permanently repaid and Indebtedness under the Oxnard Mortgage in an aggregate amount not to exceed $20.0 million.

“Fair Market Value” means, with respect to any asset or property, the price which would have been negotiated in an arm’s-length transaction, between a willing seller and a willing and able buyer, neither of whom is under pressure or compulsion to complete the transaction.

“Fox Paine” means Fox Paine & Company, LLC, a Delaware limited liability company.

“GAAP” means generally accepted accounting principles in the United States of America set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in

“Guarantee” means a guarantee other than by endorsement of negotiable instruments for collection or deposit in the ordinary course of business, direct or indirect, in any manner including, without limitation, by way of a pledge of assets or through letters of credit or reimbursement agreements in respect thereof, of all or any part of any Indebtedness.

“Guarantor Senior Debt” means, with respect to any Guarantor, the principal of, premium, if any, and interest (including any interest accruing subsequent to the filing of a petition of bankruptcy at the rate provided for in the documentation with respect thereto, whether or not such interest is an allowed claim under applicable law) on any Indebtedness of, or guaranteed by, a Guarantor, whether outstanding on the Issue Date or thereafter created, incurred or assumed, unless, in the case of any particular Indebtedness, the instrument creating or evidencing the same or pursuant to which the same is outstanding expressly provides that such Indebtedness shall not be senior in right of payment to the Guarantee of such Guarantor. Without limiting the generality of the foregoing, “Guarantor Senior Debt” shall also include the principal of, premium, if any, interest (including any interest accruing subsequent to the filing of a petition of bankruptcy at the rate provided for in the documentation with respect thereto, whether or not such interest is an allowed claim under applicable law) on, and all other amounts owing in respect of (including guarantees of the foregoing obligations):


	(x) all monetary obligations of every nature of such Guarantor under, or with respect to, the Credit Facilities, including, without limitation, obligations to pay principal, premium and interest, reimbursement obligations under letters of credit, fees, expenses and indemnities (and guarantees thereof); and

	(y) all Hedging Obligations (and guarantees thereof);

	in each case whether outstanding on the Issue Date or thereafter incurred.


	(1) any Indebtedness of Holdings or a Subsidiary Guarantor to the Company or a Subsidiary of such Subsidiary Guarantor;

	(2) Indebtedness to, or guaranteed on behalf of, any shareholder, director, officer or employee of such Guarantor or any Subsidiary of such Guarantor (including, without limitation, amounts owed for compensation) other than a shareholder who is also a lender (or an Affiliate of a lender) under the Credit Agreement;

	(3) Indebtedness to trade creditors and other amounts incurred in connection with obtaining goods, materials or services;

	(4) Indebtedness represented by Disqualified Stock;

	(5) any liability for federal, foreign, state, local or other taxes owed or owing by such Guarantor;

	(6) that portion of any Indebtedness incurred in violation of the indenture provisions described under “— Certain Covenants — Incurrence of Indebtedness and Issuance of Preferred Stock” (but, as to any such obligation, no such violation shall be deemed to exist for purposes of this clause (6) if the holder(s) of such obligation or their representative shall have received an officers’ certificate of the Company to the effect that the incurrence of such Indebtedness does not (or, in the case of revolving credit indebtedness, that the incurrence of the entire committed amount thereof at the date on which the initial borrowing thereunder is made would not) violate such provisions of the indenture);

	(7) Indebtedness which, when incurred and without respect to any election under Section 1111(b) of Title 11, United States Code, is without recourse to such Guarantor or the Company; and


	(8) any Indebtedness which is, by its express terms, subordinated in right of payment to any other Indebtedness of such Guarantor.

“Hedging Obligations” means, with respect to any specified Person, the obligations of such Person under:


	(1) interest rate swap agreements, interest rate cap agreements, interest rate collar agreements and other agreements or arrangements designed to protect such Person against fluctuations in interest rates;

	(2) currency exchange swap agreements, currency exchange cap agreements, currency exchange collar agreements and other agreements or arrangements designed to protect such Person against fluctuations in currency exchange values;

	(3) commodity swap agreements, commodity cap agreements, commodity collar agreements and other agreements or arrangements designed to protect such Person against fluctuations in commodity prices; and

	(4) other agreements or arrangements designed to protect such Person against fluctuations in interest rates or currency exchange rates.

“Indebtedness” means, with respect to any specified Person, any indebtedness of such Person, whether or not contingent:


	(1) in respect of borrowed money;

	(2) evidenced by bonds, notes, debentures or similar instruments or letters of credit (or reimbursement agreements in respect thereof);

	(3) in respect of banker’s acceptances;

	(4) representing Capital Lease Obligations;

	(5) representing the balance deferred and unpaid of the purchase price of any property due more than six months after such property is acquired, except any such balance that constitutes an accrued expense or trade payable (other than any contingent payment obligations of a Person based on the performance of a business or asset or Capital Stock purchased by such Person); or

	(6) representing the net loss value of any Hedging Obligations,

if and to the extent any of the preceding items (other than letters of credit and Hedging Obligations) would appear as a liability upon a balance sheet of the specified Person prepared in accordance with GAAP. In addition, the term “Indebtedness” includes all Indebtedness of others secured by a Lien on any asset of the specified Person (whether or not such Indebtedness is assumed by the specified Person) and, to the extent not otherwise included, the Guarantee by the specified Person of any indebtedness of any other Person.


	(1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;

	(2) in connection with any Qualified Receivables Transaction, the Securitization Financing Amount; and

	(3) the principal amount of the Indebtedness, together with any interest on the Indebtedness that is more than 30 days past due, in the case of any other Indebtedness.

In addition, for the purpose of avoiding duplication in calculating the outstanding principal amount of Indebtedness for purposes of the covenant described under “— Certain Covenants — Incurrence of Indebtedness and Issuance of Preferred Stock,” Indebtedness arising solely by reason of the existence of a Lien to secure other Indebtedness permitted to be incurred under the covenant described under “— Certain Covenants — Incurrence of Indebtedness and Issuance of Preferred Stock” will not be considered incremental Indebtedness.

Indebtedness will not include the obligations of any Person (A) resulting from the endorsement of negotiable instruments for collection or deposit in the ordinary course of business, (B) under stand-by letters of credit to the extent collateralized by cash or Cash Equivalents or (C) resulting from representations, warranties, covenants and indemnities given by such Person that are reasonably customary for sellers or transferors in an accounts receivable securitization transaction.

“Investments” means, with respect to any Person, all direct or indirect investments by such Person in other Persons (including Affiliates) in the forms of loans (including Guarantees or other obligations), advances or capital contributions (excluding commission, travel and similar advances to officers and employees made in the ordinary course of business and excluding advances made to customers and suppliers with respect to current or anticipated purchases of inventory in the ordinary course of business), purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities, together with all items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP. If the Company or any Restricted Subsidiary of the Company sells or otherwise disposes of any Equity Interests of any direct or indirect Restricted Subsidiary of the Company such that, after giving effect to any such sale or disposition, such Person is no longer a Restricted Subsidiary of the Company, the Company will be deemed to have made an Investment on the date of any such sale or disposition equal to the Fair Market Value of the Company’s Investments in such Subsidiary that were not sold or disposed of in an amount determined as provided in the final paragraph of the covenant described under “— Certain Covenants — Restricted Payments.”

“Leverage Ratio” means with respect to any specified Person for any period, the ratio of Total Indebtedness of such Person and its Restricted Subsidiaries as of the last day of the applicable Reference Period to the Consolidated Cash Flow of such Person and its Restricted Subsidiaries for such Reference Period. In the event that the specified Person or any of its Restricted Subsidiaries incurs, assumes, guarantees, repays, repurchases or redeems any Indebtedness (other than ordinary working capital borrowings) or issues, repurchases or redeems Disqualified Stock or preferred stock subsequent to the commencement of the period for which the Leverage Ratio is being calculated and on or prior to the date on which the event for which the calculation of the Leverage Ratio is made (the “Calculation Date”), then the Leverage Ratio will be calculated giving pro forma effect to such incurrence, assumption, guarantee, repayment, repurchase or redemption of Indebtedness, or such issuance, repurchase or redemption of Disqualified Stock or preferred stock, and the use of the proceeds therefrom as if the same had occurred at the beginning of the applicable four-quarter reference period.

(1) (x) acquisitions that have been made by the specified Person or any of its Restricted Subsidiaries, including through mergers or consolidations and including any related financing transactions, during the Reference Period or subsequent to such Reference Period and on or prior to the Calculation Date will be given pro forma effect as if they had occurred on the first day of the Reference Period, and for purposes of determining the pro forma effects of such acquisition, Consolidated Cash Flow will be calculated to give pro forma effect to cost savings and operating expense reductions related to such acquisition that have occurred or are reasonably expected to occur within the 12 months following such acquisition, in the reasonable judgment of the chief financial officer of the specified Person; and (y) in addition, with respect to any acquisition made by the specified Person or any of its Restricted Subsidiaries during either of the two fiscal quarters immediately preceding such Reference Period, Consolidated Cash Flow will also be calculated to give pro forma effect to cost savings and operating expense reductions expected to result from steps taken during such Reference Period (but on or prior to the first anniversary of such acquisition) as if such steps were taken on the first day of such Reference Period (regardless, with respect to each of clauses (x) and (y) hereof, of whether those cost savings or operating expense reductions could then be reflected in pro forma financial statements in accordance with Regulation S-X promulgated under the Securities Act or any other regulation or policy of the Commission related thereto); provided, that in either such case, adjustments are set forth in an


	officers’ certificate signed by the specified Person’s chief executive officer and chief financial officer which states (i) the amounts of such adjustment or adjustments, (ii) that such adjustment or adjustments are based on the reasonable good faith beliefs of the officers executing such officers’ certificate at the time of such execution and (iii) that any related Incurrence of Indebtedness is permitted pursuant to the indenture;

	(2) the Consolidated Cash Flow attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses disposed of prior to the Calculation Date, will be excluded;

	(3) if, since the beginning of the applicable four quarter period, any Person that became a Restricted Subsidiary or was merged with or into the Company or any Restricted Subsidiary since the beginning of such four quarter period shall have made any acquisition, disposition, merger or consolidation or has been determined to be a discontinued operation that would have required adjustment pursuant to this definition, then the Leverage Ratio shall be calculated giving pro forma effect thereto for such period as if such acquisition, disposition, merger or consolidation or determination of a discontinued operation had occurred at the beginning of the applicable four-quarter period;

	(4) any Person that is a Restricted Subsidiary of the Company on the Calculation Date will be deemed to have been a Restricted Subsidiary at all times during the applicable four-quarter reference period;

	(5) any Person that is not a Restricted Subsidiary of the Company on the Calculation Date will be deemed not to have been a Restricted Subsidiary at any time during the applicable four-quarter reference period; and

	(6) if any Indebtedness bears a floating rate of interest, the interest expense on such Indebtedness will be calculated as if the rate in effect on the Calculation Date had been the applicable rate for the entire applicable four-quarter reference period (taking into account any Hedging Obligation applicable to such Indebtedness if such Hedging Obligation has a remaining term as at the Calculation Date in excess of 12 months).

“Leverage Test” means, for any date during each period set forth below, the ratio set forth opposite such period:

“Lien” means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law, including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell or give a security interest in and, except in connection with any Qualified Receivables Transaction, any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction.

“Management Fee Letter” means that certain letter agreement dated as of May 30, 2003 among Fox Paine & Company, LLC, Desarrollo Consolidado de Negocios, S.A. de C.V. and Seminis Merger Corp. as in effect on the Issue Date.

“Marketable Securities” means publicly traded debt or equity securities that are listed for trading on a national securities exchange or NASDAQ and that were issued by a corporation whose debt securities are rated in one of the three highest categories by either S&P or Moody’s.

“Moody’s” means Moody’s Investors Service, Inc. or any successor rating agency.

“Net Income” means, with respect to any specified Person, the net income (loss) of such Person, determined in accordance with GAAP and before any reduction in respect of preferred stock dividends, excluding, however:


	(1) any gain or loss, together with any related provision for taxes on such gain or loss, realized in connection with: (a) any Asset Sale (without regard to the $2.5 million limitation set forth in the definition thereof); or (b) the disposition of any securities by such Person or any of its Restricted Subsidiaries or the extinguishment of any Indebtedness of such Person or any of its Restricted Subsidiaries; and

	(2) any extraordinary or nonrecurring gain or loss, together with any related provision for taxes on such extraordinary or nonrecurring gain or loss as determined in the good faith judgment of the chief financial officer of Holdings.

“Net Proceeds” means the aggregate cash proceeds received (when actually received) by the Company or any of its Restricted Subsidiaries in respect of any Asset Sale (including, without limitation, any cash received upon the sale or other disposition of any non-cash consideration received in any Asset Sale), net of the direct costs relating to such Asset Sale, including, without limitation, legal, accounting and investment banking fees, sales commissions, recording fees, title transfer fees, appraiser fees, cost of preparation of assets for sale and any relocation expenses incurred as a result of the Asset Sale, taxes paid or payable as a result of the Asset Sale, in each case, after taking into account any available tax credits or deductions and any tax sharing arrangements, and amounts required to be applied to the repayment of Indebtedness secured by a Lien on the asset or assets that were the subject of such Asset Sale and any reserve for adjustment in respect of the sale price of such asset or assets established in accordance with GAAP.


	(1) as to which neither the Company nor any of its Restricted Subsidiaries (a) provides credit support of any kind (including any undertaking, agreement or instrument that would constitute Indebtedness) (other than pledges of Equity Interests of Unrestricted Subsidiaries for the benefit of lenders of Unrestricted Subsidiaries), (b) is directly or indirectly liable as a guarantor or otherwise, or (c) constitutes the lender; and

	(2) no default with respect to which (including any rights that the holders of the Indebtedness may have to take enforcement action against an Unrestricted Subsidiary) would permit upon notice, lapse of time or both any holder of any other Indebtedness (other than the notes) of the Company or any of its Restricted Subsidiaries to declare a default on such other Indebtedness or cause the payment of the Indebtedness to be accelerated or payable prior to its stated maturity.

“Obligations” means any principal, interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities payable under the documentation governing any Indebtedness.

“Oxnard Mortgage” means a mortgage, whether arising before or after the Issue Date, on the Company’s headquarters located in Oxnard, California.

“Permitted Business” means any business in which the Company and its Subsidiaries were engaged on the Issue Date, and any business incidental, reasonably related, complementary or ancillary thereto, or which is a reasonable extension thereof as determined in good faith by the Board of Directors of the Company.


	(1) any Investment in the Company or in a Restricted Subsidiary of the Company;

	(2) any Investment in cash and Cash Equivalents;


	(3) any Investment by the Company or any Restricted Subsidiary of the Company in a Person, if as a result of such Investment:


	(a) such Person becomes a Restricted Subsidiary of the Company; or

	(b) such Person is merged, consolidated or amalgamated with or into, or transfers or conveys substantially all of its assets to, or is liquidated into, the Company or a Restricted Subsidiary of the Company;


	(4) any Investment made as a result of the receipt of non-cash consideration from an Asset Sale that was made pursuant to and in compliance with the covenant described under “— Repurchase at the Option of Holders — Asset Sales;”

	(5) any Investment or acquisition of assets solely in exchange for the issuance of Equity Interests (other than Disqualified Stock) of the Company or Holdings or out of the proceeds of a substantially concurrent issuance or sale of Equity Interests (other than Disqualified Stock) of the Company or Holdings;

	(6) any Investments received in compromise of obligations of (A) trade creditors or customers that were incurred in the ordinary course of business, including pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of, or other foreclosure with respect to, any trade creditor or customer or (B) litigation, arbitration or other similar disputes;

	(7) Hedging Obligations;

	(8) repurchases of the notes;

	(9) Investments consisting of non-cash consideration received in the form of securities, notes or similar obligations in connection with dispositions of obsolete, worn out or surplus assets or property permitted pursuant to the indenture;

	(10) advances, loans or extensions of credit to suppliers in the ordinary course of business by the Company or any of its Restricted Subsidiaries;

	(11) Investments of any Person (other than Indebtedness of such Person) in existence at the time such Person becomes a Subsidiary of the Company; provided such Investment was not made in connection with or in anticipation of such Person becoming a Subsidiary of the Company;

	(12) any Investment consisting of a guarantee permitted under the covenant described under “— Certain Covenants — Incurrence of Indebtedness and Issuance of Preferred Stock;”

	(13) Investments (including debt obligations) received in connection with the bankruptcy or reorganization of suppliers and customers and in settlement of delinquent obligations of, and other disputes with, customers and suppliers arising in the ordinary course of business;

	(14) advances to employees for moving, travel and entertainment, payroll advances and other similar advances to cover matters that are expected at the time of such advances to be treated as expenses for accounting purposes and that are made in the ordinary course of business;

	(15) loans and advances to employees, officers and directors of Holdings, the Company and its Restricted Subsidiaries in the ordinary course of business for bona fide business purposes not in excess of $3.0 million in aggregate principal amount at any time outstanding;

	(16) any Investment existing on the Issue Date and any renewal or replacement thereof on terms and conditions not materially less favorable to the Holders of the notes than the terms of the Investment being replaced;

	(17) Investments in prepaid expenses, negotiable instruments held for collection and lease, utility and workers’ compensation, performance and other similar deposits;


	(18) purchases of shares of any non-wholly owned Subsidiary of the Company from any Person other than Holdings, the Company or any Subsidiary of the Company;

	(19) other Investments in any Person having an aggregate Fair Market Value (measured on the date each such Investment was made and without giving effect to subsequent changes in value), when taken together with all other Investments made pursuant to this clause (19), that are at the time outstanding not to exceed $15.0 million; and

	(20) any Investment by the Company or a Restricted Subsidiary in a Receivables Subsidiary or any Investment by a Receivables Subsidiary in any other Person in connection with a Qualified Receivables Transaction; provided, that the foregoing Investment is in the form of a note or other instrument that the Receivables Subsidiary or other Person is required to repay as soon as practicable from available cash collections less amounts required to be established as reserves pursuant to contractual agreements with entities that are not Affiliates of the Company entered into as part of a Qualified Receivables Transaction; and provided further, that the foregoing Investment is, in the good faith determination of the Board of Directors of the Company, necessary or advisable to effect the applicable Qualified Receivables Transaction.


	(1) Equity Interests in the Company or any Guarantor; or

	(2) debt securities that are subordinated to (a) all Senior Debt and Guarantor Senior Debt and (b) any debt securities issued in exchange for Senior Debt to substantially the same extent as, or to a greater extent than, the notes and the note Guarantees are subordinated to Senior Debt and Guarantor Senior Debt under the indenture.


	(1) Liens on assets of the Company or any Restricted Subsidiary securing Indebtedness or other Obligations under Credit Facilities or other Senior Debt or Guarantor Senior Debt that was permitted by the terms of the indenture to be incurred;

	(2) Liens securing Acquired Debt that was permitted to be incurred pursuant to the covenant described under “— Certain Covenants — Incurrence of Indebtedness and Issuance of Preferred Stock,” provided that such Liens were not created in connection with or in contemplation of such acquisition or merger transaction pursuant to which the Acquired Debt was incurred and do not extend to any assets other than those acquired or those of the Person merged into or consolidated with the Company or the Restricted Subsidiary;

	(3) (a) Liens securing Indebtedness that was incurred pursuant to clause (11) of the third paragraph of the covenant described under “— Certain Covenants — Incurrence of Indebtedness and Issuance of Preferred Stock;” or

	(b) Liens securing Indebtedness that was incurred by non-Guarantor Restricted Subsidiaries (other than Seminis Korea or any of its Restricted Subsidiaries) pursuant to such covenant;

	(4) Liens in favor of the Company and its Restricted Subsidiaries;

	(5) Liens to secure Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation or improvement of property, plant or equipment used in the business of the Company or such Restricted Subsidiary, covering only the assets acquired with or financed by such Indebtedness;

	(6) Liens on property or shares of Capital Stock of a Person existing at the time such Person is merged with or into or consolidated with the Company or any Subsidiary of the Company; provided that such Liens were in existence prior to the contemplation of such merger or consolidation and do not


	extend to any assets other than those of the Person merged into or consolidated with the Company or the Subsidiary;

	(7) Liens on property or shares of Capital Stock existing at the time of acquisition of the property or shares of Capital Stock by the Company or any Subsidiary of the Company; provided that such Liens were in existence prior to the contemplation of such acquisition;

	(8) Liens to secure the performance of statutory obligations, surety or appeal bonds, performance bonds or other obligations of a like nature incurred in the ordinary course of business;

	(9) Liens existing on the Issue Date;

	(10) Liens for taxes, assessments or governmental charges or claims that are not yet delinquent or that are being contested in good faith by appropriate proceedings promptly instituted and diligently concluded provided that any reserve or other appropriate provision as is required in conformity with GAAP has been made therefor;

	(11) pledges or deposits made in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other types of social security legislation;

	(12) Liens securing Indebtedness under Hedging Obligations;

	(13) Liens securing Indebtedness of the Company or any of its Restricted Subsidiaries with respect to obligations that do not exceed $10.0 million at any one time outstanding;

	(14) Liens on goods and documents of title to goods arising in the ordinary course of letter of credit transactions entered into in the ordinary course of business;

	(15) Liens securing Permitted Refinancing Indebtedness permitted to be incurred under the indenture to refinance Indebtedness secured by a Lien permitted under the indenture; provided, however, that such new Lien will be limited to all or part of the same property that secured the original Lien (plus improvements on or replacements of such property) and the Indebtedness secured by such Lien at such time is not increased to any amount greater than the sum of (i) the outstanding principal amount or, if greater, committed amount, of the Indebtedness at the time the original Lien became a Permitted Lien under the indenture, and (ii) an amount necessary to pay any fees, commissions and expenses, including premiums, related to such Permitted Refinancing Indebtedness;

	(16) (a) Liens of carriers, warehousemen, mechanics, suppliers, materialmen, repairmen and other Liens imposed by law incurred in the ordinary course of business;

	(b) easements, rights of way, zoning restrictions, reservations, encroachments and other similar encumbrances in respect of real property;

	(c) judgment Liens not giving rise to an Event of Default so long as such Lien is adequately bonded and any appropriate legal proceedings that may have been initiated for the review of such judgment, decree or order shall not have been finally terminated or the period within which such proceedings may be initiated shall not have expired;

	(d) Liens upon specific items of inventory or other goods and proceeds of any Person securing such Person’s obligations in respect of banker’s acceptances issued or credited for the account of such Person to facilitate the purchase, shipment or storage of such inventory or other goods;

	(e) Liens encumbering deposits made to secure obligations arising from statutory, regulatory, contractual, or warranty requirements of the Company or any of its Restricted Subsidiaries, including rights of offset and set-off;

	(f) Liens arising out of consignment or similar arrangements for the sale of goods in the ordinary course of business;

	(g) any interest or title of a lessor in the property subject to any lease other than a capital lease;


	(h) leases or subleases granted to others that do not materially interfere with the ordinary course of business of the Company and its Restricted Subsidiaries;

	(i) Liens arising from filing Uniform Commercial Code financing statements regarding leases, provided that such Liens do not extend to any property or assets which are not leased property subject to such leases or subleases; and

	(j) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods;

	(17) Liens on the assets of Unrestricted Subsidiaries, or on the Equity Interests of Unrestricted Subsidiaries, that secure Non-Recourse Debt of Unrestricted Subsidiaries;

	(18) Liens on assets of a Receivables Subsidiary incurred in connection with a Qualified Receivables Transaction; and

	(19) Liens created in substitution of or as replacements for any Liens permitted by the preceding clauses (1) through (18) and this clause (19); provided, however that, based on a good faith determination of an officer of the Company, the Fair Market Value of the assets encumbered under any such substitute or replacement Lien is not greater than the Fair Market Value of the assets encumbered by the otherwise permitted Lien which is being replaced.

“Permitted Refinancing Indebtedness” means any Indebtedness of the Company or any of its Restricted Subsidiaries issued in exchange for, or the net proceeds of which are used to extend, refinance, renew, replace, defease or refund, other Indebtedness of the Company or any of its Restricted Subsidiaries (other than intercompany Indebtedness); provided that:


	(1) the principal amount (or accreted value, if applicable) of such Permitted Refinancing Indebtedness does not exceed the principal amount (or accreted value, if applicable) of the Indebtedness extended, refinanced, renewed, replaced, defeased or refunded (plus all accrued interest on the Indebtedness and the amount of all expenses, fees, commissions, and premiums incurred in connection therewith) except that the principal amount of such Permitted Refinancing Indebtedness in respect of the Oxnard Mortgage may be increased to up to $20.0 million;

	(2) such Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of, and has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded;

	(3) if the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded is subordinated in right of payment to the notes, such Permitted Refinancing Indebtedness is subordinated in right of payment to, the notes on terms at least as favorable to the Holders of notes as those contained in the documentation governing the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; and

	(4) such Indebtedness is incurred either by the Company or by any Restricted Subsidiary of the Company who is the obligor on the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded.

“Person” means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, limited liability company or government or other entity.

“Principals” means investment entities managed or controlled by Fox Paine or its Affiliates.

“Qualified IPO” means one or more underwritten public offerings of common equity securities of Holdings pursuant to an effective registration statement filed under the Securities Act (excluding registration statements filed on Form S-8, or any similar successor form) which offerings generate at least $100.0 million of gross proceeds to Holdings and which results in the listing of the common equity securities of Holdings on a national securities exchange or authorization for quotation on the Nasdaq National Market System.

“Qualified Receivables Transaction” means any transaction or series of transactions that may be entered into by the Company or any of its Restricted Subsidiaries in which the Company or any of its Restricted Subsidiaries may sell, convey or otherwise transfer to (1) a Receivables Subsidiary (in the case of a transfer by the Company or any of its Restricted Subsidiaries) and (2) any other Person (in the case of a transfer by a Receivables Subsidiary), or may grant a security interest in, any accounts receivable (whether now existing or arising in the future) of the Company or any of its Restricted Subsidiaries, and any related assets, including all collateral securing such accounts receivable, all contracts and all guarantees or other obligations in respect of such accounts receivable, proceeds of such accounts receivable and other assets (including contract rights) which are customarily transferred or in respect of which security interests are customarily granted in connection with asset securitization transactions involving accounts receivable.

“Receivables Subsidiary” means a Subsidiary of the Company that engages in no activities other than in connection with the financing of accounts receivable and that is designated by the Company’s Board of Directors (as provided below) as a Receivables Subsidiary:


	(1) no portion of the Indebtedness or any other Obligations (contingent or otherwise) of which


	(a) is guaranteed by the Company or any Restricted Subsidiary of the Company (excluding guarantees of Obligations (other than the principal of, and interest on, Indebtedness) pursuant to representations, warranties, covenants and indemnities entered into in the ordinary course of business in connection with a Qualified Receivables Transaction),

	(b) is recourse to or obligates the Company or any Restricted Subsidiary of the Company in any way other than pursuant to representations, warranties, covenants and indemnities entered into in the ordinary course of business in connection with a Qualified Receivables Transaction, or

	(c) subjects any property or asset of the Company or of any Restricted Subsidiary of the Company (other than accounts receivable and related assets as provided in the definition of “Qualified Receivables Transaction”), directly or indirectly, contingently or otherwise, to the satisfaction thereof, other than pursuant to representations, warranties, covenants and indemnities entered into in the ordinary course of business in connection with a Qualified Receivables Transaction;


	(2) with which neither the Company nor any Restricted Subsidiary of the Company has any material contract, agreement, arrangement or understanding other than on terms no less favorable to the Company or such Restricted Subsidiary than those that might be obtained at the time from Persons who are not Affiliates of the Company, other than fees payable in the ordinary course of business in connection with servicing accounts receivable; and

	(3) with which neither the Company nor any Restricted Subsidiary of the Company has any obligation to maintain or preserve such Restricted Subsidiary’s financial condition or cause such Restricted Subsidiary to achieve certain levels of operating results.

Any such designation by the Company’s Board of Directors will be evidenced to the trustee by filing with the trustee a Board Resolution giving effect to such designation and an officers’ certificate certifying that such designation complied with the preceding conditions.


	(1) any controlling stockholder, majority-owned Subsidiary or immediate family member (in the case of an individual) of any one or more Principals; or

	(2) any trust, corporation, partnership or other entity, the beneficiaries, stockholders, partners, owners or Persons beneficially owning a majority controlling interest of which consist of any one or more Principals and/or such other Persons referred to in the immediately preceding clause (1).

“Representative” means any agent or representative in respect of any Designated Senior Debt; provided that if, and for so long as, any Designated Senior Debt lacks such representative, then the Representative for

“Restricted Investment” means an Investment other than a Permitted Investment.

“Restricted Subsidiary” of a Person means any Subsidiary of the referent Person that is not an Unrestricted Subsidiary.

“S&P” means Standard & Poor’s Ratings Services, a division of McGraw Hill Inc., a New York corporation, or any successor rating agency.

“Securitization Financing Amount” means, as of any date, with respect to a Qualified Receivables Transaction, that portion of the Indebtedness of the related Receivables Subsidiary that is attributable to the accounts receivable and related assets of the type described in the definition of “Qualified Receivables Transaction” transferred to such Receivables Subsidiary by or on behalf of the Company and its Restricted Subsidiaries.

“Seminis Korea” means Seminis Korea, Inc., a corporation organized under the laws of South Korea.

“Senior Debt” means the principal of, premium, if any, and interest (including any interest accruing subsequent to the filing of a petition of bankruptcy at the rate provided for in the documentation with respect thereto, whether or not such interest is an allowed claim under applicable law) on any Indebtedness of the Company, whether outstanding on the Issue Date or thereafter created, incurred or assumed, unless, in the case of any particular Indebtedness, the instrument creating or evidencing the same or pursuant to which the same is outstanding expressly provides that such Indebtedness shall not be senior in right of payment to the notes. Without limiting the generality of the foregoing, “Senior Debt” shall also include the principal of, premium, if any, interest (including any interest accruing subsequent to the filing of a petition of bankruptcy at the rate provided for in the documentation with respect thereto, whether or not such interest is an allowed claim under applicable law) on, and all other amounts owing in respect of (including guarantees of the foregoing obligations):


	(1) all monetary obligations of every nature of the Company under, or with respect to, the Credit Facilities, including, without limitation, obligations to pay principal, premium and interest, reimbursement obligations under letters of credit, fees, expenses and indemnities (and guarantees thereof); and

	(2) all Hedging Obligations (and guarantees thereof);


	(1) any Indebtedness of the Company to a Subsidiary of the Company;

	(2) Indebtedness to, or guaranteed on behalf of, any shareholder, director, officer or employee of the Company or any Subsidiary of the Company (including, without limitation, amounts owed for compensation) other than a shareholder who is also a lender (or an Affiliate of a lender) under the Credit Facilities;

	(3) Indebtedness to trade creditors and other amounts incurred in connection with obtaining goods, materials or services;

	(4) Indebtedness represented by Disqualified Stock;

	(5) any liability for federal, foreign, state, local or other taxes owed or owing by the Company;

	(6) that portion of any Indebtedness incurred in violation of the indenture provisions described under “— Certain Covenants — Incurrence of Indebtedness and Issuance of Preferred Stock” (but, as to any such obligation, no such violation shall be deemed to exist for purposes of this clause (6) if the holder(s) of such obligation or their representative shall have received an officers’ certificate of the Company to the effect that the incurrence of such Indebtedness does not (or, in the case of revolving


	credit indebtedness, that the incurrence of the entire committed amount thereof at the date on which the initial borrowing thereunder is made would not) violate such provisions of the indenture);

	(7) Indebtedness which, when incurred and without respect to any election under Section 1111(b) of Title 11, United States Code, is without recourse to the Company; and

	(8) any Indebtedness which is, by its express terms, subordinated in right of payment to any other Indebtedness of the Company.

“Significant Subsidiary” means any Restricted Subsidiary of the Company that would be a “significant subsidiary” as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to the Securities Act, as such Regulation is in effect on the Issue Date.

“South Korean Loans” means Indebtedness at any time outstanding incurred by Seminis Korea and its Restricted Subsidiaries.

“Specified Assets” means those certain assets located in South Korea and The Netherlands which as of the Issue Date are specified in a schedule to the Credit Agreement.

“Stated Maturity” means, with respect to any installment of interest or principal on any series of Indebtedness, the date on which the payment of interest or principal was scheduled to be paid in the original documentation governing such Indebtedness, and will not include any contingent obligations to repay, redeem or repurchase any such interest or principal prior to the date originally scheduled for the payment thereof.

“Subordinated Indebtedness” means Indebtedness of the Company or any Guarantor that is subordinated or junior in right of payment to the notes or the Guarantee of such Guarantor, as the case may be.


	(1) any corporation, association or other business entity of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees of the corporation, association or other business entity is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person (or a combination thereof);

	(2) any partnership (a) the sole general partner or the managing general partner of which is such Person or a Subsidiary of such Person or (b) the only general partners of which are that Person or one or more Subsidiaries of that Person (or any combination thereof); and

	(3) any other Person that is consolidated in the consolidated financial statements of the specified Person in accordance with GAAP.

“Subsidiary Guarantees” means the Guarantees of the Subsidiary Guarantors.


	(1) the Domestic Subsidiaries of the Company as of the Issue Date; and

	(2) any other Subsidiary of the Company that executes a Subsidiary Guarantee in accordance with the provisions of the indenture.

“Total Indebtedness” means, at a particular date, the sum of (a) the aggregate stated balance sheet amount of all Indebtedness of such Person and its Restricted Subsidiaries and (b) to the extent not included in clause (a), the aggregate redemption price of any Disqualified Stock, in each case as determined on a consolidated basis in accordance with GAAP at such date.

“Unrestricted Subsidiary” means any Subsidiary of the Company that is designated by the Board of Directors of the Company as an Unrestricted Subsidiary pursuant to a Board Resolution, but only to the extent that such Subsidiary:


	(1) has no Indebtedness other than Non-Recourse Debt;

	(2) is not party to any agreement, contract, arrangement or understanding with the Company or any Restricted Subsidiary of the Company unless the terms of any such agreement, contract, arrangement or understanding are no less favorable to the Company or such Restricted Subsidiary than those that might be obtained at the time from Persons who are not Affiliates of the Company; and

	(3) is a Person with respect to which neither the Company nor any of its Restricted Subsidiaries has any direct or indirect obligation (a) to subscribe for additional Equity Interests or (b) to maintain or preserve such Person’s financial condition or to cause such Person to achieve any specified levels of operating results.

Any designation of a Subsidiary of the Company as an Unrestricted Subsidiary will be evidenced to the trustee by filing with the trustee a certified copy of the Board Resolution giving effect to such designation and an officers’ certificate certifying that such designation complied with the preceding conditions and was permitted by the covenant described under “— Certain Covenants — Restricted Payments.” If, at any time, any Unrestricted Subsidiary would fail to meet the preceding requirements as an Unrestricted Subsidiary, it will thereafter cease to be an Unrestricted Subsidiary for purposes of the indenture and any Indebtedness of such Subsidiary will be deemed to be incurred by a Restricted Subsidiary of the Company as of such date and, if such Indebtedness is not permitted to be incurred as of such date under the covenant described under “— Certain Covenants — Incurrence of Indebtedness and Issuance of Preferred Stock,” the Company will be in default of such covenant. The Board of Directors of the Company may at any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided that such designation will be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of the Company of any outstanding Indebtedness of such Unrestricted Subsidiary and such designation will only be permitted if (1) such Indebtedness is permitted under the covenant described under “— Certain Covenants — Incurrence of Indebtedness and Issuance of Preferred Stock,” calculated on a pro forma basis as if such designation had occurred at the beginning of the four-quarter reference period and (2) no Default or Event of Default would be in existence following such designation.

“Voting Stock” of any Person as of any date means the Capital Stock of such Person that is at the time entitled to vote in the election of the Board of Directors of such Person.

“Weighted Average Life to Maturity” means, when applied to any Indebtedness at any date, the number of years obtained by dividing:


	(1) the sum of the products obtained by multiplying (a) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect of the Indebtedness, by (b) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment; by

	(2) the then outstanding principal amount of such Indebtedness.

On September 29, 2003 we sold the original notes to Citigroup Global Markets Inc., CIBC World Markets Corp., Harris Nesbitt Corp. and Rabo Securities USA, Inc., together the initial purchasers. In connection with the sale of the original notes, we entered into a registration rights agreement with the initial purchasers. This agreement requires us to file a registration statement under the Securities Act of 1933 offering to exchange the new notes for your original notes. Accordingly, we are offering you the opportunity to exchange your original notes for the same principal amount of new notes. The new notes will be registered and issued without a restrictive legend. This means that, unlike your original notes, which contain restrictions on their transfer, the new notes may be reoffered and resold by you to any potential buyer freely without further registration under the Securities Act of 1933. This is beneficial to you since in order to sell your original notes you must find an available exemption from the registration requirements of the Securities Act of 1933.

The registration rights agreement further provides that we must use commercially reasonable efforts to cause the registration statement to be declared effective by the SEC on or prior to May 27, 2004, or we will owe liquidated damages, in the form of a higher rate of interest, to the original note holders. Except as discussed below, upon the completion of the exchange offer we will have no further obligation to register your original notes.

A copy of the registration rights agreement has been filed as an exhibit to this registration statement. You are strongly encouraged to read the entire text of the agreement.

In accordance with the registration rights agreement, we are also required to file a shelf registration statement with the SEC to cover resales of the original notes or the new notes by holders who satisfy certain conditions relating to the provision of information in connection with the shelf registration statement if:


	•	we are not permitted to consummate the exchange offer because we determine that the exchange offer is not permitted by applicable law or SEC policy;

	•	the exchange offer is not for any reason consummated on or prior to May 27, 2004; or

	•	any holder of notes notifies us prior to the 20th business day following the consummation of the exchange offer that:


	•	it is an initial purchaser holding original notes following the consummation of the exchange offer that are not eligible to be exchanged for new notes in the exchange offer;

	•	it is an initial purchaser that participated in the exchange offer that did not received freely tradeable new notes for original notes constituting any portion of an unsold allotment;

	•	it is not an initial purchaser and is not eligible to participate in the exchange offer (other than by reason of such holder being an affiliate of ours).

In the event that we are obligated to file a shelf registration statement, we will be required to keep such shelf registration statement effective for up to two years from the date of effectiveness. Other than as described above, no holder will have the right to participate in the shelf registration or require that we register his or her original notes in accordance with the Securities Act of 1933. If you participate in the exchange offer, you will be able to sell or transfer freely your new notes if:


	•	the notes issued in the exchange offer are being acquired in the ordinary course of your business;

	•	you are not participating, do not intend to participate and have no arrangement or understanding with any person to participate in the distribution of the notes issued to you in the exchange offer; and

	•	you are not an affiliate of ours, as defined under the Securities Act of 1933.

We believe that the notes issued to you in this exchange offer may be offered for resale, sold and otherwise transferred by you, without compliance with the registration and prospectus delivery provisions of the Securities Act of 1933, only if you make the representations that we discuss above.

Our belief is based upon existing interpretations by the SEC’s staff contained in several “no-action” letters to third parties unrelated to us. If you tender your original notes in the exchange offer for the purpose of participating in a distribution of new notes you cannot rely on these interpretations by the SEC’s staff and you must comply with the registration and prospectus delivery requirements of the Securities Act of 1933 in connection with a secondary resale transaction.

The SEC considers broker-dealers that acquired original notes directly from us, but not as a result of market-making activities or other trading activities, to be making a distribution of the new notes if they participate in the exchange offer. Consequently, these broker-dealers cannot use this prospectus for the exchange offer in connection with a resale of the new notes and, absent an exemption, must comply with the registration and prospectus delivery requirements of the Securities Act of 1933 in connection with a resale of the new notes. These broker-dealers cannot rely on the position of the SEC’s staff set forth in the Exxon Capital Holdings Corporation no-action letter (available May 13, 1988) or similar letters.

A broker-dealer that has bought original notes for market-making or other trading activities must deliver a prospectus in order to resell any new notes it receives for its own account in the exchange offer. The SEC has taken the position that broker-dealers may fulfill their prospectus delivery requirements with respect to the new notes by delivering the prospectus contained in the registration statement for the exchange offer. This prospectus may be used by a broker-dealer to resell any of its new notes. We have agreed in the registration rights agreement to send a prospectus to any broker-dealer that requests copies in the notice and questionnaire included in the letter of transmittal accompanying the prospectus for a period of up to 180 days after the date of expiration of this exchange offer.

Unless you are required to do so because you are a broker-dealer or if you do not meet the conditions described above, you may not use this prospectus for an offer to resell, resale or other retransfer of new notes. We are not making this exchange offer to, nor will we accept tenders for exchange from, holders of original notes in any jurisdiction in which the exchange offer or the acceptance of it would not be in compliance with the securities or blue sky laws of that jurisdiction.

You may suffer adverse consequences if you fail to exchange your original notes. Following the completion of the exchange offer, except as set forth above and in the registration rights agreement, you will not have any further registration rights and your original notes will continue to be subject to certain restrictions on transfer. Accordingly, if you do not participate in the exchange offer, your ability to sell your original notes could be adversely affected.

Representations We Need From You Before You May Participate in the Exchange Offer

We need representations from you before you can participate in the exchange offer.


	•	the notes you acquire in the exchange offer are being obtained in the ordinary course of your business;

	•	neither you nor any person you are acting for is engaging in or intends to engage in a distribution of the notes;

	•	neither you nor any person you are acting for has an arrangement or understanding with any person to participate in the distribution of the notes;

	•	neither you nor any person you are acting for is our “affiliate”, as defined under Rule 405 of the Securities Act of 1933;

	•	you acknowledge and agree that if you are a broker-dealer registered under the Securities Exchange Act of 1934, as amended, or you are participating in the exchange offer for the purposes of distributing the new notes, you must comply with the registration and prospectus delivery requirements of the


		Securities Act of 1933 in connection with a secondary resale of the notes, including the requirement that any secondary resale transaction be covered by an effective registration statement containing the selling security holder information required by Item 507 of Regulation S-K under the Securities Act of 1933, and you cannot rely on the position of the SEC staff in its no-action letters; and

	•	if you or any other person you are acting for is a broker-dealer, and you receive notes for your own account in exchange for original notes that were acquired as a result of market-making activities or other trading activities, you will deliver a prospectus in connection with any resale of such notes.

We will accept any validly tendered original notes that are not withdrawn prior to 5:00 p.m. New York City time on the expiration date. We will issue $1,000 principal amount of new notes in exchange for each $1,000 principal amount of your original notes tendered. Holders may tender some or all of their original notes in the exchange offer.

The form and terms of the new notes will be substantially the same as the form and terms of your original notes except that:


	•	interest on the new notes will accrue from the last interest payment date on which interest was paid on your original notes, or, if no interest was paid, from the date of the original issuance of your original notes;

	•	the new notes have been registered under the Securities Act of 1933 and will not bear a legend restricting their transfer; and

	•	the provisions for payment of additional interest in the case of non-registration will be eliminated.

The new notes will be issued under, and entitled to the benefits of, the same indenture governing your original notes.

This prospectus and the documents you received with this prospectus are being sent to you and to others believed to have beneficial interests in the original notes. We intend to conduct the exchange offer in accordance with the applicable requirements of the Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC.

We will have accepted your validly tendered original notes when we have given oral or written notice to Wells Fargo. Wells Fargo will act as agent for you for the purpose of receiving the notes. If any tendered original notes are not accepted for exchange because of an invalid tender, the occurrence of certain other events or otherwise, certificates sent to Wells Fargo will be returned, without expense, as promptly as practicable after the expiration date to you, unless you request in the letter of transmittal that the notes be sent to someone else.

You will not be required to pay brokerage commissions, fees or transfer taxes in the exchange of your original notes. We will pay all charges and expenses in connection with the exchange offer except for any taxes you may incur in effecting the transfer of your original notes or new notes to some other person, or if a transfer tax is imposed for any reason other than the exchange of notes pursuant to the exchange offer.

The exchange offer will expire at 5:00 p.m. New York City time, on unless we extend the exchange offer, in which case the exchange offer shall terminate at 5:00 p.m. New York City time on the last day of the extension. In any event, the exchange offer will be held open for at least 20 business days. In order to extend the exchange offer, we will issue a notice by press release or other public announcement.


	•	to terminate the exchange offer, if any of the conditions shall not have been satisfied; or

	•	to amend the terms of the exchange offer in any manner.

If we delay, extend, terminate or amend the exchange offer, we will give notice to the exchange agent and issue a press release or other public announcement.

Except in limited circumstances, only a DTC participant listed on a DTC securities position listing with respect to the original notes may tender original notes in the exchange offer. Except as stated below under “— Book-Entry Transfer,” to tender in the exchange offer:


	•	if you do not hold your position through DTC, Euroclear or Clearstream, Luxembourg, you must, on or before the expiration date, deliver a duly completed letter of transmittal to the exchange agent at its address specified in the letter of transmittal, and certificates for your original notes must be received by Wells Fargo along with the letter of transmittal;

	•	if you hold your position through DTC, you must instruct DTC and a DTC participant by completing the form “Instruction to Registered Holder from Beneficial Holder” accompanying this prospectus of your intention whether or not you wish to tender your original notes for new notes; and you must in turn follow the procedures for book-entry transfer as set forth below under “— Book-Entry Transfer” and in the letter of transmittal; or

	•	if you hold your position through Euroclear or Clearstream, Luxembourg, the form “Instruction to Registered Holder from Beneficial Holder” with respect to original notes held through Euroclear or Clearstream, Luxembourg must be completed by a direct accountholder in Euroclear or Clearstream, Luxembourg, and interests in the original notes must be tendered in compliance with procedures established by Euroclear or Clearstream, Luxembourg.

If you intend to use the guaranteed delivery procedures, you must comply with the guaranteed delivery procedures described below.

Neither we, nor the exchange agent will be responsible for the communication of tenders by holders to the accountholders in DTC, Euroclear or Clearstream, Luxembourg through which they hold original notes or by such accountholders to the exchange agent, DTC, Euroclear or Clearstream, Luxembourg.

Holders will not be responsible for the payment of any fees or commissions to the exchange agent for the original notes.

In no event should a holder submitting a tender for exchange send a letter of transmittal or original notes to any other agent of ours other than the exchange agent, or to DTC, Euroclear or Clearstream, Luxembourg.

Holders may contact the exchange agent for assistance in filling out and delivering letters of transmittal and for additional copies of the exchange offer materials.

To be tendered effectively, a letter of transmittal or, as described below under “— Book-Entry Transfer,” an “agent’s message” and other required documents must be received by Wells Fargo at its address set forth under “— Exchange Agent” below prior to the expiration date.

If you do not withdraw your tender before the expiration date, it will constitute an agreement between you and us in accordance with the terms and conditions in this prospectus and in the letter of transmittal.

The method of delivery of your original notes, the letter of transmittal and all other required documents to be delivered to Wells Fargo is at your election and risk. Instead of delivery by mail, it is recommended that you use an overnight or hand delivery service. In all cases, you should allow sufficient time to ensure delivery to Wells Fargo before the expiration date. No letter of transmittal or original notes should be sent to us. You may request your brokers, dealers, commercial banks, trust companies, or nominees to effect these transactions on your behalf.

If your original notes are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and you wish to tender your original notes, then you should contact the registered holder promptly and instruct the registered holder to tender on your behalf If you wish to tender on behalf of a registered owner, you must, prior to completing and executing a letter of transmittal and delivering the registered owner’s original notes, either make appropriate arrangements to register ownership of the original notes in your name or obtain a properly completed power of attorney or other proper endorsement from the registered holder. We strongly urge you to act immediately since the transfer of registered ownership may take considerable time.

Signatures on a letter of transmittal or a notice of withdrawal must be guaranteed by an “eligible guarantor institution” within the meaning of Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended, referred to as an eligible institution, that is a member of specified signature guarantee programs.

Signatures on a letter of transmittal or a notice of withdrawal will not be required to be guaranteed if the original notes are tendered:


	•	by a registered holder who has not completed the box entitled “Special Issuance Instructions” or “Special Delivery Instructions” on the letter of transmittal; or

	•	for the account of an eligible institution.

If a letter of transmittal or any notes or powers of attorney are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations, or others acting in a fiduciary or representative capacity, such persons should so indicate when signing. Evidence satisfactory to us of their authority to so act must be submitted with such letter of transmittal unless waived by us.

All questions as to the validity, form, eligibility, including time of receipt, acceptance and withdrawal of tendered notes will be determined by us, in our sole discretion, and our determination will be final and binding. We reserve the absolute right to reject any and all original notes not properly tendered or any original notes the acceptance of which would be unlawful in the opinion of us or our counsel. We also reserve the right to waive any defects, irregularities, or conditions of tender as to particular original notes. Our interpretation of the terms and conditions of the exchange offer, including the instructions in a letter of transmittal, will be final and binding on all parties. Any defects or irregularities in connection with tenders of original notes must be cured within such time as we shall determine, unless waived by us. Although we intend to notify you of defects or irregularities with respect to tenders of original notes, neither we, Wells Fargo nor any other person shall be under any duty to give such notification or shall incur any liability for failure to give such notification. Tenders of original notes will not be deemed to have been made until all such defects and irregularities have been cured or waived. Any original notes received by Wells Fargo that are not properly tendered and as to which the defects or irregularities have not been cured or waived will be returned by Wells Fargo as soon as practicable following the expiration date to you, unless you request in the letter of transmittal that the notes be sent to someone else.

In addition, we reserve the right in our sole discretion to purchase or make offers for any original notes that remain outstanding after the expiration date and, to the extent permitted by applicable law, to purchase original notes in the open market in privately negotiated transactions, or otherwise. The terms of any such purchases or offers could differ from the terms of this exchange offer.

Despite any other term of the exchange offer, we will not be required to accept for exchange, or exchange new notes for, any old notes, and we may terminate the exchange offer, if:


	•	the exchange offer, or the making of any exchange by a holder, violates, in our good faith determination or on the advice of counsel, any applicable law, rule or regulation or any applicable interpretation of the staff of the SEC;

	•	any action or proceeding is instituted or threatened in any court or by the SEC or any other governmental agency with respect to the exchange offer which, in our judgment, would impair our ability to proceed with the exchange offer; or

	•	we have not obtained any governmental approval which we, in our sole discretion, consider necessary for the completion of the exchange offer as contemplated by this prospectus.

These conditions listed above are for our sole benefit and may be asserted by us at any time, regardless of the circumstances giving rise to any of these conditions, or may be waived by us in whole or in part at any time in our sole discretion. The failure by us to exercise any of our rights shall not be a waiver of our rights. We are required to use commercially reasonable efforts to obtain the withdrawal of any stop order at the earliest possible time.

In all cases, issuance of notes for tendered original notes that are accepted for exchange in the exchange offer will be made only after timely receipt by Wells Fargo of:


	•	certificates for original notes or a timely confirmation from DTC of such original notes into Wells Fargo’s account at DTC,

	•	a properly completed and duly executed letter of transmittal or, with respect to DTC and its participants, an “agent’s message” described further below in which the tendering holder acknowledges its receipt of and agreement to be bound by the letter of transmittal for such exchange offer, and

	•	all other required documents.

If we do not accept your tendered original notes or if you submit original notes for a greater aggregate principal amount than you desire to exchange, then the unaccepted or unexchanged original notes will be returned without expense to you or, in the case of notes tendered by book-entry transfer into Wells Fargo’s account at DTC pursuant to the book-entry transfer procedures described below, such non-exchanged notes will be credited to an account maintained with DTC, as promptly as practicable after the expiration or termination of the exchange offer.

We understand that the exchange agent will make a request promptly after the date of this prospectus to establish accounts with respect to the original notes at DTC for the purpose of facilitating the exchange offer. Any financial institution that is a participant in DTC’s system may make book-entry delivery of original notes by causing DTC, Euroclear or Clearstream, Luxembourg, as the case may be, to transfer such original notes into the exchange agent’s DTC account in accordance with DTC’s electronic Automated Tender Offer Program procedures for such transfer. The exchange of new notes for tendered original notes will only be made after timely:


	•	confirmation of book-entry transfer of the original notes into the exchange agent’s account; and

	•	receipt by the exchange agent of an executed and properly completed letter of transmittal or an “agent’s message and all other required documents specified in the letter of transmittal.

The confirmation, letter of transmittal or agent’s message and any other required documents must be received at the exchange agent’s address listed below under “— Exchange Agent” on or before 5:00 p.m. New York time, on the expiration date of the exchange offer, or, if the guaranteed delivery procedures described below are complied with, within the time period provided under those procedures.

As indicated above, delivery of documents to any of DTC, Euroclear or Clearstream, Luxembourg in accordance with its procedures does not constitute delivery to the exchange agent.

The term “agent’s message” means a message, transmitted by DTC and received by the exchange agent and forming part of the confirmation of a book-entry transfer, which states that DTC has received an express acknowledgment from a participant in DTC tendering original notes stating:


	•	the aggregate principal amount of original notes which have been tendered by the participant;

	•	that such participant has received an appropriate letter of transmittal and agrees to be bound by the terms of the letter of transmittal and the terms of the exchange offer; and

	•	that we may enforce such agreement against the participant. Delivery of an agent’s message will also constitute an acknowledgment from the tendering DTC participant that the representations contained in the letter of transmittal are true and correct.

If you wish to tender your original notes and the original notes are not immediately available, or time will not permit your original notes and other required documents to reach Wells Fargo before the expiration date, or the procedure for book-entry transfer cannot be completed on a timely basis, a tender may be effected if:


	•	the tender is made by or through an eligible institution;

	•	before the expiration date, Wells Fargo has received from such eligible institution a properly completed and duly executed letter of transmittal, or a facsimile thereof, and notice of guaranteed delivery substantially in the form provided by us, by facsimile transmission, mail or hand delivery. The notice of guaranteed delivery shall state your name and address and the amount of original notes tendered, shall state that the tender is being made thereby and shall guarantee that, within three New York Stock Exchange trading days after the date of execution of the notice of guaranteed delivery, the certificates for all physically tendered original notes, in proper form for transfer, or a confirmation from DTC of book-entry transfer, the letter of transmittal, or a manually executed facsimile thereof, properly completed and duly executed, and any other documents required by the applicable letter of transmittal will be deposited by the eligible institution with Wells Fargo; and

	•	the certificates for all physically tendered original notes, in proper form for transfer, or a confirmation from DTC of book-entry transfer, the properly completed and duly executed letter of transmittal, or a manually executed facsimile thereof, and all other documents required by the applicable letter of transmittal are received by Wells Fargo within three New York Stock Exchange trading days after the date of execution of the notice of guaranteed delivery.

You may withdraw your tender of original notes at any time prior to 5:00 p.m. New York City time, on the expiration date.

For a withdrawal of tendered notes to be effective, a written or, for a DTC participant, electronic, notice of withdrawal must be received by Wells Fargo, at its address set forth in the next section of this prospectus entitled “— Exchange Agent”, prior to 5:00 p.m. New York City time, on the expiration date.


	•	specify your name;

	•	identify the original notes to be withdrawn, including, if applicable, the certificate number or numbers and aggregate principal amount of such original notes;

	•	be signed by you in the same manner as the original signature on the letter of transmittal by which your original notes were tendered, including any required signature guarantees, or be accompanied by


		documents of transfer sufficient for the trustee of your original notes to register the transfer of those notes into the name of the person withdrawing the tender; and

	•	specify the name in which you want the withdrawn original notes to be registered, if different from your name.

All questions as to the validity, form and eligibility, including time of receipt, of such notices will be determined by us, and our determination shall be final and binding on all parties. Any original notes withdrawn will be considered not to have been validly tendered for exchange for the purposes of the exchange offer. Any notes which have been tendered for exchange but which are not exchanged for any reason will be returned to you without cost as soon as practicable after withdrawal, rejection of tender, or termination of the exchange offer relating to such original notes. Properly withdrawn original notes may be retendered by following one of the procedures described above in “– Procedures for Tendering Your Original Notes” at any time on or prior to the expiration date.

All executed letters of transmittal should be directed to the exchange agent. We have appointed Wells Fargo Bank, National Association as the exchange agent for the exchange offer. Questions, requests for assistance and requests for additional copies of the prospectus or a letter of transmittal should be directed to the exchange agent at its offices at Wells Fargo Bank, National Association, MAC E2818-176, 17th Floor, 707 Wilshire Boulevard, Los Angeles, CA 90017, Attn: Corporate Trust Administration. The exchange agent’s telephone number is (213) 614-3349 and facsimile number is (213) 614-3355.

We will not make any payments to brokers, dealers or others soliciting acceptances of the exchange offer, other than to the exchange agent. The principal solicitation is being made by mail. However, additional solicitations may be made in person or by telephone by our officers and employees.

The estimated cash expenses to be incurred in connection with the exchange offer will be paid by us and are estimated in the aggregate to be approximately $ , which includes fees and expenses of Wells Fargo, as exchange agent, and accounting, legal, printing and related fees and expenses.

If you tender original notes for exchange you will not be obligated to pay any transfer taxes unless you instruct us to register your new notes in a different name or if a transfer tax is imposed for a reason other than the exchange of notes pursuant to this exchange offer. If you request that your original notes not tendered or not accepted in the exchange offer be returned to a different person, you will be responsible for the payment of any applicable transfer tax.

We will issue the new notes in exchange for original notes under the exchange offer only after timely receipt by the exchange agent of the original notes, a properly completed and duly executed letter of transmittal or agent’s message and all other required documents. Therefore, holders of the original notes desiring to tender original notes in exchange for new notes should allow sufficient time to ensure timely delivery. We are under no duty to give notification of defects or irregularities of tenders of original notes for exchange. Upon completion of the exchange offer, specified rights under the registration rights agreement, including registration rights and any right to additional interest, will be either limited or eliminated.

Participation in the exchange offer is voluntary. In the event the exchange offer is completed, we will not be required to register the remaining original notes, except in the limited circumstances described under “— Purpose and Effect of Exchange Offer; Registration Rights.” Original notes that are not tendered or that


	•	holders may resell original notes only if an exemption from registration under the Securities Act of 1933 is available or, outside the United States, to non-U.S. persons in accordance with the requirements of Regulation S under the Securities Act of 1933; and

	•	the remaining original notes will bear a legend restricting transfer in the absence of registration or an exemption.

To the extent that original notes are tendered and accepted in connection with the exchange offer, any trading market for remaining original notes could be adversely affected.

We will be required to pay additional interest on the original notes in the event that:


	•	the exchange offer registration statement is not declared effective by the SEC on or prior to April 28, 2004;

	•	the exchange offer is not consummated on or prior to May 27, 2004; or

	•	a shelf registration statement, if it has been required to be filed, is not declared effective within 360 calendar days after it was required to be filed.

Each of these events is a registration default. We will be required to pay additional interest in respect of the notes following the occurrence of a registration default at a rate equal to 0.25% per annum, which rate shall increase by 0.25% per annum for each subsequent 90-day period during which such registration default continues up to a maximum of 1.00% per annum.

All accrued additional interest will be paid to the holders in the same manner as interest is paid under the notes. Following the cure of all registration defaults, the accrual of additional interest will cease.

The notes will initially be represented by one or more permanent global notes in definitive, fully registered book-entry form (the global securities) which will be registered in the name of Cede & Co., as nominee of DTC and deposited on behalf of purchasers of the notes represented thereby with a custodian for DTC for credit to the respective accounts of the purchasers (or to such other accounts as they may direct) at DTC.

We expect that pursuant to procedures established by DTC (a) upon deposit of the global securities, DTC or its custodian will credit on its internal system portions of the global securities which will contain the corresponding respective amount of the global securities to the respective accounts of persons who have accounts with such depositary and (b) ownership of the notes will be shown on, and the transfer of ownership thereof will be affected only through, records maintained by DTC or its nominee (with respect to interests of participants (as defined below) and the records of participants (with respect to interests of persons other than participants). Such accounts initially will be designated by or on behalf of the initial purchasers and ownership of beneficial interests in the global securities will be limited to persons who have accounts with DTC (the participants) or persons who hold interests through participants. Noteholders may hold their interests in a global security directly through DTC if they are participants in such system, or indirectly through organizations which are participants in such system.

So long as DTC or its nominee is the registered owner or holder of any of the notes, DTC or such nominee will be considered the sole owner or holder of such notes represented by such global securities for all purposes under the indenture and under the notes represented thereby. No beneficial owner of an interest in the global securities will be able to transfer such interest except in accordance with the applicable procedures of DTC in addition to those provided for under the indenture and, if applicable, those of the Euroclear System (Euroclear) and Clearstream Banking, societe anonyme, Luxembourg (Clearstream Luxembourg).

The descriptions of the operations and procedures of DTC, Euroclear and Clearstream, Luxembourg set forth below are provided solely as a matter of convenience. These operations and procedures are solely within the control of the respective settlement systems and are subject to change by them from time to time. Neither we nor the initial purchasers take any responsibility for these operations or procedures, and investors are urged to contact the relevant system or its participants directly to discuss these matters.


	•	a limited purpose trust company organized under the laws of the State of New York;

	•	a “banking organization” within the meaning of the New York Banking Law;

	•	a member of the Federal Reserve System;

	•	a “clearing corporation” within the meaning of the Uniform Commercial Code, as amended; and

	•	a “clearing agency” registered pursuant to Section 17A of the Securities Exchange Act of 1934 (the “Exchange Act”).

DTC was created to hold securities for its participants (collectively, the “Participants”) and facilitates the clearance and settlement of securities transactions between Participants through electronic book-entry changes to the accounts of its Participants, thereby eliminating the need for physical transfer and delivery of certificates. DTC’s Participants include securities brokers and dealers (including the initial purchasers), banks and trust companies, clearing corporations and certain other organizations. Indirect access to DTC’s system is also available to other entities such as banks, brokers, dealers and trust companies (collectively, the “Indirect Participants”) that clear through or maintain a custodial relationship with a Participant, either directly or indirectly. Investors who are not Participants may beneficially own securities held by or on behalf of DTC only through Participants or Indirect Participants.

We expect that pursuant to procedures established by DTC (1) upon deposit of each Global Note, DTC will credit the accounts of Participants designated by the initial purchasers with an interest in the Global Note and (2) ownership of the notes will be shown on, and the transfer of ownership thereof will be effected only through, records maintained by DTC (with respect to the interests of Participants) and the records of Participants and the Indirect Participants (with respect to the interests of persons other than Participants).

The laws of some jurisdictions may require that certain purchasers of securities take physical delivery of such securities in definitive form. Accordingly, the ability to transfer interests in the notes represented by a Global Note to such persons may be limited. In addition, because DTC can act only on behalf of its Participants, who in turn act on behalf of persons who hold interests through Participants, the ability of a person having an interest in notes represented by a Global Note to pledge or transfer such interest to persons or entities that do not participate in DTC’s system, or to otherwise take actions in respect of such interest, may be affected by the lack of a physical definitive security in respect of such interest.

So long as DTC or its nominee is the registered owner of a Global Note, DTC or such nominee, as the case may be, will be considered the sole owner or holder of the notes represented by the Global Note for all purposes under the indenture. Except as provided below, owners of beneficial interests in a Global Note will not be entitled to have notes represented by such Global Note registered in their names, will not receive or be entitled to receive physical delivery of Certificated Notes, and will not be considered the owners or holders thereof under the indenture for any purpose, including with respect to the giving of any direction, instruction or approval to the trustee thereunder. Accordingly, each holder owning a beneficial interest in a Global Note must rely on the procedures of DTC and, if such holder is not a Participant or an Indirect Participant, on the procedures of the Participant through which such holder owns its interest, to exercise any rights of a holder of notes under the indenture or such Global Note. We understand that under existing industry practice, in the event that we request any action of holders of notes, or a holder that is an owner of a beneficial interest in a Global Note desires to take any action that DTC, as the holder of such Global Note, is entitled to take, DTC would authorize the Participants to take such action and the Participants would authorize holders owning through such Participants to take such action or would otherwise act upon the instruction of such holders. Neither we nor the trustee will have any responsibility or liability for any aspect of the records relating to or payments made on account of notes by DTC, or for maintaining, supervising or reviewing any records of DTC relating to such notes.

Payments with respect to the principal of, and premium, if any, and interest on, any notes represented by a Global Note registered in the name of DTC or its nominee on the applicable record date will be payable by the trustee to or at the direction of DTC or its nominee in its capacity as the registered holder of the Global Note representing such notes under the indenture. Under the terms of the indenture, we and the trustee may treat the persons in whose names the notes, including the Global Notes, are registered as the owners thereof for the purpose of receiving payment thereon and for any and all other purposes whatsoever. Accordingly, neither we nor the trustee has or will have any responsibility or liability for the payment of such amounts to owners of beneficial interests in a Global Note (including principal, premium, if any, and interest). Payments by the Participants and the Indirect Participants to the owners of beneficial interests in a Global Note will be governed by standing instructions and customary industry practice and will be the responsibility of the Participants or the Indirect Participants and DTC.

Transfers between Participants in DTC will be effected in accordance with DTC’s procedures, and will be settled in same-day funds. Transfers between participants in Euroclear or Clearstream, Luxembourg will be effected in the ordinary way in accordance with their respective rules and operating procedures.

Subject to compliance with the transfer restrictions applicable to the notes, cross-market transfers between the Participants in DTC, on the one hand, and Euroclear or Clearstream, Luxembourg participants, on the other hand, will be effected through DTC in accordance with DTC’s rules on behalf of Euroclear or Clearstream, Luxembourg, as the case may be, by its respective depositary; however, such cross-market transactions will require delivery of instructions to Euroclear or Clearstream, Luxembourg, as the case may be, by the counterparts in such system in accordance with the rules and procedures and within the established deadlines (Brussels time) of such system. Euroclear or Clearstream, Luxembourg, as the case may be, will, if

the transaction meets its settlement requirements, deliver instructions to its respective depositary to take action to effect final settlement on its behalf by delivering or receiving interests in the relevant Global Notes in DTC, and making or receiving payment in accordance with normal procedures for same-day funds settlement applicable to DTC. Euroclear participants and Clearstream, Luxembourg participants may not deliver instructions directly to the depositories for Euroclear or Clearstream, Luxembourg.

Because of time zone differences, the securities account of a Euroclear or Clearstream, Luxembourg participant purchasing an interest in a Global Note from a Participant in DTC will be credited, and any such crediting will be reported to the relevant Euroclear or Clearstream, Luxembourg participant, during the securities settlement processing day (which must be a business day for Euroclear and Clearstream, Luxembourg) immediately following the settlement date of DTC. Cash received in Euroclear or Clearstream, Luxembourg as a result of sales of interests in the Global Notes by or through a Euroclear or Clearstream, Luxembourg participant to a Participant in DTC will be received with value on the settlement date of DTC but will be available in the relevant Euroclear or Clearstream, Luxembourg cash account only as of the business day for Euroclear or Clearstream, Luxembourg following DTC’s settlement date.

Although DTC, Euroclear and Clearstream, Luxembourg have agreed to the foregoing procedures to facilitate transfers of interests in the Global Notes among participants in DTC, Euroclear and Clearstream, Luxembourg, they are under no obligation to perform or to continue to perform such procedures, and such procedures may be discontinued at any time. Neither we nor the trustee will have any responsibility for the performance by DTC, Euroclear or Clearstream, Luxembourg or their respective participants or indirect participants of their respective obligations under the rules and procedures governing their operations.


	•	we notify the trustee in writing that DTC is no longer willing or able to act as a depositary or DTC ceases to be registered as a clearing agency under the Exchange Act and a successor depositary is not appointed within 90 days of such notice or cessation; or

	•	an event of default has occurred and is continuing and the registrar has received a request from DTC to issue Certificated Notes,

then, upon surrender by DTC of the Global Notes, Certificated Notes will be issued to each person that DTC identifies as the beneficial owner of the notes represented by the Global Notes. Upon any such issuance, the trustee is required to register such Certificated Notes in the name of such person or persons (or the nominee of any thereof) and cause the same to be delivered thereto.

Neither we nor the trustee shall be liable for any delay by DTC or any Participant or Indirect Participant in identifying the beneficial owners of the related notes and each such person may conclusively rely on, and shall be protected in relying on, instructions from DTC for all purposes (including with respect to the registration and delivery, and the respective principal amounts, of the notes to be issued).

The following is a discussion of the material U.S. federal tax consequences of the ownership and disposition of the notes. Unless otherwise stated, this discussion is limited to the tax consequences to those persons who purchase the notes from the initial purchasers and who hold the notes as capital assets under Section 1221 of the Internal Revenue Code. The discussion does not address specific tax consequences that may be relevant to particular persons including, for example, financial institutions, broker-dealers, insurance companies, tax-exempt organizations, U.S. expatriates and persons in special situations, such as those who hold notes as part of a straddle, hedge, conversion transaction, or other integrated investment. If a partnership holds notes, the tax treatment of a partner will generally depend on the status of the partner and on the activities of the partnership. Partners of partnerships holding notes should consult their tax advisors. This discussion does not address the tax consequences to persons that have a “functional currency” other than the U.S. dollar. In addition, this discussion does not address U.S. federal alternative minimum tax consequences or any aspect of state, local or foreign taxation. This discussion is based upon current U.S. federal income tax laws, regulations, rulings and judicial decisions, all of which are subject to change, possibly with retroactive effect.

Prospective purchasers of the notes are urged to consult their own tax advisors concerning the specific U.S. federal income tax consequences to them of owning and disposing of the notes, as well as the application of state, local and foreign income and other tax laws.

For purposes of this discussion, you are a “U.S. holder” if you are a beneficial owner of a note and are a U.S. citizen or resident, a corporation created or organized in or under the laws of the United States or of any political subdivision thereof, an estate, the income of which is subject to U.S. federal income taxation regardless of its source, or a trust if a U.S. court is able to exercise primary supervision over its administration and one or more U.S. persons have the authority to control all of its substantial decisions.

Taxation of Interest. If you are a U.S. holder, interest on your notes generally will be taxable as ordinary interest income at the time it is accrued or received in accordance with your regular method of tax accounting.

In general, if the terms of a debt instrument entitle a holder to receive payments other than fixed periodic interest that exceed the issue price of the instrument, the holder may be required to recognize additional interest as “original issue discount” over the term of the instrument. If the amount or timing of any additional payments on a note is contingent, the note could be subject to special rules that apply to contingent payment debt instruments. In certain circumstances, you could receive payments on the notes in excess of stated principal or interest. Under circumstances described elsewhere in this prospectus, we will be required to pay additional amounts on the notes as additional interest if we fail to comply with our obligations under the registration rights agreement. In addition, if a Change of Control occurs, you may require us to redeem your notes at a premium. We believe the possibility that we will pay these additional amounts is “remote or incidental” within the meaning of the applicable Treasury regulations. On that basis, we believe the possibility that these additional amounts may be paid should not be taken into account in computing original issue discount and should not cause the notes to be treated as contingent payment debt instruments. Our determination that the possibility that these additional amounts may be paid is “remote or incidental” is binding on you, unless you explicitly disclose that you are taking a different position to the Internal Revenue Service on your tax return for the year during which you acquire the notes. It is possible, however, that the Internal Revenue Service may take a different position, in which case the timing and amount of income recognition relating to the additional amounts you may receive on the notes may be different. Additional interest, if paid, should be taxable to you as ordinary income at the time the amounts are accrued or received in accordance with your regular method of tax accounting.

The exchange of original notes for new notes will not be treated as a taxable transaction for U.S. Federal income tax purposes because the terms of the new notes will not be considered to differ materially in kind or in extent from the terms of the original notes. Rather, the new notes you receive in the exchange offer will be treated as a continuation of your investment in the original notes. As a result, you will not have any material U.S. Federal income tax consequences if you exchange your original notes for new notes.

If you are thinking about exchanging your original notes for new notes, you should consult your own tax advisors concerning the tax consequences of the exchange arising under state, local or foreign laws.

Sale, Exchange, Retirement or Other Taxable Disposition of the Notes. Upon the sale, exchange, retirement or other taxable disposition of a note you generally will recognize gain or loss equal to the difference between the amount realized on the sale, exchange or retirement (less any portion allocable to accrued and unpaid interest which will be taxable as ordinary income) and your adjusted tax basis in the note. Your adjusted tax basis in a note generally will be the purchase price of the note less any principal payments you receive.

The gain or loss you recognize on the sale, exchange, retirement or other taxable disposition of the notes generally will be capital gain or loss. The gain or loss generally will be long-term capital gain or loss if you have held the notes for more than one year. The deductibility of capital losses is subject to limitation.

A “non-U.S. holder” is any beneficial owner of a note other than a U.S. holder.

Taxation of Interest. If you are a non-U.S. holder, you generally will not be subject to U.S. federal income or withholding tax on interest paid on the notes so long as that interest is not effectively connected with your conduct of a trade or business within the United States, and, in the case of the withholding tax:


	•	you do not actually or constructively own 10% or more of the total combined voting power of all classes of our stock entitled to vote;

	•	you are not a “controlled foreign corporation” with respect to which we are a “related person” within the meaning of the Internal Revenue Code; and

	•	either (A) you certify to us or our payment agent, under penalties of perjury, that you are not a U.S. person and provide your name and address on IRS Form W-8BEN (or a suitable substitute form), or (B) a financial institution that holds customers’ securities in the ordinary course of its trade or business and holds the note on behalf of a non-U.S. holder, certifies under penalties of perjury that IRS Form W-8BEN (or a suitable substitute form) has been received from the beneficial owner and provides a copy of the form to us or our payment agent.

If these conditions are not satisfied, then interest paid on the notes will be subject to U.S. withholding tax at a rate of 30% unless that rate is reduced or eliminated pursuant to an applicable tax treaty and you provide us with a properly completed and executed IRS Form W-8BEN (or a suitable substitute form) claiming benefits under such treaty.

Sale, Exchange, Retirement or Other Taxable Disposition of the Notes. Any gain you recognize on the sale, exchange, retirement or other taxable disposition of a note generally will be exempt from U.S. federal income and withholding tax unless:


	•	the gain is effectively connected with your conduct of a trade or business within the United States; or

	•	if you are an individual, you are present in the United States for 183 days or more during the taxable year of such disposition and certain other conditions are present.

Effectively Connected Income. If the interest, gain or other income you recognize on a note is effectively connected with your conduct of a trade or business within the United States, you will be exempt from the withholding tax previously discussed if you provide us with a properly completed and executed IRS

Form W-8ECI (or a suitable substitute form), but generally will be subject to U.S. federal income tax on the interest, gain or other income at regular federal income tax rates. In addition to regular U.S. federal income tax, corporations may be subject to a branch profits tax equal to 30% of their effectively connected earnings and profits, as adjusted for specific items, unless they qualify for a lower rate under an applicable tax treaty.

Federal Estate Taxes. A note held by an individual who at the time of death is not a citizen or resident of the United States will not be subject to U.S. federal estate tax as a result of the individual’s death, provided that the individual does not actually or constructively own 10% or more of the total combined voting power of all classes of our stock entitled to vote and that the interest accrued on the notes was not effectively connected with that holder’s conduct of a trade or business within the United States.

We will, where required, report to you and to the Internal Revenue Service the amount of any interest paid on the notes in each calendar year and the amounts of tax withheld, if any, with respect to those payments. A noncorporate U.S. holder may be subject to information reporting and to backup withholding with respect to payments of interest made on a note, or proceeds of the disposition of a note before maturity, unless the U.S. holder provides a correct taxpayer identification number or proof of an applicable exemption and otherwise complies with applicable requirements of the information reporting and backup withholding rules.

In the case of payments of interest to non-U.S. holders, current Treasury regulations provide that the backup withholding tax and certain information reporting requirements will not apply to payments with respect to which either the non-U.S. holder certifies as to its non-U.S. holder status under penalties of perjury as described above or an exemption has otherwise been established, provided that neither we nor our payment agent has actual knowledge that the holder is a U.S. person or that the conditions of any other exemption are not in fact satisfied.

Information reporting and backup withholding requirements will apply, however, to the gross proceeds paid to a non-U.S. holder on the disposition of the notes by or through a U.S. office of a U.S. or foreign broker, unless the non-U.S. holder establishes that it qualifies for an exemption. Information reporting requirements, but not backup withholding, will apply to payment of the proceeds of a disposition of the notes by or through a foreign office of a U.S. broker or foreign brokers with certain types of relationships to the United States unless the broker has documentary evidence in its file that the holder of the notes is not a U.S. person and the broker has no actual knowledge to the contrary, or the holder establishes that it qualifies for an exemption. Neither information reporting nor backup withholding generally will apply to payment of the proceeds of a disposition of the notes by or through a foreign office of a foreign broker not subject to the preceding sentence.

Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be refunded or credited against the holder’s U.S. federal income tax liability, provided that the required information is furnished to the Internal Revenue Service. Copies of the information returns reporting interest and withholding also may be made available to the tax authorities in the country in which a non-U.S. holder is a resident under the provisions of an applicable income tax treaty or other agreement.

The new notes, subject to satisfaction of certain conditions, may be acquired and held by an employee benefit plan subject to Title I of ERISA, or by an individual retirement account or employee benefit plan subject to section 4975 of the Code. A fiduciary of an employee benefit plan subject to ERISA must determine that the acquisition and holding of a new note is consistent with its fiduciary duties under ERISA. The fiduciary of an ERISA plan, as well as any other prospective investor subject to section 4975 of the Code, must also determine that its acquisition and holding of new notes does not result in a non-exempt prohibited transaction as defined in section 406 of ERISA or section 4975 of the Code. Each purchaser and transferee of new notes subject to ERISA and/or Section 4975 of the Code will be deemed to have made certain representations with respect to its acquisition and holding of the new notes.

Each broker-dealer that receives new notes for its own account pursuant to the exchange offer must acknowledge that it will deliver a prospectus in connection with any resale of such new notes. This prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of new notes received in exchange for Securities where such Securities were acquired as a result of market-making activities or other trading activities. We have agreed that, starting on the expiration date of the exchange offer and ending on the close of business 180 days after the expiration date of the exchange offer, they will make this prospectus, as amended or supplemented, available to any broker-dealer for use in connection with any such resale. In addition, until , 2004, all dealers effecting transactions in the new notes may be required to deliver a prospectus.

We will not receive any proceeds from any sale of new notes by broker-dealers. New notes received by broker-dealers for their own account pursuant to the exchange offer may be sold from time to time in one or more transactions in the over-the-counter market, in negotiated transactions, through the writing of options on the new notes or a combination of such methods of resale, at market prices prevailing at the time of resale, at prices related to such prevailing market prices or at negotiated prices. Any such resale may be made directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any such broker-dealer and/or the purchasers of any such new notes.

Any broker-dealer that resells new notes that were received by it for its own account pursuant to the exchange offer and any broker or dealer that participates in a distribution of such new notes may be deemed to be an “underwriter” within the meaning of the Act, and any profit of any such resale of new notes and any commissions or concessions received by any such persons may be deemed to be underwriting compensation under the Securities Act. The letter of transmittal states that by acknowledging that it will deliver and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act.

For a period of 180 days after the expiration date of the exchange offer, We will promptly send additional copies of this prospectus and any amendment or supplement to this prospectus to any broker-dealer that requests such documents in the letter of transmittal. We have agreed to pay all expenses incident to the exchange offer (including the expenses of one counsel for the holders of the original notes) other than commissions or concessions of any brokers or dealers and will indemnify the holders of the original notes (including any broker-dealers) against certain liabilities, including liabilities under the Securities Act.

The validity of the notes will be passed upon for us by Milbank, Tweed, Hadley & McCloy LLP, New York, New York.

The financial statements as of September 30, 2002 and 2001 and for each of the three years in the period ended September 30, 2002 included in this Prospectus have been so included in reliance on the report (which contains an explanatory paragraph relating to the Company’s liquidity as described in Note 2 to the financial statements) of PricewaterhouseCoopers LLP, independent accountants, given on the authority of said firm as experts in auditing and accounting.

We have filed with the SEC a registration statement on Form S-4 under the Securities Act of 1933 with respect to this offering of notes. This prospectus, which is part of the registration statement, does not contain all of the information set forth in the registration statement and the exhibits to the registration statement. For further information with respect to us and the notes, you should refer to the registration statement and the exhibits filed as a part of the registration statement. If a document has been filed as an exhibit to the registration statement, we refer you to the copy of the document that has been filed. Each of the statements in this prospectus relating to a document that has been filed as an exhibit is qualified in all respects by the filed exhibit. You may inspect a copy of the registration statement, including exhibits thereto, without charge at the SEC’s Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. Copies of all or any part of the registration statement may be obtained from the Public Reference Room upon payment of fees prescribed by the SEC. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.

Additionally, under the terms of the indenture, Holdings has agreed that, whether or not required by the rules and regulations of the SEC, so long as any notes are outstanding, Holdings will furnish to the trustee and the holders of notes (i) all quarterly and annual financial information that would be required to be contained in a filing with the SEC on Forms 10-Q and 10-K, if Holdings were required to file such forms, including a “Management’s Discussion and Analysis of Financial Condition and Results of Operations” that describes our financial condition and results of operations and our consolidated subsidiaries and, with respect to the annual financial statements only, a report thereon by our independent auditors and (ii) all current reports that would be required to be filed with the SEC on Form 8-K if Holdings were required to file such reports. In addition, whether or not required by the rules and regulations of the SEC, Holdings will file a copy of all such information and reports with the SEC for public availability (unless the SEC will not accept such a filing) and make such information available to prospective investors upon request.

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations, stockholders’ equity and cash flows present fairly, in all material respects, the financial position of Seminis, Inc. and its subsidiaries at September 30, 2002 and 2001 and the results of their operations and their cash flows for each of the three years in the period ended September 30, 2002 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company’s management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

As discussed in Note 2 to the financial statements, all outstanding amounts borrowed under the Company’s syndicated credit facility must be repaid by December 31, 2003. In the event that the lenders of the credit facility do not renew or extend the final maturity date of the facility, the Company will be obligated to secure alternative sources of financing. There can be no assurance that such financing will be available and the inability to find such financing could have a material adverse impact on the future financial position and operating results of the Company.

As discussed in Note 1, the Company adopted Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets.” Accordingly, the Company ceased amortizing goodwill as of October 1, 2001.

The accompanying notes are an integral part of these consolidated financial statements.

Seminis, Inc. (the “Company”, “we”) is the leading worldwide developer, producer and marketer of vegetable and fruit seeds. The Company is a majority-owned subsidiary of Savia, S.A. de C.V. (“Savia”) and effectively began operations when it purchased Asgrow Seed Company (“Asgrow”) in December 1994.

The consolidated financial statements include the accounts of the Company and its majority controlled and owned subsidiaries. Investments in unconsolidated entities, representing ownership interests between 20% and 50%, are accounted for using the equity method of accounting. All material intercompany transactions and balances have been eliminated in consolidation. Certain reclassifications have been made to prior years’ financial statements to conform to fiscal year 2002 presentation.

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the fiscal year, including estimates and assumptions related to customer discounts and allowances. Actual results could differ from those estimates.

Product sales are recognized upon shipment of goods and are reduced by provisions for discounts and allowances based on the Company’s historical and anticipated experience.

The Company classifies as cash equivalents all highly liquid investments purchased with an original maturity of three months or less. The Company invests its excess cash in deposits with major international banks, in government securities and in money market accounts with financial institutions. Such investments are considered cash equivalents for purposes of reporting cash flows and bear minimal risk.

Accounts receivable are valued net of reserves for bad debts, discounts and allowances. Calculations of reserves are based on historical experience and anticipated market conditions and are adjusted as management determines necessary. The Company performs ongoing credit evaluations of its customers’ financial condition and generally does not require collateral. The Company’s diversified customer base limits the amount of credit exposure to any one customer.

Inventories are stated at the lower of cost or estimated net realizable value. Costs for substantially all inventories are determined using the first-in, first-out (“FIFO”) method and include the cost of materials, direct labor and the applicable share of overhead costs. Unharvested crop-growing costs are included as part of inventory and represent costs incurred to plant and maintain seed crops which will be harvested during the subsequent fiscal year. Inventories are periodically reviewed and reserves established for deteriorated, excess and obsolete items.

Property, plant and equipment are stated at cost. Provisions for depreciation have been made using the straight-line and accelerated methods for financial reporting purposes and accelerated methods for tax purposes. Estimated useful lives generally range from 5 to 40 years for buildings and improvements and from 3 to 20 years for machinery and equipment.

Intangible assets consist primarily of the excess of purchase price over the fair market value of net assets acquired in purchase acquisitions and the costs of acquired germplasm, patents and trademarks. The costs of acquired germplasm, patents and trademarks are being amortized over 10 to 20 years on an accelerated basis. Other intangibles are amortized over 3 to 10 years on a straight-line basis.

Goodwill was amortized over 15 years on a straight-line basis. Upon adoption of SFAS No. 142, the Company has ceased amortization of its goodwill in fiscal year 2002.

Costs of computer software developed and obtained for internal use are capitalized and amortized over the respective license periods or expected useful lives, which range from three to five years. Capitalized computer software costs include external direct costs for licenses and services and payroll and payroll-related costs for employees who are directly associated with developing or installing such software.

The Company continually monitors its long-lived assets to determine whether any impairment of these assets has occurred. In making such determination, the Company evaluates the performance of the underlying businesses, products and product lines. The Company recognizes impairment of long-lived assets in the event the net book value of such assets exceeds the future undiscounted cash flows attributable to such assets. In fiscal year 2000, the Company recognized a $6,400 impairment write-down associated with its investment in LSL Plantscience. No other material impairments have been experienced.

The Company maintains third party seedmen’s errors and omissions insurance covering claims by growers for losses incurred as a result of seed quality or errors arising in fulfilling customer orders. Such policies are subject to annual renewal and revision and have coverage limits, deductibles and other terms. Provisions are made for anticipated losses in excess of coverage amounts provided by insurance based on historical experience and expected resolution. The Company performs ongoing evaluations of such claims and adjusts reserves as necessary to reflect expected settlements.

Research and development costs are charged to operations as incurred. Costs attributable to in-process research and development activities acquired in a purchase transaction are written-off at the date of acquisition.

Deferred income taxes reflect temporary differences between the amounts at which assets and liabilities are recorded for financial reporting purposes and the amounts utilized for tax purposes. A valuation allowance is established against deferred tax assets when all or some portion of such assets is unlikely to be realized.

The financial statements of the Company’s foreign subsidiaries are generally measured using the local currency as the functional currency. Assets and liabilities of these subsidiaries are translated at the rates of exchange at the balance sheet date. Income and expense items are primarily translated at average monthly rates of exchange prevailing during the fiscal year. The resultant translation adjustments are included in accumulated other comprehensive loss as a separate component of stockholders’ equity. Gains and losses from foreign currency transactions are included in the consolidated statements of operations.

Subsidiaries operating in highly inflationary economies or primarily using the United States dollar as their functional currency include gains and losses from foreign currency transactions and balance sheet translation adjustments in the consolidated statements of operations.

The Company’s financial instruments consist primarily of cash, accounts receivable, notes receivable, accounts payable, accrued liabilities, debt and mandatorily redeemable securities. These balances are stated in the consolidated financial statements at amounts that approximate fair market value unless separately disclosed in the Notes to Consolidated Financial Statements.

Comprehensive income is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. For the Company, comprehensive income primarily consists of its reported net income or loss and changes in foreign currency translation adjustments and minimum pension liability adjustment during a period.

The Company accounts for stock-based employee compensation arrangements in accordance with the provisions of Accounting Principles Board Opinion (“APB”) No. 25, “Accounting for Stock Issued to Employees,” and complies with the disclosure provisions of SFAS No. 123, “Accounting for Stock-Based Compensation.” Under APB No. 25, compensation cost is recognized based on the difference, if any, on the date of grant between the fair market value of the Company’s stock and the amount an employee must pay to acquire the stock.

The Company accounts for derivative instruments and hedging activities in accordance with the provisions of SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities,” as amended by SFAS No. 137 and No. 138. SFAS No. 133 requires companies to record derivatives on the balance sheet as assets or liabilities, measured at fair market value. It also requires that gains or losses resulting from changes in the values of those derivatives be accounted for depending on the use of the derivative and whether it qualifies for hedge accounting. The Company does not currently have any derivative instruments and therefore adoption of SFAS No. 133 did not have a material impact on the Company’s consolidated financial position or results of operations for fiscal year 2002.

The Company accounts for shipping and handling fees and costs in accordance with the provisions of EITF 00-10, “Accounting for Shipping and Handling Fees and Costs.” EITF 00-10 requires that all amounts billed to a customer in a sale transaction related to shipping and handling, if any, represent revenues earned for the goods provided and should be classified as revenue. It also states that a company may record shipping and handling costs in cost of sales. If such costs are significant and are not included in cost of sales (that is, if those costs are accounted for together or separately on other income statement line items), a company should disclose both the amount(s) of such costs and the line item(s) on the income statement that include them. Freight and handling charges of $4.3 million related to customer shipping were stated on a gross basis in selling expense with a corresponding $3.1 million of revenue stated in net sales in fiscal year 2002 and $1.4 million related to customer shipping were stated on a gross basis in selling expense with a corresponding $1.3 million of revenue stated in net sales in the fourth quarter of fiscal year 2001, respectively. In the prior reporting periods, these freight and handling charges were netted with the associated billing of these costs to the Company’s customers. Restatements of the prior periods to conform to EITF 00-10 were impractical because there was no system in place to capture this information in the past.

Effective January 2001, Class C Preferred Stock and additional capital contribution accrue cash dividends at 10% per annum. The syndicated bank agreement, however, precludes the payment of cash dividends.

Income (loss) per common share has been computed pursuant to the provisions of Statement of Financial Accounting Standards No. 128, “Earnings per Share.” Basic income (loss) per common share is computed by dividing income (loss) available to common stockholders by the average number of common shares outstanding during each period. Income (loss) available to common stockholders represents reported net income less preferred dividends, accretion of redemption value for redeemable common stock and the excess of the repurchase price paid over the redemption value of redeemable common stock. Diluted income (loss) per common share reflects the potential dilution that could occur if dilutive securities and other contracts were exercised or converted into common stock or resulted in the issuance of common stock. The

following table provides a reconciliation of income from continuing operations and sets forth the computation for basic and diluted income (loss) per share from continuing operations:

A total of 4.3, 2.1 and 1.1 million potential shares from options were excluded from the computation of diluted earnings per share for fiscal years 2002, 2001 and 2000, respectively, due to their antidilutive effect.

Contingently payable dividends represent dividends that may potentially be payable to Savia if the Exchange Agreement described in Note 9 is not consummated. As part of this agreement, Savia agreed to forego dividends on Class C Preferred Stock and additional paid-in capital contributions effective July 1, 2002; however, such dividends would be payable if the exchange transaction is not completed and the agreement is terminated. These dividends have not been accrued but are included in the calculation of earnings per share in order to present the most dilutive result. On a pro forma basis, had the exchange transaction been completed as of July 1, 2002, income available for common stockholders would have been $1,559 and the weighted average common shares outstanding would have been increased by 9,417 shares, resulting in income per common share available for common stockholders of $0.02.

SFAS No. 141, “Business Combinations,” was effective for the company on July 1, 2001. SFAS No. 141 addresses financial accounting and reporting for business combinations and supersedes APB Opinion No. 16, “Business Combinations,” and FASB Statement No. 38, “Accounting for Preacquisition Contingencies of Purchased Enterprises.” All business combinations in the scope of this Statement are to be accounted for using one method, the purchase method.

SFAS No. 142, “Goodwill and Other Intangible Assets,” was effective for the Company for fiscal years beginning after December 15, 2001, but was adopted early as of the beginning of fiscal year 2002. SFAS 142 addresses financial accounting and reporting for acquired goodwill and other intangible assets and supersedes APB Opinion No. 17, “Intangible Assets.” It addresses how intangible assets that are acquired individually or with a group of other assets (but not those acquired in a business combination) should be accounted for in financial statements upon their acquisition. This Statement also addresses how goodwill and other intangible assets should be accounted for after they have been initially recognized in the financial statements. We have ceased the amortization of goodwill and other intangible assets due to our adoption of SFAS No. 142 and no impairment was required in fiscal year 2002.

In June 2001, the FASB issued SFAS No. 143, “Accounting for Asset Retirement Obligations.” SFAS No. 143, is effective for fiscal years beginning after June 15, 2002 and requires an entity to record the fair value of a liability for an asset retirement obligation in the period in which it is incurred. Management has not yet determined the impact, if any, of the adoption of this standard on the financial position or results of operation of the Company.

In May 2002, the FASB issued SFAS No. 145, “Rescission of SFAS Nos. 4, 44 and 64, Amendment of SFAS No. 13 and Technical Corrections.” Among other things, SFAS No. 145 rescinds various pronouncements regarding extinguishment of debt and allows extraordinary accounting treatment for early extinguishment only when the provisions of Accounting Principles Board Opinion No. 30, “Reporting the Results of Operations — Reporting the Effects of Disposal of a Segment of a Business and Extraordinary, Unusual and Infrequent Occurring Events and Transactions,” are met. SFAS No. 145 provisions regarding early extinguishment of debt are generally effective for fiscal years beginning after May 15, 2002. The Company believes this new standard will not have an impact on its business, consolidated financial position, results of operations or cash flows.

The provisions of SFAS No. 146 are required to be applied prospectively to exit or disposal activities initiated after December 31, 2002. The Company believes SFAS No. 146 may affect the timing of recognizing future restructuring costs, as well as the amounts recognized, depending on the nature of the exit or disposal activity and the timing of the related estimated cash flows.

On November 25, 2002, the FASB issued Interpretation No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees of Indebtedness of Others, Including Indirect Guarantees of Indebtedness of Others, an interpretation of FASB Statements No. 5, 57, and 107 and Rescission of FASB Interpretation No. 34.” FIN 45 clarifies the requirements of SFAS No. 5, “Accounting for Contingencies,” relating to the guarantor’s accounting for, and disclosure of, the issuance of certain types of guarantees. The disclosure provisions of the Interpretation are effective for financial statements of interim or annual periods that end after December 15, 2002.

In December 2000, the lenders granted a waiver with respect to these covenants that extended through April 30, 2001, at which time any defaults would once again arise. As we did not expect to be in compliance with our covenants once the waiver expired, all outstanding borrowings under the credit facility were classified as a current liability as of September 30, 2000. In connection with granting the waivers, the lenders agreed to reschedule principal payments within fiscal year 2001. The lenders also accelerated the final maturity of the term loan and the termination date for the revolving credit commitments to June 30, 2002 from June 30, 2004. We were obligated to deliver a financial plan through September 30, 2002, which detailed cash flow projections on a monthly basis as well as proposed alternatives for the refinancing of the credit facility or recapitalization of the company.

On May 31, 2001, our lenders agreed with the financial plan that we submitted and agreed to restructure our existing credit facility. Upon receipt of the amended credit agreement, long-term portions of borrowings were reclassified from current liabilities to long-term debt. Among other things, the amendment extended the final maturity of the credit facility from the previously agreed on date of June 30, 2002 to December 31, 2002, revised principal payment dates under the term loan, instituted a new grid pricing formula to determine interest on borrowings and revised covenant obligations. Interim principal obligations under the amendment included $16.0 million due in the fourth quarter of fiscal year 2001, $19.0 million, $4.0 million, $31.0 million and $9.0 million due in the first, second, third and fourth quarters of fiscal year 2002, respectively. All remaining amounts were due in the first quarter of fiscal year 2003.

In October 2001, we completed the sale of an office building in Seoul, South Korea, which generated net proceeds of approximately $20.0 million. We used $19.5 million of the proceeds to make the scheduled $19.0 million payment on the credit facility in October 2001. We also sold one of our non-core businesses in January 2002, which generated additional proceeds of approximately $17.6 million. We used $13.0 million of the proceeds to prepay our existing credit facility in January 2002 and utilized our operating cash flow to pay the remaining $18.0 million in June 2002.

We met all required principal and interest payments during fiscal years 2002 and 2001 and were in compliance with all of our financial covenants under the amended credit agreement at September 30, 2002. In October 2002, we paid an additional $5.0 million of principal as required by the amended credit agreement; however, as of December 31, 2002, we had not completed a refinancing transaction in order to pay the remaining balance of $224.7 million. The lenders agreed to temporarily extend the term of the credit facility and in January 2003, a formal amendment was executed. Among other things, the amendment extended the final maturity of the credit facility from the previously agreed on date of December 31, 2002 to December 31, 2003, revised principal payment dates under the term loan, instituted a new grid pricing formula to determine interest on borrowings and revised covenant obligations. Interim principal obligations under the amendment included $3.0 million and $9.5 million due in the third and fourth quarters of fiscal year 2003, respectively. The remaining outstanding amount totaling $212.2 million will be due in the first quarter of fiscal year 2004. Upon receipt of the amended credit agreement, long-term portions of borrowings were reclassified from current liabilities to long-term debt as of September 30, 2002.

Although not impacting current liquidity, the Company entered into an exchange agreement with its majority shareholder, Savia S.A. de C.V. as of July 1, 2002 to exchange all of its outstanding Seminis Class C Preferred Stock (including accrued PIK dividends) having a principal value of $120.2 million, additional paid-in capital (including accrued PIK dividends) of $46.7 million and accrued and unpaid cash dividends of $10.0 million into 37.7 million shares of Seminis Class A common stock. The remaining accrued and unpaid cash dividends on the Class C Preferred Stock of $15.0 million will remain due and payable and will be paid in cash by the Company in accordance with the terms of the exchange agreement. On July 3, 2002, the Company received an opinion from UBS Warburg that, as of such date, the number of shares of Class A common stock to be received by Savia in the exchange was fair from a financial point of view to the holders of the Company’s Class A common stock and Class B common stock (in each case other than Savia and its

affiliates and other than holders of the Company’s Class B common stock that also hold shares of the Company’s Class B Redeemable preferred stock). The exchange agreement was approved by the Company’s Board of Directors on July 3, 2002 and was approved by our stockholders on September 26, 2002. Although the exchange agreement was approved by the Stockholders at the Annual Meeting, it is subject to customary closing conditions and approvals by creditors of Savia and the Company. At this time, all of the closing conditions and approvals have not been satisfied and therefore, the exchange has not been consummated. The Company may not complete all of the transactions contemplated under the exchange agreement until the conditions and approvals are obtained or waived, including the payment by the Company of the accrued and unpaid dividends on the Class B preferred stock and the consent of the lenders under the Company’s Syndicated Credit Facility.

In December 2002, Savia, Seminis’ majority stockholder, announced that it signed a letter of intent with Fox Paine & Company LLC under which Fox Paine and certain Savia related parties will acquire all the outstanding shares of Seminis, Inc. (See Note 16). The proposed transaction is subject to numerous conditions; however, if completed, such a change in control would require the credit facility to be paid in full. It is anticipated that such a transaction would be funded by financing arranged by Fox Paine.

Whereas we have met our obligations as well as covenant requirements under the amended credit facility through September 30, 2002, we must successfully execute a refinancing plan prior to December 31, 2003 in order to meet the final maturity of the facility. We will continue to pursue a refinancing plan, which may include negotiation of a new credit facility, and/or placement of new debt securities; however, there can be no assurances that we will be able to successfully complete the refinancing. Additionally, there can be no assurances that the Fox Paine transaction will be consummated. Failure to comply with existing covenants, which would make the Syndicated debt callable, or our inability to obtain adequate financing with reasonable terms prior to December 31, 2003 could have a material adverse impact on our business, results of operations or financial condition.

In February 2000, we announced a cost-saving initiative designed to streamline operations, increase utilization of facilities and improve efficiencies. The first phase of the initiative, which commenced in fiscal year 2000 and focused on North American operations, was completed by the end of fiscal year 2001. In June 2001, we commenced the second phase, which was targeted at our global operations and expanded the phase to cover additional headcount reductions and to consolidate our facilities in Holland. The key elements to the Global Restructuring and Optimization Plan involve:


	•	reorganizing our ten legacy seed companies into four geographical regions;

	•	selling or consolidating certain operation and production facilities;

	•	reducing headcount that results from the reorganization and from facility consolidation;

	•	rationalizing our product portfolio;

	•	implementing an advanced logistics management information system; and

	•	divesting non-strategic assets.

In connection with phase one of the Global Restructuring and Optimization Plan, we recorded pre-tax charges to operations of approximately $34.4 million for restructuring costs during fiscal year 2000 that included severance and other exit costs, inventory write-downs and costs associated with streamlining our products portfolio. Of this amount, $18.4 million was included in cost of goods sold for inventory write-downs. The remaining $16.0 million was included in selling, general and administrative expenses and consisted

primarily of severance costs. The total phase one and initial phase two severance charges related to a planned 600-employee reduction worldwide in both operational and administrative groups.

As part of the implementation of the expanded second phase of our Global Restructuring and Optimization Plan, we recorded a pre-tax charge of $12.0 million in selling, general and administrative expenses in the third quarter of fiscal year 2001. This charge primarily related to severance and related costs resulting from an additional planned 250-employee reduction worldwide in both operational and administrative groups. In fiscal year 2001, we also recorded non-cash inventory write-downs of $58.2 million in cost of goods sold in order to comply with more stringent seed quality standards and to further rationalize our product portfolio from 6,000 to 4,000 varieties. We believe we have established adequate reserves for all of the remaining costs and expenses related to our Global Restructuring and Optimization Plan.

To date, there have been no material adjustments to amounts accrued under the plan. The remaining $3.3 million reserve balance is expected to be utilized in fiscal year 2003.

Inventories are presented net of reserves of $86,957 and $114,316 at September 30, 2002 and 2001, respectively. A non-recurring inventory write-down of approximately $58,200 was taken in fiscal year 2001 to rationalize the Company’s product portfolio and impose more stringent seed quality standards as part of the Global Restructuring and Optimization Plan.

Property, plant and equipment consist of the following at September 30, 2002 and 2001:

Intangible assets at September 30, 2002 and 2001 consist of the following and are net of accumulated amortization for the respective fiscal years as parenthetically noted:

Changes in the net carrying amount of goodwill for the year ended September 30, 2002, are as follows:

Amortization expense on goodwill was $9,047 and $9,872 for the years ended September 30, 2001 and September 30, 2000, respectively.

As required by SFAS No. 142, the results for the prior years have not been restated. Had the Company accounted for its goodwill under SFAS No. 142 for all periods presented, the Company’s net income and loss per share would have been as follows:

Other borrowings consist of various domestic and foreign, government and non-government loans of less than $1,500 each, bearing interest annually at average rates of 8.79% through 2013 and 8.5% through 2007 for fiscal years 2002 and 2001, respectively.

In July 1999, the Company entered into a new credit agreement with Bank of Montreal and Harris Trust and Savings Bank providing for a $350,000 credit facility. The Company used a portion of the net proceeds of its initial public offering (Note 10) and funds available under the new credit facility to pay loan origination fees and repay indebtedness under its previous credit agreement. The Company’s $350,000 credit facility consists of a term loan in the amount of $200,000 and a revolving line of credit in the amount of $150,000. The term loan required semi-annual payments, with the remaining balance due and the revolving line of credit originally maturing on June 30, 2004.

The July 1999 agreement contains a number of financial covenants, including net worth and indebtedness tests and limitations on its ability to make acquisitions, transfer or sell assets, create liens, pay dividends, enter into transactions with its affiliates or enter into a merger, consolidation or sale of substantially all of its assets. The agreement is secured by the intellectual property of Seminis and 100% of the shares of Seminis Vegetable Seeds, Inc., a wholly owned subsidiary of Seminis, Inc. and shares of some other international subsidiaries. The credit agreement provides for events of default typical of facilities of its type, as well as an event of default if Pulsar Internacional, S.A. de C.V., together with its affiliates, which includes Savia, fails to hold a majority of the board of directors or direct management of the Company or control at least 51% of the voting rights of the Company.

In June 2000, the Company amended its credit agreement to provide for more relaxed financial covenant ratios as well as to allow for the needed expenses related to the Global Restructuring and Optimization Plan. The Company also entered into a security agreement with the lenders that collateralized certain receivables, general intangibles and inventory.

As of September 30, 2000, we were not in compliance with certain covenants of our existing credit facility, which gave the lenders the right to accelerate payment of all amounts outstanding under the facility. In December 2000, the lenders granted a waiver with respect to these covenants that extended through April 30, 2001, at which time any defaults would once again arise. As we did not expect to be in compliance with our covenants once the waiver expired, all outstanding borrowings under the credit facility were classified as a current liability as of September 30, 2000. In connection with granting the waivers, the lenders agreed to reschedule principal payments within fiscal year 2001. The lenders also accelerated the final maturity of the term loan and the termination date for the revolving credit commitments to June 30, 2002 from June 30, 2004. We were obligated to deliver a financial plan through September 30, 2002, which detailed cash flow projections on a monthly basis as well as proposed alternatives for the refinancing of the credit facility or recapitalization of the company.

2002, revised principal payment dates under the term loan, instituted a new grid pricing formula to determine interest on borrowings and revised covenant obligations. Interim principal obligations under the amendment included $16.0 million due in the fourth quarter of fiscal year 2001, $19.0 million, $4.0 million, $31.0 million and $9.0 million due in the first, second, third and fourth quarters of fiscal year 2002, respectively. All remaining amounts were due in the first quarter of fiscal year 2003.

In October 2001, we completed the sale of an office building in Seoul, South Korea, which generated net proceeds of approximately $20.0 million. We used $19.5 million of the proceeds to make the scheduled $19.0 million payment on the credit facility in October 2001. We also sold one of our non-core businesses in January 2002, which generated additional proceeds of approximately $17.6 million. We used $13.0 million of the proceeds to prepay our existing credit facility in January 2002 and utilized our operating cash flow to pay the remaining $18.0 million in June 2002.

We met all required principal and interest payments during fiscal years 2002 and 2001 and were in compliance with all of our financial covenants under the amended credit agreement at September 30, 2002. In October 2002, we paid an additional $5.0 million of principal as required by the amended credit agreement; however, as of December 31, 2002, we had not completed a refinancing transaction in order to pay the remaining balance of $224.7 million. The lenders agreed to temporarily extend the term of the credit facility and in January 2003, a formal amendment was executed. Among other things, the amendment extended the final maturity of the credit facility from the previously agreed on date of December 31, 2002 to December 31, 2003, revised principal payment dates under the term loan, instituted a new grid pricing formula based on the greater of the sum of the base rate and 3.5% or an interest rate that ranges from 9.0% to 10.25% to determine interest on borrowings and revised covenant obligations. Interim principal obligations under the amendment included $3.0 million and $9.5 million due in the third and fourth quarters of fiscal year 2003, respectively. The remaining outstanding amount totaling $212.2 million will be due in the first quarter of fiscal year 2004. Upon receipt of the amended credit agreement, long-term portions of borrowings were reclassified from current liabilities to long-term debt as of September 30, 2002.

Loan origination fees of $3,611 were capitalized in fiscal year 1999 in connection with the July 1999 credit agreement, $2,222 were capitalized in fiscal year 2000 in connection with the amended credit agreement and $2,985 were capitalized in fiscal year 2001 in connection with the May 2001 amended credit agreement. The fees are being amortized to interest expense over the life of the agreement that expired on December 31, 2002. Fees related to the fifth amendment will be amortized over the life of the agreement, which will expire on December 31, 2003. Interest expense includes amortization of loan origination fees of $4,354, $3,075 and $843 in fiscal years 2002, 2001 and 2000, respectively.

For the fiscal years ended September 30, 2002, 2001 and 2000, the Company incurred interest at a weighted-average rate of 8.90%, 11.19% and 8.70% per annum, respectively.

In January 1999, the Board of Directors of Seminis, Inc., an Illinois corporation, authorized the reincorporation of the Company in Delaware. In conjunction with the reincorporation the holders of certain securities agreed to a plan for the recapitalization of the Company (the “Recapitalization”) to occur concurrently. The Recapitalization was effective June 18, 1999 and provided for the exchange of shares of the Illinois corporation for shares of the Delaware corporation as follows: (i) all preferred stock was exchanged for like preferred stock; (ii) all 6,772 shares of Class B Redeemable Common Stock (“Old Class B Redeemable Common Stock”) were converted into one-half the number of such shares of Class B Common Stock; (iii) all Class A Common Stock was exchanged for one-half the number of such shares of Class B Common Stock; and (iv) all options to purchase Class C Common Stock were exchanged for options to

purchase Class A Common Stock. Immediately following the Recapitalization, the Company paid a 1-for-1 stock dividend to all holders of Class B Common Stock.

In July 1999, the Company completed an initial public offering of 13,750 shares of Class A Common Stock at an initial offering price of $15.00 per share, raising net proceeds of $191,700. The Company used the net proceeds of the offering and funds available under the new July 1999 credit facility to pay loan origination fees, repay indebtedness under the April 1999 credit agreement and $7,700 of a $20,000 intercompany advance from Savia. The remaining $12,300 of the intercompany advance was converted into 1.2 shares of Class C Preferred Stock.

On October 1, 1995, the Company acquired Petoseed Co., Inc. (“Petoseed”) through a tax-free merger (the “Merger”) with George J. Ball, Inc. (“Ball”). As part of the transaction, Seminis issued 25 shares of Class A Redeemable Preferred Stock to the stockholders of Ball. Upon the completion of the Company’s initial public offering in July 1999, each share of Class A Redeemable Preferred Stock automatically converted into one share of Class B Redeemable Preferred Stock.

The Class B Redeemable Preferred Stock has no voting rights. The Company pays quarterly dividends on all issued shares of Class B Redeemable Preferred Stock at a rate of 8% per year. Dividends are cumulative if unpaid and are added to the redemption value of the shares. The liquidation value of the shares is equal to the redemption value at any point in time. Class B Redeemable Preferred Stock is not redeemable at the option of the holder. The Company shall redeem all outstanding shares of the Class B Redeemable Preferred Stock on October 1, 2005.

The Company also issued 18,091 shares of Old Class B Redeemable Common Stock to the Ball stockholders as part of the Ball Merger. In November 1997, Savia purchased 3,895 shares of Old Class B Redeemable Common Stock from the former Ball stockholders for $72,875 or $18.71 per share. In January 1998, the Company repurchased 11,319 shares of Old Class B Redeemable Common Stock from the former Ball stockholders for $211,824 or $18.71 per share. Such shares were canceled upon repurchase.

Upon the Recapitalization in June 1999, each share of Old Class B Redeemable Common Stock automatically converted into one share of Class B Common Stock, however, upon the conversion, the Old Class B Redeemable Common Stock lost its redemption and accretion rights.

The redemption price of the Old Class B Redeemable Common Stock accreted at an annual rate of approximately 6%. The redemption price was $7.48 per share on the June 18, 1999 conversion date.

The Company is authorized to issue up to 211,000 shares of Class A Common Stock. Upon completion of the Company’s initial public offering in July 1999, the Company issued 13,750 shares of Class A Common Stock. In addition, 4,677 shares were reserved for issuance of stock options. Class A Common Stock is entitled to one vote per share.

Following the Ball Merger, Savia owned all 30,000 outstanding shares of the Company’s Class B Common Stock. During fiscal year 1998, the Company issued 7,386 shares of Class B Common Stock for cash

in the amount of $138,200. The share price of $18.71 was based on the fair market value of the Company at the time of the transaction.

In February 1999, the Company converted its convertible subordinated debt due Savia of $35,857 into 1,916 shares of Class B Common Stock at $18.71 per share. As part of the Company’s recapitalization in June 1999, 6,772 shares of Old Class B Redeemable Common Stock were effectively converted into the same number of shares of Class B Common Stock. Holders of the Class B Common Stock are entitled to three votes per share.

In the fourth quarter of fiscal year 2001, 706 shares of Class B Common Stock were converted to Class A Common Stock and in the second quarter of fiscal year 2000, 226 shares of Class B Common Stock were converted to Class A Common Stock.

The Company is authorized to issue up to 14 shares of its Class C Preferred Stock. In December 1998, Savia made an equity investment in Seminis of $10,000 in exchange for 1 share of Class C Preferred Stock to finance the purchase of shares of Hungnong, which Seminis was obligated to purchase from the minority shareholders. In March 1999, Savia made an additional equity investment in Seminis of $20,000 in exchange for 2 shares of Class C Preferred Stock to finance working capital requirements. In July 1999, the Company converted $12,300 of an intercompany advance from Savia into 1.2 shares of Class C Preferred Stock. In April, May and June 2000, the company converted $22,000, $14,000 and $6,000, respectively, of intercompany advances from Savia into 2.2 shares, 1.4 shares and .6 shares of Class C Preferred Stock. In August and September 2000, Savia made additional equity investments of $10,000 and $14,000, respectively, in exchange for 1.0 shares and 1.4 shares of Class C Preferred Stock.

Shares of Class C Preferred Stock have no voting rights and are redeemable at the option of the Company. Dividends accrue cumulatively at the rate of 10% per year and are payable quarterly. Dividends payable through January 2001 are payable by issuing additional fully paid and non-assessable shares of Class C Preferred Stock. Subsequently, the dividends are part of the accrued liabilities.

The liquidation value of Class C Preferred Stock at September 30, 2002 and 2001, included $18,011 and $8,989, respectively, of accrued cash dividends classified in accrued liabilities.

In October and November 2000, the Company received additional capital contributions of $31.9 million and $14.0 million, respectively, from Savia to finance additional working capital requirements. Dividends were accrued at the rate of 10% per year.

On October 1, 2002 the Board of Directors approved the conversion of the Savia additional capital contribution and the associated paid in kind dividends that totaled $46.7 million to be converted to 4.67 shares of Class C Preferred Stock. Concurrently, the Board also adopted a resolution authorizing and directing an increase in the number of shares designated as Class C Redeemable PIK Preferred Stock from 14.4 shares to 16.7 shares.

The Company entered into an exchange agreement with its majority shareholder, Savia S.A. de C.V. as of July 1, 2002 to exchange all of its outstanding Seminis Class C Preferred Stock (including accrued PIK dividends) having a principal value of $120.2 million, additional paid-in capital (including accrued PIK dividends) of $46.7 million and accrued and unpaid cash dividends of $10.0 million into 37.7 million shares of Seminis Class A common stock. The remaining accrued and unpaid cash dividends on the Class C Preferred

Stock of $15.0 million will remain due and payable and will be paid in cash by the Company in accordance with the terms of the exchange agreement. On July 3, 2002, the Company received an opinion from UBS Warburg that, as of such date, the number of shares of Class A common stock to be received by Savia in the exchange was fair from a financial point of view to the holders of the Company’s Class A common stock and Class B common stock (in each case other than Savia and its affiliates and other than holders of the Company’s Class B common stock that also hold shares of the Company’s Class B Redeemable preferred stock). The exchange agreement was approved by the Company’s Board of Directors on July 3, 2002 and was approved by our stockholders on September 26, 2002. Although the exchange agreement was approved by the Stockholders at the Annual Meeting, it is subject to customary closing conditions and approvals by creditors of Savia and the Company. At this time, all of the closing conditions and approvals have not been satisfied and therefore, the exchange has not been consummated. The Company may not complete all of the transactions contemplated under the exchange agreement until the conditions and approvals are obtained or waived, including the payment by the Company of the accrued and unpaid dividends on the Class B preferred stock and the consent of the lenders under the Company’s Syndicated Credit Facility.

Income (loss) from continuing operations before income taxes consists of the following:

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities as of September 30, 2002 and 2001 are as follows:

Based upon an assessment of the net deferred tax assets in the United States and foreign jurisdictions, an increase in valuation allowance on the remaining deferred tax assets in the United States and The Netherlands was considered necessary during fiscal year 2001.

The valuation allowance for deferred tax assets as of September 30, 2002 and 2001 was $57,060 and $62,769, respectively. The net change in the total valuation allowance for the years ended September 30, 2002 and 2001 was a decrease of $5,709 and an increase of $44,168, respectively. The decrease in 2002 consisted of partial utilization of NOLs in The Netherlands which had been fully reserved, utilization of a fully reserved NOL carryback in the United States based on a change in the tax law, offset by additional losses generated in the United States for which no benefit was recorded.

The Company’s tax asset of $58,864 for net operating loss and foreign tax credit carryforwards include appropriate balances relating to a Netherlands net operating loss carryforward of $28,894 that has an indefinite life and a United States net operating loss carryforward of $83,971 which will expire in 2020 and 2022.

To address cash flow needs in the United States, the repatriation strategy for earnings in Korea was changed during fiscal year 2001. Accordingly, United States tax was recorded for previously undistributed Korean earnings. The earnings for certain other foreign subsidiaries will only be repatriated to the United States to the extent the foreign taxes can be utilized as foreign tax credits against federal taxes.

The expense (benefit) for income taxes varies from income taxes based on the federal statutory rate as follows:

U.S. Plans. The Company maintains a Company-sponsored defined contribution savings plan covering eligible employees. Company contributions are based on a percentage of employee contributions and on employee salaries. Company contributions totaled $1,576, $2,428 and $2,499 in fiscal years 2002, 2001 and 2000, respectively. The Company also maintains a qualified profit sharing plan. Annual contributions are made at the discretion of the Company’s board of directors and totaled $514, $566 and $440 in fiscal years 2002, 2001 and 2000, respectively.

Foreign Plans. In accordance with the local statutory requirements, the Company sponsors retirement and severance plans at several of its foreign locations. The Company has an accrual of $19,740 at September 30, 2002 and $11,531 at September 30, 2001 for anticipated payments to be made to foreign employees upon retirement or termination. The accrual in fiscal year 2002 included a $7,176 equity adjustment for minimum pension liability in Holland.

The Company provides a defined-benefit pension plan in The Netherlands (the “Netherlands Plan”) as required by statute. The following provides a reconciliation of the benefit obligation, plan assets and funded status of the Netherlands Plan as of September 30, 2002 and 2001.

The components of net pension expense of the Netherlands Plan, based on the most recent valuation dates, are as follows:

In 1998, the Company adopted the Seminis 1998 Stock Option Plan (the “Stock Option Plan”) under which key employees and board of director members may be granted options to purchase shares of the Company’s authorized and issued Class A Common Stock. The board of directors reserved 3,677 shares for issuance under the plan. On September 26, 2002, during the annual meeting of stockholders, the stockholders approved an amendment to the Seminis, Inc. 1998 Stock Option Plan to increase the number of shares that may be granted under the Plan from 3,677 shares to 4,677 shares. In July 1998, the Board of Directors awarded options to acquire 267 shares by plan participants. During October 1999 and August 2000, 520 options and 432 options were issued at $7.63 and $1.56 per share, respectively. During October 2000 and August 2001, 513 options and 950 options were issued at $1.36 and $1.18 per share, respectively. During April 2002, 2,562 options were issued at $1.28 per share. Under the Stock Option Plan, the option exercise price is equal to fair market value at the date of grant.

Options currently expire no later than ten years from the grant date and generally vest over four years. Proceeds received by the Company from exercises will be credited to common stock and additional paid-in capital.

Stock option plan activity during the three years ended September 30, 2002 was as follows:

The following table summarizes information concerning currently outstanding and exercisable stock options:

Pro forma information regarding net income is required by SFAS No. 123. This information is required to be determined as if the Company had accounted for its employee stock options granted under the fair market value method of that statement. The weighted average fair value of options granted in fiscal year 2000 was $2.80 per share using the Black-Scholes option pricing model, assuming a weighted average risk-free interest rate of 6.03%, an expected life of five years and no projected dividend yields. Stock price volatility was 55% and 100% for the October 1999 and August 2000 grants, respectively. The weighted average fair value of options granted in fiscal year 2001 was $0.96 per share using the Black-Scholes options pricing model, assuming a weighted average risk-free interest rate of 5.04%, an expected life of five years and no projected dividend yields. The weighted average fair value of options granted in fiscal year 2002 was $0.98 per share using the Black-Scholes options pricing model, assuming a weighted average risk-free interest rate of 4.59%, an expected life of five years and no projected dividend yields. Stock price volatility was 100% for the October 2000, August 2001 and April 2002 grants.

For purposes of pro forma disclosures, the estimated fair market value of the options is amortized to expense over the options’ vesting periods. Stock-based compensation costs determined under the fair value method would have decreased net income by $769 ($0.01 per share) for the year ended September 30, 2002, and increased net loss by $622 ($0.01 per share) and $795 ($0.01 per share) for the years ended September 30, 2001 and 2000, respectively.

During the quarter ended June 29, 2001, the Company adopted a stock award plan that was approved by the shareholders on September 26, 2002. Certain key executives were awarded with Company shares that vest after meeting certain quarterly performance criteria over 18 months. Upon meeting each quarterly goal, the shares awarded were immediately vested. Total number of shares eligible to be awarded under this plan is 4.8 million. Performance targets were met, which resulted in an accrual of approximately $7.3 million and $2.6 million recorded in selling, general and administrative expenses based on current market value of Common Stock at the date the award was earned in fiscal year 2002 and 2001, respectively.

The Company leases land, buildings, machinery and equipment under operating leases. Rental expenses aggregated approximately $7,579, $9,461 and $11,973 in fiscal years 2002, 2001 and 2000, respectively.

Minimum annual lease commitments under non-cancelable operating leases at September 30, 2002 are as follows:

The Company has been named as a defendant in various lawsuits arising out of alleged seedmen’s errors and omissions. The Company maintains third-party seedmen’s errors and omissions insurance covering these types of claims, thus policies are subject to annual renewal and revisions and house deductibles and coverage limits. An accrual for management’s estimate of exposure related to such claims has been recorded in the financial statements and is disclosed in Note 7. It is the opinion of management that the ultimate resolution of these matters will not have a material adverse effect on the Company’s consolidated financial position or results of operations.

Historically, resolution of asserted claims has been in line with management’s expectations.

The Company operates principally in one business segment consisting of the development, production and marketing of vegetable and fruit seeds. Revenues derived from sales to external customers attributed to

the Company’s country of domicile, to individual countries representing more than 10% of the Company’s consolidated net sales and to all other foreign countries in total are summarized as follows:

Long-lived assets other than financial instruments and deferred tax assets located in the Company’s country of domicile, located in individual foreign countries representing more than 10% of the Company’s consolidated long-lived assets and located in all other foreign countries in total in which the Company holds assets are summarized as follows:

Balances and transactions with related parties included in the consolidated financial statements are as follows:

Pursuant to an agreement between our company and Bionova, a biotechnology and fresh produce company and a majority owned subsidiary of Savia, we paid Bionova for access to the results of Bionova’s biotechnology research. This agreement was terminated during the third quarter of fiscal year 2002. Research and development expenses included $662, $2,255 and $2,500 in fiscal year 2002, 2001 and 2000, respectively, in biotechnology research fees.

In fiscal year 2002 and 2001, we had sales of $793 and $944, respectively, to Agrobionova, an affiliate of Savia and a receivable of $355 and $617 at September 30, 2002 and 2001, respectively. We also had sales of $296 to Bionova in fiscal year 2001 and a corresponding receivable of $296 at September 30, 2001.

We have issued 10,830 shares of our Class C preferred stock to Savia for a total purchase price of $108.3 million. These shares accrue dividends quarterly at a rate of 10.0% per year. In October and November 2000, we received an additional $31.9 million and $14.0 million, respectively, of capital contributions from Savia. We have agreed to pay dividends on these contributions at the same rate as the Class C preferred stock. Through July 1, 2002, there were $25.0 million of accrued and unpaid dividends on the outstanding Class C preferred stock and additional capital contributions. We have also paid dividends of $12.7 million in the form of additional shares on the Class C preferred stock, which are classified as additional paid in capital.

The seed business is highly seasonal. Generally, net sales are highest in the second fiscal quarter due to increased demand from northern hemisphere growers who plant seed in the early spring. Seminis recorded 33.7% of its fiscal year 2002 and 2001 net sales, during its second fiscal quarter. Seminis’ results in any particular quarter should not be considered indicative of those to be expected for a full year.

The following table sets forth results of operations data for the last eight fiscal quarters.

On December 13, 2002, Savia, S.A. de C.V., Seminis’ majority stockholder, announced that it signed a letter of intent with Fox Paine & Company, LLC, a San Francisco based private equity firm, under which Fox Paine and certain Savia related parties will acquire all of the outstanding shares of Seminis, Inc. In response to the proposed transaction, the Company formed a special committee of the independent directors to evaluate the proposed transaction and its fairness and to make a recommendation to the full Board of Directors. The proposed transaction is subject to certain conditions, including the satisfactory completion of a review of the business and financial condition of Seminis by Fox Paine, the negotiation of definitive agreements covering the transactions contemplated under the letter of intent, the refinancing and incurrence of additional indebtedness of Seminis, the acquisition of the Seminis shares held by the public, the approval of the bank lenders of both Savia and its controlling stockholders, the obtaining of regulatory approvals, the approval of the Board of Directors of Seminis and Savia and the approval of the stockholders of Seminis and Savia.

On December 17, 2002 and January 4, 2003, four purported class action lawsuits were filed relating to the above-described transaction. Three of these actions — Garry Firth v. Alfonso Romo Garza, et al., Civil Action No. 20085, Boris Pozniak v. Alfonso Romo Garza, et al., Civil Action No. 20097 and Pablo Herranz v. Seminis, Inc., et al., Civil Action No. 20105 — were filed in the Delaware Court of Chancery (New Castle

County), while the fourth, Mark Rosales v. Seminis, Inc., Case No. CIV216255, was filed in California Superior Court (Ventura County). The Firth, Pozniak and Herranz complaints name as defendants Savia S.A. de C.V. (“Savia”) and Seminis, Inc. (“Seminis”), along with Seminis’ directors. The Rosales complaint names as a defendant Seminis and its directors. All four complaints purport to be brought on behalf of Seminis common stockholders or their successors. All four complaints allege that the above-described transaction, if consummated, would provide insufficient consideration to Seminis common stockholders and allege that the defendants breached their fiduciary duties in connection with the transaction. The complaints seek a preliminary and permanent injunction to enjoin the transaction and, in the event the transaction is consummated, rescission and damages. The defendants will vigorously defend these actions.

On September 29, 2003, the exchange transaction described in Note 2 and the merger and related transactions described above were completed. As a result, Fox Paine, together with its affiliated and co-investors, acquired 75.1% of the outstanding shares of the Company’s common stock. In addition, the Company repaid all borrowings outstanding under its existing credit agreement, retired its Class B Redeemable Preferred Stock, borrowed $190.0 million under a new senior secured credit agreement, issued $190.0 million of ten-year, 10 1/4% senior subordinated notes and issued 50,000 shares of mandatorily redeemable paid in kind preferred stock along with warrants to purchase 3.9 million shares of the Company’s common stock for combined proceeds of $50.0 million.

In connection with the transactions described in the first paragraph of Note 16, Seminis Vegetable Seeds, Inc. (“Seminis Vegetable”) will offer senior subordinated unsecured notes (the “Notes”) that will be fully and unconditionally guaranteed by Seminis and the wholly-owned domestic subsidiaries of Seminis Vegetable. All the guarantees are joint and several. The following table presents condensed consolidating financial information for Seminis, the parent company of Seminis Vegetable and a guarantor of the Notes; Seminis Vegetable, the issuer of the Notes and a wholly-owned subsidiary of Seminis; the wholly-owned domestic subsidiaries of Seminis Vegetable that guarantee the Notes; the foreign subsidiaries of Seminis Vegetable that do not guarantee the Notes; and consolidating adjustments. The following condensed consolidating balance sheets, statements of operations and statements of cash flows have been prepared as if Seminis accounted for its ownership of its subsidiaries using the equity method of accounting in accordance with the requirements for presentation of such information.

The accompanying notes are an integral part of these consolidated financial statements.

Seminis, Inc. (“Seminis,” “we” or the “Company”) is the leading worldwide developer, producer and marketer of vegetable and fruit seeds. The Company is a majority-owned subsidiary of Savia, S.A. de C.V. (“Savia”) and effectively began operations when it purchased Asgrow Seed Company in December 1994.

The consolidated financial statements include the accounts of the Company and its majority controlled and owned subsidiaries. Investments in unconsolidated entities, representing ownership interests between 20% and 50%, are accounted for using the equity method of accounting. All material intercompany transactions and balances have been eliminated in consolidation. Certain reclassifications have been made to prior periods to conform to the current quarter presentation.

Seminis generally operates on a 13 week quarter closing on the Friday closest to the natural calendar quarter, except for the fiscal year end, which closes on September 30.

The unaudited consolidated financial statements included herein reflect all adjustments (consisting only of normal recurring adjustments) that the Company considers necessary for a fair presentation of the results of operations for the interim periods covered and the financial condition of the Company at the date of the interim balance sheet. The Company’s business is subject to seasonal fluctuation and, therefore, the results of operations for periods less than one year are not necessarily indicative of results that may be expected for any other interim period or for the fiscal year as a whole.

Effective January 2001, shares of Seminis Class C Preferred Stock and additional capital contribution accrue cash dividends at 10% per annum. The Company’s syndicated credit facility, however, precludes the payment of cash dividends. These dividends have not been accrued effective July 1, 2002 in accordance with an amended and restated exchange agreement by and between the Company and Savia, as further described in Note 2. As part of the amended and restated agreement, Savia agreed to forego dividends on its shares of Seminis Class C Preferred Stock and additional capital contributions effective July 1, 2002; however, such dividends would be payable if the transactions described in Note 2 are not completed and the amended and restated agreement is terminated.

Net loss per common share has been computed pursuant to the provisions of Statement of Financial Accounting Standards (“SFAS” ) No. 128, “Earnings per Share.” Basic loss per common share is computed

by dividing net loss available to common stockholders by the average number of common shares outstanding during each period. Net loss available to common stockholders represents reported net income (loss) less preferred and additional capital contribution dividends. Diluted net loss per common share reflects the potential dilution that could occur if dilutive securities and other contracts were exercised or converted into common stock or resulted in the issuance of common stock. The following table provides a reconciliation of net income (loss) and sets forth the computation for basic and diluted net loss per share available for common stockholders.

A total of 4.1 million potential shares from options were excluded from the computation of diluted earnings per share for the three and nine months ended June 27, 2003, due to their antidilutive effect. A total of 4.4 million potential shares from options were excluded from the computation of diluted earnings per share for the three and nine months ended June 28, 2002, due to their antidilutive effect.

Contingently payable dividends represent dividends that may be payable to Savia if the exchange contemplated by the amended and restated exchange agreement described in Note 2 is not consummated. As part of the amended and restated exchange agreement, Savia agreed to forego dividends on its shares of Seminis Class C Preferred Stock and additional capital contributions effective July 1, 2002; however, such dividends would be payable if the transactions contemplated by the amended and restated exchange agreement are not completed and the amended and restated exchange agreement is terminated. These dividends have not been accrued but are included in the calculation of earnings per share.

In August 2001, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” SFAS No. 144 supersedes SFAS No. 121 but retains many of its fundamental provisions. In addition, SFAS No. 144 expands the scope of discontinued operations to include more disposal transactions. We have adopted SFAS No. 144 as of October 1, 2002. The adoption of SFAS No. 144 did not have a material effect on our consolidated financial position, results of operations or cash flows.

In May 2002, the FASB issued SFAS No. 145, “Rescission of SFAS Nos. 4, 44 and 64, Amendment of SFAS No. 13 and Technical Corrections.” Among other things, SFAS No. 145 rescinds various pronouncements regarding extinguishment of debt and allows extraordinary accounting treatment for early extinguishment only when the provisions of Accounting Principles Board Opinion No. 30, “Reporting the Results of Operations-Reporting the Effects of Disposal of a Segment of a Business and Extraordinary, Unusual and Infrequent Occurring Events and Transactions” are met. SFAS No. 145 provisions regarding early extinguishment of debt are generally effective for fiscal years beginning after May 15, 2002. Accordingly, SFAS No. 145 was adopted by the Company on October 1, 2002. Such adoption did not have an impact on our business, consolidated financial position, results of operations or cash flow.

On November 25, 2002, the Financial Accounting Standards Board issued FASB Interpretation No. (“FIN” 45), “Guarantor’s Accounting and Disclosure Requirements for Guarantees of Indebtedness of Others, Including Indirect Guarantees of Indebtedness of Others, an interpretation of FASB Statements No. 5, 57 and 107 and Rescission of FASB interpretation No. 34.” FIN 45 clarifies the requirements of FASB Statement No. 5, “Accounting for Contingencies”, relating to the guarantor’s accounting for and disclosure of, the issuance of certain types of guarantees. The disclosure provisions of the interpretation are effective for financial statements of interim or annual periods that end after December 15, 2002. Accordingly, the Company adopted FIN 45 during the quarter ended December 27, 2002. The Company has no guarantees that would require disclosure under FIN 45.

do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. The provisions of this Interpretation are effective for all enterprises with variable interests in variable interest entities created after January 31, 2003. The adoption of this Interpretation did not have a significant impact on the Company’s financial condition or results of operations.

In April 2003, the FASB issued SFAS No. 149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities.” This Statement amends and clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts (collectively referred to as derivatives) used for hedging activities under SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities.” The provisions of this Statement are effective for contracts entered into or modified after June 30, 2003 and for hedging relationships designated after June 30, 2003. The adoption of this Statement is not expected to have significant impact on the Company’s financial condition or results of operations.

In May 2003, the FASB issued SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity.” This Statement establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. This Statement requires that an issuer classify a financial instrument that is within its scope as a liability (or an asset in some circumstances). The provisions of this Statement are effective for financial instruments entered into or modified after May 31, 2003, and otherwise are effective at the beginning of the first interim period beginning after June 15, 2003. Upon adoption of this Statement, the Company will have to restate the carrying value of its mandatorily redeemable preferred stock to the present value of this obligation and reclassify this amount into liabilities on the balance sheet. Additionally, amounts previously accrued as dividends on the mandatorily redeemable preferred stock will be expensed in the statement of operation as interest expense.

As of September 30, 2000, we were not in compliance with certain covenants of our existing syndicated credit facility, which gave the lenders the right to accelerate payment of all amounts outstanding under the facility. In December 2000, the lenders granted a waiver with respect to these covenants that extended through April 30, 2001, at which time any defaults would once again arise. As we did not expect to be in compliance with our covenants once the waiver expired, all outstanding borrowings under the syndicated credit facility were classified as a current liability as of September 30, 2000. In connection with granting the waivers, the lenders agreed to reschedule principal payments within fiscal year 2001. The lenders also accelerated the final maturity of the term loan and the termination date for the revolving credit commitments to June 30, 2002 from June 30, 2004. We were obligated to deliver a financial plan through September 30, 2002, which detailed cash flow projections on a monthly basis as well as proposed alternatives for the refinancing of the syndicated credit facility or recapitalization of the Company.

On May 31, 2001, our lenders agreed with the financial plan that we submitted and agreed to restructure our existing syndicated credit facility. Upon receipt of the amended syndicated credit facility, long-term portions of borrowings were reclassified from current liabilities to long-term debt. Among other things, the amendment extended the final maturity of the syndicated credit facility from the previously agreed on date of June 30, 2002 to December 31, 2002, revised principal payment dates under the term loan, instituted a new grid pricing formula to determine interest on borrowings and revised covenant obligations. Interim principal obligations under the amendment included $16.0 million due in the fourth quarter of fiscal year 2001 and $19.0 million, $4.0 million, $31.0 million and $9.0 million due in the first, second, third and fourth quarters of fiscal year 2002, respectively. All remaining amounts were due in the first quarter of fiscal year 2003.

In October 2001, we completed the sale of an office building in Seoul, South Korea, which generated net proceeds of approximately $20.0 million. We used $19.5 million of the proceeds to make the scheduled $19.0 million payment on the syndicated credit facility in October 2001. We also sold one of our non-core businesses in January 2002, which generated additional proceeds of approximately $17.6 million. We used $13.0 million of the proceeds to prepay our existing syndicated credit facility in January 2002 and utilized our operating cash flow to pay the remaining $18.0 million in June 2002.

We met all required principal and interest payments during fiscal years 2002 and 2001 and were in compliance with all of our financial covenants under the amended syndicated credit facility at September 30, 2002. In October 2002, we paid an additional $5.0 million of principal as required by the amended syndicated credit facility; however, as of December 31, 2002, we had not completed a refinancing transaction in order to pay the remaining balance of $224.7 million. The lenders agreed to temporarily extend the term of the syndicated credit facility and in January 2003, a formal amendment was executed. Among other things, the amendment extended the final maturity of the syndicated credit facility from the previously agreed on date of December 31, 2002 to December 31, 2003, revised principal payment dates under the term loan, instituted a new grid pricing formula to determine interest on borrowings and revised covenant obligations. Outstanding interim principal obligations under the amendment included $6.0 million due in the fourth quarter of fiscal year 2003. The remaining outstanding amount totaling $210.6 million will be due in the first quarter of fiscal year 2004. We met all required principal and interest payments and were in compliance with all of our financial covenants at June 27, 2003 under the newly extended amendment. As all remaining amounts under the amended syndicated credit facility are due within one year, the $216.6 million of outstanding borrowings under the syndicated credit facility has been classified as a current liability as of June 27, 2003.

On May 30, 2003, we and/or certain other parties entered into an amended and restated exchange agreement, a contribution agreement, an agreement and plan of merger, a stock purchase agreement and certain other related agreements pursuant to which an acquisition company was formed at the direction of Fox Paine & Company, LLC, a San Francisco based private equity firm, to acquire all of the outstanding shares of the Company’s common stock. Public holders of approximately 15.8 million shares of Seminis common stock will receive cash consideration of $3.78 per share in the merger. Immediately following the merger and related transactions, Fox Paine, its affiliates and co-investors will own approximately 75% of the shares of Seminis common stock outstanding following the completion of the transactions, and the remaining shares will be owned by certain affiliates of Alfonso Romo Garza, Seminis’ and Savia’s current Chairman and Chief Executive Officer, certain creditors of a Savia affiliate and nine members of Seminis and Savia management. Additionally, certain entities affiliated with Mr. Romo will receive co-investment rights to purchase, subject to certain conditions, up to 34% of the outstanding shares of Seminis common stock following the transactions. Following the merger and related transactions, the Company will be privately held and Seminis common stock will no longer be listed on The Nasdaq National Market. Seminis stockholders representing approximately 85% of the voting power represented by the outstanding shares of Seminis common stock currently entitled to vote have entered into a voting agreement to vote in favor of the merger.

Prior to the consummation of the merger and pursuant to the terms of the amended and restated exchange agreement, Savia will exchange all of its outstanding shares of Seminis Class C preferred stock (including accrued Paid In Kind (“PIK”) dividends) having a principal value of $120.2 million, additional paid-in capital (including accrued PIK dividends) of $46.7 million and accrued and unpaid dividends for 37.7 million shares of Seminis Class A Common Stock and cash equal to $15.0 million plus interest at a rate of 10.0% per annum from July 1, 2002, less $3.0 million.

Although we have met our obligations and covenant requirements under the amended syndicated credit facility through June 27, 2003, we must successfully execute a refinancing plan prior to December 31, 2003 in order to meet the final maturity of the facility. The consummation of the proposed transactions require the Company’s amended syndicated credit facility to be refinanced. It is anticipated that the proposed transactions

would be funded, in part, by financing arranged by the newly-formed acquisition company. There can be no assurances that the merger and related transactions will be consummated. Failure to comply with existing covenants in the amended syndicated credit facility, which would make the facility callable, or our inability to refinance the facility prior to December 31, 2003, could have a material adverse impact on our business, results of operations or financial condition.

Changes in the net carrying amount of goodwill for the period ended June 27, 2003, are as follows:

Goodwill acquired during the period resulted from the purchases of minority holdings of Selekta, a South African subsidiary, and Nath Sluis, an Indian subsidiary.

The following table sets forth the Company’s intangible assets, at June 27, 2003 and September 30, 2002, which continue to be amortized:

Amortization expense on intangible assets was $4.0 and $4.2 million for the three months ended June 27, 2003 and June 28, 2002, respectively; and $11.9 and $12.5 million for the nine months ended June 27, 2003 and June 28, 2002, respectively. Based on current information, estimated amortization expense for acquired

intangible assets for this fiscal year, and for each of the next four succeeding fiscal years, is expected to be approximately $15.8, $14.5, $13.5, $12.6 and $12.0 million, respectively.

Accrued liabilities consist of the following at June 27, 2003 and September 30, 2002:

The Company has a policy whereby all stock option grants are priced at fair market value on the date of grant. Under the provisions of SFAS No. 123, “Accounting for Stock-Based Compensation,” the Company uses the intrinsic value method of accounting for stock-based compensation in accordance with Accounting Principles Board (APB) Opinion No. 25, “Accounting for Stock Issued to Employees.” Under the intrinsic value method, compensation cost is the excess, if any, of the quoted market price of the stock at the grant date or other measurement date over the amount an employee must pay to acquire the stock.

In accordance with the disclosure provisions of SFAS No. 148, “Accounting for Stock-Based Compensation — Transition and Disclosures,” the following table reflects pro forma net income and earnings per share had the Company elected to adopt the fair value approach of SFAS No. 123:

In January 2002, melon growers in Costa Rica notified us that our Dorado melon seeds were infected with watermelon fruit blotch. Growers who purchased the infected Seminis seeds and growers whose crops were infected by the bacteria that spread from crops grown with the infected seeds have claimed damages against us. The claims by those growers who purchased Seminis seeds have been settled for approximately $5.8 million, of which, approximately $2.6 million was recovered under our errors and omissions insurance policy and the remainder of the settlement was paid by the Company by July 2002. The claims by the growers with infected crops total approximately $4.7 million and we believe these claims are covered under our general liability insurance policy. We have finalized a settlement of nearly all of these claims. Our general liability insurance carrier continues to deny coverage, and we are continuing to negotiate with them on this matter. In the event we cannot finalize the settlement with our general liability insurance carrier, we plan to seek all legal remedies and redress available to us against the carrier.

In early 2000, we filed a suit against Dietrich Schmidt, the former president of Seminis and the current president of United Genetics, a competitor of ours, United Genetics and two former Seminis breeders, Ken Owen and Wei Ouyang, for trade secret misappropriation and breach of contract. Schmidt filed a counterclaim for defamation against us. We were unsuccessful on our claims for trade secret misappropriation and breach of contract and Schmidt was successful on his counterclaim, with the court awarding him $1 in nominal damages. The court subsequently awarded Schmidt, Owen and Ouyang their attorneys’ fees. We have appealed certain aspects of the judgment, including the fee award. The appeal is still pending and is not expected to be decided until late 2003.

Between December 17, 2002 and January 31, 2003, five purported class action lawsuits were filed relating to the proposed transaction under which Fox Paine and several Savia-related parties would acquire all of the outstanding shares of Seminis. Four of these actions — Garry Firth v. Alfonso Romo Garza, et al., Civil Action No. 20085, Boris Pozniak v. Alfonso Romo Garza, et al., Civil Action No. 20097, Pablo Herranz v. Seminis, Inc., et al., Civil Action No. 20105 and Haven Capital Management v. Seminis, Inc., et al., Civil Action No. 20140-NC were filed in the Delaware Court of Chancery (New Castle, County), while the fifth, Mark Rosales v. Seminis, Inc., Case No. CIV216255, was filed in California Superior Court (Ventura County). In February 2003, the Firth, Pozniak, Herranz and Haven Capital cases were consolidated into one proceeding entitled In re Seminis, Inc. Shareholders’ Litigation, Consolidated C.A. No. 20140-NC and the Haven Capital complaint was designated as the operative complaint in the consolidated lawsuit. That complaint names as defendant’s Savia, Seminis and Seminis’ directors. The Rosales (California) complaint names as defendants Seminis and its directors. Both the Delaware consolidated action and the Rosales action purport to be brought on behalf of Seminis common stockholders or their successors. Both of these actions-which were brought prior to the public announcement of Seminis entering into the merger agreement-allege that the merger, if consummated, would provide insufficient consideration to Seminis common stockholders and allege that the defendants breached their fiduciary duties in connection with the transaction. The complaints seek a preliminary and permanent injunction to enjoin the transaction and, in the event the transaction is consummated, rescission and damages. No provision for loss has been made in the accompanying consolidated financial statements, as the probability of an unfavorable outcome and the amount of loss, if any, are not determinable at this time.

During the last months of fiscal year 2002, Seminis’ subsidiary in Spain sold Boludo tomato seed to growers in the Canary Islands of Spain. Subsequently, some fields planted with this seed showed symptoms of the bacteria, Clavibacter michiganses, which can be seed borne, among other possible sources. Seminis has been conducting an investigation of the seeds and until July 31, 2003, all Seminis seed used in these fields that had been tested, tested negative for the presence of the bacteria. Spanish authorities requested an analysis of all seed lots sold in the Canary Islands. On July 31, 2003, Seminis was notified that after analyzing 89 lots of Boludo seed, a single seed lot tested positive for the presence of the bacteria. Seminis believes that other

factors that may cause the disease were present at the time of the infection, and could be responsible for, or contributing factors to, the presence of the bacteria and damage to the crops. These factors include, but are not limited to: poor sanitary practices in the growers’ fields (failure to remove debris from prior harvests); bacteria from sources other than Seminis that remained in the fields from prior seasons; the practice of grafting, which can magnify the effects of small outbreaks and weaken the crops; failure to properly rotate crops from season to season; and third-party isolates (different strains) of the disease that may have been present. Seminis continues to investigate this matter vigorously, in particular investigating the single positive test result, which is inconsistent with the findings of all of the other independent laboratories’ test results for Seminis seed lots. Seminis does not believe that its Boludo tomato seeds sold in the Canary Islands caused any bacterial damage. Notwithstanding the foregoing, tomato growers may initiate legal claims against the Company alleging that Seminis seeds were the source of the bacteria and claiming significant damages and Seminis cannot predict the outcome of any such claims, if initiated.

In connection with the transactions described in this prospectus, Seminis Vegetable Seeds, Inc. (“Seminis Vegetable”) will offer senior subordinated unsecured notes (the “Notes”) that will be fully and unconditionally guaranteed by Seminis and the wholly-owned domestic subsidiaries of Seminis Vegetable. All the guarantees are joint and several. The following table presents condensed consolidating financial information for Seminis, the parent company of Seminis Vegetable and a guarantor of the Notes; Seminis Vegetable, the issuer of the Notes and a wholly-owned subsidiary of Seminis; the wholly-owned domestic subsidiaries of Seminis Vegetable that guarantee the Notes; the foreign subsidiaries of Seminis Vegetable that do not guarantee the Notes; and consolidating adjustments. The following condensed consolidating balance sheets, statements of operations and statements of cash flows have been prepared as if Seminis accounted for its ownership of its subsidiaries using the equity method of accounting in accordance with the requirements for presentation of such information.

On September 29, 2003, the exchange, merger and other related transactions described in Note 2 were completed. As a result, Fox Paine, together with its affiliated and co-investors, acquired 75.1% of the outstanding shares of the Company’s common stock. In addition, the Company repaid all borrowings outstanding under its existing credit agreement, retired its Class B Redeemable Preferred Stock, borrowed $190.0 million under a new senior secured credit agreement, issued $190.0 million of ten-year, 10 1/4% senior subordinated notes and issued 50,000 shares of mandatorily redeemable paid in kind preferred stock along with warrants to purchase 3.9 million shares of the Company’s common stock for combined proceeds of $50.0 million.

Seminis Vegetable Seeds, Inc. (“Seminis Vegetable”), the issuer of the 10 1/4% Senior Subordinated Notes due 2013, and Petoseed International, Inc. (“Petoseed”), a direct subsidiary of Seminis Vegetable and a guarantor of the 10 1/4% Senior Subordinated Notes due 2013, are incorporated under the laws of California. Sections 317(a) and (b) of the California General Corporations Law (the “CGCL”) permits a corporation to indemnify any present or former officer, director, employee or other agent of the corporation (“agent”) who was or is a party or is threatened to be made a party to any civil, criminal, administrative or investigative proceeding (“proceeding”) against expenses (including attorneys’ fees), judgments, fines, settlements and other amounts actually and reasonably incurred if that person acted (i) in good faith and (ii) in a manner that he or she reasonably believed to be in the best interests of the corporation and, in the case of a criminal proceeding, such person had no reasonable cause to believe that his or her conduct was unlawful.

As permitted by Section 317(c) of the CGCL, in respect of any proceeding by or in right of the corporation to procure a judgment in its favor, a corporation may indemnify any agent’s expenses actually and reasonably incurred by such person in connection with the defense or settlement of the action if he or she acted (i) in good faith and (ii) in a manner he or she believed to be in the best interests of the corporation and its shareholders. Indemnification shall not be made in respect of any claim, issue or matter as to which an officer or director has been found liable to the corporation in the performance of his or her duty to the corporation and its shareholders, unless and only to the extent that the court in which the proceeding is or was pending shall determine upon application, that, in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for expenses.

Section 317(f) of the CGCL provides that in the case that an agent has been successful on the merits in defense of any proceeding described in the preceding paragraphs or in defense of any claim, issue, or matter therein, the agent shall be indemnified against expenses actually and reasonably incurred by the person in connection therewith.

The right of indemnification under Section 317 of the CGCL shall not be deemed exclusive of any additional rights to indemnification that may be granted by any by-law, agreement, vote of shareholders or disinterested directors, or authorized in the articles of the corporation.

As permitted by the CGCL, the by-laws of Petoseed provide that Petoseed may indemnify any director, officer, agent or employee to the fullest extent permitted under the CGCL. Additionally, pursuant to its by-laws, Petoseed may purchase and maintain insurance for any director, officer, agent or employee whether or not Petoseed would have the power to indemnify any such person.

Seminis, Inc. (“Holdings”), the direct parent corporation of Seminis Vegetable and a guarantor of the 10 1/4% Senior Subordinated Notes due 2013, is incorporated under the laws of Delaware. Sections 145(a) of the Delaware General Corporation Law (the “DGCL”) provide that a corporation may indemnify officers, directors, employees and agents of the corporation (“person”) against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement that are actually and reasonably incurred by them in connection with any specified acts, suits or proceedings whether civil, criminal, administrative or investigative, if they acted in good faith and in a manner they reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceedings, if they had no reasonable cause to believe that their conduct was unlawful.

Section 145(b) of the DGCL provides that the corporation may indemnify a person who is a party to any proceeding by or in the right of the corporation against expenses (including attorneys’ fees) actually and reasonably incurred in connection with the defense or settlement of such action. Indemnification shall not be made where such person has been found liable to the corporation unless and only to the extent a court determines that such person is fairly and reasonably entitled to indemnity for such expenses.

Under Section 145(c) of the DGCL, a corporation shall indemnify a person that has been successful on the merits or otherwise in defense of any proceeding described in the preceding paragraphs, or in defense of any claim, issue or matter therein. Such person shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection therewith.

The right to indemnification and to receive payment of expenses incurred under the DGCL is not exclusive of other indemnification that may be granted by any by-law, agreement, vote of stockholders or disinterested directors or otherwise.

As permitted by the DGCL, the Certificate of Incorporation and by-laws of Holdings (the “Certificate”) provides that a director of Holdings shall not be personally liable to Holdings or its stockholders for monetary damages for breach of fiduciary duty as a director, except to the extent such exemption from liability or limitation thereof is not permitted under the DGCL. In addition, as permitted by the DGCL, the Certificate provides that any present or former director, officer, employee or agent of Holdings or a person serving at the request of Holdings as a director, officer, employee or agent of another corporation or of a partnership, joint venture trust or other enterprise shall be held harmless by Holdings to the fullest extent permitted by the DGCL against all expense, liability and loss reasonably incurred or suffered by such person in connection therewith; provided, however that, except in limited circumstances, Holdings shall indemnify any such person seeking indemnification in connection with a proceeding initiated by the such person only if such proceeding was authorized by the Board.

Holdings maintains insurance to protect itself and any director, officer, employee or agent of Holdings or any person serving at the request of the corporation as a director, officer, employee or agent of another corporation against any such expense, liability or loss incurred in their capacity as such, whether or not Holdings would have the power to indemnify such person against such expense, liability or loss under the DGCL.

PGI Alfalfa, Inc. and Baxter Seed Co., Inc. (“Baxter”), subsidiaries of Seminis Vegetable and guarantors of the 10 1/4% Senior Subordinated Notes due 2013, are incorporated under the laws of Iowa and Texas, respectively. Each of Iowa and Texas have similar statutory provisions allowing for the indemnification of directors and officers. The by-laws of Baxter provide that Baxter’s board of directors may authorize Baxter to pay expenses incurred by, or satisfy a judgment or fine rendered or levied against present or former directors, officers or employees.


	(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement:


	(i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;

	(ii) To reflect in the prospectus any facts or events arising after the effective date of the Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the Registration Statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective Registration Statement; and


	(iii) To include any material information with respect to the plan of distribution not previously disclosed in the Registration Statement or any material change in such information in the Registration Statement.


	(2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at the time shall be deemed to be the initial BONA FIDE offering thereof.

	(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

(b) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrants pursuant to the foregoing provisions, or otherwise, the Registrants has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrants of expenses incurred or paid by a director, officer or controlling person of the Registrants in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrants will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

(c) The undersigned Registrants hereby undertakes to supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the Registration Statement when it became effective.

Pursuant to the requirements of the Securities Act of 1933, the undersigned co-registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Oxnard, California, on the 13th day of November, 2003.

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Alfonso Romo Garza, Bernardo Jimenez Barrera, Gaspar Alvarez Martinez his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including pre- and post-effective amendments) to this Registration Statement, and to file the same with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that each of said attorneys-in-fact and agents or their substitute or substitutes may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated:

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoint Michael A. Key, Bernardo Jimenez Barrera, Gaspar Alvarez Martinez his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including pre-and post-effective amendments) to this Registration Statement, and to file the same with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that each of said attorneys-in-fact and agents or their substitute or substitutes may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated:

*To be filed by amendment. EX-2.1 3 v94566orexv2w1.txt EXHIBIT 2.1 EXHIBIT 2.1 AGREEMENT AND PLAN OF MERGER THIS AGREEMENT AND PLAN OF MERGER, dated as of May 30, 2003 (this "Agreement"), is made by and among Seminis Acquisition LLC, a Delaware limited liability company ("Parent"), Seminis Merger Corp., a Delaware corporation and wholly owned subsidiary of Parent ("Merger Sub"), and Seminis, Inc., a Delaware corporation (the "Company"). WHEREAS, the Company has authority to issue 288,000,000 shares of capital stock consisting of: (1) 278,000,000 shares of common stock, par value $.01 per share (the "Company Common Stock"), of which (a) 211,000,000 shares are designated Class A Common Stock, par value $.01 per share (the "Company Class A Common Stock"), 18,978,291 of which were outstanding as of April 29, 2003 and (b) 67,000,000 shares are designated Class B Common Stock, par value $.01 per share (the "Company Class B Common Stock"), 45,142,508 of which were outstanding as of April 29, 2003, and (2) 10,000,000 shares of preferred stock, par value $.01 per share (the "Company Preferred Stock"), of which (a) 25,000 shares are designated Class A Redeemable Preferred Stock, par value $.01 per share (the "Company Class A Preferred Stock"), none of which are outstanding, (b) 25,000 shares are designated Class B Redeemable Preferred Stock, par value $.01 per share (the "Company Class B Preferred Stock"), 25,000 of which were outstanding as of April 29, 2003 and (c) 16,688 shares are designated Class C Redeemable PIK Preferred Stock, par value $.01 per share (the "Company Class C Preferred Stock"), 16,688 of which were outstanding as of April 29, 2003; WHEREAS, each share of Company Class A Common Stock is entitled to one vote per share and each share of Company Class B Common Stock is entitled to three votes per share; WHEREAS, Parent and its Affiliates own an aggregate of 3,199,361 shares of Company Class A Common Stock and 42,823,515 shares of Company Class B Common Stock as of the date hereof, and Parent and its Affiliates will own an aggregate of 41,554,346 shares of Company Class A Common Stock and 42,823,515 shares of Company Class B Common Stock as of the Closing Date; WHEREAS, Affiliates of Parent have proposed to the board of directors of the Company (the "Company Board") a transaction pursuant to which Parent would, among other things, acquire the outstanding shares of Company Common Stock not owned by Parent or its Affiliates; WHEREAS, the Company Board has established a special committee of the Company Board comprised solely of directors unaffiliated with Parent or its Affiliates (the "Special Committee") to consider such proposal and make a recommendation to the Company Board with respect thereto; WHEREAS, the Special Committee and the Company Board, based on the recommendation of the Special Committee, (a) have determined that the merger of Merger Sub with and into the Company, with the Company as the surviving corporation (the "Merger"), upon the terms and subject to the conditions set forth in this Agreement, is advisable, fair to and in the best interests of the Company's stockholders (other than Parent and its Affiliates), and (b) have approved (i) this Agreement and the Merger, pursuant to which each share of Company Common Stock issued and outstanding immediately prior to the Effective Time (except for shares of Company Common Stock owned, directly or indirectly by Parent, Merger Sub or the Company, and except for any shares of Company Common Stock as to which appraisal rights are exercised and perfected pursuant to applicable law) will be converted into the right to receive $3.78 in cash (the "Per Share Amount"), and (ii) the Related Agreements and the Related Transactions; WHEREAS, the Special Committee and the Company Board, based on the recommendation of the Special Committee, have resolved to recommend that the Company's stockholders approve and adopt this Agreement and the Merger; WHEREAS, immediately following the Merger, pursuant to the Stock Purchase Agreement, of even date herewith, among Fox Paine Seminis Holdings, LLC ("FPSH"), Banca Afirme, S.A., Institucion de Banca Multiple, Afirme Grupo Financiero, as trustee, under the Irrevocable Administration and Payment Trust Number 167-5 (Fideicomiso Irrevocable de Administracion y Pago Numero 167-5) (the "ARG Trust"), Parent and Merger Sub (the "Stock Purchase Agreement"), FPSH will purchase shares of common A-1 stock, par value $.01 per share, of the Surviving Corporation (the "New Company Common Stock") from Parent on the terms and conditions set forth in the Stock Purchase Agreement (the "Stock Purchase"); WHEREAS, as a condition and inducement to FPSH's willingness to enter into the Stock Purchase Agreement and consummate the transactions contemplated thereby, FPSH has required certain Persons to enter into a voting agreement, of even date herewith (the "Voting Agreement"), pursuant to which, among other things, and subject to the terms and conditions therein, each Person (other than FPSH) party to the Voting Agreement agrees to vote, or cause to be voted, all shares of Company Common Stock beneficially owned by such stockholder in favor of the Merger; WHEREAS, the members of Parent (including the managing member) and the board of directors of Merger Sub have determined that this Agreement and the Merger are advisable, fair to and in the best interests of their respective company and members or corporation and stockholders (as applicable) and have approved this Agreement and the Merger; and WHEREAS, Parent, Merger Sub and the Company desire to make certain representations, warranties, covenants and agreements in connection with the Merger and also to prescribe various conditions to the Merger; NOW, THEREFORE, in consideration of the representations, warranties, covenants and agreements contained in this Agreement, the parties agree as follows: ARTICLE I CERTAIN DEFINITIONS As used in this Agreement, the following terms shall have the respective meanings set forth below: "Affiliate" of a specified Person means a Person who, directly or indirectly, through one or more intermediaries controls, is controlled by or is under common control with such specified Person; provided that as used in this Agreement with respect to Parent, the term "Affiliate" or "Affiliates" means Affiliates of Parent, including Savia, Merger Sub and their respective Affiliates, other than the Company and its Subsidiaries. For purposes of this definition, "control" (including, with correlative meanings, the terms "controlled by" and "under common control with") means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting shares, by contract or otherwise. "Agreement" shall have the meaning set forth in the preamble. "Acquisition Agreement" shall have the meaning set forth in Section 6.10(e). "ARG Trust" shall have the meaning set forth in the recitals. "Award List" shall have the meaning set forth in Section 3.10(a). "Award Cancellation Time" means the time that is immediately prior to the Effective Time. "Benefit Plans" shall have the meaning set forth in Section 4.10(a). "Certificate of Merger" shall have the meaning set forth in Section 3.2. "Certificate" shall have the meaning set forth in Section 3.8(d). "Closing" shall have the meaning set forth in Section 3.2. "Closing Date" shall have the meaning set forth in Section 3.2. "Code" means the Internal Revenue Code of 1986, as amended. "Company" shall have the meaning set forth in the preamble. "Company 2002 10-K" shall have the meaning set forth in Section 4.15(a). A-2 "Company Balance Sheet" means the audited balance sheet for the period ended September 30, 2002, contained in the Company's Form 10-K for the period ended September 30, 2002, filed with the SEC on January 14, 2003. "Company Board" shall have the meaning set forth in the recitals. "Company Class A Common Stock" shall have the meaning set forth in the recitals. "Company Class A Preferred Stock" shall have the meaning set forth in the recitals. "Company Class B Common Stock" shall have the meaning set forth in the recitals. "Company Class B Preferred Stock" shall have the meaning set forth in the recitals. "Company Class C Preferred Stock" shall have the meaning set forth in the recitals. "Company Common Stock" shall have the meaning set forth in the recitals. "Company Competing Transaction" means any recapitalization, merger, consolidation or other business combination involving the Company, or direct or indirect acquisition of shares of Company Common Stock representing 15% or more of the voting power of the Company (except for transactions contemplated by the Exchange Agreement or any amendment thereto) or any material portion of the assets (except for acquisitions of assets in the ordinary course of business consistent with past practice) of the Company and its Subsidiaries, or any combination of the foregoing. "Company Credit Agreement" means the Credit Agreement among the Company, Seminis Vegetable Seeds, Inc., SVS Holland B.V., as borrowers, and Harris Trust and Savings Bank, individually and as administrative agent, and Bank of Montreal, Chicago Branch, individually and as syndication agent, and the lenders from time to time parties thereto, dated as of June 28, 1999, as amended through the date hereof. "Company Disclosure Schedule" means the schedule of disclosures delivered by the Company to Parent and Merger Sub concurrent with the execution of this Agreement. "Company Germplasm" means the germplasm actively used in the breeding or research programs of the Company and its Subsidiaries. "Company Intellectual Property" means the intellectual property rights used in the conduct of the business of the Company or its Subsidiaries, including all patents and patent applications, trademarks, trademark registrations and applications, domain names, copyrights and copyright registrations and applications, computer programs, technology, know-how, trade secrets, proprietary processes, inventions, service marks, original works of authorship and formulae, together with the goodwill associated with the foregoing. "Company's Knowledge" means the actual knowledge, after reasonable inquiry, of Eugenio Najera, Bruno Ferrari, C. Edward Green, Jose Manuel Madero, Gaspar Alvarez, Oscar Velasco, Salvador Alanis, Cristobal Cardenas, Enrique Osorio, Franco Campana, Jean Pierre Posa, Juliet Ream, Patrick Turner, Steve Witt, and, with respect to seedmen's claims only, Pieter Vandenberg. "Company Material Adverse Effect" means any event, change, circumstance, effect or state of facts that is or is reasonably expected to be materially adverse to (a) the business, results of operations, condition (financial or otherwise), assets or liabilities of the Company and its Subsidiaries, taken as a whole, or (b) the ability of the Company to consummate any of the transactions contemplated by this Agreement and the Related Agreements, including the Merger and the Related Transactions, except to the extent that such adverse effect results from (i) general economic conditions or changes therein, (ii) financial or securities market fluctuations or conditions, (iii) changes in, or events or conditions affecting, the industries or businesses in which the Company and its Subsidiaries operate, or (iv) the announcement of the transactions contemplated by this Agreement or the Letter of Intent. "Company Permits" shall have the meaning set forth in Section 4.9. "Company Preferred Stock" shall have the meaning set forth in the recitals. A-3 "Company PVP Certificates" shall have the meaning set forth in Section 4.12(a). "Company SEC Documents " shall have the meaning set forth in Section 4.4(a). "Company Securities" shall have the meaning set forth in Section 4.2(a). "Company Stock Plans" shall have the meaning set forth in Section 3.10(a). "Company Stockholder Approval" means the vote of a majority of the voting power of the Company Common Stock (voting together as a single class) for the approval and adoption of this Agreement and the Merger. "Company Termination Fee" shall have the meaning set forth in Section 8.3(a). "Compensation Payment" shall have the meaning set forth in Section 4.10(d). "Confidentiality Agreement" shall have the meaning set forth in Section 6.5(a). "Contribution Agreement" means the Contribution Agreement of even date herewith among Parent, the Contributors (as defined therein), ARG Trust, Mexican SPC (as defined therein) and Mr. Alfonso Romo Garza, providing for the contribution of shares of Company Common Stock to Parent. "Controlled Group Liability" shall have the meaning set forth in Section 4.10(f). "Debt Financing" shall have the meaning set forth in Section 5.7(b). "DGCL" means the General Corporation Law of the State of Delaware. "Disinterested Stockholder Approval" shall have the meaning set forth in Section 6.10(C). "Dissenting Shares" shall have the meaning set forth in Section 3.9. "Effective Time" shall have the meaning set forth in Section 3.2. "Employees" shall have the meaning set forth in Section 4.10(h). "Employment Agreements" shall have the meaning set forth in Section 4.10(h). "Environmental Claim" shall have the meaning set forth in Section 4.17(a). "Environmental Laws" means all applicable statutes, laws, ordinances, codes, common law, licenses, permits, rules, regulations, orders, demands, approvals, authorizations and similar items of any Governmental Entity relating to pollution or Hazardous Substances or protection of human health or the environment (including ambient air, surface water, ground water, land surface or subsurface strata) or emissions, discharges, releases, disposal or handling of any pollutants or Hazardous Substances. "ERISA" shall have the meaning set forth in Section 4.10(a). "ERISA Affiliate" shall have the meaning set forth in Section 4.10(c). "Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder. "Exchange Agreement" shall have the meaning set forth in Section 2.1. "Existing Policy" shall have the meaning set forth in Section 6.8(c). "Financial Statements" shall have the meaning set forth in Section 4.4(a). "Financing Commitment Letters" shall have the meaning set forth in Section 5.7(b). "Financing Documents" shall have the meaning set forth in Section 4.22. "FPSH" shall have the meaning set forth in the recitals. "FPSH Expenses" means all documented out-of-pocket fees and expenses actually and reasonably incurred by FPSH and its Affiliates or on their behalf in connection with any of the transactions contemplated A-4 by this Agreement and the Related Agreements (including fees and expenses payable to financing sources, investment bankers, consultants, counsel to any of the foregoing, accountants and legal counsel). "GAAP" means U.S. generally accepted accounting principles. "Governmental Entity" shall have the meaning set forth in Section 4.6. "Hazardous Substance" means any substance presently listed, defined, designated or classified as hazardous, toxic, radioactive or dangerous, or otherwise regulated, under any Environmental Law, including any toxic waste, pollutant, contaminant, hazardous substance, toxic substance, hazardous waste, special waste, industrial substance or petroleum or any derivative or byproduct thereof, radon, radioactive material, asbestos, or asbestos containing material, urea formaldehyde, foam insulation or polychlorinated biphenyls, lead or lead-based paints or materials. "HMO" shall have the meaning set forth in Section 4.10(c). "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. "Indemnified Parties" shall have the meaning set forth in Section 6.8(b). "Indebtedness" of any Person means (a) all obligations of such Person for borrowed money or for the deferred purchase price of property or services (other than current trade liabilities incurred in the ordinary course of business and payable in accordance with customary practices, and excluding ordinary operating leases), (b) any other obligations of such Person that are evidenced by a note, bond, debenture or similar instrument, (c) all obligations under conditional sale or other title retention agreements relating to property purchased, (d) capital lease or sale-leaseback obligations, (e) all liabilities secured by any Lien on any property (other than ordinary operating leases), and (f) any guarantee or assumption of any of the foregoing in clauses (a) through (e) above or guaranty of minimum equity or capital or any make-whole or similar obligation or any other guarantee of indebtedness of a third party. "Insurance Policies" shall have the meaning set forth in Section 4.16. "IRS" means the U.S. Internal Revenue Service. "Key Employee" means any Chief Executive Officer, President, Executive Vice President or Senior Vice President or other employee of the Company or its Subsidiaries whose annual base salary (excluding bonuses and other non-salary compensation) exceeds $100,000. "Leased Real Property" shall have the meaning set forth in Section 4.18(a). "Lenders" shall have the meaning set forth in Section 5.7(b). "Letter of Intent" means the non-binding letter of intent, by and among Fox Paine & Company, LLC, Savia, ARG Trust, Servasa, S.A. de C.V. and Mr. Alfonso Romo, dated December 13, 2002, as amended. "Lien" means, with respect to any asset (including any security), any security interests, liens, claims, charges, title defects, deficiencies or exceptions (including, with respect to Real Property Leases, subleases, assignments, licenses or other agreements granting to any third party any interest in a Real Property Lease or any right to the use or occupancy of any Leased Real Property), mortgages, pledges, easements, encroachments, restrictions on use, rights-of-way, rights of first refusal, options, conditional sales or other title retention agreements, covenants, conditions or other similar restrictions (including restrictions on transfer) or other encumbrances of any nature whatsoever in respect of such asset. "Material Contracts" shall have the meaning set forth in Section 4.15(a). "Merger" shall have the meaning set forth in the recitals. "Merger Consideration" shall have the meaning set forth in Section 3.8(d). "Merger Sub" shall have the meaning set forth in the preamble. "MS Common Stock" means shares of common stock, par value $.01 per share, of Merger Sub. A-5 "MS Preferred Stock" means shares of preferred stock, par value $.01 per share, of Merger Sub. "New Company Common Stock" shall have the meaning set forth in the recitals. "NOL Carryforwards" shall have the meaning specified in Section 4.13. "Outside Date" shall mean October 15, 2003, unless the commitment set forth in the Financing Commitment Letters (or in any replacement financing arrangement pursuant to Section 6.6(d)) shall have been extended or obtained until a date beyond October 15, 2003, in which event "Outside Date" shall mean the earlier of (i) the date until which financing commitments have been extended or obtained, and (ii) November 30, 2003. "Owned Real Property" shall have the meaning set forth in Section 4.18(a). "Parent" shall have the meaning set forth in the preamble. "Parent Disclosure Schedule" means the schedule of disclosures delivered by Parent to the Company concurrent with the execution of this Agreement. "Parent Material Adverse Effect" means any event, change, circumstance, effect or state of facts that is or is reasonably expected to be materially adverse to the ability of Parent or Merger Sub to consummate the transactions contemplated by this Agreement or by the Related Agreements. "Paying Agent" shall have the meaning set forth in Section 3.11(a). "PBGC" means the Pension Benefit Guaranty Corporation. "Permitted Discussions" shall have the meaning set forth in Section 6.10(a). "Permitted Liens" means (a) growers', mechanics', carriers', workers', repairers', materialmen's, warehousemen's, and other similar Liens arising in the ordinary course of the Company's business and either (i) for sums not yet due and payable or (ii) such Liens as are less than $100,000 in amount and are being contested in good faith and by appropriate proceedings, (b) Liens under the Company Credit Agreement, (c) Liens for current Taxes not yet due or payable or being contested in good faith or for supplemental Taxes for which the Company has not received a written notice of assessment, and (d) any other covenants, conditions, restrictions, reservations, rights and non-monetary Liens incurred or suffered in the ordinary course of business and that (i) do not materially detract from the current use of the applicable Real Property and (ii) would not, individually or in the aggregate, have a Company Material Adverse Effect. "Per Share Amount" shall have the meaning set forth in the recitals. "Person" means an individual, corporation, limited liability company, partnership, association, trust, unincorporated organization, other entity or "group" (as defined in the Exchange Act). "Proxy Statement" shall have the meaning set forth in Section 6.2. "Real Property" shall have the meaning set forth in Section 4.18(a). "Real Property Lease" shall mean any contract or agreement to which the Company or any of its Subsidiaries is a party relating to the lease of real property used by the Company or its Subsidiaries requiring annual payments in excess of (or reasonably expected to be in excess of) $100,000. "Record Date" shall mean the date on which holders of Company Common Stock on such date, as reflected on the Company's (or its transfer agent's) books and records, shall be entitled to vote at the Stockholders Meeting, such date determined in accordance with the Company's Bylaws and other applicable requirements. "Related Agreements" shall mean the Voting Agreement, the Contribution Agreement and the Stock Purchase Agreement. "Related Transactions" shall mean the transactions contemplated by the Related Agreements. "Restricted Shares" means shares of restricted stock granted under any Company Stock Plan. A-6 "Retained Options" shall have the meaning set forth in Section 3.10(a). "Retained Option Participants" shall have the meaning set forth in Section 3.10(a). "Savia" means Savia, S.A. de C.V., a corporation (sociedad anonima de capital variable) organized under the laws of the United Mexican States. "SEC" means the U.S. Securities and Exchange Commission. "Securities Act" means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder. "Special Committee" shall have the meaning set forth in the recitals. "Stock Option" shall have the meaning set forth in Section 3.10(a). "Stock Purchase" shall have the meaning set forth in the recitals. "Stock Purchase Agreement" shall have the meaning set forth in the recitals. "Stockholders' Agreement" means the Stockholders' Agreement, of even date herewith, by and among Merger Sub and the Persons listed on the signature pages thereto. "Stockholders Meeting" shall have the meaning set forth in Section 6.1. "Subsidiary" means, with respect to any Person, any other Person, whether incorporated or unincorporated or domestic or foreign to the United States, of which (a) such first Person or any other Subsidiary of such first Person is a general partner (excluding such partnerships where such first Person or any Subsidiary of such first Person does not have a majority of the voting interest in such partnership) or (b) at least a majority of the securities or other interests having by their terms ordinary voting power to elect a majority of the board of directors or others performing similar functions with respect to such corporation or other organization is, directly or indirectly, owned or controlled by such first Person or by any one or more of its Subsidiaries, or by such first Person and one or more of its Subsidiaries. "Superior Transaction" shall have the meaning set forth in Section 6.10(e). "Surviving Corporation" shall have the meaning set forth in Section 3.1. "Tail Period" shall have the meaning set forth in Section 6.8(c). "Tax Returns" means all reports, returns, information returns, statements, declarations and certifications required to be filed with respect to Taxes. "Taxes" means any income, alternative or add-on minimum tax, gross receipts, sales, use, transfer, gains, ad valorem, franchise, profits, license, withholding, payroll, employment, excise, severance, stamp, occupation, premium, property, environmental or windfall profit tax, custom, duty or other tax, or other like assessment or charge, together with any related interest, penalty, addition to tax or additional amount. "Transmittal Documents" shall have the meaning set forth in Section 3.11(b). "Voting Agreement" shall have the meaning set forth in the recitals. "WARN Act" shall have the meaning set forth in Section 4.11(b). ARTICLE II THE EXCHANGE AND THE DIVIDEND SECTION 2.1. The Exchange. Immediately prior to the Merger, and pursuant to, and subject to the conditions set forth in, the Amended and Restated Exchange Agreement, dated as of the date hereof, by and between the Company and Savia (the "Exchange Agreement"): the Company will issue to Savia an aggregate of 37,669,480 shares of Company Class A Common Stock and will pay to Savia an amount in cash as determined in accordance with the Exchange Agreement in exchange for (a) all of Savia's right, title and A-7 interest in and to 16,688 shares of Company Class C Preferred Stock (all of which shares of Company Class C Preferred Stock shall be surrendered, free and clear of any and all Liens) including the right to accrued but unpaid paid in kind dividends thereon, (b) any right, title or interest in or to any and all accrued and unpaid cash dividends on the Company Class C Preferred Stock, and (c) any right, title or interest in or to any and all accrued and unpaid cash obligations on additional paid in capital and any other rights and claims with respect to any of the foregoing through the Effective Time. SECTION 2.2. The Company Class B Preferred Stock Dividend. Immediately prior to the Merger, the Company shall declare and pay a dividend equal to all accrued and unpaid dividends on the Company Class B Preferred Stock as of the payment date immediately preceding the Closing Date (which, as of April 25, 2003, are in an aggregate amount equal to $5,666,667), which payment shall be made in cash in accordance with the Company's certificate of incorporation and the certificate of designations for the Company Class B Preferred Stock. SECTION 2.3. Withholding Taxes. The amounts set forth in this Article II or Article III shall be subject to reduction for any applicable federal, state, local or foreign withholding Taxes. To the extent that amounts are so withheld, such amounts shall be treated for all purposes of this Agreement as having been paid to the Person in respect of which such withholding was made. ARTICLE III THE MERGER SECTION 3.1. The Merger. Subject to the conditions of this Agreement and in accordance with the DGCL, the parties hereto shall consummate the Merger pursuant to which (a) Merger Sub shall merge with and into the Company and the separate corporate existence of Merger Sub shall thereupon cease, (b) the Company shall be the surviving corporation in the Merger (sometimes referred to as the "Surviving Corporation") and shall continue to be governed by the laws of the State of Delaware, and (c) the corporate existence of the Company, with all of its rights, privileges, immunities, powers and franchises, shall continue unaffected by the Merger. SECTION 3.2. Effective Time. As soon as practicable after the satisfaction or waiver (to the extent permitted by applicable law) of the conditions set forth in Article VII, the parties hereto shall cause a certificate of merger (the "Certificate of Merger") to be executed and filed on the Closing Date (or on such other date as Parent and the Company may agree) with the Secretary of State of the State of Delaware in such form as required by, and executed in accordance with, the relevant provisions of the DGCL. The closing of the Merger (the "Closing") will take place (a) at the offices of Wachtell, Lipton, Rosen & Katz, 51 West 52nd Street, New York, New York, at 10:00 a.m. New York City time as soon as reasonably practicable (but in any event no later than the third business day) after satisfaction or waiver (to the extent permitted by applicable law) of the conditions set forth in Article VII (other than those conditions that are to be satisfied at the Closing, but subject to the satisfaction or waiver (to the extent permitted by applicable law) of such other conditions), or (b) at such other place or time and/or such other date as the parties may agree. The date on which the Closing occurs is referred to in this Agreement as the "Closing Date." The Merger shall become effective at such time as the Certificate of Merger is duly filed with the Secretary of State of the State of Delaware or at such later date and time as the parties shall agree and as shall be specified in the Certificate of Merger (the time the Merger becomes effective, the "Effective Time"). SECTION 3.3. Effects of the Merger. The Merger shall have the effects as set forth in the applicable provisions of the DGCL. Without limiting the generality of the foregoing, and subject thereto, at the Effective Time, all the properties, rights, privileges, powers and franchises of the Company and Merger Sub shall vest in the Surviving Corporation, and all debts, liabilities and duties of the Company and Merger Sub shall become the debts, liabilities and duties of the Surviving Corporation. A-8 SECTION 3.4. Certificate of Incorporation and Bylaws. (a) The certificate of incorporation of the Company in effect immediately prior to the Effective Time, as amended in accordance with the Certificate of Merger attached hereto as Exhibit A, shall be the certificate of incorporation of the Surviving Corporation until amended in accordance with its terms and applicable law. (b) The bylaws of Merger Sub in effect immediately prior to the Effective Time, in the form attached hereto as Exhibit H, shall be the bylaws of the Surviving Corporation until amended in accordance with their terms and applicable law. SECTION 3.5. Directors. The directors of Merger Sub immediately prior to the Effective Time shall be the initial directors of the Surviving Corporation, each to hold office in accordance with the certificate of incorporation and bylaws of the Surviving Corporation until such director's successor is duly elected or appointed and qualified. SECTION 3.6. Officers. The officers of the Company immediately prior to the Effective Time shall be the initial officers of the Surviving Corporation, each to hold office in accordance with the certificate of incorporation and bylaws of the Surviving Corporation until such officer's successor is duly elected or appointed and qualified. SECTION 3.7. Subsequent Actions. If, at any time after the Effective Time, the Surviving Corporation shall determine in good faith or be advised that any deeds, bills of sale, assignments, assurances or any other actions or things are necessary or desirable to vest, perfect or confirm of record or otherwise in the Surviving Corporation its right, title or interest in, to or under any of the rights, properties or assets of either of the Company or Merger Sub acquired or to be acquired by the Surviving Corporation as a result of, or in connection with the Merger or otherwise to carry out this Agreement, the officers and directors of the Surviving Corporation shall be authorized to execute and deliver, in the name and on behalf of either the Company or Merger Sub, all such deeds, bills of sale, assignments and assurances and to take and do, in the name and on behalf of each of such corporations or otherwise, all such other actions and things as may be necessary or desirable to vest, perfect or confirm any and all right, title and interest in, to and under such rights, properties or assets in the Surviving Corporation or otherwise to carry out this Agreement. SECTION 3.8. Effect on the Capital Stock. As of the Effective Time, by virtue of the Merger and without any action on the part of the Company, Parent, Merger Sub or any holder of any shares of Company Common Stock, Company Preferred Stock or any shares of capital stock of Merger Sub: (a) Each share of MS Common Stock issued and outstanding immediately prior to the Effective Time shall be converted into one share of New Company Common Stock following the Merger. (b) Each share of Company Common Stock that is owned by Parent or Merger Sub immediately prior to the Effective Time shall automatically be canceled and retired and shall cease to exist, and no cash, Company Common Stock or other consideration shall be delivered or deliverable in exchange therefor. (c) Each share of Company Common Stock that is owned by or held in the treasury of the Company immediately prior to the Effective Time shall automatically be canceled and retired and shall cease to exist, and no cash, Company Common Stock or other consideration, including the Merger Consideration, shall be delivered or deliverable in exchange therefor. (d) Shares of Company Common Stock issued and outstanding immediately prior to the Effective Time (other than any shares to be canceled pursuant to Sections 3.8(b) and 3.8(c) and any Dissenting Shares) held by each stockholder of the Company shall be converted into the right to receive an amount in cash (the "Merger Consideration") equal to the product of (A) the number of shares of Company Common Stock owned by such stockholder immediately prior to the Effective Time, and (B) the Per Share Amount. The Merger Consideration shall be payable to the holder of shares of Company Common Stock, without interest thereon, upon the surrender of the certificate or certificates formerly representing such shares of Company Common Stock (each, a "Certificate") in the manner provided in Section 3.11, less any required withholding of U.S. federal, state, local or foreign Taxes. From and after A-9 the Effective Time, all such shares of Company Common Stock so converted into the Merger Consideration shall no longer be outstanding and shall be deemed to be canceled and retired and shall cease to exist, and each holder of a Certificate or Certificates shall cease to have any rights with respect thereto, except the right to receive the Merger Consideration therefor upon the surrender of such Certificate or Certificates in accordance with Section 3.11 (or, with respect to Dissenting Shares, as provided in Section 3.9). (e) Each share of Company Class B Preferred Stock issued and outstanding or held by the Company as treasury stock immediately prior to the Effective Time shall remain issued and outstanding or held as treasury stock, as the case may be, and shall be unaffected by the Merger. SECTION 3.9. Dissenting Shares. Anything in this Agreement to the contrary notwithstanding, each share of Company Common Stock or Company Class B Preferred Stock outstanding immediately prior to the Effective Time and held by a holder who has not voted in favor of the Merger or consented thereto in writing and who has demanded appraisal for such share of Company Common Stock or Company Class B Preferred Stock in accordance with Section 262 of the DGCL, if such Section 262 of the DGCL provides for appraisal rights for such shares of Company Common Stock or Company Class B Preferred Stock in the Merger ("Dissenting Shares"), shall not: (a) in the case of the Company Common Stock, be converted into or be exchangeable for the right to receive the Merger Consideration; or (b) in the case of the Company Class B Preferred Stock, remain issued and outstanding following the Merger, unless and until such holder of Company Common Stock or Company Class B Preferred Stock, as the case may be, fails to perfect or withdraws or otherwise loses his right to appraisal and payment under the DGCL. If, after the Effective Time, any such holder fails to perfect or withdraws or loses his right to appraisal, such Dissenting Shares shall: (a) in the case of Company Common Stock, thereupon be treated as if such shares had been converted as of the Effective Time into the right to receive the Merger Consideration, if any, to which such holder is entitled, without interest or dividends thereon; and (b) in the case of Company Class B Preferred Stock, remain issued and outstanding and unaffected by the Merger. The Company shall give Parent (a) prompt notice of any demands received by the Company for appraisal of shares of Company Common Stock or Company Class B Preferred Stock, attempted written withdrawals of such demands, and any other instruments served pursuant to the DGCL and received by the Company relating to stockholders' rights to appraisal with respect to the Merger; and (b) the opportunity to direct all negotiations and proceedings with respect to any exercise of such appraisal rights under the DGCL. The Company shall not, except with the prior written consent of Parent, voluntarily make any payment with respect to any demands for payment of fair value for capital stock of the Company, offer to settle or settle any such demands or approve any withdrawal of any such demands. SECTION 3.10. List of Other Equity Awards; Treatment of Other Equity Awards. (a) Section 3.10(a) of the Company Disclosure Schedule contains a true and complete list (the "Award List") of each option to purchase shares of Company Common Stock (a "Stock Option") granted under each employee and director stock incentive or compensation plan, agreement or arrangement (the "Company Stock Plans") outstanding as of the date hereof (along with the exercise prices thereof). Stock Options held by any person permitted by Parent in writing on or after the date hereof to retain his or her Stock Options following the Award Cancellation Time (collectively, the "Retained Option Participants") are referred to as "Retained Options," to the extent such Person agrees to have such Stock Options treated as Retained Options. Parent may require that a Retained Option Participant, as a condition of having the Stock Options held by such Retained Option Participant be treated as Retained Options, agree in writing to be subject to certain restrictions on the transferability of any shares of New Company Common Stock that are acquired after the Effective Time upon the exercise of such Retained Options. (b) At the Award Cancellation Time, each then-outstanding Stock Option (whether vested or unvested), other than any Retained Option, shall be canceled and, in consideration of such cancellation, the Company shall pay to the holder as soon as practicable following the Award Cancellation Time, in full satisfaction of such Stock Option, less any applicable withholding tax, an amount in cash equal to the product of (i) the excess of the Per Share Amount over the exercise price per share of such unexercised Stock Option, if any, and (ii) the number of shares of Company Common Stock subject to such Stock Option. A-10 (c) The Company shall (i) take all actions reasonably necessary to cause the actions and effects specified in Section 3.10(b) to occur, (ii) take all actions reasonably necessary, with Parent's assistance, to ensure that, effective as of the Award Cancellation Time, no holder of Stock Options, other than the Retained Option Participants, will have any right to receive any shares of capital stock of the Company or, if applicable, the Surviving Corporation, upon exercise of any Stock Option or any other event, and (iii) provide its reasonable cooperation to Parent in connection with the actions contemplated by this Section 3.10, including seeking, on Parent's behalf, consents from the Retained Option Participants to have their Stock Options treated as Retained Options. SECTION 3.11. Payment for Shares. (a) Prior to the Effective Time, Parent shall designate a bank or trust company reasonably acceptable to the Company to act as paying agent in connection with the Merger (the "Paying Agent") pursuant to a paying agent agreement providing for the matters set forth in this Section 3.11 and otherwise reasonably satisfactory to the Company. At, or promptly following the Effective Time, Parent shall, or shall cause the Surviving Corporation to, make available to the Paying Agent for the benefit of holders of shares of Company Common Stock, as needed, the aggregate consideration to which such holders of shares of Company Common Stock shall be entitled at the Effective Time pursuant to Section 3.8(d). Such funds shall be invested in time deposits, treasury bills, or money market or other similar instruments as directed by the Surviving Corporation pending payment thereof by the Paying Agent to holders of the shares of Company Common Stock. Earnings from such investments shall be the sole and exclusive property of the Surviving Corporation, and no part thereof shall accrue to the benefit of the holders of shares of Company Common Stock. (b) Promptly after the Effective Time, the Paying Agent shall mail to each record holder, as of the Effective Time, of an outstanding Certificate(s), whose shares of Company Common Stock were converted pursuant to Section 3.8(d) into the right to receive the Merger Consideration (i) a letter of transmittal (which shall specify that delivery shall be effected, and risk of loss and title to the Certificate(s) shall pass, only upon proper delivery of the Certificates to the Paying Agent and shall be in such form and have such other provisions not inconsistent with this Agreement as Parent may reasonably specify), and (ii) instructions for use in effecting the surrender of the Certificates in exchange for payment of the Merger Consideration (together, the "Transmittal Documents"). Upon surrender of a Certificate or Certificates for cancellation to the Paying Agent or to such other agent or agents as may be appointed by Parent, together with such letter of transmittal and any other required documents, duly executed, the holder of such Certificate(s) shall be entitled to receive in exchange therefor (as promptly as practicable) the Merger Consideration in respect of all shares of Company Common Stock formerly represented by such surrendered Certificate(s), without any interest thereon, pursuant to Section 3.8(d). The Certificate(s) so surrendered shall forthwith be canceled. If payment of the Merger Consideration is to be made to a Person other than the Person in whose name the surrendered Certificate(s) is registered, it shall be a condition of payment that the Certificate(s) so surrendered shall be properly endorsed or shall otherwise be in proper form for transfer, that the signatures on the Certificate(s) or any related stock power shall be properly guaranteed and that the Person requesting such payment shall have established to the satisfaction of Parent that any transfer and other Taxes required by reason of the payment of the Merger Consideration to a Person other than the registered holder of the Certificate(s) surrendered have been paid or are not applicable. Until surrendered in accordance with the provisions of and as contemplated by this Section 3.11, any Certificate(s) (other than Certificate(s) representing shares of Company Common Stock subject to Sections 3.8(b) and (c) and other than Dissenting Shares) shall be deemed, at any time after the Effective Time, to represent only the right to receive the Merger Consideration in cash without interest as contemplated by this Section 3.11. Upon the surrender of a Certificate(s) in accordance with the terms and instructions contained in the Transmittal Documents, the Surviving Corporation shall cause the Paying Agent to pay to the holder of such Certificate(s) in exchange therefor cash in an amount equal to the Merger Consideration (other than Certificate(s) representing shares of Company Common Stock subject to Sections 3.8(b) and (c) and other than Dissenting Shares). (c) At the Effective Time, the stock transfer books of the Company shall be closed and there shall not be any further registration of transfers of any shares of capital stock thereafter on the records of the Company. A-11 If, after the Effective Time, a Certificate (other than those subject to Sections 3.8(b) and (c)) is presented to the Surviving Corporation, it shall be canceled and exchanged for the consideration provided for, and in accordance with the procedures set forth, in this Section 3.11. No interest shall accrue or be paid on any cash payable upon the surrender of a Certificate. (d) From and after the Effective Time, the holders of Certificates shall cease to have any rights with respect to shares of Company Common Stock represented by such Certificate except as otherwise provided herein or by applicable law. (e) If any Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the Person claiming such Certificate to be lost, stolen or destroyed, the Surviving Corporation shall pay or cause to be paid in exchange for such lost, stolen or destroyed Certificate the relevant portion of the Merger Consideration in accordance with Section 3.8(d) for shares of Company Common Stock represented thereby. When authorizing such payment of any portion of the Merger Consideration in exchange therefor, the board of directors of the Surviving Corporation may, in its discretion and as a condition precedent to the payment thereof, require the owner of such lost, stolen or destroyed Certificate to give the Surviving Corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the Surviving Corporation with respect to the Certificate alleged to have been lost, stolen or destroyed. (f) Promptly following the date that is one year after the Effective Time, the Surviving Corporation shall be entitled to require the Paying Agent to deliver to it any cash (including any interest received with respect thereto), Certificates and other documents in its possession relating to the Merger, that had been made available to the Paying Agent and that have not been disbursed to holders of Certificates, and thereafter such holders shall be entitled to look to the Surviving Corporation (subject to abandoned property, escheat or similar laws) only as a general creditor thereof with respect to any portion of the Merger Consideration payable upon due surrender of their Certificates, without any interest thereon. (g) The Merger Consideration paid in the Merger shall be net to the holder of shares of Company Common Stock in cash, subject to reduction only for any applicable federal, state, local or foreign withholding Taxes. To the extent that amounts are so withheld, such amounts shall be treated for all purposes of this Agreement as having been paid to the Person in respect of which such withholding was made. (h) Anything to the contrary in this Section 3.11 notwithstanding, to the fullest extent permitted by law, none of the Paying Agent, Parent or the Surviving Corporation shall be liable to any holder of a Certificate for any amount properly delivered to a public official pursuant to any applicable abandoned property, escheat or similar law. If Certificates are not surrendered prior to two years after the Effective Time, unclaimed funds payable with respect to such Certificates shall, to the extent permitted by applicable law, become the property of the Surviving Corporation, free and clear of all claims or interest of any Person previously entitled thereto. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY Except as set forth in the Company SEC Documents filed on or prior to the date hereof or in the Company Disclosure Schedule (it being understood that any matter set forth in any section of the Company Disclosure Schedule shall be deemed disclosed with respect to any other section of the Company Disclosure Schedule to the extent such matter is disclosed in a way as to make its relevance to the information called for by such other section reasonably clear on its face), the Company hereby represents and warrants to Parent and Merger Sub as follows: SECTION 4.1. Organization and Qualification; Subsidiaries. (a) To the Company's Knowledge, each of the Company and its Subsidiaries is a corporation duly organized, validly existing and, if applicable, in good standing under the laws of the jurisdiction of its incorporation and has all requisite corporate or other power and authority and all necessary governmental approvals to own, lease and operate its properties and to carry on its businesses as now being conducted, except A-12 where the failure to be in good standing or to have such power, authority and governmental approvals, would not, individually or in the aggregate, have a Company Material Adverse Effect. The Company has heretofore delivered to Parent accurate and complete copies of the certificate of incorporation and bylaws, as currently in effect, of the Company. Section 4.1(a) of the Company Disclosure Schedule sets forth a complete list of the Company's Subsidiaries. (b) To the Company's Knowledge, each of the Company and its Subsidiaries is duly qualified or licensed and, if applicable, in good standing to do business in each jurisdiction in which the property owned, leased or operated by it or the nature of the business conducted by it makes such qualification or licensing necessary, except in such jurisdictions where the failure to be so duly qualified or licensed and in good standing would not, individually or in the aggregate, have a Company Material Adverse Effect. (c) The Company does not own, directly or indirectly, any equity (other than equity of its Subsidiaries) or debt (other than debt of its Subsidiaries and other than short-term investments of the Company's working capital in high-grade commercial paper or similar high-grade, short-term instruments) or similar interest in any Person. SECTION 4.2. Capitalization of the Company and its Subsidiaries. (a) The authorized capital stock of the Company consists of: (i) 278,000,000 shares of Company Common Stock, (A) 211,000,000 shares of which are designated as shares of Company Class A Common Stock and (B) 67,000,000 shares of which are designated as shares of Company Class B Common Stock and (ii) 10,000,000 shares of Company Preferred Stock, (A) 25,000 shares of which are designated as shares of Company Class A Preferred Stock, (B) 25,000 shares of which are designated as shares of Company Class B Preferred Stock and (C) 16,688 shares of which are designated as shares of Company Class C Preferred Stock. As of April 29, 2003, (i) 18,978,291 shares of Company Class A Common Stock were issued and outstanding, (ii) 45,142,508 shares of Company Class B Common Stock were issued and outstanding, (iii) no shares of Company Class A Preferred Stock were issued and outstanding, (iv) 25,000 shares of Company Class B Preferred Stock were issued and outstanding and (v) 16,688 shares of Company Class C Preferred Stock were issued and outstanding. All of the outstanding shares of Company Common Stock and Company Preferred Stock have been validly issued, and are fully paid, nonassessable and free of preemptive rights. As of April 29, 2003, a total of 4,170,854 shares of Company Class A Common Stock were reserved for issuance pursuant to outstanding Stock Options, and no other shares of Company Class A Common Stock are subject to issuance pursuant to Stock Options or awards of Restricted Shares. Immediately prior to the Effective Time, no shares of Company Class A Preferred Stock or Company Class C Preferred Stock will be outstanding and 25,000 shares of Company Class B Preferred Stock will be outstanding. Set forth in Section 4.2(a) of the Company Disclosure Schedule is a complete and accurate list of the Company Stock Plans and the number of shares of Company Common Stock reserved for issuance pursuant to Stock Options outstanding as of April 29, 2003 under each such Company Stock Plan, and no other shares of Company Common Stock are subject to issuance pursuant to such Company Stock Plans. Since April 29, 2003, no shares of capital stock of the Company have been issued other than pursuant to Stock Options set forth on the Award List, and since April 29, 2003, no Stock Options or Restricted Shares have been granted. Except as set forth above, and as contemplated by Section 2.1, there are no outstanding (i) shares of capital stock (including Restricted Shares) or other voting securities of the Company, (ii) securities of the Company or any of its Subsidiaries convertible into or exchangeable for shares of capital stock or voting securities of the Company, (iii) options or other rights to acquire from the Company or any of its Subsidiaries, or obligations of the Company or any of its Subsidiaries to issue or sell, any capital stock, voting securities or securities convertible into or exchangeable for capital stock or voting securities of the Company, or (iv) equity equivalents, interests in the ownership or earnings of the Company or other similar rights (collectively, "Company Securities"). Other than as contemplated by this Agreement, there are no outstanding obligations of the Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire any Company Securities. (b) All of the outstanding capital stock of, or other ownership interests in, each Subsidiary of the Company, is owned by the Company, directly or indirectly, free and clear of any Lien or any other limitation A-13 or restriction (including any restriction on the right to vote or sell the same, except as may be provided as a matter of law). All such shares have been validly issued, fully paid and nonassessable, and have been issued free of preemptive rights. There are no outstanding securities of the Company or any of its Subsidiaries convertible into or exchangeable for, no options or other rights to acquire from the Company or any of its Subsidiaries, and no other contract, understanding, arrangement or obligation (whether or not contingent) providing for the issuance or sale, directly or indirectly, of, any capital stock or other ownership interests in, or any other securities of, any Subsidiary of the Company. There are no outstanding equity equivalents, interests in the ownership or earnings or similar rights of any Subsidiary of the Company. There are no contractual obligations of the Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire any outstanding shares of capital stock or other ownership interests in any Subsidiary of the Company. (c) The shares of Company Class A Common Stock constitute the only class of equity securities of the Company or any of its Subsidiaries registered or required to be registered under the Exchange Act. No Subsidiary of the Company owns any capital stock in the Company. (d) Other than the Voting Agreement, there are no voting trusts or other agreements or understandings to which the Company or any of its Subsidiaries, or to the Company's Knowledge, any of the Company's stockholders, is a party with respect to the voting of the capital stock of the Company or any of its Subsidiaries. (e) To the Company's Knowledge, other than with respect to the Indebtedness set forth in Section 4.2(e) of the Company Disclosure Schedule, there is no Indebtedness of the Company or any of its Subsidiaries existing that contains any material restriction upon, or imposes any material penalty with respect to (i) the prepayment of such Indebtedness, (ii) the incurrence of Indebtedness by the Company or its Subsidiaries, respectively, or (iii) the ability of the Company or its Subsidiaries to grant any of the Liens on its properties or assets contemplated by the Financing Commitment Letters. SECTION 4.3. Authority Relative to this Agreement. (a) The Company has all the necessary corporate power and authority to execute and deliver this Agreement and, subject to obtaining Company Stockholder Approval (or if applicable, the Disinterested Stockholder Approval), to consummate the transactions contemplated hereby in accordance with the terms hereof. The execution, delivery and performance of this Agreement by the Company and the consummation by it of the transactions contemplated hereby have been duly and validly authorized by all necessary corporate action, and, except for obtaining the Company Stockholder Approval (or if applicable, the Disinterested Stockholder Approval), no other corporate action or corporate proceeding on the part of the Company is necessary to authorize the execution and delivery by the Company of this Agreement and the consummation by it of the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by the Company and, assuming due and valid authorization, execution and delivery by Parent and Merger Sub, constitutes a valid, legal and binding agreement of the Company, enforceable against the Company in accordance with its terms, except that such enforcement may be subject to (i) any bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or other laws, now or hereafter in effect, affecting creditors' rights generally, and (ii) the effect of general principles of equity (regardless of whether enforceability is considered in a proceeding of law or equity). (b) (i) The Special Committee has been duly authorized and constituted, and (ii) the Special Committee, at a meeting thereof duly called and held on May 30, 2003, (A) determined that this Agreement, the Related Agreements, the Merger and the Related Transactions are fair to and in the best interests of the Company's stockholders (other than Parent and its Affiliates), (B) determined that this Agreement, the Related Agreements, the Merger and the Related Transactions should be approved and declared advisable by the Company Board and (C) resolved to recommend that the Company's stockholders approve and adopt this Agreement and the Merger. (c) The Company Board, at a meeting thereof duly called and held on May 30, 2003, based on the recommendation of the Special Committee, (i) determined that this Agreement, the Related Agreements, the Merger and the Related Transactions are fair to and in the best interests of the Company and its stockholders A-14 (other than Parent and its Affiliates), (ii) approved and declared advisable this Agreement and the Merger, and (iii) resolved to recommend that the Company's stockholders approve and adopt this Agreement and the Merger. SECTION 4.4. SEC Reports; Financial Statements. (a) Since August 1, 2000, the Company has filed with the SEC all forms, reports, schedules, statements and other documents required to be filed by it under the Securities Act and the Exchange Act (any such documents filed since August 1, 2000 and prior to the Closing Date collectively, including all exhibits and schedules thereto and documents incorporated by reference therein, the "Company SEC Documents"). The Company SEC Documents, including any financial statements or schedules included therein, at the time filed, or, in the case of registration statements, on their respective effective dates, (i) complied in all material respects with the applicable requirements of the Securities Act and the Exchange Act, as the case may be and (ii) did not at the time filed (or, in the case of registration statements, at the time of effectiveness), contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. No Subsidiary of the Company is required to file any form, report or other document with the SEC pursuant to Section 13 or 15(d) of the Exchange Act. The financial statements included in the Company SEC Documents (the "Financial Statements") (i) have been prepared from, and are in accordance with, the books and records of the Company and its Subsidiaries, (ii) complied on the date of filing and effectiveness thereof in all material respects with applicable accounting requirements and with the published rules and regulations of the SEC with respect thereto on the date of filing and effectiveness thereof, (iii) have been prepared in accordance with GAAP as in effect as of the dates of such financial statements applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto and, in the case of unaudited statements, as permitted by the rules and regulations of the SEC during the periods involved), and (iv) fairly present in all material respects the consolidated financial position and the consolidated results of operations and cash flows (and changes in financial position, if any) of the Company and its Subsidiaries as of the times and for the periods referred to therein, except that any Financial Statements that are unaudited, interim financial statements were or are subject to normal and recurring year end adjustments which were not and are not expected, individually or in the aggregate, to be material in amount. The representations and warranties set forth in this Section 4.4(a) are made to the Company's Knowledge. (b) Except as otherwise available via the SEC's Electronic Data Gathering, Analysis, and Retrieval (EDGAR) service, the Company has heretofore made available to Parent, in the form filed with the SEC (including any amendments thereto), (i) its Annual Reports on Form 10-K for each of its two most recently completed fiscal years, (ii) all definitive proxy statements relating to the Company's meetings of stockholders (whether annual or special) held since March 14, 2000, and (iii) all other reports (other than Quarterly Reports on Form 10-Q) or registration statements filed by the Company with the SEC since March 14, 2000. SECTION 4.5. Proxy Statement. None of the information included in the Proxy Statement will, at the time filed with the SEC, at the time mailed to the Company's stockholders or at the time of the Stockholders Meeting, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which such statements are made, not misleading, except that no representation is made by the Company with respect to statements made in or omitted from the Proxy Statement relating to Parent, FPSH or any of their respective Affiliates based on information supplied by Parent, FPSH or any of their respective Affiliates for inclusion or incorporation by reference in the Proxy Statement. The Proxy Statement will comply as to form in all material respects with the requirements of the Exchange Act. SECTION 4.6. Consents and Approvals, No Violations. To the Company's Knowledge, no filing with or notice to, and no permit, authorization, consent or approval of, any federal, state, local or foreign court or tribunal or administrative, governmental, arbitral or regulatory body, agency or authority (a "Governmental Entity"), is required on the part of the Company or any of its Subsidiaries for the execution, delivery and performance by the Company of this Agreement or the Related Agreements or the consummation by the A-15 Company of the transactions contemplated hereby or thereby, except (a) pursuant to the applicable requirements of the Securities Act and the Exchange Act, (b) the filing of the Certificate of Merger pursuant to the DGCL, (c) where the failure to obtain such permits, authorizations, consents or approvals or to make such filings or give such notice would not, individually or in the aggregate, have a Company Material Adverse Effect, and (d) with respect to the Stock Purchase Agreement only, in connection with the requirements of the HSR Act and the rules and regulations in foreign jurisdictions governing antitrust or merger control matters. Neither the execution, delivery and performance of this Agreement or the Related Agreements by the Company, nor the consummation by the Company of the transactions contemplated hereby or thereby will (i) conflict with or result in any breach of any provision of the respective certificate of incorporation or bylaws (or similar governing documents) of the Company or of any its Subsidiaries, (ii) result in a violation or breach of, or constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, amendment, cancellation, alteration or acceleration, or result in the creation of a Lien on any property or asset of the Company or any of its Subsidiaries, or trigger any rights of first refusal) under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, lease, license, contract, agreement or other instrument or obligation to which the Company or any of its Subsidiaries is a party or by which any of them or any of their respective properties, capital stock or assets may be bound or result in the loss or impairment of the Company's or any of its Subsidiary's right to use the Company Intellectual Property, Company PVP Certificates or Company Germplasm, or (iii) violate any order, writ, injunction, decree, law, statute, rule or regulation applicable to the Company or any of its Subsidiaries or any of their respective properties or assets, except in the case of (ii) or (iii) above for violations, breaches, defaults or other occurrences that would not, individually or in the aggregate, have a Company Material Adverse Effect. SECTION 4.7. No Default. To the Company's Knowledge, none of the Company or any of its Subsidiaries is in default, breach or violation (and no event has occurred that with notice or the lapse of time or both would constitute a default, breach or violation) of any term, condition or provision of (a) its certificate of incorporation or bylaws (or similar governing documents), (b) any note, bond, mortgage, indenture, lease, license, contract, agreement or other instrument or obligation to which the Company or any of its Subsidiaries is now a party or by which any of them or any of their respective properties or assets may be bound or (c) any order, writ, injunction, decree, law, statute, rule or regulation applicable to the Company, any of its Subsidiaries or any of their respective properties or assets, except in the case of (b) or (c) above for violations, breaches or defaults that would not, individually or in the aggregate, have a Company Material Adverse Effect. SECTION 4.8. No Undisclosed Liabilities; Absence of Changes. (a) Except (i) for liabilities incurred since September 30, 2002 in the ordinary course of business consistent with past practice, or (ii) for liabilities and obligations reasonably required by the Merger or any other transactions contemplated by this Agreement or the Related Agreements, neither the Company nor any of its Subsidiaries has, or has incurred since September 30, 2002, any material liabilities or obligations of any nature, whether or not absolute, accrued, contingent or otherwise, that would be required to be reflected or reserved against on a consolidated balance sheet, or in the notes thereto, of the Company and its Subsidiaries prepared in accordance with GAAP. (b) Other than as reasonably required by this Agreement and the Related Agreements, to the Company's Knowledge, (i) since September 30, 2002 and prior to the date hereof, the Company and its Subsidiaries have conducted their businesses in the ordinary course of business consistent with past practice, and (ii) since December 27, 2002 and prior to the date hereof, the Company has not taken any of the actions set forth in paragraphs (a) through (q) of Section 6.3. (c) Since September 30, 2002, there has not been any Company Material Adverse Effect. SECTION 4.9. Compliance with Applicable Law. Except as would not, individually or in the aggregate, have a Company Material Adverse Effect: (a) the Company and its Subsidiaries hold all permits, licenses, variances, exemptions, orders and approvals of all Governmental Entities necessary for them to own, lease or operate their properties and assets and to carry on their businesses as now conducted ("Company Permits"); A-16 (b) there has not occurred any default under, or violation of, or failure of compliance under, any such Company Permit; (c) the businesses of the Company and its Subsidiaries are not being, and have not been, conducted in violation of any law, ordinance, regulation, order, judgment, injunction, writ or decree of any Governmental Entity; and (d) there is (and during the past two years, there has been) no claim, action, proceeding, review or investigation pending or threatened against the Company or any Subsidiary of the Company or any of their respective products by, on behalf of or before any Governmental Entity. SECTION 4.10. Employee Benefit Matters. (a) Section 4.10(a) of the Company Disclosure Schedule sets forth a complete list of all material employee, consultant or director benefit plans, arrangements or agreements, including any employee welfare benefit plan within the meaning of Section 3(1) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), any employee pension benefit plan within the meaning of Section 3(2) of ERISA (whether or not such plan is subject to ERISA) and any material bonus, incentive, deferred compensation, vacation, stock purchase, stock option, severance, termination, indemnity, employment, change of control or fringe benefit plan, program, arrangement or agreement that provides benefits to any current or former employee or director of the Company or any of its Subsidiaries or any beneficiary or dependent thereof or with respect to which the Company or any of its Subsidiaries could have a material liability (collectively, the "Benefit Plans"). The Company has made available to Parent for each Benefit Plan, if applicable, true and complete copies of (i) each Benefit Plan (or, in the case of any unwritten Benefit Plan, a description thereof) and any amendment thereto, (ii) the most recent summary plan description (or similar document), (iii) the most recent Annual Reports (Form 5500 Series) and accompanying schedules, if any, (iv) the most recent actuarial report, and (v) the most recent determination letter from the IRS (if applicable). (b) Section 4.10(b) of the Company Disclosure Schedule contains a complete and accurate list of all Key Employees, setting forth their respective names, current positions, salaries and target bonuses. (c) (i) Each Benefit Plan has been maintained and administered in material compliance with its terms and with all applicable laws including ERISA and the Code; (ii) each Benefit Plan intended to be qualified under Section 401(a) of the Code is so qualified and has been determined by the IRS to be so qualified, and, to the Company's Knowledge, no event has occurred that could reasonably be expected to adversely affect the qualified status of such Benefit Plan; (iii) neither the Company nor any of its Subsidiaries has incurred or is reasonably likely to incur any material liability or penalty under Sections 4975 or 4976 of the Code or Sections 409 or 502(i) of ERISA; (iv) there are no pending, or to the Company's Knowledge threatened, claims against or otherwise involving any of the Benefit Plans (other than routine claims for benefits); (v) no Benefit Plan is under audit or investigation by the IRS, the Department of Labor or the PBGC, and no such audit or investigation is pending or, to the Company's Knowledge, threatened; (vi) all contributions or other payments required to be made, as well as all required filings with Governmental Entities required to be made, as of the date of this Agreement to or pursuant to the Benefit Plans with respect to the Company or any of its Subsidiaries have been made; (vii) neither the Company nor any entity under "common control" with the Company within the meaning of Sections 414(b), (c), (m) or (o) of the Code or Section 4001 of ERISA (an "ERISA Affiliate") has at any time contributed to, or been required to contribute to, any "pension plan" (as defined in Section 3(2) of ERISA) that is subject to Title IV of ERISA or Section 412 of the Code, including any "multi-employer plan" (as defined in Sections 3(37) and 4001(a)(3) of ERISA); (viii) none of the Company and its Subsidiaries nor any ERISA Affiliates has incurred any "withdrawal liability" (as defined in Part I of Subtitle E of Title IV of ERISA) that has not been satisfied in full; (ix) neither the Company nor any of its Subsidiaries has any obligation for retiree health or life benefits, other than benefits mandated by applicable law; (x) the Company or its Subsidiaries may amend or terminate any of the Benefit Plans without incurring any material liability thereunder; (xi) all amounts of deferred compensation benefits under any Benefit Plan have been properly accrued on the Financial Statements of the Company and its Subsidiaries to the extent required under GAAP; and (xii) each Benefit Plan which is an "employee welfare benefit plan" within the meaning of Section 3(1) of ERISA is either insured pursuant to a contract of insurance whereby the insurance company bears any risk of loss with respect to such claims or covered under a contract with a health maintenance organization (an "HMO") pursuant to which the HMO bears the liability for such claims. A-17 (d) The consummation of the transactions contemplated by this Agreement and the Related Agreements will not (either alone or upon the occurrence of any additional or subsequent events) (i) constitute an event under any Benefit Plan, trust, or loan that will or may result in any payment (whether of severance pay or otherwise), acceleration, forgiveness of indebtedness, vesting, distribution, increase in benefits or obligation to fund benefits with respect to any current or former employee, officer, consultant or director of the Company or any Subsidiary, or (ii) result in the triggering or imposition of any restrictions or limitations on the right of the Company or Parent to amend or terminate any Benefit Plan and receive the full amount of any excess assets remaining or resulting from such amendment or termination, subject to applicable taxes. No payment or benefit which has been made or will or may be made by the Company, any of its Subsidiaries, Parent or any of its Affiliates with respect to any employee, officer or director of the Company or its Subsidiaries (a "Compensation Payment") will be characterized as an "excess parachute payment," within the meaning of Section 280G(b)(1) of the Code, no amount of any Compensation Payment or benefit will fail to be deductible by the Company by reason of Section 162(m) of the Code, and no deduction that the Company has taken on any previously filed Tax return would reasonably be expected to be challenged as non-deductible pursuant to Section 162(m) of the Code. (e) No Benefit Plan is or has been subject to Title IV or Section 302 of ERISA or Sections 412 or 4971 of the Code. (f) There does not now exist, nor do any circumstances exist that could result in, any Controlled Group Liability that would be a liability of the Company or any of its Subsidiaries following the Closing. Without limiting the generality of the foregoing, neither the Company nor any of its Subsidiaries, nor any of their respective ERISA Affiliates, has engaged in any transaction described in Section 4069 or Section 4204 or 4212 of ERISA. "Controlled Group Liability" means any and all liabilities (i) under Title IV of ERISA, (ii) under Section 302 of ERISA, (iii) under Sections 412 and 4971 of the Code, (iv) as a result of a failure to comply with the continuation coverage requirements of Section 601 et seq. of ERISA and Section 4980B of the Code, and (v) under corresponding or similar provisions of foreign laws or regulations, other than such liabilities that, in each case, arise solely out of, or relate solely to, the Benefit Plans listed in Section 4.10(a) of the Disclosure Schedule. (g) Except as would not, individually or in the aggregate, have a Company Material Adverse Effect, all Benefit Plans subject to the laws of any jurisdiction outside of the United States (i) have been maintained in accordance with such laws and all applicable requirements, (ii) if they are intended to qualify for special tax treatment, meet all requirements for such treatment, and (iii) if they are intended to be funded and/or book-reserved, are fully funded and/or book reserved, as appropriate, based upon reasonable actuarial assumptions. (h) The Company acknowledges that Merger Sub has entered into certain employment-related agreements (the "Employment Agreements"), dated as of the date hereof, with the employees listed on Schedule 4.10(h) (the "Employees"), which are intended to supersede the Employees' existing employment agreements at the Effective Time. The Company confirms and acknowledges that (i) the Special Committee has been apprised of the material terms of the Employment Agreements and, by approving this Agreement, has authorized the Company to consent to permit the Employees to enter into the Employment Agreements (which the Company hereby does) and (ii) by entering into the Employment Agreements and performing their obligations thereunder, no Employee will be deemed to be in violation of his employment agreement listed on Schedule 4.10(h), and that neither Parent nor Merger Sub shall be deemed to be interfering with any contractual rights of the Company or the Company's relationship with the Employees. SECTION 4.11. Labor Matters. (a) (i) There is no labor strike, dispute, slowdown, stoppage or lockout of any material nature pending, or, to the Company's Knowledge, threatened against or affecting the Company or any of its Subsidiaries and during the immediately preceding three years there has not been any such action. (ii) Section 4.11(a)(ii) of the Company Disclosure Schedule sets forth a complete and accurate list of all collective bargaining or similar agreements with any labor organization, or work rules or practices agreed to with any labor organization or employee association by the Company or any of its Subsidiaries. A-18 (iii) There are no material complaints, lawsuits or other proceedings pending or, to the Company's Knowledge, threatened in any forum by or on behalf of any present or former employee, consultant, officer or director of the Company or any of its Subsidiaries, any applicant for employment or classes of the foregoing alleging breach by the Company or its Subsidiaries of any express or implied contract of employment, any laws governing employment or the termination thereof or other discriminatory, wrongful or tortious conduct in connection with the employment relationship. (b) The Company and its Subsidiaries and each member of their respective business enterprises has complied with the Worker Adjustment and Retraining Notification Act (the "WARN Act") and any similar state, local or foreign law or regulation, as applicable. There has not occurred a "mass layoff" (as defined in the WARN Act) affecting any site of employment or facility of the Company or its Subsidiaries during the 90 -day period prior to the date of this Agreement. (c) Section 4.11(c) of the Company Disclosure Schedule sets forth a complete and accurate list of all collective bargaining or similar agreements which were in place as of September 30, 2002, but have since been materially modified, renewed, renegotiated or superceded by one or more of the collective bargaining or similar agreements set forth in Section 4.11(a)(ii) of the Company Disclosure Schedule, none of which has resulted in a material increase in cost on an annual basis to the Company or its Subsidiaries under such modified, renewed, renegotiated or superseding agreement. SECTION 4.12. Intellectual Property. (a) Section 4.12(a) of the Company Disclosure Schedule sets forth, (i) a complete and accurate list of all (A) patents and patent applications, (B) trademark and service mark registrations and applications, and (C) copyright registrations and applications for copyright registrations, currently owned by the Company or its Subsidiaries, in whole or in part, including jointly with others, in each case, in (1) Australia, Benelux, Brazil, Canada, Hungary, Japan, South Korea, Mexico, Morocco, New Zealand, the United Kingdom, the United States, as well as CTM and Madrid protocol jurisdictions, and (2) all other countries and jurisdictions (except, with respect to this clause (2), as would not, individually or in the aggregate, have a Company Material Adverse Effect), (ii) the corporate names under which the Company or its Subsidiaries conduct business, (iii) the domain names currently owned by the Company or its Subsidiaries, (iv) all of the certificates of plant variety protection currently owned by the Company or its Subsidiaries ("Company PVP Certificates") and all applications by the Company or any of its Subsidiaries for certificates of plant variety protection; and (v) a list of all products sold by the Company and its Subsidiaries as of the date hereof. (b) Except as would not, individually or in the aggregate, have a Company Material Adverse Effect, the Company or one of its Subsidiaries (i) owns or has the right to use all Company Intellectual Property, free and clear of all Liens, other than Permitted Liens, and (ii) owns and possesses all right, title and interest in and to, or possesses the valid right to use, in the manner used by the Company and its Subsidiaries, all Company Germplasm and Company PVP Certificates. (c) To the Company's Knowledge, except as would not have, individually or in the aggregate, a Company Material Adverse Effect, (i) no Person has a right to receive from the Company any royalty or similar payment in respect of any item of Company Intellectual Property or Company Germplasm or Company PVP Certificate pursuant to any contractual or other arrangements entered into by the Company or any of its Subsidiaries, (ii) no former or present employees, officers, directors or Affiliates of the Company hold any right, title or ownership interest, directly or indirectly, in whole or in part, in or to any Company Intellectual Property, Company PVP Certificate or Company Germplasm, (iii) except under confidentiality obligations, there has been no disclosure by the Company or any of its Subsidiaries of any confidential information or trade secrets or other proprietary information, and (iv) the Company and its Subsidiaries, as applicable, have taken reasonable steps to enforce the agreements that have been entered into by the Company's and its Subsidiaries' employees, consultants, contractors and other entities for ownership and confidentiality of the Company Intellectual Property, the Company PVP Certificates and the Company Germplasm. To the Company's Knowledge, except as would not have, individually or in the aggregate, a Company Material Adverse Effect, each current employee or consultant of the Company or any of its U.S. Subsidiaries who is a breeder and who has created Company Intellectual Property has executed an A-19 agreement with provisions covering ownership and confidentiality of the Company Intellectual Property (including, where applicable, Company Germplasm) and Company PVP Certificates. With respect to current employees or consultants of the Company or its Subsidiaries who are not covered by the immediately preceding sentence, to the Company's Knowledge, their failure to execute an agreement with provisions covering ownership and confidentiality of the Company Intellectual Property (including where applicable, Company Germplasm) and Company PVP Certificates, will not individually or in the aggregate have a Company Material Adverse Effect. (d) To the Company's Knowledge, (i) the conduct of the business of the Company and its Subsidiaries as currently conducted (including the use of, or reliance upon, the Company Intellectual Property, the Company PVP Certificates and the Company Germplasm) does not infringe upon any intellectual property rights or any certificate of plant variety protection owned or controlled by any Person, except, as would not, individually or in the aggregate, have a Company Material Adverse Effect, (ii) there are no material claims or suits pending or threatened, and neither the Company nor any of its Subsidiaries has received notice of any such material claim or suit (A) alleging that the conduct of the business of the Company or any of its Subsidiaries infringes upon or constitutes the unauthorized use of the proprietary rights (including with respect to any certificate of plant variety protection or any germplasm) of any Person or (B) challenging the ownership, use, validity or enforceability of the Company Intellectual Property, Company PVP Certificates or Company Germplasm, (iii) no material Company Intellectual Property or Company PVP Certificate is being violated or infringed upon by any Person, and (iv) there are no settlements, consents, judgments, orders or other agreements which restrict the Company's or any of its Subsidiary's rights to use any material Company Intellectual Property, material Company PVP Certificate or material Company Germplasm. (e) Except as would not individually, or in the aggregate, have a Company Material Adverse Effect, to the Company's Knowledge the Company and its Subsidiaries are in compliance with all requirements (including payment of filing, examination, or maintenance fees and proofs of working or use) relating to the maintenance of registrations of the Company Intellectual Property. (f) Solely for the purposes of this Section 4.12, "Company's Knowledge" means the actual knowledge, after reasonable inquiry, of Eujenio Najera, Bruno Ferrari, C. Edward Green, Jose Manuel Madero, Gaspar Alvarez, Oscar Velasco, Salvador Alanis, Cristobal Cardenas, Enrique Osorio, Franco Campana, Jean Pierre Posa, Juliet Ream, Patrick Turner, Steve Witt, Keith Redenbaugh and Thomas Kramer. SECTION 4.13. Taxes. The Company and its Subsidiaries have filed all material Tax Returns that are required by applicable laws to be filed by them, and such Tax Returns are complete and accurate in all material respects. Neither the Company nor any of its Subsidiaries currently is the beneficiary of any extension of time within which to file any such material Tax Return. The Company and its Subsidiaries have paid all material Taxes which have or may become due and payable (whether or not shown on any Tax Return), other than those Taxes being contested in good faith through appropriate proceedings for which provision has been made in accordance with GAAP on the most recent consolidated balance sheet of the Company set forth in the Financial Statements. All material Taxes which the Company and its Subsidiaries are required by law to withhold and collect at or prior to Closing (including any such Taxes arising in connection with the transactions contemplated by Article II or Article III) have been, or will have been, duly withheld, collected and paid over, in each case, in a timely manner, to the proper taxing authorities to the extent due and payable. The Company and its Subsidiaries have not executed any waiver to extend, or otherwise taken or failed to take any action that would have the effect of extending, the applicable statute of limitations in respect of any material Tax liabilities of the Company or any of its Subsidiaries for the taxable years prior to and including the most recent taxable year. Neither the Company nor any of its Subsidiaries (or any predecessor thereto) is a "consenting corporation" within the meaning of Section 341(f) of the Code. None of the Company or any of its Subsidiaries (a) has been a member of any consolidated, combined or unitary group (other than with the Company and its Subsidiaries) for Tax purposes, or (b) has any material liability for the Taxes of any other Person (other than the Company and its Subsidiaries) under Treasury Regulation Section 1.1502-6 (or any similar provision of state, local or foreign law), as a transferee or successor, by contract or otherwise. The Company and its Subsidiaries are not a party to any tax sharing agreement or arrangement (other than with the Company and its Subsidiaries). No material liens or A-20 encumbrances for Taxes exist with respect to any of the assets or properties of the Company or any of its Subsidiaries, except for statutory liens for Taxes not yet due or payable or that are being contested in good faith through appropriate proceedings. All of the U.S. federal income Tax Returns filed by or on behalf of each of the Company and its Subsidiaries have been examined by and settled with the IRS, or the statute of limitations with respect to the relevant Tax liability expired, for all taxable periods ending on or before September 30, 1995. All Taxes due with respect to any completed and settled audit, examination or deficiency litigation with any taxing authority have been paid in full. There is no audit, examination, deficiency, or refund litigation pending with respect to any material Taxes and no taxing authority has given written notice of the commencement of (or its intent to commence) any audit, examination or deficiency litigation with respect to any material Taxes. No closing agreements, private letter rulings, technical advice memoranda or similar agreements or rulings have been entered into or issued by any taxing authority with respect to the Company or any of its Subsidiaries. There are no outstanding assessments, claims or deficiencies for any material Taxes of the Company or any of its Subsidiaries that have been proposed, asserted or assessed, in each case in writing. None of the Company or any Subsidiary has been a U.S. real property holding corporation within the meaning of Section 897(c)(2) of the Code during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code. The Company and its Subsidiaries had net operating loss carryforwards reflected on its consolidated U.S. federal income Tax Return for the taxable year ended September 30, 2002 totaling not less than $84 million and the fiscal unit represented by three Dutch subsidiaries of the Company is expected to have net operating loss carryforwards reflected on its Dutch income Tax Return for such taxable year totaling not less than E32.6 million (the U.S. and Dutch net operating loss carryforwards together, the "NOL Carryforwards"), which NOL Carryforwards are subject to adjustment as a result of current or future audits by appropriate taxing authorities. Except as may result from this Agreement or the Related Agreements, or the transactions contemplated hereby or thereby, none of the NOL Carryforwards is currently subject to limitation under Section 382 of the Code or Treasury Regulations Section 1.1502-15 or -21 (or any comparable provisions of Dutch tax law) or otherwise. Neither the Company nor any of its Subsidiaries has constituted a "distributing corporation" or a "controlled corporation" within the meaning of Section 355(a)(1)(A) of the Code in a distribution of stock intended to qualify for tax-free treatment under Section 355 of the Code. SECTION 4.14. Absence of Litigation. There are no suits, claims, actions, proceedings or investigations pending or, to the Company's Knowledge, threatened against, affecting or involving the Company or any of its Subsidiaries, or any properties of the Company or any of its Subsidiaries, before any Governmental Entity, except as would not, individually or in the aggregate, have a Company Material Adverse Effect. Neither the Company nor any of its Subsidiaries, nor any of their respective properties or assets, is subject to any order, writ, judgment, injunction, decree, determination or award which has or would have, individually or in the aggregate, a Company Material Adverse Effect. SECTION 4.15. Material Contracts. (a) To the Company's Knowledge and except for contracts filed as exhibits to the Company's Annual Report on Form 10-K for the year ended September 30, 2002 (the "Company 2002 10-K"), Section 4.15(a) of the Company Disclosure Schedule lists, as of the date hereof, each of the following contracts and agreements (including oral agreements) of the Company and each of its Subsidiaries (such contracts and agreements, together with all contracts and agreements disclosed in Section 4.15(a) of the Company Disclosure Schedule or filed as exhibits to the Company 2002 10-K, being "Material Contracts"): (i) each contract, agreement and other arrangement for the purchase of inventory, spare parts, other materials or personal property with any supplier or for the furnishing of services to the Company and each of its Subsidiaries or otherwise related to the businesses of the Company and each of its Subsidiaries, other than purchase orders in the ordinary course of business consistent with past practice, under the terms of which the Company or any of its Subsidiaries: (A) is likely to pay or otherwise give consideration of more than $200,000 in the aggregate during the calendar year ended December 31, 2003; or (B) is likely to pay or otherwise give consideration of more than $1,000,000 in the aggregate over the remaining term of such contract; A-21 (ii) each contract, agreement and other arrangement for the sale of inventory or other property or for the furnishing of services by the Company or any of its Subsidiaries, other than purchase orders in the ordinary course of business consistent with past practice, that: (A) is likely to involve consideration of more than $200,000 in the aggregate during the calendar year ended December 31, 2003; or (B) is likely to involve consideration of more than $1,000,000 in the aggregate over the remaining term of the contract; (iii) all material broker, distributor, dealer, manufacturer's representative, franchise, agency, sales promotion, market research, marketing, consulting and advertising contracts and agreements to which the Company or any of its Subsidiaries is a party; (iv) all management contracts and contracts with independent contractors or consultants (or similar arrangements) to which the Company or any of its Subsidiaries is a party and which are not cancelable without penalty or further payment in excess of $200,000 and without more than 90 days' notice; (v) all contracts and agreements relating to Indebtedness of the Company or any of its Subsidiaries or to any direct or indirect guaranty by the Company or any of its Subsidiaries of Indebtedness of any other Person, other than any such contracts or agreements as do not involve more than $100,000 individually or $500,000 in the aggregate; (vi) all material contracts, agreements, commitments, written understandings or other arrangements with any Governmental Entity, to which the Company or any of its Subsidiaries is a party; (vii) all contracts and agreements containing any provision or covenant limiting or purporting to limit the ability of the Company or any of its Subsidiaries in any material respect to (i) sell any products or services of or to any other Person, (ii) engage in any line of business or (iii) compete with or obtain products or services from any Person or limiting the ability of any Person to provide products or services to the Company or any of its Subsidiaries, in each case, in any geographic area or during any period of time; (viii) all material contracts or arrangements between the Company or any of its Subsidiaries, on the one hand, and any director, officer, employee, stockholder or Affiliate (or any of their respective Affiliates), on the other hand; (ix) all Real Property Leases; (x) all material license agreements under which the Company or any of its Subsidiaries has granted or received the right to use any Company Intellectual Property (other than licenses for readily available commercial software) or Company Germplasm; and (xi) all other contracts and agreements, whether or not made in the ordinary course of business, which are material to the Company and its Subsidiaries, taken as a whole, or the conduct of the business of the Company and its Subsidiaries, taken as a whole, or the absence of which would, in the aggregate, have a Company Material Adverse Effect. (b) Except as would not, individually or in the aggregate, have a Company Material Adverse Effect, each Material Contract: (i) is legal, valid and binding on the Company or its respective Subsidiary party thereto and, to the Company's Knowledge, the other parties thereto, and is in full force and effect and (ii) upon consummation of the transactions contemplated by this Agreement and the Related Agreements, shall be in full force and effect without penalty or other adverse consequence. Except as would not, individually or in the aggregate, have a Company Material Adverse Effect, neither the Company nor any of its Subsidiaries is in breach of, or default under, any Material Contract. Neither the Company nor any Subsidiary has received any written or, to the Company's Knowledge, oral notice of a material default (which has not been cured), offset or counterclaim under any Material Contract, or any other written or, to the Company's Knowledge, oral communication calling upon it to comply with any provision of any Material Contract or asserting noncompliance therewith or asserting the Company or any Subsidiary has waived or altered its rights thereunder, nor has the Company or any Subsidiary received any written or, to the A-22 Company's Knowledge, oral notice that any party to any Material Contract intends or is threatening to terminate or fail to exercise any renewal or extension of any Material Contract. (c) No other party to any Material Contract is, to the Company's Knowledge, in material breach thereof or default thereunder. (d) There is no contract, agreement or other arrangement granting any Person any preferential right to purchase any of the material real or personal properties or assets of the Company or any of its Subsidiaries, other than inventory in the ordinary course of business consistent with past practice. SECTION 4.16. Insurance. To the Company's Knowledge, the Company and its Subsidiaries have in full force and effect the material policies of fire, liability, errors and omissions and other forms of insurance listed in Section 4.16 of the Company Disclosure Schedule (such policies, the "Insurance Policies"), all of which policies have previously been provided to Parent. To the Company's Knowledge, the Insurance Policies are in full force and effect, and no notice of cancellation or non-renewal has been received by the Company or any of its Subsidiaries with respect to any Insurance Policy that has not been cured by the payment of premiums that are due. To the Company's Knowledge, the Company and its Subsidiaries have complied in all material respects with the terms and provisions of the Insurance Policies. The Company or one of its Subsidiaries is the primary party to each such Insurance Policy. To the Company's Knowledge, since January 1, 2001, none of the insurers of the Company or any of its Subsidiaries has rejected or plans to reject, any insurance claim of the Company or its Subsidiaries in excess of $100,000. SECTION 4.17. Environmental Laws and Regulations. (a) To the Company's Knowledge, (i) the Company and each of its Subsidiaries is in compliance with all Environmental Laws, except for such non-compliance that individually or in the aggregate would not have a Company Material Adverse Effect, which compliance includes the possession by the Company and its Subsidiaries of all permits and other governmental authorizations required under applicable Environmental Laws, and compliance with the terms and conditions thereof; (ii) during the immediately preceding four years, neither the Company nor any of its Subsidiaries has received written or oral notice of, or is the subject of, any action or threatened action, cause of action, claim, investigation, demand or notice by any Person alleging material liability (including as a result of non-compliance) under any Environmental Law (an "Environmental Claim") including relating to the business of the Company or any of its Subsidiaries or relating to any contractor, subcontractor or agent of the Company or any of its Subsidiaries or relating in any way to any facilities, locations, or business previously owned, leased or operated by or on behalf of the Company or any of its Subsidiaries; (iii) there are no conditions or circumstances that are reasonably likely to result in any material liability of the Company or any of its Subsidiaries under any Environmental Law or prevent or interfere with any such compliance thereunder in the future, including relating to any contractor, subcontractor or agent of the Company or any of its Subsidiaries or relating to the business of the Company or any of its Subsidiaries, or relating in any way to any facilities, locations, or business previously owned, leased or operated by or on behalf of the Company or any of its Subsidiaries; (iv) none of the properties owned or operated by the Company or any of its Subsidiaries contains any Hazardous Substance in amounts exceeding the levels permitted by applicable Environmental Laws, except for matters that are not reasonably likely to give rise to any material liability for the Company or any of its Subsidiaries, and (v) no Hazardous Substances has been disposed of, released or transported in violation of any applicable Environmental Law from any of the properties owned or operated by the Company or any of its Subsidiaries, except for matters that are not reasonably likely to give rise to any material liability for the Company or any of its Subsidiaries. There are no permits or other governmental authorizations held by the Company or any of its Subsidiaries or required for the Company's business that are required to be transferred or reissued, or that are otherwise prohibited from being transferred or reissued, pursuant to any Environmental Laws as a result of the transactions contemplated by this Agreement or the Related Agreements, except for those the failure of which to possess would not, individually or in the aggregate, have a Company Material Adverse Effect. To the Company's Knowledge, the Company has provided to Parent all environmental assessments, reports, data, results of investigations, or compliance or other environmental audits conducted by or for the Company or any of its Subsidiaries, or otherwise relating to the Company's or any Subsidiary's business or properties (owned, A-23 leased or operated) in the possession or control (direct or indirect) of the Company or any of its Subsidiaries. For purposes of this Section 4.17(a) only, the term "material liability" shall mean any liability in excess of $100,000. (b) There are no Environmental Claims that would, individually or in the aggregate, have a Company Material Adverse Effect that are pending or, to the Company's Knowledge, threatened against the Company or any of its Subsidiaries or, to the Company's Knowledge, against any Person whose liability for any Environmental Claim the Company or any of its Subsidiaries has or is reasonably likely to have been retained or assumed either contractually or by operation of law. (c) The only representations and warranties given in respect of environmental matters and agreements relating thereto are those contained in this Section 4.17 and none of the other representations and warranties shall be deemed to constitute, directly or indirectly, a representation or warranty in respect of environmental matters or agreements relating thereto. (d) The disclosures made in Section 4.17 of the Company Disclosure Schedule and the matters identified in Section 4.17 of the Company Disclosure Schedule in the document entitled Addendum to Environmental Health and Safety Documents (excepting therefrom the matters identified in Section 4.17 of the Company Disclosure Schedule in the document entitled Environmental Health and Safety Documents) would not, individually or in the aggregate, have a Company Material Adverse Effect. SECTION 4.18. Title to Real Properties; Encumbrances. (a) Section 4.18(a)(i) of the Company Disclosure Schedule sets forth a complete and accurate list of all real property (including land, buildings and other improvements) and interests in real property owned by the Company or its Subsidiaries (the "Owned Real Property"), including, for each parcel of Owned Real Property, a description thereof, including the approximate size and use of the property. Section 4.18(a)(ii) of the Company Disclosure Schedule also sets forth a complete and accurate list of all real property leased, subleased or otherwise occupied by the Company or its Subsidiaries (the "Leased Real Property"), which description shall include (for all Leased Real Property) a list of all leases and subleases (and amendments and modifications) pertaining thereto and approximate size of the premises leased thereunder, and the use of such premises. The Owned Real Property and the Leased Real Property shall be hereinafter collectively referred to as the "Real Property." The Company or its Subsidiaries has good and valid fee or leasehold title (as the case may be) to the Real Property, free and clear of all Liens, other than Permitted Liens. Except as would not, individually or in the aggregate, have a Company Material Adverse Effect, the Permitted Liens do not and will not impair or adversely affect the value of any Real Property, the current or contemplated (the term "contemplated," as used in this Section 4.18(a), meaning contemplated or planned prior to the Closing Date) use, occupancy or operation thereof, or the business, operations or condition (financial or otherwise) of the Company or any of its Subsidiaries. All aspects of the Real Property are in compliance in all respects with any and all restrictions and other provisions included in the Permitted Liens, and there are no matters which create, or which with notice or the passage of time would create, a default under any of the documents evidencing the Permitted Liens, except as would not, individually or in the aggregate, have a Company Material Adverse Effect. (b) The Real Property constitutes, in the aggregate, all of the real property used to conduct the business of the Company and its Subsidiaries in the manner conducted prior to the date hereof. Except as would not, individually or in the aggregate, have a Company Material Adverse Effect, all buildings, structures, improvements and fixtures located on, under, over or within each of the Real Properties and all other aspects of each of the Real Properties: (i) are in good operating condition and repair and are structurally sound and free of any material defects, with no material alterations or repairs being required thereto under applicable law or insurance company requirements; (ii) consist of sufficient land and improvements and lawful means of access and utility service to permit the use thereof in the manner and for the purposes to which they are presently devoted or to which they are contemplated to be devoted; and (iii) are located adjacent to public roads or streets with adequate ingress and egress available between such roads or streets and such Real Property for all purposes related to the current operations of the Company and its Subsidiaries and are otherwise suitable and adequate for their current use, operation and occupancy. A-24 (c) There are no pending or, to the Company's Knowledge, threatened material proceedings regarding the amount of the Taxes on, or the assessed valuation of, any Real Property, or relating to eminent domain or the condemnation of any portion of the Real Property, or impact fees, special assessments or similar matters with respect thereto. To the Company's Knowledge, no such action or proceeding is contemplated. (d) To the Company's Knowledge, all certificates, permits, variances or licenses from any Governmental Entity having jurisdiction over any of the Real Property and all agreements, easements or other rights that are necessary to permit the lawful use and operation of the buildings and improvements, in the manner such buildings and improvements are used and operated on any of the Real Property have been obtained and are in full force and effect and there is no pending threat of modification or cancellation of any of same, except as would not, individually or in the aggregate, have a Company Material Adverse Effect. (e) To the Company's Knowledge, all of the Real Property Leases are valid, binding and in full force and effect. True and complete copies of the Real Property Leases have previously been delivered to Parent, including all amendments or modifications thereof and all side letters or other instruments affecting the obligations of any party thereunder. The lessee (identified in Section 4.18(a)(ii) of the Company Disclosure Schedule) under each Real Property Lease is now in possession of the Leased Real Property. There is no pending or, to the Company's Knowledge, threatened suit, action or proceeding that might interfere with the quiet enjoyment of each tenant. There are no outstanding defaults or circumstances that, upon the giving of notice or passage of time or both, would constitute a default or breach by either party under any Real Property Lease. The Company and its Subsidiaries have not assigned, mortgaged, pledged or otherwise encumbered, in any material manner, their interest, if any, under any Real Property Lease. Between the date hereof and the Closing, the Company or its Subsidiaries will exercise within the time prescribed in each Real Property Lease any option provided therein to extend or renew the term thereof, (i) so long as such Real Property Lease is still necessary for the conduct of the business of the Company and its Subsidiaries as conducted during the fiscal year ended September 30, 2002 and (ii) since such time an alternate lease has not been entered into with terms, in the aggregate, generally not less favorable to the Company or its Subsidiaries. As used herein, the term "lease" shall also include subleases, the term "lessor" shall also include any sublessor, and the term "lessee" shall also include any sublessee. SECTION 4.19. Tangible Personal Property; Sufficiency of Assets. (a) The Company and its Subsidiaries have good and valid title, free and clear of all Liens (other than Permitted Liens), to all tangible personal property that they use in the operation of the business of the Company and its Subsidiaries, including all such tangible personal property reflected in the Company Balance Sheet as being owned by the Company and its Subsidiaries, except for such tangible personal property disposed of to third parties since September 30, 2002 in the ordinary course of business, consistent with past practice and which disposals would not, individually or in the aggregate, have a Company Material Adverse Effect. The tangible personal property of the Company and its Subsidiaries is generally in good working order, reasonable wear and tear excepted, and is suitable for the use for which it is intended in all material respects. (b) Upon consummation of the Merger and the Related Transactions, the Company and its Subsidiaries will own or have valid rights to use all of the rights, facilities, assets, properties and interests which are used in, and are sufficient for, the operation of the business of the Company and its Subsidiaries in the manner in which such business was conducted during the fiscal year ended September 30, 2002 and since such time in all material respects. SECTION 4.20. Affiliate Transactions. (a) To the Company's Knowledge, no Affiliate of Parent owns or has any interest in any material tangible personal property, Real Property or intangible personal property used in conducting the business of the Company and its Subsidiaries in the manner in which such business was conducted during the fiscal year ended September 30, 2002 and since such time in all material respects; (b) Other than for compensation as an employee of the Company payable in the ordinary course of business consistent with past practice and except as reflected in the Company SEC Documents, to the A-25 Company's Knowledge, no Affiliate of Parent has entered into any transactions with the Company or its Subsidiaries that are required to be disclosed in the Company SEC Documents; (c) To the Company's Knowledge, upon consummation of the transactions contemplated by Section 2.1, there will be no outstanding loans or other similar advances due and owing to Parent or its Affiliates by the Company or any of its Subsidiaries; and (d) To the Company's Knowledge, (i) no Affiliate of Parent provides, or causes to be provided to the Company or any of its Subsidiaries any rights, interests, assets, facilities, properties, goods or services, and (ii) neither the Company nor any of its Subsidiaries provides, or causes to be provided, to an Affiliate of Parent any rights, interests, assets, facilities, properties, goods or services. SECTION 4.21. Suppliers and Customers. Except as would not, individually or in the aggregate, have a Company Material Adverse Effect, since September 30, 2002, no licensor, vendor, supplier, grower, licensee or customer of the Company or any of its Subsidiaries has canceled or otherwise modified its relationship with the Company or its Subsidiaries and, to the Company's Knowledge, no such Person has notified the Company of its intention to do so. SECTION 4.22. Information in Financing Documents. None of the information supplied or to be supplied by the Company for the purpose of inclusion or incorporation by reference in any syndication and other materials to be delivered to potential financing sources in connection with the transactions contemplated by this Agreement (the "Financing Documents") will, at the date delivered, contain any untrue statement of material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. SECTION 4.23. State Takeover Statute Inapplicable. The Company Board and the Special Committee have approved this Agreement and the Related Agreements and the transactions contemplated hereby and thereby as required under any applicable state takeover laws so that any such state takeover laws (including the prohibitions under Section 203 of the DGCL) will not apply to this Agreement or the Related Agreements or any of the transactions contemplated hereby or thereby. SECTION 4.24. Brokers. Other than Merrill Lynch & Co. (a true and complete copy of whose engagement agreement has been delivered to Parent), no broker, finder, investment banker or other intermediary is or might be entitled to any brokerage, finders' or other fee or commission in connection with the transactions contemplated by this Agreement or the Related Agreements based upon arrangements made by or on behalf of the Company. SECTION 4.25. Opinion of Financial Advisor. Merrill Lynch & Co. has delivered its opinion to the Special Committee to the effect that, as of the date of such opinion, the consideration to be received in the Merger by the holders of Company Common Stock (other than Parent and its Affiliates) is fair from a financial point of view to such holders. SECTION 4.26. Company Information. The Company has provided Parent and Merger Sub with all information so as to be responsive to each of the representations and warranties set forth in Article IV. In furtherance of the foregoing, the Company represents that it has not withheld any information required by the representations and warranties set forth in Article IV. ARTICLE V REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB Parent and Merger Sub hereby represent and warrant to the Company as follows: SECTION 5.1. Organization. Each of Parent and Merger Sub is duly organized, validly existing and in good standing under the laws of the State of Delaware and has all requisite corporate or similar power and authority to own, lease and operate its properties and to carry on its business as now being conducted, except where the failure to be in good standing or to have such corporate or similar power and authority would not, individually or in the aggregate, have a Parent Material Adverse Effect. Each of Parent and Merger Sub was A-26 formed solely for the purpose of engaging in the transactions contemplated by this Agreement and the Related Agreements. Other than Parent's 100% ownership interest in Merger Sub, on the date hereof, neither Parent, nor Merger Sub owns any equity, debt or similar interest in any Person. Parent and Merger Sub have delivered to the Company accurate and complete copies of the certificate of incorporation and bylaws (or other governing documents), as currently in effect, of Parent and Merger Sub. Merger Sub has not engaged in any activities, owned any assets or been subject to any liabilities, except as is necessary to effect the Merger. SECTION 5.2. Authority Relative to this Agreement. Each of Parent and Merger Sub has all necessary power and authority to execute and deliver this Agreement and the Related Agreements and to consummate the transactions contemplated hereby and thereby. The execution and delivery of this Agreement and the Related Agreements and the consummation of the transactions contemplated hereby and thereby have been duly and validly authorized by the members (including the managing member) of Parent and by the board of directors of Merger Sub, and no other corporate or similar proceedings on the part of Parent or Merger Sub are necessary to authorize this Agreement or the Related Agreements or to consummate the transactions contemplated hereby or thereby. This Agreement and the Related Agreements have been duly and validly executed and delivered by each of Parent and Merger Sub and, assuming due and valid authorization, execution and delivery by the other parties thereto, constitute valid, legal and binding agreements of each of Parent and Merger Sub, enforceable against each of Parent and Merger Sub in accordance with their terms, except that such enforcement may be subject to (a) any bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or other laws, now or hereafter in effect, affecting creditors' rights generally, and (b) the effect of general principles of equity (regardless of whether enforceability is considered in a proceeding of law or equity). SECTION 5.3. Consents and Approvals; No Violations. Except for filings, permits, authorizations, consents and approvals as may be required under, and other applicable requirements of, the Securities Act, the Exchange Act, any applicable antitrust or trade regulation laws, state securities or blue sky laws, and the filing and recordation of the Certificate of Merger as required by the DGCL, no filing with or notice to, and no permit, authorization, consent or approval of, any Governmental Entity is necessary for the execution and delivery by Parent and Merger Sub of this Agreement or the Related Agreements or the consummation by Parent and Merger Sub of the transactions contemplated hereby or thereby, except where the failure to obtain such permits, authorizations, consents or approvals or to make such filings or give such notice would not, individually or in the aggregate, have a Parent Material Adverse Effect. Neither the execution, delivery and performance of this Agreement or the Related Agreements by Parent and Merger Sub nor the consummation by Parent and Merger Sub of the transactions contemplated hereby or thereby will (a) conflict with or result in any breach of any provision of the certificates of incorporation or bylaws (or similar governing documents) of Parent or Merger Sub, (b) result in a violation or breach of, or constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, amendment, cancellation or acceleration, or result in the creation of a Lien on any property or asset of Parent or any of its Subsidiaries, or trigger any rights of first refusal) under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, lease, license, contract, agreement or other instrument or obligation to which Parent or Merger Sub is a party or by which either of them or their respective properties or assets may be bound, or (c) violate any order, writ, injunction, decree, law, statute, rule or regulation applicable to Parent or Merger Sub or any of their respective properties or assets, except in the case of (b) or (c) above for violations, breaches, defaults or other occurrences that would not, individually or in the aggregate, have a Parent Material Adverse Effect. Except for those referred to above in this Section 5.3 and the approval of the Savia shareholders (which has been obtained), Parent and its Affiliates have received all approvals and consents of third parties, including shareholders, creditors and Governmental Entities, required to effect the transactions contemplated by the Exchange Agreement and the Contribution Agreement. SECTION 5.4. Capitalization. (a) As of the date of this Agreement, 100% of the membership interests of Parent are owned as set forth on Section 5.4 of the Parent Disclosure Schedule. As of the date of this Agreement, Merger Sub has authority to issue (i) 1,000 shares of MS Common Stock, 1,000 of which shares are issued and outstanding, A-27 all of which issued and outstanding shares are owned by Parent, and (ii) 1,000 shares of MS Preferred Stock, none of which shares is issued or outstanding. (b) Immediately prior to the Effective Time, (i) Merger Sub shall have authority to issue 100,000,000 shares of MS Common Stock, 84,377,861 of which shares shall be issued and outstanding and all of which issued and outstanding shares will be owned by Parent, and (ii) 1,000 shares of MS Preferred Stock, none of which shares shall be issued or outstanding. (c) All the issued and outstanding shares of capital stock of, or other ownership interests in, each of Parent and Merger Sub have been duly authorized, validly issued and are fully paid and nonassessable and are owned free and clear of all Liens. SECTION 5.5. Proxy Statement; Information. (a) None of the information supplied by Parent or Merger Sub in writing specifically for inclusion or incorporation by reference in the Proxy Statement will, at the time filed with the SEC, at the time mailed to the Company's stockholders or at the time of the Stockholders Meeting, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. (b) A copy of all written material non-public financial information with respect to the Company or any of its Subsidiaries that Parent or Savia or their respective officers, directors, employees, investment bankers, attorneys, agents or representatives has provided to FPSH or any of its Affiliates or their respective investment bankers, attorneys, agents or representatives, has been provided or made available to the Special Committee or its advisors. (c) All material information requested in a letter from the Special Committee to Mr. Alfonso Romo Garza, as Chief Executive Officer and controlling stockholder (through Savia) of the Company, dated January 7, 2003, has, to Parent's knowledge, been provided or made available to the Special Committee or its advisors. SECTION 5.6. Brokers. Except as set forth in Section 5.6 of the Parent Disclosure Schedule, no broker, finder, investment banker or other intermediary is or might be entitled to any brokerage, finder's or other fee or commission payable by the Company in connection with the transactions contemplated by this Agreement and the Related Agreements based upon arrangements made by or on behalf of Parent or its Affiliates for which the Company would be liable either prior to or after the Effective Time (which, if scheduled, is identified by time period). SECTION 5.7. Financing. (a) Attached hereto as (i) Exhibit B is a complete and correct copy of the Stock Purchase Agreement, and (ii) Exhibit C is a complete and correct copy of the Contribution Agreement. All of the agreements described in clauses (i) and (ii) above are in full force and effect and have not been amended or modified. (b) The Special Committee has previously been provided with fully-executed commitment letters, highly confident letters and related documentation, copies of which are attached hereto as Exhibit D (the "Financing Commitment Letters"), from lenders (the "Lenders") relating to such debt financing as is necessary, together with the funds to be received by the Surviving Corporation pursuant to the Stock Purchase Agreement, to consummate the Merger, pay the cash amounts payable to the holders of Stock Options pursuant to Section 3.10, effect all re-financings of certain outstanding Indebtedness required as a result of the Merger or as required by the Financing Commitment Letters and pay the anticipated fees and expenses related to the Merger and the Related Transactions (the "Debt Financing"). On the date hereof, the Financing Commitment Letters are in full force and effect and have not been amended or modified in any respect. As of the date hereof, the Lenders have not advised Parent or any of its Affiliates of any facts which cause them to believe the financings contemplated by the Financing Commitment Letters will not be consummated substantially in accordance with the terms thereof. A-28 (c) Parent has been informed by FPSH that FPSH has the necessary power and authority to call the funds necessary to make the equity commitment contemplated by the Stock Purchase Agreement and Financing Commitment Letters, without need for any consent or approval of any Person and without any other condition to be satisfied (excluding customary conditions that have been previously disclosed to the Special Committee and those conditions set forth in the equity commitment letter attached hereto as Exhibit F). Attached hereto as Exhibit F is the fully-executed equity commitment letter providing such equity commitment necessary to consummate the transactions contemplated by the Stock Purchase Agreement, in full force and effect as of the date hereof, without amendment or modification in any respect, provided to FPSH by Fox Paine Capital Fund II, L.P. SECTION 5.8. Ownership of Shares. Except as set forth in the Related Agreements, on the Closing Date, Parent will beneficially and of record own 84,377,861 shares of Company Common Stock, free and clear of any Liens or any other limitation or restriction (including any restriction on the right to vote or sell the same, except as may be provided as a matter of law). SECTION 5.9. Parent/FPSH Agreements. A complete and correct copy of all material written arrangements or agreements between Parent or any of its Affiliates, on the one hand, and FPSH or its Affiliates, on the other hand, relating to their investment in the Surviving Corporation has been provided to the Special Committee. SECTION 5.10. Parent Information. Parent represents that neither it, nor the chief financial officer of Savia, is aware of any fact, event or circumstance that makes, or could reasonably be expected to make, the Company's representations and warranties set forth in Section 4.20 (Affiliate Transactions) not true and correct. ARTICLE VI COVENANTS SECTION 6.1. Stockholders Meeting. The Company, acting through the Company Board in accordance with its certificate of incorporation and bylaws, shall, as promptly as practicable following the date of this Agreement and in consultation with Parent, take all action reasonably necessary, except as otherwise provided for herein, to seek approval and adoption of this Agreement and the Merger at a duly called and noticed meeting of the Company's stockholders (the "Stockholders Meeting"). SECTION 6.2. Proxy Statement. Promptly following the date of this Agreement, the Company and Parent shall, except as otherwise provided for herein, cooperate in preparing a proxy statement or information statement that meets the requirements of the Exchange Act (together with any amendments thereof or supplements thereto, the "Proxy Statement") to seek the approval and adoption of this Agreement and the Merger by the Company's stockholders. The Company shall use its commercially reasonable efforts to cause the Proxy Statement to be mailed to the Company's stockholders as promptly as reasonably practicable. The Company and Parent each agrees to correct any information provided by it for use in the Proxy Statement that shall have become false or misleading. The Company will promptly notify Parent of the receipt of any comments from the SEC and any request by the SEC for any amendment to the Proxy Statement or for additional information. All filings with the SEC, including the Proxy Statement, and all mailings to the Company's stockholders in connection with the Merger, including the Proxy Statement, shall be subject to the prior review and comment by Parent, and shall be reasonably acceptable to Parent. Parent will furnish (or cause to be furnished) to the Company the information relating to it and its Affiliates and FPSH and its Affiliates required by the Exchange Act to be set forth in the Proxy Statement. The Company agrees to use its commercially reasonable efforts, after consultation with the other parties hereto, to respond promptly to any comments made by the SEC with respect to the Proxy Statement and any preliminary version thereof filed by it and cause such Proxy Statement to be mailed to the Company's stockholders at the earliest practicable time. Subject to Section 6.10, the Company shall include in the Proxy Statement the recommendation of the Special Committee and the recommendation of the Company Board that the Company's stockholders vote A-29 in favor of the approval and adoption of this Agreement and the Merger (as the same may be amended, modified or withdrawn in accordance with Section 6.10). SECTION 6.3. Conduct of Business of the Company. The Company hereby covenants and agrees that, prior to the Effective Time, unless Parent shall otherwise consent in writing (which consent shall not be unreasonably withheld or delayed) or except as otherwise expressly contemplated by this Agreement or the Related Agreements, the Company shall, and shall cause its Subsidiaries to, (i) operate its business in the usual and ordinary course consistent with past practice, (ii) use its commercially reasonable efforts to preserve substantially intact its business organization, maintain its rights and franchises, retain the services of its respective principal officers and key employees and maintain its relationships with its respective principal customers, suppliers and other persons with which it or any of its Subsidiaries has significant business relations and (iii) use its commercially reasonable efforts to maintain and keep its properties and assets in as good repair and condition as at present, ordinary wear and tear excepted. Without limiting the generality of the foregoing, and except as otherwise expressly contemplated by this Agreement, Sections 6.3(a)-6.3(q) of the Company Disclosure Schedule or the Related Agreements or consented to in writing by Parent (which consent shall not be unreasonably withheld or delayed), the Company shall not, and shall not permit its Subsidiaries to, do any of the following: (a) amend or propose to amend its certificate of incorporation or bylaws (or other governing documents); (b) authorize for issuance, issue, sell, deliver, or agree or commit to issue, sell or deliver, dispose of, encumber or pledge (whether through the issuance or granting of options, warrants, commitments, subscriptions, rights to purchase or otherwise) any stock of any class or any securities, except as required by agreements with the Company's employees under the Company Stock Plans as in effect as of the date hereof, or amend any of the terms of any such securities or agreements outstanding as of the date hereof; (c) split, combine or reclassify any shares of its capital stock, declare, set aside or pay any dividend or other distribution (whether in cash, stock or property or any combination thereof) in respect of its capital stock, or redeem or otherwise acquire any of its securities or any securities of its Subsidiaries; (d) (i) incur or assume any long-term or short-term indebtedness or issue any debt securities, other than borrowings under (A) the Revolving Credit (as defined in the Company Credit Agreement) or (B) those agreements for short term bank borrowings listed on Section 4.2(e) of the Company Disclosure Schedule under the heading "Seminis Korea;" provided that in no event shall outstanding borrowings pursuant to clause (B) exceed $25 million, in each case in the ordinary course of business consistent with past practice; (ii) assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the obligations of any other Person; (iii) make any loans, advances or capital contributions to, or investments in, any other Person (other than to wholly owned Subsidiaries of the Company) or make any change in its existing borrowing or lending arrangements for or on behalf of any such Person, whether pursuant to an employee benefit plan or otherwise; (iv) pledge or otherwise encumber shares of capital stock of the Company or any of its Subsidiaries; or (v) mortgage, pledge or otherwise encumber any of its material assets, tangible or intangible, or create or suffer to exist any material Lien thereupon other than Permitted Liens in the ordinary course of business, consistent with past practice; (e) adopt a plan of complete or partial liquidation or adopt resolutions providing for the complete or partial liquidation, dissolution, consolidation, merger, restructuring or recapitalization of the Company or any of its Subsidiaries; (f) (i) except as may be required by law or existing agreements, plans or arrangements as in effect as of the date hereof, or in the ordinary course of business consistent with past practice, pay, agree to pay, grant, issue or accelerate payments or benefits pursuant to any Benefit Plan in excess of the payments or benefits provided under such Benefit Plan as of the date hereof, (ii) except (A) for increases in the ordinary course of business consistent with past practice for employees other than officers and directors of A-30 the Company that, in the aggregate, do not result in a material increase in benefits or compensation expense to the Company, or (B) as required under existing agreements or in the ordinary course of business consistent with past practice, increase in any manner the salary or fees or benefits of any director, officer, consultant or employee, or (iii) except as may be required by law, amend (other than amendments made in the ordinary course of business consistent with past practice) or terminate any Benefit Plan or establish, adopt or enter into any plan, agreement, program, policy, trust, fund or other arrangement that would be a Benefit Plan if it were in existence as of the date of this Agreement; (g) acquire, sell, transfer, lease, encumber or dispose of any assets outside the ordinary course of business or any assets (other than inventory in the ordinary course consistent with past practice) that, in the aggregate, are material to the Company and its Subsidiaries taken as a whole, or enter into any commitment or transaction outside the ordinary course of business consistent with past practice that would be material to the Company and its Subsidiaries taken as a whole; (h) except as may be required as a result of a change in law or in GAAP, change any of the financial accounting principles or practices used by it; (i) revalue in any material respect any of its assets, including writing down the value of inventory or writing off notes or accounts receivable other than in the ordinary course of business; (j) (i) acquire (by merger, consolidation, or acquisition of stock or assets) any corporation, partnership or other business organization or division thereof or any equity interest therein; (ii) enter into any contract or agreement other than in the ordinary course of business consistent with past practice that would be material to the Company and its Subsidiaries taken as a whole; (iii) other than as contemplated by Section 6.3(j)(iii) of the Company Disclosure Schedule, authorize any new capital expenditure or expenditures which, individually, is in excess of $500,000 or, in the aggregate, are in excess of $2,000,000; or (iv) enter into or amend any contract, agreement, commitment or arrangement providing for the taking of any action that would be prohibited under this clause (j); (k) make any material Tax election, change any material method of Tax accounting or settle or compromise any material Tax liability of the Company or any of its Subsidiaries, and, in any event, the Company shall consult with Parent before filing or causing to be filed any material Tax Return of the Company or any of its Subsidiaries, except to the extent such Tax Return is filed in the ordinary course of business consistent with past practice, and before executing or causing to be executed any agreement or waiver extending the period for assessment or collection of any material Taxes of the Company or any of its Subsidiaries; (l) pay, discharge or satisfy any material claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction in the ordinary course of business consistent with past practice or to the extent provided for in reserves specific to such claim, liability or obligation; (m) (i) permit any insurance policy or policies naming it as a beneficiary or a loss payable payee, which policy or policies, individually or in the aggregate, is/are material to the Company and the Subsidiaries taken as a whole, to be canceled or terminated without notice to Parent unless the Company or one of its Subsidiaries shall have obtained a comparable replacement policy, or (ii) enter into any insurance policy or policies naming it as a beneficiary or a loss payable payee, which policy or policies, individually or in the aggregate, is/are material to the Company and the Subsidiaries taken as a whole; (n) except in the ordinary course of business consistent with past practice, (i) terminate, amend or modify (in any material respect), or waive any material provision of, any Material Contract, or (ii) amend, modify or change (in any material respect) any material policies or procedures governing product sales or returns or the treatment of accounts receivable; (o) settle or compromise any pending or threatened material suit, action or claim; (p) enter into any agreement containing any provision or covenant limiting in any material respect the ability of the Company or any of its Subsidiaries to (i) sell any products or services of or to any other A-31 Person, (ii) engage in any line of business, or (iii) compete with or obtain products or services from any Person or limiting the ability of any Person to provide products or services to the Company or any of its Subsidiaries, in each case, in any geographic area or during any period of time; (q) (i) terminate the employment of, materially change the terms or conditions of employment of, or, as referenced by the Employee's waiver in the Employment Agreements, pay any severance amounts upon a voluntary termination of employment or "retirement" of, any of the individuals listed on Section 6.3(q)(i) of the Company Disclosure Schedule, (ii) amend or modify any of the employment agreements listed on Section 6.3(q)(ii) of the Company Disclosure Schedule, or (iii) amend or modify any of the letter agreements listed on Section 6.3(q)(iii) of the Company Disclosure Schedule; or (r) take, or agree in writing or otherwise to take, any of the actions prohibited in Sections 6.3(a) through (q). SECTION 6.4. Notification of Certain Matters. The Company, Merger Sub and Parent each shall give prompt notice to the others of (a) the occurrence or nonoccurrence of any event the occurrence or nonoccurrence of which would be likely to cause (i) any representation or warranty contained in this Agreement to be untrue or inaccurate, or (ii) any covenant, condition or agreement contained in this Agreement not to be complied with or satisfied, and (b) any failure of a party to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it hereunder; provided, however, that the delivery of any notice pursuant to this Section 6.4 shall not affect the representations, warranties or covenants of the parties hereto or limit or otherwise affect the remedies available to the Company, Parent or Merger Sub hereunder. SECTION 6.5. Access to Information. (a) Between the date hereof and the Effective Time, the Company will, upon reasonable request, give Parent and its authorized representatives (including FPSH) and Persons providing or committed or proposing to provide the Company with financing and their representatives, reasonable access during normal business hours to employees, plants, offices, warehouses and other facilities and properties and to all books and records (including Tax Returns and work papers of the Company's independent auditors, when available) of the Company and its Subsidiaries, will permit Parent and its authorized representatives (including FPSH) to make such inspections (including any physical inspections or soil or groundwater investigations) as they may reasonably request and will instruct the officers and employees of the Company and those of its Subsidiaries to furnish to Parent and its authorized representatives (including FPSH) such financial and operating data and other information with respect to the business and properties of the Company and any of its Subsidiaries as Parent may from time to time reasonably request; provided that the Company shall not be required to provide any such information if the Person receiving such information is not subject to a confidentiality agreement for the benefit of the Company; provided, further that in the event Parent or its authorized representatives or agents (including FPSH) elect to prepare Phase I environmental site assessments, equivalent analyses, or any other reports analyzing potential environmental, human health, or safety issues or liabilities based on the books and records of the Company, or access to the Company's employees, plants, etc., Parent shall promptly provide to the Company copies of any such reports (when executed and delivered), including cost estimates (if any). All information obtained by Persons pursuant to this Section 6.5(a) shall be kept confidential in accordance with, and shall otherwise be subject to the terms of, the confidentiality agreement, dated December 13, 2002, as supplemented by the letter to the Company dated January 10, 2003, by and among Savia, Fox Paine & Company, LLC, ARG Trust, Servasa, S.A. de C.V. and Mr. Alfonso Romo Garza (the "Confidentiality Agreement"). (b) Prior to the Effective Time, the Company shall, and shall use commercially reasonable efforts to cause its accountants, counsel, agents and other representatives to, cooperate with Parent by providing information about the Company which is reasonably requested by Parent and its representatives (including FPSH) in connection with the preparation of the Financing Documents and such other documents and other reasonable requests with respect to such documents. Notwithstanding anything in this Agreement to the contrary, to the extent reasonably appropriate to assist the success of the Debt Financing, Parent may disclose, or cause its representatives to disclose, and at the request of Parent, the Company shall disclose information A-32 concerning the Company and its Subsidiaries and their respective businesses, assets and properties, and the Merger and the Related Transactions in the Financing Documents and to prospective financing sources in connection with the Merger, subject to the prior execution of a customary confidentiality agreement approved by the Company (which approval shall not be unreasonably withheld or delayed) executed by the recipient of any such information; provided that nothing in this Section 6.5(b) shall require the Company prior to Closing to sign a registration statement with respect to any securities. (c) Prior to the Effective Time, the Company shall, no later than 30 days following the end of each month and 45 days following the end of each quarter, prepare and deliver to Parent upon completion the balance sheet, income statement and statement of cash flows prepared in accordance with GAAP of the Company for each month ended between the date of this Agreement and the Effective Time. The Company shall promptly prepare all reasonably requested financial statements required to be included in the Financing Documents. SECTION 6.6. Additional Agreements, Commercially Reasonable Efforts. (a) Prior to the Effective Time, upon the terms and subject to the conditions of this Agreement, each of Savia, Parent, Merger Sub and the Company agrees to use its commercially reasonable efforts to take, or cause to be taken, all actions, and to do, or cause to be done, all things necessary, proper or advisable under any applicable laws, rules or regulations to consummate and make effective as promptly as practicable the Merger and the Related Transactions and the other transactions contemplated by this Agreement and the Related Agreements, including (i) the preparation and filing of all forms, registrations and notices required to be filed to consummate the Merger and the Related Transactions and the other transactions contemplated hereby and thereby and the taking of such actions as are necessary to obtain any requisite approvals, consents, orders, exemptions or waivers by any third party, including any Governmental Entity, and (ii) the satisfaction of the other parties' conditions to the consummation of the Merger and the Related Transactions. Without limiting this Section 6.6, Parent and the Company shall each use its commercially reasonable efforts to avoid the entry of, or to have vacated or terminated, any decree, order, or judgment that would restrain, prevent or delay the Closing, on or before the Outside Date, including defending through litigation on the merits any claim asserted in any court by any Person. In addition, no party hereto shall take any action after the date hereof that would reasonably be expected to materially delay the obtaining of, or result in not obtaining, any permission, approval or consent from any Governmental Entity necessary to be obtained prior to the consummation of the Merger and the Related Transactions. In furtherance of and not in limitation of the foregoing, the Company shall permit Parent to reasonably participate (subject to the Company's right to control) in the defense and settlement of any claim, suit or cause of action relating to this Agreement, the Merger or the other transactions contemplated hereby, and the Company shall not settle or compromise any such claim, suit or cause of action without Parent's prior written consent (which consent shall not be unreasonably withheld or delayed). (b) The Company agrees to use its commercially reasonable efforts to cooperate with Parent in connection with its efforts to obtain any financing for Parent and/or the Surviving Corporation and its Subsidiaries in connection with consummation of the Merger, and Parent shall use its commercially reasonable efforts to obtain such financing for Parent and/or the Surviving Corporation and its Subsidiaries. At the reasonable request of Parent from time to time, the Company agrees to use its commercially reasonable efforts to cause members of its senior management to participate in the preparation of any Financing Documents reasonably requested by Parent and to participate in any "roadshow" or other presentations to potential investors in connection with the obtaining of any financing for Parent and/or the Company and its Subsidiaries in connection with the Merger. (c) Prior to the Effective Time, the Company or its Subsidiaries, on the one hand, and Parent or its Affiliates, on the other hand, shall permit the other parties hereto to review and discuss in advance, and consider in good faith the views of the other parties in connection with, any proposed written (or any material proposed oral) communication with any Governmental Entity regarding any of the transactions contemplated by this Agreement or the Related Agreements. The Company or its Subsidiaries, on the one hand, and Parent or its Affiliates, on the other hand, shall promptly inform the other parties hereto of, and if in writing, A-33 furnish the other parties with copies of (or, in the case of material oral communication, advise the other parties orally of) any communication from any Governmental Entity regarding any of the transactions contemplated by this Agreement or the Related Agreements. If the Company or its Subsidiaries, on the one hand, or Parent or its Affiliates, on the other hand, receives a request for additional information or documentary material from any such Governmental Entity with respect to the Merger or the Related Transactions, then such party will endeavor in good faith to make, or cause to be made, as soon as reasonably practicable and after consultation with the other parties hereto, an appropriate response in compliance with such request. None of the Company or its Subsidiaries, on the one hand, or Parent or its Affiliates, on the other hand, shall participate in any meeting with any Governmental Entity with respect to the Merger or the Related Transactions unless it consults with the other parties hereto in advance and, to the extent permitted by such Governmental Entity, gives the other parties the opportunity to attend and participate thereat. To the extent not otherwise provided in this Section 6.6(c), the Company or its Subsidiaries, on the one hand, and Parent or its Affiliates, on the other hand, shall furnish the other parties hereto with copies of all correspondence, filings and communications between it and any such Governmental Entity with respect to the Merger or the Related Transactions, provided that either the Company or Parent or an Affiliate of Parent may redact any information from such correspondence, filings, and communications that discusses or reflects its valuation of the Merger or Related Transactions. Tax return filings in the ordinary course and Tax proceedings with a Governmental Entity shall not be subject to the above provisions of this Section 6.6(c). The Company or its Subsidiaries, on the one hand, and Parent or its Affiliates, on the other hand, shall furnish the other parties hereto with such necessary information and reasonable assistance as such other parties may reasonably request in connection with their preparation of necessary filings or submissions of information to any Governmental Entity. To the extent that transfers of Company Permits are required as a result of execution of this Agreement or the Related Agree-ments or consummation of the Merger or the Related Transactions, the Company and Parent shall use all commercially reasonable efforts to effect such transfers. (d) Notwithstanding any other provision of this Agreement to the contrary, Parent may amend or revise the Financing Commitment Letters referred to in Section 5.6(b), or enter into new, replacement or additional financing arrangements, through itself or any of its Affiliates, in connection with the financings referred to in Section 5.6(b) or otherwise to facilitate the transactions contemplated by this Agreement or the Related Agreements, provided that (i) any such action would not, individually or in the aggregate, have a Parent Material Adverse Effect or delay the Closing, and (ii) any such amendment or revision or new, replacement or additional financing arrangements are upon terms and conditions that are substantially equivalent to those set forth in the Financing Commitment Letters, and to the extent any of the terms or conditions are not substantially equivalent to those set forth in the Financing Commitment Letters, on terms and conditions reasonably satisfactory to the Special Committee. (e) Between the date hereof and the Closing, the Company shall use its commercially reasonable efforts to identify and secure or provide any consents or notices required as a result of the execution, delivery or performance of this Agreement or the Related Agreements or the consummation of the transactions contemplated hereby or thereby. SECTION 6.7. Public Announcements. Parent, Merger Sub and the Company, as the case may be, will consult with each other before issuing any press release or otherwise making any public statements with respect to this Agreement, the Related Agreements, the Merger, the Related Transactions or the other transactions contemplated hereby or thereby, and shall not issue any such press release or make any such public statement without the prior consent of the other parties hereto (which consent shall not be unreasonably withheld or delayed), except as may be required by applicable law or by obligations pursuant to any listing agreement with any national securities exchange or national market system to which Parent, its Affiliates, the Company or its Subsidiaries is a party. The parties hereto have agreed on the text of the joint press release by which announcement of the execution of this Agreement will be made. SECTION 6.8. Indemnification. (a) Parent and Merger Sub agree that all rights to indemnification or exculpation now existing in favor of the directors, officers, employees and agents of the Company and its Subsidiaries as provided in their A-34 respective certificates of incorporation or bylaws (or other governing documents) or otherwise in effect as of the date hereof with respect to matters occurring prior to the Effective Time shall survive the Merger and shall continue in full force and effect after the Effective Time. Any rights to indemnification or exculpation pursuant to this Section 6.8(a) shall not be amended, repealed or otherwise modified for a period of six years from the Effective Time in a manner that would adversely affect the rights thereunder of individuals who at the Effective Time were directors, officers, employees or agents of the Company. (b) From and after the Effective Time, the Surviving Corporation shall, to the fullest extent permitted under the DGCL, indemnify and hold harmless, each present and former director and officer of the Company and its Subsidiaries and each such individual who served at the request of the Company or its Subsidiaries as a director, officer, trustee, partner, fiduciary, employee or agent of another corporation, partnership, joint venture, trust, pension or other employee benefit plan or enterprise (collectively, the "Indemnified Parties") against all costs and expenses (including attorneys' fees), judgments, fines, losses, claims, damages, liabilities and settlement amounts paid in connection with any claim, action, suit, proceeding or investigation (whether arising before or after the Effective Time), whether civil, administrative or investigative, based on the fact that such individual is or was a director or officer of the Company or any of its Subsidiaries and arising out of or pertaining to any action or omission occurring at or before the Effective Time (including the transactions contemplated hereby and the Related Transactions). The Surviving Corporation shall be entitled to assume the defense of any such claim, action, suit, investigation or proceeding with counsel reasonably satisfactory to the Indemnified Party and the Surviving Corporation shall not be liable to any Indemnified Party for any legal expenses of separate counsel or any other expenses subsequently incurred by such Indemnified Party in connection with the defense thereof, except that if the Surviving Corporation elects not to assume such defense or counsel for the Indemnified Party advises that there are issues that raise conflicts of interest between the Surviving Corporation and the Indemnified Party or such Indemnified Party shall have legal defenses available to it that are different from or in addition to those available to the Surviving Corporation, the Indemnified Party may retain counsel reasonably satisfactory to the Surviving Corporation, and the Surviving Corporation shall pay all reasonable fees and expenses of such counsel for the Indemnified Party promptly as statements therefor are received; provided that the Surviving Corporation shall not be liable for the fees of more than one counsel with respect to a particular claim, action, suit, investigation or proceeding, for all Indemnified Parties, other than local counsel, unless a conflict of interest shall be caused thereby, provided further that the Surviving Corporation shall not be liable for any settlement effected without its written consent (which consent shall not be unreasonably withheld or delayed). (c) The Surviving Corporation shall provide or maintain in effect for six years from the Effective Time (the "Tail Period") directors' and officers' and corporate liability insurance covering those individuals who are covered by the directors' and officers' and corporate liability insurance policy provided for directors and officers of the Company and its Subsidiaries as of the date hereof (the "Existing Policy") on terms (other than with respect to minimum aggregate limits of liability for directors' and officers' and corporate liability insurance coverage) comparable to the Existing Policy and such coverage shall contain minimum aggregate limits of liability for directors' and officers' and corporate liability insurance coverage for directors and officers of the Company and its Subsidiaries of at least $25 million and deductibles no larger than those customary for such type of insurance coverage; provided, however, that in no event shall the Surviving Corporation be required to expend in excess of $1,000,000 in aggregate premiums for such insurance coverage with respect to the Tail Period, and if the premiums of such insurance coverage exceed such amount, the Surviving Corporation shall be obligated to maintain or obtain a policy with the greatest coverage available for a cost not exceeding such amount. (d) Parent shall cause Savia to exercise its right pursuant to the Existing Policy to obtain insurance coverage for the Discovery Period (as defined in the Existing Policy) provided that the Company shall pay its portion of the cost of any such insurance coverage in accordance with intercompany allocations made on a basis consistent with past practice. The cost to the Company for such coverage shall not exceed $100,000 in the aggregate.* - --------------- * Pursuant to an amendment to the merger agreement dated July 31, 2003, this section 6.8(d) has been deleted. A-35 (e) If the Surviving Corporation or any of its successors or assigns (i) consolidates with or merges into any other Person and shall not be the continuing or surviving corporation or entity of such consolidation or merger, or (ii) transfers or conveys all or substantially all of its properties and assets to any Person, then, in each such case, to the extent necessary, proper provision shall be made so that the successors and assigns of the Surviving Corporation, as the case may be, shall assume the obligations of the Surviving Corporation set forth in this Section 6.8. (f) The rights of each Indemnified Party under this Section 6.8 shall be in addition to any rights such individual may have under the certificate of incorporation or bylaws (or other governing documents) of the Company or any of its Subsidiaries, under the DGCL or any other applicable laws or under any agreement of any Indemnified Party with the Company or any of its Subsidiaries. These rights shall survive consummation of the Merger and are intended to benefit, and shall be enforceable by, each Indemnified Party. SECTION 6.9. Contributions to Parent. Parent shall cause, prior to the Effective Time, the stockholders of the Company set forth on Exhibit E to sell and/or contribute such number of shares of Company Common Stock set forth next to such stockholder's name on Exhibit E to Parent in exchange for an equivalent number of membership interests of Parent (which membership interests shall be issued by Parent prior to the Effective Time), all in accordance with the Contribution Agreement attached as Exhibit C hereto. The shares of Company Common Stock contributed to Parent shall be canceled and retired in the Merger in accordance with Section 3.8(b). SECTION 6.10. No Solicitation. (a) Except as set forth in this Section 6.10, the Company agrees that, during the term of this Agreement, it shall not, and shall not authorize or permit any of its Subsidiaries to, and shall use commercially reasonable efforts to cause its or its Subsidiaries' directors, officers, investment bankers, consultants, attorneys, agents or representatives, directly or indirectly, not to (i) solicit, initiate or knowingly encourage or facilitate, or furnish or disclose non-public information in furtherance of, any inquiries or the making of any proposal with respect to a Company Competing Transaction, (ii) negotiate, explore or otherwise engage in substantive discussions with any Person (other than FPSH, Parent, or their respective directors, officers, employees, agents and representatives) with respect to any Company Competing Transaction or (iii) enter into any agreement, arrangement or understanding with respect to a Company Competing Transaction; provided that, prior to the Effective Time, if the Company receives a written proposal for a Company Competing Transaction (x) that was not initiated, solicited or knowingly encouraged after the date of this Agreement by the Company, its Subsidiaries or any of its or their directors, officers, employees, investment bankers, consultants, attorneys, agents or representatives and (y) that the Special Committee determines in good faith, by majority vote, after receiving advice from its outside legal and financial advisors, constitutes or presents a reasonable likelihood of resulting in a Superior Transaction, then subject to compliance with Section 6.10(d), the Company may, directly or indirectly, (A) furnish information with respect to the Company to the Person making such proposal pursuant to a customary confidentiality agreement, and (B) participate in discussions or negotiations with such Person regarding such proposal. The activities referred to in clauses (A) and (B) of the previous sentence, if undertaken in compliance with all of the terms and conditions of the previous sentence, are referred to herein as "Permitted Discussions." The Company shall, and shall cause its Subsidiaries, and shall use commercially reasonable efforts to cause the Company's and its Subsidiaries' respective directors, officers, investment bankers, consultants, attorneys, agents and representatives immediately to cease all existing activities, discussions and negotiations with any parties conducted prior to the date hereof with respect to any inquiries or proposals relating to a Company Competing Transaction. A violation of clauses (i) or (ii) of this Section 6.10(a) by an employee of the Company or any of its Subsidiaries shall be deemed a violation by the Company of such clauses. (b) Except as permitted by Section 6.10(c), neither the Special Committee nor the Company Board shall (i) withdraw or modify, or propose to withdraw or modify, in a manner adverse to Parent or FPSH, its recommendation in favor of the Merger, or (ii) approve or recommend, or propose publicly to approve or recommend, any Company Competing Transaction. Nothing contained in this Agreement shall prevent the A-36 Special Committee or the Company Board from complying with Rules 14d-9 and 14e-2 promulgated under the Exchange Act. (c) In the event that, prior to the Effective Time the Special Committee believes, in its good faith judgment, after receiving the advice of its outside legal counsel, that failing to do so would create a reasonable likelihood of breaching its fiduciary duties under applicable law, the Special Committee (and the Company Board acting on the recommendation of the Special Committee) may (subject to this Section 6.10(c) and to Section 6.10(d)) withdraw or modify its approval or recommendation in favor of the Merger, provided that it gives Parent three days' prior written notice of its intention to do so. Any such withdrawal or modification of the recommendation shall not change the approval of the Special Committee and the Company Board for purposes of causing any state takeover statute or other state law to be inapplicable to the transactions contemplated hereby, or change the obligation of the Company to present this Agreement and the Merger for approval and adoption. The foregoing notwithstanding, in such event, unless the Special Committee determines otherwise, this Agreement and the Merger will require the approval of the holders of a majority of the outstanding shares beneficially owned by stockholders of the Company other than Parent, FPSH and their respective Affiliates (the "Disinterested Stockholder Approval"). (d) From and after the execution of this Agreement, the Company shall promptly advise Parent orally and in writing of any request for information or of any proposal in connection with a Company Competing Transaction, the material terms and conditions of such request or proposal and the identity of the Person making such request or proposal. The Company shall keep Parent reasonably apprised of the status (including amendments and proposed amendments) of any proposal relating to a Company Competing Transaction on a current basis, including promptly providing to Parent copies of any written communications between the Company and any Person relating to a Company Competing Transaction. (e) If prior to the Effective Time the Special Committee determines in good faith, after consultation with its outside financial and legal advisors, that any bona fide written proposal from a third party for a Company Competing Transaction received after the date hereof that was not initiated, solicited or encouraged by the Company or any of its Subsidiaries or their respective directors, officers, employees, investment bankers, consultants, attorneys, agents or representatives in violation of this Agreement is more favorable to the stockholders of the Company (taking into account all the terms and conditions of the Company Competing Transaction and this Agreement that the Special Committee in good faith deems relevant, including any conditions to and expected timing and risks of consummation, and the ability of the party making such proposal to obtain financing for such Company Competing Proposal and taking into account all other legal, financial, regulatory and other aspects of such proposal) than the transactions contemplated by this Agreement (taking into account any adjustment to the terms and conditions of such transaction proposed in writing by Parent in response to such Company Competing Transaction) (a "Superior Transaction"), and the Special Committee believes in its good faith judgment, after receiving advice of its outside legal counsel that failing to terminate this Agreement and enter into such a Company Competing Transaction would create a reasonable likelihood of breaching its fiduciary duties under applicable law, the Company may terminate this Agreement and enter into a binding acquisition agreement (an "Acquisition Agreement") with respect to such Superior Transaction provided, that, prior to any such termination, (i) the Company has provided Parent written notice that it intends to terminate this Agreement pursuant to this Section 6.10(e), identifying the Superior Transaction then determined to be more favorable and the parties thereto and delivering to Parent a copy of the Acquisition Agreement for such Company Competing Transaction in the form to be entered into, and (ii) at least seven full calendar days after the Company has provided the notice referred to in clause (i) above (provided that the Special Committee's determinations and beliefs shall continue in effect without material revision or modification), (A) the Company (1) delivers to Parent a written notice of termination of this Agreement pursuant to this Section 6.10(e), and (2) delivers (or causes the other party to a Superior Transaction to deliver) to FPSH the Company Termination Fee and the FPSH Expenses as provided in Section 8.3, and (B) FPSH receives a written acknowledgment from the Company and from the other party to a Superior Transaction that the Company and such other party have irrevocably waived any right to contest such payments. SECTION 6.11. Resignation of Directors. Immediately prior to the Effective Time, the Company shall deliver to Parent evidence satisfactory to Parent of the resignation of all directors of the Company (other than A-37 those directors set forth in a written notice of Parent to the Company), such resignations to become effective as of the Effective Time. SECTION 6.12. Solvency Opinion. The parties shall engage, at the expense of the Company, an appraisal firm of national reputation reasonably acceptable to the Company, the Special Committee, Parent and the Lenders, to deliver a letter addressed to the Special Committee, Parent and FPSH and, if requested by them, the Lenders (and on which the Special Committee and FPSH shall be entitled to rely) indicating that at and immediately after the Effective Time, and after giving effect to the Merger and the other transactions contemplated hereby and by the Related Agreements, including the Debt Financing, the Company will not (a) be insolvent and will have assets sufficient to pay its debts, (b) have unreasonably small capital with which to engage in its business and perform its obligations under this Agreement and the Related Agreements, and (c) have incurred and does not believe it would incur debts beyond its ability to pay as they become absolute and matured. SECTION 6.13. Related Agreements. Parent and Merger Sub agree that they will not, and will not permit any of their Affiliates to, without the prior consent of the Special Committee, which consent shall not be unreasonably withheld, enter into any amendment to or modification or waiver of any provision of the Related Agreements or take any action to terminate any such agreement that will prevent or delay the Closing. The parties to the Contribution Agreement have acknowledged in such agreement that the Company would not have entered into this Agreement had the parties not entered into the Contribution Agreement. Parent and Merger Sub shall use all commercially reasonable efforts to fulfill all of their obligations under the Related Agreements and to cause any conditions to closing under such agreements to be satisfied. Parent and Merger Sub shall give the Special Committee prompt written notice of (a) any material breach or threatened material breach by any party of the terms or provisions of the Related Agreements, (b) any termination or threatened termination of any of the Related Agreements, or (c) any exercise or threatened exercise of any condition under any of the Related Agreements. SECTION 6.14. Exchange Agreement. The Company will not, and Savia has agreed not to, terminate the Exchange Agreement during the term of this Agreement. In addition, subject to the conditions set forth in Sections 7.1(a) and 7.2 of this Agreement, immediately prior to the Closing, the Company shall consummate the transactions contemplated by the Exchange Agreement. SECTION 6.15. Privilege. The parties agree and acknowledge that the disclosure, provision or furnishing of information, directly or indirectly, by the Company under this Agreement shall not be deemed a waiver of any privilege under applicable law that has been or may be asserted, including privileges arising under or relating to the attorney-client relationship (which shall include the attorney-client and work product privileges). SECTION 6.16. Employee Matters. (a) For a period of one year following the Effective Time, the Surviving Corporation shall provide, or cause to be provided, to the employees of the Company immediately prior to the Effective Time who continue employment, employee benefit programs that are, in the aggregate, generally comparable to those provided to the employees of the Company as of the date hereof; provided that, other than as required by applicable law or employment agreements binding upon the Surviving Corporation or any of its Subsidiaries (in the absence of the consent of the individuals party to such employment agreements), the Surviving Corporation may at any time increase or reduce the level of such benefit programs if such an increase or reduction shall be determined to be advisable in the sole business judgment of the Surviving Corporation. (b) The Company's annual bonuses for the fiscal year ending in 2003 under the Company's Executive Incentive Plan shall be determined based upon the incentive compensation targets set forth in Section 6.16(b) of the Company Disclosure Schedule. SECTION 6.17. Merger Sub Charter Amendment. At least five days prior to the Effective Time, (a) Parent shall cause Merger Sub to amend its certificate of incorporation to authorize 100,000,000 shares of MS Common Stock, and (b) Parent shall cause Merger Sub to issue to Parent an additional 84,376,861 shares of MS Common Stock so that immediately prior to the Effective Time, Parent shall own all of the outstanding 84,377,861 shares of MS Common Stock. A-38 ARTICLE VII CONDITIONS TO CONSUMMATION OF THE MERGER SECTION 7.1. Conditions to the Merger. (a) The obligation of the Company to consummate the Merger and the other transactions contemplated hereby is subject to the satisfaction or waiver (to the extent permitted by applicable law) at or prior to the Effective Time of each of the following conditions: (i) Accuracy of Representations and Warranties. The representations and warranties made by Parent and Merger Sub herein, disregarding all qualifications and exceptions contained herein relating to materiality or Parent Material Adverse Effect or words of similar import, shall be true and correct on the date hereof and on the Closing Date as if made on and as of such dates (except for representations and warranties that are made as of a specified date, which shall be true and correct only as of such specified date) with only such exceptions as would not, individually or in the aggregate, have a Parent Material Adverse Effect. (ii) Compliance with Covenants. Each of Parent and Merger Sub shall have performed in all material respects (or with respect to any obligation or agreement qualified by materiality or Parent Material Adverse Effect, in all respects) all obligations and agreements, and complied in all material respects (or with respect to any covenant qualified by materiality or Parent Material Adverse Effect, in all respects) with all covenants, contained in this Agreement to be performed or complied with by it prior to or on the Closing Date. (iii) Officer's Certificates. The Company shall have received a certificate of Parent, dated as of the Closing Date, signed by an executive officer of Parent to evidence satisfaction of the conditions set forth in Sections 7.1(a)(i) and (ii). (iv) Debt Financing. The Debt Financing shall have been obtained and, to the extent required, the existing Indebtedness of the Company shall have been repaid. (b) The obligation of Parent and Merger Sub to consummate the Merger and the other transactions contemplated hereby is subject to the satisfaction or waiver (to the extent permitted by applicable law) at or prior to the Effective Time of each of the following conditions: (i) Accuracy of Representations and Warranties. The representations and warranties made by the Company herein (other than in the case of Section 4.8(c)), disregarding all qualifications and exceptions contained herein relating to materiality or Company Material Adverse Effect or words of similar import, shall be true and correct on the date hereof and on the Closing Date as if made on and as of such dates (except for representations and warranties that are made as of a specified date, which shall be true and correct only as of such specified date) with only such exceptions as would not have, individually or in the aggregate, a Company Material Adverse Effect. The representation made by the Company in Section 4.8(c) shall be true and correct in all respects on the date hereof and on the Closing Date as if made on and as of such dates. (ii) Compliance with Covenants. The Company shall have performed in all material respects (or with respect to any obligation or agreement qualified by materiality or Company Material Adverse Effect, in all respects) all obligations and agreements, and complied in all material respects (or with respect to any covenant qualified by materiality or Company Material Adverse Effect, in all respects) with all covenants, contained in this Agreement to be performed or complied with by it prior to or on the Closing Date. (iii) Officer's Certificate. Parent shall have received a certificate of the Company, dated as of the Closing Date, signed by an executive officer of the Company to evidence satisfaction of the conditions set forth in Sections 7.1(b)(i) and (ii). (iv) No Litigation. After the date hereof, there shall not be (A) any new suit, action or proceeding by any Governmental Entity or any other Person or (B) any development in any existing suit, action or A-39 proceeding by any Governmental Entity or any other Person that, in any such case is more likely than not, individually or in the aggregate, to have a Company Material Adverse Effect (for purposes of this clause (iv) only, excluding the reference to the phrase "or is reasonably expected to be" from the definition of Company Material Adverse Effect). (v) Debt Financing. The proceeds from the credit facility portion of the Debt Financing under the Financing Commitment Letters, or alternative financing as permitted pursuant to Section 6.6(d), shall have been obtained substantially on the terms set forth in the Financing Commitment Letters (or the alternative commitment letter referred to in Section 6.6(d)) or, if unavailable on such terms, on such other terms as are not materially less favorable to Parent than those contemplated by the Financing Commitment Letters (or the alternative commitment arrangements referred to in Section 6.6(d)). The proceeds from the senior subordinated note issuance portion of the Debt Financing shall be an amount not less than $175 million, and on terms that are not materially less favorable to Parent than those set forth in Section 7.1(b)(v) of the Parent Disclosure Schedule. (vi) Foreign Investment in Real Property Tax Act. Parent shall have received duly executed and acknowledged affidavits of the Company, in form substantially identical to those attached as Exhibit G hereto in accordance with Treasury Regulation Sections 1.1445-2(c)(3), 1.897-2(g), 1.897-2(g) and 1.897-2(h), certifying that each "interest" in the Company (within the meaning of Section 897(c)(1) of the Code) is not a "United States real property interest" within the meaning of Section 897(c) of the Code. SECTION 7.2. Conditions to Each Party's Obligations to Effect the Merger. The respective obligations of each party hereto to effect the Merger and the other transactions contemplated hereby are further subject to the satisfaction at or prior to the Effective Time of each of the following conditions, any and all of which may be waived in whole or in part by the parties hereto to the extent permitted by applicable law: (a) Stockholder Approval. The Company Stockholder Approval (or if applicable, the Disinterested Stockholder Approval) shall have been validly obtained under the DGCL and the Company's certificate of incorporation and bylaws. (b) Statutes; Court Orders. No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated, issued or enforced by any Governmental Entity that prohibits, restrains, enjoins, precludes or restricts the consummation of the Merger or the Related Transactions. (c) Contribution Agreement. The transactions contemplated by the Contribution Agreement shall have occurred. (d) Stock Purchase Closing. All conditions to the Stock Purchase set forth in Article VII of the Stock Purchase Agreement (other than the condition requiring the consummation of the Merger) shall have been satisfied or waived (to the extent permitted by applicable law) and shall be in full force and effect and the closing of the Stock Purchase shall occur substantially concurrently with the Closing. (e) Competition Approvals. All clearances or approvals required from any Governmental Entity, including pursuant to any antitrust or trade regulation laws or regulations, shall have been received in connection with the Merger and the Related Transactions, other than those clearances or approvals the failure of which to obtain would not have, individually or in the aggregate, a Company Material Adverse Effect. (f) Solvency Opinion. The parties shall have received the opinion referred to in Section 6.12. A-40 ARTICLE VIII TERMINATION; AMENDMENT; WAIVER SECTION 8.1. Termination. This Agreement may be terminated and the Merger may be abandoned at any time prior to the Effective Time notwithstanding receipt of the Company Stockholder Approval (or if applicable, the Disinterested Stockholder Approval): (a) by mutual written consent duly authorized by the Company Board (provided such termination has been approved by the Special Committee) and the board of directors of Parent; (b) by Parent or the Company, if (i) any Governmental Entity shall have enacted, entered, promulgated, issued or enforced a final statute, rule, regulation, executive order, decree, ruling or injunction (which statute, rule, regulation, executive order, decree, ruling or injunction the parties hereto shall use their commercially reasonable efforts to reverse, overturn or lift) or taken any other final action restraining, enjoining or otherwise prohibiting the Merger or the Related Transactions and such order, decree, ruling or other action is or shall have become final and nonappealable, or (ii) the Effective Time shall not have occurred on or before the Outside Date; provided, however, that the right to terminate this Agreement under this clause (ii) shall not be available to any party hereto whose failure to fulfill any obligation under this Agreement has been the cause of, or resulted in, the failure of the Effective Time to occur on or before the Outside Date; (c) by Parent, if (i) there shall have been a material breach of any of the Company's representations, warranties or covenants, which breach (A) would give rise to the failure of a condition set forth in Section 7.1(b) or Section 7.2, and (B) is not capable of being cured prior to the Outside Date or, if curable, has not been cured within 20 business days following receipt by the Company of written notice from Parent and Merger Sub of such breach, (ii) the Special Committee or the Company Board shall withdraw, modify, or change (including by amendment of the Proxy Statement) its recommendation with respect to this Agreement and the Merger in a manner adverse to Parent or FPSH or shall have resolved to do any of the foregoing, (iii) the Special Committee or the Company Board shall have recommended any proposal in respect of a Company Competing Transaction or (iv) any Person or group (as defined in Section 13(d)(3) of the Exchange Act) other than Parent or any of its Affiliates shall have become the beneficial owner of shares of Common Stock representing 15% or more of the voting power of the Company (either on a primary or a fully-diluted basis). (d) by the Company, if there shall have been a material breach of any of Parent's or Merger Sub's representations, warranties or covenants, which breach (i) would give rise to the failure of a condition set forth in Section 7.1(a) or Section 7.2 and (ii) is not capable of being cured prior to the Outside Date or, if curable, has not been cured within 20 business days following receipt by Parent and Merger Sub of written notice from the Company of such breach; (e) by the Company, pursuant to and in compliance with Section 6.10(e); (f) by either Parent or the Company, if at the Stockholders Meeting (including any postponement or adjournment thereof), (i) the Company Stockholder Approval shall have not been obtained, or (ii) if applicable, the Disinterested Stockholder Approval shall not have been obtained; or (g) by the Company, if the Stock Purchase Agreement shall have been terminated pursuant to Section 8.1(a), (b), (c) or (d) of the Stock Purchase Agreement. SECTION 8.2. Effect of Termination. In the event of the termination and abandonment of this Agreement pursuant to Section 8.1, written notice thereof shall forthwith be given to the other party or parties in accordance with Section 9.4, specifying the provision hereof pursuant to which such termination is made, and this Agreement shall forthwith become void and have no effect, without any liability on the part of any of the Company or its Subsidiaries or its Affiliates or Parent or its Affiliates or their respective directors, officers, employees or stockholders, other than the provisions of this Section 8.2 and Section 8.3; provided, however, that nothing contained in this Section 8.2 shall relieve any party from liability for any willful and material breach of this Agreement. A-41 SECTION 8.3. Fees and Expenses. (a) In the event that: (i) (A)(x) Parent or the Company shall have terminated this Agreement pursuant to Section 8.1(b)(ii) and the failure of the Company to fulfill any obligation under this Agreement has been the cause of, or resulted in, the failure of the Effective Time to occur on or prior to the Outside Date, (y) Parent shall have terminated this Agreement pursuant to Section 8.1(c)(i) or (z) either party shall have terminated this Agreement pursuant to Section 8.1(f), (B) on or prior to such time (or in connection with clause (z), on or prior to the Stockholders Meeting) any entity or group (other than Parent and its Affiliates or FPSH and its Affiliates) shall have made and not withdrawn a proposal that is or becomes publicly disclosed for (or publicly disclosed its intention to make a proposal for) a Company Competing Transaction, and (C) within 12 months of termination of this Agreement, the Company (1) consummates a Company Competing Transaction, or (2) enters into a Company Competing Transaction that is thereafter consummated at any time (including after the 12-month period described in the beginning of this clause (C)); (ii) (A) Parent shall have terminated this Agreement pursuant to Section 8.1(c)(ii), (iii) or (iv), and (B) within 12 months of termination of this Agreement, the Company (1) consummates a Company Competing Transaction, or (2) enters into a Company Competing Transaction that is thereafter consummated at any time (including after the 12-month period described in the beginning of this clause (B)); or (iii) the Company shall have terminated this Agreement pursuant to Section 8.1(e), then, in any such event, the Company shall pay to FPSH, a termination fee in cash, of $15 million (the "Company Termination Fee") (less any amount paid or payable pursuant to Section 8.3(b)). Any Company Termination Fee that becomes payable shall be paid (m) in the case of clause (i) or clause (ii) above, not later than the date on which a Company Competing Transaction is consummated, and (n) in the case of clause (iii) above, at or prior to such termination pursuant to Section 8.1(e). (b) Upon the termination of this Agreement (i) by Parent or the Company pursuant to Section 8.1(b)(ii) where the failure of the Company to fulfill any obligation under this Agreement has been the cause of, or resulted in, the failure of the Effective Time to occur on or before the Outside Date; (ii) by Parent pursuant to Section 8.1(c)(i), (ii), (iii) or (iv); or (iii) by Parent or the Company pursuant to Section 8.1(f), the Company shall pay to FPSH the FPSH Expenses up to, but not exceeding $4.5 million in cash not later than two business days after submission of statements therefor, less any such expenses previously reimbursed by the Company. (c) Except as specifically provided in this Section 8.3, all costs and expenses incurred in connection with this Agreement, the Related Agreements, the Merger, the Related Transactions and the other transactions contemplated by this Agreement and the Related Agreements shall be paid by the party incurring such expenses, regardless of whether the Merger and the Related Transactions or any other transaction contemplated by this Agreement or the Related Agreements is consummated. SECTION 8.4. Amendment. This Agreement may be amended at any time before or after the Company Stockholder Approval (or if applicable the Disinterested Stockholder Approval) by an instrument in writing signed by all of the parties hereto; provided that, in addition to any other approval required by law, (a) in the case of the Company, this Agreement may only be amended following approval of such amendment by the Special Committee and (b) in the case of Parent, this Agreement may only be amended following written approval by FPSH; provided, further that after the Company Stockholder Approval (or if applicable the Disinterested Stockholder Approval), no amendment shall be made that by law requires further approval by the stockholders of the Company without the further approval of such stockholders. SECTION 8.5. Waiver. At any time prior to the Effective Time, any party hereto may (i) extend the time for the performance of any of the obligations or other acts of the other party, (ii) waive any inaccuracies in the representations and warranties of the other party contained herein or in any document, certificate or A-42 writing delivered pursuant hereto, or (iii) waive compliance by the other party with any of the agreements or conditions contained herein; provided, however, that the Company may only grant such extension or waiver if it first obtains the written approval of the Special Committee, and Parent may only grant such extension or waiver if it first obtains the written approval of FPSH. Any agreement on the part of any party or parties hereto to any such extension or waiver shall be valid only if set forth in an instrument in writing signed on behalf of such party or parties. The failure of any party hereto to assert any of its rights hereunder shall not constitute a waiver of such rights. In the event that this Agreement is to be terminated by the Company, it shall be terminated by the Company following approval by the Special Committee and may not be terminated without the approval of the Special Committee. ARTICLE IX MISCELLANEOUS SECTION 9.1. Nonsurvival of Representations and Warranties. The representations and warranties made herein shall not survive beyond the Effective Time. SECTION 9.2. Entire Agreement; Assignment. This Agreement and the Related Agreements (including the schedules and Exhibits hereto and thereto) constitute the entire agreement among the parties hereto with respect to the subject matter hereof and supersede all other prior agreements and understandings, both written and oral, between the parties hereto with respect to the subject matter hereof. This Agreement shall not be assigned by operation of law or otherwise, except that Parent may assign any or all of its rights and obligations under this Agreement to an Affiliate of Parent, but no such assignment shall relieve Parent of its obligations hereunder if such assignee does not perform such obligations. SECTION 9.3. Severability. If any provision of this Agreement, or the application thereof to any Person or circumstance, is held invalid or unenforceable, the remainder of this Agreement, and the application of such provision to other Persons or circumstances shall not be affected thereby, and to such end, the provisions of this Agreement are agreed to be severable. Upon such determination that any provision is invalid or unenforceable, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties hereto as closely as possible in a manner acceptable to all parties hereto. SECTION 9.4. Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing (including by facsimile with written confirmation thereof) and unless otherwise expressly provided herein, shall be delivered during normal business hours by hand, by Federal Express or other nationally recognized overnight commercial delivery service, or by facsimile notice, confirmation of receipt received, addressed as follows, or to such other address as may be hereafter notified by the respective parties hereto: (a) If to Parent or Merger Sub: c/o Savia, S.A. de C.V. Ave. Roble No. 565 Ote. -- Piso 4 Colonia Valle Del Campestre Garza Garcia, N.L. 66265 Mexico Attention: Bernardo Jimenez Barrera Facsimile: 011-52-818-399-5606 A-43 With copies, which will not constitute notice, to: Milbank, Tweed, Hadley & McCloy LLP One Chase Manhattan Plaza New York, New York 10005 Attention: Howard S. Kelberg, Esq. Facsimile: 212-822-5530 Fox Paine & Company, LLC 950 Tower Lane, Suite 1950 Foster City, California 94404 Attention: W. Dexter Paine, III Facsimile: 650-525-1396 Wachtell, Lipton, Rosen & Katz 51 West 52nd Street New York, New York 10019 Attention: Mitchell S. Presser, Esq. Facsimile: 212-403-2000 (b) If to the Company: Seminis, Inc. 2700 Camino del Sol Oxnard, California 93030-7967 Attention: Chairman of the Special Committee of the Board of Directors Facsimile: 805-918-2530 With copies, which will not constitute notice, to: Seminis, Inc. 2700 Camino del Sol Oxnard, California 93030-7967 Attention: General Counsel Facsimile: 805-918-2530 Skadden, Arps, Slate, Meagher & Flom LLP Four Times Square New York, New York 10036 Attention: Peter A. Atkins, Esq. David J. Friedman, Esq. Facsimile: 212-735-2000 SECTION 9.5. Governing Law; Consent to Jurisdiction; Waiver of Jury Trial. (a) This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to the principles of conflicts of law thereof. (b) The parties hereto hereby agree and consent to be subject to the exclusive jurisdiction of the courts of the State of Delaware sitting in the County of New Castle and the United States District Court for the State of Delaware in any suit, action or proceeding seeking enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the Merger. Each party hereto hereby irrevocably waives, to the fullest extent permitted by law, (i) any objection that it may now or hereafter have to laying venue of any suit, action or proceeding brought in such courts, and (ii) any claim that any suit, action or proceeding brought in such courts has been brought in an inconvenient forum. A-44 (c) EACH OF PARENT, MERGER SUB AND THE COMPANY HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTIONS OF PARENT, MERGER SUB OR THE COMPANY IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT THEREOF. SECTION 9.6. Specific Performance. The parties hereto agree that irreparable damage would occur if any provision of this Agreement were not performed in accordance with the terms hereof and that the parties shall be entitled, without posting a bond or similar indemnity, to an injunction or injunctions to prevent breaches of this Agreement or to enforce specifically the performance of the terms and provisions hereof in any federal court located in the State of Delaware or any Delaware state court, in addition to any other remedy to which they are entitled at law or in equity. SECTION 9.7. Interpretation. When a reference is made in this Agreement to Articles, Sections, Exhibits or Schedules, such reference shall be to an Article or Section of or Exhibit or Schedule to this Agreement unless otherwise indicated. The table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Whenever the words "include," "includes" or "including" are used in this Agreement, they shall be deemed to be followed by the words "without limitation." SECTION 9.8. Parties in Interest. (a) Subject to Section 9.8(b), this Agreement shall be binding upon and inure solely to the benefit of each party hereto and its successors and permitted assigns, and except as provided in Section 6.8 and as otherwise explicitly provided in this Agreement and in the Stock Purchase Agreement, nothing in this Agreement, express or implied, is intended to or shall confer upon any other Person any rights, benefits or remedies of any nature whatsoever under or by reason of this Agreement. (b) Notwithstanding anything to the contrary contained herein, (i) FPSH shall be a third party beneficiary of this Agreement and shall have the right to directly enforce Section 6.10, Section 8.3, Section 8.4 and Section 8.5, (ii) FPSH shall have the right to enforce any right under this Agreement exercisable by Parent or Merger Sub, (iii) any representations, warranties or covenants made by the Company to Parent or Merger Sub shall be deemed made to (and, with respect to covenants, shall be enforceable by) FPSH, (iv) any notice to Parent, Merger Sub or the Company under this Agreement given (or required to be given) shall be simultaneously given to FPSH and (v) anything under this Agreement that must be approved by or acceptable to Parent or Merger Sub must also be approved or accepted by FPSH (which approval or acceptance shall be subject to the same standards applicable to Parent and Merger Sub with respect thereto); provided, however, that none of clauses (i), (ii) or (iii) of this Section 9.8(b) shall prevent Parent or Merger Sub from directly enforcing its rights under this Agreement. The Stock Purchase Agreement shall provide that it may not be amended, modified, supplemented or any terms waived in a manner that would prevent or delay the Closing without the approval of the Special Committee (which approval shall not be unreasonably withheld or delayed). The parties to the Stock Purchase Agreement have acknowledged in such agreement that the Company would not have entered into this Agreement had the parties not entered into the Stock Purchase Agreement. SECTION 9.9. Performance by Others. Savia shall cause Parent and Merger Sub (and, if applicable, their successors or permitted assigns) to comply with their obligations under this Agreement and the Related Agreements to which Parent or Merger Sub is a party. SECTION 9.10. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original, but all of which shall constitute one and the same agreement. A-45 IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be duly executed on its behalf as of the day and year first above written. SEMINIS ACQUISITION LLC By: /s/ BERNARDO JIMENEZ ------------------------------------ Name: Bernardo Jimenez Title: Attorney in Fact SEMINIS MERGER CORP. By: /s/ BERNARDO JIMENEZ ------------------------------------ Name: Bernardo Jimenez Title: Attorney in Fact SEMINIS, INC. By: /s/ GASPAR ALVAREZ ------------------------------------ Name: Gaspar Alvarez Title: VP WW Corporate Comptroller By: /s/ ENRIQUE OSORIO ------------------------------------ Name: Enrique Osorio Title: Treasurer Vice President For purposes of Section 9.9 only, SAVIA, S.A. DE C.V. By: /s/ BERNARDO JIMENEZ ---------------------------------- Name: Bernardo Jimenez Title: Attorney in Fact A-46 EX-2.2 4 v94566orexv2w2.txt EXHIBIT 2.2 EXHIBIT 2.2 EXECUTION COPY ================================================================================ STOCK PURCHASE AGREEMENT dated as of May 30, 2003 by and among FOX PAINE SEMINIS HOLDINGS, LLC, BANCA AFIRME, S.A., INSTITUCION DE BANCA MULTIPLE, AFIRME GRUPO FINANCIERO, AS TRUSTEE, UNDER THE IRREVOCABLE ADMINISTRATION AND PAYMENT TRUST NUMBER 167-5 (FIDEICOMISO IRREVOCABLE DE ADMINISTRACION Y PAGO NUMERO 167-5), SEMINIS ACQUISITION LLC, and SEMINIS MERGER CORP. ================================================================================ TABLE OF CONTENTS

Section 6.5. Further Assurances..................................................................... 18 Section 6.6. Public Announcements................................................................... 19 Section 6.7. Capitalization Matters................................................................. 19 ARTICLE VII CONDITIONS TO CONSUMMATION OF THE STOCK PURCHASE............................................................................... 19 Section 7.1. Conditions to Performance by Parent and Merger Sub..................................... 19 Section 7.2. Conditions to Performance by FPSH...................................................... 20 ARTICLE VIII TERMINATION; AMENDMENT; WAIVER......................................................... 23 Section 8.1. Termination............................................................................ 23 Section 8.2. Effect of Termination.................................................................. 24 Section 8.3. Fees and Expenses...................................................................... 24 Section 8.4. Amendment.............................................................................. 25 Section 8.5. Waiver................................................................................. 25 Section 8.6. Survival............................................................................... 25 Section 8.7. Sole Remedy............................................................................ 25 ARTICLE IX MISCELLANEOUS.......................................................................... 26 Section 9.1. Entire Agreement; Assignment........................................................... 26 Section 9.2. Severability........................................................................... 26 Section 9.3. Notices................................................................................ 26 Section 9.4. Governing Law; Consent to Jurisdiction; Waiver of Jury Trial........................... 28 Section 9.5. Specific Performance................................................................... 28 Section 9.6. Interpretation......................................................................... 29 Section 9.7. Parties in Interest.................................................................... 29 Section 9.8. Counterparts........................................................................... 29

Exhibit A Form of Stock Purchase Agreement for Additional Purchasers Exhibit B-1 Form of 15% Co-Investment Rights Agreement Exhibit B-2 Form of SPC Hurdle Co-Investment Rights Agreement Exhibit B-3 Form of FPSH Hurdle Co-Investment Rights Agreement Exhibit C Form of Parent FIRPTA Affidavit ARG Trust Disclosure Trust Parent Disclosure Schedule STOCK PURCHASE AGREEMENT THIS STOCK PURCHASE AGREEMENT, dated as of May 30, 2003 (this "Agreement"), is made by and among FOX PAINE SEMINIS HOLDINGS, LLC, a Delaware limited liability company ("FPSH"), BANCA AFIRME, S.A., INSTITUCION DE BANCA MULTIPLE, AFIRME GRUPO FINANCIERO, AS TRUSTEE, UNDER THE IRREVOCABLE ADMINISTRATION AND PAYMENT TRUST NUMBER 167-5 (FIDEICOMISO IRREVOCABLE DE ADMINISTRACION Y PAGO NUMERO 167-5), a Mexican trust (the "ARG Trust"), SEMINIS ACQUISITION LLC, a Delaware limited liability company ("Parent") and SEMINIS MERGER CORP., a Delaware corporation and a wholly-owned subsidiary of Parent ("Merger Sub"). WHEREAS, Parent, Merger Sub, and Seminis, Inc., a Delaware corporation (the "Company"), have entered into an Agreement and Plan of Merger (the "Merger Agreement"), of even date herewith, pursuant to which Merger Sub will merge with and into the Company (the "Merger") on the terms and conditions set forth therein; WHEREAS, after the Stockholders Meeting (as defined in the Merger Agreement) and immediately prior to the time that the Merger becomes effective under the DGCL (the "Effective Time"), Parent will have received as a contribution and Parent will own 41,554,346 shares of Class A Common Stock, par value $.01 per share, of the Company (the "Company Class A Common Stock") and 42,823,515 shares of Class B Common Stock, par value $.01 per share, of the Company (the "Company Class B Common Stock," and together with the Company Class A Common Stock, the "Company Common Stock") pursuant to the Contribution Agreement; WHEREAS, immediately following the Effective Time, the Company shall have authority to issue 205,000,000 shares of capital stock consisting of: (i) 200,000,000 shares of common stock, par value $.01 per share (the "New Company Common Stock"), 84,377,861 of which shares shall be issued and outstanding, and (ii) 5,000,000 shares of preferred stock, par value $.01 per share (the "Company Preferred Stock"), of which (A) 25,000 shares shall be designated Class A Redeemable Preferred Stock, par value $.01 per share (the "Company Class A Preferred Stock"), none of which shall be issued or outstanding, and (B) 25,000 shares shall be designated Class B Redeemable Preferred Stock, par value $.01 per share (the "Company Class B Preferred Stock"), 25,000 shares of which shall be issued and outstanding; WHEREAS, as of the date hereof, Merger Sub has authority to issue (i) 1,000 shares of common stock, par value $.01 per share (the "MS Common Stock"), 1,000 of which shares of MS Common Stock are issued and outstanding, and (ii) 1,000 shares of preferred stock, par value $.01 per share (the "MS Preferred Stock"), none of which shares is issued or outstanding; WHEREAS, immediately prior to the Effective Time, Merger Sub shall have authority to issue (i) 100,000,000 shares of MS Common Stock, 84,377,861 of which shares shall be issued and outstanding, and (ii) 1,000 shares of MS Preferred Stock, none of which shares shall be issued or outstanding; WHEREAS, Parent owns all of the outstanding shares of MS Common Stock on the date hereof and will own all of the outstanding shares of MS Common Stock immediately prior to the Effective Time; WHEREAS, in the Merger, each share of Company Common Stock owned by Parent will be cancelled and each share of MS Common Stock will be converted into one share of New Company Common Stock; WHEREAS, immediately following the Effective Time, the 84,377,861 shares of New Company Common Stock owned by Parent will represent all of the issued and outstanding shares of New Company Common Stock; WHEREAS, on the terms and subject to the conditions contained herein, Parent desires to sell and FPSH desires to purchase all of Parent's right, title and interest in and to the FPSH Sale Shares for an amount equal to the FPSH Purchase Price (the "FPSH Stock Purchase"); WHEREAS, on the terms and subject to the conditions contained herein, Parent desires to grant an option to the ARG Trust (the "ARG Option"), pursuant to which the ARG Trust shall have the right, but not the obligation, to purchase all of Parent's right, title and interest in and to 900,737 shares of New Company Common Stock owned by Parent (the "ARG Trust Sale Shares") for an aggregate purchase price of $3,062,506 (the "ARG Purchase Price") (the "ARG Trust Stock Purchase"); WHEREAS, on the terms and subject to the conditions contained herein, Parent desires to sell, and Merger Sub (as a constituent party to the Merger) desires that the Company (as the surviving party in the Merger) purchase all of Parent's right, title and interest in and to 6,411,953 shares of New Company Common Stock owned by Parent (the "Company Sale Shares") for an aggregate purchase price of $21,800,641 (the "Company Purchase Price") (the "Company Stock Purchase" and together with the FPSH Stock Purchase and the ARG Trust Stock Purchase, the "Stock Purchase"); WHEREAS, after the Closing and the closing of the Debt Financing (as defined in the Merger Agreement), Parent shall be liquidated pursuant to the terms of the LLC Agreement (as defined in the Contribution Agreement) and in such liquidation, Parent will distribute (i) the Cash Distribution to Savia, S.A. de C.V. ("Savia"), (ii) if the ARG Option is exercised, the right to receive the ARG Purchase Price to Savia, (iii) the right to receive the Additional Purchase Amount, if any, to Savia, (iv) shares of New Company Common Stock to the Persons (and in the amounts) set forth in Section 3.4(b) of the Parent Disclosure Schedule, and (v) all remaining assets, if any, including shares of New Company Common Stock not purchased pursuant to the ARG Option, to Savia; WHEREAS, the members of Parent and the board of directors of Merger Sub have determined that the Stock Purchase is fair to and in the best interests of their respective -2- corporation and stockholders or company and members (as applicable) and have approved the Stock Purchase and this Agreement; WHEREAS, FPSH, the ARG Trust, Parent and Merger Sub desire to make certain representations, warranties, covenants and agreements in connection with the Stock Purchase and also to prescribe various conditions to the Stock Purchase; and WHEREAS, Parent and Merger Sub desire to grant to FPSH certain rights with respect to the Merger, the Merger Agreement, the Contribution, the Contribution Agreement, the Debt Financing (as defined in the Merger Agreement) and the Financing Commitment Papers; NOW, THEREFORE, in consideration of the representations, warranties, covenants and agreements contained in this Agreement, the parties hereto agree as follows: ARTICLE I CERTAIN DEFINITIONS As used in this Agreement, the following terms shall have the respective meanings set forth below: "Additional Purchase Amount" means such amount, if any, equal to (i) the Additional Sale Shares, multiplied by (ii) $3.40. "Additional Purchaser" means any Person that agrees pursuant to the form of agreement attached hereto as Exhibit A, between the date hereof and the Closing Date, to purchase, and that purchases, on the Closing Date, shares of New Company Common Stock from Parent; provided, however, that the Additional Purchasers shall be comprised exclusively of bondholders of, and derivatives holders who are now creditors of, Pulsar Internacional, S.A. de C.V., with such bondholders entitled to purchase a maximum of 6,429,150 shares of New Company Common Stock from Parent and such derivatives holders entitled to purchase a maximum of 6,525,328 shares of New Company Common Stock from Parent. "Additional Sale Shares" means the aggregate number of shares of New Company Common Stock, if any, purchased by the Additional Purchasers; provided, however, that in no event shall the aggregate number of Additional Sale Shares exceed 12,954,478 shares of New Company Common Stock. "Affiliate" means any Person that directly, or indirectly, through one or more intermediaries, controls, or is controlled by, or is under common control with, the applicable Person. "Agreement" shall have the meaning set forth in the preamble. "ARG Option" shall have the meaning set forth in the recitals. "ARG Purchase Price" shall have the meaning set forth in the recitals. -3- "ARG Trust" shall have the meaning set forth in the preamble. "ARG Trust Disclosure Schedule" means the schedule of disclosures delivered to Parent and Merger Sub by the ARG Trust together with the execution of this Agreement. "ARG Trust Material Adverse Effect" shall have the meaning set forth in Section 5.1. "ARG Trust Sale Shares" shall have the meaning set forth in the recitals. "ARG Trust Stock Purchase" shall have the meaning set forth in the recitals. "Buyer Material Adverse Effect" means any event, change, circumstance, effect or state of facts that is or is reasonably expected to be materially adverse to FPSH after giving effect to the Stock Purchase and the Related Transactions, except to the extent that such adverse effect results from (i) general economic conditions or changes therein, (ii) financial or securities market fluctuations or conditions, (iii) changes in, or events or conditions affecting, the industries or businesses in which the Company and its Subsidiaries operate, or (iv) the announcement of the transactions contemplated by the Merger Agreement or the Letter of Intent (as defined in the Merger Agreement). "Cash Distribution" shall mean an amount equal to (i) $263,106,832 MINUS (ii) the product of the aggregate number of Additional Sale Shares multiplied by $3.40. "Closing" shall have the meaning set forth in Section 2.1. "Closing Date" shall have the meaning set forth in Section 2.1. "Code" means the Internal Revenue Code of 1986, as amended. "Company" shall have the meaning set forth in the recitals. "Company Class A Common Stock" shall have the meaning set forth in the recitals. "Company Class B Common Stock" shall have the meaning set forth in the recitals. "Company Class A Preferred Stock" shall have the meaning set forth in the recitals. "Company Class B Preferred Stock" shall have the meaning set forth in the recitals. "Company Common Stock" shall have the meaning set forth in the recitals. "Company Material Adverse Effect" means any event, change, circumstance, effect or state of facts that is or is reasonably expected to be materially adverse to (a) the business, results of operations, condition (financial or otherwise), assets or liabilities of the Company and its Subsidiaries, taken as a whole, or (b) the ability of the Company to consummate any of the transactions contemplated by this Agreement and the Related Agreements (other than the Indemnification Agreement), including the Stock Purchase and the Related Transactions (other than the transactions contemplated by the Indemnification Agreement), except to the extent that such adverse effect results from (i) general economic conditions or changes therein, (ii) financial -4- or securities market fluctuations or conditions, (iii) changes in, or events or conditions affecting, the industries or businesses in which the Company and its Subsidiaries operate, or (iv) the announcement of the transactions contemplated by the Merger Agreement or the Letter of Intent (as defined in the Merger Agreement). "Company Preferred Stock" shall have the meaning set forth in the recitals. "Company Purchase Price" shall have the meaning set forth in the recitals. "Company Sale Shares" shall have the meaning set forth in the recitals. "Company Securities" shall have the meaning set forth in Section 3.5(a). "Company Stock Purchase" shall have the meaning set forth in the recitals. "Contribution Agreement" means the Contribution Agreement of even date herewith, among Parent, Mr. Romo (as defined therein), Desarrollo Consolidado de Negocios, S.A. de C.V., the ARG Trust and the Contributors (as defined therein) providing for the contribution of Company Common Stock to Parent. "DGCL" means the General Corporation Law of the State of Delaware. "Effective Time" shall have the meaning set forth in the recitals. "Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder. "Financing Commitment Papers" shall mean, collectively, (i) the Commitment Letter, of even date herewith, from Citicorp North America, Inc., Citigroup Global Markets Inc., Harris Trust and Savings Bank, Bank of Montreal, CIBC World Markets Corp. and Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A., "Rabobank International," New York Branch, to Parent, (ii) the Fee Letter, of even date herewith, from Citicorp North America, Inc., Citigroup Global Markets Inc., Harris Trust and Savings Bank, Bank of Montreal, CIBC World Markets Corp. and Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A., "Rabobank International," New York Branch, to Parent, (iii) the Engagement Letter, of even date herewith, from Citigroup Global Markets Inc., Harris Trust and Savings Bank, Bank of Montreal, CIBC World Markets Corp. and Rabo Securities USA Inc. to Parent, and (iv) the Highly Confident Letter, of even date herewith, from Citigroup Global Markets Inc. to Parent. "FPSH" shall have the meaning set forth in the preamble. "FPSH Expenses" means all out-of-pocket fees and expenses actually and reasonably incurred by FPSH and its Affiliates or on their behalf in connection with any of the transactions contemplated by this Agreement and the Related Agreements (including fees and expenses payable to financing sources, consultants, counsel to any of the foregoing, accountants and legal counsel). "FPSH Material Adverse Effect" shall have the meaning set forth in Section 4.1. -5- "FPSH Purchase Price" shall mean the product of (i) the FPSH Sale Shares multiplied by (ii) $3.40. "FPSH Sale Shares" means (i) 70,972,409 shares of New Company Common Stock minus (ii) the aggregate number of Additional Sale Shares. "FPSH Stock Purchase" shall have the meaning set forth in the recitals. "GFA" shall have the meaning set forth in Section 8.3(c). "Governmental Entity" means any federal, state, local or foreign court or tribunal or administrative, governmental or regulatory body, agency or authority. "HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. "Indemnification Agreement" shall mean the Indemnification Agreement, of even date herewith, by and among FPSH, the ARG Trust, Desarrollo Consolidado de Negocios, S.A. de C.V., Desarrollo Empresarial Regiomontano, S.A. de C.V., Emprima, S.A. de C.V., Park Financial Group, Ltd (BVI), Savia, S.A. de C.V., Alfonso Romo Garza and Parent. "Lien" means, with respect to any asset (including any security), any security interests, liens, claims, charges, title defects, deficiencies or exceptions, mortgages, pledges, easements, encroachments, restrictions on use, rights-of-way, rights of first refusal, options, conditional sales or other title retention agreements, covenants, conditions or other similar restrictions (including restrictions on transfer) or other encumbrances of any nature whatsoever in respect of such asset. "Merger" shall have the meaning set forth in the recitals. "Merger Agreement" shall have the meaning set forth in the recitals. "Merger Sub" shall have the meaning set forth in the preamble. "Merger Sub Securities" shall have the meaning set forth in Section 3.5(b). "MS Common Stock" shall have the meaning set forth in the recitals. "MS Preferred Stock" shall have the meaning set forth in the recitals. "New Company Common Stock" shall have the meaning set forth in the recitals. "Parent" shall have the meaning set forth in the preamble. "Parent Disclosure Schedule" means the schedule of disclosures delivered by Parent and Merger Sub to FPSH and the ARG Trust together with the execution of this Agreement. "Parent Material Adverse Effect" means any event, change, circumstance, effect or state of facts that is or is reasonably expected to be materially adverse to the ability of Parent or -6- Merger Sub to consummate the transactions contemplated by this Agreement or the Related Agreements. "Person" means an individual, corporation, limited liability company, partnership, association, trust, unincorporated organization, other entity or "group" (as defined in the Exchange Act). "Related Agreements" means the Voting Agreement, the Merger Agreement, the Contribution Agreement, and the Indemnification Agreement. "Related Transactions" shall mean the transactions contemplated by the Related Agreements. "Savia" shall have the meaning set forth in the recitals. "Stock Purchase" shall have the meaning set forth in the recitals. "Stockholders' Agreement" means the Stockholders' Agreement, of even date herewith, by and among Merger Sub and the Persons listed on the signature pages thereto. "Subsidiary" means, with respect to any Person, any other Person, whether incorporated or unincorporated or domestic or foreign to the United States of which (a) such first Person or any other Subsidiary of such first Person is a general partner (excluding such partnerships where such first Person or any Subsidiary of such first Person does not have a majority of the voting interest in such partnership) or (b) at least a majority of the securities or other interests having by their terms ordinary voting power to elect a majority of the board of directors or others performing similar functions with respect to such corporation or other organization is, directly or indirectly, owned or controlled by such first Person or by any one or more of its Subsidiaries, or by such first Person and one or more of its Subsidiaries. "Voting Agreement" means the voting agreement, of even date herewith, among FPSH and the other Persons party thereto pursuant to which, among other things, each Person (other than FPSH) party thereto agrees to vote all shares of Company Common Stock beneficially owned by such Person in favor of the Merger. ARTICLE II THE STOCK PURCHASE Section 2.1. The Closing. The closing of the Stock Purchase (the "Closing") will be held at the offices of Wachtell, Lipton, Rosen & Katz, 51 West 52nd Street, New York, New York, at 10:00 a.m. New York City time (or such other place as the parties hereto may agree) on the first business day after satisfaction or waiver of the conditions set forth in Article VII (other than those conditions that are to be satisfied on the Closing Date, but subject to the satisfaction or waiver of such other conditions on the Closing Date) (the "Closing Date"). -7- Section 2.2. Purchase and Sale. Subject to the terms and conditions set forth herein, at the Closing, (a) Parent shall sell to FPSH (or one or more of its designated Affiliates) all of Parent's rights, title and interests in the FPSH Sale Shares, free and clear of any Lien, (b) Parent shall sell to the Company all of Parent's right, title and interest in the Company Sale Shares, free and clear of any Lien, and (c) if the ARG Option has been exercised, Parent shall sell to the ARG Trust all of Parent's right, title and interest in the ARG Trust Sale Shares, free and clear of any Lien. Section 2.3. ARG Option. Parent hereby grants to the ARG Trust the right, but not the obligation, to purchase the ARG Trust Sale Shares for the ARG Purchase Price in accordance with the terms hereof. The ARG Option can be exercised at any time on or before the third business day prior to the Closing Date by delivery to Parent of a written notice stating that the ARG Trust irrevocably exercises the ARG Option to purchase the ARG Trust Sale Shares pursuant to the terms of this Agreement. Exercise of the ARG Option shall constitute: (a) acknowledgment by the ARG Trust that Parent shall transfer the right to receive the ARG Purchase Price to Savia and an agreement by the ARG Trust that it is obligated to pay the ARG Purchase Price to Savia after such transfer; and (b) an agreement by the ARG Trust that Savia may receive or retain any cash dividends on its shares held by the ARG Trust in an amount equal to the ARG Purchase Price otherwise payable by Savia to ARG Trust in lieu of payment to Savia of the ARG Purchase Price by ARG Trust. Section 2.4. Delivery of Sale Shares; Payment. (a) At the Closing, (i) Parent shall deliver or cause to be delivered to FPSH (or one or more of its designated Affiliates) one or more stock certificates representing in the aggregate the FPSH Sale Shares, duly endorsed in blank for transfer or accompanied by duly executed stock powers and all applicable stock transfer stamps and other instruments requisite to proper transfer, all in proper form, (ii) Parent shall deliver or cause to be delivered to the Company one or more stock certificates representing in the aggregate the Company Sale Shares, duly endorsed in blank for transfer or accompanied by duly executed stock powers and all applicable stock transfer stamps and other instruments requisite to proper transfer, all in proper form, (iii) if the ARG Option has been exercised, Parent shall deliver or cause to be delivered to the ARG Trust one or more stock certificates representing in the aggregate the ARG Trust Sale Shares, duly endorsed in blank for transfer or accompanied by duly executed stock powers and all applicable stock transfer stamps and other instruments requisite to proper transfer, all in proper form, and (iv) if the ARG Option has not been exercised, Parent shall deliver or cause to be delivered to Savia one or more stock certificates representing in the aggregate the ARG Trust Sale Shares, duly endorsed in blank for transfer or accompanied by duly executed stock powers and all applicable stock transfer stamps and other instruments requisite to proper transfer, all in proper form. (b) At the Closing, (i) FPSH (or one or more of its designated Affiliates) shall pay to Parent by wire transfer of immediately available funds (to the account designated by Parent in writing not less than three days prior to Closing) the FPSH Purchase Price, (ii) Parent shall cause the Company to pay to Parent by wire transfer of immediately available funds (to the account designated by Parent in writing not less than three days prior to Closing) the Company Purchase Price, and (iii) if the ARG Option has been exercised, the transactions contemplated by the last sentence of Section 2.3 shall occur. -8- ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB Parent and Merger Sub hereby represent and warrant to FPSH and the ARG Trust as follows: Section 3.1. Organization. Each of Parent and Merger Sub is duly organized, validly existing and in good standing under the laws of the State of Delaware and has all requisite corporate or similar power and authority to own, lease and operate its properties and to carry on its business as now being conducted, except where the failure to be in good standing or to have such corporate or similar power and authority would not, in the aggregate, have a Parent Material Adverse Effect. Each of Parent and Merger Sub was formed solely for the purpose of engaging in the transactions contemplated by this Agreement, the Merger Agreement and the Contribution Agreement and the other transactions contemplated by the Related Agreements. Other than Parent's 100% ownership interest in Merger Sub and as contemplated by the Contribution Agreement, neither Parent, nor Merger Sub owns any equity, debt or similar interest in any Person. Parent and Merger Sub have delivered to FPSH and the ARG Trust accurate and complete copies of the certificate of incorporation and bylaws (or other governing documents), as currently in effect, of Parent and Merger Sub. Neither Parent nor Merger Sub has engaged in any activities, owned any assets or been subject to any liabilities, except as is necessary to effect the Merger, the Stock Purchase and the Contribution. Neither Parent nor Merger Sub has any Indebtedness (as defined in the Merger Agreement) or liabilities, other than as contemplated by this Agreement, the Related Agreements and the Financing Commitment Papers. Section 3.2. Authority. Each of Parent and Merger Sub has all necessary power and authority to execute and deliver this Agreement and any Related Agreement to which it is a party and to consummate the transactions contemplated hereby and thereby. The execution and delivery of this Agreement and any Related Agreement to which it is a party and the consummation of the transactions contemplated hereby and thereby have been duly and validly authorized by the boards of directors (or other governing body) and stockholders or members (as applicable) of each of Parent and Merger Sub, and no other corporate or similar proceedings on the part of Parent or Merger Sub are necessary to authorize this Agreement or any Related Agreement to which it is a party or to consummate the transactions contemplated hereby or thereby. This Agreement and any Related Agreement to which it is a party have been duly and validly executed and delivered by each of Parent and Merger Sub and, assuming due and valid authorization, execution and delivery by the other party or parties hereto or thereto, constitute the valid, legal and binding agreements of each of Parent and Merger Sub, enforceable against each of Parent and Merger Sub in accordance with their terms. Section 3.3. Consents and Approvals; No Violations. Except as set forth on Section 3.3 of the Parent Disclosure Schedule, no filing with or notice to, and no permit, authorization, consent or approval of, any Governmental Entity or any other Person is necessary for the execution and delivery by Parent and Merger Sub of this Agreement or the consummation by Parent and Merger Sub of the transactions contemplated by this Agreement and the Related Agreements, except where the failure to obtain such permits, authorizations, consents or -9- approvals or to make such filings or give such notice would not have a Parent Material Adverse Effect or a Company Material Adverse Effect. Neither the execution, delivery and performance of this Agreement by Parent and Merger Sub, nor the consummation by Parent and Merger Sub of the transactions contemplated by this Agreement and the Related Agreements will (a) conflict with or result in any breach of any provision of the certificates of incorporation or bylaws (or similar governing documents) of Parent or Merger Sub, (b) result in a violation or breach of, or constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, amendment, cancellation or acceleration, or result in the creation of a Lien on any property or asset of Parent or Merger Sub, or trigger any rights of first refusal) under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, lease, license, contract, agreement or other instrument or obligation to which Parent or Merger Sub is a party or by which either of them or their respective properties or assets may be bound, or (c) violate any order, writ, injunction, decree, law, statute, rule or regulation applicable to Parent, Merger Sub or any of their respective properties or assets, except in the case of (b) or (c) above for violations, breaches, defaults or other occurrences that would not, individually or in the aggregate, have a Parent Material Adverse Effect or a Company Material Adverse Effect. Section 3.4. Contributions to Parent; Distributions from Parent. (a) On the date hereof, Parent entered into the Contribution Agreement with the Persons set forth in Section 3.4(a) of the Parent Disclosure Schedule pursuant to which, immediately prior to the Effective Time, such Persons have agreed to transfer to Parent all rights, title and interests in the shares of Company Common Stock set forth next to such Person's name in Section 3.4(a) of the Parent Disclosure Schedule, in each case, free and clear of any Lien and in accordance with the terms of the Contribution Agreement. (b) Immediately after the Closing and the closing of the Debt Financing (as defined in the Merger Agreement), Parent shall be liquidated pursuant to the terms of the LLC Agreement (as defined in the Contribution Agreement) and in such liquidation, Parent will distribute (i) the Cash Distribution to Savia, (ii) if the ARG Option is exercised, the right to receive the ARG Purchase Price to Savia, (iii) the right to receive the Additional Purchase Amount, if any, to Savia, (iv) shares of New Company Common Stock to the Persons (and in the amounts) set forth in Section 3.4(b) of the Parent Disclosure Schedule and (v) all remaining assets, if any, including shares of New Company Common Stock not purchased pursuant to the ARG Option, to Savia. Section 3.5. Capitalization. (a) Immediately following the Effective Time and immediately prior to the Closing, the authorized capital stock of the Company shall consist of (i) 200,000,000 shares of New Company Common Stock, 84,377,861 shares of which shall be issued and outstanding and owned exclusively by Parent, and (ii) 5,000,000 shares of Company Preferred Stock, (A) 25,000 shares of which shall be designated as shares of Company Class A Preferred Stock, none of which shall be issued or outstanding, and (B) 25,000 shares of which shall be designated as shares of Company Class B Preferred Stock, 25,000 shares of which shall be issued and outstanding. Except (w) as set forth in the preceding sentence, (x) the options to purchase shares of New Company Common Stock granted under the Amended and Restated Seminis, Inc. 1998 -10- Stock Option Plan which are or become Retained Options (as defined in the Merger Agreement) in accordance with any agreements among Parent, FPSH and any individual owning such Retained Options (as defined in the Merger Agreement), (y) as contemplated by this Agreement, and (z) as provided in the employment agreements and letter agreements set forth in Section 3.5 of the Parent Disclosure Schedule, immediately following the Effective Time and immediately prior to the Closing, there will be no outstanding (i) shares of capital stock or other voting securities of the Company, (ii) securities of the Company convertible into or exchangeable for shares of capital stock or voting securities of the Company, (iii) options or other rights to acquire from the Company, or obligations of the Company to issue or sell, any capital stock, voting securities or securities convertible into or exchangeable for capital stock or voting securities of the Company, or (iv) equity equivalents, interests in the ownership or earnings of the Company or other similar rights (collectively, "Company Securities"). Other than pursuant to this Agreement and the Related Agreements (including the Stockholders' Agreement to be executed at the Closing), there are no outstanding obligations of the Company to repurchase, redeem or otherwise acquire any Company Securities. (b) As of the date hereof, Merger Sub has authority to issue (i) 1,000 shares of MS Common Stock, 1,000 of which shares are issued and outstanding, all of which issued and outstanding shares are owned by Parent, and (ii) 1,000 shares of MS Preferred Stock, none of which shares is issued or outstanding. Immediately prior to the Effective Time, (i) Merger Sub shall have authority to issue 100,000,000 shares of MS Common Stock, 84,377,861 of which shares shall be issued and outstanding and all of which will be owned by Parent, and (ii) 1,000 shares of MS Preferred Stock, none of which shares shall be issued or outstanding. Except as set forth in the preceding sentence, there are no outstanding (i) shares of capital stock or other voting securities of Merger Sub, (ii) securities of Merger Sub convertible into or exchangeable for shares of capital stock or voting securities of Merger Sub, (iii) options or other rights to acquire from Merger Sub, or obligations of Merger Sub to issue or sell, any capital stock, voting securities or securities convertible into or exchangeable for capital stock or voting securities of Merger Sub, or (iv) equity equivalents, interests in the ownership or earnings of Merger Sub or other similar rights (collectively, "Merger Sub Securities"). There are no outstanding obligations of Merger Sub to repurchase, redeem or otherwise acquire any Merger Sub Securities. Section 3.6. Ownership of Stock. (a) On the Closing Date, following the Effective Time and prior to the Closing, Parent will be the owner, beneficially and of record, of the FPSH Sale Shares, free and clear of any Lien and will transfer to FPSH (or one or more of its Affiliates) good and valid title to such FPSH Sale Shares free and clear of any Lien. Except as set forth in Section 3.6(a) of the Parent Disclosure Schedule, on the Closing Date, Parent will have no beneficial interest in any Company Securities other than the FPSH Sale Shares, the Company Sale Shares, the ARG Trust Sale Shares and the Additional Sale Shares, if any. (b) On the Closing Date, following the Effective Time and prior to the Closing, Parent will be the owner, beneficially and of record, of the Company Sale Shares, free and clear of any Lien and will transfer to the Company good and valid title to such Company Sale Shares free and clear of any Lien. -11- (c) On the Closing Date, following the Effective Time and prior to the Closing, Parent will be the owner, beneficially and of record, of the ARG Trust Sale Shares, free and clear of any Lien and, (i) if the ARG Option has been exercised, will transfer to the ARG Trust good and valid title to such ARG Trust Sale Shares free and clear of any Lien, or (ii) if the ARG Option has not been exercised, will transfer to Savia good and valid title to such ARG Trust Sale Shares free and clear of any Lien. Section 3.7. Proxy Statement; Information. (a) None of the information supplied by Parent or Merger Sub in writing specifically for inclusion in the Proxy Statement (as defined in the Merger Agreement) will, at the time filed with the SEC (as defined in the Merger Agreement), at the time first mailed to the Company's stockholders or at the time of the Stockholders Meeting (as defined in the Merger Agreement), contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. (b) A copy of all written material non-public financial information with respect to the Company or any of its Subsidiaries that Parent or Savia or their respective officers, directors, employees, investment bankers, attorneys, agents or representatives has provided to FPSH or any of its Affiliates or their respective investment bankers, attorneys, agents or representatives, has been provided or made available to the Special Committee (as defined in the Merger Agreement) or its advisors. (c) All material information requested in a letter from the Special Committee to Mr. Alfonso Romo Garza, as Chief Executive Officer and controlling stockholder (through Savia) of the Company, dated January 7, 2003, has, to Parent's knowledge, been provided or made available to the Special Committee (as defined in the Merger Agreement) or its advisors and to FPSH or its advisors. Section 3.8. Brokers. No broker, finder or investment banker is entitled to any brokerage, finder's or other fee or commission in connection with the transactions contemplated by this Agreement and the Related Agreements based upon arrangements made by or on behalf of Parent or Merger Sub. Section 3.9. Acknowledgment. Each of Parent and Merger Sub hereby acknowledges that (a) in connection with FPSH entering into the Stock Purchase Agreement, FPSH is relying upon the representations, warranties and covenants of (i) each of Parent and Merger Sub contained in this Agreement, and (ii) each of Parent, the Contributors (as defined in the Contribution Agreement), Mr. Romo (as defined in the Contribution Agreement), Desarrollo Consolidado de Negocios, S.A. de C.V. and the ARG Trust contained in the Contribution Agreement, and (b) FPSH shall be entitled to rely upon and enforce the representations, warranties and covenants as provided in this Agreement and in the Indemnification Agreement. -12- ARTICLE IV REPRESENTATIONS AND WARRANTIES OF FPSH FPSH hereby represents and warrants to Parent and the ARG Trust as follows: Section 4.1. Organization. FPSH is duly organized, validly existing and in good standing under the laws of the State of Delaware and has all requisite corporate or similar power and authority to own, lease and operate its properties and to carry on its business as now being conducted, except where the failure to be in good standing or to have such corporate or similar power and authority would not, in the aggregate, have an FPSH Material Adverse Effect. FPSH was formed solely for the purpose of engaging in the transactions contemplated by this Agreement. FPSH has not engaged in any activities, owned any assets or been subject to any liabilities, other than in connection with or as contemplated by this Agreement, the Related Agreements and the Financing Commitment Papers. The term "FPSH Material Adverse Effect" means any event, change, circumstance or effect that is or is reasonably expected to be materially adverse to the ability of FPSH to consummate the Stock Purchase. Section 4.2. Authority. FPSH has all necessary power and authority to execute and deliver this Agreement and any Related Agreement to which it is a party and to consummate the transactions contemplated hereby and thereby. The execution and delivery of this Agreement and any Related Agreement to which it is a party and the consummation of the transactions contemplated hereby and thereby have been duly and validly authorized by the manager and the sole member of FPSH, and no other corporate or similar proceedings on the part of FPSH are necessary to authorize this Agreement or any Related Agreement to which it is a party or to consummate the transactions contemplated hereby or thereby. This Agreement and any Related Agreement to which it is a party have been duly and validly executed and delivered by FPSH and, assuming due and valid authorization, execution and delivery by the other parties hereto or thereto, constitute valid, legal and binding agreements of FPSH, enforceable against FPSH in accordance with their terms. Section 4.3. Consents and Approvals; No Violations. No filing with or notice to, and no permit, authorization, consent or approval of, any Governmental Entity or any other Person is necessary for the execution and delivery by FPSH of this Agreement or the consummation by FPSH of the transactions contemplated hereby, except (a) in connection with the requirements of the HSR Act and (b) where the failure to obtain such permits, authorizations, consents or approvals or to make such filings or give such notice would not have an FPSH Material Adverse Effect. Neither the execution, delivery and performance of this Agreement by FPSH nor the consummation by FPSH of the transactions contemplated hereby will (a) conflict with or result in any breach of any provision of the governing documents of FPSH, (b) result in a violation or breach of, or constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, amendment, cancellation or acceleration, or result in the creation of a Lien on any property or asset of FPSH, or trigger any rights of first refusal) under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, lease, license, contract, agreement or other instrument or obligation to which FPSH is a party or by which FPSH or its properties or assets may be bound, or (c) violate any order, writ, injunction, decree, law, statute, rule or regulation applicable to FPSH or its properties or assets, except in the case of (b) or (c) -13- above for violations, breaches, defaults or other occurrences that would not, individually or in the aggregate, have an FPSH Material Adverse Effect. Section 4.4. Proxy Statement. None of the information supplied by FPSH in writing specifically for inclusion in the Proxy Statement (as defined in the Merger Agreement) will, at the time filed with the SEC (as defined in the Merger Agreement), at the time first mailed to the Company's stockholders or at the time of the Stockholders Meeting (as defined in the Merger Agreement), contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. Section 4.5. Brokers. No broker, finder or investment banker is entitled to any brokerage, finder's or other fee or commission in connection with the transactions contemplated by this Agreement and the Related Agreements based upon arrangements made by or on behalf of FPSH. Section 4.6. Purchase for Investment. FPSH acknowledges that it (a) has such knowledge and experience in business and financial matters with respect to investments in securities to enable it to understand and evaluate the risks of the investment contemplated hereby and form an investment decision with respect thereto and is able to bear the risk of such investment for an indefinite period and to afford a complete loss thereof, (b) is an "accredited investor" as defined in Rule 501 of Regulation D under the Securities Act of 1933, as amended and (c) has had the opportunity to (i) ask such questions as it has deemed necessary of, and to receive answers from, representatives of Parent concerning the terms of its purchase of the FPSH Sale Shares contemplated hereby and the merits and risks of investing in such securities and (ii) to obtain such additional information which Parent possesses or can acquire without unreasonable effort or expense. Section 4.7. Financial Capability. FPSH will have on the Closing Date sufficient cash and cash equivalents (and has provided Parent with evidence thereof) to purchase the FPSH Sale Shares and to consummate the transactions contemplated by this Agreement, including payments of fees and expenses contemplated hereunder. ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE ARG TRUST The ARG Trust hereby represents and warrants to Parent and FPSH as follows: Section 5.1. Organization. The ARG Trust is duly created under the laws of the United Mexican States and has all requisite power and authority to own, lease and operate its properties and to carry on its business as now being conducted, except where the failure to have such power and authority would not, in the aggregate, have an ARG Trust Material Adverse Effect. The term "ARG Trust Material Adverse Effect" means any event, change, circumstance or effect that is or is reasonably expected to be materially adverse to the ability of the ARG Trust to consummate the ARG Trust Stock Purchase. -14- Section 5.2. Authority. The ARG Trust has all necessary power and authority to execute and deliver this Agreement and any Related Agreement to which it is a party and to consummate the transactions contemplated hereby and thereby. The execution and delivery of this Agreement and any Related Agreement to which it is a party and the consummation of the transactions contemplated hereby and thereby have been duly and validly authorized by the technical committee of the ARG Trust, and, except as set forth in Section 5.2 of the ARG Trust Disclosure Schedule, no other proceedings on the part of the ARG Trust are necessary to authorize this Agreement or any Related Agreement to which it is a party or to consummate the transactions contemplated hereby or thereby. This Agreement and any Related Agreement to which it is a party have been duly and validly executed and delivered by the ARG Trust and, assuming due and valid authorization, execution and delivery by the other parties hereto or thereto, constitute valid, legal and binding agreements of the ARG Trust, enforceable against the ARG Trust in accordance with their terms. Section 5.3. Consents and Approvals; No Violations. Except as set forth in Section 5.3 of the ARG Disclosure Schedule, no filing with or notice to, and no permit, authorization, consent or approval of, any Governmental Entity or any other Person is necessary for the execution and delivery by the ARG Trust of this Agreement or the consummation by the ARG Trust of the transactions contemplated hereby, except where the failure to obtain such permits, authorizations, consents or approvals or to make such filings or give such notice would not have an ARG Trust Material Adverse Effect. Neither the execution, delivery and performance of this Agreement by the ARG Trust nor the consummation by the ARG Trust of the transactions contemplated hereby will (a) conflict with or result in any breach of any provision of the governing documents of the ARG Trust, (b) result in a violation or breach of, or constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, amendment, cancellation or acceleration, or result in the creation of a Lien on any property or asset of the ARG Trust, or trigger any rights of first refusal) under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, lease, license, contract, agreement or other instrument or obligation to which the ARG Trust is a party or by which the ARG Trust or its properties or assets may be bound, or (c) violate any order, writ, injunction, decree, law, statute, rule or regulation applicable to the ARG Trust or its properties or assets, except in the case of (b) or (c) above for violations, breaches, defaults or other occurrences that would not, individually or in the aggregate, have an ARG Trust Material Adverse Effect. Section 5.4. Proxy Statement. None of the information supplied by the ARG Trust in writing specifically for inclusion in the Proxy Statement (as defined in the Merger Agreement) will, at the time filed with the SEC (as defined in the Merger Agreement), at the time first mailed to the Company's stockholders or at the time of the Stockholders Meeting (as defined in the Merger Agreement), contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. Section 5.5. Brokers. No broker, finder or investment banker is entitled to any brokerage, finder's or other fee or commission in connection with the transactions contemplated by this Agreement and the Related Agreements based upon arrangements made by or on behalf of the ARG Trust. -15- Section 5.6. Purchase for Investment. The ARG Trust acknowledges that its technical committee (a) has such knowledge and experience in business and financial matters with respect to investments in securities to enable it to understand and evaluate the risks of the investment contemplated hereby and form an investment decision with respect thereto and is able to bear the risk of such investment for an indefinite period and to afford a complete loss thereof, (b) is an "accredited investor" as defined in Rule 501 of Regulation D under the Securities Act of 1933, as amended and (c) has had the opportunity to (i) ask such questions as it has deemed necessary of, and to receive answers from, representatives of Parent concerning the terms of its purchase of the ARG Trust Sale Shares contemplated hereby and the merits and risks of investing in such securities and (ii) to obtain such additional information which Parent possesses or can acquire without unreasonable effort or expense. ARTICLE VI COVENANTS Section 6.1. Merger Agreement; Contribution Agreement; Financing Commitment Papers. (a) Parent and Merger Sub hereby acknowledge and agree that pursuant to this Agreement, Section 9.8(b) of the Merger Agreement and Section 8.7(b) of the Contribution Agreement, FPSH shall be a third party beneficiary of the Merger Agreement and the Contribution Agreement. As a third party beneficiary of the Merger Agreement, FPSH shall have the right to directly enforce Sections 6.10 (No Solicitation), 8.3 (Fees and Expenses), 8.4 (Amendment) and 8.5 (Waiver) of the Merger Agreement. As a third party beneficiary of the Merger Agreement and the Contribution Agreement, (i) FPSH shall have the right to exercise any right (or enforce any obligation, covenant or condition) under the Merger Agreement and the Contribution Agreement exercisable (or enforceable) by Parent or Merger Sub (to the extent that Parent or Merger Sub shall not have exercised or enforced such right, obligation, covenant or condition), (ii) representations, warranties or covenants made to Parent or Merger Sub in the Merger Agreement and the Contribution Agreement shall be deemed made to (and, with respect to covenants, shall be enforceable (to the extent that Parent or Merger Sub has not enforced such covenant) by) FPSH, and (iii) anything under the Merger Agreement and the Contribution Agreement that must be approved by or acceptable to Parent or Merger Sub must also be approved or accepted by FPSH; provided, however, that the foregoing shall not grant to FPSH the right to amend or waive any obligation, covenant or condition under the Merger Agreement or the Contribution Agreement without the written consent of Parent. (b) Parent and Merger Sub hereby covenant and agree that (i) without the prior written consent of FPSH, neither Parent nor Merger Sub shall waive any obligation, covenant or condition under the Merger Agreement or the Contribution Agreement, (ii) Parent and Merger Sub shall provide to FPSH any notice under the Merger Agreement and the Contribution Agreement received from any other party thereto within one day of receipt of such notice by Parent or Merger Sub and neither Parent nor Merger Sub shall deliver any notice under the Merger Agreement or the Contribution Agreement to any other party thereto without the prior written consent of FPSH, and (iii) upon the request and at the direction of FPSH, Parent and Merger Sub -16- shall exercise or enforce any rights under the Merger Agreement or the Contribution Agreement specified by FPSH; provided, however, that the foregoing shall not grant to FPSH the right to amend or waive any obligation, covenant or condition under the Merger Agreement or the Contribution Agreement without the written consent of Parent. (c) Parent hereby acknowledges and agrees that (i) FPSH (through Parent) shall have the right to exercise any right (or enforce any obligation, covenant or condition) under the Financing Commitment Papers exercisable or enforceable by Parent (to the extent that Parent shall not have exercised or enforced such right), and (ii) anything under the Financing Commitment Papers that must be approved by or acceptable to Parent must also be approved or accepted by FPSH. Parent hereby covenants that (x) without the prior written consent of FPSH, it shall not amend, modify or waive any obligation, covenant or condition under any of the Financing Commitment Papers, (y) it shall provide to FPSH any notice under the Financing Commitment Papers received from any other party thereto within one day of receipt of such notice by Parent and Parent shall not deliver any notice under any of the Financing Commitment Papers to any other party thereto without the prior written consent of FPSH, and (z) upon the request and at the direction of FPSH, Parent shall exercise or enforce any rights under the Financing Commitment Papers specified by FPSH; provided, however, that the foregoing shall not grant to FPSH the right to amend or waive any obligation, covenant or condition under the Financing Commitment Papers without the written consent of Parent. Section 6.2. Pre-Closing Conduct. Parent, Merger Sub, FPSH and the ARG Trust hereby covenant and agree that neither FPSH, nor the ARG Trust, nor Parent, nor Merger Sub shall take any action that would make any of the representations or warranties of Parent, Merger Sub, the ARG Trust or FPSH contained in this Agreement or the Related Agreements untrue or incorrect as of the date hereof or the Closing Date or would result in any of the conditions set forth in Article VII not being satisfied. Section 6.3. Notification of Certain Matters. The parties hereto shall give prompt notice to one another of (a) the occurrence or nonoccurrence of any event the occurrence or nonoccurrence of which would be likely to cause (i) any representation or warranty contained in this Agreement or the Related Agreements to be untrue or inaccurate, or (ii) any covenant, condition or agreement contained in this Agreement or the Related Agreements not to be complied with or satisfied, and (b) any failure of any party hereto or to any Related Agreement to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it under this Agreement or the Related Agreements; provided, however, that the delivery of any notice pursuant to this Section 6.3 shall not affect the representations, warranties or covenants of the parties hereto or limit or otherwise affect the remedies available to any party hereunder. Section 6.4. Additional Agreements, Reasonable Best Efforts. (a) Prior to the Closing Date, upon the terms and subject to the conditions of this Agreement, each of FPSH, the ARG Trust, Parent and Merger Sub agrees to use its reasonable best efforts to take, or cause to be taken, all actions, and to do, or cause to be done, all things necessary, proper or advisable under any applicable laws, rules or regulations to consummate and make effective as promptly as practicable the Stock Purchase and the Related Transactions and the other transactions contemplated by this Agreement and the Related Agreements, includ- -17- ing (i) the preparation and filing of all forms, registrations and notices required to be filed to consummate the Stock Purchase and the Related Transactions and the other transactions contemplated hereby and thereby and the taking of such actions as are necessary to obtain any requisite approvals, consents, orders, exemptions or waivers by any third party, including any Governmental Entity, (ii) to make an appropriate filing of a Notification and Report Form pursuant to the HSR Act (and to make such other filings as are required under laws, rules and regulations in foreign jurisdictions governing antitrust or merger control matters) with respect to the transactions contemplated hereby as promptly as practicable after the date hereof and to supply as promptly as practicable any additional information and documentary material that may be requested pursuant to the HSR Act (or pursuant to such foreign laws, rules or regulations), (iii) the preparation of any Financing Documents (as defined in the Merger Agreement) reasonably requested by FPSH or Parent, and (iv) the satisfaction of the conditions to the consummation of the Stock Purchase and the Related Transactions. In addition, no party hereto shall take any action after the date hereof that would reasonably be expected to materially delay the obtaining of, or result in not obtaining, any permission, approval or consent from any Governmental Entity necessary to be obtained prior to the consummation of the Stock Purchase and the Related Transactions. (b) Each of the parties hereto agrees to use its reasonable efforts to assist the other parties hereto in connection with structuring or obtaining any financing for Parent and/or the Company and its Subsidiaries in connection with consummation of the Merger, and each of the parties shall use its reasonable efforts to obtain such financing for Parent and/or the Company and its Subsidiaries. (c) Prior to the Effective Time, each party shall promptly consult with the other parties hereto with respect to, provide any necessary information with respect to and provide the other (or its counsel) copies of, all filings made by such party with any Governmental Entity or any other information supplied by such party to a Governmental Entity in connection with this Agreement, the Related Agreements and the transactions contemplated hereby and thereby. Each party hereto shall promptly inform the other of any communication from any Governmental Entity regarding the Stock Purchase or any of the Related Transactions. If any party hereto or Affiliate thereof receives a request for additional information or documentary material from any such Governmental Entity with respect to the Stock Purchase or the Related Transactions, then such party will endeavor in good faith to make, or cause to be made, as soon as reasonably practicable and after consultation with the other party, an appropriate response in compliance with such request. Section 6.5. Further Assurances. (a) Parent, Merger Sub and the ARG Trust shall use their reasonable best efforts to implement the provisions of this Agreement, and, for such purpose, at the request of FPSH, will, at or after the Closing, promptly execute and deliver, or cause to be so executed and delivered, such documents to FPSH or the Company and take such further action as FPSH may deem reasonably necessary or desirable to facilitate or better evidence the consummation of the transactions contemplated hereby. -18- (b) FPSH shall use its reasonable best efforts to implement the provisions of this Agreement, and, for such purpose, at the request of Parent or Merger Sub, will, at or after the Closing, promptly execute and deliver, or cause to be so executed and delivered, such documents to Parent or Merger Sub, and take such further action as Parent or Merger Sub may deem reasonably necessary or desirable to facilitate or better evidence the consummation of the transactions contemplated hereby. (c) Parent shall cause the Company to become a party to this Agreement immediately following consummation of the Merger. Section 6.6. Public Announcements. The parties will consult with each other before issuing any press release or otherwise making any public statements with respect to this Agreement, the Related Agreements, the Merger, the Related Transactions or the other transactions contemplated hereby or thereby, and shall not issue any such press release or make any such public statement without the prior consent of the other parties hereto (which consent shall not be unreasonably withheld or delayed), except as may be required by applicable law or by obligations pursuant to any listing agreement with any national securities exchange or national market system to which any party or its Affiliates is a party. The parties hereto have agreed on the text of the joint press release by which announcement of the execution of this Agreement will be made. Section 6.7. Capitalization. (a) Parent shall not permit Merger Sub or commit the Surviving Corporation (as defined in the Merger Agreement) to, and Merger Sub shall not, incur, or become responsible for, any Indebtedness (as defined in the Merger Agreement) or other liabilities, other than as reasonably required to fulfill their respective obligations under this Agreement, the Related Agreements or the Financing Commitment Papers. (b) At least five days prior to the Effective Time, (i) Parent shall cause Merger Sub to amend its certificate of incorporation to authorize 100,000,000 shares of MS Common Stock, and (ii) Parent shall cause Merger Sub to issue to Parent an additional 84,376,861 shares of MS Common Stock so that immediately prior to the Effective Time, Parent shall own all of the outstanding 84,377,861 shares of MS Common Stock. ARTICLE VII CONDITIONS TO CONSUMMATION OF THE STOCK PURCHASE Section 7.1. Conditions to Performance by Parent and Merger Sub. The obligation of Parent and Merger Sub to consummate the Stock Purchase is subject to the satisfaction (or waiver) at or prior to the Closing Date of each of the following conditions: (a) Accuracy of Representations and Warranties. The representations and warranties made by FPSH herein, disregarding all qualifications and exceptions contained herein relating to materiality or FPSH Material Adverse Effect or words of similar import, shall be true and correct on the date hereof and on the Closing Date as if made on and as of such dates (except -19- for representations and warranties that are made as of a specified date, which shall be true and correct only as of such specified date) with only such exceptions as would not reasonably be expected to have, individually or in the aggregate, an FPSH Material Adverse Effect. (b) Compliance with Covenants. FPSH shall have performed in all material respects (or with respect to any obligation or agreement qualified by materiality or FPSH Material Adverse Effect, in all respects) all obligations and agreements, and complied in all material respects (or with respect to any covenant qualified by materiality or FPSH Material Adverse Effect, in all respects) with all covenants, contained in this Agreement to be performed or complied with by FPSH prior to or on the Closing Date. (c) Officer's Certificates. Parent shall have received a certificate of FPSH, dated as of the Closing Date, signed by an executive officer of FPSH to evidence satisfaction of the conditions set forth in Sections 7.1(a) and (b). (d) Co-Investment Rights Agreements. The Company and Desarrollo Consolidado de Negocios, S.A. de C.V. shall have executed and delivered the 15% Co-Investment Rights Agreement and the SPC Hurdle Co-Investment Rights Agreement in form and substance substantially identical to the forms attached hereto as Exhibits B-1 and B-2 and the Company and FPSH shall have executed and delivered the FPSH Hurdle Co-Investment Rights Agreement in form and substance identical to the form attached hereto as Exhibit B-3, with the number of Co-Investment Rights granted pursuant to the SPC Hurdle Co-Investment Rights Agreement, on the one hand, and FPSH Hurdle Co-Investment Rights Agreement, on the other hand, determined in accordance with the letter, of even date herewith, from FPSH to Desarrollo Consolidado de Negocios, S.A. de C.V. (e) [Reserved] (f) Conditions to the Merger. The conditions to the Merger set forth in Sections 7.1(b) and 7.2 (other than Sections 7.2(c) and 7.2(d)) of the Merger Agreement shall have been satisfied or waived, and the Effective Time shall have occurred. (g) Closings of the Merger and the Debt Financing. The closing of the Merger and the Debt Financing (as defined in the Merger Agreement) shall occur substantially concurrently with the Closing. (h) Statutes; Court Orders. No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated, issued or enforced by any Governmental Entity that prohibits, restrains, enjoins, precludes or restricts the consummation of the Stock Purchase or the Related Transactions. Section 7.2. Conditions to Performance by FPSH. The obligation of FPSH to consummate the Stock Purchase is subject to the satisfaction (or waiver) at or prior to the Closing Date of each of the following conditions: (a) Accuracy of Representations and Warranties. -20- (i) The representations and warranties made herein by Parent, Merger Sub and the ARG Trust, disregarding all qualifications and exceptions contained herein relating to materiality, Parent Material Adverse Effect, ARG Trust Material Adverse Effect and Company Material Adverse Effect or words of similar import, shall be true and correct on the date hereof and on the Closing Date as if made on and as of such dates (except for representations and warranties that are made as of a specified date, which shall be true and correct only as of such specified date) with only such exceptions as would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect, an ARG Trust Material Adverse Effect, a Company Material Adverse Effect or a Buyer Material Adverse Effect. (ii) The representations and warranties made in the Contribution Agreement by Parent, the Contributors (as defined in the Contribution Agreement), Mr. Romo (as defined in the Contribution Agreement), the ARG Trust and Mexican SPC (as defined in the Contribution Agreement), disregarding all qualifications and exceptions contained therein relating to materiality, Parent Material Adverse Effect, Contributor Material Adverse Effect (as defined in the Contribution Agreement) and Company Material Adverse Effect or words of similar import, shall be true and correct on the date hereof and on the Closing Date as if made on and as of such dates (except for representations and warranties that are made as of a specified date, which shall be true and correct only as of such specified date) with only such exceptions as would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect, a Contributor Material Adverse Effect (as defined in the Contribution Agreement), a Company Material Adverse Effect or a Buyer Material Adverse Effect. (b) Compliance with Covenants. (i) Parent, Merger Sub and the ARG Trust shall have performed in all material respects (or with respect to any obligation or agreement qualified by materiality, Company Material Adverse Effect, Parent Material Adverse Effect or ARG Trust Material Adverse Effect, in all respects) all obligations and agreements, and complied in all material respects (or with respect to any covenant qualified by materiality, Company Material Adverse Effect, Parent Material Adverse Effect or ARG Trust Material Adverse Effect, in all respects) with all covenants contained in this Agreement to be performed or complied with by them prior to or on the Closing Date. (ii) Parent, each of the Contributors (as defined in the Contribution Agreement), Mr. Romo (as defined in the Contribution Agreement), the ARG Trust and Mexican SPC (as defined in the Contribution Agreement) shall have performed in all material respects (or with respect to any obligation or agreement qualified by materiality, Parent Material Adverse Effect, Company Material Adverse Effect or Contributor Material Adverse Effect (as defined in the Contribution Agreement), in all respects) all obligations and agreements, and complied in all material respects (or with respect to any covenant qualified by materiality, Parent Material Adverse Effect, Company Material Adverse Effect or Contributor Material Adverse Effect (as defined in the Contribution Agreement), in all respects) with all covenants contained in the Contribution Agreement to be performed or complied with by them prior to or on the Closing Date. -21- (c) Officer's Certificates. (i) FPSH shall have received (A) a certificate of Parent, dated as of the Closing Date, signed by an executive officer of Parent, to evidence satisfaction of the conditions set forth in Sections 7.2(a) and (b), and (B) a certificate of the ARG Trust, dated as of the Closing Date, signed by the settlor of the ARG Trust, to evidence satisfaction of the conditions set forth in Sections 7.2(a) and (b). (ii) FPSH shall have received a certificate of each of the Contributors (as defined in the Contribution Agreement), Mr. Romo (as defined in the Contribution Agreement) and Mexican SPC (as defined in the Contribution Agreement), dated as of the Closing Date, signed by an executive officer of each of the Contributors (as defined in the Contribution Agreement) (other than any Management Contributor) (as defined in the Contribution Agreement), each of whom shall sign in his individual capacity), an executive officer of Mexican SPC (as defined in the Contribution Agreement) and Mr. Romo (as defined in the Contribution Agreement) to evidence satisfaction of the conditions set forth in Sections 7.2(a)(ii) and (b)(ii). (d) No Litigation. After the date hereof, there shall not be (i) any new suit, action or proceeding by any Governmental Entity or any other Person or (ii) any development in any existing suit, action or proceeding by any Governmental Entity or any other Person that, in any such case, is more likely than not, individually or in the aggregate, to have a Company Material Adverse Effect or a Buyer Material Adverse Effect (for purposes of this Section 7.2(d) only, excluding the reference to the phrase "or is reasonably expected to be" from the definitions of Company Material Adverse Effect and Buyer Material Adverse Effect). (e) Co-Investment Rights Agreements. The Company and Desarrollo Consolidado de Negocios, S.A. de C.V. shall have executed and delivered the 15% Co-Investment Rights Agreement and the SPC Hurdle Co-Investment Rights Agreement in form and substance substantially identical to the forms attached hereto as Exhibits B-1 and B-2 and the Company and FPSH shall have executed and delivered the FPSH Hurdle Co-Investment Rights Agreement in from and substance identical to the form attached hereto as Exhibit B-3, with the number of Co-Investment Rights granted pursuant to the SPC Hurdle Co-Investment Rights Agreement, on the one hand, and FPSH Hurdle Co-Investment Rights Agreement, on the other hand, determined in accordance with the letter, of even date herewith, from FPSH to Desarrollo Consolidado de Negocios, S.A. de C.V. (f) [Reserved]. (g) Foreign Investment in Real Property Tax Act. FPSH shall have received an affidavit of Parent in form substantially identical to the form attached as Exhibit C hereto duly executed and acknowledged, certifying facts that would exempt the FPSH Stock Purchase from the provisions of the Foreign Investment in Real Property Tax Act. FPSH shall have received a duly executed and acknowledged affidavit of the Company, in form and in substance reasonably satisfactory to FPSH and in accordance with Treasury Regulation Sections 1.1445-2(c)(3), 1.897-2(g) and 1.897-2(h), certifying that each "interest" in the Company (within the meaning of -22- Section 897(c)(1) of the Code) is not a "United States real property interest" within the meaning of Section 897(c) of the Code. (h) Contribution Agreement. There shall not have occurred any breach of any of the representations, warranties or covenants under the Contribution Agreement, that, individually or in the aggregate, would have a Company Material Adverse Effect. As of the Closing Date, each of the Pre-Closing Restructuring Steps (as defined in the Contribution Agreement) shall have been completed and each of the Post-Closing Restructuring Steps (as defined in the Contribution Agreement) shall occur substantially concurrently with the Closing. The transactions contemplated by the Contribution Agreement shall have been consummated. (i) Conditions to the Merger. The conditions to the Merger set forth in Sections 7.1(b) and 7.2 (other than Section 7.2(d)) of the Merger Agreement shall have been satisfied or waived, and the Effective Time shall have occurred. (j) Closings of the Merger and the Debt Financing. The closing of the Merger and the Debt Financing (as defined in the Merger Agreement) shall occur substantially concurrently with the Closing. (k) Capitalization. The equity capitalization of the Company immediately following the Closing, giving effect to the transactions contemplated by this Agreement and the Related Agreements, shall be as set forth in Section 7.2(k) of the Parent Disclosure Schedule. (l) Statutes; Court Orders. No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated, issued or enforced by any Governmental Entity that prohibits, restrains, enjoins, precludes or restricts the consummation of the Stock Purchase or the Related Transactions. ARTICLE VIII TERMINATION; AMENDMENT; WAIVER Section 8.1. Termination. This Agreement may be terminated and the Stock Purchase may be abandoned at any time prior to the Closing: (a) by mutual written consent of Parent and FPSH, duly authorized by the boards of directors (or similar governing bodies) of Parent and FPSH; (b) by Parent or FPSH, if (i) any Governmental Entity shall have enacted, entered, promulgated, issued or enforced a final statute, rule, regulation, executive order, decree, ruling or injunction (which statute, rule, regulation, executive order, decree, ruling or injunction the parties hereto shall use their reasonable best efforts to reverse, overturn or lift) or taken any other final action restraining, enjoining or otherwise prohibiting the Stock Purchase or the Related Transactions and such order, decree, ruling or other action is or shall have become final and nonappealable, or (ii) the Merger Agreement shall have been terminated in accordance with its terms; -23- (c) by FPSH, if (i) there shall have been a material breach of any of the representations, warranties or covenants of Parent or Merger Sub under this Agreement, which breach (A) would give rise to the failure of a condition set forth in Section 7.2 and (B) is not capable of being cured prior to the Outside Date (as defined in the Merger Agreement) or, if curable, has not been cured within 20 business days following receipt by Parent of written notice from FPSH of such breach, or (ii) there shall have been a breach of any of the representations, warranties or covenants under the Contribution Agreement, which breach, individually or in the aggregate would reasonably be expected to have a Parent Material Adverse Effect, a Contributor Material Adverse Effect (as defined in the Contribution Agreement), a Company Material Adverse Effect or a Buyer Material Adverse Effect; provided that in the case of clause (ii), such breach is not capable of being cured prior to the Outside Date (as defined in the Merger Agreement) or, if curable, has not been cured within 20 business days following receipt by Parent of written notice from FPSH of such breach; or (d) by Parent, if there shall have been a material breach of any of the representations, warranties or covenants of FPSH which breach (A) would give rise to the failure of a condition set forth in Section 7.1 and (B) is not capable of being cured prior to the Outside Date (as defined in the Merger Agreement) or, if curable, has not been cured within 20 business days following receipt by FPSH of written notice from Parent of such breach. Section 8.2. Effect of Termination. In the event of the termination and abandonment of this Agreement pursuant to Section 8.1, written notice thereof shall forthwith be given to the other party or parties specifying the provision hereof pursuant to which such termination is made, and this Agreement shall forthwith become void and have no effect, without any liability on the part of any party hereto or its Affiliates, directors, officers or stockholders, other than the provisions of this Section 8.2, Section 8.3(a) and Article IX of this Agreement; provided, however, that nothing contained in this Section 8.2 shall relieve any party from liability for any willful and material breach of this Agreement. Section 8.3. Fees and Expenses. (a) Except as otherwise provided in the Merger Agreement, if the transactions contemplated by this Agreement are not consummated for any reason, all costs and expenses incurred in connection with this Agreement shall be paid by the party incurring such expenses. (b) If the transactions contemplated by this Agreement are consummated, on the Closing Date, the parties hereto shall cause the Company to pay to FPSH by wire transfer of immediately available funds (to the account or accounts designated by FPSH in writing not less than one business day prior to the Closing) (i) a transaction fee equal to the amount paid to Savia in cash pursuant to Section 2.02 of the Exchange Agreement (as defined in the Merger Agreement), and (ii) all FPSH Expenses; provided, however, that the FPSH Expenses shall not exceed $7.5 million. (c) If the transactions contemplated by this Agreement are consummated, on the Closing Date, Parent shall cause the Company to pay the settlement amount to Grupo Financiero Atlantico ("GFA") in accordance with the Settlement Agreement by and among Savia, the Company, Desarrollo Inmobiliario Omega, S.A. de C.V., Bionova Holding Corp., Pulsar Inter- -24- nacional, S.A. de C.V., Alfonso Romo Garza, Servasa, S.A. de C.V., the ARG Trust, Fox Paine & Company, LLC and GFA, dated as of April 25, 2003. Section 8.4. Amendment. This Agreement may be amended at any time by an instrument in writing signed by FPSH and Parent; provided, however, that any amendment that would prevent or delay the Closing shall also require the written consent of the Special Committee (as defined in the Merger Agreement), such consent not to be unreasonably withheld or delayed. Section 8.5. Waiver. At any time prior to the Effective Time: (a) Parent may (i) extend the time for the performance of any of the obligations or other acts of FPSH, (ii) waive any inaccuracies in the representations and warranties of FPSH contained herein or in any document, certificate or writing delivered pursuant hereto, or (iii) waive compliance by FPSH with any of the agreements or conditions contained herein, and (b) FPSH may (i) extend the time for the performance of any of the obligations or other acts of Parent, Merger Sub or the ARG Trust, (ii) waive any inaccuracies in the representations and warranties of Parent, Merger Sub or the ARG Trust contained herein or in any document, certificate or writing delivered pursuant hereto, or (iii) waive compliance by Parent, Merger Sub or the ARG Trust with any of the agreements or conditions contained herein; provided, however, that in the case of clauses (a) and (b), any extension or waiver that would prevent or delay the Closing shall also require the written consent of the Special Committee (as defined in the Merger Agreement), such consent not to be unreasonably withheld or delayed. Any agreement on the part of any party hereto to any such extension or waiver shall be valid only if set forth in an instrument in writing signed on behalf of such party. The failure of any party hereto to assert any of its rights hereunder shall not constitute a waiver of such rights. Section 8.6. Survival. The parties hereto hereby acknowledge that indemnification with respect to breaches of representations, warranties and covenants contained in this Agreement shall be made pursuant to the Indemnification Agreement and that the representations and warranties in this Agreement shall survive as provided in this Section 8.6 for such purpose. The representations and warranties in this Agreement shall survive until the two-year anniversary of the Closing, provided, however, that the representations and warranties contained in Section 3.6 of this Agreement shall survive indefinitely. Any covenants or agreements contained herein or made pursuant hereto that by their terms are to be performed prior to the Closing Date, shall not survive beyond the Closing Date. Any covenants or agreements contained herein or made pursuant hereto that by their terms are to be performed in whole or in part after the Closing Date, shall survive until fully discharged. Section 8.7. Sole Remedy. After the Closing, and conditioned thereupon, to the extent permitted by law, the indemnities set forth in the Indemnification Agreement shall be the exclusive remedies of the parties hereto and their respective officers, directors, employees, agents and Affiliates for any misrepresentation, breach of warranty or nonfulfillment or failure to be performed of any covenant or agreement contained in this Agreement, and the parties shall not be entitled to rescission of this Agreement or to any further indemnification rights or claims of any nature whatsoever in respect thereof, all of which the parties hereto hereby waive. -25- ARTICLE IX MISCELLANEOUS Section 9.1. Entire Agreement; Assignment. This Agreement and the Related Agreements (including the schedules and Exhibits hereto and thereto) constitute the entire agreement among the parties hereto with respect to the subject matter hereof and supersede all other prior agreements and understandings, both written and oral, between the parties hereto with respect to the subject matter hereof. This Agreement shall not be assigned by operation of law or otherwise. Notwithstanding the foregoing, at Closing, FPSH may assign its rights and obligations under this Agreement to one or more of its Affiliates who would qualify as an "FPSH Affiliate Transferee" as defined in the Stockholders' Agreement, and with respect to Section 2.2 of this Agreement, to any entity co-investing with FPSH who would qualify as a "Co-Investor Transferee" under the Stockholders' Agreement; provided, however, that FPSH remains liable for its obligations hereunder until the Closing occurs at which time such assignees shall be liable. Section 9.2. Severability. If any provision of this Agreement, or the application thereof to any Person or circumstance, is held invalid or unenforceable, the remainder of this Agreement, and the application of such provision to other Persons or circumstances shall not be affected thereby, and to such end, the provisions of this Agreement are agreed to be severable. Upon such determination that any provision is invalid or unenforceable, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties hereto as closely as possible in a mutually acceptable manner. Section 9.3. Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing (including by facsimile with written confirmation thereof) and unless otherwise expressly provided herein, shall be delivered during normal business hours by hand, by Federal Express or other nationally recognized overnight commercial delivery service, or by facsimile notice, confirmation of receipt received, addressed as follows, or to such other address as may be hereafter notified by the respective parties hereto: (a) If to Parent, Merger Sub or the ARG Trust: c/o Savia, S.A. de C.V. Ave. Roble No. 565 Ote. - Piso 4 Colonia Valle Del Campestre Garza Garcia, N.L. 66265 Mexico Attention: Bernardo Jimenez Barrera Facsimile: 011-52-818-399-5606 With a copy, which will not constitute notice, to: Milbank, Tweed, Hadley & McCloy LLP One Chase Manhattan Plaza New York, New York 10005 -26- Attention: Howard S. Kelberg, Esq. Facsimile: 212-822-5530 With copies, which will not constitute notice, to: Seminis, Inc. 2700 Camino del Sol Oxnard, California 93030-7967 Attention: Chairman of the Special Committee of the Board of Directors Facsimile: 805-918-2530 Seminis, Inc. 2700 Camino del Sol Oxnard, California 93030-7967 Attention: General Counsel Facsimile: 805-918-2530 Skadden, Arps, Slate, Meagher & Flom LLP Four Times Square New York, NY 10036 Attention: Peter A. Atkins, Esq. David J. Friedman, Esq. Facsimile: 212-735-2000 (b) If to FPSH: Fox Paine & Company, LLC 950 Tower Lane, Suite 1950 Foster City, California 94404 Attention: W. Dexter Paine, III Facsimile: 650-525-1396 With a copy, which will not constitute notice, to: Wachtell, Lipton, Rosen & Katz 51 West 52nd Street New York, New York 10019 Attention: Mitchell S. Presser, Esq. Facsimile: 212-403-2000 With copies, which will not constitute notice, to: Seminis, Inc. 2700 Camino del Sol Oxnard, California 93030-7967 Attention: Chairman of the Special Committee -27- of the Board of Directors Facsimile: 805-918-2530 Seminis, Inc. 2700 Camino del Sol Oxnard, California 93030-7967 Attention: General Counsel Facsimile: 805-918-2530 Skadden, Arps, Slate, Meagher & Flom LLP Four Times Square New York, NY 10036 Attention: Peter A. Atkins, Esq. David J. Friedman, Esq. Facsimile: 212-735-2000 Section 9.4. Governing Law; Consent to Jurisdiction; Waiver of Jury Trial. (a) This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to the principles of conflicts of law thereof. (b) The parties hereto hereby agree and consent to be subject to the exclusive jurisdiction of the courts of the State of Delaware sitting in the County of New Castle and the United States District Court for the State of Delaware in any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the Stock Purchase. Each party hereto hereby irrevocably waives, to the fullest extent permitted by law, (i) any objection that it may now or hereafter have to laying venue of any suit, action or proceeding brought in such courts, and (ii) any claim that any suit, action or proceeding brought in such courts has been brought in an inconvenient forum. (c) The ARG Trust irrevocably appoints CT Corporation Systems, which currently maintains an office at 2711 Centerville Road, Suite 400, Wilmington, Delaware, 19808, as its agent to receive service of process or other legal summons for purposes of any such action or proceeding. So long as the ARG Trust has any obligation under this Agreement, it will maintain a duly appointed agent in the State of Delaware for the service of such process or summons, and if it fails to maintain such an agent, any such process or summons may be served by mailing a copy thereof by registered mail, or a form of mail substantially equivalent thereto, addressed to it at its address as provided for notices hereunder. (d) EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTIONS OF ANY PARTY HERETO IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT THEREOF. Section 9.5. Specific Performance. The parties hereto agree that irreparable damage would occur if any provision of this Agreement were not performed in accordance with the terms -28- hereof and that the parties shall be entitled, without posting a bond or similar indemnity, to an injunction or injunctions to prevent breaches of this Agreement or to enforce specifically the performance of the terms and provisions hereof in any federal court located in the State of Delaware or any Delaware state court, in addition to any other remedy to which they are entitled at law or in equity. Section 9.6. Interpretation. When a reference is made in this Agreement to Articles, Sections, Exhibits or Schedules, such reference shall be to an Article or Section of or Exhibit or Schedule to this Agreement unless otherwise indicated. The table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Whenever the words "include," "includes" or "including" are used in this Agreement, they shall be deemed to be followed by the words "without limitation." Section 9.7. Parties in Interest. (a) Subject to Section 9.7(b), except as otherwise provided in Sections 2.2, 8.5 and 9.1 of this Agreement, this Agreement shall be binding upon and inure solely to the benefit of each party hereto and its successors and permitted assigns, and nothing in this Agreement, express or implied, is intended to or shall confer upon any other Person any rights, benefits or remedies of any nature whatsoever under or by reason of this Agreement. (b) Notwithstanding anything to the contrary contained herein, (i) Savia shall be a third party beneficiary of this Agreement and shall have the right to enforce any right under this Agreement exercisable by Parent to the extent such right is not enforced by Parent, and (ii) any representations, warranties or covenants made by FPSH shall be deemed made to Savia. (c) The parties hereto acknowledge that the Company would not have entered into the Merger Agreement had the parties hereto not entered into this Agreement. Section 9.8. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original, but all of which shall constitute one and the same agreement. -29- IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be duly executed on its behalf as of the day and year first above written. FOX PAINE SEMINIS HOLDINGS, LLC By: Fox Paine & Company, LLC, as sole member By: /S/ Kevin Schwartz ------------------ Name: Kevin Schwartz Title: Vice President BANCA AFIRME, S.A., INSTITUCION DE BANCA MULTIPLE, AFIRME GRUPO FINANCIERO, AS TRUSTEE, UNDER THE IRREVOCABLE ADMINISTRATION AND PAYMENT TRUST NUMBER 167-5 (FIDEICOMISO IRREVOCABLE DE ADMINISTRACION Y PAGO NUMERO 167-5) By: /S/ Adrian J. Lozano -------------------- Name: Adrian J. Lozano Title: Delegado Fiduciario By: /S/ Beatriz Garza L. -------------------- Name: Beatriz Garza L. Title: Delegado Fiduciario SEMINIS ACQUISITION LLC By: /S/ Bernardo Jimenez -------------------- Name: Bernardo Jimenez Title: Authorized Officer SEMINIS MERGER CORP. By: /S/ Bernardo Jimenez -------------------- Name: Bernardo Jimenez Title: President [SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT] EX-2.3 5 v94566orexv2w3.txt EXHIBIT 2.3 EXHBIIT 2.3 EXECUTION COPY This AMENDED AND RESTATED EXCHANGE AGREEMENT (amending and restating in its entirety the Exchange Agreement, dated as of July 1, 2002 (the "Old Exchange Agreement")) dated as of May 30, 2003 (this "Agreement") is made and entered into by and between Seminis, Inc., a Delaware corporation ("Seminis"), and Savia, S.A. de C.V., a Mexican corporation ("Savia"). WHEREAS, Seminis and Savia have not completed the transactions contemplated under the Old Exchange Agreement, and Seminis and Savia have agreed to amend and restate the Old Exchange Agreement; WHEREAS, on July 2, 2002, Savia (a) owned 12,018 shares of Class C Redeemable PIK Preferred Stock, par value $.01 per share, of Seminis (the "Class C Preferred Stock") with a liquidation value of $120,181,364 and (b) had contributed to Seminis $46,695,372 of additional capital contributions, including accrued in kind obligations thereon ( the "APIC"); WHEREAS, by resolution of the Board of Directors of Seminis, on July 16, 2002, the APIC was determined to have the legal and economic rights equivalent in all respects to the Class C Preferred Stock; WHEREAS, in accordance with such resolution, on December 31, 2002, Seminis issued 4,669.5372 additional shares of Class C Preferred Stock (the "Additional Shares") to evidence the interests previously reflected as APIC; WHEREAS, the interest accrued on the APIC between January 1, 2001 until December 31, 2002 has been treated as a cash obligation of Seminis (the "Cash Obligation"); WHEREAS, Seminis has entered into an Agreement and Plan of Merger by and among Seminis, Seminis Acquisition LLC and Seminis Merger Corp. (the "Merger Agreement"), pursuant to which Seminis Merger Corp. will merge with and into Seminis (the "Merger") with Seminis as the surviving corporation in the Merger and in connection thereunder, Seminis desires to recapitalize (a) all of the issued and outstanding shares of Class C Preferred Stock, (b) the accrued and unpaid dividends on the Class C Preferred Stock through the date of the Exchange (as defined below), other than $15,000,000 of such accrued and unpaid dividends, to be paid by the Cash Payment (as defined below), (the "Dividends"), and (c) the Cash Obligation; WHEREAS, Savia has agreed, in connection with the Merger and related transactions, to exchange all of the issued and outstanding shares of Class C Preferred Stock, the Cash Obligation and the Dividends for 37,669,480 shares of Class A Common Stock, par value $.01 per share, of Seminis (the "Class A Common Stock") and a payment equal to (i) $15,000,000 plus (ii) Interest from July 1, 2002 until the date of payment minus (iii) $3,000,000 (the "Cash Payment"). -1- NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: ARTICLE I EXCHANGE AND CLOSING 1.01 Exchange. Savia and Seminis hereby agree to exchange all of the right, title and interest of Savia in and to 16,688 shares of Class C Preferred Stock, the Cash Obligation and the Dividends, and any other rights or claims with respect to any of the foregoing through the effective time of the Merger, for 37,669,480 shares of Class A Common Stock (the "Seminis Shares") and the Cash Payment (the "Exchange"), on the terms and subject to the conditions set forth in Section 2.01. 1.02 Closing. The Closing will take place at the offices of Seminis, 2700 Camino del Sol, Oxnard, California 93030, or at such other place as Seminis and Savia mutually agree, immediately prior to the Merger. ARTICLE II EXCHANGE OF SHARES AND PAYMENTS 2.01 Exchange of Shares. (a) At the Closing, Seminis will deliver to Savia a certificate or certificates representing the Seminis Shares, registered in the name of Savia, and (b) At the Closing, Savia will assign and transfer to Seminis all of Savia's right, title and interest in and to 16,688 shares of Class C Preferred Stock, the Cash Obligation and the Dividends by delivering to Seminis (i) a certificate or certificates representing the 16,688 shares of Class C Preferred Stock, in genuine and unaltered form, duly endorsed in blank or accompanied by duly executed stock powers endorsed in blank, with requisite stock transfer tax stamps, if any, attached, and (ii) an acknowledgement that the Cash Obligation, the Dividends and any other rights or claims with respect to the Class C Preferred Stock, Cash Obligation or Dividends through the effective time of the Merger have been fully satisfied as part of the delivery of the Seminis Shares. 2.02 Payment of Cash Payment. At the Closing, Seminis will pay to Savia the Cash Payment. -2- ARTICLE III REPRESENTATIONS AND WARRANTIES OF SAVIA Savia hereby represents and warrants to Seminis as follows: 3.01 Organization of Savia. Savia is a corporation duly organized, validly existing and in good standing under the laws of the United Mexican States. Savia has full corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder and to consummate the transactions contemplated hereby, including, without limitation, to own, hold, exchange and transfer the 16,688 shares of Class C Preferred Stock, the Cash Obligation and the Dividends. 3.02 Title to Class C Preferred Stock. Savia owns 16,688 shares of Class C Preferred Stock, beneficially and of record, free and clear of all liens, except for the lien under the Pledge and Security Agreement dated as of June 27, 2001 between Savia and JP Morgan Chase Bank (formerly known as The Chase Manhattan Bank), as collateral agent (the "Pledge Agreement"). At or prior to the Closing, Savia will provide to Seminis a copy of all documentation evidencing the release of the 16,688 shares of Class C Preferred Stock from the lien pursuant to the Pledge Agreement, and upon such release, Savia shall have the right to transfer the 16,688 shares of Class C Preferred Stock free and clear of all liens. The delivery of a certificate or certificates at the Closing representing the shares of Class C Preferred Stock in the manner provided in Section 2.01(b) will transfer to Seminis good and valid title to the shares of Class C Preferred Stock, free and clear of all liens. Upon the Closing, Seminis shall acquire all of Savia's right, title and interest in and to the Cash Obligation and Dividends free and clear of all liens. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SEMINIS Seminis hereby represents and warrants to Savia as follows: 4.01 Organization. Seminis is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. Seminis has full corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby. 4.02 Class A Common Stock. Upon issuance and delivery of the Seminis Shares in accordance with this Agreement, the Seminis Shares will be duly authorized, validly issued, fully paid and nonassessable. -3- ARTICLE V COVENANTS OF SAVIA Savia covenants and agrees with Seminis that, at all times from and after the date hereof until the Closing, Savia will not sell, dispose, or otherwise transfer, or incur any lien or other interest on, the 16,688 shares of Class C Preferred Stock, the Cash Obligation or the Dividends, other than pursuant to the Pledge Agreement. Savia will comply with all covenants and provisions of this Article V, except to the extent Seminis may otherwise consent in writing. ARTICLE VI CONDITIONS TO OBLIGATIONS OF SEMINIS AND SAVIA The obligations of Seminis hereunder to deliver the Seminis Shares and the Cash Payment and the obligations of Savia hereunder to exchange the 16,688 shares of Class C Preferred Stock, the Cash Obligation and the Dividends are subject to the consummation of the Merger. Such conditions may be waived in whole or in part by Seminis and Savia. ARTICLE VII TERMINATION 7.01 Termination. This Agreement may be terminated, and the transactions contemplated herein may be abandoned: (a) at any time before the Closing, by mutual written agreement of Savia, Seminis and Fox Paine Seminis Holdings, LLC ("FPSH"); (b) at any time, by either party upon termination of the Merger Agreement; or (c) by either party, if the Closing has not occurred on or before the six-month anniversary of the date hereof. 7.02 Effect of Termination. If this Agreement is validly terminated pursuant to Section 7.01, this Agreement will forthwith become null and void, and there will be no liability or obligation on the part of Savia or Seminis (or any of their respective officers, directors, employees, agents or other representatives or affiliates) pursuant hereto. -4- ARTICLE VIII DEFINITIONS 8.01 Definitions. As used in this Agreement, the following defined terms have the meanings indicated below: "Closing" means the closing of the transactions contemplated by Article II. "Interest" means a rate of interest of 10% per year, compounded quarterly. ARTICLE IX MISCELLANEOUS 9.01 Notices. All notices and other communications in connection with this Agreement must be in writing and given by hand delivery, airmail (postage prepaid) or telex or facsimile transmission, in each case addressed as specified below or in any subsequent notice from the intended recipient to the party sending the notice. Such notices and communications will be effective upon delivery if delivered by hand, upon receipt if sent by mail, upon transmission with answerback confirmed if sent by telex or upon receipt if sent by facsimile transmission. If to Seminis, to: Seminis, Inc. 2700 Camino del Sol Oxnard, California 93030 Facsimile No.: 805-918-2553 Attn: Enrique Osorio With copies to: Skadden, Arps, Slate, Meagher & Flom LLP Four Times Square New York, New York 10036 Facsimile No.: 212-735-2000 Attn: Peter A. Atkins, Esq. David J. Friedman, Esq. If to Savia, to: Savia, S.A. de C.V. Rio Sena No. 500 Pte. Col. Del Valle Entre Humberto Lobo y Tamesis San Pedro Garza Garcia, Nuevo Leon 66220 Mexico -5- Facsimile No.: 011 528181735508 Attn: Francisco Garza With copies to: Milbank, Tweed, Hadley & McCloy LLP 1 Chase Manhattan Plaza New York, New York 10005 Facsimile No.: 212-822-5530 Attn: Howard S. Kelberg, Esq. Fox Paine & Company, LLC 950 Tower Lane, Suite 1150 Foster City, California 94404 Facsimile No.: 650-525-1396 Attn: W. Dexter Paine, III Wachtell, Lipton, Rosen & Katz 51 West 52nd Street New York, New York 10019 Facsimile No. 212-403-2000 Attn: Mitchell S. Presser, Esq. All such notices, requests and other communications will (i) if delivered personally to the address as provided in this Section, be deemed given upon delivery, (ii) if delivered by facsimile transmission to the facsimile number as provided in this Section, be deemed given upon receipt, and (iii) if delivered by mail in the manner described above to the address as provided in this Section, be deemed given upon receipt (in each case regardless of whether such notice, request or other communication is received by any other person to whom a copy of such notice, request or other communication is to be delivered pursuant to this Section). Any party from time to time may change its address, facsimile number or other information for the purpose of notices to that party by giving notice specifying such change to the other party hereto. 9.02 Entire Agreement. This Agreement supersedes all prior discussions and agreements between the parties with respect to the subject matter hereof and contains the sole and entire agreement between the parties hereto with respect to the subject matter hereof. 9.03 Expenses. Except as otherwise expressly provided in this Agreement (including, without limitation, as provided in Section 7.02), whether or not the transactions contemplated hereby are consummated, each party will pay its own costs and expenses. 9.04 Waiver. Any term or condition of this Agreement may be waived at any time by the party that is entitled to the benefit thereof, but no such waiver shall be effective unless set forth in a written instrument duly executed by or on behalf of the -6- party waiving such term or condition. No waiver by any party of any term or condition of this Agreement, in any one or more instances, shall be deemed to be or construed as a waiver of the same or any other term or condition of this Agreement on any future occasion. All remedies, either under this Agreement or by law or otherwise afforded, will be cumulative and not alternative. 9.05 Amendment. This Agreement may be amended, supplemented or modified only by a written instrument duly executed by or on behalf of each party hereto provided, however, that any amendment that would prevent, delay or alter the terms of the Merger, shall require the written consent of FPSH (such consent not to be unreasonably withheld or delayed). 9.06 Headings. The headings used in this Agreement have been inserted for convenience of reference only and do not define or limit the provisions hereof. 9.07 Invalid Provisions. If any provision of this Agreement is held to be illegal, invalid or unenforceable under any present or future law, and if the rights or obligations of any party hereto under this Agreement will not be materially and adversely affected thereby, (a) such provision will be fully severable, (b) this Agreement will be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part hereof, and (c) the remaining provisions of this Agreement will remain in full force and effect and will not be affected by the illegal, invalid or unenforceable provision or by its severance herefrom. 9.08 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware applicable to a contract executed and performed in the State of Delaware, without giving effect to the conflicts of laws principles thereof. 9.09 Counterparts. This Agreement may be executed in any number of counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument. -7- IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the duly authorized officer of each party hereto as of the date first written above. SAVIA, S.A. DE C.V. /s/ Bernardo Jimenez --------------------------------- Name: Bernardo Jimenez Title: Attorney in Fact SEMINIS, INC. /s/ Gaspar Alvarez --------------------------------- Name: Gaspar Alvarez Title: VPWW Corporate Comptroller /s/ Enrique Osorio --------------------------------- Name: Enrique Osorio Title: Treasurer Vice President EX-2.4 6 v94566orexv2w4.txt EXHIBIT 2.4 EXHIBIT 2.4 EXECUTION COPY ================================================================================ CONTRIBUTION AGREEMENT dated as of May 30, 2003 by and among SEMINIS ACQUISITION LLC, SAVIA, S.A. DE C.V., BANCA AFIRME, S.A., INSTITUCION DE BANCA MULTIPLE, AFIRME GRUPO FINANCIERO, AS TRUSTEE, UNDER THE IRREVOCABLE ADMINISTRATION AND PAYMENT TRUST NUMBER 167-5 (FIDEICOMISO IRREVOCABLE DE ADMINISTRACION Y PAGO NUMERO 167-5) CONJUNTO ADMINISTRATIVO INTEGRAL, S.A. DE C.V., DESARROLLO CONSOLIDADO DE NEGOCIOS, S.A. DE C.V., EMPRIMA, S.A. DE C.V., PARK FINANCIAL GROUP, LTD (BVI), ALFONSO ROMO GARZA, AND CERTAIN MEMBERS OF SEMINIS AND SAVIA MANAGEMENT ================================================================================ TABLE OF CONTENTS
Page ---- ARTICLE I CERTAIN DEFINITIONS...................................................................... 3 ARTICLE II THE CONTRIBUTION......................................................................... 8 Section 2.1. The Closing......................................................................... 8 Section 2.2. Contribution........................................................................ 8 Section 2.3. Delivery of Contribution Shares..................................................... 8 Section 2.4. Distribution of Parent Assets....................................................... 9 ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT................................................. 9 Section 3.1 Organization........................................................................ 9 Section 3.2. Authority........................................................................... 9 Section 3.3. Consents and Approvals; No Violations............................................... 10 Section 3.4. Membership Interests................................................................ 10 Section 3.5. Capitalization...................................................................... 10 Section 3.6. Brokers............................................................................. 11 Section 3.7. Acknowledgment...................................................................... 11 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE CONTRIBUTORS, MR. ROMO, EMPRIMA AND MEXICAN SPC...................................................................................... 11 Section 4.1. Representations and Warranties with Respect to the Contribution Shares.............. 11 Section 4.2. Representations and Warranties of Savia............................................. 14 Section 4.3. Representations and Warranties with Respect to the Restructurings................... 15 ARTICLE V COVENANTS................................................................................ 16 Section 5.1. Pre-Closing Conduct................................................................. 16 Section 5.2. Further Assurances.................................................................. 17 Section 5.3. Notification of Certain Matters..................................................... 17 Section 5.4. Public Announcements................................................................ 17 Section 5.5. Additional Agreements, Reasonable Best Efforts...................................... 18 ARTICLE VI CONDITIONS TO CONSUMMATION OF THE CONTRIBUTION........................................... 19 ARTICLE VII TERMINATION; AMENDMENT; WAIVER........................................................... 19 Section 7.1. Termination......................................................................... 19 Section 7.2. Effect of Termination............................................................... 19 Section 7.3. Fees and Expenses................................................................... 19 Section 7.4. Amendment........................................................................... 19 Section 7.5. Waiver.............................................................................. 20 Section 7.6. Survival............................................................................ 20 Section 7.7. Indemnification by Management Contributors.......................................... 20 Section 7.8. Sole Remedy......................................................................... 20
ARTICLE VIII MISCELLANEOUS............................................................................ 21 Section 8.1. Entire Agreement; Assignment........................................................ 21 Section 8.2. Severability........................................................................ 21 Section 8.3. Notices............................................................................. 21 Section 8.4. Governing Law; Consent to Jurisdiction; Waiver of Jury Trial........................ 23 Section 8.5. Specific Performance................................................................ 24 Section 8.6. Interpretation...................................................................... 24 Section 8.7. Parties in Interest................................................................. 24 Section 8.8. Counterparts........................................................................ 25

Exhibit A Management Contributors Exhibit B Form of Stock Purchase Agreement for Additional Purchasers Exhibit C Amended and Restated Limited Liability Company Agreement of Seminis Acquisition LLC Exhibit D Legal Opinion of Milbank, Tweed, Hadley & McCloy LLP Exhibit E Legal Opinion of Mancera Ernst & Young Contributors Disclosure Schedule Parent Disclosure Schedule CONTRIBUTION AGREEMENT THIS CONTRIBUTION AGREEMENT, dated as of May 30, 2003 (this "Agreement"), is made by and among SEMINIS ACQUISITION LLC, a Delaware limited liability company ("Parent"), SAVIA, S.A. DE C.V., a corporation (sociedad anonima de capital variable) organized under the laws of the United Mexican States ("Savia"), BANCA AFIRME, S.A., INSTITUCION DE BANCA MULTIPLE, AFIRME GRUPO FINANCIERO, AS TRUSTEE, UNDER THE IRREVOCABLE ADMINISTRATION AND PAYMENT TRUST number 167-5 (FIDEICOMISO IRREVOCABLE DE ADMINISTRACION Y PAGO NUMERO 167-5), a trust created under the laws of the United Mexican States ("ARG Trust"), CONJUNTO ADMINISTRATIVO INTEGRAL, S.A. DE C.V., a corporation (sociedad anonima de capital variable) organized under the laws of the United Mexican States ("CAI"), DESARROLLO CONSOLIDADO DE NEGOCIOS, S.A. DE C.V., a corporation (sociedad anonima de capital variable) organized under the laws of the United Mexican States ("Mexican SPC"), EMPRIMA, S.A. DE C.V., a corporation (sociedad anonima de capital variable) organized under the laws of the United Mexican States ("Emprima"), PARK FINANCIAL GROUP, LTD (BVI) a British Virgin Islands Company ("Park"), ALFONSO ROMO GARZA, an individual and a citizen of the United Mexican States ("Mr. Romo") and CERTAIN MEMBERS OF SEMINIS, INC. AND SAVIA MANAGEMENT as listed on Exhibit A hereto ("Management Contributors," and together with Savia, the ARG Trust, CAI, and Park, the "Contributors"). WHEREAS, Parent, Seminis Merger Corp., a Delaware corporation ("Merger Sub"), and Seminis, Inc., a Delaware corporation (the "Company"), have entered into an Agreement and Plan of Merger (the "Merger Agreement") of even date herewith, pursuant to which Merger Sub will merge with and into the Company (the "Merger") on the terms and subject to the conditions set forth therein with the Company as the surviving corporation in the Merger; WHEREAS, (i) Savia owns, as of the date hereof, and will own, immediately prior to the Closing, (A) Class C Redeemable PIK Preferred Stock, par value, $.01 per share, exchangeable into 37,669,480 shares of Class A Common Stock, par value $.01 per share of the Company (the "Class A Common Stock") (the "Exchange" (as defined in the Merger Agreement) is contemplated to occur after the date hereof and prior to the Closing), and (B) 40,615,619 shares of Class B Common Stock, par value $.01 per share of the Company (the "Class B Common Stock," together with the Class A Common Stock, the "Old Company Common Stock") (the 37,669,480 shares of Class A Common Stock and the 40,615,619 shares of Class B Common Stock, taken together, the "Savia Old Company Shares"), (ii) the ARG Trust owns, as of the date hereof, and will own, as of the Closing Date, 2,157,361 shares of Class A Common Stock and 2,207,896 shares of Class B Common Stock (the "ARG Trust Old Company Shares"), (iii) CAI owns, as of the date hereof, and will own, as of the Closing Date, 42,000 shares of Class A Common Stock (the "CAI Old Company Shares"), (iv) Park owns, as of the date hereof, and will own, as of the Closing Date, 1,000,000 shares of Class A Common Stock (the "Park Old Company Shares"), and (v) each of the Management Contributors owns, as of the date hereof, and will own, as of the Closing Date, the shares of Old Company Common Stock set forth on Exhibit A (with respect to each such Management Contributor, the "Management Old Company Shares," together with the Savia Old Company Shares, the ARG Trust Old Company Shares, the CAI Old Company Shares and the Park Old Company Shares, the "Contribution Shares"); WHEREAS, on the terms and subject to the conditions contained herein, Parent desires to acquire and (i) Savia desires to contribute its right, title and interest in and to the Savia Old Company Shares, (ii) the ARG Trust desires to contribute its right, title and interest in and to the ARG Trust Old Company Shares that it will own as of the Closing Date, (iii) CAI desires to contribute its right, title and interest in and to the CAI Old Company Shares, (iv) Park desires to contribute its right, title and interest in and to the Park Old Company Shares, and (v) each of the Management Contributors desires to contribute his right, title and interest in and to his Management Old Company Shares in exchange for membership interests in Parent (collectively, the "Contribution"); WHEREAS, immediately prior to the time that the Merger becomes effective under the DGCL (the "Effective Time"), Parent will own the Contribution Shares; WHEREAS, as of the date hereof, Merger Sub has authority to issue (i) 1,000 shares of common stock, par value $.01 per share (the "MS Common Stock"), 1,000 of which shares of MS Common Stock are issued and outstanding, and (ii) 1,000 shares of preferred stock, par value $.01 per share (the "MS Preferred Stock"), none of which shares is issued or outstanding; WHEREAS, immediately prior to the Effective Time, Merger Sub shall have authority to issue (i) 100,000,000 shares of MS Common Stock, 84,377,861 of which shares shall be issued and outstanding, and (ii) 1,000 shares of MS Preferred Stock, none of which shares shall be issued or outstanding; WHEREAS, Parent owns all of the outstanding shares of MS Common Stock on the date hereof and will own all of the outstanding shares of MS Common Stock immediately prior to the Effective Time; WHEREAS, pursuant to the Merger, each share of Old Company Common Stock owned by Parent will be cancelled and each share of MS Common Stock will be converted into one share of common stock, par value $.01 per share of the surviving corporation in the Merger (the "New Company Common Stock"); WHEREAS, after the Merger, on the terms and subject to the conditions in the Stock Purchase Agreement, (i) FPSH will purchase the FPSH Sale Shares (as defined in the Stock Purchase Agreement), (ii) the Company will purchase 6,411,953 shares of New Company Common Stock owned by Parent and (iii) if the ARG Option (as defined in the Stock Purchase Agreement) is exercised, the ARG Trust will purchase 900,737 shares of New Company Common Stock owned by Parent (collectively, the "Stock Purchase"); WHEREAS, after the closing of the Stock Purchase and the Debt Financing (as defined in the Stock Purchase Agreement), Parent shall be liquidated pursuant to the terms of the LLC Agreement and in such liquidation, Parent will distribute (i) the Cash Distribution to Savia, (ii) if the ARG Option is exercised, the right to receive the ARG Purchase Price (as defined in the Stock Purchase Agreement) to Savia, (iii) such additional amount (the "Additional Purchase -2- Amount"), if any, to Savia, equal to (A) the aggregate number of shares of New Company Common Stock purchased by the Additional Purchasers, multiplied by (B) $3.40, (iv) 4,365,257 shares of New Company Common Stock to the ARG Trust, (v) 42,000 shares of New Company Common Stock to CAI, (vi) 1,000,000 shares of New Company Common Stock to Park, (vii) an aggregate of 685,505 shares of New Company Common Stock to the Management Contributors as set forth on Exhibit A hereto, and (viii) all remaining assets, including shares not purchased pursuant to the ARG Option, if any, to Savia; WHEREAS, Parent, Mr. Romo and the Contributors desire to make certain representations, warranties, covenants and agreements in connection with the transactions described herein; NOW, THEREFORE, in consideration of the representations, warranties, covenants and agreements contained in this Agreement, the parties hereto agree as follows: ARTICLE I CERTAIN DEFINITIONS As used in this Agreement, the following terms shall have the respective meanings set forth below: "Additional Purchase Amount" shall have the meaning set forth in the recitals. "Additional Purchaser" shall mean any Person that agrees pursuant to the form of agreement attached hereto as Exhibit B, between the date hereof and the Closing Date, to purchase, and that purchases, on the Closing Date, shares of New Company Common Stock from Parent, provided, however, that the Additional Purchasers shall be comprised exclusively of bondholders of, and derivatives holders who are now creditors of, Pulsar Internacional, S.A. de C.V. with such bondholders entitled to purchase a maximum of 6,429,150 shares of New Company Common Stock from Parent and such derivatives holders entitled to purchase a maximum of 6,525,328 shares of New Company Common Stock from Parent. "Additional Sale Shares" means the aggregate number of shares of New Company Common Stock, if any, purchased by the Additional Purchasers, provided, however, that in no event shall the aggregate number of Additional Sale Shares exceed 12,954,478 shares of New Company Common Stock. "Affiliate" means any Person that directly, or indirectly, through one or more intermediaries, controls, or is controlled by, or is under common control with, the applicable Person. "Agreement" shall have the meaning set forth in the preamble. "ARG Option" shall have the meaning set forth in the recitals. "ARG Purchase Price" shall have the meaning set forth in the recitals. -3- "ARG Trust" shall have the meaning set forth in the recitals. "ARG Trust Old Company Shares" shall have the meaning set forth in the recitals. "CAI" shall have the meaning set forth in the preamble. "CAI Old Company Shares" shall have the meaning set forth in the recitals. "Cash Distribution" shall mean an amount equal to (i) $263,106,832 MINUS (ii) the product of the aggregate number of Additional Sale Shares multiplied by $3.40. "Class A Common Stock" shall have the meaning set forth in the recitals. "Class B Common Stock" shall have the meaning set forth in the recitals. "Closing" shall have the meaning set forth in Section 2.1. "Closing Date" shall have the meaning set forth in Section 2.1. "Company" shall have the meaning set forth in the recitals. "Company Material Adverse Effect" means any event, change, circumstance, effect or state of facts that is or is reasonably expected to be materially adverse to (a) the business, results of operations, condition (financial or otherwise), assets or liabilities of the Company and its Subsidiaries, taken as a whole, or (b) the ability of the Company to consummate any of the transactions contemplated by this Agreement and the Related Agreements (other than the Indemnification Agreement), except to the extent that such adverse effect results from (i) general economic conditions or changes therein, (ii) financial or securities market fluctuations or conditions, (iii) changes in, or events or conditions affecting, the industries or businesses in which the Company and its Subsidiaries operate, or (iv) the announcement of the transactions contemplated by the Merger Agreement or the Letter of Intent (as defined in the Merger Agreement). "Company Securities" shall have the meaning set forth in Section 3.5. "Contribution" shall have the meaning set forth in the recitals. "Contribution Shares" shall have the meaning set forth in the recitals. "Contributor Disclosure Schedule" means the schedule of disclosures delivered by the Contributors to Parent together with the execution of this Agreement. "Contributor Material Adverse Effect" shall have the meaning set forth in Section 4.1. "Contributors" shall have the meaning set forth in the preamble. "Debt Financing" shall have the meaning set forth in the Merger Agreement. -4- "DGCL" means the General Corporation Law of the State of Delaware. "Effective Time" shall have the meaning set forth in the recitals. "Emprima" shall have the meaning set forth in the preamble. "Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder. "FPSH" means Fox Paine Seminis Holdings, LLC. "FPSH Sale Shares" means (i) 70,972,409 shares of New Company Common Stock minus (ii) the Additional Sale Shares. "Governmental Entity" means any federal, state, local or foreign court or tribunal or administrative, governmental or regulatory body, agency or authority. "Indebtedness" of any Person means (a) all obligations of such Person for borrowed money or for the deferred purchase price of property or services (other than current trade liabilities incurred in the ordinary course of business and payable in accordance with customary practices, and excluding ordinary operating leases), (b) any other obligations of such Person that are evidenced by a note, bond, debenture or similar instrument, (c) all obligations under conditional sale or other title retention agreements relating to property purchased, (d) capital lease or sale-leaseback obligations, (e) all liabilities secured by any Lien on any property (other than ordinary operating leases), and (f) any guarantee or assumption of any of the foregoing in clauses (a) through (e) above or guaranty of minimum equity or capital or any make-whole or similar obligation or any other guarantee of indebtedness of a third party. "Indemnification Agreement" shall mean the Indemnification Agreement, of even date herewith, by and among FPSH, the ARG Trust, Mexican SPC, Desarrollo Empresarial Regiomontano, S.A. de C.V., Emprima, Park, Savia, Mr. Romo and Parent. "Lien" means, with respect to any asset (including any security), any security interests, liens, claims, charges, title defects, deficiencies or exceptions, mortgages, pledges, easements, encroachments, restrictions on use, rights-of-way, rights of first refusal, options, conditional sales or other title retention agreements, covenants, conditions or other similar restrictions (including restrictions on transfer) or other encumbrances of any nature whatsoever in respect of such asset. "LLC Agreement" shall have the meaning set forth in Section 2.3(b). "Management Contributors" shall have the meaning set forth in the preamble. "Management Old Company Shares" shall have the meaning set forth in the recitals. "Membership Interests" shall have the meaning set forth in Section 2.3(b). -5- "Merger" shall have the meaning set forth in the recitals. "Merger Agreement" shall have the meaning set forth in the recitals. "Merger Sub" shall have the meaning set forth in the recitals. "Mexican SPC" shall have the meaning set forth in the preamble. "Mr. Romo" shall have the meaning set forth in the preamble. "MS Common Stock" shall have the meaning set forth in the recitals. "MS Preferred Stock" shall have the meaning set forth in the recitals. "New Company Common Stock" shall have the meaning set forth in the recitals. "Old Company Common Stock" shall have the meaning set forth in the recitals. "Parent" shall have the meaning set forth in the preamble. "Parent Disclosure Schedule" means the schedule of disclosures delivered by Parent to the Contributors together with the execution of this Agreement. "Parent Material Adverse Effect" means any event, change, circumstance, effect or state of facts that is or is reasonably expected to be materially adverse to the ability of Parent or Merger Sub to consummate the transactions contemplated by this Agreement or the Related Agreements. "Park" shall have the meaning set forth in the preamble. "Park Old Company Shares" shall have the meaning set forth in the recitals. "Person" means an individual, corporation, limited liability company, partnership, association, trust, unincorporated organization, other entity or "group" (as defined in the Exchange Act). "Pre-Closing Restructuring Steps" shall mean the items specified under the heading "Pre-Closing Restructuring Steps" in Section 4.3(c) of the Contributor Disclosure Schedule. "Post-Closing Restructuring Steps" shall mean the items specified under the heading "Post-Closing Restructuring Steps" in Section 4.3(c) of the Contributor Disclosure Schedule. "Related Agreements" means the Merger Agreement, the Voting Agreement, the Stock Purchase Agreement and the Indemnification Agreement. "Related Transactions" shall mean the transactions contemplated by the Related Agreements. -6- "Restructuring Steps" shall mean the items set forth in Section 4.3(c) of the Contributor Disclosure Schedule. "Romo Entities" shall mean Mr. Romo, Alejandro Garza Laguerra, Savia, the ARG Trust, Pulsar Internacional, S.A. de C.V., CAI, Desarrollo Empresarial Regiomontano, S.A. de C.V., Mexican SPC, Emprima, Impulsora, S.A. de C.V., Park, Servasa, S.A. de C.V. and each of their respective Affiliates, not including the Company and its Subsidiaries. "Romo Entity Consents" shall have the meaning set forth in Section 4.3(c). "Romo Entity Matters" means (a) any Indebtedness of any Romo Entity or any liabilities related thereto, (b) any restructuring or settlement of any Indebtedness or equity or assets of any Romo Entity or any liabilities related thereto, (c) any sale, transfer, pledge, assignment, encumbrance or other disposition by any Romo Entity of any shares of Company Common Stock or New Company Common Stock or any equity securities of Savia, (d) the Restructuring Steps (including the making and consummation of offers to purchase shares of New Company Common Stock to Persons (other than the Management Contributors) pursuant to any written or oral communications with, or consent solicitations of, such Persons), and (e) any other transactions contemplated by this Agreement. "Savia" shall have the meaning set forth in the preamble. "Savia Expenses" means all out-of-pocket fees and expenses actually and reasonably incurred by Savia or on its behalf in connection with any of the transactions contemplated by this Agreement and the Related Agreements (including fees and expenses of accountants and legal counsel); provided, however, that "Savia Expenses" shall not include (a) any financing charges, (b) any charges related to any Romo Entity Matters (other than the fees and expenses of its US counsel relating solely to the transactions contemplated by this Agreement and the Related Agreements), or (c) the fees and expenses of any financial advisors or investment bankers of the Romo Entities (including Grupo Financiero Atlantico or any of its Affiliates). "Savia Old Company Shares" shall have the meaning set forth in the recitals. "Stock Purchase" shall have the meaning set forth in the recitals. "Stock Purchase Agreement" shall mean the Stock Purchase Agreement by and among FPSH, the ARG Trust, Parent and Merger Sub of even date herewith. "Stockholders' Agreement" means the Stockholders' Agreement, to be entered into at Closing, by and among the Company and the Persons to be listed on the signature pages thereto. "Subsidiary" means, with respect to any Person, any other Person, whether incorporated or unincorporated or domestic or foreign to the United States of which (a) such first Person or any other Subsidiary of such first Person is a general partner (excluding such partnerships where such first Person or any Subsidiary of such first Person does not have a majority of the voting interest in such partnership) or (b) at least a majority of the securities or other interests -7- having by their terms ordinary voting power to elect a majority of the board of directors or others performing similar functions with respect to such corporation or other organization is, directly or indirectly, owned or controlled by such first Person or by any one or more of its Subsidiaries, or by such first Person and one or more of its Subsidiaries. "Voting Agreement" means the voting agreement, of even date herewith, among FPSH and the other Persons party thereto pursuant to which, among other things, each Person (other than FPSH) party thereto agrees to vote all shares of Old Company Common Stock beneficially owned by such Person in favor of the Merger. ARTICLE II THE CONTRIBUTION Section 2.1 The Closing. The closing of the Contribution (the "Closing") will be held at the offices of Wachtell, Lipton, Rosen & Katz, 51 West 52nd Street, New York, New York, at 10:00 a.m. New York City time (or such other place as the parties hereto may agree) on the first business day after satisfaction or waiver of the conditions set forth in Article VI (other than those conditions that are to be satisfied on the Closing Date, but subject to the satisfaction or waiver of such other conditions on the Closing Date) (the "Closing Date"). Section 2.2 Contribution. Subject to the terms and conditions set forth herein, at the Closing, (a) Savia shall contribute to Parent all of Savia's right, title and interests in the Savia Old Company Shares, free and clear of any Lien, (b) the ARG Trust shall contribute to Parent all of its right, title and interests in the ARG Trust Old Company Shares, free and clear of any Lien, (c) CAI shall contribute to Parent all of CAI's right, title and interests in the CAI Old Company Shares, free and clear of any Lien, (d) Park shall contribute to Parent all of Park's right, title and interests in the Park Old Company Shares, free and clear of any Lien, and (e) each of the Management Contributors shall contribute to Parent all of his right, title and interests in his Management Old Company Shares, free and clear of any Lien. Section 2.3 Delivery of Contribution Shares. (a) At the Closing, (i) Savia shall deliver or cause to be delivered to Parent one or more stock certificates representing in the aggregate the Savia Old Company Shares, (ii) the ARG Trust shall deliver or cause to be delivered to Parent one or more stock certificates representing in the aggregate the ARG Trust Old Company Shares, (iii) CAI shall deliver or cause to be delivered to Parent one or more stock certificates representing in the aggregate the CAI Old Company Shares, (iv) Park shall deliver or cause to be delivered to Parent one or more stock certificates representing in the aggregate the Park Old Company Shares, and (v) each of the Management Contributors shall deliver or cause to be delivered to Parent one or more stock certificates representing in the aggregate his Management Old Company Shares, in each case duly endorsed in blank for transfer or accompanied by duly executed stock powers and all applicable stock transfer stamps and other instruments requisite to proper transfer, all in proper form. -8- (b) At the Closing, each of the Contributors and Parent shall enter into the Amended and Restated Limited Liability Agreement of Parent (the "LLC Agreement") substantially identical to the form set forth on Exhibit C, which shall provide that each of the Contributors shall have a membership interest representing such member's proportionate percentage ownership in Parent as set forth in the LLC Agreement. Section 2.4 Distribution of Parent Assets. Immediately after the closing of the Merger, the Stock Purchase and the Debt Financing, Parent shall distribute (a) all of Parent's rights, title and interests in (i) 4,365,257 shares of New Company Common Stock to the ARG Trust, (ii) 42,000 shares of New Company Common Stock to CAI, (iii) 1,000,000 shares of New Company Common Stock to Park, and (iv) an aggregate of 685,505 shares of New Company Common Stock to the Management Contributors as set forth on Exhibit A hereto, and (b) to Savia (i) by wire transfer of immediately available funds (to the account designated by Savia in writing not less than three days prior to the closing of the Merger) an amount equal to the Cash Distribution, (ii) if the ARG Option is exercised, the right to receive the ARG Purchase Price, (iii) the Additional Purchase Amount, if any, and (iv) all remaining assets, including shares of New Company Common Stock, if any. After such distribution, Parent shall be dissolved in accordance with the terms of the LLC Agreement and the provisions of the Delaware Limited Liability Company Act. ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT Parent hereby represents and warrants to the Contributors as follows: Section 3.1 Organization. Parent is duly organized, validly existing and in good standing under the laws of the State of Delaware and has all requisite corporate or similar power and authority to own, lease and operate its properties and to carry on its business as now being conducted, except where the failure to be in good standing or to have such corporate or similar power and authority would not, in the aggregate, have a Parent Material Adverse Effect. Parent was formed solely for the purpose of engaging in the transactions contemplated by this Agreement, the Merger Agreement and the Stock Purchase Agreement. Other than Parent's 100% ownership interest in Merger Sub, on the date hereof, Parent does not own any equity, debt or similar interest in any Person. Parent has delivered to the Contributors accurate and complete copies of the certificate of formation and other governing documents, as currently in effect, of Parent. Parent has not engaged in any activities, owned any assets or been subject to any liabilities, except as is necessary to effect the Merger, the Contribution, the Stock Purchase and the other transactions contemplated by the Related Agreements. Section 3.2 Authority. Parent has all necessary power and authority to execute and deliver this Agreement and any Related Agreement to which it is a party and to consummate the transactions contemplated hereby and thereby. The execution and delivery of this Agreement and any Related Agreement to which it is a party and the consummation of the transactions contemplated hereby and thereby have been duly and validly authorized by the sole member of Parent and no other corporate or similar proceedings on the part of Parent is necessary to -9- authorize this Agreement or any Related Agreement to which it is a party or to consummate the transactions contemplated hereby or thereby. This Agreement and any Related Agreement to which it is a party have been duly and validly executed and delivered by Parent and, assuming due and valid authorization, execution and delivery by the other parties hereto or thereto, constitute the valid, legal and binding agreements of Parent, enforceable against Parent in accordance with their terms. Section 3.3 Consents and Approvals; No Violations. Except as set forth on Section 3.3 of the Parent Disclosure Schedule, no filing with or notice to, and no permit, authorization, consent or approval of, any Governmental Entity or any other Person is necessary for the execution and delivery by Parent of this Agreement or the consummation by Parent of the transactions contemplated by this Agreement or the Related Agreements except where the failure to obtain such permits, authorizations, consents or approvals or to make such filings or give such notice would not have a Parent Material Adverse Effect. Except as set forth in Section 3.3 of the Parent Disclosure Schedule, neither the execution, delivery and performance of this Agreement by Parent, nor the consummation by Parent of the transactions contemplated by this Agreement and the Related Agreements will (a) conflict with or result in any breach of any provision of the certificate of formation of Parent or the LLC Agreement, (b) result in a violation or breach of, or constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, amendment, cancellation or acceleration, or result in the creation of a Lien on any property or asset of Parent, or trigger any rights of first refusal) under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, lease, license, contract, agreement or other instrument or obligation to which Parent is a party or by which its respective properties or assets may be bound, or (c) violate any order, writ, injunction, decree, law, statute, rule or regulation applicable to Parent or its respective properties or assets, except in the case of (b) or (c) above for violations, breaches, defaults or other occurrences that would not, individually or in the aggregate, have a Parent Material Adverse Effect or a Company Material Adverse Effect. Section 3.4 Membership Interests. (a) On the Closing Date, the Membership Interests to be issued pursuant to the transactions contemplated hereby will be duly authorized and validly issued, fully paid and nonassessable and Parent will transfer to each of the Contributors good and valid title to such Contributor's Membership Interests free and clear of any Lien. (b) The shares of New Company Common Stock to be distributed pursuant Section 2.4 hereof will be duly authorized and validly issued, fully paid and non-assessable and Parent will transfer to each of the Contributors good and valid title to such shares of New Company Common Stock free and clear of any Lien. Section 3.5 Capitalization. Immediately following the Effective Time and immediately prior to the closing of the Stock Purchase, the authorized capital stock of the Company shall consist of (i) 200,000,000 shares of New Company Common Stock, 84,377,861 shares of which shall be issued and outstanding and owned exclusively by Parent, and (ii) 5,000,000 shares of Company Preferred Stock, (A) 25,000 shares of which shall be designated as shares of Company Class A Preferred Stock, none of which shall be issued or outstanding, and (B) 25,000 -10- shares of which shall be designated as shares of Company Class B Preferred Stock, 25,000 shares of which shall be issued and outstanding. Except (w) as set forth in the preceding sentence, (x) the options to purchase shares of New Company Common Stock granted under the Amended and Restated Seminis, Inc. 1998 Stock Option Plan which are or become Retained Options (as defined in the Merger Agreement) in accordance with any agreements among Parent, FPSH and any individual owning such Retained Options (as defined in the Merger Agreement), (y) as contemplated by this Agreement, and (z) as provided in the employment agreements and letter agreements set forth in Section 3.5 of the Parent Disclosure Schedule, immediately following the Effective Time and immediately prior to the closing of the Stock Purchase, there will be no outstanding (i) shares of capital stock or other voting securities of the Company, (ii) securities of the Company convertible into or exchangeable for shares of capital stock or voting securities of the Company, (iii) options or other rights to acquire from the Company, or obligations of the Company to issue or sell, any capital stock, voting securities or securities convertible into or exchangeable for capital stock or voting securities of the Company, or (iv) equity equivalents, interests in the ownership or earnings of the Company or other similar rights (collectively, "Company Securities"). Other than pursuant to this Agreement and the Related Agreements (including the Stockholders' Agreement to be executed at the closing of the Stock Purchase), there are no outstanding obligations of the Company to repurchase, redeem or otherwise acquire any Company Securities. Section 3.6 Brokers. No broker, finder or investment banker is entitled to any brokerage, finder's or other fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of Parent. Section 3.7 Acknowledgment. Parent hereby acknowledges that (i) FPSH is relying upon the representations, warranties and covenants of Parent contained in this Agreement in connection with FPSH entering into the Stock Purchase Agreement, and (ii) FPSH shall be entitled to rely upon and enforce such representations, warranties and covenants as provided in this Agreement and in the Indemnification Agreement. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE CONTRIBUTORS, MR. ROMO, EMPRIMA AND MEXICAN SPC Section 4.1 Representations and Warranties with Respect to the Contribution Shares. Each of the Contributors, Emprima, Mexican SPC and Mr. Romo, severally and not jointly, hereby represents and warrants to Parent with respect to itself or himself as set forth below: (a) Organization. Other than as set forth in Section 4.1(a) of the Contributor Disclosure Schedule with respect to the good standing of CAI, such Contributor (other than the Management Contributors) and Mexican SPC is duly organized, validly existing and in good standing under the laws of its respective jurisdiction of incorporation or formation and has all requisite corporate or similar power and authority to own, lease and operate its properties and to carry on its business as now being conducted, except where the failure to be in good standing or -11- to have such corporate or similar power and authority would not have a Contributor Material Adverse Effect. The ARG Trust is duly created under the laws of the United Mexican States and has all requisite power and authority to own, lease and operate its properties and to carry on its business as now being conducted, except where the failure to be in good standing or to have such corporate or similar power and authority would not have a Contributor Material Adverse Effect. The term "Contributor Material Adverse Effect" means any event, change, circumstance or effect that is or is reasonably expected to be materially adverse to the ability of such Contributor (or in the case of Mr. Romo, Emprima, or Mexican SPC, such Person) to consummate the transactions contemplated by this Agreement. (b) Authority. Such Contributor, Mr. Romo, Emprima and Mexican SPC has all necessary power and authority to execute and deliver this Agreement and any Related Agreement to which it is a party and to consummate the transactions contemplated hereby or thereby. The execution and delivery of this Agreement and any Related Agreement to which it is a party and the consummation of the transactions contemplated hereby or thereby have been duly and validly authorized by the board of directors (or other governing body) and stockholders or beneficiaries, if necessary, of such Contributor (other than the ARG Trust and the Management Contributors) and Mexican SPC and the technical committee of the ARG Trust, and except as set forth in Section 4.1(b) of the Contributor Disclosure Schedule, no other corporate or similar proceedings on the part of such Contributor, Mr. Romo, Emprima or Mexican SPC is necessary to authorize this Agreement or any Related Agreement to which it is a party or to consummate the transactions contemplated hereby or thereby. This Agreement and any Related Agreement to which it is a party have been duly and validly executed and delivered by such Contributor, Mr. Romo, Emprima and Mexican SPC and, assuming due and valid authorization, execution and delivery by the other parties hereto and thereto, constitute valid, legal and binding agreements of such Contributor, Mr. Romo, Emprima and Mexican SPC, enforceable against such Contributor, Mr. Romo, Emprima and Mexican SPC in accordance with their terms. (c) Consents and Approvals; No Violations. Except as set forth in Section 4.1(c) or (d) of the Contributor Disclosure Schedule, no filing with or notice to, and no permit, authorization, consent or approval of, any Governmental Entity or any other Person is necessary for the execution and delivery by such Contributor, Mr. Romo, Emprima or Mexican SPC of this Agreement or any Related Agreement to which it is a party or the consummation by such Contributor, Mr. Romo, Emprima or Mexican SPC of the transactions contemplated by this Agreement, the Related Agreements or the Restructuring Steps, except where the failure to obtain such permits, authorizations, consents or approvals or to make such filings or give such notice would not have a Contributor Material Adverse Effect or a Company Material Adverse Effect. Except as set forth in Section 4.1(c) of the Contributor Disclosure Schedule, neither the execution, delivery and performance of this Agreement or any Related Agreement to which it is a party by such Contributor, Mr. Romo, Emprima or Mexican SPC, nor the consummation by such Contributor, Mr. Romo, Emprima or Mexican SPC of the transactions contemplated by this Agreement, the Related Agreements or the Restructuring Steps will (i) conflict with or result in any breach of any provision of the governing documents of such Contributor, Emprima or Mexican SPC, (ii) result in a violation or breach of, or constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, amendment, cancellation or acceleration, or result in the creation of a Lien on any property or asset of such Contributor, Mr. Romo, Emprima or Mexican SPC, or trigger any rights of first refusal) under, any of the -12- terms, conditions or provisions of any note, bond, mortgage, indenture, lease, license, contract, agreement or other instrument or obligation to which such Contributor, Mr. Romo, Emprima or Mexican SPC is a party or by which such Contributor, Mr. Romo, Emprima or Mexican SPC or its respective properties or assets may be bound, or (iii) violate any order, writ, injunction, decree, law, statute, rule or regulation applicable to such Contributor, Mr. Romo, Emprima or Mexican SPC or its respective properties or assets, except in the case of (ii) or (iii) above for violations, breaches, defaults or other occurrences that would not, individually or in the aggregate, have a Contributor Material Adverse Effect or a Company Material Adverse Effect. (d) Ownership of Stock. Subject to the consents set forth in Sections 4.1(b) and 4.1(c) and except as set forth in Section 4.1(d) of the Contributor Disclosure Schedule, (i) Savia is and at all times through the Closing will be the owner, beneficially and of record, of the Savia Old Company Shares, free and clear of any Lien and will transfer to Parent good and valid title to such Savia Old Company Shares free and clear of any Lien, (ii) (A) the ARG Trust is and at all times will be the owner beneficially and of record of the ARG Trust Old Company Shares, free and clear of any Lien and will transfer to Parent good and valid title to such ARG Trust Old Company Shares free and clear of any Lien, (iii) CAI is and at all times through the Closing will be the owner, beneficially and of record, of the CAI Old Company Shares, free and clear of any Lien and will transfer to Parent good and valid title to such CAI Old Company Shares free and clear of any Lien, (iv) Park is and at all times through the Closing will be the owner, beneficially and of record, of the Park Old Company Shares, free and clear of any Lien, and will transfer to Parent good and valid title to such Park Old Company Shares free and clear of any Lien, and (v) each of the Management Contributors is and at all times through the Closing will be the owner, beneficially and of record, of his Management Old Company Shares, free and clear of any Lien and will transfer to Parent good and valid title to such Management Old Company Shares, free and clear of any Lien. (e) Purchase for Investment. The Membership Interests to be acquired by each Contributor will be acquired for its or his own account for the purpose of investment. Such Contributor will refrain from transferring or otherwise disposing of any of the Membership Interests, or any interest therein other than pursuant to this Agreement. (f) Accredited Investor. Such Contributor acknowledges that it or he (i) has such knowledge and experience in business and financial matters with respect to investments in securities to enable it or him to understand and evaluate the risks of such investment and form an investment decision with respect thereto and is able to bear the risk of such investment for an indefinite period and to afford a complete loss thereof, (ii) is an "accredited investor" as defined in Rule 501 of Regulation D under the Securities Act of 1933, as amended and (iii) has had the opportunity to (x) ask such questions as it or he has deemed necessary of, and to receive answers from, representatives of Parent concerning the terms of its purchase of the Membership Interests contemplated hereby and the merits and risks of investing in such securities and (y) to obtain such additional information which Parent possesses or can acquire without unreasonable effort or expense. (g) Brokers. Other than Grupo Financiero Atlantico, no broker, finder or investment banker is entitled to any brokerage, finder's or other fee or commission in connection -13- with the transactions contemplated by this Agreement or the Related Agreements based upon arrangements made by or on behalf of each of the Contributors or any Romo Entity. (h) Acknowledgment. Each of the Contributors, Mexican SPC, Emprima and Mr. Romo hereby acknowledges that (i) FPSH is relying upon the representations, warranties and covenants of each of such Contributors, Mexican SPC, Emprima and Mr. Romo contained in this Agreement in connection with FPSH entering into the Stock Purchase Agreement and (ii) FPSH shall be entitled to rely upon and enforce such representations, warranties and covenants as provided in this Agreement and in the Indemnification Agreement. Section 4.2 Representations and Warranties of Savia. Savia hereby represents and warrants to Parent as follows: (a) Completeness of Assets. For purposes of this Section 4.2, Subsidiaries of Savia shall not include the Company and its Subsidiaries. (i) Except as disclosed in Section 4.2(a)(i) of the Contributor Disclosure Schedule, neither Savia nor any of its Subsidiaries owns any asset, property or right, tangible or intangible, that is used in, or for the benefit of, the business conducted by the Company and its Subsidiaries. (ii) Except as disclosed in the Company SEC Documents (as defined in the Merger Agreement) or in Section 4.2(a)(ii) of the Contributor Disclosure Schedule, (x) neither Savia nor any of its Subsidiaries provides or causes or permits to be provided and, since September 30, 1999, neither Savia nor any of its Subsidiaries has provided or caused or permitted to be provided, to the Company or any of its Subsidiaries, any assets, loans, advances, services or facilities and (y) neither the Company nor any of its Subsidiaries provides or causes to be provided to Savia or any of its Subsidiaries any assets, loans, advances, services or facilities, and, since September 30, 1999, neither the Company nor any of its Subsidiaries has provided or caused to be provided, to Savia or any of its Subsidiaries, any assets, loans, advances, services or facilities. (iii) Except as disclosed in the Company SEC Documents (as defined in the Merger Agreement) or in Section 4.2(a)(iii) of the Contributor Disclosure Schedule, (x) neither the Company nor any of its Subsidiaries purchases from or sells to, and, since September 30, 1999, neither the Company nor any of its Subsidiaries has purchased from or sold to, Savia or any of its Subsidiaries, goods or services, (y) neither the Company nor any of its Subsidiaries, jointly with Savia and any of its Subsidiaries, purchases or sells goods and services, and, since September 30, 1999, neither the Company nor any of its Subsidiaries, jointly with Savia or any of its Subsidiaries, has purchased or sold goods or services and (z) neither the Company nor any of its Subsidiaries has, and, since September 30, 1999, neither the Company nor any of its Subsidiaries has had, any other significant business relationship with Savia or any of its Subsidiaries. (b) No Undisclosed Liabilities. Except as disclosed in Section 4.2(b) of the Contributor Disclosure Schedule, neither Savia nor any of its Subsidiaries (excluding the Company and its Subsidiaries) has, or has incurred or has permitted to be incurred any liabilities -14- or obligations of any nature, whether or not absolute, accrued, contingent or otherwise, that have become or may become liabilities of the Company or any of its Subsidiaries. Except as disclosed in Section 4.3(b) of the Contributor Disclosure Schedule, neither the Company, nor its Subsidiaries, is responsible for any liabilities or obligations of any nature, whether or not absolute, accrued, contingent or otherwise, of Savia or any of its Subsidiaries. Section 4.3 Representations and Warranties with Respect to the Restructurings. Mr. Romo, Mexican SPC, Emprima, and Park, jointly and severally, hereby represent and warrant to Parent: (a) Completeness of Assets. (i) Except as disclosed in Section 4.3(a)(i) of the Contributor Disclosure Schedule, none of the Romo Entities owns any asset, property or right, tangible or intangible, that is used in, or for the benefit of, the business conducted by the Company and its Subsidiaries. (ii) Except as disclosed in the Company SEC Documents (as defined in the Merger Agreement) or in Section 4.3(a)(ii) of the Contributor Disclosure Schedule, (x) no Romo Entity provides or causes to be provided and, since September 30, 1999, no Romo Entity has provided or caused to be provided, to the Company or any of its Subsidiaries, any assets, loans, advances, services or facilities and (y) neither the Company nor any of its Subsidiaries provides or causes to be provided to any Romo Entity any assets, loans, advances, services or facilities, and, since September 30, 1999, neither the Company nor any of its Subsidiaries has provided or caused to be provided, to any Romo Entity, any assets, loans, advances, services or facilities. (iii) Except as disclosed in the Company SEC Documents (as defined in the Merger Agreement) or in Section 4.3(a)(iii) of the Contributor Disclosure Schedule, (x) neither the Company nor any of its Subsidiaries purchases from or sells to, and, since September 30, 1999, neither the Company nor any of its Subsidiaries has purchased from or sold to, any Romo Entity, goods or services, (y) neither the Company nor any of its Subsidiaries, jointly with any Romo Entity, purchases or sells goods and services, and, since September 30, 1999, neither the Company nor any of its Subsidiaries, jointly with any Romo Entity, has purchased or sold goods or services and (z) neither the Company nor any of its Subsidiaries has, and, since September 30, 1999, neither the Company nor any of its Subsidiaries has had, any other significant business relationship with any Romo Entity. (b) No Undisclosed Liabilities. Except as disclosed in Section 4.3(b) of the Contributor Disclosure Schedule, none of the Romo Entities has, or has incurred any liabilities or obligations of any nature, whether or not absolute, accrued, contingent or otherwise, that have become or may become liabilities of the Company or any of its Subsidiaries. Except as disclosed in Section 4.3(b) of the Contributor Disclosure Schedule, neither the Company, nor its Subsidiaries, is responsible for any liabilities or obligations of any nature, whether or not absolute, accrued, contingent or otherwise, of any Romo Entity. -15- (c) Romo Entity Matters. (i) The Romo Entities have obtained the written consents and/or amendments set forth in Section 4.3(c) of the Contributor Disclosure Schedule (the "Romo Entity Consents"). True and complete copies of the Romo Entity Consents have been provided to FPSH. Except as set forth in Section 4.3(c) of the Contributor Disclosure Schedule, other than the Romo Entity Consents, no filing with or notice to, and no permit, authorization, consent or approval of, any Governmental Entity or any other Person is necessary for the consummation by any Romo Entity of the transactions contemplated by this Agreement, the Related Agreements or the Restructuring Steps, except where the failure to obtain such permits, authorizations, consents or approvals or to make such filings or give such notice would not have a Contributor Material Adverse Effect or a Company Material Adverse Effect. (ii) Except as set forth in Section 4.3(c) of the Contributor Disclosure Schedule, the consummation by any Romo Entity of the transactions contemplated by this Agreement, the Related Agreements or the Restructuring Steps will not (A) conflict with or result in any breach of any provision of the governing documents of any Romo Entity, (B) result in a violation or breach of, or constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, amendment, cancellation or acceleration, or result in the creation of a Lien on any property or asset of any Romo Entity, or trigger any rights of first refusal) under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, lease, license, contract, agreement or other instrument or obligation to which any Romo Entity is a party or by which any Romo Entity or its respective properties or assets may be bound, or (C) violate any order, writ, injunction, decree, law, statute, rule or regulation applicable to such Romo Entity or its properties or assets, except in the case of (B) or (C) above for violations, breaches, defaults or other occurrences that would not, individually or in the aggregate, have a Contributor Material Adverse Effect or a Company Material Adverse Effect. (d) Restructuring Steps. To the extent necessary, the applicable Romo Entities have entered into valid, legal and binding agreements providing for the Restructuring Steps. (e) Legal Opinions. Attached hereto as Exhibit D and Exhibit E are true and complete copies of written opinions dated the date hereof from Milbank, Tweed, Hadley & McCloy LLP and Mancera Ernst & Young. ARTICLE V COVENANTS Section 5.1 Pre-Closing Conduct. Each party hereby covenants and agrees that it shall not take any action that would make any of such party's representations or warranties contained in this Agreement or the Related Agreements untrue or incorrect as of the date hereof or the Closing Date or would result in any of the conditions set forth in Article VI not being satisfied. Moreover, each of Mr. Romo and Savia hereby covenants and agrees that it shall not approve -16- any action that will result in the Company violating the Merger Agreement or any Related Agreement and will take all actions to cause the Romo Entities to take such actions necessary to consummate the transactions contemplated by this Agreement and the Related Agreements. Section 5.2 Further Assurances. (a) Parent shall use its best efforts to implement the provisions of this Agreement, and, for such purpose, at the request of any of the Contributors, will, at or after the Closing, promptly execute and deliver, or cause to be so executed and delivered, such documents to any of the Contributors and take such further action as any of the Contributors may deem reasonably necessary or desirable to facilitate or better evidence the consummation of the transactions contemplated hereby. (b) Each of Savia and Mr. Romo shall use its best efforts to implement the provisions of this Agreement, and, for such purpose, at the request of Parent, will, at or after the Closing, promptly execute and deliver, or cause to be so executed and delivered, such documents to Parent, and to take such further action as Parent may deem reasonably necessary or desirable to facilitate or better evidence the consummation of the transactions contemplated hereby, including such action as is required to rectify any breach of the representations contained in Section 4.2 and Section 4.3(a) and (b) of this Agreement. Without limiting the foregoing, to the extent that any contract or agreement to which any Romo Entity is a party, is used in, or for the benefit of, the business conducted by the Company and its Subsidiaries, and is not assignable without the consent of another party, (i) Savia and Mr. Romo shall use reasonable best efforts to obtain the consent of such other party to the assignment of any such contract or agreement to the Company in all cases in which such consent is or may be required for such assignment, and (ii) if such consent shall not be obtained, Savia and Mr. Romo shall cause the Romo Entities to cooperate to put into place a reasonable arrangement designed to provide for the Company the benefits intended to be assigned to the Company or one of its Subsidiaries under the relevant contract or agreement, including enforcement at the cost and for the account of the Company or one of its Subsidiaries of any rights of any Romo Entity against the other party thereto arising out of the breach or cancellation thereof by such other party or otherwise. Section 5.3 Notification of Certain Matters. The parties hereto shall give prompt notice to one another of (i) the occurrence or nonoccurrence of any event the occurrence or nonoccurrence of which would be likely to cause (A) any representation or warranty contained in this Agreement or the Related Agreements to be untrue or inaccurate, or (B) any covenant, condition or agreement contained in this Agreement or the Related Agreements not to be complied with or satisfied, and (ii) any failure of any party hereto to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it under this Agreement or the Related Agreements; provided, however, that the delivery of any notice pursuant to this Section 5.3 shall not affect the representations, warranties or covenants of the parties hereto or limit or otherwise affect the remedies available to any party hereunder. Section 5.4 Public Announcements. Parent and the Contributors, as the case may be, will consult with each other before issuing any press release or otherwise making any public statements with respect to this Agreement, the Related Agreements or the other transactions contemplated hereby or thereby, and shall not issue any such press release or make any such -17- public statement without the prior consent of the other parties hereto (which consent shall not be unreasonably withheld or delayed), except as may be required by applicable law or by obligations pursuant to any listing agreement with any national securities exchange or national market system to which Parent, the Contributors or their Affiliates is a party. The parties hereto have agreed on the text of the joint press release by which announcement of the execution of this Agreement will be made. Section 5.5 Additional Agreements, Reasonable Best Efforts. (a) Prior to the Closing Date, upon the terms and subject to the conditions of this Agreement, each of Parent, Emprima, Mexican SPC, Mr. Romo and the Contributors agrees to use its reasonable best efforts to take, or cause to be taken, all actions, and to do, or cause to be done, all things necessary, proper or advisable under any applicable laws, rules or regulations to consummate and make effective as promptly as practicable the Contribution and the Related Transactions and the other transactions contemplated by this Agreement and the Related Agreements, including, but not limited to, (i) the preparation and filing of all forms, registrations and notices required to be filed to consummate the Contribution and the Related Transactions and the other transactions contemplated hereby and thereby and the taking of such actions as are necessary to obtain any requisite approvals, consents, orders, exemptions or waivers by any third party, including any Governmental Entity, and (ii) the satisfaction of the conditions to the consummation of the Contribution and the Related Transactions. In addition, no party hereto shall take any action after the date hereof that would reasonably be expected to materially delay the obtaining of, or result in not obtaining, any permission, approval or consent from any Governmental Entity necessary to be obtained prior to the consummation of the Contribution and the Related Transactions. (b) Prior to the Effective Time, each party shall promptly consult with the other parties hereto with respect to, provide any necessary information with respect to and provide the other (or its counsel) copies of, all filings made by such party with any Governmental Entity or any other information supplied by such party to a Governmental Entity in connection with this Agreement, the Related Agreements and the transactions contemplated hereby and thereby. Each party hereto shall promptly inform the other of any communication from any Governmental Entity regarding the Contribution or any of the Related Transactions. If any party hereto or Affiliate thereof receives a request for additional information or documentary material from any such Governmental Entity with respect to the Contribution or the Related Transactions, then such party will endeavor in good faith to make, or cause to be made, as soon as reasonably practicable and after consultation with the other party, an appropriate response in compliance with such request. (c) Each of Emprima, the ARG Trust, CAI, Park, Mr. Romo, Mexican SPC and the Management Contributors hereby covenants, and if the ARG Option is not exercised, Savia covenants, that upon the consummation of the transactions contemplated by this Agreement, the Merger Agreement and the Stock Purchase Agreement, each such party shall execute the Stockholders' Agreement. -18- ARTICLE VI CONDITIONS TO CONSUMMATION OF THE CONTRIBUTION The obligation of Parent, on the one hand, and the Contributors and Mr. Romo, on the other hand, to consummate the Contribution is subject to (a) the satisfaction or waiver of the conditions to the Merger set forth in Sections 7.1(b) and 7.2 (other than Section 7.2(c)) of the Merger Agreement, (b) the Pre-Closing Restructuring Steps having occurred and (c) the Post-Closing Restructuring Steps occurring substantially concurrently with the Closing; provided, however, that no party hereto shall have the right to assert the nonfulfillment of the condition set forth in clause (b) or clause (c) as a basis for failing to consummate the Contribution, if (x) the non-occurrence of any Restructuring Step is the result of a breach by any Romo Entity, or (y) any of Parent, the Contributors or Mr. Romo shall have failed to use its reasonable best efforts to cause the Restructuring Steps to have occurred. ARTICLE VII TERMINATION; AMENDMENT; WAIVER Section 7.1 Termination. This Agreement may be terminated by any party hereto and the Contribution may be abandoned at any time prior to the Closing if the Merger Agreement is terminated in accordance with its terms. Section 7.2 Effect of Termination. In the event of the termination and abandonment of this Agreement pursuant to Section 7.1, written notice thereof shall forthwith be given to the other party or parties, and this Agreement shall forthwith become void and have no effect, without any liability on the part of any party hereto or its Affiliates, directors, officers or stockholders, other than the provisions of this Section 7.2 and Section 7.3(a) of this Agreement; provided, however, that nothing contained in this Section 7.2, shall relieve any party from liability for any breach of this Agreement. Section 7.3 Fees and Expenses. (a) If the transactions contemplated by this Agreement are not consummated for any reason, all costs and expenses incurred in connection with this Agreement shall be paid by the party incurring such expenses. (b) If the transactions contemplated by this Agreement and the Related Agreements are consummated, on the Closing Date, Parent shall cause the Company to pay to Savia by wire transfer of immediately available funds (to the account or accounts designated by Savia in writing not less than one business day prior to Closing) all Savia Expenses; provided, however, that the Savia Expenses shall not exceed $3.5 million. Section 7.4 Amendment. This Agreement may be amended at any time with the prior written consent of FPSH by an instrument in writing signed by each party hereto; provided, however, that any amendment that would prevent or delay the Closing shall also require the written consent of the Special Committee (as defined in the Merger Agreement), such consent not to be unreasonably withheld or delayed. -19- Section 7.5 Waiver. Subject to the prior written consent of FPSH, at any time prior to the Effective Time, any party hereto may (a) extend the time for the performance of any of the obligations or other acts of the other party, (b) waive any inaccuracies in the representations and warranties of the other party contained herein or in any document, certificate or writing delivered pursuant hereto, or (c) waive compliance by the other party with any of the agreements or conditions contained herein; provided, however, that in the case of clauses (a) and (c), that any extension or waiver that would prevent or delay the Closing shall also require the written consent of the Special Committee (as defined in the Merger Agreement), such consent not to be unreasonably withheld or delayed. Any agreement on the part of any party hereto to any such extension or waiver shall be valid only if set forth in an instrument in writing signed on behalf of such party. The failure of any party hereto to assert any of its rights hereunder shall not constitute a waiver of such rights. Section 7.6 Survival. The parties hereto hereby acknowledge that indemnification of FPSH with respect to breaches of representations, warranties and covenants contained in this Agreement shall be made pursuant to the Indemnification Agreement and that the representations and warranties in this Agreement shall survive as provided in this Section 7.6 for such purpose. The representations and warranties in this Agreement shall survive until the two-year anniversary of the Closing; provided, however, that the representations and warranties contained in Section 4.1(d) of this Agreement shall survive indefinitely. Any covenants or agreements contained herein or made pursuant hereto that by their terms are to be performed prior to the Closing Date, shall not survive beyond the Closing Date. Any covenants or agreements contained herein or made pursuant hereto that by their terms are to be performed in whole or in part after the Closing Date, shall survive until fully discharged. Section 7.7 Indemnification by Management Contributors. Each of the Management Contributors shall, severally and not jointly, indemnify the Company and hold it harmless from and against any loss, liability, claim, cost, damage or expense (including reasonable legal fees and expenses) suffered or incurred by the Company to the extent arising from any breach or inaccuracy of any representation or warranty made by such Management Contributor pursuant to Section 4.1 or the nonfulfillment by such Management Contributor of any covenant or agreement of such Management Contributor under this Agreement. For purposes of this Section 7.7, the Company shall be a third party beneficiary of this Agreement. Section 7.8 Sole Remedy. Except as otherwise provided in Section 7.7, after the Closing, and conditioned thereupon, to the extent permitted by law, the indemnities set forth in the Indemnification Agreement shall be the exclusive remedies of the parties hereto and their respective officers, directors, employees, agents and Affiliates for any misrepresentation, breach of warranty or nonfulfillment or failure to be performed of any covenant or agreement contained in this Agreement, and the parties shall not be entitled to rescission of this Agreement or to any further indemnification rights or claims of any nature whatsoever in respect thereof, all of which the parties hereto hereby waive. -20- ARTICLE VIII MISCELLANEOUS Section 8.1 Entire Agreement; Assignment. This Agreement and the Related Agreements (including the schedules and Exhibits hereto and thereto) constitute the entire agreement among the parties hereto with respect to the subject matter hereof and supersede all other prior agreements and understandings, both written and oral, between the parties hereto with respect to the subject matter hereof. This Agreement shall not be assigned by operation of law or otherwise. Section 8.2 Severability. If any provision of this Agreement, or the application thereof to any Person or circumstance, is held invalid or unenforceable, the remainder of this Agreement, and the application of such provision to other Persons or circumstances shall not be affected thereby, and to such end, the provisions of this Agreement are agreed to be severable. Upon such determination that any provision is invalid or unenforceable, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties hereto as closely as possible in a mutually acceptable manner. Section 8.3 Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing (including by facsimile with written confirmation thereof) and unless otherwise expressly provided herein, shall be delivered during normal business hours by hand, by Federal Express or other nationally recognized overnight commercial delivery service, or by facsimile notice, confirmation of receipt received, addressed as follows, or to such other address as may be hereafter notified by the respective parties hereto: (a) If to Parent: c/o Savia, S.A. de C.V. Ave. Roble No. 565 Ote. - Piso 4 Colonia Valle Del Campestre Garza Garcia, N.L. 66265 Mexico Attention: Bernardo Jimenez Barrera Facsimile: 011-52-818-399-5606 With a copy, which will not constitute notice, to: Milbank, Tweed, Hadley & McCloy LLP One Chase Manhattan Plaza New York, New York 10005 Attention: Howard S. Kelberg, Esq. Facsimile: 212-822-5530 With a copy, which will not constitute notice, to: Fox Paine & Company, LLC 950 Tower Lane, Suite 1950 -21- Foster City, California 94404 Attention: W. Dexter Paine, III Facsimile: 650-525-1396 With a copy, which will not constitute notice, to: Wachtell, Lipton, Rosen & Katz 51 West 52nd Street New York, New York 10019 Attention: Mitchell S. Presser, Esq. Facsimile: 212-403-2000 With copies, which will not constitute notice, to: Seminis, Inc. 2700 Camino del Sol Oxnard, California 93030-7967 Attention: Chairman of the Special Committee of the Board of Directors Facsimile: 805-918-2530 Seminis, Inc. 2700 Camino del Sol Oxnard, California 93030-7967 Attention: General Counsel Facsimile: 805-918-2530 Skadden, Arps, Slate, Meagher & Flom LLP Four Times Square New York, NY 10036 Attention: Peter A. Atkins, Esq. David J. Friedman, Esq. Facsimile: 212-735-2000 (b) If to the Contributors, Mr. Romo, Mexican SPC or Emprima: Savia, S.A. de C.V. Ave. Roble No. 565 Ote. - Piso 4 Colonia Valle Del Campestre Garza Garcia, N.L. 66265 Mexico Attention: Bernardo Jimenez Barrera Facsimile: 011-52-818-399-5606 With a copy, which will not constitute notice, to: Fox Paine & Company, LLC 950 Tower Lane, Suite 1950 -22- Foster City, California 94404 Attention: W. Dexter Paine, III Facsimile: 650-525-1396 With a copy, which will not constitute notice, to: Wachtell, Lipton, Rosen & Katz 51 West 52nd Street New York, New York 10019 Attention: Mitchell S. Presser, Esq. Facsimile: 212-403-2000 With a copy, which will not constitute notice, to: Milbank, Tweed, Hadley & McCloy LLP One Chase Manhattan Plaza New York, New York 10005 Attention: Howard S. Kelberg, Esq. Facsimile: 212-822-5530 With copies, which will not constitute notice, to: Seminis, Inc. 2700 Camino del Sol Oxnard, California 93030-7967 Attention: Chairman of the Special Committee of the Board of Directors Facsimile: 805-918-2530 Seminis, Inc. 2700 Camino del Sol Oxnard, California 93030-7967 Attention: General Counsel Facsimile: 805-918-2530 Skadden, Arps, Slate, Meagher & Flom LLP Four Times Square New York, NY 10036 Attention: Peter A. Atkins, Esq. David J. Friedman, Esq. Facsimile: 212-735-2000 Section 8.4 Governing Law; Consent to Jurisdiction; Waiver of Jury Trial. (a) This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to the principles of conflicts of law thereof. -23- (b) The parties hereto hereby agree and consent to be subject to the exclusive jurisdiction of the courts of the State of Delaware sitting in the County of New Castle and the United States District Court for the State of Delaware in any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the Contribution. Each party hereto hereby irrevocably waives, to the fullest extent permitted by law, (i) any objection that it may now or hereafter have to laying venue of any suit, action or proceeding brought in such courts, and (ii) any claim that any suit, action or proceeding brought in such courts has been brought in an inconvenient forum. (c) Each of the Contributors, Mr. Romo, Emprima and Mexican SPC irrevocably appoints CT Corporation Systems, which currently maintains an office at 2711 Centerville Road, Suite 400, Wilmington, Delaware, 19808, as its agent to receive service of process or other legal summons for purposes of any such action or proceeding. So long as any party hereto has any obligation under this Agreement, it will maintain a duly appointed agent in the State of Delaware for the service of such process or summons, and if it fails to maintain such an agent, any such process or summons may be served by mailing a copy thereof by registered mail, or a form of mail substantially equivalent thereto, addressed to it at its address as provided for notices hereunder. (d) EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTIONS OF ANY PARTY HERETO IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT THEREOF. Section 8.5 Specific Performance. The parties hereto agree that irreparable damage would occur if any provision of this Agreement were not performed in accordance with the terms hereof and that the parties shall be entitled, without posting a bond or similar indemnity, to an injunction or injunctions to prevent breaches of this Agreement or to enforce specifically the performance of the terms and provisions hereof in any federal court located in the State of Delaware or any Delaware state court, in addition to any other remedy to which they are entitled at law or in equity. Section 8.6 Interpretation. When a reference is made in this Agreement to Articles, Sections, Exhibits or Schedules, such reference shall be to an Article or Section of or Exhibit or Schedule to this Agreement unless otherwise indicated. The table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Whenever the words "include," "includes" or "including" are used in this Agreement, they shall be deemed to be followed by the words "without limitation." Section 8.7 Parties in Interest. (a) Subject to Section 8.7(b), this Agreement shall be binding upon and inure solely to the benefit of each party hereto and its successors and permitted assigns, and except as provided in Section 7.4, 7.5 and Section 7.7, nothing in this Agreement, express or implied, is -24- intended to or shall confer upon any other Person any rights, benefits or remedies of any nature whatsoever under or by reason of this Agreement. (b) Notwithstanding anything to the contrary contained herein, (i) FPSH shall be a third party beneficiary of this Agreement and shall have the right to enforce any right under this Agreement exercisable by Parent, the Contributors, Mr. Romo, Emprima or Mexican SPC to the extent such right is not enforced by Parent, the Contributors, Mr. Romo, Mexican SPC or Emprima (ii) any representations, warranties or covenants made by Parent, any Contributor, Mr. Romo, Emprima or Mexican SPC shall be deemed made to (and, with respect to covenants, shall be enforceable (to the extent such right is not enforced by any Contributor, Mr. Romo, the ARG Trust, Mexican SPC or Parent) by FPSH, (iii) any notice under this Agreement given (or required to be given) to Parent, any Contributor, Mr. Romo, the ARG Trust or Mexican SPC shall be simultaneously given to FPSH and to the Special Committee (as defined in the Merger Agreement), and (iv) anything under this Agreement that must be approved by or acceptable to Parent, any Contributor, Mr. Romo, the ARG Trust or Mexican SPC must also be approved or accepted by FPSH. The parties hereto acknowledge that the Company would not have entered into the Merger Agreement had the parties hereto not entered into this Agreement. Section 8.8 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original, but all of which shall constitute one and the same agreement. -25- IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be duly executed on its behalf as of the day and year first above written. SEMINIS ACQUISITION LLC By: /s/ Bernardo Jimenez --------------------------------- Name: Bernardo Jimenez Title: President SAVIA, S.A. DE C.V. By: /s/ Bernardo Jimenez --------------------------------- Name: Bernardo Jimenez Title: Attorney in Fact BANCA AFIRME, S.A., INSTITUCION DE BANCA MULTIPLE, AFIRME GRUPO FINANCIERO, AS TRUSTEE, UNDER THE IRREVOCABLE ADMINISTRATION AND PAYMENT TRUST number 167-5 (FIDEICOMISO IRREVOCABLE DE ADMINISTRACION Y PAGO NUMERO 167-5) By: /s/ Adrian J. Lozano --------------------------------- Name: Adrian J. Lozano Title: Delegado Fiduciario By: /s/ Beatriz Garza L --------------------------------- Name: Beatriz Garza L. Title: Delegado Fiduciario CONJUNTO ADMINISTRATIVO INTEGRAL, S.A. DE C.V. By: /s/ Carlos G. Mahuad --------------------------------- Name: Carlos G. Mahuad Title: Attorney in Fact By: /s/ Heriberto S. Muzza --------------------------------- Name: Heriberto S. Muzza Title: Attorney in Fact [SIGNATURE PAGE TO CONTRIBUTION AGREEMENT] DESARROLLO CONSOLIDADO DE NEGOCIOS, S.A. DE C.V. By: /s/ Gustavo Adolfo Romo Garza --------------------------------- Name: Gustavo Adolfo Romo Garza Title: Attorney in Fact EMPRIMA, S.A. DE C.V. By: /s/ Carlos G. Mahuad --------------------------------- Name: Carlos G. Mahuad Title: Attorney in Fact By: /s/ Heriberto S. Muzza --------------------------------- Name: Heriberto S. Muzza Title: Attorney in Fact PARK FINANCIAL GROUP By: /s/ Bernardo Jimenez --------------------------------- Name: Bernardo Jimenez Title: Authorized Officer [SIGNATURE PAGE TO CONTRIBUTION AGREEMENT] By: /s/ Alfonso Romo Garza --------------------------------- Name: Alfonso Romo Garza By: /s/ Bruno Ferrari --------------------------------- Name: Bruno Ferrari By: /s/ Gaspar Alvarez --------------------------------- Name: Gaspar Alvarez By: /s/ Charles Edward Green --------------------------------- Name: Charles Edward Green By: /s/ Franco Campana --------------------------------- Name: Franco Campana By: /s/ Jean Pierre Posa --------------------------------- Name: Jean Pierre Posa By: /s/ Luis Maiz --------------------------------- Name: Luis Maiz By: /s/ Mateo Mazal Beja --------------------------------- Name: Mateo Mazal Beja By: /s/ Bernardo Jimenez --------------------------------- Name: Bernardo Jimenez By: /s/ Adrian Rodriguez --------------------------------- Name: Adrian Rodriguez [SIGNATURE PAGE TO CONTRIBUTION AGREEMENT] EX-4.1 7 v94566orexv4w1.txt EXHIBIT 4.1 EXHIBIT 4.1 CONFORMED COPY ================================================================================ SEMINIS VEGETABLE SEEDS, INC., the Guarantors named herein and Wells Fargo Bank, National Association, as Trustee -------------------------------------- INDENTURE Dated as of September 29, 2003 -------------------------------------- $190,000,000 10-1/4% Senior Subordinated Notes due 2013 ================================================================================ CROSS-REFERENCE TABLE
TIA Indenture Section Section ------- ----------- 310(a)(1)................................................................ 7.10 (a)(2)................................................................ 7.10 (a)(3)................................................................ N.A. (a)(4)................................................................ N.A. (a)(5)................................................................ N.A. (b)................................................................... 7.08; 7.10 (b)(1)................................................................ 7.10 (c)................................................................... N.A. 311(a)................................................................... 7.11 (b)................................................................... 7.11 (c)................................................................... N.A. 312(a)................................................................... 2.06 (b)................................................................... 13.03 (c)................................................................... 13.03 313(a)................................................................... 7.06 (b)(1)................................................................ N.A. (b)(2)................................................................ 7.06; 11.04 (c)................................................................... 7.06; 11.04 (d)................................................................... 7.06 314(a)................................................................... 4.18; 13.04 (b)................................................................... 11.02 (c)(1)................................................................ 13.04 (c)(2)................................................................ 13.04 (c)(3)................................................................ N.A. (d)................................................................... 11.04 (e)................................................................... 13.05 (f)................................................................... N.A. 315(a)................................................................... 7.01(b) (b)................................................................... 7.05 (c)................................................................... 7.01(a) (d)................................................................... 7.01(c) (e)................................................................... 6.12 316(a) (last sentence)................................................... 2.10 (a)(1)(A)............................................................. 6.05 (a)(1)(B)............................................................. 6.04 (a)(2)................................................................ N.A. (b)................................................................... 6.08 (c)................................................................... 8.04 317(a)(1)................................................................ 6.09 (a)(2)................................................................ 6.10 (b)................................................................... 2.05; 7.12 318(a)................................................................... 12.01
- ----------------------- N.A. means Not Applicable Note: This Cross-Reference Table shall not, for any purpose, be deemed to be a part of this Indenture TABLE OF CONTENTS
Page ---- ARTICLE ONE DEFINITIONS AND INCORPORATION BY REFERENCE SECTION 1.01. Definitions..................................................................... 1 SECTION 1.02. Incorporation by Reference of Trust Indenture Act............................... 34 SECTION 1.03. Rules of Construction........................................................... 35 ARTICLE Two THE SECURITIES SECTION 2.01. Amount of Notes................................................................. 36 SECTION 2.02. Form and Dating................................................................. 36 SECTION 2.03. Execution and Authentication.................................................... 38 SECTION 2.04. Registrar and Paying Agent...................................................... 39 SECTION 2.05. Paying Agent To Hold Money in Trust............................................. 39 SECTION 2.06. Holder Lists.................................................................... 40 SECTION 2.07. Transfer and Exchange........................................................... 40 SECTION 2.08. Replacement Notes............................................................... 41 SECTION 2.09. Outstanding Notes............................................................... 41 SECTION 2.10. Treasury Notes.................................................................. 41 SECTION 2.11. Temporary Notes................................................................. 42 SECTION 2.12. Cancellation.................................................................... 42 SECTION 2.13. Defaulted Interest.............................................................. 42 SECTION 2.14. CUSIP Number.................................................................... 43 SECTION 2.15. Deposit of Moneys............................................................... 43 SECTION 2.16. Book-Entry Provisions for Global Notes.......................................... 43 SECTION 2.17. Special Transfer Provisions..................................................... 45 SECTION 2.18. Computation of Interest......................................................... 50 ARTICLE Three REDEMPTION SECTION 3.01. Election To Redeem; Notices to Trustee.......................................... 50 SECTION 3.02. Selection by Trustee of Notes To Be Redeemed.................................... 50 SECTION 3.03. Notice of Redemption............................................................ 50 SECTION 3.04. Effect of Notice of Redemption.................................................. 52 SECTION 3.05. Deposit of Redemption Price..................................................... 52 SECTION 3.06. Notes Redeemed in Part.......................................................... 52
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Page ---- SECTION 3.07. Other Mandatory Redemption..................................................... 53 ARTICLE FOUR COVENANTS SECTION 4.01. Payment of Notes............................................................... 53 SECTION 4.02. Maintenance of Office or Agency................................................ 53 SECTION 4.03. Legal Existence................................................................ 54 SECTION 4.04. [Reserved]..................................................................... 54 SECTION 4.05. Waiver of Stay, Extension or Usury Laws........................................ 54 SECTION 4.06. Compliance Certificate......................................................... 54 SECTION 4.07. Payment of Taxes............................................................... 55 SECTION 4.08. Repurchase at the Option of Holders upon Change of Control..................... 55 SECTION 4.09. Limitation on Indebtedness and Issuance of Preferred Stock..................... 57 SECTION 4.10. Limitation on Restricted Payments.............................................. 60 SECTION 4.11. Limitation on Liens............................................................ 65 SECTION 4.12. Limitation on Asset Sales...................................................... 66 SECTION 4.13. Limitation on Dividends and Other Payments Affecting Restricted Subsidiaries................................................................ 69 SECTION 4.14. Limitation on Transactions with Affiliates..................................... 71 SECTION 4.15. Designation of Restricted and Unrestricted Subsidiaries........................ 74 SECTION 4.16. Payments for Consent........................................................... 74 SECTION 4.17. Reports........................................................................ 75 SECTION 4.18. Creation of Subsidiaries; Additional Subsidiary Guarantees..................... 75 SECTION 4.19. Prohibition on Incurrence of Senior Subordinated Debt.......................... 75 ARTICLE FIVE SUCCESSOR CORPORATION SECTION 5.01. Merger, Consolidation and Sale of Assets....................................... 76 SECTION 5.02. Successor Person Substituted................................................... 77 ARTICLE SIX DEFAULTS AND REMEDIES SECTION 6.01. Events of Default.............................................................. 78 SECTION 6.02. Acceleration of Maturity; Rescission........................................... 80 SECTION 6.03. Other Remedies................................................................. 81 SECTION 6.04. Waiver of Past Defaults and Events of Default.................................. 81 SECTION 6.05. Control by Majority............................................................ 81 SECTION 6.06. Limitation on Suits............................................................ 82
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Page ---- SECTION 6.07. No Personal Liability of Directors, Officers, Employees and Stockholders....... 82 SECTION 6.08. Rights of Holders To Receive Payment........................................... 83 SECTION 6.09. Collection Suit by Trustee..................................................... 83 SECTION 6.10. Trustee May File Proofs of Claim............................................... 83 SECTION 6.11. Priorities..................................................................... 84 SECTION 6.12. Undertaking for Costs.......................................................... 84 ARTICLE SEVEN TRUSTEE SECTION 7.01. Duties of Trustee.............................................................. 84 SECTION 7.02. Rights of Trustee.............................................................. 86 SECTION 7.03. Individual Rights of Trustee................................................... 87 SECTION 7.04. Trustee's Disclaimer........................................................... 87 SECTION 7.05. Notice of Defaults............................................................. 87 SECTION 7.06. Reports by Trustee to Holders.................................................. 88 SECTION 7.07. Compensation and Indemnity..................................................... 88 SECTION 7.08. Replacement of Trustee......................................................... 89 SECTION 7.09. Successor Trustee by Consolidation, Merger, etc. .............................. 90 SECTION 7.10. Eligibility; Disqualification.................................................. 90 SECTION 7.11. Preferential Collection of Claims Against Company.............................. 90 SECTION 7.12. Paying Agents.................................................................. 91 ARTICLE EIGHT MODIFICATION AND WAIVER SECTION 8.01. Without Consent of Holders..................................................... 91 SECTION 8.02. With Consent of Holders........................................................ 92 SECTION 8.03. Compliance with Trust Indenture Act. .......................................... 94 SECTION 8.04. Revocation and Effect of Consents.............................................. 94 SECTION 8.05. Notation on or Exchange of Notes............................................... 94 SECTION 8.06. Trustee To Sign Amendments, etc. .............................................. 94 ARTICLE NINE DISCHARGE OF INDENTURE; DEFEASANCE SECTION 9.01. Discharge of Liability on Notes; Defeasance.................................... 95 SECTION 9.02. Conditions to Defeasance....................................................... 97 SECTION 9.03. Deposited Money and Government Securities To Be Held in Trust; Other Miscellaneous Provisions....................................... 98
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Page ---- SECTION 9.04. Reinstatement.................................................................. 98 SECTION 9.05. Moneys Held by Paying Agent.................................................... 99 SECTION 9.06. Moneys Held by Trustee......................................................... 99 ARTICLE TEN GUARANTEE OF SECURITIES SECTION 10.01. Guarantee...................................................................... 100 SECTION 10.02. Execution and Delivery of Guarantee............................................ 101 SECTION 10.03. Release of Subsidiary Guarantors............................................... 101 SECTION 10.04. Waiver of Subrogation.......................................................... 102 SECTION 10.05. Notice to Trustee.............................................................. 103 SECTION 10.06. Subordination of Guarantee..................................................... 103 ARTICLE ELEVEN SUBORDINATION SECTION 11.01. Notes Subordinated to Senior Debt.............................................. 103 SECTION 11.02. Suspension of Payment When Senior Debt Is in Default........................... 104 SECTION 11.03. Obligations Subordinated to Prior Payment of All Senior Debt on Dissolution, Liquidation or Reorganization of Company...................... 106 SECTION 11.04. Payments May Be Paid Prior to Dissolution...................................... 107 SECTION 11.05. Holders To Be Subrogated to Rights of Holders of Senior Debt. ................. 108 SECTION 11.06. Obligations of the Company Unconditional....................................... 108 SECTION 11.07. Reliance on Judicial Order or Certificate of Liquidating Agent................. 109 SECTION 11.08. Subordination Rights Not Impaired by Acts or Omissions of the Company or Holders of Senior Debt. .................................... 109 SECTION 11.09. Holders Authorize Trustee To Effectuate Subordination of Obligations........... 110 SECTION 11.10. This Article Eleven Not To Prevent Events of Default........................... 110 SECTION 11.11. Amendments or Modifications to Article Eleven.................................. 110 SECTION 11.12. Notice to Trustee; Rights of Trustee and Paying Agent.......................... 111 ARTICLE TWELVE MISCELLANEOUS SECTION 12.01. Trust Indenture Act Controls................................................... 112 SECTION 12.02. Notices........................................................................ 112 SECTION 12.03. Communications by Holders with Other Holders................................... 113 SECTION 12.04. Certificate and Opinion as to Conditions Precedent............................. 113 SECTION 12.05. Statements Required in Certificate and Opinion................................. 114
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Page ---- SECTION 12.06. Rules by Trustee and Agents.................................................... 114 SECTION 12.07. Legal Holidays................................................................. 114 SECTION 12.08. Governing Law.................................................................. 114 SECTION 12.09. No Adverse Interpretation of Other Agreements.................................. 115 SECTION 12.10. Successors..................................................................... 115 SECTION 12.11. Multiple Counterparts.......................................................... 115 SECTION 12.12. Table of Contents, Headings, etc. ............................................. 115 SECTION 12.13. Separability................................................................... 115 EXHIBITS Exhibit A Form of Note................................................................... A-1 Exhibit B Form of Legend for Rule 144A Global Notes and Other Notes That Are Restricted Notes.................................................. B-1 Exhibit C Form of Legend for Temporary Regulation S Global Note.......................... C-1 Exhibit D Form of Legend for Global Note................................................. D-1 Exhibit E Form of Certificate To Be Delivered in Connection with Transfers Pursuant to Regulation S................................................... E-1 Exhibit F Form of Guarantee.............................................................. F-1 Exhibit G Form of Certificate from Acquiring Institutional Accredited Investor........... G-1 Exhibit H Form of Legend for Temporary Regulation S Global Note.......................... H-1
-v- INDENTURE, dated as of September 29, 2003, by and among SEMINIS VEGETABLE SEEDS, INC., a California corporation, as issuer (the "Company"), the Guarantors set forth on the signature pages hereto and Wells Fargo Bank, National Association, a national banking association organized under the laws of the United States of America, as trustee (the "Trustee"). Each party agrees as follows for the benefit of the other parties and for the equal and ratable benefit of the Holders of the Notes. ARTICLE ONE DEFINITIONS AND INCORPORATION BY REFERENCE SECTION 1.01. Definitions. "Acceleration Notice" has the meaning set forth in Section 6.02(a). "Acquired Debt" means, with respect to any specified Person: (1) Indebtedness of any other Person existing at the time such other Person is merged with or into or became a Restricted Subsidiary of such specified Person, and in each case such Indebtedness was not incurred in connection with, or in contemplation of, such other Person merging with or into, or becoming a Subsidiary of, such specified Person; and (2) Indebtedness secured by a Lien encumbering any asset acquired by such specified Person. "Acquisition Transactions" means the acquisition by the Principals, Alfonso Romo Garza and certain of his Affiliates, certain members of management of the Company and Holdings and certain other parties of Equity Interests in Holdings and the other transactions, payments (including the repayment of indebtedness) and agreements set forth in or contemplated by the Acquisition Transactions Agreements and as described in the Offering Memorandum (including, without limitation, the repurchase or redemption of the Class B Redeemable Preferred Stock of Holdings and the payment of accrued dividends thereon through the date of repurchase or redemption. "Acquisition Transactions Agreements" means the amended and restated exchange agreement, an agreement and plan of merger, the contribution agreement, the stock purchase agreement, the stockholders' agreement, the co-investment rights agreements contemplated by the stock purchase agreement and the stockholders' agreement, the indemnification agreement, the voting agreement, the management fee letter agreement, the employment agreements and any other agreement implementing the Acquisition Transactions, between or among, -2- as the case may be, Holdings, Seminis Merger Corp., Seminis Acquisition LLC, Fox Paine and certain of its Affiliates, Alfonso Romo Garza and certain of his Affiliates, certain creditors of an Affiliate of Savia S.A. de C.V., certain individuals that are or shall become members of management of the Company and Holdings, and the other parties thereto, as in effect on the Issue Date or, if any such agreement is not in effect on the Issue Date, as such agreement may become in effect in accordance with the terms of the other Acquisition Transactions Agreements that are in effect on the Issue Date. "Additional Interest" means the Additional Interest payable pursuant to Section 4 of the Registration Rights Agreement. "Additional Notes" has the meaning set forth in Section 2.03. "Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, "control," as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise. For purposes of this definition, the terms "controlling," "controlled by" and "under common control with" have correlative meanings. Notwithstanding the foregoing, no Person (other than the Company or any Subsidiary of the Company) in whom a Receivables Subsidiary makes an Investment in connection with a Qualified Receivables Transaction shall be deemed to be an Affiliate of the Company or any of its Subsidiaries solely by reason of such investment. "Affiliate Transaction" has the meaning set forth in Section 4.14(a). "Agent" means any Registrar, Paying Agent, or agent for service or notices and demands. "Agent Members" has the meaning set forth in Section 2.16(a). "amend" means amend, modify, supplement, restate or amend and restate, including successively; and "amending" and "amended" have correlative meanings. "Asset Sale" means: (1) the sale, lease, conveyance or other disposition of any assets or rights, other than sales or other transfers of inventory or germplasm in the ordinary course of business; provided that the sale, conveyance or other disposition of all or substantially all of the assets of the Company and its Restricted Subsidiaries taken as a whole shall be governed by Section 4.08 and/or Section 5.01, to the extent applicable and not by the provisions of Section 4.12; and -3- (2) the issuance of Equity Interests in any of the Company's Restricted Subsidiaries or the sale of Equity Interests in any of its Restricted Subsidiaries (other than directors' qualifying shares or shares or interests required to be held by foreign nationals to the extent mandated by applicable law). Notwithstanding the preceding, none of the following items shall be deemed to be an Asset Sale: (1) any single transaction or series of related transactions that involves assets having a Fair Market Value of less than $2,500,000; (2) a transfer of assets between or among the Company and its Restricted Subsidiaries; (3) an issuance or sale of Equity Interests by a Restricted Subsidiary of the Company to the Company or to another Restricted Subsidiary of the Company; (4) the sale or lease of equipment, products, services, inventory or accounts receivable in the ordinary course of business; (5) the creation of Liens permitted by this Indenture; (6) transfers of accounts receivable and related assets of the type specified in the definition of "Qualified Receivables Transaction" (or a fractional undivided interest therein) by a Receivables Subsidiary in a Qualified Receivables Transaction; (7) the sale or other disposition of cash or Cash Equivalents; (8) the exchange of assets held by the Company or a Restricted Subsidiary for assets held by any Person or entity, provided that (i) the assets received by the Company or such Restricted Subsidiary in any such exchange shall immediately constitute, be part of, or be used in a Permitted Business by the Company or such Restricted Subsidiary; and (ii) any such assets received are of a comparable Fair Market Value to the assets exchanged as determined in good faith by the Company; (9) a Restricted Payment that does not violate, or a Permitted Investment that is permitted by, Section 4.10; (10) the surrender or waiver of contractual rights or the settlement, release or surrender of contract, tort or other claims of any kind; (11) the grant in the ordinary course of business of any license of patents, trademarks, registrations therefor, know-how and other intellectual property; and -4- (12) any disposition of obsolete, worn-out or surplus property. "Asset Sale Offer" has the meaning set forth in Section 4.12(c). "Authentication Order" has the meaning set fort in Section 2.03. "Bankruptcy Law" means Title 11, United States Code, or any similar U.S. Federal or state law for the relief of debtors. "Beneficial Owner" has the meaning assigned to such term in Rule 13d-3 and Rule 13d-5 under the Exchange Act as in effect on the Issue Date. The terms "Beneficially Owns" and "Beneficially Owned" have a corresponding meaning. "Board of Directors" means: (1) with respect to a corporation, the board of directors of the corporation; (2) with respect to a partnership, the Board of Directors of the general partner of the partnership; and (3) with respect to any other Person, the board or committee of such Person serving a similar function. "Board Resolution" means a copy of a resolution certified by the secretary or an assistant secretary of the Company to have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification. "Business Day" means a day other than a Saturday, Sunday or other day on which commercial banking institutions in New York City are authorized or required by law to close. "Calculation Date" has the meaning set forth in the definition of "Leverage Ratio." "Capital Lease Obligation" means, at the time any determination is to be made, the amount of the liability in respect of a capital lease that would at that time be required to be capitalized on a balance sheet in accordance with GAAP. "Capital Stock" means: (1) in the case of a corporation, corporate stock; (2) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock; -5- (3) in the case of a partnership or limited liability company, partnership or membership interests (whether general or limited); and (4) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person. "Cash Equivalents" means: (1) securities issued or directly and fully guaranteed or insured by the U.S. government or any agency or instrumentality of the U.S. government (provided that the full faith and credit of the United States is pledged in support of those securities) having maturities of not more than six months from the date of acquisition; (2) certificates of deposit and eurodollar time deposits with maturities of one year or less from the date of acquisition, bankers' acceptances with maturities not exceeding one year and overnight bank deposits, in each case, with any lender party to a Credit Facility or with any domestic commercial bank having capital and surplus in excess of $500,000,000; (3) repurchase obligations with a term of not more than seven days for underlying securities of the types described in clauses (1) and (2) above entered into with any financial institution meeting the qualifications specified in clause (2) above; (4) commercial paper having one of the two highest ratings obtainable from Moody's or S&P and in each case maturing within one year after the date of acquisition; (5) money market funds at least 95% of the assets of which constitute Cash Equivalents of the kinds described in clauses (1) through (4) of this definition; and (6) in the case of any Restricted Subsidiary organized or having its principal place of business outside of the United States, investments denominated in the currency of the jurisdiction in which such Restricted Subsidiary is organized or has its principal place of business which are similar to the items specified in clauses (1), (2), (3) and (4). "Certificated Notes" has the meaning set forth in Section 2.02: "Change of Control" means the occurrence of any of the following: (1) prior to such time as there shall have been consummated a Qualified IPO, the occurrence of any of the following: (i) the Permitted Holders shall cease to control the largest percentage of the voting power of the Voting Stock of Holdings (as compared to any other "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act)) and counting Alfonso Romo Garza ("Mr. Romo") and his Affiliates -6- as a single "group" as used in Sections 13(d) and 14(d) of the Exchange Act) or (ii) the Permitted Holders shall cease to control at least 40% of the voting power of the Voting Stock of Holdings; (2) from and after the time that there shall have been consummated a Qualified IPO, the occurrence of any of the following: (i) any "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), other than the Permitted Holders, is or becomes the Beneficial Owner, directly or indirectly, of 35% or more of the voting power of the Voting Stock of Holdings (counting Mr. Romo and his Affiliates as a "group" as used in Sections 13(d) and 14(d) of the Exchange Act) and the Permitted Holders cease to control the largest percentage of the voting power of the Voting Stock of Holdings; or (ii) during any period of two consecutive years, individuals who at the beginning of such period constituted the Board of Directors of Holdings (together with any new directors whose election to such Board of Directors or whose nomination for election was approved by a vote of at least 66 2/3% of the directors of Holdings then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute at least a majority of the Board of Directors of Holdings; (3) at any time, Holdings ceases to own, beneficially, 100% of the Voting Stock of the Company; (4) the direct or indirect sale, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the properties or assets of the Company and the Restricted Subsidiaries, taken as a whole, to any "person" (as that term is used in Section 13(d)(3) of the Exchange Act) other than to the Permitted Holders; or (5) the adoption of a plan relating to the liquidation or dissolution of the Company. "Change of Control Offer" has the meaning set forth in Section 4.08(a). "Change of Control Payment Date" has the meaning set forth in Section 4.08(a). "Commission" means the U.S. Securities and Exchange Commission. "Company" means the party named as such in the introduction to this Indenture until a successor replaces such party pursuant to Article Five and thereafter means the successor. "Consolidated Cash Flow" means, with respect to any specified Person for any period, the Consolidated Net Income of such Person for such period adjusted as follows: -7- (1) plus provision for taxes based on income or profits of such Person and its Restricted Subsidiaries for such period, to the extent that such provision for taxes was deducted in computing such Consolidated Net Income; (2) plus consolidated interest expense of such Person and its Restricted Subsidiaries for such period, whether paid or accrued and whether or not capitalized (including, without limitation, amortization of debt issuance costs and original issue discount, non-cash interest payments, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, commissions, discounts and other fees and charges incurred in respect of letters of credit or bankers' acceptance financings, and net of the effect of all payments made or received pursuant to Hedging Obligations), to the extent that any such expense was deducted in computing such Consolidated Net Income; (3) plus depreciation, amortization (including amortization of goodwill and other intangibles but excluding amortization of prepaid cash expenses that were paid in a prior period) and other non-cash expenses (excluding any such non-cash expense to the extent that it represents an accrual of or reserve for cash expenses in any future period or amortization of a prepaid cash expense that was paid in a prior period) of such Person and its Restricted Subsidiaries for such period to the extent that such depreciation, amortization and other non-cash expenses were deducted in computing such Consolidated Net Income; (4) plus all one-time fees, costs, expenses (including cash compensation payments), in each case incurred by the Company and its Restricted Subsidiaries (or the company or business being acquired) (x) in connection with the Acquisition Transactions and (y) in connection with or resulting from any other merger, consolidation or acquisition occurring after the Issue Date in an aggregate amount not to exceed seven percent of the total enterprise value of such merger, consolidation or acquisition; (5) plus unrealized non-cash losses resulting from foreign currency balance sheet adjustments required by GAAP to the extent such losses were deducted in computing such Consolidated Net Income; (6) minus non-cash items increasing such Consolidated Net Income for such period, other than the accrual of revenue in the ordinary course of business; (7) plus all amounts deducted in arriving at such Consolidated Net Income for such period in respect of severance packages payable in connection with the termination of any officer, director or employee of Holdings or any of its Subsidiaries; -8- (8) plus, in the case of non-cash minority interest loss, the amount of such loss for such period, and minus, in the case of non-cash minority interest income, the amount of such income for such period; (9) plus, (i) in any fiscal year, payments of the advisory fees (but not expense reimbursement) required to be paid by Holdings pursuant to the Management Fee Letter, and (ii) reasonable out-of-pocket expenses of Fox Paine (as defined in the Management Fee Letter) required to be paid by Holdings pursuant to the terms of the Management Fee Letter; (10) plus, to the extent included in Consolidated Net Income, non-cash restricted stock award charges incurred in Holdings' fiscal year ended September 30, 2002; in each case, on a consolidated basis and determined in accordance with GAAP. Consolidated Cash Flow shall not include the impact of any purchase accounting adjustments which may be allocated to (x) in-process research and development in such Person's income statement and (y) inventory in such Person's balance sheet to the extent such adjustments reflect differences between the historical carrying amounts and the Fair Market Value of the inventory, and, consistent with such treatment, when the affected inventory is sold, Consolidated Cash Flow shall be calculated as if such purchase accounting adjustments had not been made. "Consolidated Net Income" means, with respect to any specified Person for any period, the aggregate of the Net Income of such Person and its Restricted Subsidiaries for such period, on a consolidated basis, determined in accordance with GAAP; provided that: (1) the Net Income (but not loss) of any Person that is not a Restricted Subsidiary shall be included only to the extent of the amount of dividends or distributions paid in cash to the specified Person or a Restricted Subsidiary of the Person and the loss of any such Person shall only be included to the extent the Company or a Restricted Subsidiary funds such loss; (2) the Net Income of any Restricted Subsidiary shall be excluded to the extent that the declaration or payment of dividends or similar distributions by that Restricted Subsidiary of that Net Income is not at the date of determination permitted without any prior governmental approval (that has not been obtained) or, directly or indirectly, by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Restricted Subsidiary or its stockholders, except that the Net Income of any such Restricted Subsidiary for such period shall be included in such Consolidated Net Income up to the aggregate amount of cash which actually has been or could have been distributed in cash by such Restricted Subsidiary during such period to the Company or another Restricted Subsidiary as a dividend or other distribution (by loans, advances, intercompany transfers or otherwise) (subject, in the case of a dividend or other distribution which could have been -9- paid to another Restricted Subsidiary, to the limitations contained in this clause (2) with respect to such Restricted Subsidiary); (3) the cumulative effect of a change in accounting principles shall be excluded; (4) the non-cash impairment loss of such Person or its Restricted Subsidiaries relating to goodwill or other non-amortizing intangible asset shall be excluded; and (5) corporate overhead expenses payable by Holdings described in Section 4.10(b)(10)(y), the funds for which are provided by the Company and/or its Restricted Subsidiaries shall be deducted in calculating the Consolidated Net Income of the Company and its Restricted Subsidiaries. "Corporate Trust Office" means the principal office of the Trustee at which at any time its corporate trust business shall be administered, which office at the date hereof is located at 707 Wilshire Blvd., 17th Floor, Los Angeles, California 90017, Attention: Corporate Trust Department, or such other address as the Trustee may designate from time to time by notice to the Holders and the Company, or the principal corporate trust office of any successor Trustee (or such other address as such successor Trustee may designate from time to time by notice to the Holders and the Company). "Covenant Defeasance" has the meaning set forth in Section 9.01(b). "Credit Agreement" means that certain Credit Agreement entered into in September 2003, by and among the Company, as borrower, the guarantors party thereto, Citicorp North America, Inc., as administrative agent, Harris Trust and Savings Bank, as syndication agent, and the other agents and lenders party thereto, including any related notes, guarantees, collateral documents, instruments and agreements executed in connection therewith, and in each case as amended, restated, modified, renewed, refunded, replaced (whether upon or after termination or otherwise) or refinanced (including by means of sales of debt securities to institutional and other investors) from time to time. "Credit Facilities" means one or more debt facilities (including, without limitation, the Credit Agreement) or commercial paper facilities, in each case with banks, investment banks, insurance companies, mutual funds and/or other institutional lenders or debt investors providing for revolving credit loans, term loans, receivables or inventory financings (including through the sale of receivables or inventory to such lenders) or letters of credit, in each case, as amended, restated, modified, renewed, refunded, replaced (whether upon or after termination or otherwise) or refinanced (including by means of sales of debt securities to institutional and other investors) in whole or in part from time to time, whether by the same or any other lender or group of lenders; provided, however, that "Credit Facilities" shall not include the South Korean Loans. -10- "Custodian" means any receiver, interim receiver, receiver and manager, trustee, assignee, liquidator, custodian or similar official under any Bankruptcy Law. "Default" means any event that is, or with the passage of time or the giving of notice or both would be, an Event of Default. "Depositary" means, with respect to the Notes issued in the form of one or more Global Notes, The Depository Trust Company or another Person designated as Depositary by the Company, which Person must be a clearing agency registered under the Exchange Act. "Designated Senior Debt" means: (1) Indebtedness under or in respect of the Credit Agreement; and (2) any other Indebtedness constituting Senior Debt which, at the time of determination, has an aggregate principal amount of at least $25,000,000 and is specifically designated in the instrument evidencing such Senior Debt as "Designated Senior Debt" by the Company. "Disqualified Stock" means any Capital Stock that, by its terms (or by the terms of any security into which it is convertible, or for which it is exchangeable, in each case at the option of the holder of the Capital Stock), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the holder of the Capital Stock, in whole or in part, on or prior to the date that is 91 days after the date on which the Notes mature, provided that if such Capital Stock is issued pursuant to any plan for the benefit of employees of Holdings, the Company or its Restricted Subsidiaries, such Capital Stock shall not constitute Disqualified Stock solely because it may be required to be repurchased by the Company in order to satisfy applicable statutory or regulatory obligations. Notwithstanding the preceding sentence, any Capital Stock that would constitute Disqualified Stock solely because the holders of the Capital Stock have the right to require the Company to repurchase such Capital Stock upon the occurrence of a change of control or an asset sale or upon or related to termination of employment, death or disability (or which right was otherwise created in connection with an employment arrangement) shall not constitute Disqualified Stock if the terms of such Capital Stock provide that the Company may not repurchase or redeem any such Capital Stock pursuant to such provisions unless such repurchase or redemption complies with Section 4.10. "Distribution Compliance Period" means the 40 day distribution compliance period as defined in Regulation S which, in the case of the Initial Notes, ends November 9, 2003. "Domestic Subsidiary" means any Restricted Subsidiary of the Company that was formed under the laws of the United States or any state of the United States or the District of Columbia. -11- "Equity Interests" means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock). "Equity Offering" means a public or private sale or issuance of Capital Stock (other than Disqualified Stock) of the Company or Holdings or any capital contribution to Holdings; provided that, in the event of an Equity Offering by Holdings or any capital contribution to Holdings, Holdings contributes to the capital of the Company the portion of the net cash proceeds of such Equity Offering or capital contribution necessary to pay the aggregate redemption price of the Notes to be redeemed pursuant to Section 3.01. "Event of Default" has the meaning set forth in Section 6.01. "Excess Proceeds" has the meaning set forth in Section 4.12(c). "Exchange Act" means the U.S. Securities Exchange Act of 1934, as amended. "Exchange Offer" means the exchange and issuance by the Company, pursuant to a Registration Rights Agreement, of a principal amount of Exchange Securities (which will be registered pursuant to the Exchange Offer Registration Statement) equal to the outstanding principal amount of Initial Notes or Additional Notes, as the case may be, tendered by Holders thereof in connection with such exchange and issuance. "Exchange Offer Registration Statement" has the meaning set forth in the Registration Rights Agreement. "Exchange Securities" has the meaning set forth in the Registration Rights Agreement. "Existing Indebtedness" means the Indebtedness of the Company and its Restricted Subsidiaries (other than Indebtedness under the Credit Agreement and the South Korean Loans) in existence on the Issue Date until such amounts are permanently repaid and Indebtedness under the Oxnard Mortgage in an aggregate amount not to exceed $20,000,000. "Fair Market Value" means, with respect to any asset or Property, the price which would have been negotiated in an arm's-length transaction, between a willing seller and a willing and able buyer, neither of whom is under pressure or compulsion to complete the transaction. "Fox Paine" means Fox Paine & Company, LLC, a Delaware limited liability company. "GAAP" means generally accepted accounting principles in the United States of America set forth in the opinions and pronouncements of the Accounting Principles Board of the -12- American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as have been approved by a significant segment of the accounting profession, as in effect on the Issue Date. "Global Notes" has the meaning set forth in Section 2.02. "Global Note Legend" means the legend set forth in Exhibit D. "Government Securities" means any security issued or guaranteed as to principal or interest by the United States, or by a Person controlled or supervised by and acting as an instrumentality of the government of the United States pursuant to the authority granted by the Congress of the United States or any certificate of deposit for any of the foregoing. "Guarantee" means a guarantee other than by endorsement of negotiable instruments for collection or deposit in the ordinary course of business, direct or indirect, in any manner including, without limitation, by way of a pledge of assets or through letters of credit or reimbursement agreements in respect thereof, of all or any part of any Indebtedness. "Guarantees" as used herein also refers to the guarantee of the Notes pursuant to the terms of Article Ten and the related guarantee endorsed on the Notes by the Guarantors. "Guarantor Senior Debt" means, with respect to any Guarantor, the principal of, premium, if any, and interest (including any interest accruing subsequent to the filing of a petition of bankruptcy at the rate provided for in the documentation with respect thereto, whether or not such interest is an allowed claim under applicable law) on any Indebtedness of, or guaranteed by, a Guarantor, whether outstanding on the Issue Date or thereafter created, incurred or assumed, unless, in the case of any particular Indebtedness, the instrument creating or evidencing the same or pursuant to which the same is outstanding expressly provides that such Indebtedness shall not be senior in right of payment to the Guarantee of such Guarantor. Without limiting the generality of the foregoing, "Guarantor Senior Debt" shall also include the principal of, premium, if any, interest (including any interest accruing subsequent to the filing of a petition of bankruptcy at the rate provided for in the documentation with respect thereto, whether or not such interest is an allowed claim under applicable law) on, and all other amounts owing in respect of (including guarantees of the foregoing obligations): (x) all monetary obligations of every nature of such Guarantor under, or with respect to, the Credit Facilities, including, without limitation, obligations to pay principal, premium and interest, reimbursement obligations under letters of credit, fees, expenses and indemnities (and guarantees thereof); and (y) all Hedging Obligations (and guarantees thereof); in each case whether outstanding on the Issue Date or thereafter incurred. -13- Notwithstanding the foregoing, "Guarantor Senior Debt" shall not include: (1) any Indebtedness of Holdings or a Subsidiary Guarantor to the Company or a Subsidiary of such Subsidiary Guarantor; (2) Indebtedness to, or guaranteed on behalf of, any shareholder, director, officer or employee of such Guarantor or any Subsidiary of such Guarantor (including, without limitation, amounts owed for compensation) other than a shareholder who is also a lender (or an Affiliate of a lender) under the Credit Agreement; (3) Indebtedness to trade creditors and other amounts incurred in connection with obtaining goods, materials or services; (4) Indebtedness represented by Disqualified Stock; (5) any liability for federal, foreign, state, local or other taxes owed or owing by such Guarantor; (6) that portion of any Indebtedness incurred in violation of Section 4.09 (but, as to any such obligation, no such violation shall be deemed to exist for purposes of this clause (6) if the holder(s) of such obligation or their representative shall have received an Officers' Certificate of the Company to the effect that the incurrence of such Indebtedness does not (or, in the case of revolving credit indebtedness, that the incurrence of the entire committed amount thereof at the date on which the initial borrowing thereunder is made would not) violate Section 4.09); (7) Indebtedness which, when incurred and without respect to any election under Section 1111(b) of Title 11, United States Code, is without recourse to such Guarantor or the Company; and (8) any Indebtedness which is, by its express terms, subordinated in right of payment to any other Indebtedness of such Guarantor. "Guarantors" means Holdings and the Subsidiary Guarantors. "Hedging Obligations" means, with respect to any specified Person, the obligations of such Person under: (1) interest rate swap agreements, interest rate cap agreements, interest rate collar agreements and other agreements or arrangements designed to protect such Person against fluctuations in interest rates; -14- (2) currency exchange swap agreements, currency exchange cap agreements, currency exchange collar agreements and other agreements or arrangements designed to protect such Person against fluctuations in currency exchange values; (3) commodity swap agreements, commodity cap agreements, commodity collar agreements and other agreements or arrangements designed to protect such Person against fluctuations in commodity prices; and (4) other agreements or arrangements designed to protect such Person against fluctuations in interest rates or currency exchange rates. "Holder" or "Noteholder" means the Person in whose name a Note is registered on the Register. "Holdings" means Seminis, Inc., a Delaware corporation. "incur" has the meaning set forth in Section 4.09(a). "Indebtedness" means, with respect to any specified Person, any indebtedness of such Person, whether or not contingent: (1) in respect of borrowed money; (2) evidenced by bonds, notes, debentures or similar instruments or letters of credit (or reimbursement agreements in respect thereof); (3) in respect of banker's acceptances; (4) representing Capital Lease Obligations; (5) representing the balance deferred and unpaid of the purchase price of any property due more than six months after such property is acquired, except any such balance that constitutes an accrued expense or trade payable (other than any contingent payment obligations of a Person based on the performance of a business or asset or Capital Stock purchased by such Person); or (6) representing the net loss value of any Hedging Obligations, if and to the extent any of the preceding items (other than letters of credit and Hedging Obligations) would appear as a liability upon a balance sheet of the specified Person prepared in accordance with GAAP. In addition, the term "Indebtedness" includes all Indebtedness of others secured by a Lien on any asset of the specified Person (whether or not such Indebtedness is assumed by the specified Person) and, to the extent not otherwise included, the Guarantee by the specified Person of any indebtedness of any other Person. -15- The amount of any Indebtedness outstanding as of any date shall be: (1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount; (2) in connection with any Qualified Receivables Transaction, the Securitization Financing Amount; and (3) the principal amount of the Indebtedness, together with any interest on the Indebtedness that is more than 30 days past due, in the case of any other Indebtedness. In addition, for the purpose of avoiding duplication in calculating the outstanding principal amount of Indebtedness for purposes of Section 4.09, Indebtedness arising solely by reason of the existence of a Lien to secure other Indebtedness permitted to be incurred under Section 4.09 shall not be considered incremental Indebtedness. Indebtedness shall not include the obligations of any Person (A) resulting from the endorsement of negotiable instruments for collection or deposit in the ordinary course of business, (B) under stand-by letters of credit to the extent collateralized by cash or Cash Equivalents or (C) resulting from representations, warranties, covenants and indemnities given by such Person that are reasonably customary for sellers or transferors in an accounts receivable securitization transaction. "Indenture" means this Indenture as amended, restated or supplemented from time to time. "Initial Notes" means the Company's 10 1/4 % Senior Subordinated Notes, issued on the Issue Date, but not including any Exchange Securities issued in exchange therefor. "Initial Purchasers" means Citigroup Global Markets Inc., CIBC World Markets Corp., Harris Nesbitt Corp. and Rabo Securities USA, Inc. "interest" means, with respect to the Notes, interest and Additional Interest. "Interest Payment Date" means April 1 and October 1 of each year. "Investments" means, with respect to any Person, all direct or indirect investments by such Person in other Persons (including Affiliates) in the forms of loans (including Guarantees or other obligations), advances or capital contributions (excluding commission, travel and similar advances to officers and employees made in the ordinary course of business and excluding advances made to customers and suppliers with respect to current or anticipated purchases of inventory in the ordinary course of business), purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities, together with all items that are or -16- would be classified as investments on a balance sheet prepared in accordance with GAAP. If the Company or any Restricted Subsidiary of the Company sells or otherwise disposes of any Equity Interests of any direct or indirect Restricted Subsidiary of the Company such that, after giving effect to any such sale or disposition, such Person is no longer a Restricted Subsidiary of the Company, the Company shall be deemed to have made an Investment on the date of any such sale or disposition equal to the Fair Market Value of the Company's Investments in such Subsidiary that were not sold or disposed of in an amount determined as provided in Section 4.10(c). "Issue Date" means September 29, 2003. "Legal Defeasance" has the meaning set forth in Section 9.01(b). "Legal Holiday" has the meaning set forth in Section 12.07. "Leverage Ratio" means with respect to any specified Person for any period, the ratio of Total Indebtedness of such Person and its Restricted Subsidiaries as of the last day of the applicable Reference Period to the Consolidated Cash Flow of such Person and its Restricted Subsidiaries for such Reference Period. In the event that the specified Person or any of its Restricted Subsidiaries incurs, assumes, guarantees, repays, repurchases or redeems any Indebtedness (other than ordinary working capital borrowings) or issues, repurchases or redeems Disqualified Stock or preferred stock subsequent to the commencement of the period for which the Leverage Ratio is being calculated and on or prior to the date on which the event for which the calculation of the Leverage Ratio is made (the "Calculation Date"), then the Leverage Ratio will be calculated giving pro forma effect to such incurrence, assumption, guarantee, repayment, repurchase or redemption of Indebtedness, or such issuance, repurchase or redemption of Disqualified Stock or preferred stock, and the use of the proceeds therefrom as if the same had occurred at the beginning of the applicable four-quarter reference period. In addition, for purposes of calculating the Leverage Ratio: (1) (x) acquisitions that have been made by the specified Person or any of its Restricted Subsidiaries, including through mergers or consolidations and including any related financing transactions, during the Reference Period or subsequent to such Reference Period and on or prior to the Calculation Date will be given pro forma effect as if they had occurred on the first day of the Reference Period, and for purposes of determining the pro forma effects of such acquisition, Consolidated Cash Flow will be calculated to give pro forma effect to cost savings and operating expense reductions related to such acquisition that have occurred or are reasonably expected to occur within the 12 months following such acquisition, in the reasonable judgment of the chief financial officer of the specified Person; and (y) in addition, with respect to any acquisition made by the specified Person or any of its Restricted Subsidiaries during either of the two fiscal quarters immediately preceding such Reference Period, Consolidated Cash Flow will also be cal- -17- culated to give pro forma effect to cost savings and operating expense reductions expected to result from steps taken during such Reference Period (but on or prior to the first anniversary of such acquisition) as if such steps were taken on the first day of such Reference Period (regardless, with respect to each of clauses (x) and (y) hereof, of whether those cost savings or operating expense reductions could then be reflected in pro forma financial statements in accordance with Regulation S-X promulgated under the Securities Act or any other regulation or policy of the Commission related thereto); provided, that in either such case, adjustments are set forth in an officers' certificate signed by the specified Person's chief executive officer and chief financial officer which states (i) the amounts of such adjustment or adjustments, (ii) that such adjustment or adjustments are based on the reasonable good faith beliefs of the officers executing such officers' certificate at the time of such execution and (iii) that any related Incurrence of Indebtedness is permitted pursuant to this Indenture; (2) the Consolidated Cash Flow attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses disposed of prior to the Calculation Date, will be excluded; (3) if, since the beginning of the applicable four quarter period, any Person that became a Restricted Subsidiary or was merged with or into the Company or any Restricted Subsidiary since the beginning of such four quarter period shall have made any acquisition, disposition, merger or consolidation or has been determined to be a discontinued operation that would have required adjustment pursuant to this definition, then the Leverage Ratio shall be calculated giving pro forma effect thereto for such period as if such acquisition, disposition, merger or consolidation or determination of a discontinued operation had occurred at the beginning of the applicable four-quarter period; (4) any Person that is a Restricted Subsidiary of the Company on the Calculation Date will be deemed to have been a Restricted Subsidiary at all times during the applicable four-quarter reference period; (5) any Person that is not a Restricted Subsidiary of the Company on the Calculation Date will be deemed not to have been a Restricted Subsidiary at any time during the applicable four-quarter reference period; and (6) if any Indebtedness bears a floating rate of interest, the interest expense on such Indebtedness will be calculated as if the rate in effect on the Calculation Date had been the applicable rate for the entire applicable four-quarter reference period (taking into account any Hedging Obligation applicable to such Indebtedness if such Hedging Obligation has a remaining term as at the Calculation Date in excess of 12 months). -18- "Leverage Test" means, for any date during each period set forth below, the ratio set forth opposite such period:
Period Ratio ------ ----- Issue Date through September 30, 2004 5.25 to 1 October 1, 2004 through September 30, 2005 4.75 to 1 October 1, 2005 through September 30, 2006 4.25 to 1 October 1, 2006 and thereafter 4.00 to 1
"Lien" means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law, including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell or give a security interest and, except in connection with any Qualified Receivables Transaction, any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction. "Management Fee Letter" means that certain letter agreement dated as of May 30, 2003 among Fox Paine & Company, LLC, Desarrollo Consolidado de Negocios, S.A. de C.V. and Seminis Merger Corp. as in effect on the Issue Date. "Marketable Securities" means publicly traded debt or equity securities that are listed for trading on a national securities exchange or Nasdaq and that were issued by a corporation whose debt securities are rated in one of the three highest categories by either S&P or Moody's. "Maturity Date" when used with respect to any Note, means the date on which the principal amount of such Note becomes due and payable as therein or herein provided. "Moody's" means Moody's Investors Service, Inc. or any successor rating agency. "Net Income" means, with respect to any specified Person, the net income (loss) of such Person, determined in accordance with GAAP and before any reduction in respect of preferred stock dividends, excluding, however: (1) any gain or loss, together with any related provision for taxes on such gain or loss, realized in connection with: (a) any Asset Sale (without regard to the $2,500,000 -19- limitation set forth in the definition thereof); or (b) the disposition of any securities by such Person or any of its Restricted Subsidiaries or the extinguishment of any Indebtedness of such Person or any of its Restricted Subsidiaries; and (2) any extraordinary or nonrecurring gain or loss, together with any related provision for taxes on such extraordinary or nonrecurring gain or loss as determined in the good faith judgment of the chief financial officer of Holdings. "Net Proceeds" means the aggregate cash proceeds received (when actually received) by the Company or any of its Restricted Subsidiaries in respect of any Asset Sale (including, without limitation, any cash received upon the sale or other disposition of any non-cash consideration received in any Asset Sale), net of the direct costs relating to such Asset Sale, including, without limitation, legal, accounting and investment banking fees, sales commissions, recording fees, title transfer fees, appraiser fees, cost of preparation of assets for sale and any relocation expenses incurred as a result of the Asset Sale, taxes paid or payable as a result of the Asset Sale, in each case, after taking into account any available tax credits or deductions and any tax sharing arrangements, and amounts required to be applied to the repayment of Indebtedness secured by a Lien on the asset or assets that were the subject of such Asset Sale and any reserve for adjustment in respect of the sale price of such asset or assets established in accordance with GAAP. "Non-Payment Default" has the meaning set forth in Section 11.02(a)(2). "Non-Recourse Debt" means Indebtedness: (1) as to which neither the Company nor any of its Restricted Subsidiaries (a) provides credit support of any kind (including any undertaking, agreement or instrument that would constitute Indebtedness) (other than pledges of Equity Interests of Unrestricted Subsidiaries for the benefit of lenders of Unrestricted Subsidiaries), (b) is directly or indirectly liable as a guarantor or otherwise, or (c) constitutes the lender; and (2) no default with respect to which (including any rights that the holders of the Indebtedness may have to take enforcement action against an Unrestricted Subsidiary) would permit upon notice, lapse of time or both any holder of any other Indebtedness (other than the Notes) of the Company or any of its Restricted Subsidiaries to declare a default on such other Indebtedness or cause the payment of the Indebtedness to be accelerated or payable prior to its stated maturity. "Non-U.S. Person" means a Person who is not a U.S. person, as defined in Regulation S. "Notes" means the 10 1/4 % Senior Subordinated Notes due 2013 issued by the Company, including, without limitation, the Exchange Securities, treated as a single class of se- -20- curities, as amended from time to time in accordance with the terms hereof, that are issued pursuant to this Indenture. "Notice of Default" shall have the meaning set forth in Section 6.01(4). "Obligations" means any principal, interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities payable under the documentation governing any Indebtedness. "Offer Amount" has the meaning set forth in Section 4.12(e). "Offering Memorandum" means the offering memorandum, dated September 22, 2003, of the Company and the Guarantors relating to the offering of the Notes and the Guarantees. "Offer Period" has the meaning set forth in Section 4.12(e). "Officer" means the Chief Executive Officer, the President, the Chief Financial Officer or any Executive Senior Vice President, Senior Vice President, Vice President, the Treasurer or the Secretary of the specified Person. "Officers' Certificate" means a certificate signed by an Officer of the specified Person and delivered to the Trustee. "Offshore Note Exchange Date" has the meaning set forth in Section 2.02. "Opinion of Counsel" means a written opinion from legal counsel who is reasonably acceptable to the Trustee. The counsel may be an employee of or counsel to Holdings, the Company, a Subsidiary Guarantor or the Trustee. "Oxnard Mortgage" means a mortgage, whether arising before or after the Issue Date, on the Company's headquarters located in Oxnard, California. "Paying Agent" has the meaning set forth in Section 2.04. "Payment Blockage Notice" has the meaning set forth in Section 11.02(a)(2). "Payment Default" has the meaning set forth in Section 6.01(5)(A). "Permanent Regulation S Global Note" has the meaning set forth in Section 2.02. "Permitted Business" means any business in which the Company and its Subsidiaries were engaged on the Issue Date, and any business incidental, reasonably related, comple- -21- mentary or ancillary thereto, or which is a reasonable extension thereof as determined in good faith by the Board of Directors of the Company. "Permitted Debt" has the meaning set forth in Section 4.09(c). "Permitted Holders" means the Principals and their Related Parties. "Permitted Investments" means: (1) any Investment in the Company or in a Restricted Subsidiary of the Company; (2) any Investment in cash and Cash Equivalents; (3) any Investment by the Company or any Restricted Subsidiary of the Company in a Person, if as a result of such Investment: (a) such Person becomes a Restricted Subsidiary of the Company; or (b) such Person is merged, consolidated or amalgamated with or into, or transfers or conveys substantially all of its assets to, or is liquidated into, the Company or a Restricted Subsidiary of the Company; (4) any Investment made as a result of the receipt of non-cash consideration from an Asset Sale that was made pursuant to and in compliance with Section 4.12; (5) any Investment or acquisition of assets solely in exchange for the issuance of Equity Interests (other than Disqualified Stock) of the Company or Holdings or out of the proceeds of a substantially concurrent issuance or sale of Equity Interests (other than Disqualified Stock) of the Company or Holdings; (6) any Investments received in compromise of obligations of (A) trade creditors or customers that were incurred in the ordinary course of business, including pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of, or other foreclosure with respect to, any trade creditor or customer, or (B) litigation, arbitration or other similar disputes; (7) Hedging Obligations; (8) repurchases of the Notes; (9) Investments consisting of non-cash consideration received in the form of securities, notes or similar obligations in connection with dispositions of obsolete, worn out or surplus assets or property permitted pursuant to this Indenture; -22- (10) advances, loans or extensions of credit to suppliers in the ordinary course of business by the Company or any of its Restricted Subsidiaries; (11) Investments of any Person (other than Indebtedness of such Person) in existence at the time such Person becomes a Subsidiary of the Company; provided such Investment was not made in connection with or in anticipation of such Person becoming a Subsidiary of the Company; (12) any Investment consisting of a guarantee permitted under Section 4.09; (13) Investments (including debt obligations) received in connection with the bankruptcy or reorganization of suppliers and customers and in settlement of delinquent obligations of, and other disputes with, customers and suppliers arising in the ordinary course of business; (14) advances to employees for moving, travel and entertainment, payroll advances and other similar advances to cover matters that are expected at the time of such advances to be treated as expenses for accounting purposes and that are made in the ordinary course of business; (15) loans and advances to employees, officers and directors of Holdings, the Company and its Restricted Subsidiaries in the ordinary course of business for bona fide business purposes not in excess of $3,000,000 in aggregate principal amount at any time outstanding; (16) any Investment existing on the Issue Date and any renewal or replacement thereof on terms and conditions not materially less favorable to the Holders of the Notes than the terms of the Investment being replaced; (17) Investments in prepaid expenses, negotiable instruments held for collection and lease, utility and workers' compensation, performance and other similar deposits; (18) purchases of shares of any non-wholly owned Subsidiary of the Company from any Person other than Holdings, the Company or any Subsidiary of the Company; (19) other Investments in any Person having an aggregate Fair Market Value (measured on the date each such Investment was made and without giving effect to subsequent changes in value), when taken together with all other Investments made pursuant to this clause (19), that are at the time outstanding not to exceed $15,000,000; and (20) any Investment by the Company or a Restricted Subsidiary in a Receivables Subsidiary or any Investment by a Receivables Subsidiary in any other Person in -23- connection with a Qualified Receivables Transaction; provided, that the foregoing Investment is in the form of a note or other instrument that the Receivables Subsidiary or other Person is required to repay as soon as practicable from available cash collections less amounts required to be established as reserves pursuant to contractual agreements with entities that are not Affiliates of the Company entered into as part of a Qualified Receivables Transaction; and provided further, that the foregoing Investment is, in the good faith determination of the Board of Directors of the Company, necessary or advisable to effect the applicable Qualified Receivables Transaction. "Permitted Junior Securities" means: (1) Equity Interests in the Company or any Guarantor; or (2) debt securities that are subordinated to (a) all Senior Debt and Guarantor Senior Debt and (b) any debt securities issued in exchange for Senior Debt to substantially the same extent as, or to a greater extent than, the Notes and the Guarantees are subordinated to Senior Debt and Guarantor Senior Debt under this Indenture. "Permitted Liens" means: (1) Liens on assets of the Company or any Restricted Subsidiary securing Indebtedness or other Obligations under Credit Facilities or other Senior Debt or Guarantor Senior Debt that was permitted by the terms of this Indenture to be incurred; (2) Liens securing Acquired Debt that was permitted to be incurred pursuant to Section 4.09, provided that such Liens were not created in connection with or in contemplation of such acquisition or merger transaction pursuant to which the Acquired Debt was incurred and do not extend to any assets other than those acquired or those of the Person merged into or consolidated with the Company or the Restricted Subsidiary; (3) (a) Liens securing Indebtedness that was incurred pursuant to Section 4.09(c)(11); or (b) Liens securing Indebtedness that was incurred by non-Guarantor Restricted Subsidiaries (other than Seminis Korea or any of its Restricted Subsidiaries) pursuant to such Section; (4) Liens in favor of the Company and its Restricted Subsidiaries; (5) Liens to secure Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation or improvement of property, plant or equipment used in the business of the Company or such Restricted Subsidiary, covering only the assets acquired with or financed by such Indebtedness; -24- (6) Liens on property or shares of Capital Stock of a Person existing at the time such Person is merged with or into or consolidated with the Company or any Subsidiary of the Company; provided that such Liens were in existence prior to the contemplation of such merger or consolidation and do not extend to any assets other than those of the Person merged into or consolidated with the Company or the Subsidiary; (7) Liens on property or shares of Capital Stock existing at the time of acquisition of the property or shares of Capital Stock by the Company or any Subsidiary of the Company; provided that such Liens were in existence prior to the contemplation of such acquisition; (8) Liens to secure the performance of statutory obligations, surety or appeal bonds, performance bonds or other obligations of a like nature incurred in the ordinary course of business; (9) Liens existing on the Issue Date; (10) Liens for taxes, assessments or governmental charges or claims that are not yet delinquent or that are being contested in good faith by appropriate proceedings promptly instituted and diligently concluded; provided that any reserve or other appropriate provision as is required in conformity with GAAP has been made therefor; (11) pledges or deposits made in the ordinary course of business in connection with workers' compensation, unemployment insurance and other types of social security legislation; (12) Liens securing Indebtedness under Hedging Obligations; (13) Liens securing Indebtedness of the Company or any of its Restricted Subsidiaries with respect to obligations that do not exceed $10,000,000 at any one time outstanding; (14) Liens on goods and documents of title to goods arising in the ordinary course of letter of credit transactions entered into in the ordinary course of business; (15) Liens securing Permitted Refinancing Indebtedness permitted to be incurred under this Indenture to refinance Indebtedness secured by a Lien permitted under this Indenture; provided, however, that such new Lien shall be limited to all or part of the same property that secured the original Lien (plus improvements on or replacements of such property) and the Indebtedness secured by such Lien at such time is not increased to any amount greater than the sum of (i) the outstanding principal amount or, if greater, committed amount of the Indebtedness at the time the original Lien became a Permitted -25- Lien under this Indenture, and (ii) an amount necessary to pay any fees, commissions and expenses, including premiums, related to such Permitted Refinancing Indebtedness; (16) (a) Liens of carriers, warehousemen, mechanics, suppliers, materialmen, repairmen and other Liens imposed by law incurred in the ordinary course of business; (b) easements, rights of way, zoning restrictions, reservations, encroachments and other similar encumbrances in respect of real property; (c) judgment Liens not giving rise to an Event of Default so long as such Lien is adequately bonded and any appropriate legal proceedings that may have been initiated for the review of such judgment, decree or order shall not have been finally terminated or the period within which such proceedings may be initiated shall not have expired; (d) Liens upon specific items of inventory or other goods and proceeds of any Person securing such Person's obligations in respect of banker's acceptances issued or credited for the account of such Person to facilitate the purchase, shipment or storage of such inventory or other goods; (e) Liens encumbering deposits made to secure obligations arising from statutory, regulatory, contractual or warranty requirements of the Company or any of its Restricted Subsidiaries, including rights of offset and set-off; (f) Liens arising out of consignment or similar arrangements for the sale of goods in the ordinary course of business; (g) any interest or title of a lessor in the property subject to any lease other than a capital lease; (h) leases or subleases granted to others that do not materially interfere with the ordinary course of business of the Company and its Restricted Subsidiaries; (i) Liens arising from filing Uniform Commercial Code financing statements regarding leases, provided that such Liens do not extend to any property or assets which are not leased property subject to such leases or subleases; and (j) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods; -26- (17) Liens on the assets of Unrestricted Subsidiaries, or on the Equity Interests of Unrestricted Subsidiaries, that secure Non-Recourse Debt of Unrestricted Subsidiaries; (18) Liens on assets of a Receivables Subsidiary incurred in connection with a Qualified Receivables Transaction; and (19) Liens created in substitution of or as replacements for any Liens permitted by the preceding clauses (1) through (18) and this clause (19); provided, however, that, based on a good faith determination of an officer of the Company, the Fair Market Value of the assets encumbered under any such substitute or replacement Lien is not greater than the Fair Market Value of the assets encumbered by the otherwise permitted Lien which is being replaced. "Permitted Refinancing Indebtedness" means any Indebtedness of the Company or any of its Restricted Subsidiaries issued in exchange for, or the net proceeds of which are used to extend, refinance, renew, replace, defease or refund, other Indebtedness of the Company or any of its Restricted Subsidiaries (other than intercompany Indebtedness); provided that: (1) the principal amount (or accreted value, if applicable) of such Permitted Refinancing Indebtedness does not exceed the principal amount (or accreted value, if applicable) of the Indebtedness extended, refinanced, renewed, replaced, defeased or refunded (plus all accrued interest on the Indebtedness and the amount of all expenses, fees, commissions and premiums incurred in connection therewith) except that the principal amount of such Permitted Refinancing Indebtedness in respect of the Oxnard Mortgage may be increased to up to $20,000,000; (2) such Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of, and has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; (3) if the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded is subordinated in right of payment to the Notes, such Permitted Refinancing Indebtedness is subordinated in right of payment to the Notes on terms at least as favorable to the Holders of Notes as those contained in the documentation governing the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; and (4) such Indebtedness is incurred either by the Company or by any Restricted Subsidiary of the Company who is the obligor on the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded. -27- "Person" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, limited liability company or government or other entity. "PII" means PII, LLC, a Delaware limited liability company. "Principals" means investment entities managed or controlled by Fox Paine or its Affiliates. "Private Placement Legend" means the legend initially set forth on the Rule 144A Global Notes and other Notes that are Restricted Notes in the form set forth in Exhibit B or the legend initially set forth on the Temporary Regulation S Global Note in the form set forth in Exhibit C, as the case may be. "Property" means, with respect to any Person, any interest of such Person in any kind of property or asset, whether real, personal or mixed, or tangible or intangible, including Capital Stock in, and other securities of, any other Person. For purposes of any calculation required pursuant to this Indenture, the value of any Property shall be its Fair Market Value. "Purchase Date" has the meaning set forth in Section 4.12(d). "Qualified Institutional Buyer" or "QIB" shall have the meaning specified in Rule 144A. "Qualified IPO" means one or more underwritten public offerings of common equity securities of Holdings pursuant to an effective registration statement filed under the Securities Act (excluding registration statements filed on Form S-8, or any similar successor form) which offerings generate at least $100,000,000 of gross proceeds to Holdings and which results in the listing of the common equity securities of Holdings on a national securities exchange or authorization for quotation on the Nasdaq National Market System. "Qualified Receivables Transaction" means any transaction or series of transactions that may be entered into by the Company or any of its Restricted Subsidiaries in which the Company or any of its Restricted Subsidiaries may sell, convey or otherwise transfer to (1) a Receivables Subsidiary (in the case of a transfer by the Company or any of its Restricted Subsidiaries) and (2) any other Person (in the case of a transfer by a Receivables Subsidiary), or may grant a security interest in, any accounts receivable (whether now existing or arising in the future) of the Company or any of its Restricted Subsidiaries, and any related assets, including all collateral securing such accounts receivable, all contracts and all guarantees or other obligations in respect of such accounts receivable, proceeds of such accounts receivable and other assets (including contract rights) which are customarily transferred or in respect of which security interests are customarily granted in connection with asset securitization transactions involving accounts receivable. -28- "Receivables Subsidiary" means a Subsidiary of the Company that engages in no activities other than in connection with the financing of accounts receivable and that is designated by the Company's Board of Directors (as provided below) as a Receivables Subsidiary: (1) no portion of the Indebtedness or any other Obligations (contingent or otherwise) of which (a) is guaranteed by the Company or any Restricted Subsidiary of the Company (excluding guarantees of Obligations (other than the principal of, and interest on, Indebtedness) pursuant to representations, warranties, covenants and indemnities entered into in the ordinary course of business in connection with a Qualified Receivables Transaction), (b) is recourse to or obligates the Company or any Restricted Subsidiary of the Company in any way other than pursuant to representations, warranties, covenants and indemnities entered into in the ordinary course of business in connection with a Qualified Receivables Transaction, or (c) subjects any property or asset of the Company or of any Restricted Subsidiary of the Company (other than accounts receivable and related assets as provided in the definition of "Qualified Receivables Transaction"), directly or indirectly, contingently or otherwise, to the satisfaction thereof, other than pursuant to representations, warranties, covenants and indemnities entered into in the ordinary course of business in connection with a Qualified Receivables Transaction; (2) with which neither the Company nor any Restricted Subsidiary of the Company has any material contract, agreement, arrangement or understanding other than on terms no less favorable to the Company or such Restricted Subsidiary than those that might be obtained at the time from Persons who are not Affiliates of the Company, other than fees payable in the ordinary course of business in connection with servicing accounts receivable; and (3) with which neither the Company nor any Restricted Subsidiary of the Company has any obligation to maintain or preserve such Restricted Subsidiary's financial condition or cause such Restricted Subsidiary to achieve certain levels of operating results. Any such designation by the Company's Board of Directors shall be evidenced to the Trustee by filing with the Trustee a Board Resolution giving effect to such designation and an Officers' Certificate certifying that such designation complied with the preceding conditions. "Redemption Date" when used with respect to any Note to be redeemed pursuant to paragraph 5 of the Notes means the date fixed for such redemption pursuant to the terms of the -29- Notes or, if applicable, such later date as such fixed date may be delayed until any applicable conditions are satisfied. "Reference Period" has the meaning set forth in Section 4.09(a). "refinance" means, in respect of any Indebtedness, to refinance, extend, renew, refund, repay, prepay, repurchase, redeem, defease or retire, or to issue other Indebtedness, in exchange or replacement for, such Indebtedness. "refinanced" and "refinancing" shall have correlative meanings. "Registrar" has the meaning set forth in Section 2.04. "Register" has the meaning set forth in Section 2.04. "Registration Rights Agreement" means the Registration Rights Agreement, dated as of the Issue Date, by and among the Company and the Guarantors and the other parties named on the signature pages thereof, as such agreement may be amended, modified or supplemented from time to time and, with respect to any Additional Notes, one or more registration rights agreements among the Company and the Guarantors and the other parties thereto, as such agreements may be amended, modified or supplemented from time to time, relating to rights given by the Company to the purchasers of Additional Notes to register such Additional Notes under the Securities Act. "Regulation S" means Regulation S promulgated under the Securities Act. "Regulation S Global Notes" has the meaning set forth in Section 2.02. "Regulation S Physical Notes" has the meaning set forth in Section 2.02. "Related Party" means: (1) any controlling stockholder, majority-owned Subsidiary or immediate family member (in the case of an individual) of any one or more Principals; or (2) any trust, corporation, partnership or other entity, the beneficiaries, stockholders, partners, owners or Persons beneficially owning a majority controlling interest of which consist of any one or more Principals and/or such other Persons referred to in the immediately preceding clause (1). "Representative" means any agent or representative in respect of any Designated Senior Debt; provided that if, and for so long as, any Designated Senior Debt lacks such representative, then the Representative for such Designated Senior Debt shall at all times constitute the holders of a majority in outstanding principal amount of such Designated Senior Debt. -30- "Resale Restriction Termination Date" means, with respect to any Note, the date that is two years (or such other period as may hereafter be provided under Rule 144(k) under the Securities Act or any successor provision thereto as permitting the resale by non-affiliates of Restricted Notes without restriction) after the later of the original issue date in respect of such Note and the last date on which the Company or any Affiliate of the Company was the owner of such Note. "Responsible Officer" shall mean, when used with respect to the Trustee, any officer in the Corporate Trust Office of the Trustee including any vice president, assistant vice president or any other officer of the Trustee who customarily performs functions similar to those performed by the Persons who at the time shall be such officers, respectively, and to whom any corporate trust matter is referred because of such officer's knowledge of and familiarity with the particular subject. "Restricted Investment" means an Investment other than a Permitted Investment. "Restricted Note" has the same meaning as "Restricted Security" set forth in Rule 144(a)(3) promulgated under the Securities Act; provided that the Trustee shall be entitled to request and conclusively rely upon an Opinion of Counsel with respect to whether any Note is a Restricted Note. "Restricted Payments" has the meaning set forth in Section 4.10(a). "Restricted Subsidiary" of a Person means any Subsidiary of the referent Person that is not an Unrestricted Subsidiary. "Rule 144" means Rule 144 promulgated under the Securities Act. "Rule 144A" means Rule 144A promulgated under the Securities Act. "Rule 144A Global Notes" has the meaning set forth in Section 2.02. "Rule 144A Physical Notes" has the meaning set forth in Section 2.02. "S&P" means Standard & Poor's Ratings Services, a division of McGraw-Hill, Inc., a New York corporation, or any successor rating agency. "Securities Act" means the U.S. Securities Act of 1933, as amended. "Securitization Financing Amount" means, as of any date, with respect to a Qualified Receivables Transaction, that portion of the Indebtedness of the related Receivables Subsidiary that is attributable to the accounts receivable and related assets of the type described in the definition of "Qualified Receivables Transaction" transferred to such Receivables Subsidiary by or on behalf of the Company and its Restricted Subsidiaries. -31- "Seminis Korea" means Seminis Korea, Inc., a corporation organized under the laws of South Korea. "Senior Debt" means the principal of, premium, if any, and interest (including any interest accruing subsequent to the filing of a petition of bankruptcy at the rate provided for in the documentation with respect thereto, whether or not such interest is an allowed claim under applicable law) on any Indebtedness of the Company, whether outstanding on the Issue Date or thereafter created, incurred or assumed, unless, in the case of any particular Indebtedness, the instrument creating or evidencing the same or pursuant to which the same is outstanding expressly provides that such Indebtedness shall not be senior in right of payment to the Notes. Without limiting the generality of the foregoing, "Senior Debt" shall also include the principal of, premium, if any, interest (including any interest accruing subsequent to the filing of a petition of bankruptcy at the rate provided for in the documentation with respect thereto, whether or not such interest is an allowed claim under applicable law) on, and all other amounts owing in respect of (including guarantees of the foregoing obligations): (1) all monetary obligations of every nature of the Company under, or with respect to, the Credit Facilities, including, without limitation, obligations to pay principal, premium and interest, reimbursement obligations under letters of credit, fees, expenses and indemnities (and guarantees thereof); and (2) all Hedging Obligations (and guarantees thereof); in each case whether outstanding on the Issue Date or thereafter incurred. Notwithstanding the foregoing, "Senior Debt" shall not include: (1) any Indebtedness of the Company to a Subsidiary of the Company; (2) Indebtedness to, or guaranteed on behalf of, any shareholder, director, officer or employee of the Company or any Subsidiary of the Company (including, without limitation, amounts owed for compensation) other than a shareholder who is also a lender (or an Affiliate of a lender) under the Credit Facilities; (3) Indebtedness to trade creditors and other amounts incurred in connection with obtaining goods, materials or services; (4) Indebtedness represented by Disqualified Stock; (5) any liability for federal, foreign, state, local or other taxes owed or owing by the Company; -32- (6) that portion of any Indebtedness incurred in violation of Section 4.09 (but, as to any such obligation, no such violation shall be deemed to exist for purposes of this clause (6) if the holder(s) of such obligation or their representative shall have received an Officers' Certificate of the Company to the effect that the incurrence of such Indebtedness does not (or, in the case of revolving credit indebtedness, that the incurrence of the entire committed amount thereof at the date on which the initial borrowing thereunder is made would not) violate Section 4.09); (7) Indebtedness which, when incurred and without respect to any election under Section 1111(b) of Title 11, United States Code, is without recourse to the Company; and (8) any Indebtedness which is, by its express terms, subordinated in right of payment to any other Indebtedness of the Company. "Significant Subsidiary" means any Restricted Subsidiary of the Company that would be a "significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to the Securities Act, as such Regulation is in effect on the Issue Date. "South Korean Loans" means Indebtedness at any time outstanding incurred by Seminis Korea and its Restricted Subsidiaries. "Specified Assets" means those certain assets located in South Korea and The Netherlands which as of the Issue Date are specified in a schedule to the Credit Agreement. "Stated Maturity" means, with respect to any installment of interest or principal on any series of Indebtedness, the date on which the payment of interest or principal was scheduled to be paid in the original documentation governing such Indebtedness, and shall not include any contingent obligations to repay, redeem or repurchase any such interest or principal prior to the date originally scheduled for the payment thereof. "Subordinated Indebtedness" means Indebtedness of the Company or any Guarantor that is subordinated or junior in right of payment to the Notes or the Guarantee of such Guarantor, as the case may be. "Subsidiary" means, with respect to any specified Person: (1) any corporation, association or other business entity of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees of the corporation, association or other business entity is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person (or a combination thereof); -33- (2) any partnership (a) the sole general partner or the managing general partner of which is such Person or a Subsidiary of such Person or (b) the only general partners of which are that Person or one or more Subsidiaries of that Person (or any combination thereof); and (3) any other Person that is consolidated in the consolidated financial statements of the specified Person in accordance with GAAP. "Subsidiary Guarantees" means the Guarantees of the Subsidiary Guarantors. "Subsidiary Guarantors" means each of: (1) the Domestic Subsidiaries of the Company as of the Issue Date; and (2) any other Subsidiary of the Company that executes a Subsidiary Guarantee in accordance with the provisions of this Indenture. "Temporary Regulation S Global Notes" has the meaning set forth in Section 2.02. "Temporary Regulation S Global Note Legend" means the legend set forth in Exhibit H. "TIA" means the Trust Indenture Act of 1939 (15 U.S. Code Sections 77aaa-77bbbb) as in effect on the date of this Indenture (except as provided in Section 8.03). "Total Indebtedness" means, at a particular date, the sum of (a) the aggregate stated balance sheet amount of all Indebtedness of such Person and its Restricted Subsidiaries and (b) to the extent not included in clause (a), the aggregate redemption price of any Disqualified Stock, in each case as determined on a consolidated basis in accordance with GAAP at such date. "Trustee" means the party named as such in this Indenture until a successor replaces it pursuant to this Indenture and thereafter means the successor. "Unrestricted Subsidiary" means any Subsidiary of the Company that is designated by the Board of Directors of the Company as an Unrestricted Subsidiary pursuant to a Board Resolution, but only to the extent that such Subsidiary: (1) has no Indebtedness other than Non-Recourse Debt; (2) is not party to any agreement, contract, arrangement or understanding with the Company or any Restricted Subsidiary of the Company unless the terms of any such agreement, contract, arrangement or understanding are no less favorable to the Company -34- or such Restricted Subsidiary than those that might be obtained at the time from Persons who are not Affiliates of the Company; and (3) is a Person with respect to which neither the Company nor any of its Restricted Subsidiaries has any direct or indirect obligation (a) to subscribe for additional Equity Interests or (b) to maintain or preserve such Person's financial condition or to cause such Person to achieve any specified levels of operating results. Any designation of a Subsidiary of the Company as an Unrestricted Subsidiary shall be evidenced to the Trustee by filing with the Trustee a certified copy of the Board Resolution giving effect to such designation and an Officers' Certificate certifying that such designation complied with the preceding conditions and was permitted by Section 4.10. If, at any time, any Unrestricted Subsidiary would fail to meet the preceding requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted Subsidiary for purposes of this Indenture and any Indebtedness of such Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of the Company as of such date and, if such Indebtedness is not permitted to be incurred as of such date under Section 4.09, the Company shall be in default of such covenant. The Board of Directors of the Company may at any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided that such designation shall be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of the Company of any outstanding Indebtedness of such Unrestricted Subsidiary and such designation shall only be permitted if (1) such Indebtedness is permitted under Section 4.09, calculated on a pro forma basis as if such designation had occurred at the beginning of the four-quarter reference period and (2) no Default or Event of Default would be in existence following such designation. "Voting Stock" of any Person as of any date means the Capital Stock of such Person that is at the time entitled to vote in the election of the Board of Directors of such Person. "Weighted Average Life to Maturity" " means, when applied to any Indebtedness at any date, the number of years obtained by dividing: (1) the sum of the products obtained by multiplying (a) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect of the Indebtedness, by (b) the number of years (calculated to the nearest one-twelfth) that shall elapse between such date and the making of such payment; by (2) the then outstanding principal amount of such Indebtedness. SECTION 1.02. Incorporation by Reference of Trust Indenture Act. Whenever this Indenture refers to a provision of the TIA, the portion of such provision required to be incorporated herein in order for this Indenture to be qualified under the TIA -35- is incorporated by reference in and made a part of this Indenture. The following TIA terms used in this Indenture have the following meanings: "indenture securities" means the Notes. "indenture securityholder" means a Holder or Noteholder. "indenture to be qualified" means this Indenture. "obligor on the indenture securities" means the Company, the Guarantors or any other obligor on the Notes. All other terms used in this Indenture that are defined by the TIA, defined in the TIA by reference to another statute or defined by Commission rule have the meanings therein assigned to them. SECTION 1.03. Rules of Construction. Unless the context otherwise requires: (1) a term has the meaning assigned to it herein, whether defined expressly or by reference; (2) "or" is not exclusive; (3) words in the singular include the plural, and in the plural include the singular; (4) words used herein implying any gender shall apply to both genders; (5) "herein," "hereof" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subsection; (6) unless otherwise specified herein, all accounting terms used herein shall be interpreted, all accounting determinations hereunder shall be made, and all financial statements required to be delivered hereunder shall be prepared in accordance with GAAP as in effect on the Issue Date; (7) "$," "U.S. Dollars" and "United States Dollars" each refer to United States dollars, or such other money of the United States that at the time of payment is legal tender for payment of public and private debts; and (8) whenever in this Indenture there is mentioned, in any context, principal, interest or any other amount payable under or with respect to any Note, such mention -36- shall be deemed to include mention of the payment of Additional Interest to the extent that, in such context, Additional Interest, was or would be payable in respect thereof. ARTICLE TWO THE SECURITIES SECTION 2.01. Amount of Notes. The Trustee shall initially authenticate the Notes for original issue on the Issue Date in an aggregate principal amount of $190,000,000 upon a written order of the Company in the form of an Officers' Certificate of the Company pursuant to Section 2.03 (other than as provided in Section 2.08). SECTION 2.02. Form and Dating. The Notes and the Trustee's certificate of authentication relating thereto shall be in substantially the forms set forth, or referenced, in Exhibit A annexed hereto and in this Article Two. The Notes may have such appropriate insertions, omissions, substitutions, notations, legends, endorsements, identifications and other variations as are required or permitted by law, stock exchange rule or depositary rule or usage, the certificate of incorporation, bylaws or other similar governing instruments of the Company, agreements to which the Company is subject, if any, or other customary usage, or as may consistently herewith be determined by the Officers of the Company executing such Notes, as evidenced by such execution (provided that any such notation, legend, endorsement, identification or variation is in a form acceptable to the Company). Each Note shall be dated the date of its authentication. Initial Notes and any Additional Notes offered and sold in reliance on Rule 144A shall be issued initially in the form of one or more permanent global Notes in substantially the form set forth in Exhibit A and shall contain the Private Placement Legend set forth in Exhibit B and the Global Note Legend (the "Rule 144A Global Notes"), registered in the name of the nominee of the Depositary, deposited with the Trustee, as custodian for the Depositary or its nominee, duly executed by the Company and authenticated by the Trustee as hereinafter provided. The aggregate principal amount of the Rule 144A Global Notes may from time to time be increased or decreased by adjustments made on the records of the Trustee, as custodian for the Depositary or its nominee, as provided in Sections 2.16 and 2.17. Initial Notes and any Additional Notes offered and sold in offshore transactions in reliance on Regulation S shall be issued initially in the form of one or more temporary global Notes in substantially the form set forth in Exhibit A and containing the Private Placement Legend as set forth in Exhibit C and the Temporary Regulation S Global Note Legend (the "Temporary Regulation S Global Notes"), registered in the name of the nominee of the Depositary, deposited with the Trustee, as custodian for the Depositary or its nominee, duly executed by the -37- Company and authenticated by the Trustee as hereinafter provided. At any time following termination of the Distribution Compliance Period (the "Offshore Note Exchange Date"), upon receipt by the Trustee and the Company of a certificate substantially in the form set forth in Exhibit E hereto, one or more permanent Global Notes substantially in the form of Exhibit A hereto and containing the Global Note Legend (the "Permanent Regulation S Global Notes," and together with the Temporary Regulation S Global Notes, the "Regulation S Global Notes") duly executed by the Company and authenticated by the Trustee as hereinafter provided shall be deposited with the Trustee, as custodian for the Depositary, and the Registrar shall reflect on its books and records the date and a decrease in the principal amount of the Temporary Regulation S Global Note in an amount equal to the principal amount of the beneficial interest in the Temporary Regulation S Global Note transferred. The aggregate principal amount of the Regulation S Global Notes may from time to time be increased or decreased by adjustments made on the records of the Trustee, as custodian for the Depositary or its nominee, as provided in Sections 2.16 and 2.17. Initial Notes and any Additional Notes issued pursuant to Section 2.07 and Section 2.16 in exchange for or upon transfer of beneficial interests in the Rule 144A Global Notes or Regulation S Global Notes shall be in the form of permanent certificated Notes in substantially the form set forth in Exhibit A containing the Private Placement Legend as set forth in Exhibit B (the "Rule 144A Physical Notes"), or in the form of permanent certificated Notes substantially in the form set forth in Exhibit A containing the Private Placement Legend as set forth in Exhibit C (the "Regulation S Physical Notes"), respectively, as hereinafter provided. No Regulation S Physical Note may be issued until expiration of the applicable Distribution Compliance Period and receipt by the Company and the Trustee from the (x) proposed transferor, of a certificate substantially in the form set forth in Exhibit C or (y) holder of a beneficial interest being exchanged, of certification that such holder is a non-U.S. person or a U.S. person (within the meaning of Regulation S) who acquired such interest in a transaction exempt from the registration requirements of the Securities Act (in which case a Rule 144A Physical Note shall be issued). The Rule 144A Physical Notes and the Regulation S Physical Notes, together with any other certificated notes in registered form, are sometimes collectively referred to as the "Certificated Notes." The Rule 144A Global Notes and the Regulation S Global Notes, together with any other global notes in registered form, are sometimes collectively referred to as the "Global Notes." Initial Notes and Additional Notes offered and sold in reliance on any exemption under the Securities Act other than Regulation S and Rule 144A shall be issued in the form of permanent Certificated Notes substantially in the form set forth in Exhibit A and shall contain the Private Placement Legend as set forth in Exhibit B. -38- Exchange Securities shall be issued substantially in the form set forth in Exhibit A and, subject to Section 2.16, shall be in the form of one or more Global Notes. SECTION 2.03. Execution and Authentication. The Notes shall be executed on behalf of the Company by its Chief Executive Officer, Chief Financial Officer, President, any Vice President, Treasurer or Assistant Treasurer. The signature of any of these officers on the Notes may be manual or facsimile. At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Notes executed by the Company to the Trustee for authentication; and the Trustee shall authenticate and deliver (i) Initial Notes for original issue in the aggregate principal amount not to exceed $190,000,000, (ii) additional Notes ("Additional Notes") from time to time for original issue in aggregate principal amounts specified by the Company and (iii) Exchange Securities from time to time for issue in exchange for a like principal amount of Initial Notes or Additional Notes, in each case specified in clauses (i) through (iii) above, upon a written order of the Company in the form of an Officers' Certificate (an "Authentication Order"), and in the case of clause (ii), upon receipt by the Trustee of an Opinion of Counsel confirming that the Holders of the outstanding Notes shall be subject to federal income tax in the same amounts, in the same manner and at the same times as would have been the case if such Additional Notes were not issued. Such Officers' Certificates shall specify the amount of Notes to be authenticated and the date on which the Notes are to be authenticated, whether the Notes are to be Initial Notes, Additional Notes or Exchange Securities, that, in the case of Additional Notes, the issuance of such Notes does not contravene any provision of Article Four of this Indenture, whether the Notes are to be issued as one or more Global Notes or Certificated Notes, the name or names of the Initial Holder or Holders and such other information as the Company may include or the Trustee may reasonably request. All Notes shall be dated the date of their authentication. If an Officer whose signature is on a Note was an Officer at the time of such execution but no longer holds that office at the time the Trustee authenticates the Note, the Note shall be valid nevertheless. No Note shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose unless there appears on such Note a certificate of authentication substantially in the form provided for herein executed by the Trustee by manual signature, and such certificate upon any Note shall be conclusive evidence, and the only evidence, that such Note has been duly authenticated and delivered hereunder. Notwithstanding the foregoing, if any Note shall have been authenticated and delivered hereunder but never issued and sold by the Company, and the Company shall deliver such Note to the Trustee for cancellation as provided in Section 2.12, for all purposes of this Indenture such Note shall be deemed never to have been -39- authenticated and delivered hereunder and shall never be entitled to the benefits of this Indenture. The Notes shall be issuable only in fully registered form without coupons in denominations of $1,000 and integral multiples of $1,000. SECTION 2.04. Registrar and Paying Agent. If a Holder has given wire transfer instructions to the Company, the Company shall pay all principal, interest and premium and Additional Interest, if any, on that Holder's Notes in accordance with those instructions. All other payments on Notes shall be made at the office or agency of the paying agent (the "Paying Agent") and registrar (the "Registrar") within the City and State of New York unless the Company elects to make interest payments by check mailed to the Holders at their address set forth in the register of Holders (the "Register"). The Registrar shall keep a Register of the Notes and of their transfer and exchange. The Company may have one or more additional Paying Agents. The term "Paying Agent" includes any additional Paying Agent. The Company shall enter into an appropriate agency agreement, which shall incorporate the provisions of the TIA, with any Agent that is not a party to this Indenture. The agreement shall implement the provisions of this Indenture that relate to such Agent. The Company shall notify the Trustee of the name and address of any such Agent. If the Company fails to maintain a Registrar or Paying Agent, or fails to give the foregoing notice, the Trustee shall act as such and shall be entitled to appropriate compensation in accordance with Section 7.07. The Trustee shall initially act as Paying Agent and Registrar. The Company may change the Paying Agent or Registrar without prior notice to the Holders of the Notes, and the Company or any of its Subsidiaries may act as Paying Agent or Registrar. SECTION 2.05. Paying Agent To Hold Money in Trust. Each Paying Agent shall hold in trust for the benefit of the Holders or the Trustee all money held by the Paying Agent for the payment of principal of or premium or interest on the Notes (whether such money has been paid to it by the Company or any other obligor on the Notes or the Guarantors), and the Company and the Paying Agent shall notify the Trustee of any default by the Company (or any other obligor on the Notes) in making any such payment. Money held in trust by the Paying Agent need not be segregated except as required by law and in no event shall the Paying Agent be liable for any interest on any money received by it hereunder, provided that if the Company or an Affiliate thereof acts as Paying Agent, it shall segregate the money held by it as Paying Agent and hold it as a separate trust fund. The Company at any time may require the Paying Agent to pay all money held by it to the Trustee and account for any funds disbursed and the Trustee may at any time during the continuance of any Event of Default specified in Section 6.01(1) or (2), upon written request to the Paying Agent, require such Paying -40- Agent to pay forthwith all money so held by it to the Trustee and to account for any funds disbursed. Upon making such payment, the Paying Agent shall have no further liability for the money delivered to the Trustee. SECTION 2.06. Holder Lists. The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of the Holders. If the Trustee is not the Registrar, the Company shall furnish to the Trustee at least five Business Days before each Interest Payment Date, and at such other times as the Trustee may request in writing, a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of the Holders, provided that, as long as the Trustee is the Registrar, no such list need be furnished. SECTION 2.07. Transfer and Exchange. Subject to Sections 2.16 and 2.17, when Notes are presented to the Registrar with a request from the Holder of such Notes to register a transfer or to exchange them for an equal principal amount of Notes of other authorized denominations, the Registrar shall register the transfer as requested. Every Note presented or surrendered for registration of transfer or exchange shall be duly endorsed or be accompanied by a written instrument of transfer in form satisfactory to the Company and the Registrar, duly executed by the Holder thereof or his attorneys duly authorized in writing. To permit registrations of transfers and exchanges, the Company shall issue and execute and the Trustee shall authenticate new Notes (and the Guarantors shall execute the Guarantee thereon) evidencing such transfer or exchange at the Registrar's request. No service charge shall be made to the Holder for any registration of transfer or exchange. The Company may require from the Holder payment of a sum sufficient to cover any transfer taxes or other governmental charge that may be imposed in relation to a transfer or exchange, but this provision shall not apply to any taxes or charges due solely in respect of an exchange pursuant to Section 2.11, 3.06, 4.08, 4.12 or 8.05 (in which events the Company shall be responsible for the payment of such taxes). The Registrar shall not be required to exchange or register a transfer of any Note for a period of 15 days immediately preceding the redemption of Notes, except the unredeemed portion of any Note being redeemed in part. Any Holder of the Global Note shall, by acceptance of such Global Note, agree that transfers of the beneficial interests in such Global Note may be effected only through a book entry system maintained by the Holder of such Global Note (or its agent), and that ownership of a beneficial interest in the Global Note shall be required to be reflected in a book entry. Except as expressly provided herein, neither the Trustee nor the Registrar shall have any duty to monitor the Company's compliance with or have any responsibility with respect to the Company's compliance with any Federal or state securities laws. -41- SECTION 2.08. Replacement Notes. If a mutilated Note is surrendered to the Registrar or the Trustee, or if the Holder of a Note claims that the Note has been lost, destroyed or wrongfully taken, the Company shall issue and the Trustee shall authenticate a replacement Note (and the Guarantors shall execute the Guarantee thereon) if the Holder of such Note furnishes to the Company and the Trustee evidence reasonably acceptable to them of the ownership and the destruction, loss or theft of such Note and if the requirements of Section 8-405 of the New York Uniform Commercial Code as in effect on the date of this Indenture are met. If required by the Trustee or the Company, an indemnity bond shall be posted, sufficient in the judgment of the Trustee and the Company to protect the Company, the Guarantors, the Trustee or any Paying Agent from any loss that any of them may suffer if such Note is replaced. The Company may charge such Holder for the Company's reasonable out-of-pocket expenses in replacing such Note and the Trustee may charge the Company for the Trustee's expenses (including, without limitation, attorneys' fees and disbursements) in replacing such Note. Every replacement Note shall constitute a contractual obligation of the Company. SECTION 2.09. Outstanding Notes. The Notes outstanding at any time are all Notes that have been authenticated by the Trustee except for (a) those canceled by it, (b) those delivered to it for cancellation, (c) to the extent set forth in Sections 9.01 and 9.02, on or after the date on which the conditions set forth in Section 9.01 or 9.02 have been satisfied, those Notes theretofore authenticated and delivered by the Trustee hereunder and (d) those described in this Section 2.09 as not outstanding. Subject to Section 2.10, a Note does not cease to be outstanding because the Company or one of its Affiliates holds the Note. If a Note is replaced pursuant to Section 2.08, it ceases to be outstanding unless the Trustee receives proof satisfactory to it that the replaced Note is held by a bona fide purchaser in whose hands such Note is a legal, valid and binding obligation of the Company. If the Paying Agent holds, in its capacity as such, on any Maturity Date, money sufficient to pay all accrued interest and principal with respect to the Notes payable on that date and is not prohibited from paying such money to the Holders thereof pursuant to the terms of this Indenture, then on and after that date such Notes cease to be outstanding and interest on them ceases to accrue. SECTION 2.10. Treasury Notes. In determining whether the Holders of the required principal amount of Notes have concurred in any declaration of acceleration or notice of default or direction, waiver or consent or any amendment, modification or other change to this Indenture, Notes owned by the Company or any Affiliate of the Company shall be disregarded as though they were not out- -42- standing, except that for the purposes of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent or any amendment, modification or other change to this Indenture, only Notes as to which a Responsible Officer of the Trustee has actually received an Officers' Certificate stating that such Notes are so owned shall be so disregarded. Notes so owned which have been pledged in good faith shall not be disregarded if the pledgee established to the satisfaction of the Trustee the pledgee's right so to act with respect to the Notes and that the pledgee is not the Company, a Guarantor, any other obligor on the Notes or any of their respective Affiliates. SECTION 2.11. Temporary Notes. Until definitive Notes are prepared and ready for delivery, the Company may prepare and the Trustee shall authenticate temporary Notes. Temporary Notes shall be substantially in the form of definitive Notes but may have variations that the Company considers appropriate for temporary Notes. Without unreasonable delay, the Company shall prepare and the Trustee shall authenticate definitive Notes in exchange for temporary Notes. Until such exchange, temporary Notes shall be entitled to the same rights, benefits and privileges as definitive Notes. SECTION 2.12. Cancellation. The Company at any time may deliver Notes to the Trustee for cancellation. The Registrar and the Paying Agent shall forward to the Trustee any Notes surrendered to them for registration of transfer, exchange or payment. The Trustee shall cancel all Notes surrendered for registration of transfer, exchange, payment, replacement or cancellation and shall deliver such canceled Notes to the Company. The Company may not reissue or resell, or issue new Notes to replace, Notes that the Company has redeemed or paid, or that have been delivered to the Trustee for cancellation. SECTION 2.13. Defaulted Interest. If the Company defaults on a payment of interest on the Notes, it shall pay the defaulted interest, plus (to the extent permitted by law) any interest payable on the defaulted interest, in accordance with the terms hereof, to the Persons who are Holders on a subsequent special record date, which date shall be at least five Business Days prior to the payment date. The Company shall fix such special record date and payment date in a manner satisfactory to the Trustee. At least 10 days before such special record date, the Company shall mail to each Holder a notice that states the special record date, the payment date and the amount of defaulted interest, and interest payable on defaulted interest, if any, to be paid. The Company may make payment of any defaulted interest in any other lawful manner not inconsistent with the requirements (if applicable) of any securities exchange on which the Notes may be listed and, upon such notice as may be required by such exchange, if, after written notice given by the Company to the Trustee of the proposed payment pursuant to this sentence, such manner of payment shall be deemed practicable by the Trustee. -43- SECTION 2.14. CUSIP Number. The Company in issuing the Notes may use a "CUSIP" number, and if so, such CUSIP number shall be included in notices of redemption or exchange as a convenience to Holders; provided that any such notice may state that no representation is made as to the correctness or accuracy of the CUSIP number printed in the notice or on the Notes, and that reliance may be placed only on the other identification numbers printed on the Notes. The Company shall promptly notify the Trustee of any such CUSIP number used by the Company in connection with the issuance of the Notes and of any change in the CUSIP number. SECTION 2.15. Deposit of Moneys. Prior to 10:00 a.m., New York City time, on each Interest Payment Date and Maturity Date, the Company shall have deposited with the Paying Agent in immediately available funds money sufficient to make cash payments, if any, due on such Interest Payment Date or Maturity Date, as the case may be, in a timely manner which permits the Trustee to remit payment to the Holders on such Interest Payment Date or Maturity Date, as the case may be. The principal and interest on Global Notes shall be payable to the Depositary or its nominee, as the case may be, as the sole registered owner and the sole Holder of the Global Notes represented thereby. The principal and interest on Certificated Notes shall be payable, either in person or by mail, at the office of the Paying Agent. SECTION 2.16. Book-Entry Provisions for Global Notes. (a) Each Global Note initially shall (i) be registered in the name of the Depositary for such Global Note or the nominee of such Depositary, (ii) be delivered to the Trustee as custodian for such Depositary and (iii) to the extent relevant thereto, bear the applicable Private Placement Legend, the Global Note Legend and the Temporary Regulation S Global Note Legend. None of the Company or the Guarantors or any of their agents shall have any responsibility or liability for any aspect of the records relating to, or payments made on account of beneficial ownership interests of, a Global Note, or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests. Members of, or participants in, the Depositary ("Agent Members") shall have no rights under this Indenture with respect to any Global Note, and the Depositary may be treated by the Company, the Guarantors, the Trustee and any agent of the Company, the Guarantors or the Trustee as the absolute owner of such Global Note for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Guarantors, the Trustee or any agent of the Company, the Guarantors or the Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depositary or impair, as between the Depositary and its Agent Members, the operation of customary practices governing the exercise of the rights of a beneficial owner of any Note. The registered Holder of a Global Note may grant proxies and otherwise authorize any Person, including Agent Members and Persons that may -44- hold interests through Agent Members, to take any action which a Holder is entitled to take under this Indenture or the Notes. (b) Interests of beneficial owners in a Global Note may be transferred in accordance with the applicable rules and procedures of the Depositary and the provisions of Section 2.17. Transfers of a Global Note shall be limited to transfers of such Global Note in whole, but not in part, to the Depositary, its successors or their respective nominees, except (i) as required in connection with transfers of interests therein pursuant to Section 2.17(b) or 2.17(g) or as may be required by the Company or the Trustee in connection with transfers pursuant to Section 2.17(i), and (ii) that Rule 144A Physical Notes or, subject to Section 2.17(h), Regulation S Physical Notes shall be transferred to all beneficial owners in exchange for their beneficial interests in the Rule 144A Global Note or the Regulation S Global Note, respectively, in the event that (A) the Depositary notifies the Company that it is unwilling or unable to continue as Depositary for the applicable Global Note and a successor depositary is not appointed by the Company within 90 days or (B) an Event of Default has occurred and is continuing and the Registrar has received a request from the Depositary. In addition, beneficial interests in a Global Note may be exchanged for a Certificated Note upon request but only upon at least 20 days' prior written notice given to the Trustee by or on behalf of the Depositary in accordance with customary procedures. In connection with any transfer or exchange of a portion of the beneficial interest in any Global Note to beneficial owners for a Certificated Note pursuant to this Section 2.16(b), the Registrar shall record on its books and records (and make a notation on the Global Note of) the date and a decrease in the principal amount of such Global Note in an amount equal to the beneficial interest in the Global Note being transferred, and the Company shall execute, and the Trustee shall authenticate and deliver, one or more Certificated Notes of like tenor and principal amount of authorized denominations. In connection with a transfer of an entire Global Note to beneficial owners pursuant to this Section 2.16(b), the applicable Global Note shall be deemed to be surrendered to the Trustee for cancellation, and the Company shall execute, and the Trustee shall authenticate and deliver to each beneficial owner identified by the Depositary in exchange for its beneficial interest in the applicable Global Note, an equal aggregate principal amount at maturity of 144A Physical Notes (in the case of the 144A Global Note) or Regulation S Physical Notes (in the case of the Regulation S Global Note), as the case may be, of authorized denominations. (c) Any beneficial interest in one of the Global Notes that is transferred to a Person who takes delivery in the form of an interest in another Global Note shall, upon transfer, cease to be an interest in such Global Note and become an interest in the other Global Note and, accordingly, shall thereafter be subject to all transfer restrictions, if any, and other procedures applicable to beneficial interests in such other Global Note for as long as it remains such an interest. (d) The Company, the Guarantors, any other obligor upon the Notes or the Trustee, in the discretion of any of them, may treat as the act of a Holder any instrument or writ- -45- ing of any Person that is identified by the Depositary as the owner of a beneficial interest in the Global Note. (e) Any Rule 144A Physical Note delivered in exchange for an interest in the Rule 144A Global Note pursuant to Section 2.16(b) shall, except as otherwise provided in Section 2.17, bear the Private Placement Legend as set forth in Exhibit B. SECTION 2.17. Special Transfer Provisions. (a) Transfers to QIBs. The following provisions shall apply with respect to the registration or any proposed registration of transfer of a Note constituting a Restricted Note to a QIB (excluding transfers to Non-U.S. Persons): (1) if it complies with all other applicable requirements of this Indenture (including Section 2.07 and Section 2.16); and (2) the Registrar shall register the transfer if such transfer is being made by a proposed transferor who has checked the box provided for on such Holder's Note stating, or to a transferee who has advised the Company and the Registrar in writing, that it is purchasing the Note for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a QIB within the meaning of Rule 144A, and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Company as it has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon its foregoing representations in order to claim the exemption from registration provided by Rule 144A; and (3) if the proposed transferee is an Agent Member, and the Notes to be transferred consist of Certificated Notes which after transfer are to be evidenced by an interest in the Global Note, upon receipt by the Registrar of instructions given in accordance with the Depositary's and the Registrar's procedures, the Registrar shall reflect on its books and records the date and an increase in the principal amount of the Global Note in an amount equal to the principal amount of the Certificated Note to be transferred, and the Trustee shall cancel the Certificated Note so transferred. (b) Transfers to Non-QIB Institutional Accredited Investors and Non-U.S. Persons. The following provisions shall apply with respect to the registration of any proposed transfer of a Note constituting a Restricted Note to any Institutional Accredited Investor which is not a QIB or to any Non-U.S. Person: (1) the Registrar shall register the transfer of any Note constituting a Restricted Note whether or not such Note bears the applicable Private Placement Legend, if (x) the requested transfer is after the second anniversary of the Issue Date (provided, -46- however, that neither the Company nor any Affiliate of the Company has held any beneficial interest in such Note, or portion thereof, at any time on or prior to the second anniversary of the Issue Date) or (y)(1) in the case of a transfer to an Institutional Accredited Investor which is not a QIB (excluding Non-U.S. Persons), the proposed transferee has delivered to the Registrar a certificate substantially in the form of Exhibit G hereto and any legal opinions and certifications required thereby or (2) in the case of a transfer to a Non-U.S. Person, the proposed transferor has delivered to the Registrar a certificate substantially in the form of Exhibit E hereto; (2) if the proposed transferor is a participant holding a beneficial interest in a Global Note, upon receipt by the Registrar of (x) the certificate, if any, required by Section 2.17(b)(i) and (y) written instructions given in accordance with the Depositary's and the Registrar's procedures, (a) the Registrar shall reflect on its books and records the date and (if the transfer does not involve a transfer of outstanding Certificated Notes) a decrease in the principal amount of such Global Note in an amount equal to the principal amount of the beneficial interest in the Global Note to be transferred and (b) the Company shall execute and the Trustee shall authenticate and deliver, one or more Certificated Notes of like tenor and amount; and (3) in the case of a transfer to a Non-U.S. Person, if the proposed transferee is a Participant, and the Notes to be transferred consist of Certificated Notes which after transfer are to be evidenced by an interest in a Regulation S Global Note, upon receipt by the Registrar of written instructions given in accordance with the Depositary's and the Registrar's procedures, the Registrar shall reflect on its books and records the date and an increase in the principal amount of such Regulation S Global Note in an amount equal to the principal amount of the Certificated Note to be transferred, and the Trustee shall cancel the Certificated Note so transferred. (c) Transfers of Interests in the Temporary Regulation S Global Notes. With respect to registration of any proposed transfer of interests in any Temporary Regulation S Global Note, the Registrar shall register the transfer of any interest in such Note only (1) if the proposed transferee is a Non-U.S. Person and the proposed transferor has delivered to the Registrar a certificate substantially in the form of Exhibit E hereto and shall take delivery in the form of an interest in the Temporary Regulation S Global Note; or (2) if the proposed transferee is a QIB and the proposed transferor has checked the box provided for on the form of Note stating, or has otherwise certified to the Company and the Registrar in writing, that the sale has been made in compliance with provisions of Rule 144A to a transferee who has signed the certification provided for on the form of Note stating, or has otherwise advised the Company and the Registrar in writing, that it is purchasing the Note for its own account or an account with respect to which -47- it exercises sole investment discretion and that it and any such account is a QIB within the meaning of Rule 144A, and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Company as it has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon its foregoing representations in order to claim the exemption from registration provided by Rule 144A; and (3) upon receipt by the Registrar of written instructions given in accordance with the Depositary's and the Registrar's procedures. (d) Transfers to Non-U.S. Persons. With respect to the registration of any proposed transfer of a Note that is a Restricted Note to a Non-U.S. Person (except for any transfer referred to in Section 2.17(c)), the Registrar shall register such transfer: (1) if it complies with all other applicable requirements of this Indenture (including Section 2.07 and Section 2.16); (2) if the proposed transfer is to be made prior to the end of the Distribution Compliance Period, upon receipt of a certificate substantially in the form of Exhibit E hereto from the proposed transferor; (3) if the proposed transfer is to be made after the end of the Distribution Compliance Period and the Note to be transferred is a 144A Physical Note or an interest in the Rule 144A Global Note, only upon receipt of a certificate substantially in the form of Exhibit B from the proposed transferor; and (4) if the proposed transferor or transferee is or is acting through an Agent Member, upon receipt by the Registrar of written instructions in accordance with the Depositary's and the Registrar's procedures. (e) Transfers Pursuant to Rule 144. With respect to the registration of any proposed transfer of a Note that is a Restricted Note pursuant to the exemption from registration under the Securities Act provided by Rule 144, the Registrar shall register such transfer: (1) if it complies with all other applicable requirements of this Indenture (including Section 2.07 and Section 2.16); and (2) if such transfer is being made by a proposed transferor who has checked the box provided for on the form of such Note stating, or has otherwise certified to the Company and the Registrar in writing, that the sale has been made in compliance with the provisions of Rule 144; and -48- (3) if the proposed transferor or transferee is or is acting through an Agent Member, upon receipt by the Registrar of written instructions given in accordance with the Depositary's and the Registrar's procedures. Each of the Company and the Trustee may require additional opinions, certifications or other evidence as may be reasonably required to confirm that any such proposed transfer is being made in compliance with the Securities Act and applicable state securities laws. (f) Transfers to the Company. With respect to the registration of any proposed transfer of a Note to the Company, the Registrar shall register such transfer: (1) if it complies with all other applicable requirements of this Indenture (including Section 2.07 and Section 2.16); and (2) if such transfer is being made by a proposed transferor who has checked the box provided for on the form of such Note stating, or has otherwise certified to the Company and the Registrar in writing, that the sale has been made to the Company; and (3) if the proposed transferor is or is acting through an Agent Member, upon receipt by the Registrar of written instructions given in accordance with the Depositary's and the Registrar's procedures. (g) Other Transfers. The Registrar shall effect and register, upon receipt of a written request from the Company to do so, a transfer not otherwise permitted by this Section 2.17, such registration to be done in accordance with the otherwise applicable provisions of this Section 2.17, upon the furnishing by the proposed transferor or transferee of a written Opinion of Counsel (which opinion and counsel are satisfactory to the Company and the Trustee) to the effect that, and such other certifications or evidence as the Company may require to confirm that, the proposed transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and otherwise in compliance with applicable state securities laws. (h) Limitation on Issuance of Certificated Notes. No Physical Note shall be exchanged for a beneficial interest in any Global Note, except in accordance with Section 2.16 and this Section 2.17. (i) Execution, Authentication and Delivery of Certificated Notes. In any case in which the Registrar is required to deliver a Physical Note to a transferor or transferee, the Company shall execute, and the Trustee shall authenticate and make available for delivery, such Physical Note. (j) Private Placement Legend. Upon the registration of transfer, exchange or replacement of Notes not bearing the Private Placement Legend, the Registrar shall deliver Notes -49- that do not bear the Private Placement Legend. Upon the registration of transfer, exchange or replacement of Notes bearing the Private Placement Legend, the Registrar shall deliver only Notes that bear the Private Placement Legend unless (i) there is delivered to the Registrar an Opinion of Counsel reasonably satisfactory to the Company and the Trustee to the effect that neither such legend nor the related restrictions on transfer are required in order to maintain compliance with the provisions of the Securities Act or (ii) such Note has been sold pursuant to an effective registration statement under the Securities Act and the Registrar has received an Officers' Certificate from the Company to such effect or (iii) the requested transfer is after the Resale Restriction Termination Date (provided, however, that neither the Company nor an Affiliate of the Company has held any beneficial interest in such Note or portion thereof at any time since the Issue Date). (k) General. By its acceptance of any Note bearing the Private Placement Legend, each Holder of such Note acknowledges the restrictions on transfer of such Note set forth in this Indenture and in the Private Placement Legend and agrees that it shall transfer such Note only as provided in this Indenture. (l) Certain Transfers in Connection with and After the Exchange Offer Under the Registration Rights Agreement. Notwithstanding any other provision of this Indenture: (1) no Exchange Securities may be exchanged by the Holder thereof for a Note issued on the Issue Date; (2) accrued and unpaid interest on the Notes issued on the Issue Date being exchanged in the Exchange Offer shall be due and payable on the next Interest Payment Date for the Exchange Securities following the Exchange Offer and shall be paid to the Holder on the relevant record date of the Exchange Securities issued in respect of the Note issued on the Issue Date being exchanged; and (3) interest on the Note issued on the Issue Date being exchanged in the Exchange Offer shall cease to accrue on the date of completion of the Exchange Offer and interest on the Exchange Securities to be issued in the Exchange Offer shall accrue from the date of the completion of the Exchange Offer. (4) The Registrar shall retain for a period of two years copies of all letters, notices and other written communications received pursuant to Section 2.16 or this Section 2.17. The Company shall have the right to inspect and make copies of all such letters, notices or other written communications at any reasonable time upon the giving of reasonable notice to the Registrar. -50- SECTION 2.18. Computation of Interest. Interest on the Notes shall be computed on the basis of a 360-day year of twelve 30-day months and actual days elapsed. ARTICLE THREE REDEMPTION SECTION 3.01. Election To Redeem; Notices to Trustee. If the Company elects to redeem Notes pursuant to paragraph 5 of the Notes, at least 30 days prior to the Redemption Date (unless a shorter notice shall be agreed to in writing by the Trustee) but not more than 60 days before the Redemption Date, the Company shall notify the Trustee in writing of the Redemption Date, the principal amount of Notes to be redeemed and the redemption price, and deliver to the Trustee, no later than two Business Days prior to the Redemption Date, an Officers' Certificate stating that such redemption shall comply with the conditions contained in paragraph 5 of the Notes. SECTION 3.02. Selection by Trustee of Notes To Be Redeemed. If less than all of the Notes are to be redeemed at any time, the Trustee shall select Notes for redemption as follows: (1) if the Notes are listed on any national securities exchange, in compliance with the requirements of the principal national securities exchange on which the Notes are listed; or (2) if the Notes are not listed on any national securities exchange, on a pro rata basis, by lot or by such method as the Trustee deems fair and appropriate; provided that no Notes of $1,000 or less shall be redeemed in part. The Trustee will promptly notify the Company in writing of the Notes selected for redemption and, in the case of any Note selected for partial redemption, the principal amount thereof to be redeemed. Notes and portions of Notes selected will be in amounts of $1,000 or whole multiples of $1,000; except that if all of the Notes of a Holder are to be redeemed, the entire outstanding amount of Notes held by such Holder, even if not a multiple of $1,000, will be redeemed. SECTION 3.03. Notice of Redemption. At least 30 days, and no more than 60 days, before a Redemption Date, the Company shall mail, or cause to be mailed, a notice of redemption by first-class mail to each Holder -51- of Notes to be redeemed at his or her last address as the same appears on the registry books maintained by the Registrar pursuant to Section 2.04, except that notices of redemption may be mailed more than 60 days prior to a redemption date if the notice is issued in connection with a defeasance of the Notes or a discharge of this Indenture pursuant to Section 9 of this Indenture. The notice shall identify the Notes to be redeemed (including the CUSIP numbers thereof) and shall state: (1) the Redemption Date; (2) the appropriate calculation of the redemption price; (3) if fewer than all outstanding Notes are to be redeemed in part, the portion of the principal amount of such Note to be redeemed and that, after the Redemption Date and upon surrender of such Note, a new Note or Notes in principal amount equal to the unredeemed portion shall be issued; (4) the name and address of the Paying Agent; (5) that Notes called for redemption must be surrendered to the Paying Agent to collect the redemption price; (6) that unless the Company defaults in making the redemption payment, interest on Notes called for redemption ceases to accrue on and after the Redemption Date; (7) which subsection of paragraph 5 of the Notes is the provision of the Notes pursuant to which the redemption is occurring; and (8) the aggregate principal amount of Notes that are being redeemed. In addition, if such redemption is subject to satisfaction of one or more conditions precedent, such notice of redemption shall describe each such condition or conditions, and if applicable, shall state that, in the Company's discretion, the Redemption Date may be delayed until such time as any or all such conditions shall be satisfied, or such redemption may not occur and such notice may be rescinded in the event that any or all such conditions shall not have been satisfied by the Redemption Date as stated in such notice, or by the Redemption Date as so delayed. At the Company's written request made at least five Business Days (unless a shorter notice shall be agreed to in writing by the Trustee) prior to the date on which notice is to be given, the Trustee shall give the notice of redemption in the Company's name and at the Company's sole expense. -52- SECTION 3.04. Effect of Notice of Redemption. Once the notice of redemption described in Section 3.03 is mailed, the Notes so to be redeemed shall, on the Redemption Date and, if applicable, upon satisfaction of any conditions to such redemption set forth in such notice of redemption, become due and payable at the redemption price, including any premium, plus interest accrued to such Redemption Date. Upon surrender to the Paying Agent, such Notes shall be paid at the redemption price, including any premium, plus interest accrued to the Redemption Date; provided that if the Redemption Date is after a regular record date and on or prior to the Interest Payment Date, the accrued interest shall be payable to the Holder of the redeemed Notes registered on the relevant record date; and provided, further, that if a Redemption Date is a Legal Holiday, payment shall be made on the next succeeding Business Day and no interest shall accrue for the period from such Redemption Date to such succeeding Business Day. Such notice, if mailed in the manner provided in Section 3.03 shall be conclusively presumed to have been given whether or not the Holder receives such notice. SECTION 3.05. Deposit of Redemption Price. (a) On or prior to 1:00 p.m., New York City time, on each Redemption Date, the Company shall deposit with the Paying Agent in immediately available funds money sufficient to pay the redemption price of, including premium, if any, and accrued interest on all Notes to be redeemed on that date other than Notes or portions thereof called for redemption on that date which have been delivered by the Company to the Trustee for cancellation. (b) On and after any Redemption Date, if money sufficient to pay the redemption price of, including premium, if any, and accrued interest on Notes called for redemption shall have been made available in accordance with Section 3.05(a) above, the Notes called for redemption shall cease to accrue interest and the only right of the Holders of such Notes shall be to receive payment of the redemption price of and, subject to the first proviso in Section 3.04, accrued and unpaid interest on such Notes to the Redemption Date. If any Note surrendered for redemption shall not be so paid, interest shall be paid, from the Redemption Date until such redemption payment is made, on the unpaid principal of the Note and any interest not paid on such unpaid principal, in each case at the rate and in the manner provided in the Notes. SECTION 3.06. Notes Redeemed in Part. If any Note is to be redeemed in part only, the notice of redemption that relates to that Note shall state the portion of the principal amount of that Note that is to be redeemed. A new Note in principal amount equal to the unredeemed portion of the original Note shall be issued in the name of the Holder of Notes upon cancellation of the original Note. On and after the Redemption Date, interest ceases to accrue on Notes or portions of them called for redemption. -53- SECTION 3.07. Other Mandatory Redemption. The Company is not required to make mandatory redemption or sinking fund payments with respect to the Notes. ARTICLE FOUR COVENANTS SECTION 4.01. Payment of Notes. The Company shall pay the principal of and interest on the Notes in accordance with the terms of the Notes and this Indenture. An installment of principal or interest shall be considered paid on the date it is due if the Trustee or Paying Agent holds on that date money designated for and sufficient to pay such installment. The Company shall pay interest on overdue principal (including post-petition interest in a proceeding under any Bankruptcy Law), and overdue interest, to the extent lawful, at the rate specified in the Notes. SECTION 4.02. Maintenance of Office or Agency. (a) The Company shall maintain an office or agency (which may be an office of the Trustee or an affiliate of the Trustee or Registrar) where Notes may be presented or surrendered for payment, where Notes may be surrendered for registration of transfer or for exchange and where notices and demands to or upon the Company or any Guarantor in respect of the Notes, the Guarantees and this Indenture may be served. The Company shall give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee, and the Company and each Guarantor hereby appoint the Trustee as their agent to receive all such presentations, surrenders, notices and demands. (b) The Company may also from time to time designate one or more other offices or agencies where the Notes may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided, however, that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in the Borough of Manhattan, the City of New York, for such purposes. The Company shall give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency. -54- (c) The Company hereby designates the Corporate Trust Office of the Trustee as one such office or agency of the Company in accordance with Section 2.04. SECTION 4.03. Legal Existence. Subject to Article Five, the Company shall do or cause to be done all things necessary to preserve and keep in full force and effect its legal existence, and the corporate, partnership or other existence of each Restricted Subsidiary, in accordance with the respective organizational documents (as the same may be amended from time to time) of each Restricted Subsidiary and the material rights (charter and statutory), and franchises of the Company and the Restricted Subsidiaries; provided that the Company shall not be required to preserve any such right, franchise, or the corporate, partnership or other existence of the Company or any of its Restricted Subsidiaries if the Company in good faith shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company and its Restricted Subsidiaries taken as a whole. SECTION 4.04. [Reserved] SECTION 4.05. Waiver of Stay, Extension or Usury Laws. The Company and each of the Guarantors covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, or plead (as a defense or otherwise) or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law or any usury law or other law which may affect the covenants or the performance of this Indenture; and (to the extent that they may lawfully do so) each of the Company and the Guarantors hereby expressly waives all benefit or advantage of any such law, and covenants that it shall not hinder, delay or impede the execution of any power herein granted to the Trustee, but shall suffer and permit the execution of every such power as though no such law had been enacted. SECTION 4.06. Compliance Certificate. (a) The Company shall deliver to the Trustee, within 95 days after the end of each fiscal year of the Company commencing with the Company's fiscal year ending September 30, 2003 an Officers' Certificate, one of the signers of which shall be the principal executive officer, principal financial officer or principal accounting officer of the Company, stating whether or not to the best knowledge of the signers thereof the Company and any Restricted Subsidiary is in default in the performance and observance of any of the terms, provisions and conditions of Section 5.01 or Sections 4.01 to 4.19, inclusive, and if the Company shall be in default, specifying all such defaults, the nature and status thereof of which they may have knowledge and what action the Company and the Guarantors are taking or propose to take with respect thereto. Such determination shall be made without regard to notice requirements or periods of grace. -55- (b) The Company shall deliver to the Trustee, as soon as possible and in any event no later than 10 Business Days after the Company becomes aware or should reasonably become aware of the occurrence of a Default or an Event of Default or an event which, with notice or the lapse of time or both, would constitute a Default or Event of Default, an Officers' Certificate setting forth the details of such Default or Event of Default, and the action which the Company is taking or proposes to take with respect to such Default or Event of Default. (c) The Company shall deliver to the Trustee, within 95 days after the end of each fiscal year, a written statement by the Company's independent public accountants stating whether, in connection with their audit of the Company's financial statements, any event which would constitute an Event of Default as defined herein insofar as they relate to accounting matters has come to their attention and, if such an Event of Default has come to their attention, specifying the nature and period of the existence thereof. SECTION 4.07. Payment of Taxes. The Company shall, and shall cause each of its Restricted Subsidiaries to, pay or discharge or cause to be paid or discharged, before the same shall become delinquent, all material taxes, assessments and governmental charges levied or imposed upon the Company or any of its Restricted Subsidiaries; provided, however, that the Company shall not be required to pay or discharge or cause to be paid or discharged any such tax, assessment, charge whose amount, applicability or validity is being contested in good faith by appropriate proceedings. SECTION 4.08. Repurchase at the Option of Holders upon Change of Control. (a) If a Change of Control occurs, each Holder of Notes shall have the right to require the Company to offer to repurchase (a "Change of Control Offer") all or any part (equal to $1,000 or an integral multiple of $1,000) of that Holder's Notes pursuant to a Change of Control Offer on the terms set forth herein. In the Change of Control Offer, the Company shall offer a Change of Control Payment in cash equal to 101% of the aggregate principal amount of Notes repurchased plus accrued and unpaid interest and Additional Interest, if any, on the Notes repurchased, to the date of purchase (the "Change of Control Payment Date"). (b) Within 30 days following the date on which the Company becomes aware that a Change of Control has occurred, the Company shall mail a notice to each Holder describing the transaction or transactions that constitute the Change of Control and offering to repurchase notes on the Change of Control Payment Date specified in the notice, which date shall be no earlier than 30 days and no later than 60 days from the date such notice is mailed. (c) The Company shall comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent those laws and regulations are applicable in connection with the repurchase of the Notes as a result of a Change of Control. To the extent that the provisions of any securities laws or regulations con- -56- flict with this Section 4.08, the Company shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under this Section 4.08 by virtue of such conflict. (d) On the Change of Control Payment Date, the Company shall, to the extent lawful: (1) accept for payment all Notes or portions of Notes properly tendered pursuant to the Change of Control Offer; (2) deposit with the Paying Agent an amount equal to the Change of Control Payment in respect of all Notes or portions of Notes properly tendered; and (3) deliver or cause to be delivered to the Trustee the Notes properly accepted together with an Officers' Certificate stating the aggregate principal amount of Notes or portions of Notes being purchased by the Company. (e) The Paying Agent shall promptly mail to each Holder of Notes properly tendered the Change of Control Payment for such Notes, and the Trustee shall promptly authenticate and mail (or cause to be transferred by book entry) to each Holder a new Note equal in principal amount to any unpurchased portion of the Notes surrendered, if any; provided that each new Note shall be in a principal amount of $1,000 or an integral multiple of $1,000. (f) The Company shall publicly announce the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date. (g) Notwithstanding the foregoing, the Company shall not be required to make a Change of Control Offer upon a Change of Control if (i) a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in this Section 4.08 applicable to a Change of Control Offer made by the Company and purchases all Notes properly tendered and not withdrawn under the Change of Control Offer or (ii) a notice of redemption pursuant to Section 3.03 is delivered, unless and until there is a default in payment of the applicable redemption price. (h) A Change of Control Offer may be made in advance of a Change of Control, and conditioned upon the occurrence of such Change of Control, if a definitive agreement is in place for the Change of Control at the time of making the Change of Control Offer. Notes repurchased by the Company pursuant to a Change of Control Offer shall have the status of notes issued but not outstanding or shall be retired and canceled, at the option of the Company. Notes purchased by a third party pursuant to the preceding paragraph shall have the status of notes issued and outstanding. -57- SECTION 4.09. Limitation on Indebtedness and Issuance of Preferred Stock. (a) The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, "incur") any Indebtedness (including Acquired Debt), and the Company shall not issue any Disqualified Stock and shall not permit any of its Restricted Subsidiaries to issue any shares of preferred stock; provided, however, that the Company may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock, and the Restricted Subsidiaries of the Company (other than Seminis Korea or any of its Restricted Subsidiaries) may incur Indebtedness (including Acquired Debt) or issue preferred stock, if the Leverage Ratio for the Company's most recently ended four full fiscal quarters for which internal financial statements are available (the "Reference Period") immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or preferred stock is issued would not have exceeded the Leverage Test in effect on and as of the last days of the applicable Reference Period, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such four-quarter period. (b) Notwithstanding any other provision of this Section 4.09, in no event shall the non-Guarantor Restricted Subsidiaries (other than Seminis Korea or any of its Restricted Subsidiaries) be permitted to incur Indebtedness (other than Indebtedness permitted pursuant to Section 4.09(c)(5)) in an aggregate principal amount (or accreted value, as applicable) at any time outstanding in excess of the greater of (x) $30,000,000 (or the U.S. Dollar equivalent thereof) and (y) the sum of 15% of the book value of the accounts receivable and inventory of all of the non-Guarantor Restricted Subsidiaries (other than Seminis Korea or any of its Restricted Subsidiaries) as set forth at the end of the most recently completed fiscal period for which internal balance sheets of such non-Guarantor Restricted Subsidiaries are available. (c) Section 4.09(a) above shall not prohibit the incurrence or existence of any of the following items of Indebtedness (collectively, "Permitted Debt"): (1) the incurrence by the Company and the Subsidiary Guarantors of Indebtedness and letters of credit under Credit Facilities in an aggregate principal amount at any one time outstanding under this clause (1) (with letters of credit being deemed to have a principal amount equal to the aggregate maximum amount then available to be drawn thereunder) not to exceed $260,000,000 (or the U.S. Dollar equivalent thereof) (provided that such aggregate amount shall be reduced to the extent of any reduction or elimination of any commitment under any Credit Facility resulting from or relating to the formation of any Receivables Subsidiary or the consummation of any Qualified Receivables Transaction), less the aggregate amount of all Net Proceeds of Asset Sales applied by the Company or any of its Restricted Subsidiaries since the Issue Date to repay any term In- -58- debtedness under a Credit Facility incurred under this clause (1) or to repay any revolving credit Indebtedness under a Credit Facility incurred under this clause (1) and effect a corresponding commitment reduction thereunder pursuant to Section 4.12(b)(1); (2) the incurrence by the Company and its Restricted Subsidiaries of Existing Indebtedness; (3) the incurrence by the Company and the Subsidiary Guarantors of Indebtedness represented by the Notes and the related Subsidiary Guarantees to be issued on the Issue Date and the Exchange Securities and the related Subsidiary Guarantees to be issued pursuant to the Registration Rights Agreement; (4) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to refund, refinance or replace, Indebtedness (other than intercompany Indebtedness) that was permitted to be incurred under Section 4.09(a) above or Section 4.09(c) (2), (3) or (4); (5) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries; provided, however, that: (A) if the Company or any Subsidiary Guarantor is the obligor on such Indebtedness (other than any Indebtedness between or among the Company and any Subsidiary Guarantor), such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations with respect to the Notes, in the case of the Company, or the Subsidiary Guarantee, in the case of a Guarantor; and (B) (i) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary of the Company and (ii) any sale or other transfer of any such Indebtedness to a Person that is neither the Company nor a Restricted Subsidiary of the Company, shall be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this Section 4.09(c)(5); (6) the incurrence by the Company of Hedging Obligations that are incurred in the ordinary course of business and not for speculative purposes; (7) the guarantee by the Company or any Subsidiary Guarantor of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be incurred by another provision of this Section 4.09; -59- (8) the accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, and the payment of dividends on Disqualified Stock or preferred stock in the form of additional shares of the same class of Disqualified Stock or preferred stock, as the case may be, shall not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock or preferred stock for purposes of this Section 4.09; (9) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness under (or constituting reimbursement obligations with respect to) letters of credit, surety, performance or appeal bonds, completion guarantees, escrow agreements or similar instruments issued in connection with the ordinary course of business, including letters of credit or similar instruments in respect of self-insurance and workers' compensation obligations; (10) Indebtedness of the Company or of any of its Restricted Subsidiaries arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business, provided that such Indebtedness is satisfied within five Business Days; (11) the incurrence of the South Korean Loans in an aggregate principal amount (or accreted value, as applicable) at any time outstanding not to exceed $30,000,000 (or the U.S. Dollar equivalent thereof); (12) Indebtedness arising from agreements of the Company or any of its Restricted Subsidiaries providing for indemnification, adjustment of purchase price or similar obligations, in each case, incurred or assumed in connection with the disposition of any business, assets or a Subsidiary of the Company; (13) the issuance by any of the Company's Restricted Subsidiaries to the Company or any of its Restricted Subsidiaries of shares of preferred stock, provided that (a) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the Company and (b) any sale or other transfer of any such preferred stock to a Person that is neither the Company nor a Restricted Subsidiary of the Company shall be deemed, in each case, to constitute an issuance of preferred stock by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this Section 4.09(c)(13); (14) the incurrence by a Receivables Subsidiary of Indebtedness in a Qualified Receivables Transaction that is without recourse (other than pursuant to representations, warranties, covenants and indemnities entered into in the ordinary course of business in connection with a Qualified Receivables Transaction) to the Company or to any Restricted Subsidiary of the Company or its assets (other than such Receivables Subsidiary -60- and its assets), and is not guaranteed by any such Person; provided that any outstanding Indebtedness incurred under this clause (14) shall reduce (for so long as, and to the extent that, the Indebtedness referred to in this clause (14) remains outstanding) the aggregate amount permitted to be incurred under Section 4.09(c)(1) above to the extent set forth therein; (15) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation or improvement of property, plant or equipment used in the business of the Company or such Restricted Subsidiary (whether through the direct purchase of assets or the Equity Interests of any Person owning such assets), in an aggregate principal amount not to exceed $12,500,000 at any time outstanding; and (16) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding not to exceed $25,000,000. Notwithstanding any other provision of this Section 4.09, the maximum amount of Indebtedness that the Company or any Restricted Subsidiary may incur pursuant to this Section 4.09 shall not be deemed to be exceeded as a result of fluctuations in the exchange rates of currencies. For purposes of determining compliance with this Section 4.09, (1) the outstanding principal amount of any particular Indebtedness shall be counted only once and any obligation arising under any guarantee, Lien, letter of credit or similar instrument supporting such Indebtedness shall be disregarded, and (2) in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (16) above, or is entitled to be incurred pursuant to Section 4.09(a), the Company in its sole discretion shall be permitted to divide and classify such item of Indebtedness on the date of its incurrence, or later classify, reclassify or divide all or a portion of such item of Indebtedness, in any manner that complies with this Section 4.09; provided that Indebtedness incurred under the Credit Agreement on the Issue Date shall be deemed to have been incurred on such date in reliance on clause (1) of this Section 4.09(c) and may not be reclassified. Furthermore, it being understood, that notwithstanding Section 4.09 or any other provision of this Indenture, on the Issue Date, the Company may incur $100,000,000 of Indebtedness consisting of a one-day loan from Citibank North America, Inc. or an affiliate thereof in order to facilitate and finance the Acquisition Transactions. SECTION 4.10. Limitation on Restricted Payments. (a) The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly: -61- (1) declare or pay any dividend or make any other payment or distribution on account of the Company's Equity Interests (including, without limitation, any payment in connection with any merger or consolidation involving the Company) or to the direct or indirect holders of the Company's Equity Interests in their capacity as such (other than dividends or distributions payable in Equity Interests (other than Disqualified Stock) of the Company); (2) purchase, redeem or otherwise acquire or retire for value (including, without limitation, in connection with any merger or consolidation involving the Company) any Equity Interests of the Company or any direct or indirect parent of the Company; (3) make any payment on or with respect to, or purchase, redeem, defease or otherwise acquire or retire for value, any Indebtedness that is subordinated to the Notes or the Subsidiary Guarantees (excluding any intercompany Indebtedness between the Company and any of its Restricted Subsidiaries), except a payment of interest or principal at the Stated Maturity thereof; or (4) make any Restricted Investment (all such payments and other actions set forth in clauses (1) through (4) being collectively referred to as "Restricted Payments"), unless, at the time of and after giving effect to such Restricted Payment: (A) no Default or Event of Default has occurred and is continuing or would occur as a consequence of such Restricted Payment; (B) the Company would, at the time of such Restricted Payment and after giving pro forma effect thereto as if such Restricted Payment had been made at the beginning of the applicable four-quarter period, have been permitted to incur at least $1.00 of additional Indebtedness pursuant to the Leverage Ratio test set forth in Section 4.09(a); and (C) such Restricted Payment, together with the aggregate amount of all other Restricted Payments made by the Company and its Restricted Subsidiaries after the Issue Date (excluding Restricted Payments permitted by clauses (2), (3), (4), (8), (9) and (10)(y) of Section 4.10(b)), is less than the sum, without duplication, of: (i) 50% of the Consolidated Net Income of the Company for the period (taken as one accounting period) from the beginning of the first fiscal quarter commencing after the Issue Date to the end of the Company's most recently ended fiscal quarter for which internal financial statements are available at the time of such Restricted Payment (or, if such Consolidated Net Income for such period is a deficit, less 100% of such deficit); plus -62- (ii) 100% of the aggregate net cash proceeds and the Fair Market Value of Marketable Securities and other assets used or useful in a Permitted Business or the Capital Stock of a Person engaged in a Permitted Business received by the Company since the Issue Date as a contribution to its common equity capital or from or in respect of the issue or sale of Equity Interests of the Company (other than Disqualified Stock) or the issue or sale of Equity Interests of Holdings (to the extent the proceeds thereof are contributed to the Company by Holdings) or from the issue or sale of convertible or exchangeable Disqualified Stock or convertible or exchangeable debt securities of the Company that have been converted into or exchanged for such Equity Interests (including such cash proceeds received in connection with any such conversion or exchange) (other than Equity Interests (or Disqualified Stock or debt securities) sold to a Subsidiary of the Company); plus (iii) the net reduction in any Restricted Investment that was made after the Issue Date resulting from cash payments of interest on Indebtedness, dividends, repayments of loans or advances, in each case to the Company or any of its Restricted Subsidiaries; plus (iv) to the extent that any Unrestricted Subsidiary of the Company is redesignated as a Restricted Subsidiary of the Company after the Issue Date, the lesser of (i) the Fair Market Value of the Company's Investment in such Subsidiary as of the date of such redesignation or (ii) such Fair Market Value as of the date on which such Subsidiary was originally designated as an Unrestricted Subsidiary; plus (v) the net cash proceeds received by the Company or any of its Restricted Subsidiaries from the sale of Restricted Investments that were made after the Issue Date, provided that the sum of all amounts added pursuant to this clause (e) shall not exceed the aggregate initial amount of all such Restricted Investments that have been made since the Issue Date; plus (vi) the amount by which Indebtedness of the Company or any of its Restricted Subsidiaries is reduced on the Company's consolidated balance sheet upon the conversion or exchange after the Issue Date of any such Indebtedness incurred after the Issue Date into or for Capital Stock (other than Disqualified Stock); plus (vii) the initial amount of any Restricted Investment that was made after the Issue Date in a Person that becomes a Restricted Subsidiary. -63- (b) So long as no Default has occurred and is continuing or would be caused thereby (except as to clauses (1), (2), (4), (10), (11) and (12) of this Section 4.10(b), where such restriction does not apply), the provisions of Section 4.10(a) shall not prohibit: (1) the payment of any dividend or the consummation of any irrevocable redemption of Notes within 60 days after the date of declaration of the dividend or giving of any such redemption notice, as the case may be, if at the date of declaration or notice the dividend or redemption payment would have complied with the provisions of this Indenture; (2) the redemption, repurchase, retirement, defeasance or other acquisition of any Subordinated Indebtedness of the Company or any Guarantor or of any Equity Interests of the Company in exchange for, or out of the net cash proceeds of the substantially concurrent sale (other than to a Restricted Subsidiary of the Company) of, or capital contribution relating to, Equity Interests of the Company (other than Disqualified Stock) or the issue or sale of Equity Interests of Holdings (to the extent the proceeds thereof are contributed to the Company by Holdings); provided that the amount of any such net cash proceeds that are utilized for any such redemption, repurchase, retirement, defeasance or other acquisition shall be excluded from clause (C)(ii) of Section 4.10(a); (3) the defeasance, redemption, repurchase or other acquisition of Subordinated Indebtedness of the Company or any Guarantor with the net cash proceeds from an incurrence of Permitted Refinancing Indebtedness; (4) (x) the repurchase of Equity Interests of the Company or Holdings deemed to occur upon the cashless exercise of stock options, warrants, convertible or exchangeable securities or other similar Equity Interests if such Equity Interests represent a portion of the exercise or exchange price of such options, warrants, convertible or exchangeable securities or other similar Equity Interests; and (y) payments to fund the purchase by the Company or Holdings of fractional shares arising out of stock dividends, splits or combinations or business combinations; (5) the repurchase of any Subordinated Indebtedness or Disqualified Stock of the Company or any securities of Holdings (including, with respect to the repurchase of securities of Holdings, by means of a dividend or distribution of cash by the Company to Holdings) at a purchase price not greater than 101% of the principal amount of such Subordinated Indebtedness or Disqualified Stock of the Company or such securities of Holdings in the event of a Change of Control pursuant to a provision similar to Section 4.08; provided that prior to consummating any such repurchase, the Company has made the Change of Control Offer required by this Indenture and has repurchased all Notes validly tendered for payment in connection with such Change of Control Offer; -64- (6) the repurchase of any Subordinated Indebtedness or Disqualified Stock of the Company or any securities of Holdings (including, with respect to the repurchase of securities of Holdings, by means of a dividend or distribution of cash by the Company to Holdings) at a purchase price not greater than 100% of the principal amount of such Subordinated Indebtedness or Disqualified Stock of the Company or such securities of Holdings in the event of an Asset Sale pursuant to a provision similar to Section 4.12; provided that prior to consummating any such repurchase, the Company has made the Asset Sale Offer required by Section 4.12(c) and has repurchased all Notes validly tendered for payment in connection with such Asset Sale Offer; (7) payments to fund the repurchase, redemption or other acquisition or retirement for value of any Equity Interests of Holdings or the Company held by any current or former director, officer, employee or consultant of Holdings, the Company or any Restricted Subsidiary of the Company (A) upon the death, disability or termination of employment of such director, officer, employee or consultant or to the extent required pursuant to employee benefit plans, employment agreements or consulting agreements or (B) pursuant to any equity subscription agreement, stock option agreement, stockholders' agreement or similar agreement; provided that the aggregate price paid for all such repurchased, redeemed, acquired or retired Equity Interests may not in any fiscal year exceed the lesser of (i) the sum of (x) $2,000,000 and (y) the aggregate amount of Restricted Payments permitted (but not made) pursuant to this clause (7) in prior fiscal years following the Issue Date and (ii) $5,000,000; provided, further, that such amount in any fiscal year may be increased by an amount not to exceed (x) the cash proceeds from the issue or sale of Equity Interests of the Company (or from the issue or sale of Equity Interests of Holdings to the extent the proceeds thereof are contributed to the Company by Holdings) to any such directors, officers, employees or consultants that occurs after the Issue Date (to the extent that the cash proceeds from the sale of such Equity Interests have not otherwise been applied to the payment of Restricted Payments by virtue of clause (a)(C)(ii) of this Section 4.10) plus (y) the cash proceeds of key man life insurance policies received by the Company and its Restricted Subsidiaries after the Issue Date; (8) the declaration and payment of dividends to holders of any class or series of Disqualified Stock of the Company issued on or after the Issue Date in accordance with Section 4.09(a); (9) payments to fund any payments that are made to consummate the Acquisition Transactions pursuant to or contemplated by the Acquisition Transactions Agreements (including, without limitation, payments made in connection with the exercise of appraisal rights under Section 262 of the Delaware General Corporation Law); (10) the making of distributions, loans or advances in an amount not to exceed (x) $1,000,000 in any fiscal year to pay the ordinary operating costs of Holdings (includ- -65- ing, without limitation, directors' fees, indemnification obligations, professional fees and expenses) plus (y) any other amounts of corporate overhead expenses payable by Holdings which were deducted in calculating Consolidated Net Income of the Company in accordance with this Indenture; (11) the payment by the Company of cash dividends to Holdings in the amounts and at the times of any payment by Holdings in respect of taxes, provided that (x) the amount of cash dividends paid pursuant to this clause (11) to enable Holdings to pay federal, state, local and foreign income taxes at any time shall not exceed the lesser of (A) the amount of such federal, state and foreign income taxes owing by Holdings at such time for the respective period and (B) the amount of such federal, state, local and foreign income taxes that would be owing by the Company and its Subsidiaries on a consolidated basis for such period if determined without regard to Holdings' ownership of the Company and (y) any refunds shall promptly be returned by Holdings to the Company; and (12) additional Restricted Payments not to exceed $15,000,000 in the aggregate. (c) The amount of all Restricted Payments (other than cash) shall be the Fair Market Value on the date of the Restricted Payment of the asset(s) or securities proposed to be transferred or issued by the Company or such Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment. The Fair Market Value of any assets or securities that are required to be valued by this Section 4.10 shall be determined by the Board of Directors of the Company, whose resolution with respect thereto shall be delivered to the Trustee. SECTION 4.11. Limitation on Liens. The Company shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly, incur or suffer to exist, any Lien (other than Permitted Liens or Liens securing Senior Debt or Guarantor Senior Debt) upon any of its property (including Capital Stock of a Restricted Subsidiary), whether owned at the Issue Date or thereafter acquired, or any interest therein or any income or profits therefrom, unless: (a) if such Lien secures senior subordinated Indebtedness, the Notes or the applicable Subsidiary Guarantee are secured on an equal and ratable basis with such Indebtedness; and (b) if such Lien secures Subordinated Indebtedness, such Lien shall be subordinated to a Lien securing the Notes or the applicable Subsidiary Guarantee in the same property as that securing such Lien to the same extent as such subordinated obligations are subordinated to the Notes and the Subsidiary Guarantees, -66- in each case until such time as the applicable Indebtedness is no longer secured by such Lien. SECTION 4.12. Limitation on Asset Sales. (a) The Company shall not, and shall not permit any of its Restricted Subsidiaries to, consummate an Asset Sale unless: (1) the Company (or the Restricted Subsidiary, as the case may be) receives consideration (including by way of relief from, or by any other Person assuming responsibility for, any liabilities, contingent or otherwise) at the time of the Asset Sale at least equal to the Fair Market Value of the assets or Equity Interests issued or sold or otherwise disposed of; (2) the Fair Market Value is determined by the Company and evidenced by an Officers' Certificate delivered to the Trustee; provided, however, that with respect to any Asset Sale or series of related Asset Sales involving aggregate consideration in excess of $15,000,000, such determination shall be made by the Company's Board of Directors and evidenced by a resolution of the Board of Directors; and (3) at least 75% (50% in the case of Specified Assets) of the consideration received in the Asset Sale by the Company or such Restricted Subsidiary is in the form of cash or Cash Equivalents. For purposes of this provision, each of the following shall be deemed to be cash: (A) any liabilities, as shown on the Company's most recent consolidated balance sheet or in the Notes thereto, of the Company or any Restricted Subsidiary (other than contingent liabilities and liabilities that are by their terms subordinated to the Notes or any Subsidiary Guarantee) that are assumed by the transferee of any such assets pursuant to an agreement that releases the Company or such Restricted Subsidiary from further liability; (B) any securities, notes or other obligations received by the Company or any such Restricted Subsidiary from such transferee that are converted by the Company or such Restricted Subsidiary into cash within 90 days of their receipt, to the extent of the cash received in that conversion; (C) any Capital Stock or assets of the kind referred to in Section 4.12(b)(3) or (4); and (D) accounts receivable of a business, retained by the Company or one of its Restricted Subsidiaries following the sale of such business; provided that such accounts receivable (x) are not past due more than 60 days and (y) do not -67- have a payment date greater than 90 days from the date of the invoice creating such accounts receivable. (b) Within 360 days after the receipt of Net Proceeds from an Asset Sale, the Company or any Restricted Subsidiary may apply those Net Proceeds at its option: (1) to repay outstanding Senior Debt of the Company or any Restricted Subsidiary of the Company (including Indebtedness or other obligations under any Credit Facility), and thereafter, repay any other outstanding Indebtedness of the Company or any Restricted Subsidiary of the Company, and, in each case, if the Indebtedness repaid is revolving credit Indebtedness, to correspondingly reduce commitments with respect thereto; (2) to make one or more capital expenditures to be used in a Permitted Business; (3) to acquire all or substantially all of the assets of, or a majority of the Capital Stock of, another Permitted Business; and (4) to acquire other assets that are used or useful in a Permitted Business. Pending the final application of any Net Proceeds, the Company or any Restricted Subsidiary of the Company may temporarily reduce revolving credit borrowings or otherwise invest the Net Proceeds in any manner that is not prohibited by this Indenture. (c) Any Net Proceeds from Asset Sales that are not applied or invested as provided in Section 4.12(b) above shall constitute "Excess Proceeds." When the aggregate amount of Excess Proceeds exceeds $10,000,000, the Company shall make an offer (an "Asset Sale Offer") to all Holders of Notes and all holders of other Indebtedness that is pari passu with the Notes containing provisions similar to those set forth in this Indenture with respect to offers to purchase or redeem with the proceeds of sales of assets to purchase the maximum principal amount of notes and such other pari passu Indebtedness that may be purchased out of the Excess Proceeds. The offer price in any Asset Sale Offer shall be equal to 100% of principal amount plus accrued and unpaid interest and Additional Interest, if any, to the date of purchase, and shall be payable in cash. If any Excess Proceeds remain after consummation of an Asset Sale Offer, the Company may use those Excess Proceeds for any purpose not otherwise prohibited by this Indenture. If the aggregate principal amount of Notes and other pari passu Indebtedness tendered into such Asset Sale Offer exceeds the amount of Excess Proceeds, the Trustee shall select the Notes and such other pari passu Indebtedness to be purchased on a pro rata basis in proportion to the respective principal amounts (or accreted values, as applicable) of the Notes and such pari passu Indebtedness then outstanding. Upon completion of each Asset Sale Offer, the amount of Excess Proceeds shall be reset to zero. -68- (d) Within 15 Business Days after the Company is obligated to make an Asset Sale Offer as described in Section 4.12(c), the Company shall send a written notice, by first-class mail, to the Holders of Notes with a copy to the Trustee, accompanied by such information regarding the Company and the Guarantors as the Company in good faith believes shall enable such Holders to make an informed decision with respect to such Asset Sale Offer. Such notice shall state, among other things, the purchase price and the purchase date (the "Purchase Date"), which shall be, subject to any contrary requirements of applicable law, a Business Day no earlier than 20 Business Days nor later than 60 Business Days from the date such notice is mailed. (e) Not later than the date upon which written notice of an Asset Sale Offer is delivered to the Holders of the Notes as provided in Section 4.12(d), the Company shall deliver to the Trustee an Officers' Certificate as to (1) the amount of the Asset Sale Offer (the "Offer Amount"), (2) the allocation of the Net Proceeds from the Asset Sale pursuant to which such Asset Sale Offer is being made and (3) the compliance of such allocation with the provisions of this Section 4.12. On or before the Purchase Date, the Company shall also irrevocably deposit with the Trustee or with the Paying Agent (or, if the Company or a wholly owned Subsidiary is the Paying Agent, shall segregate and hold in trust) in Cash Equivalents (other than in those enumerated in clause (2) of the definition of "Cash Equivalents"), maturing on the last day prior to the Purchase Date or on the Purchase Date if funds are immediately available by the opening of business, an amount equal to the Offer Amount to be held for payment in accordance with the provisions of this Section 4.12. Upon the expiration of the period for which the Asset Sale Offer remains open (the "Offer Period"), the Company shall deliver to the Trustee for cancellation the Notes or portions thereof that have been properly tendered to and are to be accepted by the Company. The Trustee or the Paying Agent shall, on the Purchase Date, mail or deliver payment to each tendering Holder in the amount of the purchase price. In the event that the aggregate purchase price of the Notes delivered by the Company to the Trustee is less than the Offer Amount, the Trustee or the Paying Agent shall deliver the excess to the Company immediately after the expiration of the Offer Period. (f) Holders electing to have a Note purchased shall be required to surrender the Note, with an appropriate form duly completed, to the Company or its agent at the address specified in the notice at least three Business Days prior to the Purchase Date. Holders shall be entitled to withdraw their election if the Trustee or the Company receives not later than one Business Day prior to the Purchase Date a telegram, telex, facsimile transmission, electronic mail or letter setting forth the name of the Holder, the principal amount of the Note that was delivered for purchase by the Holder and a statement that such Holder is withdrawing its election to have such Note purchased. If at the expiration of the Offer Period the aggregate principal of Notes surrendered by Holders exceeds the Offer Amount, the Company shall select the Notes to be purchased on pro rata basis for all Notes (with such adjustments as may be deemed appropriate by the Company so that only Notes in denominations of $1,000, or integral multiples thereof, shall be purchased). Holders whose Notes are purchased only in part shall be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered. -69- (g) At the time the Company or its agent delivers Notes to the Trustee that are to be accepted for purchase, the Company shall also deliver an Officers' Certificate stating that such Notes are to be accepted by the Company pursuant to and in accordance with the terms of this Section 4.12. A Note shall be deemed to have been accepted for purchase at the time the Trustee or the Paying Agent mails or delivers payment therefor to the surrendering Holder. (h) The Company shall comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent those laws and regulations are applicable in connection with each repurchase of Notes pursuant to an Asset Sale Offer. To the extent that the provisions of any securities laws or regulations conflict with this Section 4.12, the Company shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under this Section 4.12 by virtue of such conflict. SECTION 4.13. Limitation on Dividends and Other Payments Affecting Restricted Subsidiaries. (a) The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create or permit to exist or become effective any consensual encumbrance or restriction on the ability of any Restricted Subsidiary to: (1) pay dividends or make any other distributions on its Capital Stock to the Company or any of its Restricted Subsidiaries, or with respect to any other interest or participation in, or measured by, its profits, or pay any indebtedness owed to the Company or any of its Restricted Subsidiaries, provided that the priority of any preferred stock in receiving dividends or liquidating distributions prior to dividends or liquidating distributions being paid on common stock shall not be deemed to be a restriction on the ability to make distributions on Capital Stock; (2) make loans or advances to the Company or any of its Restricted Subsidiaries; or (3) transfer any of its properties or assets to the Company or any of its Restricted Subsidiaries. (b) However, the restrictions set forth in Section 4.13(a) shall not apply to encumbrances or restrictions existing under or by reason of: (1) agreements or instruments (including agreements or instruments governing Existing Indebtedness and Credit Facilities) as in effect on the Issue Date and any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings thereof, provided that the amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings -70- are no more restrictive, taken as a whole, with respect to such dividend and other payment restrictions than those contained in such agreements or instruments as in effect on the Issue Date; (2) Credit Facilities, provided that the encumbrances or restrictions contained therein are no more restrictive, taken as a whole, with respect to such dividend and other payment restrictions than those contained in the Credit Agreement as in effect on the Issue Date; (3) this Indenture, the Notes and the Subsidiary Guarantees; (4) applicable law, rule, regulation or order; (5) Hedging Obligations entered into from time to time; (6) any instrument of a Person acquired or assumed by the Company or any of its Restricted Subsidiaries as in effect at the time of such acquisition or assumption (except to the extent such instrument was created, executed, incurred or assumed, as the case may be, in connection with or in contemplation of such acquisition) and any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings of any such instrument, provided that the amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings are no more restrictive, taken as a whole, with respect to such dividend and other payment restrictions than those contained in such instrument at the time of such acquisition or assumption, which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person, or the property or assets of the Person, so acquired, provided, further, that, in the case of Indebtedness, such Indebtedness was permitted by the terms of this Indenture to be incurred; (7) customary non-assignment provisions in leases, licenses or other contracts and agreements entered into in the ordinary course of business; (8) purchase money obligations or Capital Lease Obligations for property acquired in the ordinary course of business that impose restrictions on that property of the nature described in Section 4.13(a)(3); (9) any agreement for the sale or other disposition of the assets or Capital Stock of a Restricted Subsidiary that restricts distributions by that Restricted Subsidiary pending its sale or other disposition; (10) Permitted Refinancing Indebtedness, provided that the restrictions contained in the agreements governing such Permitted Refinancing Indebtedness are no more -71- restrictive, taken as a whole, with respect to such dividend and other payment restrictions, than those contained in the agreements governing the Indebtedness being refinanced; (11) Liens securing Indebtedness otherwise permitted to be incurred under Section 4.11 that limit the right of the debtor to dispose of the assets subject to such Liens; (12) provisions with respect to the disposition or distribution of assets or property in joint venture agreements, asset sale agreements, sale leaseback agreements, stock sale agreements and other similar agreements entered into in the ordinary course of business; (13) restrictions on cash or other deposits or net worth imposed by customers under contracts entered into in the ordinary course of business; (14) Indebtedness or other contractual requirements of a Receivables Subsidiary governing a Qualified Receivables Transaction, provided that such restrictions apply only to such Receivables Subsidiary; (15) any Permitted Investment; (16) any mortgage financing or mortgage refinancing that imposes restrictions on the real property securing such Indebtedness; and (17) any agreement governing Indebtedness permitted to be incurred pursuant to Section 4.09; provided that (A) the provisions relating to such Indebtedness, taken as a whole, are not materially more restrictive as determined by the Board of Directors of the Company than the provisions contained in the Credit Agreement or in this Indenture as in effect on the Issue Date and (B) such encumbrance or restriction is not expected to make the Company unable to make principal or interest payments on the Notes, as determined in good faith by the Board of Directors of the Company. SECTION 4.14. Limitation on Transactions with Affiliates. (a) The Company shall not, and shall not permit any of its Restricted Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into or make or amend any transaction, contract, agreement, understanding, loan, advance or guarantee with, or for the benefit of, any Affiliate (each, an "Affiliate Transaction"), unless: (1) the Affiliate Transaction is on terms that are no less favorable to the Company or the relevant Restricted Subsidiary than those that would have been obtained in a comparable transaction by the Company or such Restricted Subsidiary with an unrelated Person and if in the good faith judgment of the Board of Directors of the Company no -72- comparable transaction is available with which to compare such Affiliate Transaction, and such Affiliate Transaction is otherwise fair to the Company or the relevant Restricted Subsidiary from a financial point of view; and (2) the Company delivers to the Trustee: (A) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $5,000,000, a resolution of the Board of Directors of the Company set forth in an Officers' Certificate certifying that such Affiliate Transaction complies with this Section 4.14 and that such Affiliate Transaction has been approved by a majority of the disinterested members of the Board of Directors of the Company; and (B) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $15,000,000 or with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $5,000,000 as to which there are no disinterested members of the Board of Directors of the Company or as to which the Company or such Restricted Subsidiary otherwise chooses, an opinion as to the fairness to the Company of such Affiliate Transaction from a financial point of view issued by an accounting, appraisal or investment banking firm of national standing. (b) The following items shall not be deemed to be Affiliate Transactions and, therefore, shall not be subject to the provisions of Section 4.14(a): (1) any employment agreement or employee benefit plan (including any incentive plan) or similar arrangement entered into by the Company or any of its Restricted Subsidiaries in the ordinary course of business with officers, directors or employees of Holdings, the Company or any such Restricted Subsidiary, including any issuance of securities (including stock options or similar rights), or other payments, awards or grants in cash, securities (including stock options or similar rights) or otherwise pursuant to, or the funding of, employment arrangements, stock options and stock ownership plans approved by the Board of Directors of Holdings or the Company, as the case may be, in the ordinary course of business; (2) transactions between or among the Company and/or its Restricted Subsidiaries; (3) transactions with a Person that is an Affiliate of the Company solely because the Company owns an Equity Interest in, or controls, such Person; -73- (4) payment of reasonable compensation, fees (including director's fees and benefits), and indemnities and insurance provided for by Holdings' or the Company's charter, by-laws and written agreements, to employees, consultants, stockholders, officers and directors of Holdings, the Company or any of its Restricted Subsidiaries in the ordinary course of business; (5) issuances and sales of Equity Interests (other than Disqualified Stock) to, or receipt of capital contributions from, Affiliates of the Company; (6) Restricted Payments and Permitted Investments that are permitted by Section 4.10; (7) any transaction pursuant to any agreement in existence on the Issue Date, as such agreement is in effect on the Issue Date; (8) transactions (A) between the Company or any of its Restricted Subsidiaries and a Receivables Subsidiary and (B) between a Receivables Subsidiary and any Person in which such Receivables Subsidiary has an Investment that in the case of (A) or (B) above, in the good faith determination of the Board of Directors of the Company, are necessary or advisable to effect the Qualified Receivables Transaction; (9) payments, advances or loans to employees, officers and directors of Holdings, the Company, and its Restricted Subsidiaries that are approved by a majority of the Board of Directors of the Company or Holdings, as the case may be, in good faith in an aggregate amount not to exceed $3,000,000 in an aggregate principal amount at any time outstanding; (10) provision of administrative or management services by Holdings, the Company or its Subsidiaries or any of their directors, officers or employees to any of their respective Subsidiaries in the ordinary course of business; (11) pledges of Equity Interests of Unrestricted Subsidiaries for the benefit of lenders of Unrestricted Subsidiaries; (12) consummation of the Acquisition Transactions, including but not limited to execution and consummation of the Acquisition Transactions Agreements and the payment of all fees, expenses, consideration and other amounts paid or to be paid in connection therewith; (13) payments by the Company or any of its Restricted Subsidiaries to Fox Paine and its Affiliates for any financial advisory, financing, underwriting or other placement services or in respect of other investment banking activities, including, without limitation, in connection with acquisitions or divestitures, which payments are approved -74- by a majority of the members of the Board of Directors of the Company, and payments pursuant to the Management Fee Letter and any amendment or supplement thereto that is no less favorable to the Company than such management agreement as in effect on the Issue Date; and (14) the existence of, or the performance by Holdings, the Company or any of its Restricted Subsidiaries of its obligations under the terms of any stockholders' agreement (including any registration rights agreement or purchase agreement related thereto) to which it is a party as of the Issue Date and any similar agreements which it may enter into thereafter, provided, however, that the existence of, or the performance by Holdings, the Company or any of its Restricted Subsidiaries of obligations under any future amendment to any such existing agreement or under any similar agreement entered into after the Issue Date shall only be permitted by this clause (14) to the extent that the terms of the amendment or new agreement are not otherwise disadvantageous to the Holders of notes in any material respect. SECTION 4.15. Designation of Restricted and Unrestricted Subsidiaries. The Board of Directors of the Company may designate any Restricted Subsidiary to be an Unrestricted Subsidiary if that designation would not cause a Default. If a Restricted Subsidiary is designated as an Unrestricted Subsidiary, the aggregate Fair Market Value of all outstanding Investments owned by the Company and its Restricted Subsidiaries in the Subsidiary properly designated shall be deemed to be an Investment made as of the time of the designation and shall reduce the amount available for Restricted Payments under Section 4.10(a) or under one or more clauses of the definition of "Permitted Investments," as determined by the Company. That designation shall only be permitted if the Investment would be permitted at that time and if the Restricted Subsidiary otherwise meets the definition of an Unrestricted Subsidiary. The Board of Directors of the Company may redesignate any Unrestricted Subsidiary to be a Restricted Subsidiary if the redesignation would not cause a Default. SECTION 4.16. Payments for Consent. The Company shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, pay or cause to be paid any consideration to or for the benefit of any Holder of Notes for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of this Indenture or the Notes unless such consideration is offered to be paid and is paid to all Holders of the Notes that consent, waive or agree to amend in the time frame set forth in the solicitation documents relating to such consent, waiver or agreement. -75- SECTION 4.17. Reports. Whether or not required by the Commission, so long as any notes are outstanding, Holdings shall furnish to the Holders of Notes, within the time periods specified in the Commission's rules and regulations: (1) all quarterly and annual financial information that would be required to be contained in a filing with the Commission on Forms 10-Q and 10-K if Holdings were required to file such Forms, including a "Management's Discussion and Analysis of Financial Condition and Results of Operations" and, with respect to the annual information only, a report on the annual financial statements by Holdings' certified independent accountants; and (2) all current reports that would be required to be filed with the Commission on Form 8-K if Holdings were required to file such reports. In addition, following the consummation of the exchange offer contemplated by the Registration Rights Agreement, whether or not required by the Commission, Holdings shall file a copy of all of the information and reports referred to in clauses (1) and (2) above with the Commission for public availability within the time periods specified in the Commission's rules and regulations (unless the Commission shall not accept such a filing) and make such information available to prospective investors upon request. In addition, the Company, Holdings and the Subsidiary Guarantors have agreed that, for so long as the Notes are not freely transferable under the Securities Act, they shall furnish to the Holders and to prospective investors, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act. SECTION 4.18. Creation of Subsidiaries; Additional Subsidiary Guarantees. If the Company or any of its Restricted Subsidiaries acquires or creates another Domestic Subsidiary (other than a Receivables Subsidiary) after the Issue Date, excluding all Subsidiaries that have properly been designated as Unrestricted Subsidiaries in accordance with this Indenture for so long as they continue to constitute Unrestricted Subsidiaries, and that newly acquired or created Domestic Subsidiary guarantees Indebtedness under the Credit Agreement, then that newly acquired or created Domestic Subsidiary shall become a Subsidiary Guarantor and execute a supplemental indenture and deliver an Opinion of Counsel satisfactory to the Trustee within 10 Business Days of the date on which it was acquired or created. SECTION 4.19. Prohibition on Incurrence of Senior Subordinated Debt. The Company shall not, and shall not permit any Restricted Subsidiary of the Company that is a Subsidiary Guarantor to, incur or suffer to exist Indebtedness that is senior in right of payment to the Notes or such Subsidiary Guarantor's Subsidiary Guarantee, as the case -76- may be, and subordinate in right of payment to any other Indebtedness of the Company or such Subsidiary Guarantor, as the case may be. ARTICLE FIVE SUCCESSOR CORPORATION SECTION 5.01. Merger, Consolidation and Sale of Assets. (a) The Company may not, directly or indirectly: (1) consolidate or merge with or into another Person (whether or not the Company is the surviving corporation); or (2) sell, assign, transfer, convey or otherwise dispose of all or substantially all of the properties or assets of the Company and its Restricted Subsidiaries taken as a whole, in one or more related transactions, to another Person; unless: (1) either: (A) the Company is the surviving corporation; or (B) the Person formed by or surviving any such consolidation or merger (if other than the Company) or to which such sale, assignment, transfer, conveyance or other disposition has been made is a corporation organized or existing under the laws of the United States, any state of the United States or the District of Columbia; (2) the Person formed by or surviving any such consolidation or merger (if other than the Company) or the Person to which such sale, assignment, transfer, conveyance or other disposition has been made assumes all the obligations of the Company under the Notes, this Indenture and the Registration Rights Agreement pursuant to agreements reasonably satisfactory to the Trustee; (3) immediately after such transaction, no Default or Event of Default exists; (4) the Company or the Person formed by or surviving any such consolidation or merger (if other than the Company), or to which such sale, assignment, transfer, conveyance or other disposition has been made shall, on the date of such transaction after giving pro forma effect thereto and any related financing transactions as if the same had occurred at the beginning of the applicable four-quarter period, be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Leverage Ratio test set forth in Section 4.09(a); and (5) the Company or the Person formed by or surviving any such consolidation or merger (if other than the Company) shall deliver, or cause to be delivered, to the Trustee, in form and substance reasonably satisfactory to the Trustee, an Officers' Certificate and an Opinion of Counsel, each stating that such transaction and the supplemental indenture, if any, in respect thereof comply with this Section 5.01 and that all conditions precedent herein provided for relating to such transaction have been satisfied. -77- In addition, the Company may not, directly or indirectly, lease all or substantially all of its properties or assets, in one or more related transactions, to any other Person. This Section 5.01 shall not apply to the merger or consolidation of any Restricted Subsidiary of the Company with or into the Company or any Guarantor or to a sale, assignment, transfer, conveyance or other disposition of assets between or among the Company and any of the Guarantors. Notwithstanding the foregoing clauses (3) and (4), the Company may merge with an Affiliate incorporated solely for the purpose of reincorporating the Company in any state of the United States or the District of Columbia. (b) A Subsidiary Guarantor may not sell or otherwise dispose of all or substantially all of its assets to, or consolidate with or merge with or into (whether or not such Guarantor is the surviving Person), another Person, other than the Company or another Guarantor, unless: (1) except in the event such Subsidiary Guarantor is the surviving Person, immediately after giving effect to that transaction, no Default or Event of Default exists; and (2) either: (A) the Person acquiring the property in any such sale or disposition or the Person formed by or surviving any such consolidation or merger assumes all the obligations of such Subsidiary Guarantor under this Indenture, its Subsidiary Guarantee and the Registration Rights Agreement pursuant to a supplemental indenture satisfactory to the Trustee; or (B) the Net Proceeds of such sale or other disposition are applied in accordance with the applicable provisions of this Indenture; and (3) the Subsidiary Guarantor or the Person formed by or surviving any such consolidation or merger (if other than the Subsidiary Guarantor) shall deliver, or cause to be delivered, to the Trustee, in form and substance reasonably satisfactory to the Trustee, an Officers' Certificate and an Opinion of Counsel, each stating that such transaction and the supplemental indenture, if any, in respect thereof comply with this Section 5.01 and that all conditions precedent herein provided for relating to such transaction have been satisfied. SECTION 5.02. Successor Person Substituted. Upon any consolidation or merger, or any transfer of all or substantially all of the assets of either the Company or any Subsidiary Guarantor in accordance with Section 5.01 above other than in the circumstances described in clause (1) or (2) of Section 10.03, the successor cor- -78- poration formed by such consolidation or into which the Company is merged or to which such transfer is made shall succeed to, and be substituted for, and may exercise every right and power the Company or such Subsidiary Guarantor under this Indenture with the same effect as if such successor corporation had been named as the Company or such Subsidiary Guarantor herein, and thereafter the predecessor corporation shall be relieved of all obligations and covenants under this Indenture and the Notes and the applicable Guarantee, as the case may be. ARTICLE SIX DEFAULTS AND REMEDIES SECTION 6.01. Events of Default. Each of the following is an "Event of Default": (1) default for 30 days in the payment when due of interest on, or Additional Interest with respect to, the Notes (whether or not prohibited by Article Eleven); (2) default in payment when due of the principal of, or premium, if any, on the Notes (whether or not prohibited by Article Eleven); (3) failure by the Company or any of its Restricted Subsidiaries for 30 days after notice from the Trustee or the Holders of at least 25% in principal amount of the then outstanding Notes to comply with the repurchase obligation under Section 4.08, the repurchase obligation under Section 4.12 or Section 5.01 (whether or not prohibited by Article Eleven); (4) failure by the Company or any of its Restricted Subsidiaries to comply with any of the other agreements in this Indenture for 60 days after written notice to the Company specifying such failure ("Notice of Default") from the Trustee or Holders of at least 25% in aggregate principal amount of the Notes then outstanding; (5) default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Company or any of its Restricted Subsidiaries (or the payment of which is guaranteed by the Company or any of its Restricted Subsidiaries) whether such Indebtedness or guarantee now exists, or is created after the Issue Date, if that default: (A) is caused by a failure to pay principal at final maturity on such Indebtedness prior to the expiration of the grace period provided in such Indebtedness on the date of such default (a "Payment Default"), or -79- (B) results in the acceleration of such Indebtedness prior to its express maturity, and, in each case, the principal amount of any such Indebtedness, together with the principal amount of any other such Indebtedness under which there has been a Payment Default or the maturity of which has been so accelerated, aggregates $10,000,000 or more; (6) failure by the Company or any of its Restricted Subsidiaries to pay final judgments aggregating in excess of $10,000,000 to the extent such judgment is not covered by insurance or is in excess of insurance coverage, which judgments are not paid, discharged or stayed for a period of 60 days; (7) except as permitted by this Indenture, any Subsidiary Guarantee shall be held in any judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full force and effect or any Subsidiary Guarantor, or any Person acting on behalf of any Subsidiary Guarantor, shall deny or disaffirm its obligations under its Guarantee; (8) the Company or any Significant Subsidiary (other than PII) pursuant to or within the meaning of any Bankruptcy Law: (A) commences a voluntary insolvency proceeding; (B) consents to the entry of an order for relief against it in an involuntary insolvency proceeding or consents to its dissolution or winding-up; (C) consents to the appointment of a Custodian of it or for any substantial part of its Property; or (D) makes a general assignment for the benefit of its creditors. (E) or takes any comparable action under any foreign laws relating to insolvency; provided, however, that the liquidation of any Restricted Subsidiary into another Restricted Subsidiary, other than as part of a credit reorganization, shall not constitute an Event of Default under this Section 6.01(8); or (9) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that: (A) is for relief against any Significant Subsidiary in an involuntary insolvency proceeding; (B) appoints a Custodian of the Company or any Significant Subsidiary or for any substantial part of its Property; or -80- (C) orders the winding up, liquidation or dissolution of the Company or any Significant Subsidiary; (D) grants any similar relief under any foreign laws; and in each such case the order or decree remains unstayed and in effect for 90 days. SECTION 6.02. Acceleration of Maturity; Rescission. (a) In the case of an Event of Default arising under Section 6.01(8) and Section 6.01(9), with respect to the Company or any of its Significant Subsidiaries, all outstanding notes shall become due and payable immediately without further action or notice. If any other Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the then outstanding Notes may declare all the Notes to be due and payable immediately by notice in writing to the Company (and to the Trustee if given by the Holders) (an "Acceleration Notice"); provided, however, that if any Senior Debt is outstanding pursuant to a Credit Facility, upon a declaration of such acceleration, such principal and interest shall be due and payable upon the earlier of (x) the fifth Business Day after sending the Company and the representative under such Credit Facility such Acceleration Notice, unless such Event of Default is cured or waived prior to such date and (y) the date of acceleration of any Senior Debt under such Credit Facility. The Holders of a majority in principal amount of the Notes by notice to the Trustee may rescind an acceleration and its consequences if the rescission would not conflict with any judgment or decree and if all existing Events of Default have been cured or waived except nonpayment of principal or interest that has become due solely because of acceleration. No such rescission shall affect any subsequent Default or impair any right consequent thereto. (b) In the event of a declaration of acceleration of the Notes because an Event of Default described in Section 6.01(5) has occurred and is continuing, the declaration of acceleration of the Notes shall be automatically annulled if the Payment Default or other default triggering such Event of Default pursuant to Section 6.01(5) shall be remedied or cured by the Company or a Restricted Subsidiary of the Company or waived by the holders of the relevant Indebtedness within 60 days after the declaration of acceleration with respect thereto and if (1) the annulment of the acceleration of the Notes would not conflict with any judgment or decree of a court of competent jurisdiction and (2) all existing Events of Default, except nonpayment of principal, premium or interest on the Notes that became due solely because of the acceleration of the Notes, have been cured or waived. (c) Subject to Section 7.01, in case an Event of Default shall occur and be continuing, the Trustee shall be under no obligation to exercise any of its rights or powers under this Indenture at the request or direction of any of the Holders of the Notes, unless such Holders shall have offered to the Trustee reasonable indemnity. Subject to Section 7.07, Holders of a majority in principal amount of the then outstanding Notes may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders of the Notes notice of any con- -81- tinuing Default or Event of Default if it determines that withholding notice is in their interest, except a Default or Event of Default relating to the payment of principal or interest or Additional Interest. SECTION 6.03. Other Remedies. If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy by proceeding at law or in equity to collect the payment of principal of, or premium, if any, and interest on the Notes or to enforce the performance of any provision of the Notes or this Indenture and may take any necessary action requested of it as Trustee to settle, compromise, adjust or otherwise conclude any proceedings to which it is a party. The Trustee may maintain a proceeding even if it does not possess any of the Notes or does not produce any of them in the proceeding. Any such proceeding instituted by the Trustee may be brought in its own name and as trustee of an express trust, and any recovery of judgment shall, after provisions for the payment of the reasonable compensation, expenses, disbursements of the Trustee and its counsel, be for the ratable benefit of the Holders of the Notes in respect of which such judgment has been recovered. A delay or omission by the Trustee or any Holder in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. No remedy is exclusive of any other remedy. All available remedies are cumulative, to the extent permitted by law. Any costs associated with actions taken by the Trustee under this Section 6.03 shall be reimbursed to the Trustee by the Company. SECTION 6.04. Waiver of Past Defaults and Events of Default. Provided the Notes are not then due and payable by reason of a declaration of acceleration, the Holders of a majority in principal amount of Notes at the time outstanding by notice to the Trustee may on behalf of the Holders of all the Notes waive any existing Default or Event of Default and its consequences under this Indenture, except a continuing Default or Event of Default (1) in the payment of interest or Additional Interest on, or the principal of, the Notes or (2) in respect of a covenant or provision hereof which under this Indenture cannot be modified or amended without the consent of the Holder of each outstanding Note affected. In the case of any such waiver, the Company, the Trustee and the Holders of the Notes shall be restored to their former positions and rights under this Indenture, respectively; provided that no such waiver shall extend to any subsequent or other Default or impair any right consequent thereto. SECTION 6.05. Control by Majority. The Holders of a majority in principal amount of the then outstanding Notes shall have the right to direct the time, method and place of conducting any proceeding for exercising any remedy available to the Trustee, subject to certain exceptions. -82- SECTION 6.06. Limitation on Suits. No Holder of Notes shall have any right to institute any proceeding with respect to this Indenture, or for the appointment of a receiver or trustee, or for any remedy hereunder unless: (1) the Holder gives the Trustee written notice of a continuing Event of Default; (2) the Holders of at least 25% in aggregate principal amount of outstanding Notes make a written request to the Trustee to institute such proceeding or to pursue such remedy as trustee; (3) such Holder or Holders offer the Trustee indemnity satisfactory to the Trustee against any costs, liability or expense; (4) the Trustee does not comply with the request within 60 days after receipt of the request and the offer of indemnity; and (5) during such 60-day period, the Holders of at least a majority in aggregate principal amount of the outstanding Notes do not give the Trustee a direction that is inconsistent with the request. However, such limitations do not apply to a suit instituted by a Holder of any Note for enforcement of payment of the principal of, and premium, if any, or interest on, such Note on or after the respective due date expressed in such Note. A Holder may not use this Indenture to prejudice the rights of another Holder or to obtain a preference or priority over another Holder. SECTION 6.07. No Personal Liability of Directors, Officers, Employees and Stockholders. No past, present or future director, officer, employee, incorporator, agent, member, stockholder or Affiliate of the Company or any Guarantor, as such, shall have any liability for any obligations of the Company or the Guarantors under the Notes, the Indenture, the Guarantees or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of Notes and Guarantees by accepting a Note and a Guarantee waives and releases all such liabilities. The waiver and release are part of the consideration for issuance of the Notes and the Guarantees. The waiver may not be effective to waive liabilities under the federal securities laws. -83- SECTION 6.08. Rights of Holders To Receive Payment. Notwithstanding any other provision of this Indenture, the right of any Holder of a Note to receive payment of the principal of or premium, if any, or interest, if any, on such Note or to bring suit for the enforcement of any such payment, on or after the due date expressed in the Notes shall not be impaired or affected without the consent of the Holder. SECTION 6.09. Collection Suit by Trustee. If an Event of Default in payment of principal, premium or interest specified in Section 6.01(1) or (2) occurs and is continuing, the Trustee may recover judgment in its own name and as trustee of an express trust against the Company or any Guarantor (or any other obligor on the Notes) for the whole amount of unpaid principal and accrued interest remaining unpaid. SECTION 6.10. Trustee May File Proofs of Claim. The Trustee may file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.07) and the Holders allowed in any judicial proceedings relative to the Company or any Guarantor (or any other obligor upon the Notes), its creditors or its Property and, unless prohibited by law, shall be entitled and empowered to collect and receive any monies or other Property payable or deliverable on any such claims and to distribute the same after deduction of its charges and expenses to the extent that any such charges and expenses are not paid out of the estate in any such proceedings and any custodian in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee, and in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due to it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.07. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan or reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceedings. All rights of action and claims under this Indenture or the Notes may be prosecuted and enforced by the Trustee without the possession of any of the Notes thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, be for the ratable benefit of the Holders in respect of which such judgment has been recovered. -84- SECTION 6.11. Priorities. If the Trustee collects any money pursuant to this Article Six, it shall pay out the money in the following order: FIRST: to the Trustee for amounts due under Section 7.07; SECOND: to Holders for amounts due and unpaid on the Notes for principal, premium, if any, and interest (including Additional Interest, if any) as to each, ratably, without preference or priority of any kind, according to the amounts due and payable on the Notes; and THIRD: to the Company or, to the extent the Trustee collects any amount from any Guarantor, to such Guarantor. The Trustee may fix a record date and payment date for any payment to Holders pursuant to this Section 6.11. SECTION 6.12. Undertaking for Costs. In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys' fees and expenses, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section 6.12 does not apply to a suit by the Trustee, a suit by a Holder pursuant to Section 6.08 or a suit by Holders of more than 10% in principal amount of the Notes then outstanding. ARTICLE SEVEN TRUSTEE SECTION 7.01. Duties of Trustee. (a) If an Event of Default occurs and is continuing, the Trustee shall be required, in the exercise of its power, to use the degree of care of a prudent man in the conduct of his own affairs. The Trustee shall not be deemed to have notice of any Default or Event of Default unless a Responsible Officer of the Trustee has actual knowledge thereof or unless written notice of any event which is in fact such a Default is received by the Trustee at the Corporate Trust Office of the Trustee, and such notice references the Notes and this Indenture. -85- (b) Except during the continuance of an Event of Default: (1) The Trustee need perform only such duties as are specifically set forth in this Indenture and no others. (2) In the absence of bad faith or willful misconduct on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture but, in the case of any such certificates or opinions which by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform on their face to the requirements of this Indenture (but need not confirm or investigate the accuracy of mathematical calculations or other facts stated therein). Whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, conclusively rely upon an Officers' Certificate, subject to the requirement in the preceding sentence, if applicable. (c) The Trustee may not be relieved from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that: (1) This paragraph does not limit the effect of Section 7.01(b). (2) The Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer or Responsible Officers of the Trustee, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts. (3) The Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction of the Holders of a majority in aggregate principal amount of the Notes received by it pursuant to the terms hereof. (4) No provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its rights, powers or duties if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity satisfactory to it against such risk or liability is not reasonably assured to it. (d) Whether or not therein expressly so provided, Sections 7.01(a), (b), (c) and (e) shall govern every provision of this Indenture that in any way relates to the Trustee. (e) The Trustee shall be under no obligation to exercise any of its rights or powers vested in it by this Indenture at the request or direction of any of the Holders pursuant to -86- this Indenture at the request of any Holder of Notes, unless such Holders shall have offered to the Trustee security or indemnity satisfactory to it against any loss, liability or expense. (f) The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree in writing with the Company or any Guarantor. Money held in trust by the Trustee need not be segregated from other funds except to the extent required by the law. SECTION 7.02. Rights of Trustee. Subject to Section 7.01: (1) The Trustee may conclusively rely on any document (whether in its original or facsimile form) reasonably believed by it to be genuine and to have been signed or presented by the proper person. The Trustee need not investigate any fact or matter stated in the document. (2) Before the Trustee acts or refrains from acting, it may require an Officers' Certificate or an Opinion of Counsel, or both, which shall conform to the provisions of Section 12.05. The Trustee shall be protected and shall not be liable for any action it takes or omits to take in good faith in reliance on such certificate or opinion. (3) The Trustee may act through its attorneys and agents and shall not be responsible for the misconduct or negligence of any agent appointed by it with due care. (4) The Trustee shall not be liable for any action it takes or omits to take in good faith which it reasonably believes to be authorized or within its rights or powers; provided that the Trustee's conduct does not constitute willful misconduct, negligence or bad faith. (5) The Trustee may consult with counsel of its selection, and the advice or opinion of such counsel with respect to legal matters relating to the Notes or this Indenture shall be full and complete authorization and protection from liability in respect of any action taken, omitted or suffered by it hereunder in good faith and in accordance with the advice or opinion of such counsel. (6) The rights, privileges, protections, immunities and benefits given to the Trustee, including, without limitation, its right to be indemnified, are extended to, and shall be enforceable by, the Trustee in each of its capacities hereunder, and each agent, custodian and other person employed to act hereunder. (7) The Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, -87- request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books records, and premises of the Company, personally or by agent or attorney at the sole cost of the Company and shall incur no liability or additional liability of any kind by reason of such inquiry or investigation. (8) The Trustee may request that the Company deliver an Officers' Certificate setting forth the names of individuals and/or titles of officers authorized at such time to take specified actions pursuant to this Indenture, which Officers' Certificate may be signed by any person authorized to sign an Officers' Certificate, including any person specified as so authorized in any such certificate previously delivered and not suspended. SECTION 7.03. Individual Rights of Trustee. The Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may make loans to, accept deposits from, perform services for or otherwise deal with either of the Company or any Guarantor, or any Affiliate thereof, with the same rights it would have if it were not Trustee. Any Agent may do the same with like rights. The Trustee, however, shall be subject to Sections 7.10 and 7.11. SECTION 7.04. Trustee's Disclaimer. The Trustee shall not be responsible for and makes no representation as to the validity or adequacy of this Indenture or the Notes or any Guarantee, it shall not be accountable for the Company's or any Guarantor's use of the proceeds from the sale of Notes or any money paid to the Company or any Guarantor pursuant to the terms of this Indenture and it shall not be responsible for any statement in the Notes, Guarantee or this Indenture other than its certificate of authentication, except that the Trustee represents that it is duly authorized to execute and deliver this Indenture, authenticate the Notes and perform its obligations hereunder and that the statements made by it in any Statement of Eligibility and Qualification on Form T-1 to be supplied to the Company shall be true and accurate subject to the qualifications set forth therein. SECTION 7.05. Notice of Defaults. If a Default occurs and is continuing and if it is known to the Trustee, the Trustee shall give to each Holder a notice of the Default within 90 days after it occurs in the manner and to the extent provided in the TIA and otherwise as provided in this Indenture. Except in the case of a Default in payment of the principal of or interest or Additional Interest on any Note (including payments pursuant to a redemption or repurchase of the Notes pursuant to the provisions of this Indenture), the Trustee may withhold the notice if and so long as a committee of its Responsible Officers in good faith determines that withholding the notice is in the interests of Holders. -88- SECTION 7.06. Reports by Trustee to Holders. (a) If required by TIA Section 313(a), within 60 days after June 15 of any year, commencing 2004 the Trustee shall mail to each Holder a brief report dated as of such date that complies with TIA Section 313(a) (but if no event described in TIA Section 313(a) has occurred within the 12 months preceding the reporting date, no report need be transmitted). The Trustee also shall comply with TIA Section 313(b)(2). The Trustee shall also transmit by mail all reports as required by TIA Section 313(c) and TIA Section 313(d). (b) A copy of each report at the time of its mailing to Holders shall be filed with the Commission and each stock exchange on which the Notes are listed to the extent required by such entities. The Company shall promptly notify the Trustee when the Notes are listed on any stock exchange or delisted therefrom. SECTION 7.07. Compensation and Indemnity. The Company and the Guarantors shall pay to the Trustee and Agents from time to time such compensation for their services hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust) as shall be agreed upon in writing. The Company and the Guarantors shall reimburse the Trustee and Agents upon request for all reasonable disbursements, expenses and advances incurred or made by them in connection with the Trustee's duties under this Indenture, including the reasonable compensation, disbursements and expenses of the Trustee's agents and external counsel, except any expense disbursement or advance as may be attributable to its willful misconduct, negligence or bad faith. The Company and the Guarantors, jointly and severally, shall fully indemnify each of the Trustee and any predecessor Trustee for, and hold each of them harmless against, any and all loss, damage, claim, liability or expense, including without limitation taxes (other than taxes based on the income of the Trustee or such Agent) and reasonable attorneys' fees and expenses incurred by each of them in connection with the acceptance or performance of its duties under this Indenture including the reasonable costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder (including, without limitation, settlement costs). The Trustee or Agent shall notify the Company and the Guarantors in writing promptly of any claim of which a Responsible Officer of the Trustee has actual knowledge asserted against the Trustee or Agent for which it may seek indemnity; provided that the failure by the Trustee or Agent to so notify the Company and the Guarantors shall not relieve the Company and Guarantors of their obligations hereunder except to the extent the Company and the Guarantors are actually prejudiced thereby. In the event that a conflict of interest exists, the Trustee may have separate counsel, which counsel must be reasonably acceptable to the Company and the Company shall pay the reasonable fees and expenses of such counsel. -89- Notwithstanding the foregoing, the Company and the Guarantors need not reimburse the Trustee for any expense or indemnify it against any loss or liability to have been incurred by the Trustee through its own willful misconduct, negligence or bad faith. To secure the payment obligations of the Company and the Guarantors in this Section 7.07, the Trustee shall have a lien prior to the Notes on all money or Property held or collected by the Trustee and such money or Property held in trust to pay principal of and interest on particular Notes. The obligations of the Company and the Guarantors under this Section 7.07 to compensate and indemnify the Trustee, Agents and each predecessor Trustee and to pay or reimburse the Trustee, Agents and each predecessor Trustee for expenses, disbursements and advances shall be joint and several liabilities of the Company and each of the Guarantors and shall survive the resignation or removal of the Trustee and the satisfaction, discharge or other termination of this Indenture, including any termination or rejection hereof under any Bankruptcy Law. When the Trustee incurs expenses or renders services after an Event of Default specified in Section 6.01(8) or (9) occurs, the expenses and the compensation for the services are intended to constitute expenses of administration under any Bankruptcy Law. For purposes of this Section 7.07, the term "Trustee" shall include any trustee appointed pursuant to this Article Seven. SECTION 7.08. Replacement of Trustee. (a) The Trustee shall comply with Section 313(b) of the TIA, to the extent applicable. (b) The Trustee may resign by so notifying the Company and the Guarantors in writing no later than 15 Business Days prior to the date of the proposed resignation. The Holders of a majority in principal amount of the outstanding Notes may remove the Trustee by notifying the Company and the removed Trustee in writing and may appoint a successor Trustee with the Company's written consent, which consent shall not be unreasonably withheld. The Company may remove the Trustee at its election if: (1) the Trustee fails to comply with Section 7.10 or Section 310 of the TIA; (2) the Trustee is adjudged bankrupt or insolvent or an order for relief is entered with respect to the Trustee under Bankruptcy Law; (3) a receiver or other public officer takes charge of the Trustee or its Property; or -90- (4) the Trustee otherwise becomes incapable of acting. (c) If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Company shall promptly appoint a successor Trustee. (d) If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Company, the Guarantors or the Holders of a majority in principal amount of the outstanding Notes may petition at the expense of the Company any court of competent jurisdiction for the appointment of a successor Trustee. (e) If the Trustee fails to comply with Section 7.10, any Holder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. (f) A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company and the Guarantors. Immediately following such delivery, the retiring Trustee shall, subject to its rights under Section 7.07, transfer all Property held by it as Trustee to the successor Trustee, the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. A successor Trustee shall mail notice of its succession to each Holder. Notwithstanding replacement of the Trustee pursuant to this Section 7.08, the Company's obligations under Section 7.07 shall continue for the benefit of the retiring Trustee. SECTION 7.09. Successor Trustee by Consolidation, Merger, etc. If the Trustee consolidates with, merges or converts into, or transfers all or substantially all of its corporate trust assets to, another corporation, subject to Section 7.10, the successor corporation without any further act shall be the successor Trustee; provided such entity shall be otherwise qualified and eligible under this Article Seven. SECTION 7.10. Eligibility; Disqualification. This Indenture shall always have a Trustee who satisfies the requirements of TIA Section 310(a)(1), (2) and (5) in every respect. The Trustee (together with its corporate parent) shall have a combined capital and surplus of at least $50,000,000 as set forth in the most recent applicable published annual report of condition. The Trustee shall comply with TIA Section 310(b), including the provision in Section 310(b)(1). SECTION 7.11. Preferential Collection of Claims Against Company. The Trustee shall comply with TIA Section 311(a), excluding any creditor relationship listed in TIA Section 311(b). A Trustee who has resigned or been removed shall be subject to TIA Section 311(a) to the extent indicated therein. -91- SECTION 7.12. Paying Agents. The Company shall cause each Paying Agent other than the Trustee to execute and deliver to it and the Trustee an instrument in which such agent shall agree with the Trustee, subject to the provisions of this Section 7.12: (1) that it shall hold all sums held by it as agent for the payment of principal of, or premium, if any, or interest on, the Notes (whether such sums have been paid to it by the Company or by any obligor on the Notes) in trust for the benefit of Holders of the Notes or the Trustee; (2) that it shall at any time during the continuance of any Event of Default, upon written request from the Trustee, deliver to the Trustee all sums so held in trust by it together with a full accounting thereof; and (3) that it shall give the Trustee written notice within three (3) Business Days of any failure of the Company (or by any obligor on the Notes) in the payment of any installment of the principal of, premium, if any, or interest on, the Notes when the same shall be due and payable. ARTICLE EIGHT MODIFICATION AND WAIVER SECTION 8.01. Without Consent of Holders. (a) Without the consent of any Holder of Notes, the Company, the Guarantors and the Trustee may amend or supplement this Indenture or the Notes: (1) to cure any ambiguity, defect or inconsistency; (2) to provide for uncertificated Notes in addition to or in place of certificated Notes; (3) to provide for the assumption of the Company's or any Guarantor's obligations to Holders of Notes in the case of a merger or consolidation or sale of all or substantially all of the Company's or such Guarantor's assets; (4) to comply with the rules of any applicable securities Depositary; (5) to comply with Section 5.01; -92- (6) to add to the agreements and covenants of Holdings, the Company and its Restricted Subsidiaries for the benefit of the Holders or surrender any right or power conferred upon Holdings, the Company or any of its Restricted Subsidiaries; (7) to evidence and provide for the acceptance and appointment under this Indenture of a successor trustee pursuant to the requirements thereof; (8) to make any change that would provide any additional rights or benefits to the Holders of Notes or that does not adversely affect the legal rights under this Indenture of any such Holder (including, but not limited to, adding a Guarantor under this Indenture); (9) to provide for the issuance of the exchange notes and the related Guarantees or Additional Notes and the related Guarantees; and (10) to comply with requirements of the Commission in order to effect or maintain the qualification of this Indenture under the Trust Indenture Act. SECTION 8.02. With Consent of Holders. (a) This Indenture or the Notes may be amended or supplemented with the consent of the Holders of at least a majority in principal amount of the Notes then outstanding (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, Notes), and any existing default or compliance with any provision of this Indenture or the Notes may be waived with the consent of the Holders of a majority in principal amount of the Notes then outstanding (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, Notes). (b) Without the consent of each Holder affected, an amendment or waiver may not (with respect to any Notes held by a non-consenting Holder): (1) reduce the principal amount of Notes whose Holders must consent to an amendment, supplement or waiver; (2) reduce the principal of or change the fixed maturity of any Note or alter the provisions with respect to the redemption of the Notes (other than pursuant to Section 4.08 and Section 4.12); (3) reduce the rate of or change the time for payment of interest on any Note; (4) waive a Default or Event of Default in the payment of principal of, or interest or premium, or Additional Interest, if any, on the Notes (except a rescission of -93- acceleration of the Notes by the Holders of at least a majority in aggregate principal amount of the Notes and a waiver of the Payment Default that resulted from such acceleration); (5) make any Note payable in money other than that stated in the Notes; (6) make any change in the provisions of this Indenture relating to waivers of past Defaults or the rights of Holders of notes to receive payments of principal of, or interest or premium or Additional Interest, if any, on the Notes; (7) waive a redemption payment with respect to any Note (other than a payment required by pursuant to Section 4.08 and Section 4.12); (8) release any Subsidiary Guarantor from any of its obligations under its Subsidiary Guarantee or this Indenture, except in accordance with the terms of this Indenture; (9) make any change to Article Eleven that adversely affect the Holders; or (10) make any change to this Section 8.02 or Section 8.01. (c) The consent of the Holders of the Notes shall not be necessary to approve the particular form of any proposed amendment. It shall be sufficient if such consent approves the substance of the proposed amendment. (d) After an amendment that requires the consent of the Holders of Notes becomes effective, the Company shall mail to each registered Holder of the Notes at such Holder's address appearing in the security register a notice briefly describing such amendment. However, the failure to give such notice to all Holders of the Notes, or any defect therein, shall not impair or affect the validity of the amendment. (e) Upon the written request of the Company accompanied by a board resolution authorizing the execution of any such supplemental indenture, and upon the receipt by the Trustee of evidence reasonably satisfactory to the Trustee of the consent of the Holders as aforesaid and upon receipt by the Trustee of the documents described in Section 8.06, the Trustee shall join with the Company in the execution of such supplemental indenture unless such supplemental indenture affects the Trustee's own rights, duties or immunities under this Indenture, in which case the Trustee may, but shall not be obligated to, enter into such supplemental indenture. (f) Notwithstanding the foregoing, without the consents of the requisite lenders under the Credit Agreement, no amendment may be made to the subordination provisions described in Section 10.06 and Article Eleven. -94- SECTION 8.03. Compliance with Trust Indenture Act. Every amendment or supplement to this Indenture or the Notes shall comply with the TIA as then in effect. SECTION 8.04. Revocation and Effect of Consents. (a) After an amendment, supplement, waiver or other action becomes effective, a consent to it by a Holder of a Note is a continuing consent conclusive and binding upon such Holder and every subsequent Holder of the same Note or portion thereof, and of any Note issued upon the transfer thereof or in exchange therefor or in place thereof, even if notation of the consent is not made on any such Note. (b) The Company may, but shall not be obligated to, fix a record date for the purpose of determining the Holders entitled to consent to any amendment, supplement, or waiver. If a record date is fixed, then, notwithstanding Section 8.04(a), those Persons who were Holders at such record date (or their duly designated proxies), and only such Persons, shall be entitled to consent to such amendment, supplement, or waiver or to revoke any consent previously given, whether or not such Persons continue to be Holders after such record date. No such consent shall be valid or effective for more than 90 days after such record date unless the consent of the requisite number of Holders has been obtained. SECTION 8.05. Notation on or Exchange of Notes. If an amendment, supplement or waiver changes the terms of a Note, the Trustee (in accordance with the specific written direction of the Company) shall request the Holder of the Note (in accordance with the specific written direction of the Company) to deliver it to the Trustee. In such case, the Trustee shall place an appropriate notation on the Note about the changed terms and return it to the Holder. Alternatively, if the Company or the Trustee so determines, the Company in exchange for the Note shall issue, the Guarantors shall endorse and the Trustee shall authenticate a new Note that reflects the changed terms. Failure to make the appropriate notation or issue a new Note shall not affect the validity and effect of such amendment, supplement or waiver. SECTION 8.06. Trustee To Sign Amendments, etc. The Trustee shall sign any amendment, supplement or waiver authorized pursuant to this Article Eight if the amendment, supplement or waiver does not affect the rights, duties, liabilities or immunities of the Trustee. If it does affect the rights, duties, liabilities or immunities of the Trustee, the Trustee may, but need not, sign such amendment, supplement or waiver. In signing or refusing to sign such amendment, supplement or waiver the Trustee shall be entitled to receive and, subject to Section 7.01, shall be fully protected in relying upon an Officers' Certificate and an Opinion of Counsel stating, in addition to the matters required by Section -95- 12.04, that such amendment, supplement or waiver is authorized or permitted by this Indenture and is a legal, valid and binding obligation of the Company and the Guarantors, enforceable against the Company and the Guarantors in accordance with its terms (subject to customary exceptions). ARTICLE NINE DISCHARGE OF INDENTURE; DEFEASANCE SECTION 9.01. Discharge of Liability on Notes; Defeasance. (a) This Indenture shall be discharged and shall cease to be of further effect as to all Notes, and related guarantees, issued hereunder when: (1) either: (A) all Notes that have been authenticated, except lost, stolen or destroyed Notes that have been replaced or paid and Notes for whose payment money has been deposited in trust and thereafter repaid to the Company, have been delivered to the Trustee for cancellation; or (B) all Notes that have not been delivered to the Trustee for cancellation have become due and payable by reason of the mailing of a notice of redemption or otherwise or shall become due and payable within one year and the Company or any Guarantor has irrevocably deposited or caused to be deposited with the Trustee as trust funds in trust solely for the benefit of the Holders, cash in U.S. Dollars, non-callable Government Securities, or a combination of cash in U.S. Dollars and non-callable Government Securities, in amounts as shall be sufficient without consideration of any reinvestment of interest, to pay and discharge the entire indebtedness on the Notes not delivered to the Trustee for cancellation for principal, premium and Additional Interest, if any, and accrued interest to the date of maturity or redemption; (2) no Default or Event of Default has occurred and is continuing on the date of the deposit or shall occur as a result of the deposit and the deposit shall not result in a breach or violation of, or constitute a default under, any other instrument to which the Company or any Guarantor is a party or by which the Company or any Guarantor is bound; (3) the Company or any Guarantor has paid or caused to be paid all sums payable by it under this Indenture; and -96- (4) the Company has delivered irrevocable instructions to the Trustee under this Indenture to apply the deposited money toward the payment of the Notes at maturity or the Redemption Date, as the case may be. In addition, the Company must deliver an Officers' Certificate and an Opinion of Counsel to the Trustee stating that all conditions precedent to satisfaction and discharge have been satisfied. (b) Subject to Sections 9.01(c) and 9.02, the Company may, at its option and at any time, elect to have all of its obligations discharged with respect to the outstanding notes and all obligations of the Guarantors discharged with respect to their Guarantees ("Legal Defeasance"). At any time, the Company may, at its option, elect to have the obligations of the Company and the Guarantors released (i) under Sections 4.03 through 4.19, inclusive, (ii) under Sections 6.01(3) (insofar as it applies to Sections 4.08, 4.12, 5.01(a)(4), (a)(5), (b)(2)(B) and (b)(3)), Section 6.01(4) (with respect to Article Four, other than Sections 4.01, 4.02 and the required offer provisions of Sections 4.08 and 4.12), Sections 6.01(5), (6), (7), (8), (9) (in the case of Sections 6.01(8) and (9), with respect to Significant Subsidiaries only) and (iii) under Section 5.01(a)(4), (a)(5), (b)(2)(B) and (b)(3) on a date the conditions set forth in Section 9.02 have been satisfied (hereinafter, "Covenant Defeasance") and thereafter any omission to comply with those covenants shall not constitute a Default or Event of Default with respect to the Notes. The Company may exercise its Legal Defeasance option notwithstanding its prior exercise of its Covenant Defeasance option. (c) If the Company exercises its Legal Defeasance option, payment of the Notes may not be accelerated because of an Event of Default with respect thereto. If the Company exercises its Covenant Defeasance option, payment of the Notes may not be accelerated because of an Event of Default as described in Section 6.01(3) (insofar as such Event of Default applies to obligations under Sections 4.08, 4.12, 5.01(a)(4), (a)(5), (b)(2)(B) and (b)(3)), or under Sections Section 6.01(4) (insofar as such Event of Default applies to Sections 4.03 through 4.19, inclusive, other than the required offer provisions of Section 4.08 and 4.12), under Section 6.01(5), (6), (7), (8) and (9) (in the case of Sections 6.01(8) and (9), with respect to Significant Subsidiaries only). If the Company exercises its Legal Defeasance option, each Guarantor, if any, shall be released from all its obligations under its Guarantee, and the Trustee shall execute a release of such Guarantee. If the Company exercises its Covenant Defeasance option, each Guarantor, if any, shall be released from its obligations under its Guarantee to the extent that the Company is released from its obligations under this Indenture. (d) Upon satisfaction of the conditions set forth herein and upon request of the Company, the Trustee shall acknowledge in writing the discharge of those obligations that the Company terminates. (e) Notwithstanding clauses (a) and (b) above, the Company's obligations in Sections 2.04, 2.06, 2.07, 2.08, 2.11, 4.01, 4.02, 7.01, 7.02, 7.07, 9.05 and 9.06 and any other -97- obligations required under the TIA shall survive until such time as the Notes have been paid in full. Thereafter, the Company's obligations in Sections 7.07, 9.05 and 9.06 and any other obligations required under the TIA shall survive. SECTION 9.02. Conditions to Defeasance. In order to exercise either Legal Defeasance or Covenant Defeasance: (1) the Company must irrevocably deposit with the Trustee, in trust, for the benefit of the Holders of the Notes, cash in U.S. Dollars, non-callable Government Securities, or a combination of cash in U.S. Dollars and non-callable Government Securities, in amounts as shall be sufficient, in the opinion of a nationally recognized firm of independent public accountants, to pay the principal of, or interest and premium and Additional Interest, if any, on the outstanding Notes on the stated maturity or on the applicable Redemption Date, as the case may be, and the Company must specify whether the Notes are being defeased to maturity or to a particular Redemption Date; (2) in the case of Legal Defeasance, the Company shall have delivered to the Trustee an Opinion of Counsel reasonably acceptable to the Trustee confirming that (a) the Company has received from, or there has been published by, the Internal Revenue Service a ruling or (b) since the Issue Date, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such Opinion of Counsel shall confirm that, the Holders of the outstanding Notes shall not recognize income, gain or loss for federal income tax purposes as a result of such Legal Defeasance and shall be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred; (3) in the case of Covenant Defeasance, the Company shall have delivered to the Trustee an Opinion of Counsel reasonably acceptable to the Trustee confirming that the Holders of the outstanding Notes shall not recognize income, gain or loss for federal income tax purposes as a result of such Covenant Defeasance and shall be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred; (4) no Default or Event of Default has occurred and is continuing on the date of such deposit (other than a Default or Event of Default resulting from the borrowing of funds to be applied to such deposit); (5) such Legal Defeasance or Covenant Defeasance shall not result in a breach or violation of, or constitute a default under any material agreement or instrument (other than this Indenture) to which the Company or any of its Restricted Subsidiaries is a party or by which the Company or any of its Restricted Subsidiaries is bound; -98- (6) the Company must deliver to the Trustee an Officers' Certificate stating that the deposit was not made by the Company with the intent of preferring the Holders of Notes over the other creditors of the Company with the intent of defeating, hindering, delaying or defrauding creditors of the Company or others; and (7) the Company must deliver to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent relating to the Legal Defeasance or the Covenant Defeasance have been complied with. However, the Opinion of Counsel required by clause (2) above shall not be required if all Notes not theretofore delivered to the Trustee for cancellation have become due and payable, shall become due and payable on their maturity date within one year or are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the Company's name, and at the Company's expense. SECTION 9.03. Deposited Money and Government Securities To Be Held in Trust; Other Miscellaneous Provisions. All money and Government Securities (including the proceeds thereof) deposited with the Trustee pursuant to Section 9.02(a) in respect of the outstanding Notes shall be held in trust and applied by the Trustee, in accordance with the provisions of such Notes and this Indenture, to the payment, either directly or through any Paying Agent, to the Holders of such Notes, of all sums due and to become due thereon in respect of principal, premium, if any, and accrued interest, but such money need not be segregated from other funds except to the extent required by law. The Company and the Guarantors shall (on a joint and several basis) pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the Government Securities deposited pursuant to Section 9.02(a) or the principal, premium, if any, and interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the Holders of the outstanding Notes. Anything in this Article Nine to the contrary notwithstanding, the Trustee shall deliver or pay to the Company from time to time upon a request of the Company any money or Government Securities held by it as provided in Section 9.02(a) which, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, are in excess of the amount thereof which would then be required to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance. SECTION 9.04. Reinstatement. If the Trustee or Paying Agent is unable to apply any money or Government Securities in accordance with Section 9.01 by reason of any legal proceeding or by reason of any -99- order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the Company's and each Guarantor's obligations under this Indenture, the Notes and the Guarantees shall be revived and reinstated as though no deposit had occurred pursuant to this Article Nine until such time as the Trustee or Paying Agent is permitted to apply all such money or Government Securities in accordance with Section 9.01; provided that if the Company or the Guarantors have made any payment of principal of, premium, if any, or accrued interest on any Notes because of the reinstatement of their obligations, the Company or the Guarantors, as the case may be, shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money or Government Securities held by the Trustee or Paying Agent. SECTION 9.05. Moneys Held by Paying Agent. In connection with the satisfaction and discharge of this Indenture, all moneys then held by any Paying Agent under the provisions of this Indenture shall, upon written demand of the Company, be paid to the Trustee, or if sufficient moneys have been deposited pursuant to Section 9.02(a), to the Company upon a request of the Company (or, if such moneys had been deposited by the Guarantors, to such Guarantors), and thereupon such Paying Agent shall be released from all further liability with respect to such moneys. SECTION 9.06. Moneys Held by Trustee. Any moneys deposited with the Trustee or any Paying Agent or then held by the Company or the Guarantors in trust for the payment of the principal of or premium, if any, or interest on any Note that are not applied but remain unclaimed by the Holder of such Note for two years after the date upon which the principal of or premium, if any, or interest on such Note shall have respectively become due and payable shall be repaid to the Company (or, if appropriate, the Guarantors) upon a request of the Company, or if such moneys are then held by the Company or the Guarantors in trust, such moneys shall be released from such trust; and the Holder of such Note entitled to receive such payment shall thereafter, as an unsecured general creditor, look only to the Company and the Guarantors for the payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money shall thereupon cease; provided that the Trustee or any such Paying Agent, before being required to make any such repayment, may, at the expense of the Company and the Guarantors, either mail to each Holder affected, at the address shown in the Register maintained by the Registrar pursuant to Section 2.04, or cause to be published once a week for two successive weeks, in a newspaper published in the English language, customarily published each Business Day and of general circulation in the City of New York, New York, a notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such mailing or publication, any unclaimed balance of such moneys then remaining shall be repaid to the Company. After payment to the Company or the Guarantors or the release of any money held in trust by the Company or any Guarantors, as the case may be, Holders entitled to the money must look only to -100- the Company and the Guarantors for payment as general creditors unless applicable abandoned property law designates another Person. ARTICLE TEN GUARANTEE OF SECURITIES SECTION 10.01. Guarantee. The Guarantors, fully and unconditionally, jointly and severally, on an unsecured senior subordinated basis, guarantee to each Holder (i) the due and punctual payment of the principal of, premium (if any) and interest on each Note, when and as the same shall become due and payable, whether at maturity, by acceleration or otherwise, the due and punctual payment of interest on the overdue principal of and interest on the Notes, to the extent lawful, and the due and punctual payment of all other obligations and due and punctual performance of all obligations of the Company to the Holders or the Trustee all in accordance with the terms of such Note, this Indenture and the Registration Rights Agreement, and (ii) in the case of any extension of time of payment or renewal of any Notes or any of such other obligations, that the same shall be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, at stated maturity, by acceleration or otherwise. Each Guarantor agrees that its obligations hereunder shall be absolute and unconditional, irrespective of, and shall be unaffected by, any invalidity, irregularity or unenforceability of any such Note or this Indenture, any failure to enforce the provisions of any such Note, this Indenture or the Registration Rights Agreement, any waiver, modification or indulgence granted to the Company with respect thereto by the Holder of such Note, or any other circumstances which may otherwise constitute a legal or equitable discharge of a surety or such Guarantor. Each Guarantor hereby waives diligence, presentment, demand for payment, filing of claims with a court in the event of merger or bankruptcy of the Company, any right to require a proceeding first against the Company, protest or notice with respect to any such Note or the Indebtedness evidenced thereby and all demands whatsoever, and covenants that this Guarantee shall not be discharged as to any such Note except by payment in full of the principal thereof, premium (if any) and interest thereon. Each Guarantor hereby agrees that, as between such Guarantor, on the one hand, and the Holders and the Trustee, on the other hand, (i) the maturity of the obligations guaranteed hereby may be accelerated as provided in Article Six for the purposes of this Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations guaranteed hereby, and (ii) in the event of any declaration of acceleration of such obligations as provided in Article Six, such obligations (whether or not due and payable) shall forthwith become due and payable by each Guarantor for the purpose of this Guarantee. The Guarantee of any Guarantor may be released pursuant to Section 4.18 or Section 10.03. -101- The Guarantors shall have the right to seek contribution from any non-paying Guarantor so long as the exercise of such right does not impair the rights of any Holder under the Guarantees. SECTION 10.02. Execution and Delivery of Guarantee. To further evidence the Guarantee set forth in Section 10.01, each Guarantor hereby agrees, on the Issue Date, that a notation of such Guarantee, substantially in the form included in Exhibit F hereto, shall be endorsed on each Note authenticated and delivered by the Trustee on the Issue Date and such Guarantee shall be executed by either manual or facsimile signature of an Officer of each Guarantor. The validity and enforceability of any Guarantee shall not be affected by the fact that it is not affixed to any particular Note. Each of the Guarantors hereby agrees that its Guarantee set forth in Section 10.01 shall be in full force and effect notwithstanding any failure to endorse on each Note a notation of such Guarantee. If an Officer of a Guarantor whose signature is on this Indenture or a Guarantee no longer holds that office at the time the Trustee authenticates the Note on which such Guarantee is endorsed or at any time thereafter, such Guarantor's Guarantee of such Note shall be valid nevertheless. The delivery of any Note by the Trustee, after the authentication thereof hereunder, shall constitute due delivery of any Guarantee set forth in this Indenture on behalf of the Guarantor. SECTION 10.03. Release of Subsidiary Guarantors. The Subsidiary Guarantee of a Subsidiary Guarantor shall be automatically released: (1) in connection with any sale or other disposition of all or substantially all of the assets of that Subsidiary Guarantor (including by way of merger or consolidation) to a Person that is not (either before or after giving effect to such transaction) a Restricted Subsidiary of the Company, if the sale or other disposition complies with Section 4.12; (2) in connection with any sale of all of the Capital Stock of a Subsidiary Guarantor to a Person that is not (either before or after giving effect to such transaction) a Restricted Subsidiary of the Company, if the sale complies with Section 4.12; (3) if the Company designates any Restricted Subsidiary that is a Subsidiary Guarantor as an Unrestricted Subsidiary in accordance with the applicable provisions of this Indenture; -102- (4) in connection with any Legal Defeasance or Covenant Defeasance of the Notes in accordance with the terms of this Indenture; or (5) if the applicable Guarantor no longer guarantees Indebtedness under the Credit Agreement; and in each such case, the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent herein provided for relating to such transactions have been complied with and that such release is authorized and permitted hereunder. In addition, in the event a Guarantor becomes a Guarantor solely because it Guarantees other Indebtedness, then upon the full and unconditional release of the Guarantee of such other Indebtedness (provided that the Trustee is given 90 days written notice of such other release) such Guarantee of such Guarantor shall also be released. The Trustee shall execute any documents reasonably requested by either the Company or a Guarantor in order to evidence the release of such Guarantor from its obligations under its Guarantee endorsed on the Notes and under this Article Ten. SECTION 10.04. Waiver of Subrogation. Until all the obligations under the Notes and the Guarantees are satisfied in full, each Guarantor hereby irrevocably waives any claim or other rights which it may now or hereafter acquire against the Company that arise from the existence, payment, performance or enforcement of such Guarantor's obligations under its Guarantee and this Indenture, including, without limitation, any right of subrogation, reimbursement, exoneration, indemnification, and any right to participate in any claim or remedy of any Holder of Notes against the Company, whether or not such claim, remedy or right arises in equity, or under contract, statute or common law, including, without limitation, the right to take or receive from the Company, directly or indirectly, in cash or other Property or by set-off or in any other manner, payment or Note on account of such claim or other rights. If any amount shall be paid to any Guarantor in violation of the preceding sentence and the Notes shall not have been paid in full, such amount shall have been deemed to have been paid to such Guarantor for the benefit of, and held in trust for the benefit of, the Holders of the Notes, and shall forthwith be paid to the Trustee for the benefit of such Holders to be credited and applied upon the Notes, whether matured or unmatured, in accordance with the terms of this Indenture. Each Guarantor acknowledges that it shall receive direct and indirect benefits from the financing arrangements contemplated by this Indenture and that the waiver set forth in this Section 10.04 is knowingly made in contemplation of such benefits. -103- SECTION 10.05. Notice to Trustee. The Company or any Guarantor shall give prompt written notice to the Trustee of any fact known to the Company or any such Guarantor which would prohibit the making of any payment to or by the Trustee at its Corporate Trust Office in respect of the Guarantees. Notwithstanding the provisions of this Article Ten or any other provision of this Indenture, the Trustee shall not be charged with knowledge of the existence of any facts which would prohibit the making of any payment to or by the Trustee in respect of the Guarantees, unless and until the Trustee shall have received written notice thereof from the Company no later than one Business Day prior to such payment; and, prior to the receipt of any such written notice, the Trustee, subject to the provisions of this Section 10.05, and subject to the provisions of Sections 7.01 and 7.02, shall be entitled in all respects to assume that no such facts exist; provided, however, that if the Trustee shall not have received the notice referred to in this Section 10.05 at least one Business Day prior to the date upon which by the terms hereof any such payment may become payable for any purpose under this Indenture (including, without limitation, the payment of the principal of, premium, if any, or interest on any Note), then, anything herein contained to the contrary notwithstanding, the Trustee shall have full power and authority to receive such money and to apply the same to the purpose for which such money was received and shall not be affected by any notice to the contrary which may be received by it less than one Business Day prior to such date. SECTION 10.06. Subordination of Guarantee. The obligations of each Guarantor under its Guarantee pursuant to this Article Ten shall be junior and subordinated to the Guarantor Senior Debt of such Guarantor on the same basis as the Notes are junior and subordinated to the Senior Debt of the Company. For the purposes of the foregoing sentence, and notwithstanding anything to the contrary contained herein, the Trustee and the Holders shall have the right to receive and/or retain payments by any of the Guarantors (or any Persons acting on their behalf) only at such times as they may receive and/or retain payments in respect of the Notes pursuant to this Indenture, including Article Eleven, and the Holders of Senior Debt shall have the same rights and remedies provided for in Article Eleven. ARTICLE ELEVEN SUBORDINATION SECTION 11.01. Notes Subordinated to Senior Debt. The Indebtedness evidenced by the Notes and the Guarantees shall be senior subordinated unsecured obligations of the Company and the Guarantors, as the case may be. The Notes shall in all respects rank pari passu with all other senior subordinated debt of the Company. The terms of the subordination provisions described in this Article Eleven with respect to -104- the Company's obligations under the Notes apply equally to each Guarantor and the Obligations of such Guarantors under their respective Guarantees. The payment of all Obligations on or relating to the Notes is subordinated in right of payment to the prior payment in full in cash or Cash Equivalents of all Obligations on Senior Debt of the Company (including all Obligations with respect to the Credit Agreement). Notwithstanding the foregoing, payments and distributions made relating to the Notes pursuant to the trust described pursuant to Section 9.01 shall not be so subordinated in right of payment so long as the payments into the trust were made in accordance with the requirements pursuant to Section 9.01 and did not violate the subordination provisions when they were made. This Article Eleven shall constitute a continuing benefit to all Persons who become holders of, or continue to hold, Senior Debt, and such provisions are made for the benefit of the holders of Senior Debt and such holders are made obligees hereunder and any one or more of them may enforce such provisions. SECTION 11.02. Suspension of Payment When Senior Debt Is in Default. (a) The Company also may not make any payment or distribution of any kind or character with respect to any Obligations on, or relating to, the Notes or acquire any Notes for cash or property or otherwise (other than Permitted Junior Securities) if: (1) a Payment Default on any Senior Debt occurs and is continuing; or (2) any other default occurs and is continuing on Designated Senior Debt that permits holders of the Designated Senior Debt to accelerate its maturity (a "Non-Payment Default") and the Trustee receives a notice of such default (a "Payment Blockage Notice") from the Representative of any Designated Senior Debt. (b) Payments on and distributions with respect to any Obligations on, or with respect to, the Notes may and shall be resumed: (1) in the case of a Payment Default, upon the date on which such default is cured or waived; and (2) in case of a Non-Payment Default, the earliest of (x) the date on which all Non-Payment Defaults are cured or waived (so long as no other event of default exists), (y) 180 days after the date on which the applicable Payment Blockage Notice is received, or (z) the date on which the Trustee receives notice from the Representative for such Designated Senior Debt rescinding the Payment Blockage Notice, unless the maturity of any Designated Senior Debt has been accelerated and such acceleration has not been waived. For the purpose of this clause (2), discharge or payment in full of Designated Senior Debt in accordance with its terms shall be the equivalent of a cure of an underlying default. -105- (c) No new Payment Blockage Notice may be delivered unless and until 360 days have elapsed since the effectiveness of the immediately prior Payment Blockage Notice. (d) No Non-Payment Default that existed or was continuing on the date of delivery of any Payment Blockage Notice to the Trustee shall be, or be made, the basis for a subsequent Payment Blockage Notice unless such default shall have been cured or waived for a period of not less than 180 consecutive days (it being acknowledged that any subsequent action, or any breach of any financial covenants for a period commencing after the date of delivery of such initial Payment Blockage Notice that in either case would give rise to a default pursuant to any provisions under which a default previously existed or was continuing shall constitute a new default for this purpose). (e) The holders of Senior Debt shall be entitled to receive payment in full in cash or Cash Equivalents of all Obligations due in respect of Senior Debt (including interest accruing after the commencement of any bankruptcy or other like proceeding at the rate specified in the applicable Senior Debt whether or not such interest is an allowed claim in any such proceeding) before the Holders of Notes shall be entitled to receive any payment or distribution of any kind or character with respect to any Obligations on, or relating to, the Notes (other than a payment or distribution of Permitted Junior Securities) in the event of any distribution to creditors of the Company: (1) in a total or partial liquidation, dissolution or winding up of the Company; (2) in a bankruptcy, reorganization, insolvency, receivership or similar proceeding relating to the Company or its Property; (3) in an assignment for the benefit of creditors; or (4) in any marshalling of the Company's assets and liabilities. (f) Unsecured Indebtedness is not deemed to be subordinate or junior to secured Indebtedness merely because it is unsecured or receives priority in respect of asset sales, cash flows or other prepayments and Indebtedness which has different security or different priorities in the same security shall not be deemed subordinate or junior to secured Indebtedness no matter what the differences are. (g) The Company must promptly notify holders of Senior Debt if payment of the Notes is accelerated because of an Event of Default. (h) The terms of the subordination provisions described above shall not apply to payments from money or of Government Securities, or a combination thereof, held in trust and deposited at a time when permitted by the subordination provisions of this Section 11.02 by the -106- Trustee for the payment of principal of, premium (if any) and interest on the Notes pursuant to Section 9.02. (i) In the event that, notwithstanding the foregoing, any payment shall be received by the Trustee or any Holder when such payment is prohibited by the foregoing provisions of this Section 11.02, such payment shall be held in trust for the benefit of, and shall be paid over or delivered to, the holders of Senior Debt (pro rata to such holders on the basis of the respective amount of Senior Debt held by such holders) or their respective Representatives, as their respective interests may appear. The Trustee shall be entitled to rely on information regarding amounts then due and owing on the Senior Debt, if any, received from the holders of Senior Debt (or their Representatives) or, if such information is not received from such holders or their Representatives, from the Company, and only amounts included in the information provided to the Trustee shall be paid to the holders of Senior Debt. Nothing contained in this Article Eleven shall limit the right of the Trustee or the Holders to take any action to accelerate the maturity of the Notes and all other Obligations owing under the Notes pursuant to Article Six or to pursue any rights or remedies hereunder (subject to the rights, if any, under this Article Eleven, of the holders of Senior Debt in respect of cash, Property or securities of the Company received upon the exercise of any such remedy); provided that all Senior Debt thereafter due or declared to be due shall first be paid in full in cash or Cash Equivalents before the Holders are entitled to receive any payment of any kind or character with respect to Obligations owing on, or with respect to, the Notes. SECTION 11.03. Obligations Subordinated to Prior Payment of All Senior Debt on Dissolution, Liquidation or Reorganization of Company. (a) Upon any payment or distribution of assets of either the Company or any Guarantor or its Property of any kind or character, whether in cash, Property or securities, to creditors upon any total or partial liquidation, dissolution, winding-up, reorganization, assignment for the benefit of creditors or marshaling of assets of the Company or any Guarantor or in a bankruptcy, reorganization, insolvency, receivership or other similar proceeding relating to the Company or its assets, whether voluntary or involuntary, all Obligations in respect of Senior Debt due or to become due shall first be paid in full in cash, Cash Equivalents or any other consideration acceptable to the holders of Senior Debt (including interest after the commencement of any bankruptcy or other like proceeding at the rate specified in the applicable Senior Debt whether or not such interest is an allowed claim in any such proceeding), before any payment or distribution of any kind or character is made on account of any Obligations on, or with respect to, the Notes or for the acquisition of any of the Notes for cash or Property or otherwise. Upon any such dissolution, winding-up, liquidation, reorganization, receivership or similar proceeding, any payment or distribution of assets of the Company of any kind or character, whether in cash, Property or securities, to which the Holders or the Trustee would be entitled, except for the provisions hereof, shall be paid by the Company or by any receiver, trustee in bankruptcy, liquidating -107- trustee, agent or other Person making such payment or distribution, or by the Holders or by the Trustee if received by it, directly to the holders of Senior Debt (pro rata to such holders on the basis of the respective amounts of Senior Debt held by such holders) or their respective Representatives, or to the Trustee or trustees under any indenture pursuant to which any of such Senior Debt may have been issued, as their respective interests may appear, for application to the payment of Senior Debt remaining unpaid until all such Senior Debt has been paid in full in cash or Cash Equivalents after giving effect to any concurrent payment, distribution or provision therefor to or for the holders of Senior Debt. (b) To the extent any payment of Senior Debt (whether by or on behalf of the Company, as proceeds of security or enforcement of any right of setoff or otherwise) is declared to be fraudulent or preferential, set aside or required to be paid to any receiver, trustee in bankruptcy, liquidating trustee, agent or other similar Person under any bankruptcy, insolvency, receivership, fraudulent conveyance or similar law, then, if such payment is recovered by, or paid over to, such receiver, trustee in bankruptcy, liquidating trustee, agent or other similar Person, the Senior Debt or part thereof originally intended to be satisfied shall be deemed to be reinstated and outstanding as if such payment had not occurred. It is further agreed that any diminution (whether pursuant to court decree or otherwise, including without limitation for any of the reasons described in the preceding paragraph) of the Company's obligation to make any distribution or payment pursuant to any Senior Debt, except to the extent such diminution occurs by reason of the repayment (which has not been disgorged or returned) of such Senior Debt in cash or Cash Equivalents, shall have no force or effect for purposes of the subordination provisions contained in this Article Eleven, with any turnover of payments as otherwise calculated pursuant to this Article Eleven to be made as if no such diminution had occurred. (c) In the event that, notwithstanding the foregoing, any payment or distribution of assets of the Company of any kind or character, whether in cash, Property or securities, shall be received by the Trustee or any Holder when such payment or distribution is prohibited by this Section 11.03, such payment or distribution shall be held in trust for the benefit of, and shall be paid over or delivered to, the holders of Senior Debt (pro rata to such holders on the basis of the respective amount of Senior Debt held by such holders) or their respective Representatives, or to the Trustee or trustees under any indenture pursuant to which any of such Senior Debt may have been issued, as their respective interests may appear, for application to the payment of Senior Debt remaining unpaid until all such Senior Debt has been paid in full in cash or Cash Equivalents, after giving effect to any concurrent payment, distribution or provision therefor to or for the holders of such Senior Debt. SECTION 11.04. Payments May Be Paid Prior to Dissolution. Nothing contained in this Article Eleven or elsewhere in this Indenture shall prevent (i) the Company, except under the conditions described in Sections 11.02 and 11.03, from -108- making payments at any time for the purpose of making payments of principal of and interest on the Obligations owing under the Notes, or from depositing with the Trustee any monies for such payments, or (ii) in the absence of actual knowledge by the Trustee that a given payment would be prohibited by Section 11.02 or 11.03, the application by the Trustee of any monies deposited with it for the purpose of making such payments of principal of, and interest on, the Obligations owing under the Notes to the Holders entitled thereto unless at least one Business Day prior to the date upon which such payment would otherwise become due and payable the Trustee shall have actually received the written notice provided for in Section 11.12, in the first sentence of Section 11.02(a) or in the last sentence of this Section 11.04 (provided that, notwithstanding the foregoing, the Holders receiving any payments made in contravention of Sections 11.02 and/or 11.03 (and such payments) shall otherwise be subject to the provisions of Sections 11.02 and 11.03). The Company shall give prompt written notice to the Trustee of any dissolution, winding-up, liquidation or reorganization of the Company, although any delay or failure to give any such notice shall have no effect on the subordination provisions contained herein. SECTION 11.05. Holders To Be Subrogated to Rights of Holders of Senior Debt. Subject to the payment in full in cash or Cash Equivalents of all Senior Debt, the Holders shall be subrogated to the rights of the holders of Senior Debt to receive payments or distributions of cash, Property or securities of the Company applicable to the Senior Debt until the Obligations owing under the Notes shall be paid in full; and, for the purposes of such subrogation, no such payments or distributions to the holders of the Senior Debt by or on behalf of the Company, or by or on behalf of the Holders by virtue of this Article Eleven, which otherwise would have been made to the Holders shall, as between the Company and the Holders, be deemed to be a payment by the Company to or on account of the Senior Debt, it being understood that the provisions of this Article Eleven are and are intended solely for the purpose of defining the relative rights of the Holders, on the one hand, and the holders of Senior Debt, on the other hand. SECTION 11.06. Obligations of the Company Unconditional. Nothing contained in this Article Eleven or elsewhere in this Indenture is intended to or shall impair as between the Company and the Holders, the Obligation of the Company, which is absolute and unconditional, to pay to the Holders the principal of and any interest on the Obligations owing under the Notes as and when the same shall become due and payable in accordance with their terms, or is intended to or shall affect the relative rights of the Holders and creditors of the Company other than the holders of Senior Debt, nor shall anything herein or therein prevent any Holder or the Trustee on its behalf from exercising all remedies otherwise permitted by applicable law upon default under this Indenture, subject to the rights, if any, under this Article Eleven, of the holders of Senior Debt in respect of cash, Property or securities of the Company received upon the exercise of any such remedy. -109- SECTION 11.07. Reliance on Judicial Order or Certificate of Liquidating Agent. Whenever a distribution is to be made or a notice given to holders of Designated Senior Debt, the distribution may be made and the notice given to their Representative. Upon any payment or distribution of assets of the Company referred to in this Article Eleven, the Trustee and the Holders shall be entitled to rely upon any order or decree made by any court of competent jurisdiction in which any insolvency, bankruptcy, receivership, dissolution, winding-up, liquidation, reorganization or similar case or proceeding is pending, or upon a certificate of the receiver, trustee in bankruptcy, liquidating trustee, assignee for the benefit of creditors, agent or other Person making such payment or distribution, delivered to the Trustee or the Holders, for the purpose of ascertaining the Persons entitled to participate in such payment or distribution, the holders of the Senior Debt and other Debt of the Company, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article Eleven. Nothing in this Article Eleven shall apply to the claims of, or payments to, the Trustee in its capacity as such under or pursuant to Section 7.07. The Trustee shall be entitled to rely on the delivery to it of a written notice by a Person representing himself or itself to be a holder of any Senior Debt (or a trustee on behalf of, or other representative of, such holder) to establish that such notice has been given by a holder of such Senior Debt or a trustee or representative on behalf of any such holder. In the event that the Trustee determines in good faith that any evidence is required with respect to the right of any Person as a holder of Senior Debt to participate in any payment or distribution pursuant to this Article Eleven, the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of Senior Debt held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and any other facts pertinent to the rights of such Person under this Article Eleven, and if such evidence is not furnished, the Trustee may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment. SECTION 11.08. Subordination Rights Not Impaired by Acts or Omissions of the Company or Holders of Senior Debt. No right of any present or future holders of any Senior Debt to enforce subordination as provided herein shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Company or by any act or failure to act, in good faith, by any such holder, or by any noncompliance by the Company with the terms of this Indenture, regardless of any knowledge thereof which any such holder may have or otherwise be charged with. Without in any way limiting the generality of the foregoing paragraph, the holders of Senior Debt or Guarantor Senior Debt may, at any time and from time to time, without the consent of or notice to the Trustee or the Holders, without incurring responsibility to the Trustee or the Holders and without impairing or releasing the subordination provided in this Article -110- Eleven or the obligations hereunder of the Holders to the holders of the Senior Debt or Guarantor Senior Debt, do any one or more of the following: (i) change the manner, place or terms of payment or extend the time of payment of, or renew or alter, Senior Debt or Guarantor Senior Debt, or otherwise amend or supplement in any manner Senior Debt or Guarantor Senior Debt, or any instrument evidencing the same or any agreement under which Senior Debt or Guarantor Senior Debt is outstanding; (ii) sell, exchange, release or otherwise deal with any Property pledged, mortgaged or otherwise securing Senior Debt or Guarantor Senior Debt; (iii) release any Person liable in any manner for the payment or collection of Senior Debt or Guarantor Senior Debt; and (iv) exercise or refrain from exercising any rights against the Company and any other Person. SECTION 11.09. Holders Authorize Trustee To Effectuate Subordination of Obligations. Each Holder authorizes and expressly directs the Trustee on its behalf to take such action as may be necessary or appropriate to effectuate, as between the holders of Senior Debt and the Holders, the subordination provided in this Article Eleven, and appoints the Trustee its attorney-in-fact for such purposes, including, in the event of any dissolution, winding-up, liquidation or reorganization of the Company (whether in bankruptcy, insolvency, receivership, reorganization or similar proceedings or upon an assignment for the benefit of credits or otherwise) tending towards liquidation of the business and assets of the Company, the filing of a claim for the unpaid balance of its Obligations owing under the Notes and accrued interest in the form required in those proceedings. If the Trustee does not file a proper claim or proof of debt in the form required in such proceeding prior to 30 days before the expiration of the time to file such claim or claims, then the holders of the Senior Debt or their Representative shall have the right to file and are or is hereby authorized to file an appropriate claim for and on behalf of the Holders. Nothing herein contained shall be deemed to authorize the Trustee or the holders of Senior Debt or their Representative to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Obligations owing under the Notes or the rights of any Holder thereof, or to authorize the Trustee or the holders of Senior Debt or their Representative to vote in respect of the claim of any Holder in any such proceeding. SECTION 11.10. This Article Eleven Not To Prevent Events of Default. The failure to make a payment on account of principal of or interest on the Obligations owing under the Notes by reason of any provision of this Article Eleven shall not be construed as preventing the occurrence of an Event of Default. SECTION 11.11. Amendments or Modifications to Article Eleven. No amendment of, or supplement or waiver to, this Indenture shall adversely affect the rights of any holder of Senior Debt under this Article Eleven or Article Twelve without -111- the consent of such holder of Senior Debt. Notwithstanding anything to the contrary contained in this Indenture (but without limiting the provisions of the immediately preceding sentence), no amendment or modification to any provision of this Article Eleven or the related definitions used herein (other than to cure any ambiguity, defect, mistake or inconsistency herein, so long as such amendment or modification does not adversely affect the rights of the holders of any Senior Debt then outstanding) shall be permitted without the consent of the Holders of at least a majority in principal amount of the Notes then outstanding voting as a single class (including consents obtained in connection with a tender offer or exchange offer for, or purchase of, the Notes) or, if required by Section 8.02, by each Holder affected. SECTION 11.12. Notice to Trustee; Rights of Trustee and Paying Agent. The Company shall give prompt written notice to the Trustee of any fact known to the Company that would prohibit the making of any payment to or by the Trustee or any Holder in respect of the Notes or under any Guarantee pursuant to the provisions of this Article Eleven although any delay or failure to give any such notice shall have no effect on the subordination provisions contained herein. Notwithstanding the provisions of this Article Eleven or any other provision of this Indenture, neither the Trustee nor any Paying Agent shall be charged with knowledge of the existence of any facts that would prohibit the making of any payment or distribution by the Trustee or such Paying Agent, and (in the absence of actual knowledge that the respective payment shall violate the applicable provisions of this Article Eleven) the Trustee and such Paying Agent may continue to make payments on the Notes, unless the Trustee or such Paying Agent shall have received, at least one Business Day prior to the date of such payment, written notice of facts that would cause the payment of any Obligations with respect to the Notes to violate this Article Eleven (although the receipt of such payment shall otherwise be subject to the applicable provisions of this Article Eleven). Only the Company, a Guarantor, a holder of Senior Debt or a Representative thereof may give the notice. Nothing in this Article Eleven shall impair the claims of, or payments to, the Trustee in its capacity as such under or pursuant to Section 7.07. Nothing in this Section 11.12 is intended to or shall relieve any Holder of Notes from the obligations imposed under Sections 11.02 and 11.03 with respect to other distributions received in violation of the provisions hereof. The Trustee in its individual or any other capacity may hold Senior Debt with the same rights it would have if it were not Trustee. Any Agent may do the same with like rights. ARTICLE TWELVE MISCELLANEOUS SECTION 12.01. Trust Indenture Act Controls. If any provision of this Indenture limits, qualifies or conflicts with another provision which is required to be included in this Indenture by the TIA, the required provision shall -112- control. If any provision of this Indenture modifies any TIA provision that may be so modified, such TIA provision shall be deemed to apply to this Indenture as so modified. If any provision of this Indenture excludes any TIA provision that may be so excluded, such TIA provision shall be excluded from this Indenture. The provisions of TIA Sections 310 through 317 that impose duties on any Person (including the provisions automatically deemed included unless expressly excluded by this Indenture) are a part of and govern this Indenture, whether or not physically contained herein. SECTION 12.02. Notices. Except for notice or communications to Holders, any notice or communication shall be given in writing and when received if delivered in person, when receipt is acknowledged if sent by facsimile, on the next Business Day if timely delivered by a nationally recognized courier service that guarantees overnight delivery or two Business Days after deposit if mailed by first-class mail, postage prepaid, addressed as follows: If to the Company: Seminis Vegetable Seeds, Inc. 2700 Camino del Sol Oxnard, California 93030-7967 Attn: General Counsel With a copy to: Milbank, Tweed, Hadley & McCloy LLP 1 Chase Manhattan Plaza New York, New York 10005 Attn: Howard Kelberg, Esq. and Wachtell, Lipton, Rosen & Katz 51 West 52nd Street New York, NY 10019 Attn: Mitchell S. Presser, Esq. -113- If to the Trustee, Registrar or Paying Agent: Wells Fargo Bank, National Association MAC E2818-176 17th Floor 707 Wilshire Blvd. Los Angeles, CA 90017 Attn: Corporate Trust Administrator Such notices or communications shall be effective when received and shall be sufficiently given if so given within the time prescribed in this Indenture. The Company, the Guarantors or the Trustee by written notice to the others may designate additional or different addresses for subsequent notices or communications. Any notice or communication mailed to a Holder shall be mailed to him by first-class mail, postage prepaid, at his address shown on the Register. Failure to mail a notice or communication to a Holder or any defect in it shall not affect its sufficiency with respect to other Holders. If a notice or communication to a Holder is mailed in the manner provided above, it shall be deemed duly given, whether or not the addressee receives it. In case by reason of the suspension of regular mail service, or by reason of any other cause, it shall be impossible to mail any notice as required by this Indenture, then such method of notification as shall be made with the approval of the Trustee shall constitute a sufficient mailing of such notice. SECTION 12.03. Communications by Holders with Other Holders. Holders may communicate pursuant to TIA Section 312(b) with other Holders with respect to their rights under this Indenture or the Notes. The Company, the Guarantors, the Trustee, the Registrar and anyone else shall have the protection of TIA Section 312(c). SECTION 12.04. Certificate and Opinion as to Conditions Precedent. Upon any request or application by the Company or any Guarantor to the Trustee to take any action under this Indenture (except for the issuance of Notes on the Issue Date), the Company or such Guarantor shall furnish to the Trustee: (1) an Officers' Certificate (which shall include the statements set forth in Section 12.05 below) stating that, in the opinion of the signers, all conditions precedent, -114- if any, provided for in this Indenture relating to the proposed action have been complied with; and (2) an Opinion of Counsel (which shall include the statements set forth in Section 12.05 below) stating that, in the opinion of such counsel, all such conditions precedent have been complied with. SECTION 12.05. Statements Required in Certificate and Opinion. Each certificate (other than certificates provided pursuant to Section 4.06) and opinion with respect to compliance by or on behalf of the Company or any Guarantor with a condition or covenant provided for in this Indenture shall include: (1) a statement that the Person making such certificate or opinion has read such covenant or condition; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (3) a statement that, in the opinion of such Person, it or he has made such examination or investigation as is necessary to enable it or him to express an informed opinion as to whether or not such covenant or condition has been complied with; and (4) a statement as to whether or not, in the opinion of such Person, such covenant or condition has been complied with. SECTION 12.06. Rules by Trustee and Agents. The Trustee may make reasonable rules for action by or meetings of Holders. The Registrar and Paying Agent may make reasonable rules for their functions. SECTION 12.07. Legal Holidays. A "Legal Holiday" is a Saturday, a Sunday or other day on which (i) commercial banks in the City of New York are authorized or required by law to close or (ii) the New York Stock Exchange is not open for trading. If a payment date is a Legal Holiday at a place of payment, payment may be made at that place on the next succeeding day that is not a Legal Holiday, and no interest shall accrue for the intervening period. SECTION 12.08. Governing Law. This Indenture, the Notes and the Guarantees shall be governed by and construed in accordance with the laws of the State of New York, but without giving effect to applicable -115- principles of conflicts of law to the extent that the application of the law of another jurisdiction would be required thereby. SECTION 12.09. No Adverse Interpretation of Other Agreements. This Indenture may not be used to interpret another indenture, loan, security or debt agreement of the Company or any Subsidiary thereof. No such indenture, loan, security or debt agreement may be used to interpret this Indenture. SECTION 12.10. Successors. All agreements of the Company and the Guarantors in this Indenture and the Notes shall bind their respective successors. All agreements of the Trustee, any additional trustee and any Paying Agents in this Indenture shall bind its successor. SECTION 12.11. Multiple Counterparts. The parties may sign multiple counterparts of this Indenture. Each signed counterpart shall be deemed an original, but all of them together represent one and the same agreement. SECTION 12.12. Table of Contents, Headings, etc. The table of contents, cross-reference sheet and headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part hereof, and shall in no way modify or restrict any of the terms or provisions hereof. SECTION 12.13. Separability. Each provision of this Indenture shall be considered separable and if for any reason any provision which is not essential to the effectuation of the basic purpose of this Indenture or the Notes shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. [Signature Pages Follow] IN WITNESS WHEREOF, the parties have caused this Indenture to be duly executed all as of the date and year first written above. SEMINIS VEGETABLE SEEDS, INC. By: /s/ Gaspar Alvarez -------------------------------------- Name: Gaspar Alvarez Title: Vice President and Worldwide Corporate Comptroller SEMINIS, INC., as Guarantor By: /s/ Gaspar Alvarez -------------------------------------- Name: Gaspar Alvarez Title: Vice President - Finance and Worldwide Corporate Comptroller PETOSEED INTERNATIONAL INC., as Guarantor By: /s/ Gaspar Alvarez -------------------------------------- Name: Gaspar Alvarez Title: Chief Financial Officer PGI ALFALFA, INC., as Guarantor By: /s/ Gaspar Alvarez -------------------------------------- Name: Gaspar Alvarez Title: Chief Financial Officer BAXTER SEED CO., INC., as Guarantor By: /s/ Gaspar Alvarez -------------------------------------- Name: Gaspar Alvarez Title: Chief Financial Officer Wells Fargo Bank, National Association, as Trustee By: /s/ Jeanie Mar -------------------------------------- Name: Jeanie Mar Title: Vice President EXHIBIT A CUSIP NO: [ ] SEMINIS VEGETABLE SEEDS, INC. No. [ ] $ 10 1/4 % SENIOR SUBORDINATED NOTE DUE 2013 SEMINIS VEGETABLE SEEDS, INC., a California corporation, as issuer (the "Company"), for value received, promises to pay to [ ] or registered assigns the principal sum of $ on October 1, 2013. Interest Payment Dates: April 1 and October 1 commencing April 1, 2004 Record Dates: March 15 and September 15 Reference is made to the further provisions of this Note contained herein, which shall for all purposes have the same effect as if set forth at this place. A-1 IN WITNESS WHEREOF, the Company has caused this Note to be signed by a duly authorized officer. SEMINIS VEGETABLE SEEDS, INC. By: ____________________________________ Name: Title: A-2 Certificate of Authentication This is one of the 10 1/4 % Senior Subordinated Notes Due 2013 referred to in the within-mentioned Indenture. WELLS FARGO BANK, NATIONAL ASSOCIATION, as Trustee By: ____________________________________ Dated: [ ] A-3 [FORM OF REVERSE OF NOTE] SEMINIS VEGETABLE SEEDS, INC. 10 1/4 % SENIOR SUBORDINATED NOTE DUE 2013 1. Interest. SEMINIS VEGETABLE SEEDS, INC., a California corporation, as issuer (the "Company"), promises to pay, until the principal hereof is paid or made available for payment, interest on the principal amount set forth on the face hereof at a rate of 10 1/4 % per annum. Interest hereon shall accrue from and including the most recent date to which interest has been paid or, if no interest has been paid, from and including September 29, 2003 to but excluding the date on which interest is paid. Interest shall be payable in arrears on each April 1 and October 1, commencing April 1, 2004. Interest shall be computed on the basis of a 360-day year of twelve 30-day months and actual days elapsed. The Company shall pay interest on overdue principal and on overdue interest (to the full extent permitted by law) at the rate borne by the Notes. 2. Method of Payment. The Company shall pay interest hereon (except defaulted interest) to the Persons who are registered Holders at the close of business on March 15 or September 15 immediately preceding the interest payment date (whether or not a Business Day). Holders must surrender Notes to a Paying Agent to collect principal payments. The Company shall pay to the Paying Agent principal and interest in money of the United States of America that at the time of payment is legal tender for payment of public and private debts. If a Holder has given wire transfer instructions to the Company, the Company may pay, or cause to be paid by the Paying Agent, all principal, interest and Additional Interest, if any, on the Holder's Notes in accordance with those instructions. All other payments on the Notes shall be made at the office or agency of the Paying Agent and Registrar unless the Company elects to make interest payments by check mailed to the Holders at their address set forth in the Register. 3. Paying Agent and Registrar. Initially, Wells Fargo Bank, National Association (the "Trustee") shall act as a Paying Agent and Registrar. The Company may change any Paying Agent or Registrar without notice to the Holders. The Company or any of its Subsidiaries may act as Paying Agent or Registrar; provided that if the Company or an Affiliate thereof acts as Paying Agent, it shall segregate the money held by it as Paying Agent and hold it as a separate trust fund. 4. Indenture. The Company issued the Notes under an Indenture dated as of September 29, 2003 (the "Indenture") between the Company, the Guarantors party thereto, and the Trustee. This is one of an issue of Notes of the Company issued, or to be issued, under the Indenture. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S. Code Sections 77aaa-77bbbb), as amended from time to time. The Notes are subject to all such terms, and Holders are referred to the Indenture and such Act for a statement of them. Capitalized and certain other terms used herein and not otherwise defined have the meanings set forth in the Indenture. A-4 5. Optional Redemption. (a) Except as set forth below, the Notes shall not be redeemable at the option of the Company prior to October 1, 2008. After October 1, 2008, the Company may redeem all or a part of the Notes upon not less than 30 nor more than 60 days' notice, at the redemption prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest and Additional Interest, if any, on the notes redeemed, to the applicable Redemption Date, if redeemed during the twelve-month period beginning on October 1 of the years indicated below:
YEAR PERCENTAGE - ------------------------------------------------------------------------ 2008.............................................. 105.125% 2009.............................................. 103.417% 2010.............................................. 101.708% 2011 and thereafter............................... 100.000%
Any such redemption or notice may, at the Company's discretion, be subject to the satisfaction of one or more conditions precedent. (b) At any time, or from time to time, on or prior to October 1, 2008, the Notes may also be redeemed, by or on behalf of the Company, in whole, or any portion thereof, at the Company's option, at the Make-Whole Price as of, and accrued but unpaid interest and Additional Interest, if any, to the date of redemption (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date). Such redemption may be made upon notice mailed by first-class mail to each Holder's registered address, not less than 30 nor more than 60 days prior to the Redemption Date. Any such redemption or notice may, at the Company's discretion, be subject to the satisfaction of one or more conditions precedent. The Company may provide in such notice that payment of such price and performance of the Company's obligations with respect to such redemption may be performed by another Person. "Make-Whole Price" means an amount equal to the greater of: (1) 100% of the principal amount of the Notes to be redeemed; and (2) as determined by an Independent Investment Banker, the sum of the present values of (A) the redemption price of the Notes at October 1, 2008 (as set forth above) and (B) the remaining scheduled payments of interest from the Redemption Date to October 1, 2008 (not including any portion of such payments of interest accrued as of the Redemption Date) discounted back to the Redemption Date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate (as defined below) plus 50 basis points, plus, in the case of both (1) and (2), accrued and unpaid interest and Additional Interest, if any, to the Redemption Date. Unless the Company defaults in payment of the Make-Whole Price, on A-5 and after the applicable Redemption Date, interest will cease to accrue on the notes to be redeemed. "Comparable Treasury Issue" means the U.S. Treasury security selected by an Independent Investment Banker as having a maturity most nearly equal to the period from the Redemption Date to October 1, 2008, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities; provided if such period is less than one year, then the U.S. Treasury security having a maturity of one year shall be used. "Comparable Treasury Price" means, with respect to any Redemption Date, (1) the average of four Reference Treasury Dealer Quotations for such Redemption Date, after excluding the highest and lowest of such Reference Treasury Dealer Quotations, or (2) if the Trustee obtains fewer than four such Reference Treasury Dealer Quotations, the average of all such Reference Treasury Dealer Quotations. "Independent Investment Banker" means Citigroup Global Markets Inc. or CIBC World Markets Corp. and their respective successors, at the Company's option, or, if such firms or the successors, if any, to such firms, as the case may be, are unwilling or unable to select the Comparable Treasury Issue, an independent investment banking institution of national standing appointed by the Company. "Reference Treasury Dealer" means Citigroup Global Markets Inc. or CIBC World Markets Corp., at the Company's option, and three additional primary U.S. government securities dealers in New York City (each a "Primary Treasury Dealer") selected by the Company, and their respective successors (provided, however, that if any such firm or any such successor, as the case may be, shall cease to be a primary U.S. government securities dealer in New York City, the Company shall substitute therefor another Primary Treasury Dealer). "Reference Treasury Dealer Quotations" means, with respect to each Reference Treasury Dealer and any Redemption Date, the average, as determined by the Trustee, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m., New York City time, on the third business day preceding such Redemption Date. "Treasury Rate" means, with respect to any Redemption Date, (1) the yield, under the heading which represents the average for the immediately preceding week, appearing in the most recently published statistical release designated "H.15(519)" or any successor publication that is published weekly by the Board of Governors of the Federal Reserve System and that establishes yields on actively traded U.S. Treasury securities adjusted to constant maturity under the caption "Treasury Constant Maturities," for the maturity corresponding to the Comparable Treasury Issue (if no maturity is within three months before or after the stated maturity, yields for the two published maturities most closely corresponding to the Comparable Treasury Issue shall be determined, and the Treasury Rate shall be interpolated or extrapolated from such yields on a straight-line basis, rounding to the nearest month) or (2) if such release (or any successor A-6 release) is not published during the week preceding the calculation date or does not contain such yields, the rate per annum equal to the semi-annual equivalent yield to maturity of the Comparable Treasury Issue, calculated using a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such Redemption Date. The Treasury Rate shall be calculated on the third business day preceding the Redemption Date. The notice of redemption with respect to the foregoing redemption need not set forth the Make-Whole Price but only the manner of calculation thereof. The Company shall notify the Trustee of the Make-Whole Price with respect to any redemption promptly after the calculation, and the Trustee shall not be responsible for such calculation. (c) At any time prior to October 1, 2006, the Company may on any one or more occasions redeem up to 35% of the aggregate principal amount of all notes issued under the Indenture at a redemption price of 110.250% of the principal amount, plus accrued and unpaid interest and Additional Interest, if any, to the Redemption Date, with the net cash proceeds of one or more Equity Offerings; provided that: (1) at least 65% of the aggregate principal amount of notes issued under the Indenture remains outstanding immediately after the occurrence of such redemption (excluding notes held by the Company and its Subsidiaries); and (2) the redemption occurs within 120 days of the date of the closing of such Equity Offering. Any such notice may be given prior to the completion of the related Equity Offering, and any such redemption or notice may, at the Company's discretion, be subject to the satisfaction of one or more conditions precedent, including but not limited to the completion of the related Equity Offering. (d) If less than all of the Notes are to be redeemed at any time, the Trustee shall select Notes for redemption as follows: (1) if the Notes are listed on any national securities exchange, in compliance with the requirements of the principal national securities exchange on which the Notes are listed; or (2) if the Notes are not listed on any national securities exchange, on a pro rata basis, by lot or by such method as the Trustee deems fair and appropriate; provided that no Notes of $1,000 or less shall be redeemed in part. A new Note in principal amount equal to the unredeemed portion thereof shall be issued in the name of the Holder thereof upon cancellation of the original Note. Notes called for redemption pursuant to this paragraph 5 hereto become due on the related Redemption Date. On A-7 and after the Redemption Date, interest stops accruing on Notes or portions of them called for redemption. 6. Notice of Redemption. Notices of redemption shall be mailed in accordance with Article Three of the Indenture. If any Note is to be redeemed in part only, the notice of redemption that relates to such Note shall state the portion of the principal amount thereof to be redeemed. 7. Offers To Purchase. The Indenture provides that upon the occurrence of a Change of Control or an Asset Sale and subject to further limitations contained therein, the Company may be required to make an offer to purchase outstanding Notes in accordance with the procedures set forth in the Indenture. 8. Registration Rights. (a) Pursuant to the Registration Rights Agreement, the Company shall be obligated to consummate an Exchange Offer pursuant to which the Holder of this Note shall have the right to exchange this Note for Notes which have been registered under the Securities Act, in like principal amount and having substantially identical terms as the Notes. (b) The Registration Rights Agreement provides for the payment of Additional Interest in the event of the occurrence or continuance of a Registration Default (as defined in the Registration Rights Agreement). 9. Denominations, Transfer, Exchange. The Notes are in registered form without coupons in denominations of $1,000 and integral multiples of $1,000. A Holder may transfer or exchange Notes in accordance with the Indenture, provided that if the Company or an Affiliate thereof acts as Paying Agent, it shall segregate the money held by it as Paying Agent and hold it as a separate trust fund. The Registrar may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and to pay to it any taxes and fees required by law or permitted by the Indenture. The Registrar shall not be required to exchange or register a transfer of any Note for a period of 15 days immediately preceding the redemption of Notes, except the unredeemed portion of any Note being redeemed in part. 10. Persons Deemed Owners. The registered Holder of this Note may be treated as the owner of this Note for all purposes. 11. Unclaimed Money. If money for the payment of principal or interest remains unclaimed for two years, the Trustee or Paying Agent shall pay the money back to the Company at its written request. After that, Holders entitled to the money must look to the Company for payment as general creditors unless an "abandoned property" law designates another Person. 12. Amendment, Supplement, Waiver, Etc. The Company, the Guarantors, if any, and the Trustee (if a party thereto) may, without the consent of the Holders of any outstanding Notes, amend, waive or supplement the Indenture or the Notes for certain specified purposes, including, among other things, curing ambiguities, defects or inconsistencies, maintaining A-8 the qualification of the Indenture under the Trust Indenture Act of 1939, as amended, providing for the assumption by a successor to the Company's or any Guarantor's obligations under the Indenture and making any change that does not adversely affect the legal rights under the Indenture of any Holder. Other amendments and modifications of the Indenture or the Notes may be made by the Company, the Guarantors, if any, and the Trustee with the consent of the Holders of not less than a majority of the aggregate principal amount of the outstanding Notes, subject to certain exceptions requiring the consent of the Holders of the particular Notes to be affected. 13. Restrictive Covenants. The Indenture imposes certain limitations on the ability of the Company and its Restricted Subsidiaries to, among other things, incur additional indebtedness, pay dividends on, redeem or repurchase its Capital Stock, make certain investments, sell assets, create restrictions on the payment of dividends or other amounts to the Company from its Restricted Subsidiaries, enter into transactions with Affiliates, create liens or consolidate, merge or sell all or substantially all of the assets of the Company and the Subsidiary Guarantors and requires Holdings to provide reports to Holders of the Notes. Such limitations are subject to a number of important qualifications and exceptions. Pursuant to Section 4.06 of the Indenture, the Company must annually report to the Trustee on compliance with such limitations. 14. Successor Corporation. When a successor corporation assumes all the obligations of its predecessor under the Notes and the Indenture and the transaction complies with the terms of Article Five of the Indenture, the predecessor corporation shall, except as provided in Article Five of the Indenture, be released from those obligations. 15. Defaults and Remedies. Events of Default are set forth in the Indenture. Subject to certain limitations in the Indenture, if an Event of Default occurs and is continuing, then, and in each and every such case (except as described below), either the Trustee, by notice in writing to the Company, or the Holders of not less than 25% of the principal amount of the Notes then outstanding, by notice in writing to the Company and the Trustee, may, and the Trustee at the request of such Holders shall, declare due and payable, if not already due and payable, the principal of and any accrued and unpaid interest on all of the Notes; and upon any such declaration all such amounts upon such Notes shall become and be immediately due and payable, anything in the Indenture or in the Notes to the contrary notwithstanding. If an Event of Default specified in Sections 6.01(8) and 6.01(9) of the Indenture occurs with respect to the Company or any Significant Subsidiary, then the principal of and any accrued and unpaid interest on all of the Notes shall immediately become due and payable without any declaration or other act on the part of the Trustee or any Holder. Holders may not enforce the Indenture or the Notes except as provided in the Indenture. The Trustee may require indemnity satisfactory to it before it enforces the Indenture or the Notes. Subject to certain limitations, Holders of a majority in principal amount of the then outstanding Notes may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders notice of any continuing default (except a default in payment of principal, premium, if any, or interest on the Notes) if it determines that withholding notice is in their best interests. A-9 16. Trustee Dealings with Company. Subject to certain limitations imposed by the Trust Indenture Act, the Trustee, in its individual or any other capacity, may make loans to, accept deposits from, and perform services for the Company or its Affiliates, and may otherwise deal with the Company or its Affiliates, as if it were not Trustee. 17. No Recourse Against Others. No past, present or future director, officer, employee, incorporator, agent, member, stockholder or Affiliate of the Company or any Guarantor, as such, shall have any liability for any obligations of the Company or the Guarantors under the Notes, the Indenture, the Guarantees or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of Notes and Guarantees by accepting a Note and a Guarantee waives and releases all such liabilities. The waiver and release are part of the consideration for issuance of the Notes and the Guarantees. 18. Discharge. The Company's obligations pursuant to the Indenture shall be discharged, except for obligations pursuant to certain sections thereof, subject to the terms of the Indenture, upon the payment of all the Notes or upon the irrevocable deposit with the Trustee of United States dollars or Government Securities sufficient to pay when due principal of and interest on the Notes to maturity or redemption, as the case may be. 19. Guarantees. The Notes shall be entitled to the benefits of certain Guarantees made for the benefit of the Holders. Reference is hereby made to the Indenture for a statement of the respective rights, limitations of rights, duties and obligations thereunder of the Guarantors, the Trustee and the Holders. 20. Authentication. This Note shall not be valid until the Trustee signs the certificate of authentication on the other side of this Note. 21. Governing Law. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. The Trustee, the Company and the Guarantors agree to submit to the jurisdiction of the courts of the State of New York in any action or proceeding arising out of or relating to the Indenture or the Notes. 22. Abbreviations. Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (= tenants in common), TENANT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act). The Company shall furnish to any Holder upon written request and without charge a copy of the Indenture. Requests may be made to: Seminis Vegetable Seeds, Inc. 2700 Camino del Sol Oxnard, California 93030-7967 Attn: General Counsel A-10 With a copy to: Milbank, Tweed, Hadley & McCloy LLP 1 Chase Manhattan Plaza New York, New York 10005 Attn: Howard Kelberg, Esq. and Wachtell, Lipton, Rosen & Katz 51 West 52nd Street New York, NY 10019 Attn: Mitchell S. Presser, Esq. A-11 ASSIGNMENT I or we assign and transfer this Note to: _____________________________________________________________________________ (Insert assignee's social security or tax I.D. number) _____________________________________________________________________________ (Print or type name, address and zip code of assignee) and irrevocably appoint: Agent to transfer this Note on the books of the Company. The Agent may substitute another to act for him. Date: ________________ Your Signature: ________________________ (Sign exactly as your name appears on the other side of this Note) Signature Guarantee: ______________________________ SIGNATURE GUARANTEE Signatures must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. A-12 OPTION OF HOLDER TO ELECT PURCHASE If you want to elect to have all or any part of this Note purchased by the Company pursuant to Section 4.08 or Section 4.12 of the Indenture, check the appropriate box: [ ] Section 4.08 [ ] Section 4.12 If you want to have only part of the Note purchased by the Company pursuant to Section 4.08 or Section 4.12 of the Indenture, state the amount you elect to have purchased: $ ______________________ (multiple of $1,000) Date: __________________ Your Signature: _________________________ (Sign exactly as your name appears on the face of this Note) ________________________ Signature Guaranteed SIGNATURE GUARANTEE Signatures must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. A-13 EXHIBIT B [FORM OF LEGEND FOR 144A GLOBAL NOTES AND OTHER SECURITIES THAT ARE RESTRICTED SECURITIES] THIS SECURITY (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS SET FORTH IN THE NEXT SENTENCE. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE HOLDER: (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A "QIB"), (B) IT IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT OR (C) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501 (A)(1),(2),(3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT) (AN "IAI"); (2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, (B) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QIB PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (C) IN AN OFFSHORE TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR 904 OF REGULATION S UNDER THE SECURITIES ACT, (D) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (E) TO AN IAI THAT, PRIOR TO SUCH TRANSFER, FURNISHES THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE TRANSFER OF THIS SECURITY (THE FORM OF WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND, IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF SECURITIES LESS THAN $250,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY, IF THE COMPANY SO REQUESTS, THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (F) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY) OR (G) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND, IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION; AND B-1 (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS SECURITY OR AN INTEREST HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION" AND "UNITED STATES" HAVE THE MEANINGS GIVEN TO THEM BY RULE 902 OF REGULATION S UNDER THE SECURITIES ACT. THE INDENTURE GOVERNING THIS SECURITY CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS SECURITY IN VIOLATION OF THE FOREGOING. B-2 [FORM OF ASSIGNMENT FOR 144A GLOBAL NOTES AND OTHER SECURITIES THAT ARE RESTRICTED SECURITIES] I or we assign and transfer this Note to: _____________________________________________________________________________ (Insert assignee's social security or tax I.D. number) _____________________________________________________________________________ (Print or type name, address and zip code of assignee) and irrevocably appoint: Agent to transfer this Note on the books of the Company. The Agent may substitute another to act for him. [Check One] [ ] (a) this Note is being transferred in compliance with the exemption from registration under the Securities Act provided by Rule 144A thereunder. or [ ] (b) this Note is being transferred other than in accordance with (a) above and documents are being furnished which comply with the conditions of transfer set forth in this Note and the Indenture. If none of the foregoing boxes is checked, the Trustee or Registrar shall not be obligated to register this Note in the name of any person other than the Holder hereof unless and until the conditions to any such transfer of registration set forth herein and in Sections 2.16 and 2.17 of the Indenture shall have been satisfied. Date: __________________ Your Signature: _________________________ (Sign exactly as your name appears on the face of this Note) Signature Guarantee: ___________________________________________________________ SIGNATURE GUARANTEE Signatures must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. B-3 TO BE COMPLETED BY TRANSFEROR IF (a) ABOVE IS CHECKED The transfer is being effected pursuant to and in accordance with Rule 144A under the Securities Act, and, accordingly, the transferor hereby further certifies that the beneficial interest or certificated Note is being transferred to a Person that the transferor reasonably believed and believes is purchasing the beneficial interest or certificated Note for its own account, or for one or more accounts with respect to which such Person exercises sole investment discretion, and such Person and each such account is a "qualified institutional buyer" within the meaning of Rule 144A in a transaction meeting the requirements of Rule 144A and such transfer is in compliance with any applicable securities laws of any state of the United States. Upon consummation of the proposed transfer in accordance with the terms of the Indenture, the transferred beneficial interest or certificated Note shall be subject to the restrictions on transfer enumerated on the Rule 144A Global Notes and/or the certificated Note and in the Indenture and the Securities Act. Dated: _______________________ ________________________________________ NOTICE: To be executed by an executive officer B-4 EXHIBIT C [FORM OF LEGEND FOR TEMPORARY REGULATION S GLOBAL NOTE] THIS SECURITY (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS SET FORTH IN THE NEXT SENTENCE. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE HOLDER: (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A "QIB"), (B) IT IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT OR (C) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501 (A)(1),(2),(3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT) (AN "IAI"); (2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, (B) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QIB PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (C) IN AN OFFSHORE TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR 904 OF REGULATION S UNDER THE SECURITIES ACT, (D) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (E) TO AN IAI THAT, PRIOR TO SUCH TRANSFER, FURNISHES THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE TRANSFER OF THIS SECURITY (THE FORM OF WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND, IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF SECURITIES LESS THAN $250,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY, IF THE COMPANY SO REQUESTS, THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (F) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY) OR (G) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND, IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE OF C-1 THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION; AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS SECURITY OR AN INTEREST HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION" AND "UNITED STATES" HAVE THE MEANINGS GIVEN TO THEM BY RULE 902 OF REGULATION S UNDER THE SECURITIES ACT. THE INDENTURE GOVERNING THIS SECURITY CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS SECURITY IN VIOLATION OF THE FOREGOING. C-2 [FORM OF ASSIGNMENT FOR REGULATION S GLOBAL NOTE] I or we assign and transfer this Note to: _____________________________________________________________________________ (Insert assignee's social security or tax I.D. number) _____________________________________________________________________________ (Print or type name, address and zip code of assignee) and irrevocably appoint: Agent to transfer this Note on the books of the Company. The Agent may substitute another to act for him. [Check One] [ ] (a) this Note is being transferred in compliance with the exemption from registration under the Securities Act provided by Regulation S thereunder. or [ ] (b) this Note is being transferred other than in accordance with (a) above and documents are being furnished which comply with the conditions of transfer set forth in this Note and the Indenture. If none of the foregoing boxes is checked, the Trustee or Registrar shall not be obligated to register this Note in the name of any person other than the Holder hereof unless and until the conditions to any such transfer of registration set forth herein and in Sections 2.16 and 2.17 of the Indenture shall have been satisfied. Date: __________________ Your Signature: _________________________ (Sign exactly as your name appears on the face of this Note) Signature Guarantee: ___________________________________________________________ SIGNATURE GUARANTEE Signatures must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. C-3 TO BE COMPLETED BY TRANSFEROR IF (a) ABOVE IS CHECKED The transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act and, accordingly, the transferor hereby further certifies that (i) the transfer is not being made to a person in the United States and (x) at the time the buy order was originated, the transferee was outside the United States or such transferor and any Person acting on its behalf reasonably believed and believes that the transferee was outside the United States or (y) the transaction was executed in, on or through the facilities of a designated offshore securities market and neither such transferor nor any Person acting on its behalf knows that the transaction was prearranged with a buyer in the United States, (ii) no directed selling efforts have been made in contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S under the Securities Act, (iii) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act and (iv) if the proposed transfer is being made prior to the expiration of the restricted period under Regulation S, the transfer is not being made to a U.S. Person or for the account or benefit of a U.S. Person (other than an initial purchaser). Upon consummation of the proposed transfer in accordance with the terms of the Indenture, the transferred beneficial interest or certificated Note shall be subject to the restrictions on transfer enumerated on the Regulation S Global Notes and/or the certificated Note and in the Indenture and the Securities Act. Dated: _______________________ ________________________________________ NOTICE: To be executed by an executive officer C-4 EXHIBIT D [FORM OF LEGEND FOR GLOBAL NOTE] Any Global Note authenticated and delivered hereunder shall bear a legend (which would be in addition to any other legends required in the case of a Restricted Note) in substantially the following form: This Note is a Global Note within the meaning of the Indenture hereinafter referred to and is registered in the name of a Depositary or a nominee of a Depositary. This Note is not exchangeable for Notes registered in the name of a person other than the Depositary or its nominee except in the limited circumstances described in the Indenture, and no transfer of this Note (other than a transfer of this Note as a whole by the Depositary to a nominee of the Depositary or by a nominee of the depositary to the depositary or another nominee of the depositary) may be registered except in the limited circumstances described in the Indenture. Unless this Certificate is presented by an authorized representative of The Depository Trust Company (a New York corporation) ("DTC") to the issuer or its agent for registration of transfer, exchange, or payment, and any Certificate issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or such other entity as is requested by an authorized representative of DTC), any transfer, pledge or other use hereof for value or otherwise by or to any person is wrongful inasmuch as the registered owner hereof, Cede & Co., has an interest herein. D-1 EXHIBIT E [FORM OF CERTIFICATE TO BE DELIVERED IN CONNECTION WITH TRANSFER PURSUANT TO REGULATION S] Wells Fargo Bank, National Association MAC E2818-176 17th Floor 707 Wilshire Blvd. Los Angeles, CA 90017 Attention: Corporate Trust Administration Re: Seminis Vegetable Seeds, Inc., a California corporation, as issuer (the "Company"), 10 1/4 % Senior Subordinated Notes Due 2013 (the "Notes") Dear Sirs: In connection with our proposed sale of $190,000,000 aggregate principal amount of the Notes, we confirm that such sale has been effected pursuant to and in accordance with Regulation S under the U.S. Securities Act of 1933, as amended (the "Securities Act"), and, accordingly, we represent that: (1) the offer of the Notes was not made to a U.S. person or to a person in the United States; (2) either (a) at the time the buy offer was originated, the transferee was outside the United States or we and any person acting on our behalf reasonably believed that the transferee was outside the United States, or (b) the transaction was executed in, on or through the facilities of a designated off-shore securities market and neither we nor any person acting on our behalf knows that the transaction has been pre-arranged with a buyer in the United States; (3) no directed selling efforts have been made in the United States in contravention of the requirements of Rule 904(a) of Regulation S; (4) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act; and (5) we have advised the transferee of the transfer restrictions applicable to the Notes. E-1 You are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceedings or official inquiry with respect to the matters covered hereby. Terms used in this certificate have the meanings set forth in Regulation S. Very truly yours, [Name of Transferee] By: ____________________________________ E-2 EXHIBIT F GUARANTEES Each of the undersigned (the "Guarantors") hereby jointly and severally unconditionally guarantees, to the extent set forth in the Indenture dated as of September 29, 2003 by and among Seminis Vegetable Seeds, Inc., a California corporation, as issuer (the "Company"), the Guarantors party thereto and Wells Fargo Bank, National Association, as Trustee (as amended, restated or supplemented from time to time, the "Indenture"), and subject to the provisions of the Indenture, (a) the due and punctual payment of the principal of, and premium, if any, and interest on the Notes, when and as the same shall become due and payable, whether at maturity, by acceleration or otherwise, the due and punctual payment of interest on overdue principal of, and premium and, to the extent permitted by law, interest, and the due and punctual performance of all other obligations of the Company to the Holders or the Trustee, all in accordance with the terms set forth in Article Ten of the Indenture, and (b) in case of any extension of time of payment or renewal of any Notes or any of such other obligations, that the same shall be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise. The obligations of the Guarantors to the Holders and to the Trustee pursuant to this Guarantee and the Indenture are expressly set forth in Article Ten of the Indenture, and reference is hereby made to the Indenture for the precise terms and limitations of this Guarantee. Each Holder of the Note to which this Guarantee is endorsed, by accepting such Note, agrees to and shall be bound by such provisions. Each Guarantee shall be limited to an amount not to exceed the maximum amount that can be guaranteed by such Guarantor after giving effect to all of its other contingent and fixed liabilities without rendering such Guarantee, as it relates to such Guarantor, voidable under applicable law relating to fraudulent conveyance or fraudulent transfer or similar laws affecting the rights of creditors generally. Capitalized terms used herein and not otherwise defined have the meanings set forth in the Indenture. [Signatures on Following Pages] F-1 IN WITNESS WHEREOF, each of the Guarantors has caused this Guarantee to be signed by a duly authorized officer. [ ], as Guarantor By: ____________________________________ Name: Title: F-2 EXHIBIT G [FORM OF CERTIFICATE FROM ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR] Seminis Vegetable Seeds, Inc. 2700 Camino del Sol Oxnard, California 93030-7967 Wells Fargo Bank, National Association MAC E2818-176 17th Floor 707 Wilshire Blvd. Los Angeles, CA 90017 Re: Seminis Vegetable Seeds, Inc., a California corporation, as issuer (the "Company"), 10 1/4 % Senior Subordinated Notes due 2013 Reference is hereby made to the Indenture, dated as of September 29, 2003 (the "Indenture"), by and among the Company, the Guarantors party thereto, and Wells Fargo Bank, National Association, as trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture. In connection with our proposed purchase of $190,000,000 aggregate principal amount of: (a) [ ] a beneficial interest in a Global Note, or (b) [ ] a Definitive Note, we confirm that: 1. We understand that any subsequent transfer of the Notes or any interest therein is subject to certain restrictions and conditions set forth in the Indenture and the undersigned agrees to be bound by, and not to resell, pledge or otherwise transfer the Notes or any interest therein except in compliance with, such restrictions and conditions and the United States Securities Act of 1933, as amended (the "Securities Act"). 2. We understand that the offer and sale of the Notes have not been registered under the Securities Act, and that the Notes and any interest therein may not be offered or sold except as permitted in the following sentence. We agree, on our own behalf and on behalf of any accounts for which we are acting as hereinafter stated, that if we should sell the Notes or any interest therein, prior to the expiration of the holding period applicable to sales of the Senior Notes under Rule 144(k) of the Securities Act, we shall do so only (A) to the Company or any subsidiary thereof, (B) in accordance with Rule 144A under the Securities Act to a "qualified institutional G-1 buyer" (as defined therein), (C) to an institutional "accredited investor" (as defined below) that, prior to such transfer, furnishes (or has furnished on its behalf by a U.S. broker-dealer) to you and to the Company a signed letter substantially in the form of this letter and, if such transfer is in respect of a principal amount of Notes, at the time of transfer of less than $250,000, an Opinion of Counsel in form reasonably acceptable to the Company to the effect that such transfer is in compliance with the Securities Act, (D) outside the United States in accordance with Rule 904 of Regulation S under the Securities Act, (E) pursuant to the provisions of Rule 144(k) under the Securities Act or (F) pursuant to an effective registration statement under the Securities Act, and we further agree to provide to any person purchasing the Definitive Note or beneficial interest in a Global Note from us in a transaction meeting the requirements of clauses (A) through (E) of this paragraph a notice advising such purchaser that resales thereof are restricted as stated herein. 3. We understand that, on any proposed resale of the Notes or beneficial interest therein, we shall be required to furnish to you and the Company such certifications, legal opinions and other information as you and the Company may reasonably require to confirm that the proposed sale complies with the foregoing restrictions. We further understand that the Notes purchased by us shall bear a legend to the foregoing effect. We further understand that any subsequent transfer by us of the Notes or beneficial interest therein acquired by us must be effected through one of the Placement Agents. 4. We are an institutional "accredited investor" (as defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of our investment in the Notes, and we and any accounts for which we are acting are each able to bear the economic risk of our or its investment. 5. We are acquiring the Notes or beneficial interest therein purchased by us for our own account or for one or more accounts (each of which is an institutional "accredited investor") as to each of which we exercise sole investment discretion. G-2 You and the Company are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceedings or official inquiry with respect to the matters covered hereby. ________________________________________ [Insert Name of Transferor] By: ____________________________________ Name: Title: Dated: _____________, _____ G-3 EXHIBIT H [FORM OF LEGEND FOR TEMPORARY REGULATION S GLOBAL NOTE] THIS NOTE IS A TEMPORARY GLOBAL NOTE. PRIOR TO THE EXPIRATION OF THE RESTRICTED PERIOD APPLICABLE HERETO, BENEFICIAL INTERESTS HEREIN MAY NOT BE HELD BY ANY PERSON OTHER THAN (1) A NON-U.S. PERSON OR (2) A U.S. PERSON WHO PURCHASED SUCH INTEREST IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), PURSUANT TO RULE 144A THEREUNDER. BENEFICIAL INTERESTS HEREIN ARE NOT EXCHANGEABLE FOR PHYSICAL NOTES OTHER THAN A PERMANENT GLOBAL NOTE IN ACCORDANCE WITH THE TERMS OF THE INDENTURE. TERMS IN THIS LEGEND ARE USED AS USED IN REGULATION S UNDER THE SECURITIES ACT. H-1 EX-4.2 8 v94566orexv4w2.txt EXHIBIT 4.2 EXHIBIT 4.2 CONFORMED COPY SEMINIS VEGETABLE SEEDS, INC. $190,000,000 10 1/4 % Senior Subordinated Notes due 2013 REGISTRATION RIGHTS AGREEMENT New York, New York September 29, 2003 Citigroup Global Markets Inc. CIBC World Markets Corp. Harris Nesbitt Corp. Rabo Securities USA, Inc. c/o Citigroup Global Markets Inc. 388 Greenwich Street New York, New York 10013 Ladies and Gentlemen: Seminis Vegetable Seeds, Inc., a corporation organized under the laws of the state of California (the "Company"), proposes to issue and sell to you (the "Initial Purchasers") its 10 1/4 % Senior Subordinated Notes due 2013 (the "Notes") upon the terms set forth in a purchase agreement of even date herewith (the "Purchase Agreement") relating to the initial placement of the Notes (the "Initial Placement"). The Notes are to be issued under an indenture (the "Indenture"), to be dated as of September 29, 2003, among the Company, Seminis, Inc., a Delaware corporation (the "Parent"), as guarantor, the other guarantors listed on the signature pages hereof (together with the Parent, the "Guarantors" and, together with the Company, the "Issuers") and Wells Fargo Bank, National Association, as trustee (the "Trustee"). The Notes will have the benefit of the guarantees (the "Guarantees" and, together with the Notes, the "Securities") provided for in the Indenture. To induce the Initial Purchasers to enter into the Purchase Agreement and to satisfy a condition of your obligations thereunder, the Issuers agree with you for your benefit and the benefit of the holders from time to time of the Securities and Exchange Securities (including the Initial Purchasers) (each a "Holder" and, together, the "Holders"), as follows: 1. Definitions. Capitalized terms used herein without definition shall have their respective meanings set forth in the Purchase Agreement. As used in this Agreement, the following capitalized defined terms shall have the following meanings: -2- "Act" shall mean the Securities Act of 1933, as amended, and the rules and regulations of the Commission promulgated thereunder. "Additional Interest" shall have the meaning set forth in Section 4 hereof. "Additional Interest Rate" shall have the meaning set forth in Section 4 hereof. "Affiliate" of any specified Person shall mean any other Person that, directly or indirectly, is in control of, is controlled by, or is under common control with, such specified Person. For purposes of this definition, "control" of a Person shall mean the power, direct or indirect, to direct or cause the direction of the management and policies of such Person whether by contract or otherwise; and the terms "controlling" and "controlled" shall have meanings correlative to the foregoing. "Broker-Dealer" shall mean any broker or dealer registered as such under the Exchange Act. "Business Day" shall mean any day other than a Saturday, a Sunday or a legal holiday or a day on which banking institutions or trust companies are authorized or obligated by law to close in New York City. "Citigroup" shall mean Citigroup Global Markets Inc. "Commission" shall mean the Securities and Exchange Commission. "Consummation Deadline" shall have the meaning set forth in Section 2(b). "Effectiveness Deadline" shall mean, in the case of an Exchange Offer Registration Statement, the meaning set forth in Section 2(a), and in the case of a Shelf Registration Statement, the meaning set forth in Section 3(b). "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder. "Exchange Offer Registration Period" shall mean the 180 day period following the consummation of the Registered Exchange Offer, exclusive of any period during which any stop order shall be in effect suspending the effectiveness of the Exchange Offer Registration Statement. "Exchange Offer Registration Statement" shall mean a registration statement of the Issuers on an appropriate form under the Act with respect to the Registered Exchange Offer, all amendments and supplements to such registration statement, including post-effective amendments thereto, in each case including the Prospectus contained therein, all exhibits thereto and all material incorporated by reference therein. -3- "Exchanging Dealer" shall mean any Holder (which may include any Initial Purchaser) that is a Broker-Dealer and elects to exchange for Exchange Securities any Securities that it acquired for its own account as a result of market-making activities or other trading activities (but not directly from any Issuer or any Affiliate of any Issuer ) for Exchange Securities. "Exchange Securities" shall mean debt securities of the Issuers identical in all material respects to the Securities (except that the Additional Interest provisions and the transfer restrictions shall be modified or eliminated, as appropriate) and to be issued under the Indenture or the Exchange Securities Indenture. "Exchange Securities Indenture" shall mean an indenture among the Issuers and the Exchange Securities Trustee, identical in all material respects to the Indenture (except that Additional Interest provisions will be modified or eliminated, as appropriate). "Exchange Securities Trustee" shall mean a bank or trust company reasonably satisfactory to the Initial Purchasers, as trustee with respect to the Exchange Securities under the Exchange Securities Indenture. "Filing Deadline" shall mean, in the case of an Exchange Offer Registration Statement, the meaning set forth in Section 2(a), and in the case of a Shelf Registration Statement, the meaning set forth in Section 3(b). "Final Memorandum" shall have the meaning set forth in the Purchase Agreement. "Guarantees" shall have the meaning set forth in the preamble hereto. "Guarantors" shall have the meaning set forth in the preamble hereto. "Holder" shall have the meaning set forth in the preamble hereto. "Indenture" shall have the meaning set forth in the preamble hereto. "Initial Placement" shall have the meaning set forth in the preamble hereto. "Initial Purchaser" shall have the meaning set forth in the preamble hereto. "Issuers" shall have the meaning set forth in the preamble hereto. "Losses" shall have the meaning set forth in Section 7(d) hereof. "Majority Holders" shall mean the Holders of a majority of the aggregate principal amount of Securities and Exchange Securities registered under a Registration Statement. -4- "Managing Underwriters" shall mean the investment banker or investment bankers and manager or managers that shall administer an underwritten offering. "Notes" shall have the meaning set forth in the preamble hereto. "Parent" shall have the meaning set forth in the preamble hereto. "Person" shall mean an individual, partnership, corporation, trust or unincorporated organization, or a government agency or a political subdivision thereof. "Prospectus" shall mean the prospectus included in any Registration Statement (including, without limitation, a prospectus that discloses information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A under the Act), as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Securities or the Exchange Securities covered by such Registration Statement, and all amendments and supplements thereto and all material incorporated by reference therein. "Purchase Agreement" shall have the meaning set forth in the preamble hereto. "Registered Exchange Offer" shall mean the proposed offer of the Issuers to issue and deliver to the Holders of the Securities that are not prohibited by any law or policy of the Commission from participating in such offer, in exchange for the Securities, a like aggregate principal amount of the Exchange Securities. "Registration Default" shall have the meaning set forth in Section 4 hereof. "Registration Statement" shall mean any Exchange Offer Registration Statement or Shelf Registration Statement that covers any of the Securities or the Exchange Securities pursuant to the provisions of this Agreement, any amendments and supplements to such registration statement, including post-effective amendments (in each case including the Prospectus contained therein), all exhibits thereto and all material incorporated by reference therein. "Securities" shall have the meaning set forth in the preamble hereto. "Shelf Registration" shall mean a registration effected pursuant to Section 3 hereof. "Shelf Registration Period" shall have the meaning set forth in Section 3(c) hereof. "Shelf Registration Statement" shall mean a "shelf" registration statement of the Issuers pursuant to the provisions of Section 3 hereof which covers some or all of the Securities -5- or Exchange Securities, as applicable, on an appropriate form under Rule 415 under the Act, or any similar rule that may be adopted by the Commission, amendments and supplements to such registration statement, including post-effective amendments, in each case including the Prospectus contained therein, all exhibits thereto and all material incorporated by reference therein. "Trustee" shall have the meaning set forth in the preamble hereto. "underwriter" shall mean any underwriter of Securities or Exchange Securities in connection with an offering thereof under a Shelf Registration Statement. 2. Registered Exchange Offer. (a) The Issuers shall prepare and, not later than 120 days (such 120th day being a "Filing Deadline") following the date of the original issuance of the Securities (or if such 120th day is not a Business Day, the next succeeding Business Day), shall file with the Commission the Exchange Offer Registration Statement with respect to the Registered Exchange Offer. The Issuers shall use their commercially reasonable efforts to cause the Exchange Offer Registration Statement to become effective under the Act not later than 210 days (such 210th day being an "Effectiveness Deadline") following the date of the original issuance of the Securities (or if such 210th day is not a Business Day, the next succeeding Business Day). (b) Upon the effectiveness of the Exchange Offer Registration Statement, the Issuers shall promptly commence the Registered Exchange Offer and shall use their commercially reasonable efforts to issue the Exchange Securities not later than 240 days (such 240th day being the "Consummation Deadline") following the date of original issuance of the Securities (or if such 240th day is not a Business Day, the next succeeding Business Day), it being the objective of such Registered Exchange Offer to enable each Holder electing to exchange Securities for Exchange Securities (assuming that such Holder is not an Affiliate of any Issuers, acquires the Exchange Securities in the ordinary course of such Holder's business, has no arrangements with any Person to participate in the distribution of the Exchange Securities and is not prohibited by any law or policy of the Commission from participating in the Registered Exchange Offer) to trade such Exchange Securities from and after their receipt without any limitations or restrictions under the Act and without material restrictions under the securities laws of a substantial proportion of the several states of the United States. (c) In connection with the Registered Exchange Offer, the Issuers shall: (i) mail to each Holder a copy of the Prospectus forming part of the Exchange Offer Registration Statement, together with an appropriate letter of transmittal and related documents; -6- (ii) use their commercially reasonably efforts to keep the Registered Exchange Offer open for not less than 20 Business Days after the date notice thereof is mailed to the Holders (or, in each case, longer if required by applicable law); (iii) in the case where a Prospectus is delivered by an Exchanging Dealer except as otherwise provided in Section 5(c) and (k) hereof, use their commercially reasonable efforts to keep the Exchange Offer Registration Statement continuously effective, supplemented and amended as required under the Act in order to ensure that it is available for sales of Exchange Securities by Exchanging Dealers during the Exchange Offer Registration Period; (iv) utilize the services of a depositary for the Registered Exchange Offer with an address in the Borough of Manhattan in New York City, which may be the Trustee, the Exchange Securities Trustee or an Affiliate of either of them; (v) permit Holders to withdraw tendered Securities at any time prior to the close of business, New York time, on the last Business Day on which the Registered Exchange Offer is open; (vi) if requested by the Commission, prior to effectiveness of the Exchange Offer Registration Statement, provide a supplemental letter to the Commission (A) stating that the Issuers are conducting the Registered Exchange Offer in reliance on the position of the Commission in Exxon Capital Holdings Corporation (pub. avail. May 13, 1988) and Morgan Stanley and Co., Inc. (pub. avail. June 5, 1991); and (B) including a representation that the Issuers have not entered into any arrangement or understanding with any Person to distribute the Exchange Securities to be received in the Registered Exchange Offer and that, to the best of the Issuers' information and belief, each Holder participating in the Registered Exchange Offer is acquiring the Exchange Securities in the ordinary course of business and has no arrangement or understanding with any Person to participate in the distribution of the Exchange Securities; and (vii) comply in all respects with all applicable laws. (d) As soon as practicable after the close of the Registered Exchange Offer, the Issuers shall: (i) accept for exchange all Securities tendered and not validly withdrawn pursuant to the Registered Exchange Offer; (ii) deliver to the Trustee for cancellation in accordance with Section 5(s) all Securities so accepted for exchange; and -7- (iii) use its commercially reasonable efforts to cause the Exchange Securities Trustee promptly to authenticate and deliver to each Holder of Securities a principal amount of Exchange Securities equal to the principal amount of the Securities of such Holder so accepted for exchange. (e) Each Holder is hereby deemed to acknowledge and agree that any Broker-Dealer and any such Holder using the Registered Exchange Offer to participate in a distribution of the Exchange Securities (x) could not under Commission policy as in effect on the date of this Agreement rely on the position of the Commission in Morgan Stanley and Co., Inc. (pub. avail. June 5, 1991) and Exxon Capital Holdings Corporation (pub. avail. May 13, 1988), as interpreted in the Commission's letter to Shearman & Sterling dated July 2, 1993 and similar no-action letters; and (y) must comply with the registration and prospectus delivery requirements of the Act in connection with any secondary resale transaction which must be covered by an effective registration statement containing the selling security holder information required by Item 507 or 508, as applicable, of Regulation S-K under the Act if the resales are of Exchange Securities obtained by such Holder in exchange for Securities acquired by such Holder directly from any Issuer or one of its Affiliates. Accordingly, each Holder participating in the Registered Exchange Offer shall be required to represent to the Issuers that, at the time of the consummation of the Registered Exchange Offer: (i) any Exchange Securities received by such Holder will be acquired in the ordinary course of business; (ii) such Holder will have no arrangement or understanding with any Person to participate in the distribution of the Securities or the Exchange Securities within the meaning of the Act; and (iii) such Holder is not an Affiliate of any Issuer. (f) If any Initial Purchaser determines that it is not eligible to participate in the Registered Exchange Offer with respect to the exchange of Securities constituting any portion of an unsold allotment, at the request of such Initial Purchaser, the Issuers shall, subject to applicable law (including, without limitation, the Act), issue and deliver to such Initial Purchaser or the Person purchasing Exchange Securities registered under a Shelf Registration Statement as contemplated by Section 3 hereof from such Initial Purchaser, in exchange for such Securities, a like principal amount of Exchange Securities. The Issuers shall use their reasonable best efforts to cause the CUSIP Service Bureau to issue the same CUSIP number for such Exchange Securities as for Exchange Securities issued pursuant to the Registered Exchange Offer. 3. Shelf Registration. (a) If (i) due to any change in law or applicable interpretations thereof by the Commission's staff, the Issuers determine upon advice of their outside counsel that they are not permitted to effect the Registered Exchange Offer as contemplated -8- by Section 2 hereof; (ii) for any other reason the Registered Exchange Offer is not consummated on or prior to the Consummation Deadline (or if such day is not a Business Day, the first Business Day thereafter); (iii) any Initial Purchaser so requests in writing prior to the 20th day following the consummation of the Registered Exchange Offer with respect to Securities that are not eligible to be exchanged for Exchange Securities in the Registered Exchange Offer and that are held by it following consummation of the Registered Exchange Offer; (iv) any Holder (other than an Initial Purchaser) notifies the Issuers in writing prior to the 20th day following the consummation of the Registered Exchange Offer that it is not eligible to participate in the Registered Exchange Offer other than by reason of such Holder being an Affiliate of an Issuer; (v) in the case of any Initial Purchaser that participates in the Registered Exchange Offer or acquires Exchange Securities pursuant to Section 2(f) hereof, prior to the 20th day following the consummation of the Registered Exchange Offer such Initial Purchaser notifies the Issuer in writing that it did not receive freely tradeable Exchange Securities in exchange for Securities constituting any portion of an unsold allotment (it being understood that (x) the requirement that an Initial Purchaser deliver a Prospectus containing the information required by Item 507 or 508 of Regulation S-K under the Act in connection with sales of Exchange Securities acquired in exchange for such Securities shall not result in such Exchange Securities being not "freely tradeable"; and (y) the requirement that an Exchanging Dealer deliver a Prospectus in connection with sales of Exchange Securities acquired in the Registered Exchange Offer in exchange for Securities acquired as a result of market-making activities or other trading activities shall not result in such Exchange Securities being not "freely tradeable") or (vi) the Issuers so elect (it being understood that such election shall not relieve the Issuers from their obligations under Section 2 hereof), the Issuers shall effect a Shelf Registration Statement in accordance with subsection (b) below; provided, however that the Issuers shall only be required to register Securities under the Shelf Registration Statement for persons who have identified themselves to the Issuers as Holders thereof. (b) The Issuers shall as promptly as practicable (but in no event more than 60 days after so required or requested pursuant to this Section 3 (such 60th day being a "Filing Deadline")) file with the Commission and thereafter shall use their commercially reasonable efforts to cause to be declared effective under the Act within 90 days after so required or requested pursuant to Section 3 (such 90th day after the related Filing Deadline being an "Effectiveness Deadline") a Shelf Registration Statement relating to the offer and sale of the Securities or the Exchange Securities, as applicable, by the Holders thereof from time to time in accordance with the methods of distribution elected by such Holders and set forth in such Shelf Registration Statement; provided, however, that nothing in this Section 3(b) shall require the filing of a Shelf Registration Statement prior to the deadline for filing the Exchange Offer Registration Statement set forth in Section 2(a); provided, further, that no Holder (other than an Initial Purchaser) shall be entitled to have the Securities held by it covered by such Shelf Registration Statement unless such Holder (i) agrees in writing to be bound by all of the provisions of this Agreement applicable to such Holder, (ii) complies with the obligations set forth in Section 5(o) hereof, and (iii) executes and delivers such other agreements and documents -9- as may be required by applicable law in connection with such registration; and provided, further, that with respect to Exchange Securities received by an Initial Purchaser in exchange for Securities constituting any portion of an unsold allotment, the Issuers may, if permitted by current interpretations by the Commission's staff, file a post-effective amendment to the Exchange Offer Registration Statement containing the information required by Item 507 or 508 of Regulation S-K, as applicable, in satisfaction of their obligations under this subsection with respect thereto, and any such Exchange Offer Registration Statement, as so amended, shall be referred to herein as, and governed by the provisions herein applicable to, a Shelf Registration Statement. (c) The Issuers shall use their commercially reasonable efforts to keep the Shelf Registration Statement continuously effective, supplemented and amended as required by the Act, in order to permit the Prospectus forming part thereof to be usable by Holders until the earliest of (i) the time when the Securities can be sold pursuant to Rule 144 under the Act without any limitations under clauses (c), (e), (f) and (h) of Rule 144 under the Act, (ii) two years from the effective date of the Shelf Registration Statement (or until one year from the effective date of the Shelf Registration Statement if the Shelf Registration Statement is filed at the request of an Initial Purchaser) and (iii) the date on which when all the Securities or Exchange Securities, as applicable, covered by the Shelf Registration Statement have been sold pursuant to the Shelf Registration Statement (in any such case, such period being called the "Shelf Registration Period"). The Issuers shall not be obligated to amend or supplement such Shelf Registration Statement more than once per calendar quarter to reflect additional Holders. The Issuers shall be deemed not to have used their commercially reasonable efforts to keep the Shelf Registration Statement effective during the requisite period if any of them voluntarily takes any action that would result in Holders of Securities or Exchange Securities covered thereby not being able to offer and sell such Securities or Exchange Securities during that period, unless (A) such action is required by applicable law or (B) such action is taken by such Issuer in good faith and for valid business reasons (not including avoidance of such Issuer's obligations hereunder), including any pending acquisition or divestiture of assets or other potential corporate development, so long as the Issuers promptly thereafter comply with the requirements of Section 5(k) hereof, if applicable. The Issuers are expressly permitted to suspend the effectiveness of the Shelf Registration Statement in good faith in connection with the acquisition or divestiture of assets, so long as the Issuers promptly thereafter comply with the requirements of Section 5(k) hereof, if applicable and Section 4 hereof. 4. Additional Interest. Additional interest (the "Additional Interest") with respect to the Securities shall be assessed as follows if any of the following events occur (each such event in clauses (a) through (d) below being herein called a "Registration Default"): (a) any Registration Statement required by this Agreement is not filed with the Commission on or prior to the applicable Filing Deadline; -10- (b) any Registration Statement required by this Agreement is not declared effective by the Commission on or prior to the applicable Effectiveness Deadline; (c) the Registered Exchange Offer has not been consummated on or prior to the Consummation Deadline; or (d) any Registration Statement required by this Agreement has been declared effective by the Commission but (i) such Registration Statement thereafter ceases to be effective or (ii) such Registration Statement or the related prospectus ceases to be usable in connection with resales of Exchange Securities, except, in the case of a Shelf Registration Statement, where such failure to be usable is determined to be the direct result of information provided by Holders of securities to be sold pursuant to any Shelf Registration Statement supplied to the Company under Section 5(o) for inclusion in such Shelf Registration Statement being or becoming misleading, and, except to the extent that the Company is permitted pursuant to Section 3(c) hereof to suspend the effectiveness of a Shelf Registration Statement and the Company within 30 days of such suspension of such Shelf registration Statement files a post effective amendment to such Shelf Registration Statement that is immediately declared effective and such Shelf Registration Statement and related prospectus are then usable in connection with resales of Exchange Securities. Each of the foregoing will constitute a Registration Default whatever the reason for any such event and whether it is voluntary or involuntary or is beyond the control of the Company or pursuant to operation of law or as a result of any action or inaction by the Commission. Additional Interest shall accrue on the Securities over and above the interest set forth in the title of the Securities from and including the date on which any such Registration Default shall occur to but excluding the date on which all such Registration Defaults have been cured, at a rate of 0.25% per annum (the "Additional Interest Rate") for the first 90-day period immediately following the occurrence of such Registration Default. The Additional Interest Rate shall increase by an additional 0.25% per annum with respect to each subsequent 90-day period until all Registration Defaults have been cured, up to a maximum Additional Interest Rate of 1.0% per annum. Notwithstanding anything to the contrary set forth herein, (1) upon filing of any Registration Statement, in the case of (a) above, (2) upon the effectiveness of any Registration Statement, in the case of (b) above, (3) upon consummation of the Registered Exchange Offer, in the case of (c) above, or (4) upon the filing of a post-effective amendment to any Registration Statement or an additional Registration Statement that causes any Registration Statement to again be declared effective or made usable in the case of (iv) above, the Additional Interest payable with respect to the Securities as a result of such clause (a), (b), (c) or (d), as applicable, shall cease. 5. Additional Registration Procedures. In connection with any Shelf Registration Statement and, to the extent applicable, any Exchange Offer Registration Statement, the following provisions shall apply: -11- (a) The Issuers shall: (i) furnish to you, not less than five Business Days prior to the filing thereof with the Commission, a copy of the Exchange Offer Registration Statement or the Shelf Registration Statement, as the case may be, and each amendment thereto and each amendment or supplement, if any, to the Prospectus included therein (including all documents incorporated by reference therein after the initial filing (other than any documents incorporated therein by reference to the Issuers' periodic reporting requirements under the Exchange Act)) and shall use their commercially reasonable efforts to reflect in each such document, when so filed with the Commission, such comments as you reasonably propose and shall not file any such document to which you (or your counsel, as the case may be) shall reasonably object within three business days after the receipt thereof. You shall be deemed to have reasonably objected to such filing if such document, as proposed to be filed, contains an untrue statement of a material fact or omits to state any material fact necessary to make the statements therein not misleading or fails to comply with the applicable requirements of the Act; (ii) if permitted by the SEC, include the information set forth in Annex A hereto on the facing page of the Exchange Offer Registration Statement, in Annex B hereto in the forepart of the Exchange Offer Registration Statement in a section setting forth details of the Exchange Offer, in Annex C hereto in the underwriting or plan of distribution section of the Prospectus contained in the Exchange Offer Registration Statement, and in Annex D hereto in the letter of transmittal delivered pursuant to the Registered Exchange Offer; (iii) if requested by an Initial Purchaser, include the information required by Item 507 or 508 of Regulation S-K, as applicable, in the Prospectus contained in the Exchange Offer Registration Statement; and (iv) in the case of the Shelf Registration Statement, include the names of the Holders that propose to sell Securities or Exchange Securities pursuant to the Shelf Registration Statement as selling security holders. (b) The Issuers shall ensure that: (i) any Registration Statement, any amendment thereto, any Prospectus forming part thereof and any amendment or supplement thereto complies in all material respects with the Act and the rules and regulations thereunder; (ii) any Registration Statement and related Prospectus and any amendment thereto does not, when it becomes effective, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; provided, however, that the Holders -12- shall ensure that written information furnished to the Issuers by or on behalf of any Holder specifically for inclusion in such Registration Statement and any amendment thereto, shall not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; and (iii) any Prospectus forming part of any Registration Statement, and any amendment or supplement to such Prospectus, does not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that the Holders shall ensure that written information furnished to the Issuers by or on behalf of any Holder specifically for inclusion in such Registration Statement and any amendment thereto, shall not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading. (c) The Issuers shall advise you, the Holders of Securities or Exchange Securities covered by any Shelf Registration Statement and any Exchanging Dealer under any Exchange Offer Registration Statement that has provided in writing to the Issuers a telephone or facsimile number and address for notices, and, if requested by you or any such Holder or Exchanging Dealer, shall confirm such advice in writing (which notice pursuant to clauses (ii)-(v) of this Section 5(c) shall be accompanied by an instruction to suspend the use of the Prospectus until the Issuers shall have remedied the basis for such suspension): (i) when a Registration Statement or any amendment thereto has been filed with the Commission and when the Registration Statement or any post-effective amendment thereto has become effective; (ii) of any request by the Commission for any amendment or supplement to the Registration Statement or the Prospectus or for additional information; (iii) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for that purpose; (iv) of the receipt by any Issuer of any notification with respect to the suspension of the qualification of the securities included therein for sale in any jurisdiction or the initiation of any proceeding for such purpose; and (v) of the happening of any event that requires any change in the Registration Statement or the Prospectus so that, as of such date, the statements therein are not misleading and do not omit to state a material fact required to be stated therein -13- or necessary to make the statements therein (in the case of the Prospectus, in the light of the circumstances under which they were made) not misleading. (d) The Issuers shall use their commercially reasonable efforts to obtain the withdrawal of any order suspending the effectiveness of any Registration Statement or the qualification of the securities included therein for sale in any jurisdiction at the earliest possible time. (e) The Issuers shall furnish to each Holder of Securities or Exchange Securities covered by any Shelf Registration Statement, without charge, at least one copy of such Shelf Registration Statement as first filed with the Commission and any post-effective amendment thereto, including all material incorporated therein by reference, and, if the Holder so requests in writing, all exhibits thereto (including exhibits incorporated by reference therein). (f) The Issuers shall, during the Shelf Registration Period, deliver to each Holder of Securities or Exchange Securities covered by any Shelf Registration Statement, without charge, as many copies of the Prospectus (including each preliminary Prospectus) included in such Shelf Registration Statement and any amendment or supplement thereto as such Holder may reasonably request. The Issuers consent to the use of the Prospectus or any amendment or supplement thereto by each of the selling Holders of Securities in connection with the offering and sale of the Securities covered by the Prospectus, or any amendment or supplement thereto, included in the Shelf Registration Statement; provided that such use of the Prospectus and any amendment or supplement thereto and such offering and sale conforms to the Plan of Distribution set forth in the Prospectus and complies with the terms of this Agreement and all applicable laws and regulations thereunder. (g) The Issuers shall furnish to each Exchanging Dealer which so requests, without charge, at least one copy of the Exchange Offer Registration Statement as first filed with the Commission and any post-effective amendment thereto, including all materials incorporated by reference therein, and, if the Exchanging Dealer so requests in writing, all exhibits thereto (including exhibits incorporated by reference therein). (h) The Issuers shall promptly deliver to each Initial Purchaser, each Exchanging Dealer and each other Person required to deliver a Prospectus during the Exchange Offer Registration Period, without charge, as many copies of the Prospectus included in such Exchange Offer Registration Statement and any amendment or supplement thereto as any such Person may reasonably request. The Issuers consent to the use of the Prospectus or any amendment or supplement thereto by any Initial Purchaser, any Exchanging Dealer and any such other Person that may be required to deliver a Prospectus following the Registered Exchange Offer in connection with the offering and sale of the Exchange Securities covered by the Prospectus, or any amendment or supplement thereto, included in the Exchange Offer Registration Statement. -14- (i) Prior to the Registered Exchange Offer or any other offering of Securities or Exchange Securities pursuant to any Registration Statement, the Issuers shall arrange, if necessary, for the qualification of the Securities or the Exchange Securities for sale under the laws of such U.S. jurisdictions as any Holder shall reasonably request and will maintain such qualification in effect so long as required; provided that in no event shall any Issuer be obligated to qualify to do business in any jurisdiction where it is not then so qualified or to take any action that would subject it to service of process in suits, other than those arising out of the Initial Placement, the Registered Exchange Offer or any offering pursuant to a Shelf Registration Statement, in any such jurisdiction where it is not then so subject. (j) The Issuers shall cooperate with the Holders to facilitate the timely preparation and delivery of certificates representing Exchange Securities or Securities to be issued or sold pursuant to any Registration Statement free of any restrictive legends and in such denominations and registered in such names as Holders may reasonably request. (k) Upon the occurrence of any event contemplated by subsections (c)(ii) through (v) above, the Issuers shall (unless they shall have invoked a Shelf Delay Period with respect to such occurrence) promptly prepare a post-effective amendment to the applicable Registration Statement or an amendment or supplement to the related Prospectus or file any other required document so that, as thereafter delivered, the Prospectus will not include an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. In such circumstances, the period of effectiveness of the Exchange Offer Registration Statement provided for in Section 2 and the Shelf Registration Statement provided for in Section 3(b) shall each be extended by the number of days from and including the date of the giving of a notice of suspension pursuant to Section 5(c) to and including the date when the Initial Purchaser, the Holders and any known Exchanging Dealer shall have received such amended or supplemented Prospectus pursuant to this Section 5. (l) Not later than the effective date of any Registration Statement, the Issuers shall provide a CUSIP number for the Securities or the Exchange Securities, as the case may be, registered under such Registration Statement and provide the Trustee with printed certificates for such Securities or Exchange Securities, in a form eligible for deposit with The Depository Trust Company. (m) The Issuers shall use their commercially reasonable efforts to comply with all applicable rules and regulations of the Commission and shall make generally available to their security holders as soon as practicable after the effective date of the applicable Registration Statement an earnings statement (which need not be audited) covering the twelve-month period beginning with the first month of the Parent's first fiscal quarter commencing after the effective date of the Registration Statement satisfying the provisions of Section 11(a) of the Act and Rule 158 thereunder. -15- (n) The Issuers shall cause the Indenture or the Exchange Securities Indenture, as the case may be, to be qualified under the Trust Indenture Act in a timely manner. (o) The Issuers may require each Holder of securities to be sold pursuant to any Shelf Registration Statement to (i) furnish to the Issuers such information regarding the Holder and the distribution of such securities as the Issuers may from time to time reasonably require for inclusion in such Registration Statement and (ii) provide the indemnity contemplated by Section 7(b) hereof. The Issuers may exclude from such Shelf Registration Statement the Securities or Exchange Securities of any Holder that unreasonably fails to furnish such information within a reasonable time after receiving such request. (p) In the case of any Shelf Registration Statement, the Issuers shall enter into such agreements (including if requested by the Holders of a majority in principal amount of the Securities, an underwriting agreement in customary form) and take all other appropriate actions in order to expedite or facilitate the registration or the disposition of the Securities or Exchange Securities and in connection therewith, if an underwriting agreement is entered into, cause the same to contain indemnification provisions and procedures no less favorable than those set forth in Section 7 (or such other provisions and procedures acceptable to the Majority Holders and the Managing Underwriters, if any, with respect to all parties to be indemnified pursuant to Section 7). (q) In the case of any underwritten Shelf Registration Statement, the Issuers shall: (i) make reasonably available for inspection by the Holders of Securities or Exchange Securities to be registered thereunder, any underwriter participating in any disposition pursuant to such Shelf Registration Statement, and any attorney, accountant or other agent retained by the Holders or any such underwriter all relevant financial and other records, pertinent corporate documents and properties of the Issuers and their subsidiaries; provided, however, that any information that is designated in writing by the Issuers, in good faith, as confidential at the time of delivery of such information shall be kept confidential by the Holders or any such underwriter, attorney, accountant or agent, unless such disclosure is made in connection with a court proceeding or required by law, or such information becomes available to the public generally or through a third party without an accompanying obligation of confidentiality; and provided further that the Issuers shall be entitled to coordinate such access to their financial and other records, corporate documents and properties in a manner that does not unreasonably interfere with the business operations of the Issuers or their subsidiaries; (ii) cause the officers, directors and employees of any Issuer to supply all relevant information reasonably requested by the Holders or any such underwriter, attorney, accountant or agent in connection with any such Shelf Registration -16- Statement as is customary for similar due diligence examinations; provided, however, that any information that is designated in writing by any Issuer, in good faith, as confidential at the time of delivery of such information shall be kept confidential by the Holders or any such underwriter, attorney, accountant or agent, unless such disclosure is made in connection with a court proceeding or required by law, or such information becomes available to the public generally or through a third party without an accompanying obligation of confidentiality and provided further that the Issuers shall be entitled to respond to such information requests in a coordinated fashion such that such requests do not unreasonably interfere with the business operations of the Issuers or their subsidiaries; (iii) make such representations and warranties to the Holders of Securities or Exchange Securities registered thereunder and the underwriters, if any, in form, substance and scope as are customarily made by issuers to underwriters in primary underwritten offerings, but in no event more expansive than those set forth in the Purchase Agreement; (iv) use their commercially reasonable efforts to obtain opinions of counsel to the Issuers and updates thereof (which counsel and opinions (in form, scope and substance) shall be reasonably satisfactory to the Managing Underwriters, if any, addressed to each selling Holder and the underwriters, if any, covering such matters as are customarily covered in opinions requested in underwritten offerings, but in no event more expansive than those set forth in the Purchase Agreement; (v) use their commercially reasonable efforts to obtain "cold comfort" letters and updates thereof from the independent certified public accountants of Parent (and, if necessary, any other independent certified public accountants of any Issuer or any subsidiary of any Issuer or of any business acquired by any Issuer for which financial statements and financial data are, or are required to be, included in the Registration Statement), addressed to each selling Holder registered thereunder and the underwriters, if any, in customary form and covering matters of the type customarily covered in "cold comfort" letters in connection with primary underwritten offerings, but in no event more expansive than those set forth in the Purchase Agreement; and (vi) deliver such documents and certificates as may be reasonably requested by the Majority Holders and the Managing Underwriters, if any, including those to evidence compliance with Section 5(k) and with any customary conditions contained in the underwriting agreement or other agreement entered into by the Issuers. The actions set forth in clauses (iii), (iv), (v) and (vi) of this Section 5(q) shall be performed at (A) the effectiveness of such Registration Statement and each post-effective amendment -17- thereto; and (B) each closing under any underwriting or similar agreement as and to the extent required thereunder. (r) [Intentionally Omitted] (s) If a Registered Exchange Offer is to be consummated, upon delivery of the Securities by Holders to the Issuers (or to such other Person as directed by the Issuers) in exchange for the Exchange Securities, the Issuers shall mark, or caused to be marked, on the Securities so exchanged that such Securities are being canceled in exchange for the Exchange Securities. In no event shall the Securities be marked as paid or otherwise satisfied. (t) The Issuers will use their commercially reasonable efforts (i) if the Securities have been rated prior to the initial sale of such Securities, to confirm such ratings will apply to the Securities or the Exchange Securities, as the case may be, covered by a Registration Statement; or (ii) if the Securities were not previously rated, to cause the Securities or Exchange Securities covered by a Registration Statement to be rated with at least one nationally recognized statistical rating agency, if so requested by Majority Holders with respect to the related Registration Statement or by any Managing Underwriters. (u) In the event that any Broker-Dealer shall underwrite any Securities or Exchange Securities or participate as a member of an underwriting syndicate or selling group or "assist in the distribution" (within the meaning of the Rules and the By-Laws of the National Association of Securities Dealers, Inc.) thereof, whether as a Holder or as an underwriter, a placement or sales agent or a broker or dealer in respect thereof, or otherwise, the Issuers will assist such Broker-Dealer in complying with the requirements of such Rules. (v) The Issuers shall use their commercially reasonable efforts to take all other steps necessary to effect the registration of the Securities or the Exchange Securities, as the case may be, covered by a Registration Statement. 6. Registration Expenses. The Issuers shall bear all expenses incurred in connection with the performance of their obligations under Sections 2, 3 and 5 hereof and, in the event of any Shelf Registration Statement, will reimburse the Holders for the reasonable fees and disbursements of one firm or counsel designated by the Majority Holders to act as counsel for the Holders in connection therewith. 7. Indemnification and Contribution. (a) Each of the Issuers jointly and severally agrees to indemnify and hold harmless each Holder of Securities or Exchange Securities, as the case may be, covered by any Registration Statement (including each Initial Purchaser and, with respect to any Prospectus delivery as contemplated in Section 5(h) hereof, each Exchanging Dealer), the directors, officers, employees and agents of each such Holder and each Person who controls any such Holder within the meaning of either the Act or the Exchange Act against any and all losses, claims, damages or liabilities, joint or several, to which -18- they or any of them may become subject under the Act, the Exchange Act or other Federal or state statutory law or regulation, at common law or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement as originally filed or in any amendment thereof, or in any preliminary Prospectus or the Prospectus, or in any amendment thereof or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein in light of the circumstances under which they were made not misleading, and jointly and severally agrees to reimburse each such indemnified party, as incurred, for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the Issuers will not be liable in any case to the extent that any such loss, claim, damage or liability arises out of or is based upon any such untrue statement or alleged untrue statement or omission or alleged omission made therein in reliance upon and in conformity with written information relating to such Holder furnished to the Issuers by or on behalf of any such Holder specifically for inclusion therein and provided further, however, that with respect to any untrue statement or omission of a material fact made in a preliminary Prospectus, the indemnity agreement contained in this Section 7(a) hereof shall not inure to the benefit of any person to the extent that any such loss, claim, damage or liability of such person occurs under the circumstance where it shall have been determined by a court of competent jurisdiction by final and nonappealable judgment that (i) the untrue statement or omission of a material fact contained in the preliminary Prospectus was corrected in the final Prospectus or in an amendment or supplement thereto, (ii) the Company had previously furnished copies of the final Prospectus, amendment or supplement to such person and (iii) such loss, claim, damage or liability results from the fact that there was not sent or given by such person at or prior to the written confirmation of the sale of such Securities, a copy of the final Prospectus, amendment or supplement. This indemnity agreement will be in addition to any liability which the Issuers may otherwise have. Each of the Issuers also jointly and severally agrees to indemnify or contribute as provided in Section 7(d) to Losses (as defined in Section 7(d) hereof) of each underwriter of Securities or Exchange Securities, as the case may be, registered under a Shelf Registration Statement, their directors, officers, employees or agents and each Person who controls such underwriter on substantially the same basis as that of the indemnification of the Initial Purchaser and the selling Holders provided in this Section 7(a) and shall, if requested by any Holder, enter into an underwriting agreement reflecting such agreement, as provided in Section 5(p) hereof. (b) Each Holder of securities covered by a Registration Statement (including each Initial Purchaser and, with respect to any Prospectus delivery as contemplated in Section 5(h), each Exchanging Dealer) severally and not jointly agrees to indemnify and hold harmless the Issuers, each of their respective directors, each of their respective officers who -19- signs such Registration Statement and each Person who controls any Issuer within the meaning of either the Act or the Exchange Act, to the same extent as the foregoing indemnity from the Issuers to each such Holder, but only with reference to written information relating to such Holder furnished to the Company by or on behalf of such Holder specifically for inclusion in the documents referred to in the foregoing indemnity. This indemnity agreement will be in addition to any liability which any such Holder may otherwise have. (c) Promptly after receipt by an indemnified party under this Section 7 or notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under this Section 7, notify the indemnifying party in writing of the commencement thereof; but the failure so to notify the indemnifying party (i) will not relieve it from liability under paragraph (a) or (b) above unless and to the extent it did not otherwise learn of such action and such failure results in the forfeiture by the indemnifying party of substantial rights and defenses; and (ii) will not, in any event, relieve the indemnifying party from any obligations to any indemnified party other than the indemnification obligation provided in paragraph (a) or (b) above. The indemnifying party shall be entitled to appoint counsel of the indemnifying party's choice at the indemnifying party's expense to represent the indemnified party in any action for which indemnification is sought (in which case the indemnifying party shall not thereafter be responsible for the fees and expenses of any separate counsel retained by the indemnified party or parties except as set forth below); provided, however, that such counsel shall be reasonably satisfactory to the indemnified party. Notwithstanding the indemnifying party's election to appoint counsel (including local counsel) to represent the indemnified party in an action, the indemnified party shall have the right to employ separate counsel (including local counsel), and the indemnifying party shall bear the reasonable fees, costs and expenses of such separate counsel if (i) the use of counsel chosen by the indemnifying party to represent the indemnified party would present such counsel with a conflict of interest; (ii) the actual or potential defendants in, or targets of, any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that there may be legal defenses available to it and/or other indemnified parties which are different from or additional to those available to the indemnifying party; (iii) the indemnifying party shall not have employed counsel reasonably satisfactory to the indemnified party to represent the indemnified party within a reasonable time after notice of the institution of such action; or (iv) the indemnifying party shall authorize the indemnified party to employ separate counsel at the expense of the indemnifying party. It is understood, however, that the Issuers shall, in connection with any one such action or separate but substantially similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the fees and expenses of only one separate firm of attorneys (in addition to any local counsel) at any time for all such Initial Purchasers and controlling persons, which firm shall be designated in writing by Citigroup. An indemnifying party will not, without the prior written consent of the indemnified parties, settle or compromise or consent to the entry of any judgment with respect to any pending or threatened claim, action, suit or proceeding in respect of which indemnification -20- or contribution may be sought hereunder (whether or not the indemnified parties are actual or potential parties to such claim or action) unless such settlement, compromise or consent includes an unconditional release of each indemnified party from all liability arising out of such claim, action, suit or proceeding. An indemnifying party shall not be liable under this Section 7 to any indemnified party regarding any settlement or compromise or consent to the entry of any judgment with respect to any pending or threatened claim, action, suit or proceeding in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified parties are actual or potential parties to such claim or action) unless such settlement, compromise or consent is consented to by such indemnifying party, which consent shall not be unreasonably withheld. Each indemnified party shall use all reasonable efforts to cooperate with the indemnifying party in the defense of any such action or claim. (d) In the event that the indemnity provided in paragraph (a) or (b) of this Section 7 is unavailable to or insufficient to hold harmless an indemnified party for any reason, then each applicable indemnifying party shall have a joint and several obligation to contribute to the aggregate losses, claims, damages and liabilities (including legal or other expenses reasonably incurred in connection with investigating or defending same) (collectively "Losses") to which such indemnified party may be subject in such proportion as is appropriate to reflect the relative benefits received by such indemnifying party, on the one hand, and such indemnified party, on the other hand, from the Initial Placement and the Registration Statement which resulted in such Losses; provided, however, that in no case shall the Initial Purchasers or any subsequent Holder of any Security or New Security be responsible, in the aggregate, for any amount in excess of the purchase discount or commission applicable to such Security, or in the case of a New Security, applicable to the Security that was exchangeable into such New Security, as set forth on the cover page of the Final Memorandum, nor shall any underwriter be responsible for any amount in excess of the underwriting discount or commission applicable to the securities purchased by such underwriter under the Registration Statement which resulted in such Losses. If the allocation provided by the immediately preceding sentence is unavailable for any reason, the indemnifying party and the indemnified party shall contribute in such proportion as is appropriate to reflect not only such relative benefits but also the relative fault of such indemnifying party, on the one hand, and such indemnified party, on the other hand, in connection with the statements or omissions which resulted in such Losses as well as any other relevant equitable considerations. Benefits received by the Issuers shall be deemed to be equal to the total net proceeds from the Initial Placement (after deducting underwriting fees and commissions, but before deducting expenses) as set forth on the cover page of the Final Memorandum. Benefits received by the Initial Purchaser shall be deemed to be equal to the total purchase discounts and commissions as set forth on the cover page of the Final Memorandum, and benefits received by any other Holders shall be deemed to be equal to the value of receiving Securities or Exchange Securities, as applicable, registered under the Act. Benefits received by any underwriter shall be deemed to be equal to the total underwriting discounts and commissions, as set forth on the cover page of the Prospectus -21- forming a part of the Registration Statement which resulted in such Losses. Relative fault shall be determined by reference to, among other things, whether any alleged untrue statement or omission relates to information provided by the indemnifying party, on the one hand, or by the indemnified party, on the other hand, the intent of the parties and their relative knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. The parties agree that it would not be just and equitable if contribution were determined by pro rata allocation (even if the Holders were treated as one entity for such purpose) or any other method of allocation which does not take account of the equitable considerations referred to above. Notwithstanding the provisions of this paragraph (d), no Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. For purposes of this Section, each Person who controls a Holder within the meaning of either the Act or the Exchange Act and each director, officer, employee and agent of such Holder shall have the same rights to contribution as such Holder, and each Person who controls any Issuer within the meaning of either the Act or the Exchange Act, each officer of any Issuer who shall have signed the Registration Statement and each director of any Issuer shall have the same rights to contribution as the Issuers, subject in each case to the applicable terms and conditions of this paragraph (d). (e) The provisions of this Section 7 will remain in full force and effect, regardless of any investigation made by or on behalf of any Holder or the Issuers or any of the officers, directors or controlling Persons referred to in this Section 7, and will survive the sale by a Holder of securities covered by a Registration Statement. 8. Underwritten Registrations. (a) If any of the Securities or Exchange Securities, as the case may be, covered by any Shelf Registration Statement are to be sold in an underwritten offering, the Managing Underwriters shall be selected by the Majority Holders; provided, however, that such Managing Underwriters must be reasonably satisfactory to the Issuers. (b) No Person may participate in any underwritten offering pursuant to any Shelf Registration Statement, unless such Person (i) agrees to sell such Person's Securities or Exchange Securities, as the case may be, on the basis reasonably provided in any underwriting arrangements approved by the Persons entitled hereunder to approve such arrangements; (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements; and (iii) agrees to be bound by Section 7(b) hereof. 9. No Inconsistent Agreements. No Issuer has, as of the date hereof, entered into, nor shall it, on or after the date hereof, enter into, any agreement with respect to its securities that is inconsistent with the rights granted to the Holders herein or otherwise conflicts with the provisions hereof. -22- 10. Amendments and Waivers. The provisions of this Agreement, including the provisions of this sentence, may not be amended, qualified, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, unless the Issuers have obtained the written consent of the Majority Holders; provided that, with respect to any matter that directly or indirectly affects the rights of any Initial Purchaser hereunder, the Issuers shall obtain the written consent of each such Initial Purchaser against which such amendment, qualification, supplement, waiver or consent is to be effective. Notwithstanding the foregoing (except the foregoing proviso), a waiver or consent to departure from the provisions hereof with respect to a matter that relates exclusively to the rights of Holders whose Securities or Exchange Securities, as the case may be, are being sold pursuant to a Registration Statement and that does not directly or indirectly affect the rights of other Holders, may be given by the Majority Holders, determined on the basis of Securities or Exchange Securities, as the case may be, being sold rather than registered under such Registration Statement. 11. Notices. All notices and other communications provided for or permitted hereunder shall be made in writing by hand-delivery, first-class mail, telex, telecopier or air courier guaranteeing overnight delivery: (a) if to a Holder, at the most current address given by such holder to the Issuers in accordance with the provisions of this Section 11, which address initially is, with respect to each Holder, the address of such Holder maintained by the Registrar under the Indenture, with a copy in like manner to Citigroup; (b) if to you, initially at the address set forth in the Purchase Agreement; and (c) if to the Issuers, initially at the address of the Company set forth in the Purchase Agreement. All such notices and communications shall be deemed to have been duly given at the time delivered by hand, if personally delivered; five Business Days after being deposited in the mail, first class, postage prepaid, if mailed; when receipt is acknowledged, if telecopied; and on the next Business Day, if timely delivered to an air courier guaranteeing overnight delivery. The Initial Purchaser or the Issuers by notice to the other parties may designate additional or different addresses for subsequent notices or communications. 12. Successors. This Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties, including, without the need for an express assignment or any consent by the Issuers thereto, subsequent Holders of Securities and Exchange Securities. The Issuers hereby agree to extend the benefits of this Agreement to any Holder of Securities or Exchange Securities, and any such Holder may specifically enforce the provisions of this Agreement as if an original party hereto. Notwithstanding the foregoing, nothing herein shall be deemed to permit any assignment, transfer or other disposition -23- of Securities or Exchange Securities in violation of the terms of the Purchase Agreement or the Indenture. Each Holder who receives and accepts any benefits of this Agreement will be deemed to agree to be bound by and comply with the terms and provisions of this Agreement. 13. Counterparts. This Agreement may be in signed counterparts, each of which shall an original and all of which together shall constitute one and the same agreement. 14. Headings. The headings used herein are for convenience only and shall not affect the construction hereof. 15. Applicable Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York applicable to contracts made and to be performed in the State of New York. 16. Severability. In the event that any one of more of the provisions contained herein, or the application thereof in any circumstances, is held invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions hereof shall not be in any way impaired or affected thereby, it being intended that all of the rights and privileges of the parties shall be enforceable to the fullest extent permitted by law. 17. Securities Held by the Issuers, etc. Whenever the consent or approval of Holders of a specified percentage of principal amount of Securities or Exchange Securities is required hereunder, Securities or Exchange Securities, as applicable, held by any Issuer or its Affiliates (other than subsequent Holders of Securities or Exchange Securities if such subsequent Holders are deemed to be Affiliates solely by reason of their holdings of such Securities or Exchange Securities) shall not be counted in determining whether such consent or approval was given by the Holders of such required percentage. If the foregoing is in accordance with your understanding of our agreement, please sign and return to us the enclosed duplicate hereof, whereupon this Agreement and your acceptance shall represent a binding agreement between the Issuers and the Initial Purchaser. Very truly yours, SEMINIS VEGETABLE SEEDS, INC. By: /s/ Gaspar Alvarez ------------------------------------ Name: Gaspar Alvarez Title: Vice President and Worlwide Corporate Comptroller GUARANTORS: SEMINIS, INC. By: /s/ Gaspar Alvarez ------------------------------------ Name: Gaspar Alvarez Title: Vice President and Worlwide Corporate Comptroller PETOSEED INTERNATIONAL, INC. By: /s/ Gaspar Alvarez ------------------------------------ Name: Gaspar Alvarez Title: Chief Financial Officer PGI ALFALFA, INC. By: /s/ Gaspar Alvarez ------------------------------------ Name: Gaspar Alvarez Title: Chief Financial Officer BAXTER SEED CO., INC. By: /s/ Gaspar Alvarez ------------------------------------ Name: Gaspar Alvarez Title: Chief Financial Officer S-1 The foregoing Agreement is hereby confirmed and accepted as of the date first above written. CITIGROUP GLOBAL MARKETS INC. CIBC WORLD MARKETS CORP. RABO SECURITIES USA, INC. HARRIS NESBITT CORP. By: CITIGROUP GLOBAL MARKETS INC. By: /s/ Paul Sharkey ---------------------- Name: Paul Sharkey Title: Vice President S-2 ANNEX A Each Broker-Dealer that receives Exchange Securities for its own account pursuant to the Exchange Offer must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Securities. The Letter of Transmittal states that by so acknowledging and by delivering a prospectus, a Broker-Dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. This Prospectus, as it may be amended or supplemented from time to time, may be used by a Broker-Dealer in connection with resales of Exchange Securities received in exchange for Securities where such Securities were acquired by such Broker-Dealer as a result of market-making activities or other trading activities. Each of the Issuers has agreed that, starting on the expiration date (as defined herein) and ending on the close of business 180 days after the expiration date, it will make this Prospectus available, as amended or supplemented, to any Broker-Dealer for use in connection with any such resale. See "Plan of Distribution." ANNEX B Each Broker-Dealer that receives Exchange Securities for its own account in exchange for Securities, where such Securities were acquired by such Broker-Dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Securities. See "Plan of Distribution." ANNEX C PLAN OF DISTRIBUTION Each Broker-Dealer that receives Exchange Securities for its own account pursuant to the Exchange Offer must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Securities. This Prospectus, as it may be amended or supplemented from time to time, may be used by a Broker-Dealer in connection with resales of Exchange Securities received in exchange for Securities where such Securities were acquired as a result of market-making activities or other trading activities. The Issuers have agreed that, starting on the Expiration Date and ending on the close of business 180 days after the Expiration Date, they will make this Prospectus, as amended or supplemented, available to any Broker-Dealer for use in connection with any such resale. In addition, until __________, 200_, all dealers effecting transactions in the Exchange Securities may be required to deliver a prospectus. The Issuers will not receive any proceeds from any sale of Exchange Securities by Brokers-Dealers. Exchange Securities received by Broker-Dealers for their own account pursuant to the Exchange Offer may be sold from time to time in one or more transactions in the over-the-counter market, in negotiated transactions, through the writing of options on the Exchange Securities or a combination of such methods of resale, at market prices prevailing at the time of resale, at prices related to such prevailing market prices or at negotiated prices. Any such resale may be made directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any such Broker-Dealer and/or the purchasers of any such Exchange Securities. Any Broker-Dealer that resells Exchange Securities that were received by it for its own account pursuant to the Exchange Offer and any broker or dealer that participates in a distribution of such Exchange Securities may be deemed to be an "underwriter" within the meaning of the Act, and any profit of any such resale of Exchange Securities and any commissions or concessions received by any such Persons may be deemed to be underwriting compensation under the Act. The Letter of Transmittal states that by acknowledging that it will deliver and by delivering a prospectus, a Broker-Dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. For a period of 180 days after the Expiration Date, the Issuers will promptly send additional copies of this Prospectus and any amendment or supplement to this Prospectus to any Broker-Dealer that requests such documents in the Letter of Transmittal. The Issuers have agreed to pay all expenses incident to the Exchange Offer (including the expenses of one counsel for the holders of the Securities) other than commissions or concessions of any brokers or dealers and will indemnify the holders of the Securities (including any Broker-Dealers) against certain liabilities, including liabilities under the Act. [If applicable, add information required by Regulation S-K Items 507 and/or 508.] ANNEX D CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO. Name: ______________________________ Address: ______________________________ ______________________________ If the undersigned is not a Broker-Dealer, the undersigned represents that it acquired the Exchange Securities in the ordinary course of its business, it is not engaged in, and does not intend to engage in, a distribution of Exchange Securities and it has no arrangements or understandings with any Person to participate in a distribution of the Exchange Securities. If the undersigned is a Broker-Dealer that will receive Exchange Securities for its own account in exchange for Securities, it represents that the Securities to be exchanged for Exchange Securities were acquired by it as a result of market-making activities or other trading activities and acknowledges that it will deliver a prospectus in connection with any resale of such Exchange Securities; however, by so acknowledging and by delivering a prospectus, the undersigned will not be deemed to admit that it is an "underwriter" within the meaning of the Act. EX-10.1 9 v94566orexv10w1.txt EXHIBIT 10.1 EXHIBIT 10.1 - -------------------------------------------------------------------------------- CONFORMED COPY $250,000,000 CREDIT AGREEMENT DATED AS OF SEPTEMBER 29, 2003 AMONG SEMINIS VEGETABLE SEEDS, INC., AS BORROWER, SEMINIS, INC., AS PARENT GUARANTOR, THE LENDERS REFERRED TO HEREIN, CITICORP NORTH AMERICA, INC., AS ADMINISTRATIVE AGENT, CIBC WORLD MARKETS CORP. AND COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A., "RABOBANK INTERNATIONAL", NEW YORK BRANCH, AS CO-DOCUMENTATION AGENTS, HARRIS TRUST AND SAVINGS BANK, AS SYNDICATION AGENT AND CITIGROUP GLOBAL MARKETS INC. AND HARRIS TRUST AND SAVINGS BANK, AS JOINT LEAD ARRANGERS AND JOINT BOOKRUNNERS CAHILL GORDON & REINDEL LLP 80 PINE STREET NEW YORK, NEW YORK 10005 - -------------------------------------------------------------------------------- TABLE OF CONTENTS
Page ---- ARTICLE I DEFINITIONS SECTION 1.01. Defined Terms............................................................................. 1 SECTION 1.02. Classification of Loans and Borrowings.................................................... 28 SECTION 1.03. Terms Generally........................................................................... 29 ARTICLE II THE CREDITS SECTION 2.01. Credit Commitments........................................................................ 29 SECTION 2.02. Procedure for Borrowing................................................................... 29 SECTION 2.03. Conversion and Continuation Options for Loans............................................. 31 SECTION 2.04. Swingline Loans........................................................................... 31 SECTION 2.05. Optional and Mandatory Prepayments of Loans; Repayments of Term B Loans................... 32 SECTION 2.06. Letters of Credit......................................................................... 35 SECTION 2.07. Repayment of Loans; Evidence of Debt...................................................... 39 SECTION 2.08. Interest Rates and Payment Dates.......................................................... 40 SECTION 2.09. Computation of Interest................................................................... 40 SECTION 2.10. Fees...................................................................................... 40 SECTION 2.11. Termination, Reduction or Adjustment of Commitments....................................... 41 SECTION 2.12. Inability to Determine Interest Rate; Unavailability of Deposits; Inadequacy of Interest Rate .......................................................................... 42 SECTION 2.13. Pro Rata Treatment and Payments........................................................... 42 SECTION 2.14. Illegality................................................................................ 43 SECTION 2.15. Requirements of Law....................................................................... 43 SECTION 2.16. Taxes..................................................................................... 44 SECTION 2.17. Indemnity................................................................................. 46 SECTION 2.18. Change of Lending Office.................................................................. 47 SECTION 2.19. Sharing of Setoffs........................................................................ 47 SECTION 2.20. Assignment of Commitments Under Certain Circumstances..................................... 47 ARTICLE III REPRESENTATIONS AND WARRANTIES SECTION 3.01. Organization, etc. ....................................................................... 48 SECTION 3.02. Due Authorization, Non-Contravention, etc................................................. 48 SECTION 3.03. Government Approval, Regulation, etc...................................................... 49 SECTION 3.04. Validity, etc. ........................................................................... 49 SECTION 3.05. Representations and Warranties in the Merger Agreement.................................... 49 SECTION 3.06. Financial Information..................................................................... 49 SECTION 3.07. No Material Adverse Effect................................................................ 50 SECTION 3.08. Litigation................................................................................ 50
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Page ---- SECTION 3.09. Compliance with Laws and Agreements....................................................... 50 SECTION 3.10. Subsidiaries.............................................................................. 50 SECTION 3.11. Ownership of Real Properties.............................................................. 50 SECTION 3.12. Ownership of Personal Property............................................................ 51 SECTION 3.13. Taxes..................................................................................... 51 SECTION 3.14. Pension and Welfare Plans................................................................. 51 SECTION 3.15. Environmental Warranties.................................................................. 52 SECTION 3.16. Regulations U and X....................................................................... 53 SECTION 3.17. Disclosure; Accuracy of Information; Pro Forma Balance Sheets and Projected Financial Statements ................................................................... 53 SECTION 3.18. Insurance................................................................................. 54 SECTION 3.19. Labor Matters............................................................................. 54 SECTION 3.20. Solvency.................................................................................. 54 SECTION 3.21. Securities................................................................................ 54 SECTION 3.22. Indebtedness Outstanding; Certain Operating Leases Terminated............................. 54 SECTION 3.23. Security Documents........................................................................ 55 SECTION 3.24. Anti-Terrorism Laws....................................................................... 56 ARTICLE IV CONDITIONS SECTION 4.01. Effective Date............................................................................ 57 SECTION 4.02. Conditions to Each Credit Event........................................................... 62 ARTICLE V AFFIRMATIVE COVENANTS SECTION 5.01. Financial Information, Reports, Notices, etc. ............................................ 63 SECTION 5.02. Compliance with Laws, etc. ............................................................... 65 SECTION 5.03. Maintenance of Properties................................................................. 65 SECTION 5.04. Insurance................................................................................. 65 SECTION 5.05. Books and Records; Visitation Rights...................................................... 66 SECTION 5.06. Environmental Covenant.................................................................... 66 SECTION 5.07. Information Regarding Collateral.......................................................... 67 SECTION 5.08. Existence; Conduct of Business............................................................ 68 SECTION 5.09. Performance of Obligations................................................................ 68 SECTION 5.10. Additional Mortgages...................................................................... 68 SECTION 5.11. Pledge of Additional Collateral........................................................... 69 SECTION 5.12. Further Assurances........................................................................ 69 SECTION 5.13. Use of Proceeds........................................................................... 70 SECTION 5.14. Payment of Taxes.......................................................................... 70 SECTION 5.15. Equal Security for Loans and Notes........................................................ 70 SECTION 5.16. Guarantees................................................................................ 70 SECTION 5.17. Subordination of Intercompany Loans....................................................... 70 SECTION 5.18. Certain Post-Closing Matters.............................................................. 71
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Page ---- ARTICLE VI NEGATIVE COVENANTS SECTION 6.01. Indebtedness; Certain Equity Securities................................................... 72 SECTION 6.02. Liens..................................................................................... 75 SECTION 6.03. Fundamental Changes; Line of Business..................................................... 77 SECTION 6.04. Investments, Loans, Advances, Guarantees and Acquisitions................................. 78 SECTION 6.05. Asset Sales............................................................................... 79 SECTION 6.06. Sale and Leaseback Transactions........................................................... 80 SECTION 6.07. Restricted Payments....................................................................... 81 SECTION 6.08. Transactions with Affiliates.............................................................. 82 SECTION 6.09. Restrictive Agreements.................................................................... 82 SECTION 6.10. Amendments or Waivers of Certain Documents; Prepayments of Certain Indebtedness........... 83 SECTION 6.11. No Other "Designated Senior Indebtedness"................................................. 83 SECTION 6.12. Interest Expense Coverage Ratio........................................................... 84 SECTION 6.13. Total Leverage Ratio...................................................................... 84 SECTION 6.14. Capital Expenditures...................................................................... 85 SECTION 6.15. Limitation on Activities of Parent Guarantor and PII, LLC................................. 86 SECTION 6.16. Anti-Terrorism Law........................................................................ 86 SECTION 6.17. Embargoed Person.......................................................................... 86 SECTION 6.18. Anti-Money Laundering..................................................................... 87 ARTICLE VII EVENTS OF DEFAULT SECTION 7.01. Listing of Events of Default.............................................................. 87 SECTION 7.02. Action if Bankruptcy...................................................................... 89 SECTION 7.03. Action if Other Event of Default.......................................................... 89 SECTION 7.04. Action if Event of Termination............................................................ 89 ARTICLE VIII THE AGENTS SECTION 8.01. The Agents................................................................................ 90 ARTICLE IX GUARANTEE SECTION 9.01. Guarantee of the Parent Guarantor......................................................... 91 SECTION 9.02. Amendments, etc. with Respect to the Applicable Obligations............................... 92 SECTION 9.03. Guarantee Absolute and Unconditional...................................................... 92 SECTION 9.04. Reinstatement............................................................................. 93 SECTION 9.05. Payments.................................................................................. 93 SECTION 9.06. Independent Obligations................................................................... 93 SECTION 9.07. Defenses of Parent Guarantor.............................................................. 93 SECTION 9.08. Agreement to Pay; Subordination........................................................... 94
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Page ---- ARTICLE X MISCELLANEOUS SECTION 10.01. Notices.................................................................................. 94 SECTION 10.02. Survival of Agreement.................................................................... 95 SECTION 10.03. Binding Effect........................................................................... 96 SECTION 10.04. Successors and Assigns................................................................... 96 SECTION 10.05. Expenses; Indemnity...................................................................... 99 SECTION 10.06. Right of Setoff.......................................................................... 100 SECTION 10.07. Applicable Law........................................................................... 100 SECTION 10.08. Waivers; Amendment....................................................................... 100 SECTION 10.09. Interest Rate Limitation................................................................. 104 SECTION 10.10. Entire Agreement......................................................................... 104 SECTION 10.11. WAIVER OF JURY TRIAL..................................................................... 104 SECTION 10.12. Severability............................................................................. 105 SECTION 10.13. Counterparts............................................................................. 105 SECTION 10.14. Headings................................................................................. 105 SECTION 10.15. Jurisdiction; Consent to Service of Process.............................................. 105 SECTION 10.16. Confidentiality.......................................................................... 106 SECTION 10.17. Citigroup Direct Website Communications.................................................. 106 SECTION 10.18. Collateral Agent as Joint Creditor....................................................... 108 SECTION 10.19. Collateral Agent as Attorney-In-Fact Regarding Foreign Collateral........................ 108
EXHIBIT A Form of Administrative Questionnaire EXHIBIT B Form of Borrowing Request EXHIBIT C Form of Assignment and Acceptance EXHIBIT D Form of Collateral Sharing Agreement EXHIBIT E Form of Compliance Certificate EXHIBIT F Form of Indemnity, Subrogation and Contribution Agreement EXHIBIT G-1 Form of Term B Note EXHIBIT G-2 Form of Revolving Note EXHIBIT H Form of Closing Certificate EXHIBIT I Form of Subsidiary Guarantee Agreement EXHIBIT J Form of Pledge Agreement EXHIBIT K Form of Security Agreement EXHIBIT L-1 Form of Opinion of Milbank, Tweed, Hadley & McCloy LLP EXHIBIT L-2 Form of Opinion of General Counsel of the Parent Guarantor EXHIBIT L-3 Form of Opinion of Local Counsel EXHIBIT M Form of Solvency Certificate EXHIBIT N Form of Mortgage EXHIBIT O Form of Real Property Officers' Certificate SCHEDULE 1.01(a) Certain Operating Leases to Be Terminated as of the Effective Date SCHEDULE 1.01(b) Inactive Subsidiaries as of the Effective Date SCHEDULE 1.01(c) Joint Venture Entities as of the Effective Date SCHEDULE 1.01(d) Subsidiary Loan Parties as of the Effective Date SCHEDULE 1.01(e) Excluded Non-U.S. Subsidiaries SCHEDULE 2.01 Lenders and Commitments

-iv- SCHEDULE 3.08 Certain Litigation SCHEDULE 3.10 Subsidiaries SCHEDULE 3.11(b) Leased and Owned Real Property SCHEDULE 3.15(a) Facilities/Properties Not in Compliance with Environmental Laws SCHEDULE 3.15(b) Environmental Claims SCHEDULE 3.15(c) Hazardous Material SCHEDULE 3.18 Insurance SCHEDULE 3.22(a) Indebtedness to Remain Outstanding SCHEDULE 3.22(b) Indebtedness to Be Paid SCHEDULE 3.22(c) Liens to Be Terminated SCHEDULE 3.22(d) Liens to Remain Outstanding SCHEDULE 3.23(d) Mortgage Filing Offices SCHEDULE 4.01(f) Local Counsel SCHEDULE 4.01(s)(A) Mortgaged Properties SCHEDULE 4.01(s)(C) Title Insurance Amounts SCHEDULE 5.18(a) Post Closing Collateral Matters SCHEDULE 5.18(b) Post Closing Landlord Lien Waiver, Access Agreement and Consent SCHEDULE 6.04 Existing Investments SCHEDULE 6.05(vi) Certain Assets Sales SCHEDULE 6.05(xi) Certain Real Property Sales Expected After the Effective Date SCHEDULE 6.09 Existing Restrictions SCHEDULE 6.14 Capital Expenditures to Be Effected as Part of the Recapitalization Transactions

-v- CREDIT AGREEMENT (this "Agreement") dated as of September 29, 2003, among SEMINIS VEGETABLE SEEDS, INC., a California corporation (the "Borrower"); SEMINIS, INC., a Delaware corporation (the "Parent Guarantor"); the financial institutions listed in Schedule 2.01, as such Schedule may from time to time be supplemented and amended (the "Lenders"); CITICORP NORTH AMERICA, INC., as administrative agent (in such capacity, the "Administrative Agent") for the Lenders; Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A., "Rabobank International", New York Branch ("Rabobank") and CIBC World Markets Corp. ("CIBC"), as co-documentation agents (in such capacity, the "Co-Documentation Agents"); HARRIS TRUST AND SAVINGS BANK ("Harris"), as syndication agent (in such capacity, the "Syndication Agent"); and CITIGROUP GLOBAL MARKETS INC. ("CGMI") and Harris, as joint lead arrangers and joint bookrunners (in such capacity, the "Joint Lead Arrangers"). The parties hereto agree as follows: ARTICLE I DEFINITIONS SECTION 1.01. Defined Terms. As used in this Agreement, the following terms shall have the meanings specified below: "425B Alta" has the meaning assigned to such term in Section 5.10. "717 Crestview" has the meaning assigned to such term in Section 5.10. "ABR Borrowing" means a Borrowing comprised of ABR Loans. "ABR Loan" means any Loan bearing interest at a rate determined by reference to the Alternate Base Rate in accordance with the provisions of Article II. "Additional Collateral" has the meaning assigned to such term in Section 5.11. "Administrative Agent" has the meaning assigned to such term in the preamble hereto. "Administrative Questionnaire" means an Administrative Questionnaire in the form of Exhibit A. "Affiliate" of any Person means any other Person which, directly or indirectly, controls, is controlled by or is under common control with such Person (excluding any trustee under, or any committee with responsibility for administering, any Plan). A Person shall be deemed to be "controlled by" any other Person if such other Person possesses, directly or indirectly, power to direct or cause the direction of the management and policies of such Person whether by contract or otherwise. "Agent Fees" has the meaning assigned to such term in Section 2.10(c). "Agent Parties" has the meaning assigned to such term in Section 10.17(c). "Agents" means the Administrative Agent and the Collateral Agent. "Aggregate Revolving Credit Exposure" means the aggregate amount of the Revolving Lenders' Revolving Credit Exposures. "Agreement" has the meaning assigned to such term in the preamble hereto. "Alternate Base Rate" means for any day, a rate per annum equal to the highest of (a) the Administrative Agent's Base Rate in effect on such day, (b) 0.5% per annum above the latest three-week moving average of secondary market morning offering rates in the United States for three-week certificates of deposit of major United States money market banks, such three-month moving average being determined weekly on each Monday (or, if any such day is not a Business Day, on the next succeeding Business Day) for the three-month period ending on the next previous Friday by the Administrative Agent on the basis of such rates reported by certificate of deposit dealers to and published by the Federal Reserve Bank of New York or, if such publication shall be suspended or terminated, on the basis of quotations for such rates received by the Administrative Agent from three New York certificate of deposit dealers of recognized standing selected by the Administrative Agent, in either case adjusted to the nearest 0.25% or, if there is no nearest 0.25%, to the next higher 0.25% (the "Certificate of Deposit Rate"), and (c) the Federal Funds Rate in effect on such day plus 1/2 of 1%. Any change in the Alternate Base Rate due to a change in the Base Rate, the Certificate of Deposit Rate or the Federal Funds Rate shall be effective as of the opening of business on the effective day of such change in the Base Rate, the Certificate of Deposit Rate or the Federal Funds Rate, respectively. "Anti-Terrorism Law" has the meaning assigned to such term in Section 3.24. "Applicable Rate" means, for any day (i) with respect to Term B Loans, (A) 2.25% per annum, in the case of ABR Loans, and (B) 3.25% per annum, in the case of Eurodollar Loans, and (ii) with respect to Revolving Loans, (A) before the Trigger Date, (x) 2.00% per annum, in the case of ABR Loans, and (y) 3.00% per annum, in the case of Eurodollar Loans, and (B) on and after the Trigger Date, the applicable rate per annum set forth in the table below (x) under the caption "ABR Revolving Loans Spread," in the case of ABR Loans, and (y) under the caption "Eurodollar Revolving Loans Spread," in the case of Eurodollar Loans, in each case based upon the Total Leverage Ratio as of the most recent determination date:
Total ABR Eurodollar Leverage Revolving Loans Revolving Loans Ratio Spread Spread - ----------------------------------------------------- ~~>4.00 to 1.00 2.00% 3.00% < or = 4.00 to 1.00 1.75% 2.75% > or =3.50 to 1.00 <3.50 to 1.00 1.50% 2.50%~~
For purposes of such calculation of the Applicable Rate with respect to Revolving Loans on and after the Trigger Date, (i) the Total Leverage Ratio shall be determined as of the end of each fiscal quarter of the Borrower's fiscal year based upon the Borrower's consolidated financial statements delivered pursuant to Section 5.01(a) or (b) and (ii) each change in the Applicable Rate resulting from a change in the Total Leverage Ratio shall be effective three (3) Business Days after the date on which the Administrative Agent shall have received the applicable financial statements and a Compliance Certificate calculating the Total Leverage Ratio. If at any time the Borrower has not submitted to the Administrative Agent the applicable information as and when required under Section 5.01(a) or (b), the Applicable Rate shall be the highest rate set forth in the table above until such time as the Borrower has provided the information required under Section 5.01(a) or (b). Within one (1) Business Day of receipt of the applicable information as and when required under Section 5.01(a) or (b), the Administrative Agent shall give each Lender telefacsimile or telephonic notice (confirmed in writing) of the Applicable Rate in effect from such date. -2- "Asset Sale" means any direct or indirect sale, transfer, lease, conveyance or other disposition by the Parent Guarantor or any of its Subsidiaries of any of its property or assets, including any sale or issuance of any Equity Interests of any Subsidiary, except (a) sales, dispositions and leases permitted by Sections 6.05(i), (ii), (iii), (iv) and (v), and (b) any such transaction or series of transactions which, if an Asset Sale, would not generate Net Proceeds in excess of $1.0 million (or, when taken together with all other such transactions, in excess of $3.0 million in any twelve-month period). "Assignment and Acceptance" means an assignment and acceptance entered into by a Lender and an assignee (with the consent of any party whose consent is required by Section 10.04(b)), and accepted by the Administrative Agent, in the form of Exhibit C or such other form as shall be approved by the Administrative Agent. "Authorized Officer" means, with respect to the Borrower, those of its officers whose signature and incumbency has been certified to the Administrative Agent and the Lenders pursuant to Section 4.01(c) or any successor thereto. "Available Revolving Credit Commitment" means as to any Revolving Lender, at any time of determination, an amount equal to such Revolving Lender's Revolving Credit Commitment at such time minus such Revolving Lender's Revolving Credit Exposure at such time. "Base Amount" has the meaning assigned to such term in Section 6.14. "Base Rate" means the rate of interest per annum publicly announced from time to time by the Administrative Agent as its base rate in effect at its principal office in New York City (the Base Rate not being intended to be the lowest rate of interest charged by the Administrative Agent in connection with extensions of credit to debtors) (any change in such rate announced by the Administrative Agent shall take effect at the opening of business on the day specified in the public announcement of such change). "Board" means the Board of Governors of the Federal Reserve System of the United States. "Borrower" has the meaning assigned to such term in the preamble to this Agreement. "Borrowing" means a Loan or group of Loans to the Borrower of the same Class and Type made (including through a conversion or continuation) by the applicable Lenders on a single date and as to which a single Interest Period is in effect. "Borrowing Date" means any Business Day specified in a notice pursuant to Section 2.02 as a date on which the Borrower requests Loans to be made hereunder. "Borrowing Request" has the meaning assigned to such term in Section 2.02(a). "Business Day" means a day other than a Saturday, Sunday or other day on which commercial banks in New York, New York are authorized or required by law to close. "B.V. Holdco" means SVS Europe Holding, B.V. "Capital Expenditures" means, for any period, (a) any and all expenditures made by the Borrower or any of its Subsidiaries in such period for assets that are, or should be, set forth as "additions to plant, property and equipment" on the financial statement prepared in accordance with GAAP, whether -3- such asset is purchased for cash or financed as an account payable or by the incurrence of Indebtedness, accrued as a liability or otherwise, and (b) all Capital Lease Obligations of the Borrower and its Subsidiaries (excluding any Capital Lease Obligation to the extent that it refinances or replaces an existing Capital Lease Obligation). "Capital Lease Obligations" means all monetary or financial obligations of the Borrower and its Subsidiaries under any leasing or similar arrangement conveying the right to use real or personal property, or a combination thereof, which, in accordance with GAAP, would or should be classified and accounted for as capital leases, and the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP and the stated maturity thereof shall be the date of the last payment of rent or any other amount due under such lease prior to the first date on which such lease may be terminated by the lessee without payment of a penalty. "Cash Interest Expense" means, for any period, Consolidated Interest Expense for such period, including imputed interest expense for Capital Lease Obligations and excluding any interest expense not payable in cash (such as, for example, amortization of discount and amortization of debt issuance costs), net of interest income. "CERCLA" means the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended. "CERCLIS" means the Comprehensive Environmental Response, Compensation and Liability Information System list promulgated by the U.S. Environmental Protection Agency pursuant to CERCLA. "CGMI" has the meaning assigned to such term in the preamble hereto. "Change in Control" means (a) prior to such time as there shall have been consummated an Initial Public Offering of the Parent Guarantor, the occurrence of any of the following: (i) Fox Paine shall cease to control the largest percentage of voting power of voting Equity Interests of the Parent Guarantor (as compared to any other "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act) and counting Mr. Romo and his Affiliates as a single "group" as used in Sections 13(d) and 14(d) of the Exchange Act), (ii) Fox Paine shall cease to control at least 40% of the voting power of the voting Equity Interests of the Parent Guarantor or (iii) Fox Paine shall cease to have the same rights to appoint a majority of the board of directors of the Parent Guarantor upon the occurrence of specified events which it has as of the Effective Date as set forth in Section 5.2 of the Stockholders' Agreement, other than in accordance with the terms of the Stockholders' Agreement as in effect on the date hereof; (b) from and after the time that there shall have been consummated an Initial Public Offering of the Parent Guarantor, the occurrence of any of the following: (i) (I) any "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), other than Fox Paine, is or becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of voting stock representing 35% or more of the voting power of the voting Equity Interests of the Parent Guarantor (counting Mr. Romo and his Affiliates as a "group" as used in Sections 13(d) and 14(d) of the Exchange Act) and (II) Fox Paine ceases to control the largest percentage of the voting power of the voting Equity Interests of the Parent Guarantor; or (ii) during any period of two consecutive years, individuals who at the beginning of such period constituted the board of directors of the Parent Guarantor (together with any new di- -4- rectors whose election to such board of directors or whose nomination for election was approved by a vote of at least 66 2/3% of the directors of the Parent Guarantor then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute at least a majority of the board of directors of the Parent Guarantor; or (c) at any time, the Parent Guarantor ceases to own 100% of the Equity Interests of the Borrower. "Charges" has the meaning assigned to such term in Section 10.09. "CIBC" has the meaning assigned to such term in the preamble hereto. "Class" when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are Revolving Loans, Term B Loans or Swingline Loans, and when used in reference to any Commitment, refers to whether such Commitment is a Revolving Credit Commitment or Term B Commitment, and when used in reference to any Lender, refers to whether such Lender is a Revolving Lender or a Term B Lender. "Closing Certificate" means a certificate substantially in the form of Exhibit H. "Code" means the Internal Revenue Code of 1986, as amended. "Co-Documentation Agents" has the meaning assigned to such term in the preamble hereto. "Collateral" means any and all "Collateral," "Mortgaged Property" or "Trust Property," as defined in any applicable Security Document. "Collateral Account" means the collateral account or sub-account established and maintained by the Collateral Agent in its name as Collateral Agent for the benefit of the Secured Parties, in accordance with the provisions of the Security Agreement. "Collateral Agent" means Citicorp North America, Inc., in its capacity as collateral agent for the Secured Parties under the Security Documents. "Collateral Sharing Agreement" means the Collateral Sharing Agreement, substantially in the form of Exhibit D, between the Borrower and the Collateral Agent for the benefit of the Secured Parties. "Commitment" means, with respect to any Lender, such Lender's Revolving Credit Commitment or Term B Commitment or any combination thereof (as the context requires). "Commitment Fee" has the meaning assigned to such term in Section 2.10(a). "Commitment Fee Average Daily Amount" has the meaning assigned to such term in Section 2.10(a). "Commitment Fee Percentage" means, for any day (i) prior to the Trigger Date, 0.50% per annum, and (ii) on and after the Trigger Date, the applicable rate per annum set forth in the table below, based on the Total Leverage Ratio as of the most recent determination date: -5-
Total Leverage Ratio Commitment Fee Percentage - -------------------- ------------------------- ~~> 3.50 to 1.0 0.50% < or = 3.50 to 1.0 0.375%~~
For purposes of such calculation of the Commitment Fee Percentage on and after the Trigger Date, (i) the Total Leverage Ratio shall be determined as of the end of each fiscal quarter of the Borrower's fiscal year based upon the Borrower's consolidated financial statements delivered pursuant to Section 5.01(a) or (b) and (ii) each change in the Commitment Fee Percentage resulting from a change in the Total Leverage Ratio shall be effective three (3) Business Days after the date on which the Administrative Agent shall have received the applicable financial statements and a Compliance Certificate calculating the Total Leverage Ratio. If at any time the Borrower has not submitted to the Administrative Agent the applicable information as and when required under Section 5.01(a) or (b), the Commitment Fee Percentage shall be the highest percentage set forth in the table above until such time as the Borrower has provided the information required under Section 5.01(a) or (b). Within one (1) Business Day of receipt of the applicable information as and when required under Section 5.01(a) or (b), the Administrative Agent shall give each Lender telefacsimile or telephonic notice (confirmed in writing) of the Commitment Fee Percentage in effect from such date. "Commitment Fee Termination Date" has the meaning assigned to such term in Section 2.10(a). "Commitment Letter" means the Amended and Restated Commitment Letter dated September 8, 2003 among the Administrative Agent, the Joint Lead Arrangers, the Syndication Agent, the Co-Documentation Agents, Bank of Montreal and Seminis Acquisition LLC. "Commitment Percentage" means the percentage of the Total Revolving Credit Commitment represented by such Lender's Revolving Credit Commitment. If the Revolving Credit Commitments have terminated or expired, the Commitment Percentage shall be determined based upon the Revolving Credit Commitments most recently in effect, giving effect to any assignments. "Communications" has the meaning assigned to such term in Section 10.17(a). "Compliance Certificate" means a certificate from a Financial Officer of the Parent Guarantor, substantially in the form of Exhibit E. "Conduit Financing Arrangement" has the meaning assigned to such term in Section 2.16. "Consolidated Current Assets" means, with respect to any Person as at any date of determination, the total assets of such Person and its consolidated Subsidiaries which should properly be classified as current assets on a consolidated balance sheet of such Person and its consolidated Subsidiaries in accordance with GAAP. "Consolidated Current Liabilities" means, with respect to any Person as at any date of determination, the total liabilities of such Person and its consolidated Subsidiaries which should properly be classified as current liabilities (other than the current portion of any Loans) on a consolidated balance sheet of such Person and its consolidated Subsidiaries in accordance with GAAP. For the avoidance of doubt Consolidated Current Liabilities shall exclude any liabilities arising in respect of Preferred Stock. -6- "Consolidated EBITDA" means, for any period, Consolidated Net Income for such period (a) plus all amounts deducted in arriving at such Consolidated Net Income amount in respect of (i) interest expense, amortization or write-off of debt discount, (ii) foreign, federal, state and local income Taxes for such period, (iii) charges for depreciation of fixed assets and amortization of intangible assets during such period, (iv) legal, professional and other fees and expenses incurred in connection with efforts of the Parent Guarantor to refinance its debt, and related to the Recapitalization Transactions, (v) severance packages payable in connection with the termination of any officer, director or employee of the Parent Guarantor or any of its Subsidiaries, (vi) expenses relating to any Permitted Acquisition (and including in respect of any related financing transactions) not in excess in the case of any Permitted Acquisition 7% of the total purchase price for such Permitted Acquisition (exclusive of any fees and expenses), (vii) non-cash expenses relating to Stock Plans and (viii) non-cash charges for the impairment of long-lived assets, (b) minus (in the case of gains) or plus (in the case of losses), gains or losses on sale of assets, (c) minus (in the case of gains) or plus (in the case of losses) non-cash charges relating to foreign currency gains or losses, (d) plus in the case of non-cash minority interest loss and minus in the case of non-cash minority interest income, (e) plus (in the case of items deducted in arriving at Consolidated Net Income) and minus (in the case of items added in arriving at Consolidated Net Income) non-cash charges resulting from changes in accounting principles, (f) plus to the extent included in Consolidated Net Income, non-cash restricted stock award charges incurred in the Parent Guarantor's fiscal year ended September 30, 2002, (g) plus extraordinary loss as defined by GAAP, (h) minus the sum of (x) interest income, and (y) extraordinary income or gains as defined by GAAP, (i) plus payments of Permitted Management Fees and (j) excluding the impact of any purchase accounting adjustments which may be allocated to (x) in-process research and development in the Parent Guarantor's income statement and (y) inventory in the Parent Guarantor's balance sheet to the extent such adjustments reflect differences between the historical carrying amounts and the fair market value of the inventory, and, consistent with such treatment, when the affected inventory is sold, Consolidated EBITDA shall be calculated as if such purchase adjustments had not been made. "Consolidated Indebtedness" means, at a particular date, the aggregate stated balance sheet amount of all Indebtedness of the Parent Guarantor and its Subsidiaries determined on a consolidated basis in accordance with GAAP at such date. "Consolidated Interest Expense" means, with respect to the Parent Guarantor and its Subsidiaries on a consolidated basis for any period, the sum of (a) gross interest expense for such period, including (i) the amortization of debt discounts, (ii) the amortization of all fees (including fees with respect to Hedging Agreements) payable in connection with the incurrence of Indebtedness to the extent included in interest expense and (iii) the portion of any payments or accruals with respect to Capital Lease Obligations allocable to interest expense, and (b) capitalized interest. For the avoidance of doubt, Consolidated Interest Expense shall exclude any amounts in respect of dividends on, or accrued value of, Preferred Stock. "Consolidated Net Income" means, for any period, the net income or loss of the Parent Guarantor and its Subsidiaries for such period determined on a consolidated basis in accordance with GAAP; provided that there shall be excluded therefrom (i) the income or loss of any Person (other than consolidated Subsidiaries of the Borrower) in which any other Person (other than the Parent Guarantor or any of its Subsidiaries) has a joint interest, except to the extent of the amount of dividends or other distributions actually paid to the Parent Guarantor or any of its Subsidiaries by such Person during such period, (ii) the cumulative effect of a change in accounting principles during such period, (iii) any net after-tax income (loss) from discontinued operations and any net after-tax gains or losses on disposal of discontinued operations, (iv) the income or loss of any Person accrued prior to the date it becomes a Subsidiary or is merged into or consolidated with the Parent Guarantor or any of its Subsidiaries or that Person's assets are acquired by the Parent Guarantor or any of its Subsidiaries, and (v) the income of any consolidated -7- Subsidiary to the extent that declaration of payment of dividends or similar distributions by that Subsidiary of that income is not at the time permitted by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Subsidiary. "Consolidated Working Capital" means, at any date, the excess of Consolidated Current Assets on such date in excess of Consolidated Current Liabilities on such date. "control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a person, whether through the ownership of voting securities, by contract or otherwise, and "controlling" and "controlled" have meanings correlative thereto. "Credit Event" has the meaning assigned to such term in Section 4.02. "Debt Incurrence" has the meaning assigned to such term in Section 2.05(c)(ii). "Default" means any Event of Default, any Event of Termination and any event or condition which upon notice, lapse of time or both would constitute an Event of Default or Event of Termination. "Default Rate" has the meaning set forth in Section 2.08(c). "Designated Senior Indebtedness" has the meaning assigned to such term in Section 6.11. "Destruction" means any and all damage to, or loss or destruction of, all or any portion of the Property of the Parent Guarantor, the Borrower or any of its Subsidiaries resulting in payments of more than $100,000 for any Property. "Dollars" or "$" means lawful money of the United States of America. "Domestic Subsidiary" means any Subsidiary of the Borrower that is not a Non-U.S. Subsidiary. "Effective Date" means the date on which the conditions specified in Section 4.01 are satisfied (or waived in accordance with Section 10.08). "Embargoed Person" has the meaning assigned to such term in Section 6.17. "Environment" means ambient air, surface water and groundwater (including potable water, navigable water and wetlands), the land surface or subsurface strata, natural resources such as flora and fauna, indoor air or as otherwise defined in any applicable Environmental Law. "Environmental Claim" means any written accusation, allegation, notice of violation, claim, demand, order, directive, cost recovery action or other cause of action by, or on behalf of, any Governmental Authority or any other Person for damages, injunctive or equitable relief, personal injury (including sickness, disease or death), Remedial Action or Remedial Action costs, tangible or intangible property damage, natural resource damages, nuisance, pollution, any adverse effect on the Environment caused by any Hazardous Material, or for fines, penalties or restrictions, resulting from or based upon: (a) the violation or alleged violation of any Environmental Law or Environmental Permit; (b) the presence, use, handling, generation, transportation, storage, treatment or disposal of any Hazardous Material; (c) exposure to any Hazardous Material; or (d) a Release or threatened Release (including sudden or non-sudden, accidental or non-accidental Releases). -8- "Environmental Laws" means any and all applicable treaties, laws (including common law), rules, regulations, codes, ordinances, orders, decrees, judgments, injunctions or binding agreements issued, promulgated or entered into by any Governmental Authority, relating in any way to the Environment, preservation or reclamation of natural resources, the management, Release or threatened Release of, or exposure to, any Hazardous Material or to human health and safety matters. "Environmental Liability" means any liability, contingent or otherwise (including, but not limited to, any liability for damages, natural resource damage, costs of Remedial Action, administrative oversight costs, non-compliance, fines, penalties or indemnities), resulting from, based upon or relating to (a) the violation or alleged violation of any Environmental Law, (b) the presence, use, handling, generation, transportation, storage, treatment or disposal of any Hazardous Material, (c) exposure to any Hazardous Material or (d) a Release or threatened Release. "Environmental Permit" means any permit, approval, authorization, certificate, license, variance, filing or permission required by or from any Governmental Authority pursuant to any Environmental Law. "Equity Interests" means shares of capital stock, partnership interests, membership interests in a limited liability company, beneficial interests in a trust or other equity ownership interests in a Person. "Equity Issuance" has the meaning assigned to such term in Section 2.05(c)(i). "Equity Rights" means all securities convertible or exchangeable for Equity Interests and all warrants, options or other rights to purchase or subscribe for any Equity Interests, whether or not presently convertible, exchangeable or exercisable. "EMU Legislation" means the legislative measures of the European Union for the introduction of, change over to or operation of the Euro in one or more member states. "ERISA" means the Employee Retirement Income Security Act of 1974, as the same may be amended from time to time. "ERISA Affiliate" means any trade or business (whether or not incorporated) that, together with any Loan Party, is treated as a single employer under Sections 414(b) or (c), (m), (o) or (t) of the Code. "ERISA Event" means (a) any "reportable event," as defined in Section 4043(c) of ERISA or the regulations issued thereunder, with respect to a Pension Plan (other than an event for which the 30-day notice period is waived by regulation); (b) the existence with respect to any Pension Plan of an "accumulated funding deficiency" (as defined in Section 412 of the Code or Section 302 of ERISA), whether or not waived, the failure to make by its due date a required installment under Section 412(m) of the Code with respect to any Pension Plan or the failure to make any required contribution to a Multiemployer Plan; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an application for a waiver of the minimum funding standard with respect to any Pension Plan; (d) the incurrence by any Loan Party or ERISA Affiliate of any liability under Title IV of ERISA with respect to any Pension Plan, other than for premiums to the PBGC payable in the ordinary course of business, and other than liability to Pension Plan participants pursuant to the terms of the Plan and in the ordinary course of business; (e) the receipt by any Loan Party or ERISA Affiliate from the PBGC or a plan administrator of any notice relating to an intention to terminate any Pension Plan, to appoint a trustee to administer any Pension Plan, or to take any other action with respect to a Pension Plan that could reasonably be expected -9- to result in material liability to a Loan Party or a Subsidiary, or the occurrence of any event or condition which could reasonably be expected to constitute grounds under ERISA for the distress or involuntary termination of or the appointment of a trustee to administer, under such circumstances, any Pension Plan; (f) the incurrence by any Loan Party or ERISA Affiliate of any liability with respect to the withdrawal or partial withdrawal from any Pension Plan or Multiemployer Plan; (g) the receipt by a Loan Party or ERISA Affiliate of any written notice imposing or threatening to impose Withdrawal Liability or a written determination that a Multiemployer Plan is, or is expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA; or (h) the making of any amendment to any Pension Plan which could reasonably be expected to result in the imposition of a lien or the posting of a bond or other security. "Euro" or "(euro)" means the single currency of the European Union as constituted by the treaty of European Union and as referred to in the EMU Legislation. "Eurodollar Borrowing" means a Borrowing comprised of Eurodollar Loans. "Eurodollar Loan" means any Loan bearing interest at a rate determined by reference to the LIBO Rate in accordance with the provisions of Article II. "Event of Default" has the meaning assigned to such term in Section 7.01. "Event of Termination" has the meaning assigned to such term in Section 7.01. "Excess Cash Flow" means, without duplication, for any Person for any period for which such amount is being determined: (a) Consolidated Net Income (without giving effect to clause (iii) of the definition thereof with respect to any cash net after-tax income from discontinued operations or after-tax gain on disposal of discontinued operations) adjusted to exclude any amount of gain included in both (x) Consolidated Net Income and (y) Net Proceeds actually applied pursuant to Section 2.05(c)(iii) or (iv), plus (b) the amount of depreciation, amortization of intangibles, deferred taxes and other non-cash expenses which, pursuant to GAAP, were deducted in determining such Consolidated Net Income of such Person, plus (c) decreases in Consolidated Working Capital, minus (d) increases in Consolidated Working Capital, minus (e) the amount of Capital Expenditures and purchases of intangibles in such period to the extent funded with Internally Generated Funds, minus (f) payments of principal under the Term B Loans on the Installment Payment Dates pursuant to Section 2.05(d) or any payments or repayments of any other Indebtedness (in the case of any revolving credit, only to the extent accompanied by a permanent reduction in commitments thereunder), in each case made during such period to the extent funded with Internally Generated Funds, minus (g) optional prepayments of principal under the Term B Loans and the Revolving Loans to the extent accompanied by a permanent reduction of commitments thereunder made during such period to the extent funded with Internally Generated Funds, minus -10- (h) Permitted Management Fees during such period to the extent not deducted from Consolidated Net Income, minus (i) Investments made during such period to the extent funded with Internally Generated Funds. For purposes of the foregoing and without duplication, Consolidated Net Income will exclude (x) all losses on the sale of capital assets or losses which are out of the ordinary course of business and (y) all write-downs of capital assets. "Excess Cash Flow Percentage" means, as of any date of determination, (i) 50% if the Total Leverage Ratio is greater than or equal to 3.5x as of the most recent determination date, (ii) 25% if the Total Leverage Ratio is less than 3.5x but greater than 3.0x as of the most recent determination date and (iii) 0% if the Total Leverage Ratio is 3.0x or less as of the most recent determination date. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Exchange Agreement" means the Amended and Restated Exchange Agreement dated as of May 30, 2003 by and between the Parent Guarantor and Savia, S.A. de C.V. "Excluded Debt Issuance" means any issuance of Indebtedness permitted by Section 6.01(a) other than any amount of Indebtedness incurred to refinance the Oxnard Mortgage which is not applied to repay the Oxnard Mortgage or to repay Revolving Loans (without permanent reduction of commitments) promptly upon receipt of such proceeds. "Excluded Equity Issuance" means the issuance of Equity Interests or Equity Rights of the Parent Guarantor (i) to Fox Paine; (ii) to a Person who is an equity investor in the Parent Guarantor arranged by Fox Paine prior to or on the Effective Date or within 180 days after the Effective Date for aggregate proceeds of up to $50.0 million; (iii) to Mr. Romo and his Affiliates; (iv) in connection with any Stock Plans; or (v) to the seller or sellers in any Permitted Acquisition. "Excluded Non-U.S. Subsidiaries" means each Non-U.S. Subsidiary set forth on Schedule 1.01(e). "Existing Letters of Credit" shall mean those letters of credit issued under the Credit Agreement dated as of June 28, 1999 among the Parent Guarantor, the Borrower, SVS Holland B.V., Harris, Bank of Montreal, Chicago Branch and the Lenders from time to time party thereto. "Executive Order" has the meaning assigned to such term in Section 3.24(a). "Facilities" has the meaning assigned to such term in Section 10.16 (a). "Federal Funds Rate" means, for any day, the weighted average of the rates (rounded upwards, if necessary, to the nearest 1/100th of 1%) on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York; provided that (a) if the day for which such rate is to be determined is not a Business Day, the Federal Funds Rate for such day shall be such rate for such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (b) if such rate is not so published for any day which is a Business Day, the Federal Funds Rate for such day shall be the average of the quotations for the day of such transactions received by the Administrative Agent from three federal funds brokers of recognized standing selected by it. -11- "Fee Letter" means the Amended and Restated Fee Letter dated September 8, 2003 among the Administrative Agent, the Joint Lead Arrangers, the Syndication Agent, the Co-Documentation Agents and the Parent Guarantor. "Fees" means the Commitment Fees, the LC Fees and the Agent Fees. "Financial Covenants" means those covenants and agreements of the Loan Parties set forth in Sections 6.12 through 6.14, inclusive. "Financial Officer" of any corporation, partnership or other entity means the chief financial officer, the principal accounting officer, treasurer or controller of such corporation, partnership or other entity. "Financing Documents" means the Loan Documents and the Subordinated Notes Documents. "Financing Transactions" means, collectively, (i) the execution and delivery by each Loan Party of each of the Loan Documents and the Borrowing of the Term B Loans and Revolving Loans hereunder in each case on the Effective Date and (ii) the issuance of the Subordinated Notes on the Effective Date. "Fiscal Quarter" means any quarter of a Fiscal Year. "Fiscal Year" means any period of twelve consecutive calendar months ending on September 30; references to a Fiscal Year with a number corresponding to any calendar year (e.g., the "2003 Fiscal Year") refer to the Fiscal Year ending on September 30 occurring during such calendar year. "Foreign Plan" means any employee benefit plan, program, policy, arrangement or agreement maintained or contributed to outside the United States by any Loan Party or any Subsidiary primarily for the benefit of employees of any Loan Party or any Subsidiary employed outside the United States. "Foreign Subsidiary Restructuring Documents" means those agreements to be executed promptly after the Effective Date relating to the transactions involving B.V. Holdco, forms of which have been previously delivered to the Administrative Agent. "Fox Paine" means Fox Paine & Company, LLC and its Affiliates taken as a whole. "GAAP" means generally accepted accounting principles in the United States applied on a consistent basis. "Governmental Authority" means any Federal, state, local or foreign court or governmental agency, authority, instrumentality or regulatory body, including any central bank. "Guarantee" of or by any Person (the "guarantor") means any obligation, contingent or otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation that would become Indebtedness of any other Person (the "primary obligor") in any manner, whether directly or indirectly, and including any obligation of the guarantor, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation or to purchase (or to advance or supply funds for the purchase of) any security for the payment thereof, (b) to purchase or lease property, securities or services for the purpose of assuring the -12- owner of such Indebtedness or other obligation of the payment thereof (including pursuant to a "synthetic lease"), (c) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation or (d) as an account party in respect of any letter of credit or letter of guaranty issued to support such Indebtedness or obligation; provided that the term "Guarantee" shall not include endorsements for collection or deposit in the ordinary course of business. The amount of the obligation under any Guarantee shall be deemed to be the lower of (a) an amount equal to the stated or determinable amount of the primary obligation in respect of which such Guarantee is made (including principal, interest and fees) and (b) the maximum amount for which such guarantor may be liable pursuant to the terms of the instrument embodying such Guarantee, unless such primary obligation and the maximum amount for which such guarantor may be liable are not stated or determinable, in which case the amount of the obligation under such Guarantee shall be such guarantor's maximum reasonably anticipated liability in respect thereof as determined by the guarantor in good faith, irrespective, in any such case, of any portion of such amount that would, in accordance with GAAP, be required to be reflected on a balance sheet of such Person. "Guarantee Agreement" means the Subsidiary Guarantee Agreement, substantially in the form of Exhibit I, made by the wholly owned Domestic Subsidiaries in favor of the Collateral Agent for the benefit of the Secured Parties. "Harris" has the meaning assigned to such term in the preamble hereto. "Hazardous Material" means all pollutants, contaminants, wastes, substances, chemicals, materials and constituents, including without limitation, crude oil, petroleum or petroleum distillates, asbestos or asbestos-containing materials, polychlorinated biphenyls ("PCBs") or PCB-containing materials or equipment of any nature which can give rise to Environmental Liability under, or are regulated pursuant to, any Environmental Law. "Hedging Agreement" means any interest rate protection agreement, foreign currency exchange agreement, commodity price protection agreement or other interest or currency exchange rate or commodity price hedging arrangement and all other similar agreements or arrangements designed to alter the risks of any Person arising from fluctuations in interest rate, currency values or commodity prices. "Iberica Transaction" means that certain transaction constituting the (a) declaration and payment of a dividend by SVS Iberica on September 30, 2003 which dividend shall take the form of Indebtedness incurred by SVS Iberica in favor of the Borrower and SVS Europe in the original aggregate principal amount of (euro)21,603,219 (or the Dollar equivalent of all or a portion thereof) (of which (euro)16,623,200 (or the Dollar equivalent of all or a portion thereof) will be owed to SVS Europe and (euro)4,980,019 (or the Dollar equivalent of all or a portion thereof) will be owed to the Borrower, and (b) the cash payment by SVS Iberica of up to (euro)396,781 (out of amounts otherwise distributable on a pro rata basis to the Borrower) to Governmental Authorities in the country of Spain on account of withholding taxes in connection with such a dividend; provided, however, that if the amount of such tax payment is less than (euro)396,781, the original principal amount of such notes may be increased by the excess of (euro)396,781 over such payment provided further that that original principal amount of such notes after giving effect to such increase shall not exceed (euro)22,000,000. "Impermissible Qualification" means, relative to the opinion or certification of any independent public accountant as to any financial statement of the Borrower, any qualification or exception to such opinion or certification: (a) which is of a "going concern" or similar nature; or -13- (b) which relates to the limited scope of examination of matters relevant to such financial statement. "Inactive Subsidiary" means, as at any date, any Subsidiary of the Parent Guarantor designated by the Borrower that as at the end of and for the Fiscal Quarter ending on or most recently ended prior to such date, shall have assets with a fair market value of less than $5,000 and gross revenues of less than $5,000, as specified in Schedule 1.01(b) or as otherwise certified in a Compliance Certificate delivered with respect to such fiscal period pursuant to Section 5.01(c); provided, however, if the aggregate fair market value of assets or gross revenues of all Inactive Subsidiaries so designated, taken together, is greater than or equal to $250,000, no such Subsidiary which when taken with all such other Subsidiaries causes such aggregate to exceed, in either case, such amount shall be deemed to be, or be, an Inactive Subsidiary. "Increased Cost Lender" has the meaning assigned to such term in Section 2.20. "Indebtedness" of any Person means the sum of all indebtedness of such Person on a consolidated basis (without duplication) with respect to (i) borrowed money or represented by bonds, debentures, notes and the like; (ii) the aggregate amount of Capital Lease Obligations; (iii) all indebtedness of third parties of the type described in the foregoing clause (i) secured by any Lien on any Property of such Person (if such indebtedness is non-recourse to such Person and such Person's assets, except for such Property, the amount of such indebtedness referred to in this clause (iii) to be deemed to be limited to the fair market value of such Property); (iv) all indebtedness representing the deferred purchase price of Property or services, excluding trade payables in the ordinary course of business; (v) letters of credit, performance bonds and other similar instruments; and (vi) Guarantees in respect of liabilities, obligations or indebtedness of the kind described in clauses (i) through (v). For the avoidance of doubt Indebtedness shall exclude any obligations arising in respect of Preferred Stock. "Indebtedness to Be Paid" means Indebtedness specified in Section 3.22(b). "Indebtedness to Remain Outstanding" means Indebtedness specified in Section 3.22(a). "Indemnitee" has the meaning assigned to such term in Section 10.05(b). "Indemnity, Subrogation and Contribution Agreement" means the Indemnity, Subrogation and Contribution Agreement, substantially in the form of Exhibit F. "Information Memorandum" means the Confidential Information Memorandum dated as of September 9, 2003 and posted electronically on Intralinks relating to the Borrower and this Agreement. "Initial Public Offering" means a primary underwritten public offering registered under the Securities Act of 1933, as amended, of common stock of the Parent Guarantor generating gross proceeds to the Parent Guarantor of at least $100.0 million. "Installment Payment Date" has the meaning assigned to such term in Section 2.05(d). "Intellectual Property" has the meaning assigned to such term in Section 3.12(b). "Interest Expense Coverage Ratio" means, for any Test Period, the ratio of (a) Consolidated EBITDA to (b) Cash Interest Expense, in each case for such Test Period. For Test Periods ending prior to the one year anniversary of the Effective Date, Cash Interest Expense and Consolidated EBITDA shall be determined on a pro forma basis to give effect to the Recapitalization Transac- -14- tions and the termination of the operating leases set forth on Schedule 1.01(a) as if they occurred on the first day of such Test Period. "Interest Payment Date" means, with respect to any Loan, the last day of the Interest Period applicable to the Borrowing of which such Loan is a part and, in the case of a Eurodollar Borrowing with an Interest Period of more than three months' duration, (a) each day that would have been an Interest Payment Date had successive Interest Periods of three months' duration been applicable to such Borrowing and, in addition, (b) the date of any refinancing of such Borrowing with a Borrowing of a different Type. "Interest Period" means (a) as to any Eurodollar Borrowing, the period commencing on the date of such Borrowing (including any date on which such Borrowing shall have been converted from a Borrowing of a different Type) or on the last day of the immediately preceding Interest Period applicable to such Borrowing, as the case may be, and (x) ending on the numerically corresponding day (or, if there is no numerically corresponding day, on the last day) in the calendar month that is 1, 2, 3 or 6 months (or if available to all Lenders, 9 or 12 months) thereafter, or (y) with respect to Eurodollar Borrowings made during the period from the Effective Date until 42 days thereafter, ending 7 days thereafter, as the Borrower may elect; provided that prior to the 31st day after the Effective Date, the Borrower shall only be permitted to request Interest Periods commencing on the date of such Borrowing, conversion of such Borrowing to a different type or on the last day of the immediately preceding Interest Period applicable to such Borrowing and ending seven days from such date, or (b) as to any ABR Borrowing (other than a Swingline Borrowing), the period commencing on the date of such Borrowing (including any date on which such Borrowing shall have been converted from a Borrowing of a different Type) or on the last day of the immediately preceding Interest Period applicable to such Borrowing, as the case may be, and ending on the earliest of (i) the next succeeding March 31, June 30, September 30 or December 31, (ii) the Revolving Credit Maturity Date (in the case of a Revolving Borrowing) or the Term B Loan Maturity Date (in the case of a Term B Borrowing) and (iii) the date such Borrowing is prepaid in accordance with Section 2.05 or converted in accordance with Section 2.03 and (c) as to any Swingline Loan, a period commencing on the date of such Loan and ending on the earliest of (i) the fifth Business Day thereafter, (ii) the Revolving Credit Maturity Date (in the case of a Revolving Credit Borrowing) or the Term B Loan Maturity Date (in the case of a Term B Borrowing) and (iii) the date such Loan is prepaid in accordance with Section 2.05; provided, however, that if any Interest Period would end on a day other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless, in the case of a Eurodollar Borrowing only, such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day. Interest shall accrue from and including the first day of an Interest Period to but excluding the last day of such Interest Period. "Internally Generated Funds" means funds not constituting the proceeds of any Indebtedness (other than a Revolving Credit Borrowing), Issuance of Equity Interests, Asset Sale or insurance recovery. "Investment" has the meaning assigned to such term in Section 6.04. "IP Group Member" means each of the IP Subsidiary and each of its direct and indirect parents that is not a Loan Party. "IP Subsidiary" means a wholly-owned Non-U.S. Subsidiary of the Borrower formed on or after the Effective Date and each other Non-U.S. Subsidiary of the Borrower to which any material portion of the Intellectual Property transferred to the IP Subsidiary by the Loan Parties is transferred. -15- "Issuing Bank" means Harris or Rabobank, or an affiliate thereof in its capacity as the issuer of Letters of Credit hereunder, and its successors in such capacity as provided in Section 2.06(i), and any other Revolving Lender approved by the Administrative Agent and the Borrower. The Issuing Bank may, in its discretion, arrange for one or more Letters of Credit to be issued by Affiliates of the Issuing Bank, in which case the term "Issuing Bank" shall include any such Affiliate with respect to Letters of Credit issued by such Affiliate. "Joint Lead Arrangers" has the meaning assigned to such term in the preamble hereto. "Joint Venture Entity" means each legal entity specified in Schedule 1.01(c) as a "Joint Venture Entity." "LC Disbursement" means a payment made by the Issuing Bank pursuant to a Letter of Credit. "LC Exposure" means, at any time, the sum of (a) the aggregate undrawn amount of all outstanding Letters of Credit at such time plus (b) the aggregate amount of all LC Disbursements that have not yet been reimbursed by or on behalf of the Borrower at such time. The LC Exposure of any Revolving Lender at any time shall be its Commitment Percentage of the total LC Exposure at such time. "LC Fees" has the meaning assigned to such term in Section 2.10(b). "Lender Affiliate" means (a) with respect to any Lender, (i) an Affiliate of such Lender or (ii) any entity (whether a corporation, partnership, trust or otherwise) that is engaged in making, purchasing, holding or otherwise investing in bank loans and similar extensions of credit in the ordinary course of its business and is administered or managed by a Lender or an Affiliate of such Lender and (b) with respect to any Lender that is a fund which invests in bank loans and similar extensions of credit, any other fund that invests in bank loans and similar extensions of credit and is managed by the same investment advisor as such Lender or by an Affiliate of such investment advisor. "Lenders" has the meaning assigned to such term in the preamble hereto. "Letter of Credit" means any letter of credit issued pursuant to this Agreement. "LIBO Rate" means, with respect to any Eurodollar Borrowing for any Interest Period the rate appearing on Page 3750 of the Telerate Service (or on any successor or substitute page of such Service, or any successor to or substitute for such Service, providing rate quotations comparable to those currently provided on such page of such Service, as determined by the Administrative Agent from time to time for purposes of providing quotations of interest rates applicable to dollar deposits in the London interbank market) at approximately 11:00 a.m., London time, two Business Days (in the event that on such day the commercial banks in London are authorized or required by law to close, then three Business Days) prior to the commencement of such Interest Period, as the rate for Dollar deposits with a maturity comparable to such Interest Period. In the event that such rate is not available at such time for any reason, then the "LIBO Rate" with respect to such Eurodollar Borrowing for such Interest Period shall be the rate supplied to the Administrative Agent at its request quoted by the Reference Banks in the London interbank market as of the day two Business Days prior to the commencement of such Interest Period as the rate for Dollar deposits with a maturity comparable to such Interest Period. "Lien" means, with respect to any asset, (a) any mortgage, deed of trust, deed to secure debt, lien, pledge, encumbrance, charge, assignment, hypothecation or security interest in or on such asset or any filing of any financing statement under the UCC as in effect in the applicable state or jurisdiction -16- or any other similar notice or lien under any similar notice or recording statute of any Governmental Authority, in each of the foregoing cases whether voluntary or imposed by law, (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement relating to such asset and (c) in the case of securities, any purchase option, call or similar right of a third party with respect to such securities. "Loan Documents" means this Agreement, the Collateral Sharing Agreement, the Indemnity, Subrogation and Contribution Agreement, the Guarantee Agreement, the Security Documents, if requested by a Lender pursuant to Section 2.07(e), each Note, each Compliance Certificate, each Closing Certificate, each Solvency Certificate, each Perfection Certificate, each Real Property Officer's Certificate and, solely for purposes of Section 7.01(a), the Fee Letter. "Loan Parties" means the Borrower, the Parent Guarantor and the Subsidiary Loan Parties. "Loan Party Information" has the meaning assigned to such term in Section 10.16(b). "Loans" means the Revolving Loans, the Swingline Loans and the Term B Loans. "Management Fee Letter" means the letter agreement, dated as of May 30, 2003, among Fox Paine & Company, LLC, Desarrollo Consolidado de Negocios, S.A. de C.V. and Seminis Merger Corp., as in effect on the Effective Date. "Material Adverse Effect" means a materially adverse effect on (a) the business, assets, operations, properties, condition (financial or otherwise), liabilities or prospects of the Loan Parties and their consolidated Subsidiaries, taken as a whole, (b) the ability of the Loan Parties (taken as a whole) to perform their obligations under the Loan Documents, (c) the rights of or benefits available to the Lenders under the Loan Documents (taken as a whole) or (d) the value of the Collateral (taken as a whole) or the validity, enforceability, perfection or priority of the Liens granted to the Collateral Agent (for its benefit and for the benefit of the other Secured Parties) on the Collateral pursuant to the Security Documents (taken as a whole). "Material Indebtedness" means Indebtedness (other than the Loans and Letters of Credit), or obligations in respect of one or more Hedging Agreements, of any one or more of the Parent Guarantor, the Borrower and the Borrower's Subsidiaries, individually or in an aggregate principal amount exceeding $5.0 million. For purposes of determining Material Indebtedness, the "principal amount" of the obligations of the Borrower or any Subsidiary in respect of any Hedging Agreement at any time shall be the maximum aggregate amount (giving effect to any netting agreements) that the Parent Guarantor, the Borrower or such Subsidiary would be required to pay if such Hedging Agreement were terminated at such time. "Maximum Rate" has the meaning assigned to such term in Section 10.09. "Merger" means the merger of Seminis Merger Corp. with and into the Parent Guarantor pursuant to the Merger Agreement with the Parent Guarantor being the surviving corporation. "Merger Agreement" means the merger agreement dated as of May 30, 2003 by and among the Seminis Acquisition LLC, Seminis Merger Corp. and the Parent Guarantor. "Mexican SPC" means Desarrollo Consolidado de Negocios, S.A. de C.V., a corporation (sociedad anonima de capital variable) organized under the laws of the United Mexican States. -17- "Moody's" means Moody's Investors Service, Inc. "Mortgage" means a mortgage, deed of trust, assignment of leases and rents, leasehold mortgage, deed to secure debt or other security document granting a Lien on any Mortgaged Property to secure the Obligations, including any amendment thereto. Each Mortgage shall be substantially in the form of Exhibit N or otherwise satisfactory in form and substance to the Collateral Agent. "Mortgaged Property" means, initially, each Real Property and identified on Schedule 4.01(s)(A), and each other Real Property and improvements thereto with respect to which a Mortgage is granted pursuant to Section 5.11. "Mr. Romo" means Alfonso Romo Garza. "Multiemployer Plan" means a multiemployer plan within the meaning of Section 4001(a)(3) of ERISA (i) to which any Loan Party or ERISA Affiliate is then making or accruing an obligation to make contributions, (ii) to which any Loan Party or ERISA Affiliate has within the preceding six plan years made contributions, including any Person which ceased to be an ERISA Affiliate during such six year period, or (iii) with respect to which Loan Party or any Subsidiary could incur liability. "Net Proceeds" means, with respect to any Equity Issuance, Debt Incurrence, Asset Sale, Destruction or Taking, (a) the cash proceeds actually received in respect of such event, including (i) any cash received in respect of any non-cash proceeds, but only as and when received, (ii) in the case of a Destruction, insurance proceeds in excess of $1.0 million, and (iii) in the case of a Taking, condemnation awards and similar payments in excess of $1.0 million, net of (b) the sum of (i) all reasonable fees and out-of-pocket expenses paid by the Parent Guarantor and its Subsidiaries to any third party or (subject to Section 6.08) any Affiliate in connection with such event, (ii) the amount of all taxes paid (or reasonably estimated to be payable) by the Parent Guarantor and its Subsidiaries, and (iii) in the case of an Asset Sale, (1) the amount of all payments required to be made by the Parent Guarantor and its Subsidiaries as a result of such event to repay Indebtedness (other than Loans) secured by a Prior Lien (as defined in the Security Agreement or applicable Mortgage) on such asset, (2) the amount of Indebtedness of the Non-U.S. Subsidiary selling such asset repaid with such proceeds, and (3) the amount of any reserves established by the Parent Guarantor and its Subsidiaries to fund contingent liabilities reasonably estimated to be payable, in each case during the year that such event occurred or the next succeeding two years, and that are directly attributable to such event (as determined reasonably and in good faith by the Borrower); provided that any amount by which such reserves are reduced for reasons other than payment of any such contingent liabilities shall be considered "Net Proceeds" upon such reduction. "New Parcel" has the meaning assigned to such term in Section 5.18(f). "New Preferred Stock" means the Class C PIK Preferred Stock issued pursuant to the New Preferred Stock Documents. "New Preferred Stock Documents" means (i) the Class C PIK Preferred Stock and Warrant Subscription Agreement dated on or about the Effective Date by and between Seminis Merger Corp. and The Northwestern Mutual Life Insurance Company (the "NML Preferred Subscription Agreement"), (ii) the Certificate of Designation attached as Exhibit A to the NML Preferred Subscription Agreement, (iii) the Warrant Agreement in the form attached as Exhibit B to the NML Preferred Subscription Agreement, (iv) the Class C PIK Preferred Stock and Warrant Subscription Agreement dated on or about the Effective Date by and among Seminis Merger Corp., Stichting Pensioenfonds ABP and Stichting Pensioenfonds Voor De Gezondheid, Geestelijke En Maatschappelijke Belangen (the "NIBC Preferred Sub- -18- scription Agreement") and (v) the Warrant Agreement or Warrant Agreements in the form attached as Exhibit B to the NIBC Preferred Subscription Agreement. "Non-Consenting Lender" has the meaning assigned to such term in Section 2.20. "Non-U.S. Jurisdiction" means each jurisdiction of organization of a Subsidiary of the Borrower other than the United States (or any State thereof) or the District of Columbia. "Non-U.S. Pledge Agreements" means one or more pledge agreements in form and substance reasonably satisfactory to the Collateral Agent covering (subject to the terms of Section 5.11) 65% of the voting Equity Interests and 100% of the non-voting Equity Interests owned by a Subsidiary Loan Party in the "first-tier" Non-U.S. Subsidiaries of the Borrower. "Non-U.S. Subsidiary" means any Subsidiary of the Borrower that is or becomes organized under the laws of a Non-U.S. Jurisdiction. "Note" means a note substantially in the form of Exhibit G-1 or G-2. "Obligations" means the unpaid principal of and interest on (including interest accruing after the maturity of the Loans made to the Borrower and interest accruing after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to the Borrower, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding) the Loans made to or LC Disbursements made pursuant to Letters of Credit issued for the account of the Borrower and all other obligations and liabilities of the Borrower to any Agent, the Issuing Bank or to any Lender, whether direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter incurred, which may arise under, out of, or in connection with, this Agreement or any other document made, delivered or given in connection herewith (including, without limitation, any Hedging Agreement), whether on account of principal, interest, fees, indemnities, costs or expenses (including, without limitation, all reasonable fees, charges and disbursements of counsel), or otherwise. "OFAC" has the meaning assigned to such term in Section 3.24(b)(v). "Other List" has the meaning assigned to such term in Section 6.17. "Organic Document" means (i) relative to each Person that is a corporation, its charter, its by-laws and all shareholder agreements, voting trusts and similar arrangements applicable to any of its authorized shares of capital stock, (ii) relative to each Person that is a partnership, its partnership agreement and any other similar arrangements applicable to any partnership or other equity interests in the Person and (iii) relative to any Person that is any other type of legal entity, such documents as shall be comparable to the foregoing. "Oxnard Mortgage" means the mortgage on the Borrower's headquarters in Oxnard, California. "Parent Guarantor" has the meaning assigned to such term in the preamble to this Agreement. "Parent Preferred Stock" means the Class B Redeemable Preferred Stock of the Parent Guarantor. "Participant" has the meaning assigned to such term in Section 10.04(f). -19- "PBGC" means the Pension Benefit Guaranty Corporation referred to and defined in ERISA. "Pension Plan" means a "pension plan," as such term is defined in Section 3(2) of ERISA, which is subject to Title IV of ERISA (other than a Multiemployer Plan) and to which any Loan Party or any ERISA Affiliate may have liability, including any liability by reason of having been a substantial employer within the meaning of Section 4063 of ERISA at any time during the preceding five years, or by reason of being deemed to be a contributing sponsor under Section 4069 of ERISA. "Perfection Certificate" means a certificate in the form of Annex 2 to the Security Agreement or any other form approved by the Collateral Agent. "Permitted Acquisition" means any acquisition, whether by purchase, merger, consolidation or otherwise, by the Borrower or any Subsidiary Loan Party of all or substantially all the assets of, or all the Equity Interests in, a Person or a division, line of business or other business unit of a Person so long as (a) such acquisition shall not be opposed by the board of directors or other governing body of such Person (unless the holders of a majority of the voting power of the voting Equity Interests of such Person are in favor of such acquisition), (b) such assets are to be used in, or such Person so acquired is engaged in, as the case may be, a business of the type conducted by the Borrower and its Subsidiaries on the Effective Date or in a business reasonably related thereto and (c) immediately after giving effect thereto, (i) no Default has occurred and is continuing or would result therefrom, (ii) all transactions related thereto are consummated in all material respects in accordance with applicable laws, (iii) in the case of an acquisition of Equity Interests, the Person acquired shall become immediately after giving effect thereto a wholly-owned Subsidiary or be merged with or into a wholly-owned Subsidiary and all actions required to be taken under Sections 5.11, 5.12 and 5.16 shall have been taken, (iv) the Borrower and its Subsidiaries are in compliance, on a pro forma basis after giving effect to such acquisition, with the covenants contained in Sections 6.12 and 6.13 recomputed as at the date of the last ended Test Period, as if such acquisition (and any related incurrence or repayment of Indebtedness) had occurred on the first day of the relevant Test Period, (v) any Indebtedness or any Preferred Stock that is incurred, acquired or assumed in connection with such acquisition shall be in compliance with Section 6.01, (vi) other than in the case where such acquisition is funded entirely with the proceeds of, or in consideration for, the issuance of Equity Interest or capital contributions, the Total Revolving Credit Commitment less the Revolving Credit Exposure of all Revolving Lenders shall not be less than $25.0 million and (vii) the Borrower has delivered to the Administrative Agent an officers' certificate to the effect set forth in clauses (a), (b) and (c)(i) through (vi) above, together with all relevant financial information for the Person or assets to be acquired. "Permitted Investments" means: (a) marketable direct obligations issued by, or unconditionally guaranteed by, the United States Government or any member state of the European Union (as it exists on the Effective Date) or issued by any agency or instrumentality thereof and backed by the full faith and credit of the United States of America or such member state of the European Union, in each case maturing within one year from the date of acquisition thereof; (b) marketable direct obligations issued by any State of the United States of America or any political subdivision of any such State or any public instrumentality thereof maturing within one year from the date of acquisition thereof and, at the time of acquisition, having one of the two highest ratings obtainable from either S&P or Moody's; -20- (c) commercial paper maturing no more than one year from the date of creation thereof and, at the time of acquisition, having a rating of at least A-1 from S&P or at least P-1 from Moody's; (d) time deposits, demand deposits, certificates of deposit, Eurodollar time deposits or bankers' acceptances maturing within one year from the date of acquisition thereof or overnight bank deposits, in each case, issued by any bank organized under the laws of any member state of the European Union (as it exists on the Effective Date), the United States of America or any State thereof or the District of Columbia or any U.S. branch of a foreign bank having at the date of acquisition thereof combined capital and surplus of not less than $500.0 million; (e) repurchase obligations with a term of not more than 90 days for underlying securities of the types described in clause (a) above entered into with any bank meeting the qualifications specified in clause (d) above; and (f) investments in money market funds which invest substantially all their assets in securities of the types described in clauses (a) through (e) above. "Permitted Lien" has the meaning assigned to such term in Section 6.02. "Permitted Management Fees" means, in any Fiscal Year, (i) the advisory fees (but not expense reimbursement) required to be paid by the Parent Guarantor pursuant to the Management Fee Letter plus (ii) reasonable out-of-pocket expenses of Fox Paine (but not Mexican SPC) (each as defined in the Management Fee Letter) required to be paid by the Parent Guarantor pursuant to the terms of the Management Fee Letter. "Permitted Refinancing" means, with respect to any Indebtedness, any refinancing thereof; provided, however, that (i) no Default shall have occurred and be continuing or would arise therefrom, (ii) any such refinancing Indebtedness shall (a) not be on financial and other terms that are more onerous in the aggregate than the Indebtedness being refinanced and shall not have defaults, rights or remedies more burdensome in the aggregate to the obligor than the Indebtedness being refinanced, (b) not have a stated maturity that is shorter than the Indebtedness being refinanced, (c) either (x) not require any payment of principal prior to the date 180 days after the Term B Loan Maturity Date (the "Test Date"), if the Indebtedness being refinanced has no remaining scheduled payment of principal required to be made prior to the Test Date or (y) not have a Weighted Average Life to Maturity that is shorter than the Indebtedness being refinanced, if the Indebtedness being refinanced has any remaining scheduled payments of principal required to be made prior to the Test Date, (d) be at least as subordinate to the Obligations as the Indebtedness being refinanced (and unsecured if the refinanced Indebtedness is unsecured), and (e) be in a principal amount that does not exceed the principal amount so refinanced (except in the case of the Oxnard Mortgage, which refinancing Indebtedness may be in an aggregate principal amount not to exceed $20.0 million), plus all accrued and unpaid interest thereon, plus the stated amount of any premium and other payments required to be paid in connection with such refinancing pursuant to the terms of the Indebtedness being refinanced, plus in either case, the amount of reasonable fees and expenses of the Borrower or any of its Subsidiaries incurred in connection with such refinancing, and (iii) the sole obligors and/or guarantors on such refinancing Indebtedness shall be the obligors and/or guarantors on such Indebtedness being refinanced other than any guarantee by a Subsidiary Loan Party that was not an original guarantor thereof. "Person" means any natural person, corporation, trust, joint venture, association, company, partnership, limited liability company or government, or any agency or political subdivision thereof. -21- "PII" means PII, LLC. "Plan" means any "employee benefit plan," as such term is defined in Section 3(3) of ERISA, that is maintained or contributed to by a Loan Party or any Subsidiary, or with respect to which a Loan Party or any Subsidiary could reasonably incur liability. "Platform" has the meaning assigned to such term in Section 10.17(b). "Pledge Agreement" means the Pledge Agreement, substantially in the form of Exhibit J, among the Loan Parties and the Collateral Agent for the benefit of the Secured Parties. "Pledged Securities" has the meaning assigned to such term in the Pledge Agreement. "Preferred Stock" means, with respect to any Person, any and all preferred or preference Equity Interests (however designated) of such Person whether or not outstanding or issued on the Effective Date. "Prepayment Date" has the meaning assigned to such term in Section 2.05(f). "Pro Rata Percentage" of any Revolving Lender at any time means the percentage of the aggregate Available Revolving Credit Commitment represented by such Lender's Available Revolving Credit Commitment. "Projected Financial Statements" has the meaning assigned to such term in Section 3.17(c). "Property" means any right, title or interest in or to property or assets of any kind whatsoever, whether real, personal or mixed and whether tangible or intangible and including any ownership interests of any Person. "Qualified Non-U.S. Intercompany Note" means an intercompany note which (i) is not subordinated to any Indebtedness of the obligor, (ii) is, subject to the last sentence of Section 5.11, pledged pursuant to the Pledge Agreement and (iii) provides for an event of default of such note (and thereupon the note becoming due and payable) upon (x) the failure of the Borrower to pay principal at maturity of any Loan or (y) the Loans, other Obligations and Commitments becoming immediately due and payable prior to maturity pursuant to Section 7.01, 7.02 or 7.03. "Rabobank" has the meaning assigned to such term in the preamble hereto. "Real Property" means all right, title and interest of any Loan Party in and to a parcel of real property owned, leased or operated (including, without limitation, any leasehold estate) by any Loan Party together with, in each case, all improvements and appurtenant fixtures, equipment, personal property, easements and other property and rights incidental to the ownership, lease or operation thereof. "Recapitalization Documents" means the Merger Agreement, the Exchange Agreement and the Stockholders' Agreement, each document attached as an exhibit to any such agreement and each document attached as an exhibit to each document attached as an exhibit to any such agreement. "Recapitalization Transactions" means the Merger, each other transaction contemplated by the Recapitalization Documents, the payment of Indebtedness to be Repaid and the payment of fees and expenses in connection with the Transactions. -22- "Reference Banks" means: (a) at any time prior to completion of the initial syndication of the Loans and Commitments, in respect of LIBO Rate, the principal London office of Citibank, N.A.; and (b) at any time thereafter, in respect of LIBO Rate, the principal London office of Citibank, N.A. and such two other banks as may be appointed by the Administrative Agent in consultation with the Borrower. "Register" has the meaning assigned to such term in Section 10.04(d). "Regulation U" means Regulation U of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof. "Regulation X" means Regulation X of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof. "Related Parties" means, with respect to any specified Person, such Person's Affiliates and the respective directors, officers, employees, agents and advisors of such Person and such Person's Affiliates. "Release" means any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, disposing, depositing, dispersing, emanating or migrating of any Hazardous Material in, into, onto or through the Environment. "Remedial Action" means (a) "remedial action" as such term is defined in CERCLA, 42 U.S.C. Section 9601(24), and (b) all other actions required by any Governmental Authority or voluntarily undertaken to: (i) clean up, remove, treat, abate, monitor or otherwise take corrective action to address any Hazardous Material in the Environment, including, without limitation, any action or payment to address any damage to natural resources; (ii) prevent the Release or threat of Release, or minimize the further Release of any Hazardous Material so it does not migrate or endanger or threaten to endanger public health, welfare or the Environment; or (iii) perform studies and investigations in connection with, or as a precondition to, (i) or (ii) above. "Requirement of Law" means, as to any Person, any law, treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or assets or to which such Person or any of its property or assets is subject. "Requisite Class Lenders" means, at any time of determination, (i) for the Class of Lenders having Term B Loans, Lenders holding more than 50% of the aggregate Term B Loans of all Lenders; and (ii) for the Class of Lenders having Revolving Credit Commitments, the Requisite Revolving Lenders. "Requisite Lenders" means, at any time, Lenders having more than fifty percent (50%) of the sum of (a) the aggregate amount of the Revolving Credit Commitments or, after the Revolving Credit Maturity Date, the Revolving Credit Exposure and (b) the aggregate outstanding amount of all Term B Loans. -23- "Requisite Revolving Lenders" means, collectively, Lenders having more than fifty percent (50%) of the aggregate outstanding amount of the Revolving Credit Commitments or, after the Revolving Credit Maturity Date, the Revolving Credit Exposure. "Restricted Payment" means any direct or indirect dividend or other distribution (whether in cash, securities or other property) with respect to any Equity Interests or Equity Rights in the Parent Guarantor, the Borrower or any Subsidiary, or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any Equity Interests or Equity Rights in the Parent Guarantor, the Borrower or any Subsidiary. "Revolving Credit Borrowing" means a Borrowing comprised of Revolving Loans. "Revolving Credit Borrowing Request" means a Borrowing Request in connection with a Revolving Credit Borrowing. "Revolving Credit Commitment" means, with respect to each Revolving Lender, the commitment of such Revolving Lender to make Revolving Loans and to acquire participations in Letters of Credit, Swingline Loans and Eurodollar Loans hereunder, expressed in each case as an amount representing the maximum principal amount of such Revolving Lender's Revolving Credit Exposure hereunder, as the same may be reduced from time to time pursuant to the provisions of this Agreement. The initial amount of each Revolving Lender's Revolving Credit Commitment is set forth in Schedule 2.01 (in the case of Revolving Credit Commitments in effect on the Effective Date), or in the Assignment and Acceptance pursuant to which such Lender shall have assumed its Revolving Credit Commitment, as applicable. The aggregate amount of the Revolving Lenders' Revolving Credit Commitments as of the Effective Date is $60.0 million. "Revolving Credit Commitment Period" means the period from and including the Effective Date to but not including the Revolving Credit Maturity Date or any earlier date on which the Revolving Credit Commitments to make Revolving Loans pursuant to Section 2.01 shall terminate as provided herein. "Revolving Credit Exposure" means with respect to any Revolving Lender at any time, the sum of (a) the aggregate principal amount at such time of all outstanding Revolving Loans of such Revolving Lender, plus (b) such Revolving Lender's LC Exposure at such time, plus (c) such Revolving Lender's Commitment Percentage of the aggregate principal amount at such time of all outstanding Swingline Loans. "Revolving Credit Maturity Date" means the fifth anniversary of the Effective Date. "Revolving Lender" means a Lender with a commitment to make Revolving Loans or with any Revolving Credit Exposure, in its capacity as such. "Revolving Loans" means the revolving loans made pursuant to clause (ii) of the first sentence of Section 2.01(a). "S&P" means Standard & Poor's, a division of The McGraw-Hill Companies. "SDN List" has the meaning assigned to such term in Section 6.17. "SEC" means the Securities and Exchange Commission. -24- "Secured Parties" has the meaning assigned to such term in the Security Agreement. "Security Agreement" means the Security Agreement, substantially in the form of Exhibit K, among the Loan Parties and the Collateral Agent for the benefit of the Secured Parties. "Security Documents" means the Security Agreement, the Pledge Agreement, the Non-U.S. Pledge Agreements, the Mortgages, the Perfection Certificate, the Collateral Sharing Agreement, Cash Management Agreements (as defined in the Security Agreement) and Hedging Agreements executed by the Loan Parties and each other security agreement or other instrument or document executed and delivered pursuant to Section 5.11, 5.12 or 5.16 to secure any of the Obligations. "Solvency Certificate" means a certificate substantially in the form of Exhibit M. "South Korean Subsidiary" means Seminis Korea, Inc. "Stock Plans" means all stock option, stock-based incentive compensation and stock purchase plans or arrangements and other stock-based plans or arrangements of the Parent Guarantor or any of its Subsidiaries adopted from time to time in the ordinary course of business. "Stockholders' Agreement" means the stockholders' agreement dated as of May 30, 2003, by and among Seminis Merger Corp. and the investors parties thereto. "Subordinated Debt" means the Subordinated Notes and any Permitted Refinancing of any thereof. "Subordinated Debt Documents" means the Subordinated Notes Documents and each document governing or pursuant to which is issued any other Subordinated Debt, as the same may be in effect from time to time in accordance with the terms hereof and thereof. "Subordinated Notes" means $190,000,000 aggregate principal amount of 10 1/4% Senior Subordinated Notes due October 1, 2013 of the Borrower issued on the Effective Date, including the senior subordinated notes to be issued pursuant to a registered exchange offer or private exchange therefor as contemplated in the offering document for the Subordinated Notes. "Subordinated Notes Documents" means the Subordinated Notes, the Subordinated Notes Indenture and all other material documents executed and delivered with respect to the Subordinated Notes or the Subordinated Notes Indenture, as in effect on the Effective Date and as the same may be modified, supplemented, restated and/or amended from time to time in accordance with the terms hereof and thereof. "Subordinated Notes Indenture" means the Indenture, dated as of September 29, 2003, between the Borrower and the Subsidiary Loan Parties and Wells Fargo Bank, National Association, as Trustee, as in effect on the Effective Date and as the same may be modified, supplemented and/or amended from time to time in accordance with the terms hereof and thereof. "Subordination Provision" has the meaning assigned to such term in Section 7.01(l). "Subsidiary" means, with respect to any Person, (i) any corporation of which more than 50% of the outstanding capital stock having ordinary voting power to elect a majority of the board of directors of such corporation (irrespective of whether at the time capital stock of any other class or classes of such corporation shall or might have voting power upon the occurrence of any contingency) is at the -25- time directly or indirectly owned by such Person, by such Person and one or more other Subsidiaries of such Person, or by one or more other Subsidiaries of such Person; (ii) any partnership of which more than 50% of the outstanding partnership interests having the power to act as a general partner of such partnership (irrespective of whether at the time any partnership interests other than general partnership interests of such partnership shall or might have voting power upon the occurrence of any contingency) are at the time directly or indirectly owned by such Person, by such Person and one or more other Subsidiaries of such Person, or by one or more other Subsidiaries of such Person; or (iii) any other legal entity the accounts of which would or should be consolidated with those of such Person on a consolidated balance sheet of such Person prepared in accordance with GAAP. Unless otherwise indicated, when used in this Agreement, the term "Subsidiary" shall refer to a Subsidiary of the Borrower. For the avoidance of doubt, (x) no Joint Venture Entity shall be considered a Subsidiary of the Borrower for purposes of this Agreement so long as it does not constitute a Subsidiary pursuant to clause (i) or (ii) of this definition and (y) PII shall not be considered to be a Subsidiary of the Borrower for purposes of this definition for so long as it is in compliance with Section 6.15. "Subsidiary Loan Party" means each of the Borrower's Domestic Subsidiaries that guarantee the Obligations pursuant to the Guarantee Agreement, initially as identified in Schedule 1.01(d) and any Subsidiary that becomes a Loan Party pursuant to Section 5.16 or otherwise. "Survey" means a survey of any Mortgaged Property (and all improvements thereon): (i) prepared by a surveyor or engineer licensed to perform surveys in the state where such Mortgaged Property is located, (ii) dated (or redated) not earlier than six months prior to the date of delivery thereof unless there shall have occurred within six months prior to such date of delivery any exterior construction on the site of such Mortgaged Property which can be depicted on a survey or any easement, right of way or other right or interest in the Mortgaged Property which can be located on a survey has been granted by a Loan Party or become effective through operation of law or otherwise, in which events, as applicable, such survey shall be dated (or redated) after the completion of such construction or if such construction shall not have been completed as of such date of delivery, not earlier than 20 days prior to such date of delivery, or after the grant or effectiveness of any such easement, right of way or other right or interest in the Mortgaged Property, (iii) certified by such surveyor (in a manner reasonably acceptable to the Collateral Agent) to the Collateral Agent and the Title Company, (iv) complying in all material respects with the minimum detail requirements of the American Land Title Association as such requirements are in effect on the date of preparation of such survey and (v) sufficient for the Title Company to remove all standard survey exceptions from the title insurance policy (or commitment) and issue a survey endorsement. "SVS Europe" means SVS Europe, B.V. "SVS Iberica" means Seminis Vegetable Seeds Iberica, S.A. "Swingline Commitment" means the commitment of the Swingline Lender to make Loans pursuant to Section 2.04. "Swingline Exposure" means, at any time, the aggregate principal amount of all Swingline Loans outstanding at such time. The Swingline Exposure of any Revolving Lender at any time shall be its Commitment Percentage of the total Swingline Exposure at such time. "Swingline Lender" means Citicorp North America, Inc., in its capacity as lender of Swingline Loans. "Swingline Loan" has the meaning assigned to such term in Section 2.04(a). -26- "Swingline Sublimit" has the meaning assigned to such term as Section 2.04(a). "Syndication Agent" has the meaning assigned to such term in the preamble hereto. "Taking" means any taking of any Property of the Parent Guarantor or any Subsidiary or any portion thereof, in or by condemnation or other eminent domain proceedings pursuant to any law, general or special, or by reason of the temporary requisition or use of any Property of the Parent Guarantor or any Subsidiary or any portion thereof, by any Governmental Authority. "Taxes" has the meaning assigned to such term in Section 2.16. "Term B Borrowing" means a Borrowing comprised of Term B Loans on the Effective Date. "Term B Borrowing Request" means a Borrowing Request in connection with a Term B Borrowing on the Effective Date. "Term B Commitment" means, with respect to each Lender, the commitment, if any, of such Lender to make a Term B Loan hereunder on the Effective Date, expressed as an amount representing the maximum principal amount of the Term B Loan to be made by such Lender hereunder, as the same may be reduced from time to time pursuant to the provisions of this Agreement. The initial amount of each Lender's Term B Commitment is set forth on Schedule 2.01 or in the Assignment and Acceptance pursuant to which such Lender shall have assumed its Term B Commitment, as applicable. The initial aggregate amount of the Lenders' Term B Commitments is $190.0 million. "Term B Lender" means a Lender with a Term B Commitment or an outstanding Term B Loan, in its capacity as such. "Term B Loan Maturity Date" means the sixth anniversary of the Effective Date. "Term B Loans" means the Loans made pursuant to clause (i) of Section 2.01(a). "Terminated Lender" has the meaning assigned thereto in Section 2.20. "Test Period" means (i) for the covenants contained in Sections 6.12 and 6.13, the four consecutive complete Fiscal Quarters of the Borrower then last ended as of each date listed under Test Period and (ii) for all other provisions in this Agreement, the four consecutive complete Fiscal Quarters of the Borrower ended as of the time indicated. Compliance with such covenants shall be tested, as of the end of each Test Period, on the date on which the financial statements pursuant to Section 5.01(a) or (b) have been, or should have been, delivered for the applicable fiscal period. "Title Company" means Royal Abstract of New York, LLC, as authorized agent for Stewart Title, or such other title insurance or abstract company as shall be approved by the Collateral Agent insuring the Mortgages. "Total Leverage Ratio" means, at any date, the ratio of (a) Consolidated Indebtedness as of such date to (b) Consolidated EBITDA for the Test Period most recently ended. For Test Periods ending prior to the one year anniversary of the Effective Date, Consolidated EBITDA for shall be determined on a pro forma basis to give effect to the Recapitalization Transactions and the termination of the operating leases set forth in Schedule 1.01(a) as if they occurred on the first day of such Test Period. In addition, for purposes of calculating the Total Leverage Ratio for any applicable period ending after Decem- -27- ber 31, 2003, Permitted Acquisitions that have been made by the Borrower or any of its Subsidiaries will be given pro forma effect as if they had occurred on the first day of such period. "Total Revolving Credit Commitment" means, at any time, the aggregate amount of the Revolving Credit Commitments, as in effect at such time. "Transaction Documents" means the Financing Documents and the Recapitalization Documents. "Transactions" means the Financing Transactions and the Recapitalization Transactions. "Transferee" has the meaning assigned to such term in Section 2.16. "Trigger Date" means the date on which a Compliance Certificate for the first fiscal quarter ending more than six months after the Effective Date shall have been received by the Administrative Agent pursuant to Section 5.01(b). "Type," when used in respect of any Loan or Borrowing, refers to the Rate by reference to which interest on such Loan or on the Loans comprising such Borrowing is determined. For purposes hereof, "Rate" shall include the LIBO Rate and the Alternate Base Rate. "UCC" means the Uniform Commercial Code as in effect in the applicable state or jurisdiction. "Unrefunded Swingline Loans" has the meaning assigned thereto in Section 2.04(c). "Voting Agreement" means the voting agreement dated as of May 30, 2003 among the stockholders parties thereto and Fox Paine Seminis Holdings, LLC. "Weighted Average Life to Maturity" means, when applied to any Indebtedness at any date, the number of years obtained by dividing (a) the aggregate outstanding principal amount of such Indebtedness on such date into (b) the sum of the total of the products obtained by multiplying (i) the amount of each scheduled installment, sinking fund, serial maturity or other required payment of principal including payment at final maturity, in respect thereof, by (ii) the number of years (calculated to the nearest one-twelfth) which will elapse between such date and the making of such payment. "Welfare Plan" means a "welfare plan," as such term is defined in Section 3(1) of ERISA, that is maintained or contributed to by a Loan Party or any Subsidiary or with respect to which a Loan Party or any Subsidiary could reasonably incur liability. "Withdrawal Liability" means liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part 1 of Subtitle E of Title IV of ERISA. SECTION 1.02. Classification of Loans and Borrowings. For purposes of this Agreement, Loans may be classified and referred to by Class (e.g., a "Revolving Loan") or by Type (e.g., a "Eurodollar Loan") or by Class and Type (e.g., a "Eurodollar Revolving Loan"). Borrowings also may be classified and referred to by Class (e.g., a "Revolving Credit Borrowing") or by Type (e.g., a "Eurodollar Borrowing") or by Class and Type (e.g., a "Eurodollar Revolving Credit Borrowing"). -28- SECTION 1.03. Terms Generally. (a) The definitions in Section 1.01 shall apply equally to both the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words "include", "includes" and "including" shall be deemed to be followed by the phrase "without limitation". All references herein to Articles, Sections, Exhibits and Schedules shall be deemed references to Articles and Sections of, and Exhibits and Schedules to, this Agreement unless the context shall otherwise require. Except as otherwise expressly provided herein, (i) any reference in this Agreement to any Loan Document means such document as amended, restated, supplemented or otherwise modified from time to time and (ii) all terms of an accounting or financial nature shall be construed in accordance with GAAP, as in effect from time to time; provided, however, that for purposes of determining compliance with the covenants contained in Article VI, all accounting terms herein shall be interpreted and all accounting determinations hereunder shall be made in accordance with GAAP as in effect on the Effective Date and applied on a basis consistent with the application used in the financial statements referred to in Section 3.06. (b) If any payment under this Agreement or any other Loan Document shall be due on any day that is not a Business Day, the date for payment shall be extended to the next succeeding Business Day, and in the case of any payment accruing interest, interest thereon shall be paid for the period of such extension. ARTICLE II THE CREDITS SECTION 2.01. Credit Commitments. (a) Subject to the terms and conditions hereof, (i) each Term B Lender severally agrees to make a Term B Loan in Dollars to the Borrower on the Effective Date in a principal amount not exceeding its Term B Commitment and, (ii) each Revolving Lender severally agrees to make Revolving Loans in Dollars to the Borrower from time to time during the Revolving Credit Commitment Period. Amounts repaid in respect of Term B Loans may not be reborrowed. During the Revolving Credit Commitment Period the Borrower may use the Revolving Credit Commitments by borrowing, prepaying the Revolving Loans in whole or in part, and reborrowing, all in accordance with the terms and conditions hereof. Notwithstanding anything to the contrary contained in this Agreement, in no event may Revolving Loans be borrowed under this Article II if, after giving effect thereto (and to any concurrent repayment or prepayment of Loans), (i) the Aggregate Revolving Credit Exposure would exceed the Total Revolving Credit Commitment then in effect or (ii) the Revolving Credit Exposure of any Revolving Lender would exceed such Revolving Lender's Revolving Credit Commitment. (b) The Revolving Loans and Term B Loans may from time to time be (i) Eurodollar Loans, (ii) ABR Loans or (iii) a combination thereof, as determined by the Borrower and notified to the Administrative Agent in accordance with Sections 2.02 and 2.03. (c) Each Loan (other than a Swingline Loan) shall be made as part of a Borrowing consisting of Loans of the same Class and Type made by the Lenders ratably in accordance with their respective Commitments of the applicable Class. The failure of any Lender to make any Loan required to be made by it shall not relieve any other Lender of its obligations hereunder; provided that the Commitments of the Lenders are several and no Lender shall be responsible for any other Lender's failure to make Loans as required. SECTION 2.02. Procedure for Borrowing. (a) The Borrower may borrow under the Revolving Credit Commitments (subject to the limitations in Section 2.01(a)) or the Term B Commitments by giving the Administrative Agent notice substantially in the form of Exhibit B (a "Borrowing -29- Request"), which notice must be received by the Administrative Agent prior to (a) 11:00 a.m., New York City time, three Business Days prior to the requested Borrowing Date, in the case of a Eurodollar Borrowing, or (b) 11:00 a.m., New York City time, on the Business Day prior to the requested Borrowing Date, in the case of an ABR Borrowing. The Borrowing Request for each Borrowing shall specify (i) whether the requested Borrowing is to be a Revolving Credit Borrowing or a Term B Borrowing, (ii) the amount to be borrowed, (iii) the requested Borrowing Date (which must be the Effective Date, in the case of a Term B Borrowing), (iv) whether the Borrowing is to be of Eurodollar Loans or ABR Loans, (v) if the Borrowing is to be of Eurodollar Loans, the length of the initial Interest Period therefor, and (vi) the location and number of the Borrower's account to which funds are to be disbursed, which shall comply with the requirements of this Agreement. If no election as to the Type of Borrowing is specified, then the requested Borrowing shall be an ABR Borrowing. If no Interest Period is specified with respect to any requested Eurodollar Borrowing, then the Borrower shall be deemed to have selected an Interest Period of one month's duration. (b) Each Borrowing shall be in a minimum aggregate principal amount of (i) in the case of a Term B Borrowing, $5.0 million or an integral multiple of $1.0 million in excess thereof or (ii) in the case of a Revolving Credit Borrowing, $1.0 million or an integral multiple of $1.0 million in excess thereof or, if less, the aggregate amount of the then Available Revolving Credit Commitments. (c) Upon receipt of the Term B Borrowing Request, the Administrative Agent shall promptly notify each Term B Lender of the aggregate amount of the Term B Borrowing and of the amount of such Term B Lender's pro rata portion thereof, which shall be based on their respective Term B Commitments. Each Term B Lender will make the amount of its pro rata portion of the Term B Borrowing available to the Administrative Agent for the account of the Borrower at the New York office of the Administrative Agent specified in Section 10.01 prior to 10:00 a.m., New York City time, on the Effective Date in funds immediately available to the Administrative Agent. Amounts so received by the Administrative Agent will promptly be made available to the Borrower by the Administrative Agent crediting the account of the Borrower on the books of such office with the aggregate of the amounts made available to the Administrative Agent by the Revolving Lenders and in like funds as received by the Administrative Agent. (d) Upon receipt of a Revolving Credit Borrowing Request, the Administrative Agent shall promptly notify each Revolving Lender of the aggregate amount of such Revolving Credit Borrowing and of the amount of such Revolving Lender's pro rata portion thereof, which shall be based on the respective Available Revolving Credit Commitments of all the Revolving Lenders. Each Revolving Lender will make the amount of its pro rata portion of each such Revolving Credit Borrowing available to the Administrative Agent for the account of the Borrower at the New York office of the Administrative Agent specified in Section 10.01 prior to 12:00 p.m., New York City time, on the Borrowing Date requested by the Borrower in funds immediately available to the Administrative Agent. Amounts so received by the Administrative Agent will promptly be made available to the Borrower by the Administrative Agent crediting the account of the Borrower on the books of such office with the aggregate of the amounts made available to the Administrative Agent by the Revolving Lenders and in like funds as received by the Administrative Agent; provided that if on the Borrowing Date of any Revolving Loans to be made to the Borrower, any Swingline Loans made to the Borrower or LC Disbursements for the account of the Borrower shall be then outstanding, the proceeds of such Revolving Loans shall first be applied to pay in full such Swingline Loans or LC Disbursements, with any remaining proceeds to be made available to the Borrower as provided above; and provided, further, that ABR Revolving Loans made to finance the reimbursement of an LC Disbursement as provided in Section 2.06(e) shall be remitted by the Administrative Agent to the Issuing Bank. -30- SECTION 2.03. Conversion and Continuation Options for Loans. (a) The Borrower may elect from time to time to convert (i) Eurodollar Loans to ABR Loans, by giving the Administrative Agent prior notice of such election not later than 11:00 a.m., New York City time, on the Business Day prior to a requested conversion or (ii) ABR Loans to Eurodollar Loans by giving the Administrative Agent prior notice of such election not later than 11:00 a.m., New York City time, three Business Days prior to a requested conversion; provided that if any such conversion of Eurodollar Loans is made other than on the last day of an Interest Period with respect thereto, the Borrower shall pay any amounts due to the Lenders pursuant to Section 2.17 as a result of such conversion. Any such notice of conversion to Eurodollar Loans shall specify the length of the initial Interest Period or Interest Periods therefor. Upon receipt of any such notice the Administrative Agent shall promptly notify each Lender thereof. All or any part of the outstanding Eurodollar Loans or ABR Loans may be converted as provided herein; provided that (i) no Loan may be converted into a Eurodollar Loan when any Default or Event of Default has occurred and is continuing, and (ii) no Loan may be converted into a Eurodollar Loan after the date that is one month prior to the Revolving Credit Maturity Date or the Term B Loan Maturity Date, as applicable. (b) Any Eurodollar Loans may be continued as such upon the expiration of the then current Interest Period with respect thereto by the Borrower giving prior notice to the Administrative Agent, not later than 11:00 a.m., New York City time, three Business Days prior to a requested continuation setting forth the length of the next Interest Period to be applicable to such Loans; provided that no Eurodollar Loan may be continued as such (i) when any Default or Event of Default has occurred and is continuing, and (ii) after the date that is one month prior to the Revolving Credit Maturity Date or the Term B Loan Maturity Date, as applicable; and provided, further, that if the Borrower shall fail to give any required notice as described above in this Section 2.03 or if such continuation is not permitted pursuant to the preceding proviso, then such Loans shall be automatically converted to ABR Loans on the last day of such then expiring Interest Period (in which case the Administrative Agent shall notify the Borrower of such conversion). (c) In connection with any Eurodollar Loans, there shall be no more than five (5) Interest Periods outstanding at any time. (d) This Section shall not apply to Swingline Loans. SECTION 2.04. Swingline Loans. (a) Subject to the terms and conditions hereof, the Swingline Lender agrees to make swingline loans (individually, a "Swingline Loan" and collectively, the "Swingline Loans") to the Borrower from time to time during the Revolving Credit Commitment Period in accordance with the procedures set forth in this Section 2.04, provided that (i) the aggregate principal amount of all Swingline Loans shall not exceed $5.0 million (the "Swingline Sublimit") at any one time outstanding, (ii) the principal amount of any borrowing of Swingline Loans may not exceed the aggregate amount of the Available Revolving Credit Commitments of all Revolving Lenders immediately prior to such borrowing or result in the Aggregate Revolving Credit Exposure then outstanding exceeding the Total Revolving Credit Commitments then in effect, and (iii) in no event may Swingline Loans be borrowed hereunder if (x) a Default or Event of Default or Event of Termination shall have occurred and be continuing and (y) such Default or Event of Default or Event of Termination shall not have been subsequently cured or waived. Amounts borrowed under this Section 2.04 may be repaid and, up to but excluding the Revolving Credit Maturity Date, reborrowed. All Swingline Loans shall at all times be ABR Loans. The Borrower shall give the Administrative Agent notice of any Swingline Loan requested hereunder (which notice must be received by the Administrative Agent prior to 11:00 a.m., New York City time, on the requested Borrowing Date) specifying (A) the amount to be borrowed, and (B) the requested Borrowing Date. Upon receipt of such notice, the Administrative Agent shall promptly notify the Swingline Lender of the aggregate amount of such borrowing. Not later than 2:00 p.m., New York City time, on the Borrowing Date specified in such notice the Swingline Lender shall make such Swingline -31- Loan available to the Administrative Agent for the account of the Borrower at the office of the Administrative Agent set forth in Section 10.01 in funds immediately available to the Administrative Agent. Amounts so received by the Administrative Agent will promptly be made available to the Borrower by the Administrative Agent crediting the account of the Borrower on the books of such office with the amount made available to the Administrative Agent by the Swingline Lender (or, in the case of a Swingline Loan made to finance the reimbursement of an LC Disbursement as provided in Section 2.06(e), by remittance to the Issuing Bank) and in like funds as received by the Administrative Agent. Each Borrowing pursuant to this Section 2.04 shall be in a minimum principal amount of $500,000 or an integral multiple of $100,000 in excess thereof. (b) Notwithstanding the occurrence of any Default or Event of Default or Event of Termination or noncompliance with the conditions precedent set forth in Article IV or the minimum borrowing amounts specified in Section 2.02, if any Swingline Loan shall remain outstanding at 10:00 a.m., New York City time, on the seventh Business Day following the Borrowing Date thereof and if by such time on such seventh Business Day the Administrative Agent shall have received neither (i) a notice of borrowing delivered by the Borrower pursuant to Section 2.02 requesting that Revolving Loans be made pursuant to Section 2.01 on the immediately succeeding Business Day in an amount at least equal to the aggregate principal amount of such Swingline Loan, nor (ii) any other notice satisfactory to the Administrative Agent indicating the Borrower's intent to repay such Swingline Loan on the immediately succeeding Business Day with funds obtained from other sources, the Administrative Agent shall be deemed to have received a notice from the Borrower pursuant to Section 2.02 requesting that ABR Revolving Loans be made pursuant to Section 2.01 on such immediately succeeding Business Day in an amount equal to the amount of such Swingline Loan, and the procedures set forth in Section 2.02 shall be followed in making such ABR Revolving Loans; provided that for the purposes of determining each Lender's Pro Rata Percentage with respect to such Borrowing, the Swingline Loan to be repaid with the proceeds of such Borrowing shall be deemed to not be outstanding. The proceeds of such ABR Revolving Loans shall be applied to repay such Swingline Loan. (c) If, for any reason, ABR Revolving Loans may not be, or are not, made pursuant to paragraph (b) of this Section 2.04 to repay any Swingline Loan as required by such paragraph, effective on the date such ABR Revolving Loans would otherwise have been made, each Revolving Lender severally, unconditionally and irrevocably agrees that it shall, without regard to the occurrence of any Default or Event of Default, purchase a participating interest in such Swingline Loan ("Unrefunded Swingline Loan") in an amount equal to the amount of the ABR Revolving Loan which would otherwise have been made pursuant to paragraph (b) of this Section 2.04. Each Revolving Lender will immediately transfer to the Administrative Agent, in immediately available funds, the amount of its participation, and the proceeds of such participations shall be distributed by the Administrative Agent to the Swingline Lender. All payments by the Revolving Lenders in respect of Unrefunded Swingline Loans and participations therein shall be made in accordance with Section 2.13. (d) Notwithstanding the foregoing, a Lender shall not have any obligation to acquire a participation in a Swingline Loan pursuant to the foregoing paragraphs if a Default or Event of Default or Event of Termination shall have occurred and be continuing at the time such Swingline Loan was made and such Lender shall have notified the Swingline Lender in writing prior to the time such Swingline Loan was made, that such Default or Event of Default or such Event of Termination has occurred and that such Lender will not acquire participations in Swingline Loans made while such Default or Event of Default or such Event of Termination is continuing. SECTION 2.05. Optional and Mandatory Prepayments of Loans; Repayments of Term B Loans. (a) The Borrower may at any time and from time to time prepay the Loans (subject to compliance with the terms of Section 2.16), in whole or in part, subject to Section 2.05(e), upon irrevoca- -32- ble notice to the Administrative Agent not later than 12:00 noon, New York City time, two Business Days prior to the date of such prepayment, specifying (i) the date and amount of prepayment, and (ii) the Class of Loans to be prepaid and whether the prepayment is of Eurodollar Loans, ABR Loans or a combination thereof (including in the case of Eurodollar Loans, the Borrowing to which such prepayment is to be applied and, if of a combination thereof, the amount allocable to each). Upon receipt of any such notice the Administrative Agent shall promptly notify each relevant Lender thereof. If any such notice is given, the 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. Partial prepayments of Loans (other than Swingline Loans) shall be in an aggregate principal amount of $5.0 million or a whole multiple of $1.0 million in excess thereof (or, if less, the remaining outstanding principal amount thereof). Partial prepayments of Swingline Loans shall be in an aggregate principal amount of $500,000 or a whole multiple of $100,000 in excess thereof (or, if less, the remaining outstanding principal amount thereof). (b) In the event and on such occasion that the Aggregate Revolving Credit Exposure exceeds the Total Revolving Credit Commitment, the Borrower shall prepay Revolving Credit Borrowings or Swingline Borrowings (or, if no such Borrowings are outstanding, deposit cash collateral in the account established with the Administrative Agent pursuant to Section 2.06(j)) in an aggregate amount equal to such excess. (c) (i) If the Parent Guarantor shall issue any Equity Interests or Equity Rights (it being understood that the issuance of debt securities convertible into, or exchangeable or exercisable for, any Equity Interest or Equity Right shall be governed by Section 2.05(c)(ii) below) (other than any Excluded Equity Issuance) (each, an "Equity Issuance"), 50% of the Net Proceeds thereof shall be applied promptly after receipt thereof toward the prepayment of the Term B Loans in accordance with Section 2.05(e) below. (ii) If the Parent Guarantor or any of its Subsidiaries shall incur or permit the incurrence of any Indebtedness (including pursuant to debt securities which are convertible into, or exchangeable or exercisable for, any Equity Interest or Equity Rights) (other than Excluded Debt Issuances) (each, a "Debt Incurrence"), 100% of the Net Proceeds thereof shall be applied promptly after receipt thereof toward the prepayment of the Term B Loans in accordance with Section 2.05(e) below. (iii) If the Parent Guarantor or any of its Subsidiaries shall receive Net Proceeds from any Asset Sale, 100% of such Net Proceeds shall be applied promptly after receipt thereof toward the prepayment of the Term B Loans in accordance with Section 2.05(e) below; provided that, if the Asset Sale consists of a sale or disposition of Property of the South Korean Subsidiary, Net Proceeds need only be applied by the end of the South Korean Subsidiary's fiscal year ending immediately following such receipt of Net Proceeds, provided, further, that (x) the Net Proceeds from Asset Sales permitted by Section 6.05(vi), (vii), (x) or (xi) shall not be required to be applied as provided herein on such date if and to the extent that (1) no Default or Event of Default then exists or would arise therefrom and (2) the Borrower delivers an officers' certificate to the Administrative Agent on or prior to the date of such Asset Sale stating that such Net Proceeds are expected to be reinvested (directly or indirectly) in fixed or capital assets of the Borrower or any Subsidiary (including by way of Capital Expenditures, the making of any Investment or the acquisition of any business or business line) in each case within 180 days (or 360 days in the case of Asset Sales set forth in Schedule 6.05) following the date of such Asset Sale (which certificate shall set forth the estimates of the proceeds to be so expended), (y) all such Net Proceeds shall be held in the Collateral Account and released therefrom only in accordance with the terms of the Security Agreement, and (z) if all or any portion of such Net Proceeds not so applied as provided herein is not so used within such 180-day (or 360-day) period, such remaining portion shall be applied on the last day of such period as specified in this subsection (c)(iii); provided, further, if the Property subject to such Asset Sale constituted Collateral under the Security Documents, then any capital assets purchased with the Net -33- Proceeds thereof pursuant to this subsection shall be mortgaged or pledged, as the case may be, to the Collateral Agent, for its benefit and for the benefit of the other Secured Parties in accordance with Section 5.11. (iv) If the Parent Guarantor or any of its Subsidiaries shall receive proceeds from insurance or condemnation recoveries in respect of any Destruction or any proceeds or awards in respect of any Taking, 100% of the Net Proceeds thereof shall be applied promptly after receipt thereof toward the prepayment of the Term B Loans in accordance with Section 2.05(e) below; provided that, if the Taking or Destruction is of Property of the South Korean Subsidiary, Net Proceeds need only be applied by the end of the South Korean Subsidiary's fiscal year ending immediately following such receipt of Net Proceeds, provided, further, that (x) so long as no Default or Event of Default then exists or would arise therefrom, such Net Proceeds shall not be required to be so applied to the extent that the Borrower has delivered an officers' certificate to the Administrative Agent promptly following the receipt of such Net Proceeds stating that such proceeds are expected to be used to (1) repair, replace or restore any Property in respect of which such Net Proceeds were paid, (2) repay Indebtedness of the Non-U.S. Subsidiary having such Destruction or Taking or (3) fund the substitution of other Property used or usable in the business of the Borrower or the Subsidiaries, in each case within 180 days following the date of the receipt of such Net Proceeds, (y) all such Net Proceeds shall be held in the Collateral Account and released therefrom only in accordance with the terms of the Security Agreement, and (z) if all or any portion of such Net Proceeds not required to be applied to the prepayment of Term B Loans pursuant to the preceding proviso is not so used within 180 days after the date of the receipt of such Net Proceeds, such remaining portion shall be applied on the last day of such period as specified in this subsection (c)(iv); provided, further, if the Property subject to such Destruction or Taking constituted Collateral under the Security Documents, then any replacement or substitution Property purchased with the Net Proceeds thereof pursuant to this subsection shall be mortgaged or pledged, as the case may be, to the Collateral Agent, for its benefit and for the benefit of the other Secured Parties in accordance with Section 5.11. (v) If, for any Fiscal Year of the Borrower commencing with its Fiscal Year ending on September 30, 2004, there shall be Excess Cash Flow for such Fiscal Year, the Excess Cash Flow Percentage of such Excess Cash Flow shall be applied, not later than the earlier of (x) 100 days after the end of such Fiscal Year, or (y) 10 days after the date upon which the Parent Guarantor is required by the SEC to file its annual report on Form 10-K, toward prepayment of the Term B Loans in accordance with Section 2.05(e) below. (d) The Term B Loans shall be repaid in consecutive quarterly installments on the dates set forth below (each such day, an "Installment Payment Date"), commencing on December 31, 2003, in an aggregate amount equal to the amount specified below for each such Installment Payment Date.
Installment Payment Date Installment Amount - ------------------------ ------------------ December 31, 2003 $ 475,000 March 31, 2004 $ 475,000 June 30, 2004 $ 475,000 September 30, 2004 $ 475,000 December 31, 2004 $ 475,000 March 31, 2005 $ 475,000 June 30, 2005 $ 475,000 September 30, 2005 $ 475,000 December 31, 2005 $ 475,000 March 31, 2006 $ 475,000
-34-
Installment Payment Date Installment Amount - ------------------------ ------------------ June 30, 2006 $ 475,000 September 30, 2006 $ 475,000 December 31, 2006 $ 475,000 March 31, 2007 $ 475,000 June 30, 2007 $ 475,000 September 30, 2007 $ 475,000 December 31, 2007 $ 475,000 March 31, 2008 $ 475,000 June 30, 2008 $ 475,000 September 30, 2008 $ 475,000 December 31, 2008 $ 475,000 March 31, 2009 $ 475,000 June 30, 2009 $ 475,000 Term B Loan Maturity Date $ 179,075,000
(e) Prepayments of Term B Loans pursuant to Section 2.05(a) shall be applied as elected by the Borrower and prepayment of Term B Loans pursuant to Section 2.05(c) shall be applied pro rata to remaining installments of principal of such Term B Loans. Except as otherwise may be directed by the Borrower, any prepayment of Loans pursuant to this Section 2.05 shall be applied, first, to any ABR Loans then outstanding and the balance of such prepayment, if any, to the Eurodollar Loans then outstanding. (f) If on any day on which Loans would otherwise be required to be prepaid pursuant to this Section 2.05, but for the operation of this Section 2.05(f) (each a "Prepayment Date"), the amount of such required prepayment exceeds the then outstanding aggregate principal amount of ABR Loans which are of the Type required to be prepaid, and no Default or Event of Default exists or is continuing, then on such Prepayment Date, (i) the Borrower shall deposit funds into the Collateral Account in an amount equal to such excess, and only the outstanding ABR Loans which are of the Type required to be prepaid shall be required to be prepaid on such Prepayment Date, and (ii) on the last day of each Interest Period after such Prepayment Date in effect with respect to a Eurodollar Loan which is of the Type required to be prepaid, the Administrative Agent is irrevocably authorized and directed to apply funds from the Collateral Account (and liquidate investments held in the Collateral Account as necessary) to prepay such Eurodollar Loans for which the Interest Period is then ending to the extent funds are available in the Collateral Account. SECTION 2.06. Letters of Credit. (a) General. Subject to the terms and conditions set forth herein, the Borrower may request the issuance of Letters of Credit for its own account, in a form reasonably acceptable to the Administrative Agent and the Issuing Bank, at any time and from time to time during the Revolving Credit Commitment Period. In the event of any inconsistency between the terms and conditions of this Agreement and the terms and conditions of any form of letter of credit application or other agreement submitted by the Borrower to, or entered into by the Borrower with, the Issuing Bank relating to any Letter of Credit, the terms and conditions of this Agreement shall control. (b) Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions. To request the issuance of a Letter of Credit (or the amendment, renewal or extension of an outstanding Letter of Credit), the Borrower shall hand deliver or telecopy (or transmit by electronic communication, if arrangements for doing so have been approved by the Issuing Bank) to the Issuing Bank and the Adminis- -35- trative Agent (reasonably in advance of the requested date of issuance, amendment, renewal or extension) a notice requesting the issuance of a Letter of Credit, or identifying the Letter of Credit to be amended, renewed or extended, and specifying the date of issuance, amendment, renewal or extension (which shall be a Business Day), the date on which such Letter of Credit is to expire (which shall comply with paragraph (c) of this Section), the amount of such Letter of Credit, the name and address of the beneficiary thereof and such other information as shall be necessary to prepare, amend, renew or extend such Letter of Credit. If requested by the Issuing Bank, the Borrower also shall submit a letter of credit application on the Issuing Bank's standard form in connection with any request for a Letter of Credit. A Letter of Credit shall be issued, amended, renewed or extended only if (and upon issuance, amendment, renewal or extension of each Letter of Credit the Borrower shall be deemed to represent and warrant that), after giving effect to such issuance, amendment, renewal or extension, (i) the LC Exposure shall not exceed $10.0 million and (ii) the Aggregate Revolving Credit Exposure shall not exceed the Total Revolving Credit Commitment. With respect to any Letter of Credit which contains any "evergreen" automatic renewal provision, the Issuing Bank shall be deemed to have consented to any such extension or renewal provided that all of the requirements of this Section 2.06 are met and no Default or Event of Default exists. (c) Expiration Date. Each Letter of Credit shall expire at or prior to the close of business on the earlier of (i) the date one year after the date of the issuance of such Letter of Credit (or, in the case of any renewal or extension thereof, one year after such renewal or extension) and (ii) the date that is five Business Days prior to the Revolving Credit Maturity Date. (d) Participations. By the issuance of a Letter of Credit (or an amendment to a Letter of Credit increasing the amount thereof) and without any further action on the part of the Issuing Bank or the Lenders, the Issuing Bank hereby grants to each Revolving Lender, and each Revolving Lender hereby acquires from the Issuing Bank, a participation in such Letter of Credit equal to such Revolving Lender's Commitment Percentage of the aggregate amount available to be drawn under such Letter of Credit. In consideration and in furtherance of the foregoing, each Revolving Lender hereby absolutely and unconditionally agrees to pay to the Administrative Agent, for the account of the Issuing Bank, such Revolving Lender's Commitment Percentage of each LC Disbursement made by the Issuing Bank and not reimbursed by the Borrower on the date due as provided in paragraph (e) of this Section, or of any reimbursement payment required to be refunded to the Borrower for any reason. Each Revolving Lender acknowledges and agrees that its obligation to acquire participations pursuant to this paragraph in respect of Letters of Credit is absolute and unconditional and shall not be affected by any circumstance whatsoever, including any amendment, renewal or extension of any Letter of Credit or the occurrence and continuance of a Default or an Event of Default or reduction or termination of the Revolving Credit Commitments, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever. (e) Reimbursement. If the Issuing Bank shall make any LC Disbursement in respect of a Letter of Credit, the Borrower shall reimburse such LC Disbursement by paying to the Administrative Agent an amount equal to such LC Disbursement not later than 2:00 p.m., New York City time, on the date that such LC Disbursement is made, if the Borrower shall have received notice of such LC Disbursement prior to 12:00 noon, New York City time, on such date, or, if such notice has not been received by the Borrower prior to such time on such date, then not later than 2:00 p.m., New York City time, on (i) the Business Day that the Borrower receives such notice, if such notice is received prior to 12:00 noon, New York City time, on the day of receipt, or (ii) the Business Day immediately following the day that the Borrower receives such notice, if such notice is not received prior to such time on the day of receipt; provided that the Borrower may, subject to the conditions to borrowing set forth herein, request in accordance with Section 2.02 that such payment be financed with an ABR Revolving Borrowing or Swingline Loan in an equivalent amount and, to the extent so financed, the Borrower's obligation to make such -36- payment shall be discharged and replaced by the resulting ABR Revolving Borrowing or Swingline Loan. If the Borrower fails to make such payment when due, the Administrative Agent shall notify each Revolving Lender of the applicable LC Disbursement, the payment then due from the Borrower in respect thereof and such Revolving Lender's Commitment Percentage thereof. Promptly following receipt of such notice, each Revolving Lender shall pay to the Administrative Agent its Commitment Percentage of the payment then due from the Borrower, in the same manner as provided in Section 2.02 with respect to Loans made by such Revolving Lender (and Section 2.02 shall apply, mutatis mutandis, to the payment obligations of the Revolving Lenders), and the Administrative Agent shall promptly pay to the Issuing Bank the amounts so received by it from the Revolving Lenders. Promptly following receipt by the Administrative Agent of any payment from the Borrower pursuant to this paragraph, the Administrative Agent shall distribute such payment to the Issuing Bank or, to the extent that Revolving Lenders have made payments pursuant to this paragraph to reimburse the Issuing Bank, then to such Revolving Lenders and the Issuing Bank as their interests may appear. Any payment made by a Revolving Lender pursuant to this paragraph to reimburse the Issuing Bank for any LC Disbursement (other than the funding of ABR Revolving Loans or a Swingline Loan as contemplated above) shall not constitute a Loan and shall not relieve the Borrower of its obligation to reimburse such LC Disbursement. (f) Obligations Absolute. The Borrower's obligation to reimburse LC Disbursements as provided in paragraph (e) of this Section 2.06 shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Agreement under any and all circumstances whatsoever and irrespective of (i) any lack of validity or enforceability of any Letter of Credit or this Agreement, or any term or provision therein, (ii) any draft or other document presented under a Letter of Credit proving to be forged, fraudulent or invalid in any respect or any statement therein being untrue or inaccurate in any respect, (iii) payment by the Issuing Bank under a Letter of Credit against presentation of a draft or other document that does not comply with the terms of such Letter of Credit, or (iv) any other event or circumstance whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of this Section, constitute a legal or equitable discharge of, or provide a right of setoff against, the Borrower's obligations hereunder. Neither the Administrative Agent, the Revolving Lenders nor the Issuing Bank, nor any of their Related Parties, shall have any liability or responsibility by reason of or in connection with the issuance or transfer of any Letter of Credit or any payment or failure to make any payment thereunder (irrespective of any of the circumstances referred to in the preceding sentence), or any error, omission, interruption, loss or delay in transmission or delivery of any draft, notice or other communication under or relating to any Letter of Credit (including any document required to make a drawing thereunder), any error in interpretation of technical terms or any consequence arising from causes beyond the control of the Issuing Bank; provided that the foregoing shall not be construed to excuse the Issuing Bank from liability to the Borrower to the extent of any direct damages (as opposed to consequential damages, claims in respect of which are hereby waived by the Borrower to the extent permitted by applicable law) suffered by the Borrower that are caused by the Issuing Bank's failure to exercise care when determining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof. The parties hereto expressly agree that, in the absence of gross negligence or willful misconduct on the part of the Issuing Bank (as finally determined by a court of competent jurisdiction), the Issuing Bank shall be deemed to have exercised care in each such determination. In furtherance of the foregoing and without limiting the generality thereof, the parties agree that, with respect to documents presented which appear on their face to be in substantial compliance with the terms of a Letter of Credit, the Issuing Bank may, in its sole discretion, either accept and make payment upon such documents without responsibility for further investigation, regardless of any notice or information to the contrary, or refuse to accept and make payment upon such documents if such documents are not in strict compliance with the terms of such Letter of Credit. (g) Disbursement Procedures. The Issuing Bank shall, promptly following its receipt thereof, examine all documents purporting to represent a demand for payment under a Letter of Credit. -37- The Issuing Bank shall promptly notify the Administrative Agent and the Borrower by telephone (confirmed by telecopy) of such demand for payment and whether the Issuing Bank has made or will make an LC Disbursement thereunder; provided that any failure to give or delay in giving such notice shall not relieve the Borrower of its obligation to reimburse the Issuing Bank and the Revolving Lenders with respect to any such LC Disbursement. (h) Interim Interest. If the Issuing Bank shall make any LC Disbursement, then, unless the Borrower shall reimburse such LC Disbursement in full on the date such LC Disbursement is made, the unpaid amount thereof shall bear interest, for each day from and including the date such LC Disbursement is made to but excluding the date that the Borrower reimburses such LC Disbursement, at the rate per annum then applicable to ABR Revolving Loans; provided that if the Borrower fails to reimburse such LC Disbursement when due pursuant to paragraph (e) of this Section 2.06, then Section 2.08(c) shall apply. Interest accrued pursuant to this paragraph shall be for the account of the Issuing Bank, except that interest accrued on and after the date of payment by any Revolving Lender pursuant to paragraph (e) of this Section 2.07 to reimburse the Issuing Bank shall be for the account of such Lender to the extent of such payment. (i) Replacement of the Issuing Bank. The Issuing Bank may be replaced at any time by written agreement among the Borrower, the Administrative Agent, the replaced Issuing Bank and the successor Issuing Bank. The Administrative Agent shall notify the Lenders of any such replacement of the Issuing Bank. At the time any such replacement shall become effective, the Borrower shall pay all unpaid fees accrued for the account of the replaced Issuing Bank pursuant to Section 2.10(b). From and after the effective date of any such replacement, (i) the successor Issuing Bank shall have all the rights and obligations of the Issuing Bank under this Agreement with respect to Letters of Credit to be issued thereafter and (ii) references herein to the term "Issuing Bank" shall be deemed to refer to such successor or to any previous Issuing Bank, or to such successor and all previous Issuing Banks, as the context shall require. After the replacement of an Issuing Bank hereunder, the replaced Issuing Bank shall remain a party hereto and shall continue to have all the rights and obligations of an Issuing Bank under this Agreement with respect to Letters of Credit issued by it prior to such replacement, but shall not be required to issue additional Letters of Credit. (j) Cash Collateralization. If any Event of Default shall occur and be continuing, on the Business Day that the Borrower receives notice from the Administrative Agent or the Requisite Lenders (or, if the maturity of the Loans has been accelerated, Revolving Lenders with LC Exposure representing greater than 50% of the total LC Exposure) demanding the deposit of cash collateral pursuant to this paragraph, the Borrower shall deposit in the Collateral Account an amount in cash equal to the LC Exposure as of such date plus any accrued and unpaid interest thereon; provided that the obligation to deposit such cash collateral shall become effective immediately, and such deposit shall become immediately due and payable, without demand or other notice of any kind, upon the occurrence of any Event of Default with respect to the Borrower described in clause (a) of Section 7.01 or any Event of Default described in clause (i) of Section 7.01. Each such deposit shall be held by the Collateral Agent as collateral for the payment and performance of the obligations of the Borrower under this Agreement and the Borrower hereby grants the Collateral Agent a security interest in respect of each such deposit and the Collateral Account in which such deposits are held. The Collateral Agent shall have exclusive dominion and control, including the exclusive right of withdrawal, over the Collateral Account. Other than any interest earned on the investment of such deposits, which investments shall be made at the option and sole discretion of the Collateral Agent and at the Borrower's risk and expense, such deposits shall not bear interest. Interest or profits, if any, on such investments shall accumulate in the Collateral Account. Moneys deposited in the Collateral Account pursuant to this Section 2.06(j) shall be applied by the Collateral Agent to reimburse the Issuing Bank for LC Disbursements for which it has not been reimbursed and, to the extent not so applied, shall be held for the satisfaction of the reimbursement obligations of the Borrower for the -38- LC Exposure at such time or, if the maturity of the Loans has been accelerated (but subject to the consent of Revolving Lenders with LC Exposure representing greater than 50% of the total LC Exposure), be applied to satisfy other obligations of the Borrower under this Agreement. If the Borrower is required to provide an amount of cash collateral hereunder as a result of the occurrence of an Event of Default, such amount (to the extent not applied as aforesaid) shall be returned to the Borrower within three Business Days after all Defaults or Events of Default have been cured or waived. (k) Rollover Letters of Credit. On and after the Effective Date, without any further action by any Person, (i) each of the Existing Letters of Credit shall be deemed for all purposes of this Agreement to be a Letter of Credit under this Agreement and (ii) any payments made in respect of an Existing Letter of Credit by the issuer thereof shall be deemed an LC Disbursement under this Agreement. SECTION 2.07. Repayment of Loans; Evidence of Debt. (a) The Borrower hereby unconditionally promises to pay to the Administrative Agent for the account of the relevant Lenders (i) in respect of Revolving Credit Borrowings, on the Revolving Credit Maturity Date (or such earlier date as, and to the extent that, such Revolving Loan becomes due and payable pursuant to Section 2.05 or Article VII), the unpaid principal amount of each Revolving Loan and each Swingline Loan made to it by each such Lender and (ii) in respect of Term B Borrowings, on the Term B Loan Maturity Date (or such earlier date as, and to the extent that, such Term B Loan becomes due and payable pursuant to Section 2.05 or Article VII), the unpaid principal amount of each Term B Loan held by each such Term B Lender. The Borrower hereby further agrees to pay interest in immediately available funds at the applicable office of the Administrative Agent (as specified in Section 2.13(a)) on the unpaid principal amount of the Revolving Loans, Swingline Loans and Term B Loans made to it from time to time from the date hereof until payment in full thereof at the rates per annum, and on the dates, set forth in Section 2.08. All payments required hereunder shall be made in Dollars. (b) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrower to the appropriate lending office of such Lender resulting from each Loan made by such lending office of such Lender from time to time, including the amounts of principal and interest payable and paid to such lending office of such Lender from time to time under this Agreement. (c) The Administrative Agent shall maintain the Register pursuant to Section 10.04, and a subaccount for each Lender, in which Register and subaccounts (taken together) shall be recorded (i) the amount of each such Loan, the Class and Type of each such Loan and the Interest Period applicable thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder in respect of each such Loan and (iii) the amount of any sum received by the Administrative Agent hereunder from the Borrower in respect of each such Loan and each Lender's share thereof. (d) The entries made in the Register and accounts maintained pursuant to paragraphs (b) and (c) of this Section 2.07 and the Notes maintained pursuant to paragraph (e) of this Section 2.07 shall, to the extent permitted by applicable law, be prima facie evidence of the existence and amounts of the obligations of the Borrower therein recorded; provided, however, that the failure of any Lender or the Administrative Agent to maintain such account, such Register or such subaccount, as applicable, or any error therein, shall not in any manner affect the obligation of the Borrower to repay (with applicable interest) the Loans made to the Borrower by such Lender in accordance with the terms of this Agreement. (e) The Loans of each Class made by each Lender to the Borrower shall, if requested by the applicable Lender (which request shall be made to the Administrative Agent), be evidenced by a -39- single Note duly executed on behalf of the Borrower, in substantially the form attached hereto as Exhibit G-1 or -2, as applicable, with the blanks appropriately filled, payable to the order of such Lender. SECTION 2.08. Interest Rates and Payment Dates. (a) Each Eurodollar Loan shall bear interest (computed on the basis of the actual number of days elapsed over a year of 360 days) for each day during each Interest Period with respect thereto at a rate per annum equal to (A) the LIBO Rate determined for such Interest Period, plus (B) the Applicable Rate. (b) Each ABR Loan (including each Swingline Loan) shall bear interest (computed on the basis of the actual number of days elapsed over a year of 365 or 366 days, as the case may be, or over a year of 360 days when the Alternate Base Rate is determined by reference to clause (c) of the definition of "Alternate Base Rate") at a rate per annum equal to the Alternate Base Rate plus the Applicable Rate. (c) If all or a portion of (i) the principal amount of any Loan, (ii) any interest payable thereon or (iii) any Commitment Fee or other amount payable hereunder shall not be paid when due (whether at the stated maturity thereof or by acceleration or otherwise), such overdue amount shall bear interest at a rate per annum (the "Default Rate") which is (x) in the case of overdue principal (except as otherwise provided in clause (y) below), the rate that would otherwise be applicable thereto pursuant to the foregoing provisions of this Section 2.08 plus 2.00% per annum or (y) in the case of any overdue interest, Commitment Fee or other Obligation, the rate described in Section 2.08(b) applicable to an ABR Revolving Loan plus 2.00% per annum, in each case from the date of such nonpayment to (but excluding) the date on which such amount is paid in full (after as well as before judgment). (d) Interest shall be payable in arrears on each Interest Payment Date and on the Term B Loan Maturity Date and Revolving Credit Maturity Date; provided that (i) interest accrued pursuant to paragraph (c) of this Section shall be payable on demand, (ii) in the event of any repayment or prepayment of any Loan, accrued interest on the principal amount repaid or prepaid shall be payable on the date of such repayment or prepayment and (iii) in the event of any conversion of any Eurodollar Loan prior to the end of the current Interest Period therefor, accrued interest on such Loan shall be payable on the effective date of such conversion. Interest in respect of each Loan shall accrue from and including the first day of an Interest Period to but excluding the last day of such Interest Period. SECTION 2.09. Computation of Interest. Each determination of an interest rate by the Administrative Agent pursuant to any provision of this Agreement shall be conclusive and binding on the Borrower and the Lenders in the absence of manifest error. SECTION 2.10. Fees. (a) The Borrower agrees to pay a commitment fee (a "Commitment Fee") to each Revolving Lender, for which payment will be made in arrears through the Administrative Agent on the last day of March, June, September and December beginning after the Effective Date, and on the Commitment Fee Termination Date (as defined below). The Commitment Fee due to each Revolving Lender shall commence to accrue for a period commencing on the Effective Date and shall cease to accrue on the date (the "Commitment Fee Termination Date") that is the later of (i) the date on which the Revolving Credit Commitment of such Revolving Lender shall be terminated as provided herein and (ii) the first date after the end of the Revolving Credit Commitment Period. The Commitment Fee accrued to each Revolving Lender shall equal the Commitment Fee Percentage multiplied by such Lender's Commitment Fee Average Daily Amount (as defined below) for the applicable quarter (or shorter period commencing on the Effective Date and ending with such Lender's Commitment Fee Termination Date). A Revolving Lender's "Commitment Fee Average Daily Amount" with respect to a calculation period shall equal the average daily amount during such period calculated using the daily amount of such Revolving Lender's Revolving Credit Commitment less such Revolving Lender's Revolving -40- Credit Exposure (excluding, in the case of all Lenders other than the Swingline Lender, clause (c) of the definition thereof for purposes of determining the Commitment Fee Average Daily Amount only) for any applicable days during such Revolving Lender's Revolving Credit Commitment Period. All Commitment Fees shall be computed on the basis of the actual number of days elapsed in a year of 360 days. (b) The Borrower agrees to pay (i) to the Administrative Agent for the account of each Revolving Lender a participation fee with respect to its participations in Letters of Credit, which shall accrue at a rate equal to the Applicable Rate for Eurodollar Revolving Loans on the average daily amount of such Lender's LC Exposure (excluding any portion thereof attributable to unreimbursed LC Disbursements) during the period from and including the Effective Date to but excluding the later of the date on which such Revolving Lender's Revolving Credit Commitment terminates and the date on which such Revolving Lender ceases to have any LC Exposure, and (ii) to the Issuing Bank a fronting fee, which shall accrue at the rate of 0.25% per annum on the average daily amount of the LC Exposure (excluding any portion thereof attributable to unreimbursed LC Disbursements) during the period from and including the Effective Date to but excluding the later of the date of termination of the Revolving Credit Commitments and the date on which there ceases to be any LC Exposure, as well as the Issuing Bank's standard fees with respect to the issuance, amendment, renewal or extension of any Letter of Credit or processing of drawings thereunder. Participation fees and fronting fees (collectively, "LC Fees") accrued through and including the last day of March, June, September and December of each calendar year during the Revolving Credit Commitment Period shall be payable on the third Business Day following such last day, commencing on the first such date to occur after the Effective Date; provided that all such fees shall be payable on the date on which the Revolving Credit Commitments terminate and any such fees accruing after the date on which the Revolving Credit Commitments terminate shall be payable on demand. Any other fees payable to the Issuing Bank pursuant to this paragraph shall be payable within 10 days after demand therefor. All participation fees and fronting fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first day but excluding the last day). (c) The Borrower agrees to pay to the Administrative Agent the administrative fee set forth in the Fee Letter (the "Agent Fees"). (d) All Fees shall be paid on the dates due, in immediately available funds, to the Administrative Agent for distribution. Once paid, none of the Fees shall be refundable. SECTION 2.11. Termination, Reduction or Adjustment of Commitments. Unless previously terminated, (i) the Term B Commitments shall terminate at 5:00 p.m., New York City time, on the Effective Date and (ii) the Revolving Credit Commitments shall terminate on the Revolving Credit Maturity Date. (b) The Borrower shall have the right, upon one Business Day's notice to the Administrative Agent, to terminate or, from time to time, reduce the amount of the Revolving Credit Commitments; provided that no such termination or reduction of Revolving Credit Commitments shall be permitted if, after giving effect thereto and to any repayments of the Loans made on the effective date thereof, the Aggregate Revolving Credit Exposure then outstanding would exceed the Total Revolving Credit Commitment then in effect. (c) If any prepayment of Term B Borrowings would otherwise be required pursuant to Section 2.05 but cannot be made because there are no Term B Borrowings outstanding, or because the amount of the required prepayment exceeds the outstanding amount of Term B Borrowings, then, on the date that such prepayment is required, the Revolving Credit Commitments shall be permanently reduced -41- by an aggregate amount equal to the amount of the required prepayment, or the excess of such amount over the outstanding amount of Term B Borrowings, as the case may be. (d) The Borrower shall pay to the Administrative Agent for the account of the applicable Revolving Lenders, on each date of termination or reduction of the Revolving Credit Commitments, the Commitment Fee on the amount of the Revolving Credit Commitments so terminated or reduced accrued to the date of such termination or reduction. (e) Each reduction in the Revolving Credit Commitments shall reduce the Swingline Commitment by an equal percentage. SECTION 2.12. Inability to Determine Interest Rate; Unavailability of Deposits; Inadequacy of Interest Rate. If prior to 11:00 a.m., London time, two Business Days before the first day of any Interest Period, including an initial Interest Period, for a requested Eurodollar Borrowing: (i) the Administrative Agent shall have determined in good faith (which determination shall be conclusive and binding upon the Borrower) that, by reason of circumstances affecting the relevant market generally, adequate and reasonable means do not exist for ascertaining the LIBO Rate for such Eurodollar Borrowing for such Interest Period, or (ii) the Administrative Agent shall have received notice from a majority in interest of the Lenders of the applicable Class that the LIBO Rate determined or to be determined for such Interest Period for such Eurodollar Borrowing will not adequately and fairly reflect the cost to such Lenders (as conclusively certified by such Lenders) of making or maintaining their affected Loans during such Interest Period, then the Administrative Agent shall give telecopy or telephonic notice thereof to the Borrower and the Lenders by 12:00 noon, New York City time, on the same day. The Administrative Agent shall give telecopy or telephonic notice to the Borrower and the Lenders as soon as practicable after the circumstances giving rise to such notice no longer exist, and until such notice has been given, any affected Eurodollar Loans shall not be (x) converted or continued pursuant to Section 2.03 or (y) made pursuant to a Borrowing Request, and shall be continued or made as an ABR Loans, as the case may be. SECTION 2.13. Pro Rata Treatment and Payments. (a) Each reduction of the Revolving Credit Commitments of the Revolving Lenders shall be made pro rata according to the amounts of such Revolving Lenders' Commitment Percentages. Each payment (including each prepayment) by the Borrower on account of principal of and interest on Loans which are ABR Loans shall be made pro rata according to the respective outstanding principal amounts of such ABR Loans then held by the Lenders of the applicable Class. Each payment (including each prepayment) by the Borrower on account of principal of and interest on Loans which are Eurodollar Loans designated by the Borrower to be applied to a particular Eurodollar Borrowing shall be made pro rata according to the respective outstanding principal amounts of such Loans then held by the Lenders of the applicable Class. Each payment (including each prepayment) by the Borrower on account of principal of and interest on Swingline Loans shall be made pro rata according to the respective outstanding principal amounts of the Swingline Loans or participating interests therein, as the case may be, then held by the relevant Lenders. All payments (including prepayments) to be made by the Borrower hereunder, whether on account of principal, interest, fees or otherwise, shall be made without setoff or counterclaim and shall be made prior to 10:00 a.m., New York time, on the due date thereof to the Administrative Agent, for the account of the Lenders of the applicable Class, at the Administrative Agent's New York office specified in Section 10.01 in the currency in which the applicable obligation is denominated and in immediately available funds. The Administrative Agent shall distribute such payments to the Lenders entitled thereto in the same currency as received and -42- promptly upon receipt in like funds as received. If any payment hereunder (other than payments on Eurodollar Loans) becomes due and payable on a day other than a Business Day, such payment shall be extended to the next succeeding Business Day, and, with respect to payments of principal, interest thereon shall be payable at the then applicable rate during such extension. If any payment on a Eurodollar Loan becomes due and payable on a day other than a Business Day, the maturity thereof shall be extended to the next succeeding Business Day (and, with respect to payments of principal, interest thereon shall be payable at the then applicable rate during such extension) unless the result of such extension would be to extend such payment into another calendar month, in which event such payment shall be made on the immediately preceding Business Day. (b) Subject to Section 2.12, unless the Administrative Agent shall have been notified in writing by any Lender prior to a Borrowing that such Lender will not make the amount that would constitute its share of such Borrowing available to the Administrative Agent, the Administrative Agent may assume that such Lender is making such amount available to the Administrative Agent, and the Administrative Agent may, in reliance upon such assumption, make available to the Borrower a corresponding amount. If such amount is not made available to the Administrative Agent by the required time on the Borrowing Date therefor, such Lender shall pay to the Administrative Agent, on demand, such amount with interest thereon at a rate equal to the daily average Federal Funds Effective Rate for the period until such Lender makes such amount immediately available to the Administrative Agent. A certificate of the Administrative Agent submitted to any Lender with respect to any amounts owing under this Section 2.13(b) shall be conclusive in the absence of manifest error. If such Lender's share of such Borrowing is not made available to the Administrative Agent by such Lender within three Business Days of such Borrowing Date, the Administrative Agent shall also be entitled to recover such amount with interest thereon at the rate per annum applicable to ABR Revolving Loans hereunder, on demand, from the Borrower, but without prejudice to any right or claim that the Borrower may have against such Lender. (c) If at any time insufficient funds are received by and available to the Administrative Agent to pay fully all amounts of principal, unreimbursed LC Disbursements, interest and fees then due hereunder, such funds shall be applied (i) first, towards payment of interest and fees then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of interest and fees then due to such parties, and (ii) second, towards payment of principal and unreimbursed LC Disbursements then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of principal and unreimbursed LC Disbursements then due to such parties. SECTION 2.14. Illegality. Notwithstanding any other provision herein, if the adoption of or any change in any Requirement of Law, or in the interpretation or application thereof, shall make it unlawful for any Lender to make or maintain Eurodollar Loans as contemplated by this Agreement, (a) the commitment of such Lender hereunder to make Eurodollar Loans, continue Eurodollar Loans as such and convert ABR Loans to Eurodollar Loans shall forthwith be suspended until such time as the making or maintaining of Eurodollar Loans shall no longer be unlawful, and (b) such Lender's Loans then outstanding as Eurodollar Loans, if any, shall be converted automatically to ABR Loans on the respective last days of the then current Interest Periods with respect to such Loans or within such earlier period as required by law. SECTION 2.15. Requirements of Law. (a) If at any time any Lender or the Issuing Bank determines that the introduction of, or any change in or in the interpretation of, any law, treaty or governmental rule, regulation or order or the compliance by such Lender or the Issuing Bank with any guideline, request or directive from any central bank or other Governmental Authority (whether or not having the force of law), shall have the effect of increasing the cost to such Lender or the Issuing Bank for agreeing to make or making, funding or maintaining any Eurodollar Loans or participating in, issuing or maintaining any Letter of Credit, then the Borrower shall from time to time, within five days of de- -43- mand therefor by such Lender or the Issuing Bank (with a copy of such demand to the Administrative Agent), pay to the Administrative Agent for the account of such Lender or the Issuing Bank additional amounts sufficient to compensate such Lender or the Issuing Bank for such increased cost. A certificate as to the amount of such increased cost, submitted to the Borrower and the Administrative Agent by such Lender or the Issuing Bank, shall be conclusive and binding for all purposes, absent manifest error. Such Lender or the Issuing Bank, as applicable, shall promptly notify the Administrative Agent and the Borrower in writing of the occurrence of any such event, such notice to state, in reasonable detail, the reasons therefor and the additional amount required fully to compensate such Lender or the Issuing Bank, as applicable, for such increased cost or reduced amount. Such additional amounts shall be payable directly to such Lender or the Issuing Bank, as applicable, within five days of the Borrower's receipt of such notice, and such notice shall, in the absence of manifest error, be conclusive and binding on the Borrower. (b) If any change in, or the introduction, adoption, effectiveness, interpretation, reinterpretation or phase-in of, any law or regulation, directive, guideline, decision or request (whether or not having the force of law) of any court, central bank, regulator or other Governmental Authority after the date hereof affects or would affect the amount of capital required or expected to be maintained by any Lender or the Issuing Bank (or a holding company controlling such Lender or the Issuing Bank) and such Lender or the Issuing Bank determines (in its sole and absolute discretion) that the rate of return on its capital (or the capital of its holding company, as the case may be) as a consequence of its Revolving Credit Commitment or the Loans made by it or its participations in Swingline Loans or any issuance, participation or maintenance of Letters of Credit is reduced to a level below that which such Lender or the Issuing Bank (or its holding company) could have achieved but for the occurrence of any such circumstance, then, in any such case upon notice from time to time by such Lender or the Issuing Bank to the Borrower, the Borrower shall immediately pay directly to such Lender or the Issuing Bank, as the case may be, additional amounts sufficient to compensate such Lender or the Issuing Bank (or its holding company) for such reduction in rate of return. A statement of such Lender or the Issuing Bank as to any such additional amount or amounts (including calculations thereof in reasonable detail) shall, in the absence of manifest error, be conclusive and binding on the Borrower. In determining such amount, such Lender or the Issuing Bank may use any method of averaging and attribution that it (in its sole and absolute discretion) shall deem applicable. (c) In the event that the Issuing Bank or any Lender determines that any event or circumstance that will lead to a claim under this Section 2.15 has occurred or will occur, the Issuing Bank or such Lender will use its best efforts to so notify the Borrower; provided that any failure to provide such notice shall in no way impair the rights of the Issuing Bank or such Lender to demand and receive compensation under this Section 2.15, but without prejudice to any claims of the Borrower for compensation for actual damages sustained as a result of any failure to observe this undertaking. (d) The above provisions of this Section 2.15 shall not apply in respect of any present or future taxes, fees, duties or other charges of any nature whatsoever imposed by any taxing authority that are imposed on or measured by the Issuing Bank's or Lender's net income or overall gross income. SECTION 2.16. Taxes. All payments by the Borrower of principal of, and interest on, the Loans and all other amounts payable hereunder shall be made free and clear of and without deduction for any present or future income, excise, stamp or franchise taxes and other taxes, fees, duties, withholdings or other charges of any nature whatsoever imposed by any taxing authority on the Administrative Agent, the Issuing Bank or any Lender (or any assignee of such Lender or the Issuing Bank, as the case may be, or a Participant or a change in designation of the lending office of a Lender or the Issuing Bank, as the case may be (a "Transferee")), but excluding taxes imposed on or measured by the recipient's net income or the recipient's overall gross income (such non-excluded items being called "Taxes") unless -44- required by applicable law, rule or regulation. In the event that any withholding or deduction from any payment to be made by the Borrower hereunder is required in respect of any Taxes pursuant to any applicable law, rule or regulation, then the Borrower will: (a) pay directly to the relevant authority the full amount required to be so withheld or deducted; (b) promptly forward to the Administrative Agent an official receipt or other documentation reasonably satisfactory to the Administrative Agent evidencing such payment to such authority; and (c) pay to the Administrative Agent for the account of the Lenders or the Issuing Bank, as the case may be, such additional amount or amounts as are necessary to ensure that the net amount actually received by each Lender or the Issuing Bank, as the case may be, will equal the full amount such Lender or the Issuing Bank, as the case may be, would have received had no such withholding or deduction been required. Moreover, if any Taxes are directly asserted against the Administrative Agent, the Issuing Bank or any Lender or Transferee with respect to any payment received by the Administrative Agent, the Issuing Bank or such Lender or Transferee hereunder, the Administrative Agent, the Issuing Bank or such Lender or Transferee may pay such Taxes and the Borrower will promptly pay such additional amounts (including any penalties, interest or expenses) as shall be necessary in order that the net amount received by such Person after the payment of such Taxes (including any Taxes on such additional amount) shall equal the amount such Person would have received had such Taxes not been asserted. If the Borrower fails to pay any Taxes when due to the appropriate taxing authority or fails to remit to the Administrative Agent, for the account of the Issuing Bank, the respective Lenders or Transferees, the required receipts or other required documentary evidence, the Borrower shall indemnify the Issuing Bank, Lenders and Transferees for any incremental Taxes, interest, penalties or other costs (including reasonable attorneys' fees and expenses) that may become payable by the Issuing Bank, any Lender or Transferee as a result of any such failure. For purposes of this Section 2.16, a distribution hereunder by the Administrative Agent to or for the account of the Issuing Bank, any Lender or Transferee shall be deemed a payment by the Borrower. Each Lender or Transferee that is organized under the laws of a jurisdiction other than the United States of America or any state or political subdivision thereof shall, on or prior to the Effective Date (in the case of each Lender that is a party hereto on the Effective Date) or on or prior to the date of any assignment, participation or change in the designated lending office hereunder (in the case of a Transferee) and thereafter as reasonably requested from time to time by the Borrower or the Administrative Agent, execute and deliver, if legally able to do so, to the Borrower and the Administrative Agent one or more (as the Borrower or the Administrative Agent may reasonably request) United States Internal Revenue Service Forms W-8BEN or W-8ECI or such other forms or documents (or successor forms or documents), appropriately completed, as may be applicable and determined by the Borrower to be reasonably satisfactory to establish the extent, if any, to which a payment to such Lender or Transferee is exempt from or entitled to a reduced rate of withholding or deduction of Taxes. With respect to obligations under this Agreement other than those specified in the immediately following paragraph, the Borrower shall not be required to indemnify or to pay any additional amounts to the Issuing Bank, any Lender or Transferee with respect to any Taxes pursuant to this Section 2.16 to the extent that (i) such Tax results from any obligation to withhold, deduct or pay amounts with respect to such Tax that existed on the date the Issuing Bank, such Lender or Transferee became a -45- party to this Agreement or otherwise becomes a Transferee but, in the case of a Transferee, only to the extent the rate of such Tax exceeds the rate of Tax in respect of which the Borrower would have been required to pay an additional amount or otherwise indemnify the Lender from whom the Transferee acquired its interest immediately prior to such transfer (and, in such case, the Borrower may deduct and withhold such Tax from payments to the Issuing Bank, such Lender or Transferee), or (ii) such Tax results from a failure by the Lender or Transferee to comply in full with the provisions of the immediately preceding paragraph (and, in such case, the Borrower may deduct and withhold all Taxes required by law as a result of such noncompliance from payments to the Issuing Bank, such Lender or Transferee). Notwithstanding anything to the contrary in this Section 2.16, if the Internal Revenue Service determines that a Lender (or Transferee) is a conduit entity participating in a conduit financing arrangement as defined in Section 7701(l) of the Code and the regulations thereunder and the Borrower was not a participant to such arrangement (other than as the Borrower under this Agreement) (a "Conduit Financing Arrangement"), then (i) the Borrower shall have no obligation to pay additional amounts or indemnify the Lender or Transferee for any Taxes with respect to any payments hereunder to the extent the amount of such Taxes exceeds the amount that would have otherwise been withheld or deducted had the Internal Revenue Service not made such a determination and (ii) such Lender or Transferee shall indemnify the Borrower in full for any and all taxes for which the Borrower is held directly liable under Section 1461 of the Code by virtue of such Conduit Financing Arrangement; provided that the Borrower (i) promptly forwards to the indemnitor an official receipt or other documentation satisfactorily evidencing such payment, (ii) shall contest such tax upon the reasonable request of the indemnitor and at such indemnitor's cost and (iii) shall pay to such indemnitor within 30 days any refund of such taxes (including interest thereon). Each Lender or Transferee represents that it is not participating in a Conduit Financing Arrangement. In the event that the Issuing Bank or any Lender or Transferee determines that any event or circumstance that will lead to a claim by it under this Section 2.16 has occurred or will occur, the Issuing Bank or such Lender or Transferee will use its best efforts to so notify the Borrower; provided that any failure to provide such notice shall in no way impair the rights of the Issuing Bank or any Lender or Transferee to demand and receive compensation under this Section 2.16, but without prejudice to any claims of the Borrower for failure to observe this undertaking. If the Administrative Agent, the Issuing Bank, any Lender or any Transferee determines in its reasonable discretion that it has received a permanent refund of any Taxes as to which it has been indemnified by the Borrower or with respect to which the Borrower has paid additional amounts pursuant to this Section 2.16, it shall pay over such permanent refund to the Borrower (to the extent of indemnity payments made, or additional amounts paid, by the Borrower under this Section 2.16 with respect to Taxes giving rise to such permanent refund), net of all out-of-pocket expenses of such Person and without interest (other than any interest paid by the relevant taxing authority with respect to such permanent refund). This Section 2.16 shall not be construed to require the Administrative Agent, the Issuing Bank, any Lender or any Transferee to make available its tax returns (or any other information relating to its taxes which it deems confidential) to the Borrower or any other Person. SECTION 2.17. Indemnity. In the event any Lender shall incur any loss or expense (including any loss (other than lost profit) or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by such Lender to make, continue or maintain any portion of the principal amount of any Loan as, or to convert any portion of the principal amount of any Loan into, a Eurodollar Loan) as a result of any conversion of a Eurodollar Loan to an ABR Loan or repayment or prepayment of the principal amount of any Eurodollar Loan on a date other than the scheduled last day of the Interest Period applicable thereto, whether pursuant to Section 2.03, 2.05, 2.07, 2.14, 2.15 or 2.20 or otherwise, or any failure to borrow or convert any Eurodollar Loan after notice thereof shall have been -46- given hereunder, whether by reason of any failure to satisfy a condition to such Borrowing or otherwise, then, upon the written notice of such Lender to the Borrower (with a copy to the Administrative Agent), the Borrower shall, within five days of its receipt thereof, pay directly to such Lender such amount as will (in the reasonable determination of such Lender) reimburse such Lender for such loss or expense. Such written notice (which shall include calculations in reasonable detail) shall, in the absence of manifest error, be conclusive and binding on the Borrower. SECTION 2.18. Change of Lending Office. Each Lender (or Transferee) agrees that, upon the occurrence of any event giving rise to the operation of Section 2.14, 2.15 or 2.16 with respect to such Lender (or Transferee), it will, if requested by the Borrower, use commercially reasonable efforts (subject to overall policy considerations of such Lender (or Transferee)) to designate another lending office for any Loans affected by such event with the object of avoiding the consequences of such event; provided that such designation is made on terms that, in the sole judgment of such Lender, cause such Lender and its respective lending offices to suffer no material economic, legal or regulatory disadvantage; and provided, further, that nothing in this Section 2.18 shall affect or postpone any of the obligations of the Borrower or the rights of any Lender (or Transferee) pursuant to Sections 2.14, 2.15 and 2.16. SECTION 2.19. Sharing of Setoffs. Each Lender agrees that if it shall, through the exercise of a right of banker's lien, setoff or counterclaim against the Borrower, or pursuant to a secured claim under Section 506 of Title 11 of the United States Code or other security or interest arising from, or in lieu of, such secured claim received by such Lender under any applicable bankruptcy, insolvency or other similar law or otherwise, or by any other means, obtain payment (voluntary or involuntary) in respect of any Loans or participations in LC Disbursements which at the time shall be due and payable as a result of which the unpaid principal portion of its Loans and participations in LC Disbursements which at the time shall be due and payable shall be proportionately less than the unpaid principal portion of such Loans and participations in LC Disbursements of any other Lender, it shall be deemed simultaneously to have purchased from such other Lender at face value, and shall promptly pay to such other Lender the purchase price for, a participation in such Loans and participations in LC Disbursements of such other Lender, so that the aggregate unpaid principal amount of such Loans and participations in LC Disbursements held by each Lender shall be in the same proportion to the aggregate unpaid principal amount of all such Loans and participations in LC Disbursements as prior to such exercise of banker's lien, setoff or counterclaim or other event; provided, however, that if any such purchase or purchases or adjustments shall be made pursuant to this Section and the payment giving rise thereto shall thereafter be recovered, such purchase or purchases or adjustments shall be rescinded to the extent of such recovery and the purchase price or prices or adjustments restored without interest. The Borrower expressly consents to the foregoing arrangements and agrees that any Lender holding a participation in a Loan or an LC Disbursement deemed to have been so purchased may exercise any and all rights of banker's lien, setoff or counterclaim with respect to any and all moneys owing by the Borrower to such Lender by reason thereof as fully as if such Lender were a direct creditor directly to the Borrower in the amount of such participation. SECTION 2.20. Assignment of Commitments Under Certain Circumstances. In the event that (a) any Lender shall have delivered a notice or certificate pursuant to Section 2.14 or 2.15, or the Borrower shall be required to make additional payments to any Lender under Section 2.16 (each, an "Increased Cost Lender") or (b) in connection with any proposed amendment, modification, termination, waiver or consent with respect to any of the provisions hereof described in Section 10.08(e), the consent of all Lenders required hereunder would have been obtained but for such Lender's failure to consent (such Lender, a "Non-Consenting Lender"); then, with respect to each such Non-Consenting Lender and Increased Cost Lender (the "Terminated Lender"), the Borrower shall have the right, but not the obligation, at its own expense, upon notice to such Terminated Lender and the Administrative Agent, to replace such Terminated Lender with an assignee (in accordance with and subject to the restrictions contained in Section 10.04) approved by the Administrative Agent, the Issuing Bank and the Swingline Lender (which -47- approval shall not be unreasonably withheld), and such Terminated Lender hereby agrees to transfer and assign without recourse (in accordance with and subject to the restrictions contained in Section 10.04) all its interests, rights and obligations under this Agreement to such assignee; provided, however, that no Terminated Lender shall be obligated to make any such assignment unless (i) such assignment shall not conflict with any law or any rule, regulation or order of any Governmental Authority and (ii) such assignee or the Borrower shall pay to the affected Terminated Lender in immediately available funds on the date of such assignment the principal of and interest accrued to the date of payment on the Loans made by such Terminated Lender and participations in LC Disbursements and Swingline Loans held by such Terminated Lender and all commitment fees and other fees owed to such Terminated Lender hereunder and all other amounts accrued for such Terminated Lender's account or owed to it hereunder (including, without limitation, any Commitment Fees). ARTICLE III REPRESENTATIONS AND WARRANTIES In order to induce the Lenders and the Administrative Agent to enter into this Agreement and to extend credit hereunder and under the other Loan Documents on the Effective Date, the Loan Parties, jointly and severally, make the representations and warranties set forth in this Article III (after giving effect to the Transactions) and upon the occurrence of each Credit Event thereafter: SECTION 3.01. Organization, etc. Each Loan Party (a) is a corporation or other form of legal entity, and each of its Subsidiaries is a corporation, partnership or other form of legal entity, validly organized and existing and in good standing under the laws of the jurisdiction of its incorporation or organization, as the case may be, except where the failure to be so organized, existing or in good standing will not, individually or in the aggregate, have a Material Adverse Effect, (b) has all requisite corporate or other power and authority to carry on its business as now conducted, (c) is duly qualified to do business and is in good standing as a foreign corporation or foreign partnership (or comparable foreign qualification, if applicable, in the case of any other form of legal entity), as the case may be, in each jurisdiction where the nature of its business requires such qualification, except where the failure to so qualify will not, individually or in the aggregate, have a Material Adverse Effect, and (d) has full power and authority and holds all requisite material governmental licenses, permits and other approvals to enter into and perform its obligations under this Agreement and each other Loan Document to which it is a party and, except where the failure to have such power or authority or to hold such licenses, permits or approvals will not, individually or in the aggregate, have a Material Adverse Effect, to own or hold under lease its Property and to conduct its business substantially as currently conducted by it. SECTION 3.02. Due Authorization, Non-Contravention, etc. The execution, delivery and performance by each Loan Party of this Agreement and each other Loan Document to which it is a party, the borrowing of the Loans, the use of the proceeds thereof and the issuance of the Letters of Credit hereunder are within each Loan Party's corporate, partnership or comparable powers, as the case may be, have been duly authorized by all necessary corporate, partnership or comparable and, if required, stockholder action, as the case may be, and do not (a) contravene the Organic Documents of any Loan Party or any of its respective Subsidiaries; (b) contravene any law, statute, rule or regulation binding on or affecting any Loan Party or any of its respective Subsidiaries; -48- (c) violate or result in a default or event of default or an acceleration of any rights or benefits under any indenture, agreement or other instrument binding upon any Loan Party or any of its respective Subsidiaries; or (d) result in, or require the creation or imposition of, any Lien on any assets of any Loan Party or any of its respective Subsidiaries except Liens created under the Loan Documents which, in the case of the foregoing clauses (b), (c) or (d), individually or in the aggregate, would have or could reasonably be expected to have a Material Adverse Effect. SECTION 3.03. Government Approval, Regulation, etc. No consent, authorization or approval or other action by, and no notice to or filing with, any Governmental Authority or regulatory body or other Person is required for the due execution, delivery or performance by the Borrower or any other Loan Party of this Agreement or any other Loan Document, the borrowing of the Loans, the use of the proceeds thereof and the issuance of Letters of Credit hereunder, nor for the consummation of the Recapitalization Transactions, except such as have been obtained or made and are in full force and effect, except filings necessary to perfect Liens under the Security Documents. No Loan Party or any of its respective Subsidiaries is an "investment company" within the meaning of the Investment Company Act of 1940, as amended, or a "holding company", or a "subsidiary company" of a "holding company", or an "affiliate" of a "holding company" or of a "subsidiary company" of a "holding company", within the meaning of the Public Utility Holding Company Act of 1935, as amended. SECTION 3.04. Validity, etc. This Agreement has been duly executed and delivered by each Loan Party and constitutes, and each other Loan Document to which any Loan Party is to be a party will, on the due execution and delivery thereof and assuming the due execution and delivery of this Agreement by each of the other parties hereto, constitute, the legal, valid and binding obligation of such Loan Party enforceable in accordance with its respective terms, subject to the effect of bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforceability of creditors' rights generally and to general principles of equity. SECTION 3.05. Representations and Warranties in the Merger Agreement. Except as otherwise disclosed in writing to the Administrative Agent prior to the Effective Date, each of the representations and warranties set forth in Articles IV and V of the Merger Agreement is true and correct in all material respects as of the Effective Date (unless expressly stated to relate to an earlier date, in which case such representations and warranties shall be true and correct as of such earlier date). SECTION 3.06. Financial Information. (a) The consolidated balance sheets of Parent Guarantor and its Subsidiaries as of September 30, 2001 and 2002, reported on by PricewaterhouseCoopers LLP, independent public accountants, and as of July 30, 2003, certified by Parent Guarantor's chief financial officer, and the related consolidated statements of earnings and cash flow of Parent Guarantor and its Subsidiaries for the three years ended September 30, 2002, copies of which have been furnished to the Administrative Agent and each Lender and (b) the financial statements delivered to the Lenders pursuant to Section 4.01(h) have been prepared in accordance with GAAP consistently applied, and present fairly in all material respects the consolidated financial condition of Parent Guarantor and its Subsidiaries as of the dates thereof and the results of their operations and cash flows for the periods then ended. (b) Except as disclosed in the financial statements referred to above or the notes thereto or in the Information Memorandum, as of the Effective Date none of Parent Guarantor or its Subsidiaries has any material Indebtedness, contingent liabilities, long-term commitments or unrealized losses. -49- SECTION 3.07. No Material Adverse Effect. Since September 30, 2002, no event or circumstance has occurred which, individually or in the aggregate, has had, or could reasonably be expected to have a Material Adverse Effect. SECTION 3.08. Litigation. Except as described in Schedule 3.08, there is no pending or, to the knowledge of the Loan Parties, threatened litigation, action or proceeding (including, without limitation, any existing or new litigation relating to the Recapitalization Transactions) affecting Parent Guarantor or any of its Subsidiaries, or any of their respective operations, properties, businesses, assets or prospects, or the ability of the parties to consummate the transactions contemplated hereby, as to which there is a reasonable likelihood of an adverse determination and that, if adversely determined, individually or in the aggregate, in the case of Parent Guarantor and its Subsidiaries, would have a Material Adverse Effect or which purports to affect the legality, validity or enforceability of this Agreement or any other Loan Document or the transactions contemplated hereby or thereby. SECTION 3.09. Compliance with Laws and Agreements. None of the Loan Parties has violated, is in violation of or has been given written notice of any violation of any laws (other than Environmental Laws, which are the subject of Section 3.15), regulations and orders of any Governmental Authority applicable to it or its property and all indentures, agreements and other instruments binding upon it or its property, except for any violations which, individually or in the aggregate, do not have a Material Adverse Effect. No Default or Event of Default has occurred and is continuing. SECTION 3.10. Subsidiaries. Schedule 3.10 sets forth the name of, and the direct or indirect ownership interest of the Parent Guarantor and the Borrower in, each Subsidiary or other investment of the Parent Guarantor or the Borrower and identifies each Subsidiary that is a Loan Party or Inactive Subsidiary or a Joint Venture Entity, in each case as of the Effective Date. SECTION 3.11. Ownership of Real Properties. (a) Each of the Borrower and its Subsidiaries has good and valid title to (or other similar title in jurisdictions outside the United States of America), or valid leasehold interests in, or easements or other limited property interests in, or is licensed to use, all its Real Property, except for minor defects in title that do not interfere with its ability to conduct its business as currently conducted or to utilize such properties and assets for their intended purposes and except where the failure to have such title, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. All such Real Property is free and clear of Liens, other than Permitted Liens. (b) As of the Effective Date, Schedule 3.11(b) contains and will contain a true and complete list of each parcel of Real Property (i) with a book value in excess of $1.0 million owned by any Loan Party as of the date hereof and describes the type of interest therein held by such Loan Party and (ii) leased, subleased or otherwise occupied or utilized by any Loan Party, as lessee, as of the date hereof and describes the type of interest therein held by such Loan Party and whether such lease, sublease or other instrument requires the consent of the landlord thereunder or other parties thereto to the Recapitalization Transactions. (c) Each of the Borrower and its Subsidiaries has complied with all obligations under all leases to which it is a party, except where the failure to comply would not, individually or in the aggregate, have a Material Adverse Effect, and all such leases are in full force and effect, except leases in respect of which the failure to be in full force and effect could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Each of the Borrower and its Subsidiaries enjoys peaceful and undisturbed possession under all such leases, other than leases in respect of which the failure to enjoy peaceful and undisturbed possession could not reasonably be expected to, individually or in the aggregate, have a Material Adverse Effect. -50- (d) As of the Effective Date, no Loan Party or any of its respective Subsidiaries has received any written notice of, or has any knowledge of, any pending or contemplated condemnation proceeding affecting any of the Mortgaged Properties or any sale or disposition thereof in lieu of condemnation that remains unresolved as of the Effective Date. (e) Neither the Borrower nor any of its Subsidiaries is obligated on the Effective Date under any right of first refusal, option or other contractual right to sell, assign or otherwise dispose of any Mortgaged Property or any interest therein. SECTION 3.12. Ownership of Personal Property. (a) Each of the Borrower and its Subsidiaries has good and valid title to (or other similar title in jurisdictions outside the United States of America) or other personal property interests in, or is licensed to use, all its material personal properties and assets, except for minor defects in title that do not interfere with its ability to conduct its business as currently conducted or to utilize such personal property and assets for their intended purposes and except where the failure to have such title, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. All such material personal property and assets are free and clear of Liens, other than Permitted Liens. (b) Each of the Borrower and its Subsidiaries owns, possesses, is licensed or otherwise has the right to use, or could obtain ownership or possession of, on terms not materially adverse to it, all patents, trademarks, service marks, trade names, copyrights, licenses and rights with respect thereto (collectively, "Intellectual Property") necessary for the present conduct of its business, without any known conflict with the rights of others, except where such conflicts could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. SECTION 3.13. Taxes. Each of the Borrower and its Subsidiaries has timely filed all federal, foreign and all other material income tax returns and reports required by law to have been filed by it and has paid all taxes and governmental charges due, except any such taxes or charges which are being diligently contested in good faith by appropriate proceedings and for which adequate reserves in accordance with GAAP shall have been set aside on its books and except where the failure to file any such returns or reports or to pay any such taxes or charges will not, individually or in the aggregate, have a Material Adverse Effect. SECTION 3.14. Pension and Welfare Plans. No ERISA Event has occurred or is reasonably expected to occur which could, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. The Borrower and its Subsidiaries and their ERISA Affiliates are in compliance in all respects with the presently applicable provisions of ERISA and the Code with respect to each Plan except for failures to so comply which could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. No condition exists or event or transaction has occurred with respect to any Plan which reasonably might result in the incurrence by the Borrower or any of its Subsidiaries or any ERISA Affiliate of any liability, fine or penalty which could, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. As of the date hereof, the Borrower, its Subsidiaries and ERISA Affiliates do not participate in or contribute to any Multiemployer Plans. Except as could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, (a) each Foreign Plan has been maintained in compliance with its terms and with the requirements of any and all applicable laws, statutes, rules, regulations and orders and has been maintained, where required, in good standing with applicable regulatory authorities, and (b) neither the Borrower nor any of its Subsidiaries has incurred any obligation in connection with the termination of or withdrawal from any Foreign Plan. -51- SECTION 3.15. Environmental Warranties. (a) Except as set forth on Schedule 3.15(a), all facilities and Real Property owned, leased or operated by the Borrower or any of its Subsidiaries, and all operations conducted thereat, are and have been in compliance with all Environmental Laws, except for such noncompliance which, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. (b) Except as set forth on Schedule 3.15(b), there are no pending or, to any Loan Party's knowledge, threatened: (i) Environmental Claims received by the Borrower or any of its Subsidiaries, or (ii) written claims, complaints, notices or inquiries received by the Borrower or any of its Subsidiaries regarding Environmental Liability, in each case which, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. (c) Except as set forth on Schedule 3.15(c), there have been no Releases or threatened Releases of Hazardous Material at, on, under or from any Real Property now or, to any Loan Party's knowledge, any real property previously owned, leased, operated or used by the Borrower or any of its Subsidiaries which, individually or in the aggregate, have had or could reasonably be expected to have a Material Adverse Effect. (d) The Borrower and its Subsidiaries have been issued and are in compliance with all Environmental Permits necessary for their operations, facilities and businesses and each is in full force and effect, except for such Environmental Permits which, if not so obtained or as to which the Borrower and its Subsidiaries are not in compliance, or are not in effect, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. (e) No Real Property now or, to any Loan Party's knowledge, real property previously owned, leased or operated by the Borrower or any of its Subsidiaries is listed or formally proposed (with respect to owned Real Property only) for listing on the National Properties List promulgated pursuant to CERCLA, on the CERCLIS or on any similar state list of sites requiring Remedial Action. (f) There are no underground storage tanks or related piping, active or abandoned, including petroleum storage tanks, surface impoundments or disposal areas, on or under any Real Property now or, to any Loan Party's knowledge, real property previously owned or leased by the Borrower or any of its Subsidiaries which, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. (g) Neither the Borrower nor any of its Subsidiaries has transported or arranged for the transportation of any Hazardous Material to any location which is listed or formally proposed for listing on the National Priorities List promulgated pursuant to CERCLA or listed on the CERCLIS or on any similar state list of sites requiring Remedial Action, or to any location which is the subject of federal, state or local enforcement action or other investigation, which listing or proposed listing, action or investigation, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. (h) No Liens have been recorded pursuant to any Environmental Law with respect to any Real Property located in the United States or, to the knowledge of any Loan Party, any other Real Property or other assets, currently owned or leased by the Borrower or any of its Subsidiaries. -52- (i) Neither the Borrower nor any of its Subsidiaries is currently conducting or financing any Remedial Action pursuant to any Environmental Law, nor has any of the Loan Parties or any of their respective Subsidiaries assumed by contract, agreement or operation of law any obligation under Environmental Law, the cost of which, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. (j) There are no polychlorinated biphenyls or friable asbestos present at any Real Property owned, leased or operated by the Borrower or any of its Subsidiaries, which, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. SECTION 3.16. Regulations U and X. The Loans, the use of the proceeds thereof, this Agreement and the transactions contemplated hereby will not result in a violation of or be inconsistent with any provision of Regulation U or Regulation X. SECTION 3.17. Disclosure; Accuracy of Information; Pro Forma Balance Sheets and Projected Financial Statements. (a) The Loan Parties have disclosed to the Lenders all agreements, instruments and corporate or other restrictions to which they or any of their Subsidiaries is subject that, in each case, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. Neither this Agreement nor any other document, certificate or statement furnished to the Administrative Agent or any Lender by or on behalf of any Loan Party in connection herewith (including, without limitation, the Information Memorandum) contains any untrue statement of a material fact or omits to state any material fact necessary in order to make the statements contained herein and therein not misleading, in light of the circumstances under which they were made; provided that to the extent this or any such document, certificate or statement (including without limitation the Information Memorandum) was based upon or constitutes a forecast or projection, the Loan Parties represent only that they acted in good faith and utilized reasonable assumptions and due care in the preparation of such document, certificate or statement (it being recognized by the Administrative Agent and the Lenders, however, that projections as to future events are not to be viewed as facts and that the actual results during the period or periods covered by the projections probably will differ from the projected results and that the difference may be material). (b) Not less than one week prior to the Effective Date, the Borrower shall have furnished to the Lenders the pro forma condensed consolidated balance sheet as of June 27, 2003, prepared giving effect to the Transactions as if the Transactions had occurred on such date. Such pro forma consolidated balance sheet (i) was prepared in good faith based on the same assumptions used to prepare the pro forma financial statements included in the Information Memorandum, (ii) accurately reflects all material adjustments necessary to give effect to the Transactions and (iii) presents fairly the pro forma financial position of the Borrower and its consolidated Subsidiaries as of June 27, 2003, as if the Transactions had occurred on such date. (c) Not less than one week prior to the Effective Date, the Borrower shall have furnished to the Lenders pro forma consolidated income statement projections for the Borrower and its Subsidiaries, pro forma consolidated balance sheet projections for the Borrower and its Subsidiaries and pro forma consolidated cash flow projections for Borrower and its Subsidiaries, all for the Fiscal Years ending 2003 through 2009, inclusive, which shall be prepared on a quarterly basis through and including Fiscal Year 2004 and annually thereafter (the "Projected Financial Statements"), which give effect to the Transactions and all Indebtedness and Liens incurred or created in connection with the Transactions. The assumptions made in preparing the Projected Financial Statements are reasonable as of the date of such projections and as of the Effective Date and all material assumptions with respect to the Projected Financial Statements are set forth therein. The Projected Financial Statements present a good faith estimate of the consolidated financial information contained therein at the date thereof, it being recognized by the Administrative Agent and the Lenders, however, that projections as to future events are not to be viewed -53- as facts and that the actual results during the period or periods covered by the projections probably will differ from the projected results and that the difference may be material. SECTION 3.18. Insurance. As of the Effective Date, set forth on Schedule 3.18 is a summary of all insurance policies maintained by the Borrower and each of its Subsidiaries (a) with respect to its properties material to the business of the Borrower and its Subsidiaries against such casualties and contingencies and of such types and in such amounts as are customary in the case of similar businesses operating in the same or similar locations, and (b) required to be maintained pursuant to the Security Documents. SECTION 3.19. Labor Matters. Except as could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect (for purposes of this representation being made on the Effective Date only, with references to the Loan Parties in such definition being deemed to be references to the Borrower and its Subsidiaries taken as a whole), (a) there are no strikes, lockouts or slowdowns against the Borrower or any Subsidiary pending or, to the knowledge of any Loan Party, threatened; (b) the hours worked by and payments made to employees of the Borrower and its Subsidiaries have not been in violation of the Fair Labor Standards Act or any other applicable Federal, state, local or foreign law dealing with such matters; and (c) all payments due from the Borrower or any Subsidiary, or for which any claim may be made against the Borrower or any Subsidiary, on account of wages and employee health and welfare insurance and other benefits, have been paid or accrued as a liability on the books of the Borrower or such Subsidiary. SECTION 3.20. Solvency. Immediately following the making of each Loan and after giving effect to the application of the proceeds of such Loans, (a) the fair value of the assets of each Loan Party, at a fair valuation, will exceed its debts and liabilities, subordinated, contingent or otherwise; (b) the present fair saleable value of the property of each Loan Party will be greater than the amount that will be required to pay the probable liability of its debts and other liabilities, subordinated, contingent or otherwise, as such debts and other liabilities become absolute and matured; (c) each Loan Party will be able to pay its debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured; and (d) each Loan Party will not have unreasonably small capital with which to conduct the business in which it is engaged as such business is now conducted and is proposed to be conducted. SECTION 3.21. Securities. Upon the issuance thereof, the common stock of each of the Parent Guarantor's and the Borrower's Subsidiaries will have been duly authorized, issued and delivered and will be fully paid, nonassessable and free of preemptive rights that have not been waived. The Equity Interests of each Subsidiary held, directly or indirectly, by the Parent Guarantor are owned, directly or indirectly, by the Borrower free and clear of all Liens. There are not, as of the Effective Date, any existing options, warrants, calls, subscriptions, convertible or exchangeable securities, rights, agreements, commitments or arrangements for any Person to acquire any common stock of the Borrower or its Subsidiaries or any other securities convertible into, exchangeable for or evidencing the right to subscribe for any such common stock, except for transfers of Equity Interests of Non-U.S. Subsidiaries to a Loan Party and except as disclosed in the financial statements delivered pursuant to Sections 5.01(a) and (b) or otherwise disclosed to the Lenders prior to the Effective Date. SECTION 3.22. Indebtedness Outstanding; Certain Operating Leases Terminated. (a) Set forth on Schedule 3.22(a) hereto is a list and description of all Indebtedness of the Loan Parties and their respective Subsidiaries (other than the Loans) that will be outstanding immediately after the Effective Date after giving effect to the Recapitalization Transactions. -54- (b) Set forth on Schedule 3.22(b) hereto is a list and description of all Indebtedness of the Loan Parties and their respective Subsidiaries that will be repaid, defeased, transferred or otherwise terminated on or prior to the Effective Date in connection with the Recapitalization Transactions (or provision for such repayment reasonably acceptable to the Administrative Agent having been made). (c) Set forth on Schedule 3.22(c) hereto is a list and description of all Liens of the Loan Parties and their respective Subsidiaries (other than on Property of Non-U.S. Subsidiaries and other than Liens under the Security Documents) that will be repaid, defeased, transferred or otherwise terminated on or prior to the Effective Date in connection with the Recapitalization Transactions. (d) Set forth on Schedule 3.22(d) hereto is a list and description of all Liens of the Loan Parties and their respective Subsidiaries (other than on Property of Non-U.S. Subsidiaries and other than Liens under the Security Documents) that will be outstanding immediately after the Effective Date. (e) The operating leases set forth in Schedule 1.01(a) shall be terminated at the Effective Date; the annual rental expense for each such operating lease as of the Effective Date is as set forth in Schedule 1.01(a). SECTION 3.23. Security Documents. (a) The Pledge Agreement is effective under New York law to create in favor of the Collateral Agent for its benefit and the benefit of the Secured Parties, a legal, valid and enforceable security interest in the Securities Collateral (as defined in the Pledge Agreement) and, when such Securities Collateral is delivered to the Collateral Agent, the Lien on such Collateral created by the Pledge Agreement shall constitute under New York law a fully perfected Lien on, and security interest in, all right, title and interest of the pledgor thereunder in such Securities Collateral. Each Non-U.S. Pledge Agreement is effective under applicable law to create in favor of the Collateral Agent for its benefit and the benefit of the Secured Parties, a legal, valid and enforceable security interest in the collateral pledged thereunder and, when the applicable steps described in the legal opinion delivered with such Non-U.S. Pledge Agreement are complied with, the Lien on such collateral created by such Non-U.S. Pledge Agreement shall constitute under applicable law a fully perfected Lien on, and security interest in, all right, title and interest of the pledgor thereunder in such collateral. (b) (i) The Security Agreement is effective under New York law to create in favor of the Collateral Agent, for its benefit and the benefit of the Secured Parties, a legal, valid and enforceable security interest in the Collateral (as defined in the Security Agreement) and (ii) when (x) financing statements in appropriate form are filed in the offices specified in Schedule 7 to the Perfection Certificate and (y) upon the taking of possession or control by the Collateral Agent of any such Collateral in which a security interest may be perfected only by possession or control (which possession or control shall be given to the Collateral Agent to the extent possession or control by the Collateral Agent is required by the Security Agreement), the Lien on such Collateral created by the Security Agreement shall constitute under New York law a fully perfected Lien on, and security interest in, all right, title and interest of the grantors thereunder in such Collateral (other than the Intellectual Property (as defined in the Security Agreement)) to the extent such Lien and security interest can be perfected by the filing of a financing statement pursuant to the UCC or by possession or control by the Collateral Agent, in each case prior and superior in right to any other Person, other than with respect to Permitted Liens. (c) When the filings in clause (b)(ii)(x) above are made and when the Security Agreement (or a summary thereof) is filed in the United States Patent and Trademark Office and the United States Copyright Office, the Lien on the Intellectual Property created by the Security Agreement shall constitute a fully perfected Lien on, and security interest in, all right, title and interest of the Loan Parties in such Intellectual Property in which a security interest may be perfected by filing, recording or registering a security agreement, financing statement or analogous document in the United States Patent -55- and Trademark Office or the United States Copyright Office, as applicable (it being understood that subsequent recordings in the United States Patent and Trademark Office and the United States Copyright Office may be necessary to perfect a Lien on registered trademarks, trademark applications and copyrights acquired by the Loan Parties after the Effective Date), in each case prior and superior in right to any other Person other than with respect to Permitted Liens. (d) Each Mortgage executed and delivered as of the Effective Date is, or, to the extent any Mortgage is duly executed and delivered thereafter by the relevant Loan Party, such Mortgage will be, effective to create, subject to the exceptions listed in each title insurance policy insuring such Mortgage, in favor of the Collateral Agent, for its benefit and the benefit of the Secured Parties, a legal, valid and enforceable Lien on and security interest in all of the Loan Parties' right, title and interest in and to the Mortgaged Properties thereunder and the proceeds thereof, and when the Mortgages are filed in the offices specified in Schedule 3.23(d), the Mortgages shall constitute a Lien on, and security interest in, all right, title and interest of the Loan Parties in such Mortgaged Properties and the proceeds thereof, in each case prior and superior in right to any other Person, other than with respect to the rights of Persons pursuant to Permitted Liens. SECTION 3.24. Anti-Terrorism Laws. (a) To the knowledge of the Loan Parties, no Loan Party or any of its Affiliates is in violation of any laws relating to terrorism or money laundering ("Anti-Terrorism Laws"), including Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001 (the "Executive Order"), and the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56. (b) To the knowledge of the Loan Parties, no Loan Party or any of its Affiliates or their respective brokers or other agents acting or benefiting in any capacity in connection with the Loans is any of the following: (i) a Person or entity that is listed in the annex to, or is otherwise subject to the provisions of, the Executive Order; (ii) a Person or entity owned or controlled by, or acting for or on behalf of, any Person or entity that is listed in the annex to, or is otherwise subject to the provisions of, the Executive Order; (iii) a Person or entity with which any Lender is prohibited from dealing or otherwise engaging in any transaction by any Anti-Terrorism Law; (iv) a Person or entity that commits, threatens or conspires to commit or supports "terrorism" as defined in the Executive Order; or (v) a Person or entity that is named as a "specially designated national and blocked person" on the most current list published by the U.S. Treasury Department Office of Foreign Assets Control ("OFAC") at its official website or any replacement website or other replacement official publication of such list. (c) To the knowledge of the Loan Parties, no Loan Party or any of its brokers or other agents acting in any capacity in connection with the Loans (i) conducts any business or engages in making or receiving any contribution of funds, goods or services to or for the benefit of any Person described in clause (b) above, (ii) deals in, or otherwise engages in any transaction relating to, any property or interests in property blocked pursuant to the Executive Order, or (iii) engages in or conspires to engage -56- in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any Anti-Terrorism Law. ARTICLE IV CONDITIONS SECTION 4.01. Effective Date. The obligations of the Lenders to make Loans, and the obligation of each Issuing Bank to issue Letters of Credit, in each case, on the Effective Date are subject, at the time of the making of such Loans or the issuance of such Letters of Credit, to satisfaction of the following conditions on or prior to the Effective Date: (a) The Administrative Agent (or its counsel) shall have received from each party hereto either (i) a counterpart of this Agreement signed on behalf of such party or (ii) written evidence satisfactory to the Administrative Agent (which may include telecopy transmission of a signed signature page of this Agreement) that such party has signed a counterpart of this Agreement. (b) The Administrative Agent shall have received (i) counterparts of the Guarantee Agreement signed on behalf of each wholly owned Domestic Subsidiary and the Parent Guarantor and (ii) counterparts of the Indemnity, Subrogation and Contribution Agreement in the Form of Exhibit F signed on behalf of each Loan Party. (c) The Administrative Agent shall have received from the Borrower a Closing Certificate in the Form of Exhibit H, dated the Effective Date and signed on behalf of the Borrower by a Financial Officer of the Parent Guarantor. (d) The Administrative Agent shall have received such documents and certificates as the Administrative Agent or its counsel may reasonably request relating to the organization, existence and good standing of each Loan Party, the authorization of the Transactions and any other legal matters relating to the Loan Parties, the Transaction Documents or the Transactions, all in form and substance reasonably satisfactory to the Administrative Agent and its counsel. (e) The Administrative Agent shall have received from Milbank, Tweed, Hadley & McCloy LLP, counsel to the Loan Parties, and Juliet L. Ream, general counsel of the Parent Guarantor, opinions addressed to each Agent and the Lenders and dated the Effective Date substantially in the form of Exhibits L-1 and L-2, respectively. (f) The Administrative Agent shall have received favorable written opinions of (i) local counsel in each of the jurisdictions (in each case unless, and to the extent otherwise agreed by the Administrative Agent) referred to in Schedule 4.01(f), in each case reasonably satisfactory to the Administrative Agent, which opinions shall (x) be addressed to each Agent and the Lenders and be dated the Effective Date, (y) cover various matters regarding the perfection and priority of the security interests granted in respect of the Equity Interests of Persons organized in such Non-U.S. Jurisdiction, and such other matters incident to the transactions contemplated herein as the Agents may reasonably request and (z) be in form, scope and substance reasonably satisfactory to the Agents, and (ii) local counsel to the Loan Parties as specified in Schedule 4.01(f) in the form of Exhibit L-3, which opinions (x) shall be addressed to each Agent and each of the Lenders and be dated the Effective Date, (y) shall cover the enforceability of the respective Mortgage and perfection of the Liens and security interests granted pursuant to the relevant Security Documents and such other matters incident to the transactions contemplated -57- herein as the Agents may reasonably request and (z) shall be in form and substance reasonably satisfactory to the Agents. (g) The issuance of the Subordinated Notes by the Borrower shall have been consummated on the Effective Date and shall have terms and conditions substantially consistent with and as set forth in the Offering Memorandum dated September 22, 2003. On the Effective Date, all Subordinated Note Documents shall be in full force and effect. Each of the conditions precedent to the consummation of the issuance of the Subordinated Notes as set forth in the Subordinated Note Documents shall have been satisfied in all material respects and not waived, consented to or approved except with the consent of the Joint Lead Arrangers (such consent not to be unreasonably withheld). (h) Not later than 30 days before the Effective Date, the Lenders shall have received, to the extent available, unaudited consolidated and consolidating balance sheets and related statements of income, stockholders' equity and cash flows of the Parent Guarantor for each completed Fiscal Quarter since the date of the last audited financial statements (and, to the extent available, for each completed month since the last such quarter), which unaudited financial statements (i) shall be in form and scope reasonably satisfactory to the Lenders and (ii) shall not be materially inconsistent with the financial statements previously provided to the Lenders. (i) The Lenders shall have received a certificate of the chief financial officer of the Parent Guarantor in the form of Exhibit M and reasonably satisfactory to the Administrative Agent, confirming the solvency of each of the Loan Parties on a consolidated basis after giving effect to the Transactions. (j) The Recapitalization Transactions shall have been consummated simultaneously with the Borrowings under this Agreement on the Effective Date in all material respects on the terms of the Recapitalization Documents, without any modification or waiver of a material term or condition thereof unless such modification or waiver shall have been approved by the Joint Lead Arrangers (such approval not to be unreasonably withheld or delayed). (k) The Lenders shall have received (i) the pro forma consolidated balance sheet referred to in Section 3.17(b), and the Administrative Agent shall be reasonably satisfied that such balance sheet is not materially inconsistent with the forecasts previously provided to the Administrative Agent, and (ii) the Projected Financial Statements, and the Administrative Agent shall be reasonably satisfied that such Projected Financial Statements are not materially inconsistent with the projections previously provided to the Joint Lead Arrangers. (l) All equity investments and all roll-over equity (other than any immaterial amount of such roll-over equity) in the Parent Guarantor shall have been made and on terms and conditions set forth in the Recapitalization Documents and the New Preferred Stock Documents, without any modification or waiver of a material term or condition thereof unless such modification or waiver shall have been approved by the Joint Lead Arrangers (such approval not to be unreasonably withheld or delayed). (m) The Administrative Agent shall have received satisfactory evidence that all loans outstanding under, and all other amounts due in respect of, the Indebtedness to Be Paid shall have been repaid in full (or satisfactory arrangements made for such repayment) and the commitments thereunder shall have been permanently terminated, and all related guarantees and security interests shall have been terminated (or provisions reasonably satisfactory to the Administrative Agent shall have been made for their termination). -58- (n) After giving effect to the Transactions, none of the Parent Guarantor or the Borrower or their respective Subsidiaries shall have outstanding any Indebtedness other than (i) the Loans and other extensions of credit under this Agreement, (ii) the Subordinated Notes and (iii) Indebtedness to Remain Outstanding. (o) All requisite material governmental authorities and third parties shall have approved or consented to the Recapitalization Transactions to the extent required, all applicable appeal periods shall have expired and there shall be no judicial or regulatory action by a governmental agency, actual or threatened, that could reasonably be expected to restrain, prevent or impose materially burdensome conditions on the Recapitalization Transactions. (p) The Administrative Agent shall have received all Fees payable to the Administrative Agent or any Lender on or prior to the Effective Date under the Fee Letter and, to the extent that statements or invoices therefor are presented to the Borrower at least one Business Day prior to the Effective Date, all other amounts due and payable pursuant to the Loan Documents on or prior to the Effective Date, including reimbursement or payment of all reasonable out-of-pocket expenses (including reasonable fees, charges and disbursements of Cahill Gordon & Reindel LLP (receipt of such invoice at least one Business Day prior to the Effective Date the Borrower hereby acknowledges) and domestic and foreign local counsel) required to be reimbursed or paid by the Borrower hereunder or under any other Loan Document. (q) The Collateral Agent shall have received counterparts of the Pledge Agreement signed by each Loan Party, and covering (subject to the terms of Section 5.11) pledges of 100% of the Equity Interests held, directly or indirectly, by the Borrower in all of its Domestic Subsidiaries and 65% of the voting Equity Interests and 100% of the nonvoting Equity Interests of the "first tier" Non-U.S. Subsidiaries of the Borrower (except with respect to the Equity Interest set forth on Schedule 5.18(a) and Excluded Non-U.S. Subsidiaries) and counterparts of the Non-U.S. Pledge Agreements covering (subject to the terms of Section 5.11) pledges of 65% of the voting Equity Interests and 100% of the non-voting Equity Interests of the "first tier" Non-U.S. Subsidiaries of the Borrower (except with respect to the Equity Interest set forth on Schedule 5.18(a) and Excluded Non-U.S. Subsidiaries), together with promissory notes evidencing all intercompany Indebtedness for amounts over $250,000 owed to any Loan Party by the Borrower or any Subsidiary as of the Effective Date and stock powers and instruments of transfer, endorsed in blank, with respect to the Equity Interests of the Borrower's Domestic Subsidiaries and any such promissory notes. (r) The Collateral Agent shall have received counterparts of the Security Agreement and Pledge Agreement signed by each Loan Party, in each case, together with the following in form and substance reasonably satisfactory to the Collateral Agent: (A) certificates representing all Pledged Securities (other than the Equity Interests set forth in Schedule 5.18(a)), together with executed and undated stock powers and/or assignments in blank; (B) [Reserved]; (C) certificates of insurance required under the Security Documents; (D) appropriate financing statements or comparable documents authorized by (and executed by, to the extent applicable) the appropriate entities in proper form for filing under the provisions of the UCC and applicable domestic or local laws, rules or regu- -59- lations in each of the offices where such filing is necessary or appropriate, in the Collateral Agent's sole discretion, to grant to the Collateral Agent a perfected first priority Lien on such Collateral, superior and prior to the rights of all third persons other than the holders of Permitted Liens; (E) UCC, judgment and tax lien, bankruptcy and pending lawsuit search reports listing all effective financing statements or comparable documents which name any applicable Loan Party as debtor and which are filed in those jurisdictions in which, any Loan Party is organized, any of such Collateral is located and the jurisdictions in which any applicable Loan Party's principal place of business is located in the United States, together with copies of such existing financing statements, none of which shall encumber such Collateral covered or intended or purported to be covered by the Security Documents other than Permitted Liens except as to those UCC, judgment and tax lien, bankruptcy and pending lawsuit search reports delivery of which the Administrative Agent, in its reasonable judgment, has waived as of the date hereof and instead elected to receive pursuant to Section 5.18(d) hereof; (F) evidence of the preparation for recording or filing, as applicable, of all recordings and filings of each such Security Document, including, without limitation, with the United States Patent and Trademark Office and the United States Copyright Office, and delivery and recordation, if necessary, of such other security and other documents, including, without limitation, UCC-3 termination statements with respect to UCC filings that do not constitute Permitted Liens, as may be necessary or, in the opinion of the Collateral Agent, desirable to perfect the Liens created, or purported or intended to be created, by such Security Documents; (G) [Reserved]; (H) evidence that all other actions reasonably necessary or, in the opinion of the Collateral Agent, desirable to perfect the security interest created by the Security Documents have been taken; and (I) a completed Perfection Certificate dated the Effective Date and signed by an executive officer or Financial Officer of the Borrower, together with all attachments contemplated thereby, including the results of a search of the UCC (or equivalent) filings made with respect to the Loan Parties in the jurisdictions contemplated by the Perfection Certificate and copies of the financing statements (or similar documents) disclosed by such search and evidence reasonably satisfactory to the Administrative Agent that the Liens indicated by such financing statements (or similar documents) are Permitted Liens or have been released. (s) The Collateral Agent shall have received the following documents and instruments: (A) Mortgages encumbering each Mortgaged Property in which the applicable Loan Party holds an ownership or leasehold interest (as indicated on Schedule 4.01(s)(A) hereto) in favor of the Collateral Agent, for its benefit and the benefit of the Secured Parties, duly executed and acknowledged by the applicable Loan Party, and otherwise in form for recording in the recording office where each such Mortgaged Property is situated, together with such certificates, affidavits, questionnaires or returns as shall be required in connection with the recording or filing thereof to create a lien under -60- applicable law, and such UCC-1 financing statements and other similar statements as are contemplated by the counsel opinions described in Section 4.01(f) in respect of such Mortgage, all of which shall be in form and substance reasonably satisfactory to the Collateral Agent, and any other instruments necessary to grant a mortgage lien under the laws of any applicable jurisdiction, which Mortgage and financing statements and other instruments shall when recorded be effective to create a Lien on such Mortgaged Property subject to no other Liens except Permitted Liens; (B) with respect to each Mortgaged Property, such consents, approvals, amendments, supplements, estoppels, tenant subordination agreements or other instruments, in form acceptable to the Collateral Agent, as necessary or required to consummate the transactions contemplated hereby or as shall reasonably be deemed necessary by the Collateral Agent in order for the owner or holder of the fee or leasehold interest constituting such Mortgaged Property to grant the Lien contemplated by the Mortgage with respect to such Mortgaged Property; (C) with respect to each Mortgage, a policy (or commitment to issue a policy) of title insurance insuring (or committing to insure) the Lien of such Mortgage as a valid first mortgage Lien on the real property and fixtures described therein in an amount not less than the amount set forth on Schedule 4.01(s)(C) (115% of the fair market value thereof), which policies (or commitments) shall (w) be issued by the Title Company, (x) include such reinsurance arrangements (with provisions for direct access) as shall be reasonably acceptable to the Collateral Agent, (y) contain a "tie-in" or "cluster" endorsement (if available under applicable law) (i.e., policies which insure against losses regardless of location or allocated value of the insured property up to a stated maximum coverage amount) and have been supplemented by such endorsements as shall be reasonably requested by the Collateral Agent (including, without limitation, endorsements, to the extent available in each jurisdiction at commercially reasonably rates, on matters relating to usury, first loss, last dollar, zoning, contiguity, variable rate, revolving credit, doing business, access, survey, address and so-called comprehensive coverage over covenants and restrictions) and (z) contain only such exceptions to title as shall be agreed to by the Collateral Agent on or prior to the Effective Date with respect to such Mortgaged Property, which exceptions shall be shown on Schedule B to the title insurance policies for each such Mortgaged Property issued by the Title Company; (D) with respect to each Mortgaged Property, policies or certificates of insurance as required by the Mortgage relating thereto, which policies or certificates shall comply with the insurance requirements contained in Section 5.04; (E) with respect to each Mortgaged Property, a Survey in form and substance reasonably acceptable to the Collateral Agent; (F) with respect to each Mortgaged Property, such affidavits, certificates, information (including financial data) and instruments of indemnification (including, without limitation, a so-called "gap" indemnification) as shall be reasonably required to induce the Title Company to issue the policy or policies (or commitment) and endorsements contemplated in subparagraph (C) above; (G) [Reserved]; -61- (H) with respect to each Mortgaged Property, copies of all leases or other agreements relating to possessory interests to which any Loan Party or Subsidiary thereof is a party. To the extent any of the foregoing in which any Loan Party is a landlord or sublandlord affect any Mortgaged Property, such agreement shall be subordinate to the Mortgage to be recorded against such Mortgaged Property and otherwise reasonably acceptable to the Collateral Agent; and (I) with respect to each Mortgaged Property, a Real Property Officers' Certificate substantially in the form of Exhibit O attached hereto. (t) The Administrative Agent shall have received subordination agreements in form and substance reasonably satisfactory to it covering all intercompany notes or other obligations owed by a Loan Party to a Subsidiary of the Parent Guarantor that is not a Loan Party. (u) The Collateral Agent shall have received a counterpart of the Collateral Sharing Agreement signed by the Borrower and the Subsidiaries of the Borrower listed thereon. (v) The Collateral Agent shall have received evidence and be reasonably satisfied that the insurance required by Section 5.04 and the Security Documents is in effect in form and substance satisfactory to the Collateral Agent. (w) The operating leases set forth in Schedule 1.01(a) shall have been terminated. (x) The Parent Preferred Stock shall be purchased or redeemed in full or shall be called for redemption in accordance with the documents governing the same and, if so called for redemption at the Effective Date, an amount in cash sufficient to pay the redemption price thereof plus all accrued and unpaid dividends and any other amounts payable thereon shall be deposited in an escrow account with an escrow agent reasonably acceptable to the Administrative Agent pursuant to an escrow agreement on terms and conditions reasonably acceptable to the Administrative Agent. (y) The employment agreements provided to the Administrative Agent to be executed and delivered on or before the Effective Date shall have been executed and delivered by the parties thereto substantially on the terms disclosed to the Administrative Agent and be in full force and effect. (z) The Fee Letter shall have been executed and delivered by the parties thereto and assumed by the Borrower pursuant to an agreement satisfactory to the Administrative Agent. SECTION 4.02. Conditions to Each Credit Event. The agreement of each Lender to make any Loan and of the Issuing Bank to issue, amend, renew or extend any Letter of Credit (such event being called a "Credit Event") (excluding continuations and conversions of Loans) requested to be made by it on any date is subject to the satisfaction of the following conditions: (a) The Administrative Agent shall have received a notice of such Credit Event as required by Section 2.02 or 2.05, as applicable. (b) The representations and warranties set forth in Article III hereof and in the other Loan Documents shall be true and correct with the same effect as if then made (unless expressly stated to relate to an earlier date, in which case such representations and warranties shall be true and correct as of such earlier date). -62- (c) At the time of and immediately after such Credit Event, no Default or Event of Default shall have occurred and be continuing. Each Credit Event shall be deemed to constitute a representation and warranty by the Borrower on the date of such Credit Event, as to the matters specified in paragraphs (b) and (c) of this Section 4.02. ARTICLE V AFFIRMATIVE COVENANTS Each Loan Party hereby covenants and agrees with the Lenders that on or after the Effective Date and until the Commitments have expired or terminated and the principal of and interest on each Loan and all fees and other amounts payable hereunder or under any other Loan Document have been paid in full and all Letters of Credit have expired or terminated and all LC Disbursements shall have been reimbursed: SECTION 5.01. Financial Information, Reports, Notices, etc. The Borrower will furnish, or will cause to be furnished, to each Lender and the Administrative Agent copies of the following financial statements, reports, notices and information: (a) as soon as available and in any event within 45 days (or such shorter period for the filing of the Parent Guarantor's Form 10-Q as may be required by the SEC) after the end of each of the first three Fiscal Quarters of each Fiscal Year of the Parent Guarantor, a consolidated balance sheet of the Parent Guarantor and its Subsidiaries as of the end of such Fiscal Quarter and consolidated statements of earnings and cash flow of the Parent Guarantor and its Subsidiaries for such Fiscal Quarter and for the same period in the prior Fiscal Year and for the period commencing at the end of the previous Fiscal Year and ending with the end of such Fiscal Quarter, certified by a Financial Officer of the Parent Guarantor, it being understood and agreed that the delivery of the Parent Guarantor's Form 10-Q (as filed with the SEC), if certified as required in this clause (a), shall satisfy the requirements set forth in this clause); (b) as soon as available and in any event within 90 days (or such shorter period as may be required for the filing of the Parent Guarantor's Form 10-K by the SEC) after the end of each Fiscal Year of the Parent Guarantor, a copy of the annual audit report for such Fiscal Year for the Parent Guarantor and its Subsidiaries, including therein a consolidated balance sheet of the Parent Guarantor and its Subsidiaries as of the end of such Fiscal Year and consolidated statements of earnings and cash flow of the Parent Guarantor and its Subsidiaries for such Fiscal Year, in each case certified (without any Impermissible Qualification) in a manner acceptable to the Administrative Agent by PricewaterhouseCoopers LLP or other independent public accountants reasonably acceptable to the Administrative Agent (it being understood and agreed that the delivery of the Parent Guarantor's Form 10-K (as filed with the SEC), if certified as required in this clause (b), shall satisfy such delivery requirement in this clause), together with a certificate of the accounting firm that reported on such financial statements stating whether they obtained knowledge during the course of their examination of such financial statements of any Default or Event of Default (which certificate may be limited to the extent required by accounting rules or guidelines); (c) concurrently with the delivery of the financial statements referred to in the foregoing clauses (a) and (b), a Compliance Certificate; -63- (d) no later than October 31 of each Fiscal Year of the Parent Guarantor, a detailed consolidated budget by Fiscal Quarter for such Fiscal Year (including a projected consolidated balance sheet and related statements of projected operations and cash flow as of the end of and for each Fiscal Quarter during such Fiscal Year) and the succeeding Fiscal Years through the Term B Loan Maturity Date (including a projected consolidated balance sheet and related statements of projected operations and cash flow as of the end of and for each Fiscal Quarter during such Fiscal Year) and, promptly when available, any significant revisions of such budgets; (e) promptly upon receipt thereof, copies of all reports submitted to the Parent Guarantor by independent certified public accountants in connection with each annual, interim or special audit of the books of the Parent Guarantor or any of its Subsidiaries made by such accountants, including any management letters submitted by such accountants to management in connection with their annual audit; (f) as soon as possible and in any event within three Business Days after becoming aware of the occurrence of any Default or Event of Default, a statement of a Financial Officer of the Parent Guarantor setting forth details of such Default or Event of Default and the action which the Parent Guarantor has taken and proposes to take with respect thereto; (g) as soon as possible and in any event within five Business Days after any Loan Party becoming actually aware of (i) the occurrence of any adverse development with respect to any litigation, action or proceeding which, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect or (ii) the commencement of any litigation, action or proceeding which, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect or that purports to affect the legality, validity or enforceability of this Agreement or any other Loan Document or the transactions contemplated hereby or thereby, notice thereof and copies of all documentation relating thereto; (h) promptly after the sending or filing thereof, copies of all reports which the Parent Guarantor sends to its security holders generally, and all reports, registration statements (other than on Form S-8 or any successor form) or other materials (including affidavits with respect to reports) which the Parent Guarantor or any of its Subsidiaries or any of their officers files with the SEC or any national securities exchange; (i) reasonably promptly upon becoming aware of the taking of any specific actions by the Parent Guarantor or any other Person to terminate any Pension Plan (other than a termination pursuant to Section 4041(b) of ERISA which can be completed without the Parent Guarantor or any ERISA Affiliate having to provide more than $1.0 million in addition to the normal contribution required for the plan year in which termination occurs to make such Pension Plan sufficient), or the occurrence of an ERISA Event which could reasonably be expected to result in a Lien on the assets of any Loan Party or a Subsidiary or in the incurrence by a Loan Party of any liability, fine or penalty which, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect, notice thereof and copies of all documentation relating thereto; (j) reasonably promptly upon written request by the Administrative Agent, copies of: (i) each Schedule B (Actuarial Information) to the annual report (Form 5500 Series) filed by any Loan Party or ERISA Affiliate with the Internal Revenue Service with respect to each Pension Plan; (ii) the most recent actuarial valuation report for each Pension Plan; (iii) all notices received by any Loan Party or ERISA Affiliate from a Multiemployer Plan sponsor or any governmental agency concerning an ERISA Event; and (iv) such other documents or governmental reports or filings relating to any Plan as the Administrative Agent shall reasonably request; -64- (k) as soon as possible, notice of any other development which, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect; (l) annually, the aggregate fair market value of all Intellectual Property transferred by the Loan Parties to the IP Subsidiary; and (m) such other information respecting the condition or operations, financial or otherwise, of the Parent Guarantor or any of its Subsidiaries as any Lender through the Administrative Agent may from time to time reasonably request. SECTION 5.02. Compliance with Laws, etc. The Loan Parties will, and will cause each of their Subsidiaries to, comply in all respects with all applicable laws, rules, regulations and orders, except where such noncompliance, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect, such compliance to include, subject to the foregoing and to Section 6.03 (without limitation): (a) the maintenance and preservation of their and their Subsidiaries' existence and their qualification as a foreign corporation or partnership (or comparable foreign qualification, if applicable, in the case of any other form of legal entity), and (b) the payment, before the same become delinquent, of all taxes, assessments and governmental charges imposed upon them or upon their property except as provided in Section 5.09. SECTION 5.03. Maintenance of Properties. Each Loan Party and each of its respective Subsidiaries will maintain, preserve, protect and keep its material properties and assets in good repair, working order and condition, and make necessary and proper repairs, renewals and replacements so that its business carried on in connection therewith may be properly conducted at all times; provided that nothing in this Section 5.03 shall prevent any Loan Party from discontinuing the operation and maintenance of any of its properties or any of those of its Subsidiaries if such discontinuance is, in the reasonable commercial judgment of such Loan Party, desirable in the conduct of its or their business and does not individually or in the aggregate have a Material Adverse Effect. SECTION 5.04. Insurance. The Loan Parties will and will cause each of their respective Subsidiaries to maintain or cause to be maintained with insurance companies that the Loan Parties reasonably believe to be financially sound and responsible (a) insurance with respect to their properties material to the business of the Loan Parties and their respective Subsidiaries against such casualties and contingencies and of such types and in such amounts with such deductibles as is customary in the case of similar businesses operating in the same or similar locations (including, without limitation, (i) physical hazard insurance on an "all risk" basis, (ii) commercial general liability against claims for bodily injury, death or property damage covering any and all claims, (iii) explosion insurance in respect of any boilers, machinery or similar apparatus constituting Collateral, (iv) business interruption insurance, (v) worker's compensation insurance as may be required by any Requirement of Law and (vi) such other insurance against risks as the Administrative Agent may from time to time require) and (b) all insurance required to be maintained pursuant to the Security Documents, and will, upon request of the Administrative Agent, furnish to each Lender at reasonable intervals a certificate of an Authorized Officer of the Borrower setting forth the nature and extent of all insurance maintained by the Loan Parties and their respective Subsidiaries in accordance with this Section. Each such insurance policy shall provide that (i) it may not be cancelled or otherwise terminated without at least thirty (30) days' prior written notice to the Collateral Agent (and to the extent any such policy is cancelled, modified or renewed, the Borrower shall deliver a copy of the renewal or replacement policy (or other evidence thereof) to the Administrative Agent and the -65- Collateral Agent, or insurance certificate with respect thereto, together with evidence satisfactory to the Administrative Agent and Collateral Agent of the payment of the premium therefor); (ii) the Collateral Agent is permitted to pay any premium therefor within thirty (30) days after receipt of any notice stating that such premium has not been paid when due; (iii) all losses thereunder shall be payable notwithstanding any act or negligence of any Loan Party or any of its Subsidiaries or its agents or employees which otherwise might have resulted in a forfeiture of all or a part of such insurance payments; (iv) to the extent such insurance policy constitutes property insurance, the Collateral Agent shall be named as an additional insured and as loss payee, pursuant to a standard non-contributory New York mortgagee endorsement, and such policy shall be in an amount at least sufficient to prevent coinsurance liability; provided that (x) the Collateral Agent, as loss payee pursuant to the foregoing, shall not agree to the adjustment of any claim without the consent of the Borrower (such consent not to be unreasonably withheld or delayed) and (y) any Net Proceeds thereof shall be applied as provided in Section 2.05(c)(iv); and (v) with respect to liability insurance, the Collateral Agent shall be named as an additional insured. Notwithstanding the inclusion in each insurance policy of the provision described in clause (ii) of the immediately preceding sentence, in the event any Loan Party gives the Collateral Agent written notice that it does not intend to pay any premium relating to any insurance policy when due, the Collateral Agent shall not exercise its right to pay such premium so long as such Loan Party delivers to the Collateral Agent a replacement insurance policy or insurance certificate evidencing that such replacement policy or certificate provides the same insurance coverage required under this Section 5.04 as the policy being replaced by such Loan Party with no lapse in such coverage. SECTION 5.05. Books and Records; Visitation Rights. Each Loan Party will, and will cause each of its respective Subsidiaries to, keep books and records which accurately reflect its business affairs in all material respects and material transactions and permit the Administrative Agent or its representatives, at reasonable times and intervals, to visit all of its offices, to discuss its financial matters with its officers and independent public accountant and, upon the reasonable request of the Administrative Agent or a Lender, to examine (and, at the expense of the Borrower, photocopy extracts from) any of its books or other corporate or partnership records, in each case upon reasonable prior notice. SECTION 5.06. Environmental Covenant. Each Loan Party will, and will cause each of its respective Subsidiaries to: (a) use and operate all of its facilities and Real Property in compliance with all Environmental Laws except for such noncompliance which, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect, and keep all Environmental Permits in effect and remain in compliance therewith and handle all Hazardous Material in compliance with all applicable Environmental Laws, except for any noncompliance which could not reasonably be expected to have a Material Adverse Effect; (b) promptly notify the Administrative Agent and provide copies of all written inquiries, claims, complaints, demands or notices from any Person or Governmental Authority relating to the environmental condition of its facilities and Real Property or compliance with or liability under any Environmental Law which, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect, and promptly cure and, if such environmental condition, compliance or liability is the subject of an action or proceeding, have dismissed with prejudice or contest in good faith and, in all cases, account for in accordance with GAAP; (c) in the event of the presence of any Hazardous Material on any Real Property which is in violation of any Environmental Law or which could reasonably be expected to result in Environmental Liability which violation or Environmental Liability, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect, each applicable Loan -66- Party and its Subsidiaries, upon discovery thereof, shall take all necessary steps to initiate and expeditiously complete all response, corrective and other action to mitigate and eliminate any such adverse effect in accordance with and to the extent required by applicable Environmental Laws, and shall keep the Administrative Agent informed of their actions; (d) at the written request of the Administrative Agent or the Requisite Lenders, which request shall specify in reasonable detail the basis therefor, each Loan Party will provide, at such Loan Party's sole cost and expense, an environmental site assessment report concerning any Real Property now or hereafter owned or leased by such Loan Party or any of its respective Subsidiaries, prepared by an environmental consulting firm reasonably acceptable to the Administrative Agent, regarding the presence or absence of Hazardous Material and indicating the potential cost of any Remedial Action in connection with such Hazardous Material on, at, under or emanating from such Real Property pursuant to any applicable Environmental Law; provided that such request may be made only if (i) there has occurred and is continuing an Event of Default or (ii) in the case of any Mortgaged Property the Administrative Agent or the Requisite Lenders reasonably believe that the Borrower or any such Real Property is not in compliance with Environmental Law and such noncompliance, individually or in the aggregate could reasonably be expected to have a Material Adverse Effect, or that circumstances exist that could reasonably be expected to form the basis of an Environmental Claim against such Loan Party or to result in Environmental Liability, in each case which, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect (in such events as are listed in this subparagraph, the environmental site assessment shall focus upon the noncompliance or other circumstances as applicable). If any Loan Party fails to provide the same within 90 days after such request was made, the Administrative Agent may order the same, and such Loan Party shall grant and hereby grants to the Administrative Agent and the Requisite Lenders and their agents access to such Real Property and specifically grants the Administrative Agent and the Requisite Lenders an irrevocable non-exclusive license, subject to the rights of tenants, to perform such an assessment, all at such Loan Party's sole cost and expense; and (e) provide such information and certifications which the Administrative Agent may reasonably request from time to time to evidence compliance with this Section 5.06. SECTION 5.07. Information Regarding Collateral. (a) Each Loan Party will furnish to the Administrative Agent prompt written notice of any change (i) in such Loan Party's corporate name or in any trade name used to identify it in the conduct of its business or in the ownership of its properties, (ii) in the location of any Loan Party's chief executive office, its principal place of business, any office in which it maintains books or records relating to Collateral owned by it or any office or facility at which Collateral owned by it is located (including the establishment of any such new office or facility), (iii) in any Loan Party's identity or corporate structure, (iv) in any Loan Party's Federal Taxpayer Identification Number or (v) in any Loan Party's jurisdiction of organization. Each Loan Party agrees not to effect or permit any change referred to in the preceding sentence unless all filings have been made under the UCC or otherwise that are required in order for the Collateral Agent to continue at all times following such change to have a valid, legal and perfected security interest in all the Collateral. Each Loan Party also agrees promptly to notify the Administrative Agent if any material portion of the Collateral is damaged or destroyed. (b) Each year, at the time of delivery of annual financial statements with respect to the preceding Fiscal Year pursuant to clause (b) of Section 5.01, the Borrower shall deliver to the Administrative Agent a certificate of a Financial Officer and the chief legal officer of the Borrower (i) setting forth any changes in the information required pursuant to Sections 1(a), 2 (with respect to any locations where any material portion of the collateral or the books and records with respect thereto are located), 8, -67- 12, 13, 14, 15, 16, 17 and 18 of the Perfection Certificate since the date of the Perfection Certificate delivered on the Effective Date or the date of the most recent certificate delivered pursuant to this Section and (ii) certifying that all UCC financing statements (including fixture filings, as applicable) or other appropriate filings, recordings or registrations, including all refilings, rerecordings and reregistrations, containing a description of the Collateral have been filed of record in each governmental, municipal or other appropriate office in each jurisdiction identified pursuant to clause (i) above to the extent necessary to protect and perfect the security interests under the Security Documents for a period of not less than 18 months after the date of such certificate (except as noted therein with respect to any continuation statements to be filed within such period). SECTION 5.08. Existence; Conduct of Business. Each Loan Party will, and will cause each of its respective Subsidiaries to, do or cause to be done all things necessary to preserve, renew and keep in full force and effect its legal existence and the rights, licenses, permits, privileges, franchises, patents, copyrights, trademarks and trade names material to the conduct of its business unless the failure to do so could not reasonably be expected to have a Material Adverse Effect; provided that the foregoing shall not prohibit any merger, consolidation, liquidation or dissolution permitted under Section 6.03. SECTION 5.09. Performance of Obligations. Each Loan Party and its respective Subsidiaries will perform all of their respective obligations under the terms of each mortgage, indenture, security agreement, other debt instrument and material contract by which they are bound or to which they are a party except for such noncompliance as individually or in the aggregate would not have a Material Adverse Effect. SECTION 5.10. Additional Mortgages. The Loan Parties, as appropriate, will, provided that one or both of the properties listed on Schedule 6.05(xi) have not been sold in an arm's-length transaction for fair market value (i) within 60 days after the Effective Date in the case of the property located at 717 Crestview Avenue, Camarillo, CA ("717 Crestview") and (ii) by January 5, 2004 in the case of the property located at 425B Alta Street, Gonzales, CA ("425B Alta"), deliver the following documents and instruments to the Administrative Agent with respect to each unsold property within 120 days of the Effective Date for the property located at 717 Crestview and by March 5, 2004 for the property located at 425B Alta: (a) a duly executed and acknowledged Mortgage, financing statements and other instruments meeting the requirements of Section 4.01(s)(A) hereof; (b) such consents, approvals, amendments, supplements, estoppels, tenant subordination agreements or other agreements as required by Section 4.01(s)(B); (c) a policy of title insurance meeting the requirements of Section 4.01(s)(C); (d) policies or certificates of insurance as required by Section 4.01(s)(D); (e) a Survey meeting the requirements of Section 4.01(s)(E); (f) such affidavits, certificates, information (including financial data) and instruments of indemnification (including, without limitation, a so-called "gap" indemnification) as required by Section 4.01(s)(F); (g) evidence of payment of all applicable premiums, charges, costs, taxes, etc. as required by Section 4.01(s)(G); -68- (h) copies of all leases or other agreements, and subordination of such, as required by Section 4.01(s)(H); (i) a Real Property Officers' Certificate as required by Section 4.01(s)(I); and (j) favorable written opinions of local counsel as required by Section 4.01(f). SECTION 5.11. Pledge of Additional Collateral. Within 45 days after the acquisition of assets of the type that would have constituted Collateral on the Effective Date pursuant to the Security Documents (the "Additional Collateral"), each appropriate Loan Party will, and will cause its respective Subsidiaries (excluding any Inactive Subsidiary) to, take all necessary action, including the filing of appropriate financing statements under the provisions of the UCC, applicable domestic or local laws, rules or regulations in each of the offices where such filing is necessary or appropriate, or entering into or amending the Guarantee Agreement and the Security Documents, or in the case of the Equity Interests of a "first tier" Non-U.S. Subsidiary (excluding any Inactive Subsidiary), entering into a Non-U.S. Pledge Agreement providing for the relevant Loan Party to have an enforceable and perfected security interest in 65% of the voting Equity Interests and 100% of the non-voting Equity Interests in such Subsidiary, to grant to the Collateral Agent for its benefit and the benefit of the Secured Parties a perfected first priority Lien in such Collateral pursuant to and to the full extent required by the Security Documents and this Agreement (including, without limitation, satisfaction of the conditions set forth in subsection (r) and (s) of Section 4.01). In the event that any Loan Party or its respective Domestic Subsidiaries acquire an interest in additional Real Property having a fair market value in excess of $2.0 million as determined in good faith by the Borrower or renews any Real Property lease covering Real Property having a fair market value in excess of $2.0 million as determined in good faith by the Borrower (whether or not the subject of a leasehold mortgage under the Security Documents or with respect to the Real Property owned in fee by the Borrower and located at 2700 Camino Del Sol, Oxnard, California, which is encumbered as of the Effective Date by a deed of trust in the original principal amount of $17,000,000 in favor of Wells Fargo Bank, National Association, when and if such deed of trust is repaid and not refinanced in connection with such repayment), the Borrower or the appropriate Loan Party or Subsidiary, as the case may be, and using its commercially reasonable efforts in respect of any such leases, will take such actions and execute such documents as the Collateral Agent shall require to confirm the Lien of a Mortgage, if applicable, or to create a new Mortgage (including, without limitation, satisfaction of the conditions set forth in subsections (r) and (s) of Section 4.01). All actions taken by the parties in connection with the pledge of Additional Collateral, including, without limitation, costs of counsel for the Administrative Agent and the Collateral Agent, shall be for the account of the Borrower, which shall pay all sums due on demand. Notwithstanding the foregoing, no Loan Party shall be required to take any action pursuant to this Section 5.11 or any Security Document that the Borrower has reasonably determined would either result in material adverse tax consequences under Section 956 of the Code or would contravene any applicable law, rule or regulation. SECTION 5.12. Further Assurances. The Loan Parties will, and will cause each Subsidiary of a Loan Party to, execute any and all further documents, financing statements, agreements and instruments, and take all such further actions (including the filing and recording of financing statements, fixture filings, mortgages, deeds of trust and other documents and the delivery of appropriate opinions of counsel), which may be required under any applicable law, or which the Administrative Agent or the Requisite Lenders may reasonably request, to grant, preserve, protect or perfect the Liens created by the Security Documents or the validity or priority of any such Lien, all at the expense of the Loan Parties. The Loan Parties also agree to provide to the Administrative Agent, from time to time upon request, evidence reasonably satisfactory to the Administrative Agent as to the perfection and priority of the Liens created or intended to be created by the Security Documents. -69- SECTION 5.13. Use of Proceeds. The Borrower covenants and agrees that (i) of the proceeds of the Term B Loan Borrowings and Revolving Credit Borrowings on the Effective Date (x) $100.0 million shall be used as an intercompany loan from the Borrower to B.V. Holdco and B.V. Holdco shall use such proceeds solely to finance directly the acquisition of SVS Europe (and all such proceeds shall be remitted by B.V. Holdco to one or more Loan Parties for such purposes within one Business Day from the Effective Date (furthermore, it being understood, that notwithstanding Section 6.01 or any other provision of this Agreement, on the Effective Date, the Borrower may incur $100.0 million of Indebtedness consisting of a one-day loan from the Administrative Agent or an affiliate thereof in order to facilitate and finance the Recapitalization Transactions)) and (y) the remainder of such proceeds will be used to finance the Recapitalization Transactions and to pay fees and expenses payable hereunder as set forth in the Commitment Letter and (ii) all other Revolving Credit Borrowings after the Effective Date will be used for general corporate purposes. SECTION 5.14. Payment of Taxes. Each Loan Party and its respective Subsidiaries will pay and discharge all taxes, assessments and governmental charges or levies imposed upon it or upon its income or profits, or upon any Properties belonging to it, prior to the date on which material penalties attach thereto, and all lawful claims which, if unpaid, might become a Lien or charge upon any Properties of such Loan Party or any of its respective Subsidiaries or cause a failure or forfeiture of title thereto; provided that neither such Loan Party nor any of its respective Subsidiaries shall be required to pay any such tax, assessment, charge, levy or claim (i) if the failure to do so, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect or (ii) that is being contested in good faith and by proper proceedings diligently conducted, which proceedings have the effect of preventing the forfeiture or sale of the Property or asset that may become subject to such Lien, if it has maintained adequate reserves with respect thereto in accordance with and to the extent required under GAAP. SECTION 5.15. Equal Security for Loans and Notes. If any Loan Party shall create or assume any Lien upon any of its property or assets, whether now owned or hereafter acquired, other than Permitted Liens (unless prior written consent to the creation or assumption thereof shall have been obtained from the Administrative Agent and the Requisite Lenders), it shall make or cause to be made effective provisions whereby the Obligations will be secured by such Lien equally and ratably with any and all other assets or Property thereby secured as long as any such assets or Property shall be secured; provided that this covenant shall not be construed as consent by the Administrative Agent and the Requisite Lenders to any violation by any Loan Party of the provisions of Section 6.02. SECTION 5.16. Guarantees. In the event that any Domestic Subsidiary (other than an Inactive Subsidiary) of the Borrower existing on the Effective Date has not previously executed the Guarantee Agreement or in the event that any Person becomes a Domestic Subsidiary (other than an Inactive Subsidiary) of the Borrower after the Effective Date, the Borrower will promptly notify the Administrative Agent of that fact and cause such Subsidiary to execute and deliver to the Administrative Agent a counterpart of the Guarantee Agreement and deliver to the Collateral Agent a counterpart of the Security Agreement and the Pledge Agreement and to take all such further actions and execute all such further documents and instruments (including actions, documents and certificates comparable to those described in Section 4.01(r) as may be necessary or, in the reasonable opinion of the Administrative Agent, desirable to create in favor of the Collateral Agent, for the benefit itself and of the Secured Parties, a valid and perfected first priority Lien on all of the Property and assets of such Subsidiary described in the applicable forms of the Security Documents). SECTION 5.17. Subordination of Intercompany Loans. Each Loan Party covenants and agrees that (A) any existing and future debt obligation of the Parent Guarantor, the Borrower or any Subsidiary Loan Party to any Non-U.S. Subsidiary shall be subordinated to the Loans to at least the same extent as the Subordinated Notes (for the avoidance of doubt, prepayments are not prohibited unless and -70- until and for so long as a Default exists under Section 7.01(a) or otherwise prohibited by such subordination provisions) and (B) no Indebtedness of any Non-U.S. Subsidiary to any Loan Party shall be subordinated to any other Indebtedness of such Subsidiary. SECTION 5.18. Certain Post-Closing Matters. (a) The Borrower shall deliver to the Administrative Agent (A) the stock certificates and related legal documentation set forth in Schedule 5.18(a) for the Non-U.S. Subsidiaries set forth therein and (B) favorable written opinions of local counsel in each of the jurisdictions referred to in Schedule 5.18(a) addressing such matters described in Section 4.01(f)(i) in each case within the time period set forth in Schedule 5.18(a), unless such date is extended by the Administrative Agent in its reasonable judgment. (b) From and after the Effective Date, the Borrower shall use its commercially reasonable efforts to deliver a lien waiver, access agreement and consent substantially in a form and substance reasonably satisfactory to the Administrative Agent with respect to the leased Real Properties set forth on Schedule 5.18(b). (c) If the transactions contemplated by the Foreign Subsidiary Restructuring Documents (without amendment or waiver from the terms of the forms thereof previously delivered to the Administrative Agent) shall not have been consummated by September 30, 2003, the provisions of Sections 6.01(a)(xvii), 6.03(a)(v) and 6.04(xii) and the parenthetical of Section 7.01(i)(iv) shall be deemed void and of no further force and effect. (d) From and after the Effective Date, with respect to foreign Intellectual Property pledged by the Loan Parties as Collateral pursuant to the Security Agreement, the Borrower shall take such actions necessary to create perfected first-priority security interests in such Collateral in such foreign jurisdictions and to evidence such perfections, including, without limitation, delivery of favorable local counsel opinions, in each case, as may be reasonably requested by the Administrative Agent. (e) For those UCC, judgment and tax lien, bankruptcy and pending lawsuit search reports, delivery of which was waived by the Administrative Agent pursuant to Section 4.01(r)(E), each respective Loan Party shall, within ten (10) days after the date hereof, order such UCC, judgment and tax lien, bankruptcy and pending lawsuit search reports. Upon receipt thereof the applicable Loan Party shall deliver the same to the Collateral Agent. In the event any Lien disclosed in such searches shall not constitute a Permitted Lien or shall evidence Indebtedness, the applicable Loan Party shall cause such Lien to be terminated promptly and in no event later than 45 days after the date of delivery of such searches. (f) Within forty-five (45) days after the Effective Date, the Borrower or the appropriate Loan Party shall deliver to the Administrative Agent, unless the Administrative Agent shall, in its reasonable judgment, waive such delivery, with respect to Parcels 3, 4 and 5 (the "New Parcels") described in Schedule A to that certain pro forma policy of lender's title insurance dated on or about the date hereof relating to the Mortgaged Property located in Warden, Washington, the following: (i) a Survey of the New Parcels meeting the requirements of Section 4.01(s)(E); (ii) endorsements to title insurance policy insuring such Mortgaged Property (1) eliminating the general or standard survey exception, (2) if applicable, removing any Liens which are not Permitted Liens, (3) amending the legal description in Schedule A to such title insurance policy, if necessary in the reasonable judgment of the Administrative Agent, (4) providing that after any amendment to such Mortgage, if necessary in the reasonable judgment of the Administrative Agent (as described below in clause (ix) of this Section 5.18(f)), the Mortgage encumbering such Mortgaged Property (including the New Parcels) (as so amended) is valid and enforceable -71- and (5) otherwise amending such title insurance policy so that the requirements of Section 4.01(s)(C) are met with respect to such New Parcels; (iii) if the New Parcels are improved with any buildings or structures, policies or certificates of insurance as required by Section 4.01(s)(D); (iv) copies of all leases and other agreements as required by Section 4.01(s)(H); (v) such consents, approvals, amendments, supplements, estoppels, tenant subordination agreements or other agreements as required by Section 4.01(s)(B); (vi) such affidavits, certificates, information (including financial data) and instruments of indemnification (including, without limitation, a so-called "gap" indemnification) as required by Section 4.01(s)(F); (vii) evidence of payment of all applicable premiums, charges, costs, taxes, etc. as required by Section 4.01(s)(G); (viii) copies of all leases or other agreements, and subordination of such, as required by Section 4.01(s)(H); (ix) an amendment to the Mortgage encumbering such Mortgaged Property (including the New Parcels) amending the legal description therein, if necessary in the reasonable judgment of the Administrative Agent. (g) From and after the Effective Date, the Borrower shall use its commercially reasonable efforts to negotiate with the financial institutions where it maintains Deposit Accounts (as defined in the Security Agreement) Control Agreements (as defined in the Security Agreement) required by the terms of the Security Agreement, the terms of such Control Agreements to be reasonably satisfactory to the Administrative Agent, and shall in any event, promptly upon request by the Administrative Agent, execute Control Agreements substantially in form of the draft of the Control Agreement distributed by Wells Fargo Bank on the Effective Date. ARTICLE VI NEGATIVE COVENANTS Until the Commitments have expired or terminated and the principal of and interest on each Loan and all Fees and other amounts payable hereunder or under any other Loan Document have been paid in full and all Letters of Credit have expired or terminated and all LC Disbursements shall have been reimbursed, each of the Loan Parties and their respective Subsidiaries agree with the Lenders that: SECTION 6.01. Indebtedness; Certain Equity Securities. (a) The Loan Parties will not, and will not permit any of their Subsidiaries to, directly or indirectly, create, incur, assume or permit to exist (including by way of Guarantee) any Indebtedness or enter into any Hedging Agreement, except: (i) Indebtedness incurred and outstanding under the Loan Documents; (ii) (A) Indebtedness of the Loan Parties incurred and outstanding under the Subordinated Notes in an aggregate principal amount not to exceed $190.0 million and (B) any Permitted Refinancing thereof; provided that in the case of clause (B) only, (x) no Default or Event of -72- Default shall have occurred or be continuing or would result therefrom and (y) after giving effect to the incurrence of such Indebtedness (and any other Indebtedness incurred since the last day of the immediately preceding Test Period) on a pro forma basis as if it were incurred on the first day of the immediately preceding Test Period (but tested as if the applicable ratio were the ratio for the next succeeding Test Period), the Borrower would be in compliance with the Financial Covenants; (iii) Indebtedness to Remain Outstanding (not including any Indebtedness of any Non-U.S. Subsidiary permitted by Section 6.01(vii) or (viii) below) and any Permitted Refinancing thereof; (iv) (x) Indebtedness of any Loan Party (other than the Parent Guarantor) to any other Loan Party (other than the Parent Guarantor), or (y) Indebtedness of any Non-U.S. Subsidiary to any Non-U.S. Subsidiary; (v) Guarantees by the Borrower of Indebtedness of any Subsidiary Loan Party and by any Subsidiary Loan Party of Indebtedness of the Borrower or any other Subsidiary Loan Party, in each case, to the extent such Indebtedness was permitted to be incurred hereunder, and if such Indebtedness is subordinated to the Obligations under the Loan Documents, such Guarantee is as subordinated in right of payment to the Obligations; (vi) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; provided that such Indebtedness is extinguished within five Business Days of its incurrence; (vii) Indebtedness in an aggregate principal amount outstanding at any time not in excess of (A) $30.0 million (or the equivalent thereof in any currency) of any Subsidiary (other than the South Korean Subsidiary and any IP Group Member), and (B) $30.0 million (or the equivalent thereof in South Korean won or any other currency) of the South Korean Subsidiary and; provided that, in each case, (x) no Default or Event of Default shall have occurred or be continuing or would result therefrom and (y) after giving effect to the incurrence of such Indebtedness (and any other Indebtedness incurred since the last day of the immediately preceding Test Period) on a pro forma basis as if it were incurred on the first day of the immediately preceding Test Period, the Borrower would be in compliance with the Financial Covenants; provided, further, that no Indebtedness not outstanding prior to the Effective Date may be incurred pursuant to this provision by the issuer of any Equity Interests set forth on Schedule 5.18(a) in respect of which the matters set forth in Section 5.18(a) shall not have been completed, or any direct or indirect parent of any such issuer other than the Borrower; (viii) Indebtedness of (A) any Non-U.S. Subsidiary to any Loan Party in an aggregate principal amount outstanding for all Non-U.S. Subsidiaries at any time not in excess of $40.0 million; provided that any such Indebtedness shall be evidenced by a Qualified Non-U.S. Intercompany Note and (B) any Loan Party to any Non-U.S. Subsidiary which must be subordinated to the Obligations as set forth in Section 5.17; (ix) Indebtedness of the Borrower or any Subsidiary (other than any IP Group Member) incurred to finance the acquisition, construction or improvement of any fixed or capital assets, including Capital Lease Obligations and any Indebtedness assumed in connection with the acquisition of any such assets or secured by a Lien on any such assets prior to the acquisition thereof, and Permitted Refinancing thereof; provided that (A) such Indebtedness is incurred prior -73- to or within 180 days after such acquisition or the completion of such construction or improvement and (B) the aggregate principal amount of Indebtedness permitted by this clause (ix) shall not exceed $10.0 million at any time outstanding; provided, further, that no Indebtedness not outstanding prior to the Effective Date may be incurred pursuant to this provision by the issuer of any Equity Interests set forth on Schedule 5.18(a) in respect of which the matters set forth in Section 5.18(a) shall not have been completed, or any direct or indirect parent of any such issuer other than the Borrower; (x) Hedging Agreements incurred by any Person (other than any IP Group Member) entered into in the ordinary course of business and not for speculative purposes; (xi) Indebtedness incurred by any Person (other than any IP Group Member) owed to (including obligations in respect of letters of credit for the benefit of) any Person providing worker's compensation, health, disability or other employee benefits or property, casualty or liability insurance to the Borrower or any Subsidiary, pursuant to reimbursement or indemnification obligations to such Person; (xii) Indebtedness of the Borrower or any of its Subsidiaries (other than any IP Group Member) in respect of performance bonds, bid bonds, appeal bonds, surety bonds and similar obligations and trade-related letters of credit, in each case provided in the ordinary course of business, including those incurred to secure health, safety and environmental obligations in the ordinary course of business; (xiii) Indebtedness incurred by any Person (other than any IP Group Member) arising from agreements of the Borrower or any Subsidiary of the Borrower (other than the IP Subsidiary) providing for indemnification, adjustment of purchase price or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or a Subsidiary, other than Guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition; (xiv) obligations incurred by any Person (other than any IP Group Member) in respect of performance and surety bonds and completion guarantees provided by the Borrower or any Subsidiary of the Borrower (other than any IP Group Member) in the ordinary course of business; (xv) Indebtedness incurred by any Person (other than any IP Group Member) existing at the time such Person becomes a Subsidiary of the Borrower in connection with an acquisition permitted by Section 6.04, but only if such Indebtedness was not created or incurred in contemplation of such Person becoming a Subsidiary and any Permitted Refinancing thereof; provided that (x) no Default or Event of Default shall have occurred or be continuing or would result therefrom and (y) after giving effect to the incurrence of such Indebtedness (and any other Indebtedness incurred since the last day of the immediately preceding Test Period) on a pro forma basis as if it was incurred on the first day of the immediately preceding Test Period, the Loan Parties would be in compliance with the Financial Covenants; (xvi) Indebtedness of Non-U.S. Subsidiaries to the Borrower representing intercompany loans on the Effective Date or thereafter to refinance Indebtedness existing on the Effective Date of such Non-U.S. Subsidiaries as set forth in Schedule 3.22(b) in an aggregate amount outstanding not to exceed $41.0 million, reduced by the amount of any repayments or prepayments of principal thereof, provided that such intercompany loans are evidenced by Qualified Non-U.S. Intercompany Notes; -74- (xvii) so long as no Default then exists or would arise therefrom, Indebtedness of B.V. Holdco to a Loan Party representing the purchase price for the Equity Interests of Non-U.S. Subsidiaries paid by B.V. Holdco to such Loan Party pursuant to the Foreign Subsidiary Restructuring Documents not to exceed $100.0 million, reduced by the amount of any repayment or prepayment of principal thereof, provided that such Indebtedness is evidenced by Qualified Non-U.S. Intercompany Notes; (xviii) so long as no Default then exists or would arise therefrom, Indebtedness of the IP Subsidiary to the Borrower representing the purchase price for any Intellectual Property transferred to the IP Subsidiary by the Loan Parties so long as the document or instrument evidencing the same is pledged pursuant to the Security Documents, provided, that such Indebtedness is evidenced by Qualified Non-U.S. Intercompany Notes; and (xix) Indebtedness not for money borrowed of SVS Iberica to the Borrower in the original principal amount up to (euro)5.5 million (or the Dollar equivalent of all or a portion thereof) issued pursuant to the Iberica Transaction, provided, that such Indebtedness is evidenced by a Qualified Non-U.S. Intercompany Note. (b) The Loan Parties will not, nor will they permit any of their Subsidiaries to, directly or indirectly, issue (including by exchange or conversion) any Preferred Stock or other preferred Equity Interest (other than the New Preferred Stock pursuant to the New Preferred Stock Documents as in effect on the Closing Date or any other Preferred Stock with identical terms or more favorable terms to the Loan Parties that is issued pursuant to clause (ii) of the definition of "Excluded Equity Issuance") which (i) matures or is mandatorily redeemable pursuant to a sinking fund obligation or otherwise or requires the payment of any cash dividends, in each case, before 180 days after the Term Loan B Maturity Date, (ii) is or may become redeemable or repurchaseable at the option of the holder thereof, in whole or in part, or (iii) is convertible or exchangeable at the option of the holder thereof for Indebtedness. SECTION 6.02. Liens. The Loan Parties will not, and will not permit any of their Subsidiaries to, directly or indirectly, create, incur, assume or permit to exist any Lien on any Property or asset now owned or hereafter acquired by them, or assign or sell any income or revenues (including accounts receivable) or rights in respect of any thereof, (a) except the following for any Person other than the IP Subsidiary (herein collectively referred to as "Permitted Liens"): (i) Liens in favor of the Collateral Agent under the Security Documents; (ii) Liens on assets acquired after the Effective Date existing at the time of acquisition thereof by the Borrower or any Subsidiary; provided that such Liens were not incurred in connection with, or in contemplation of, such acquisition and do not extend to any assets of the Borrower or any Subsidiary other than the specific assets so acquired; (iii) Liens to secure the performance of statutory obligations, surety or appeal bonds or performance bonds, landlords', carriers', warehousemen's, mechanics', suppliers', materialmen's, attorney's or other like liens, in any case incurred in the ordinary course of business and with respect to amounts not yet delinquent or being contested in good faith by appropriate proceedings promptly instituted and diligently conducted; provided that a reserve or other appropriate provision, if any, as is required by GAAP shall have been made therefor; (iv) Liens existing on the Effective Date and identified on Schedule 3.22(d) to the extent permitted by the applicable Security Documents; -75- (v) Liens for taxes, assessments or governmental charges or claims or other like statutory Liens, in any case incurred in the ordinary course of business, that do not secure Indebtedness for borrowed money and (A) that are not yet delinquent or (B) that are being contested in good faith by appropriate proceedings promptly instituted and diligently concluded; provided that any reserve or other appropriate provision as shall be required in conformity with GAAP shall have been made therefor; (vi) Liens to secure Indebtedness (including Capital Lease Obligations) of the type described in Section 6.01(a)(ix) covering only the assets acquired or improved with such Indebtedness; (vii) Liens on the assets of a Non-U.S. Subsidiary that are not otherwise Collateral which Liens secure such Non-U.S. Subsidiary's obligations under Indebtedness incurred pursuant to Section 6.01(a)(vii); (viii) Liens securing Indebtedness incurred to refinance Indebtedness secured by the Liens of the type described in clauses (ii), (iv) and (vii) of this Section 6.02; provided that any such Lien shall not extend to or cover any assets not securing the Indebtedness so refinanced; (ix) (A) Liens in the form of zoning restrictions, easements, licenses, reservations, covenants, conditions or other restrictions on the use of real property or other minor irregularities in title (including leasehold title) that do not (1) secure Indebtedness or (2) individually or in the aggregate materially impair the value or marketability of any Mortgaged Property affected thereby or the occupation, use and enjoyment in the ordinary course of business of the Borrower and any Subsidiary at such Mortgaged Property and (B) with respect to leasehold interests in real property, mortgages, obligations, liens and other encumbrances incurred, created, assumed or permitted to exist and arising by, through or under a landlord or owner of such leased property encumbering the landlord's or owner's interest in such leased property; (x) Liens in the form of pledges or deposits securing bids, tenders, contracts (other than contracts for the payment of money) or leases to which the Borrower or any Subsidiary is a party, in each case, made in the ordinary course of business for amounts (A) not yet due and payable or (B) being contested in good faith by appropriate proceedings promptly instituted and diligently conducted; provided that a reserve or other appropriate provision, if any, as is required by GAAP shall have been made therefor; (xi) Liens resulting from operation of law with respect to any judgments, awards or orders to the extent that such judgments, awards or orders do not cause or constitute a Default under this Agreement; (xii) Liens in the form of licenses, leases or subleases granted or created by the Borrower or any Subsidiary, which licenses, leases or subleases do not interfere, individually or in the aggregate, in any material respect with the business of the Borrower and its Subsidiaries taken as a whole or individually or in the aggregate materially impair the use (for its intended purpose) or the value of any Mortgaged Property, provided that (x) to the extent such licenses, leases or subleases relate to Mortgaged Property in existence as of the Effective Date, the Borrower or such Subsidiary shall use its commercially reasonable efforts to as soon as practicable cause such leases or subleases to be subordinated to the Lien granted and evidenced by the Security Documents in accordance with the provisions thereof and (y) to the extent entered into after the Effective Date, such leases or subleases shall be subordinate to the Lien granted and evidenced by the Security Documents in accordance with the provisions thereof; provided, further, that any such -76- Lien shall not extend to or cover any assets of the Parent Guarantor or any Subsidiary that is not the subject of any such license, lease or sublease; (xiii) Liens on fixtures or personal property held by or granted to landlords pursuant to leases to the extent that such Liens are not yet due and payable; provided (i) with respect to any such Liens on any material portion of the Collateral in existence on the Effective Date, the Borrower or any applicable Subsidiary has used its commercially reasonable efforts to obtain a landlord lien waiver reasonably satisfactory to the Collateral Agent and (ii) with respect to any leases entered into after the Effective Date, the Borrower or any applicable Subsidiary shall use its commercially reasonable efforts to (x) enter into a lease that does not grant a Lien on fixtures or personal property in favor of the landlord thereunder or (y) obtain a landlord lien waiver reasonably satisfactory to the Collateral Agent; (xiv) Liens securing Indebtedness permitted by Section 6.01(a)(xv); provided that such Liens existed prior to such Person becoming a Subsidiary, were not created in anticipation thereof and attach only to specific assets of such Person that is the subject of the acquisition; (xv) any other Lien on Property or assets securing Indebtedness of the Borrower or any of its Subsidiaries permitted to be incurred under this Agreement in an aggregate amount not to exceed $2.0 million at any time outstanding; (xvi) sales, transfers or other dispositions of Property or assets to the extent permitted by Section 6.05; and (xvii) Liens to secure Indebtedness of the type described in Section 6.01(a)(x) so long as the secured party thereunder at the time of entering into such agreement is a Lender or an affiliate of a Lender; provided, however, that no Liens shall be permitted to exist, directly or indirectly, on any Securities Collateral (as defined in the Pledge Agreement) other than Liens in favor of the Collateral Agent. SECTION 6.03. Fundamental Changes; Line of Business. (a) The Loan Parties will not, and will not permit any of their Subsidiaries to, directly or indirectly, merge into or consolidate with any other Person, or permit any other Person to merge into or consolidate with them, or liquidate or dissolve, except that, if at the time thereof and immediately after giving effect thereto no Default or Event of Default shall have occurred and be continuing, (i) any Subsidiary may merge into the Borrower in a transaction in which the Borrower is the surviving corporation, (ii) any Subsidiary may merge with or into any wholly owned Subsidiary in a transaction in which the surviving entity is a wholly owned Subsidiary and (if any party to such merger is a Subsidiary Loan Party) is a Subsidiary Loan Party, (iii) Permitted Acquisitions may be consummated so long as the surviving Person is the Borrower or a Subsidiary Loan Party, (iv) sales, transfers, leases or dispositions permitted by Section 6.05 may be effected by way of merger or consolidation of any Subsidiary with any other Person (whether or not such Subsidiary is the surviving entity) and (v) PII may be dissolved pursuant to the terms of the Foreign Subsidiary Restructuring Documents, provided that in connection with the foregoing, the appropriate Loan Parties shall take all actions necessary or reasonably requested by the Collateral Agent to maintain the perfection of or perfect, as the case may be, protect and preserve the Liens on the Collateral granted to the Collateral Agent pursuant to the Security Documents and otherwise comply with the provisions of Sections 5.11 and 5.12, in each case, on the terms set forth therein and to the extent applicable. (b) Notwithstanding the foregoing, any Subsidiary Loan Party may dispose of any or all of its assets (upon voluntary liquidation or otherwise) to the Borrower or any other Subsidiary Loan -77- Party (provided that in connection with the foregoing, the appropriate Loan Parties shall take all actions necessary or reasonably requested by the Collateral Agent to maintain the perfection of or perfect, as the case may be, protect and preserve the Liens on the Collateral granted to the Collateral Agent pursuant to the Security Documents and otherwise comply with the provisions of Sections 5.11 and 5.12, in each case, on the terms set forth therein and to the extent applicable), and any Subsidiary which is not a Subsidiary Loan Party may dispose of assets to any other Subsidiary which is not a Subsidiary Loan Party. (c) The Borrower will not, and will not permit any of its Subsidiaries to, directly or indirectly, engage in any business other than businesses of the type conducted by the Borrower and the Subsidiary Loan Parties on the Effective Date and businesses reasonably related thereto. SECTION 6.04. Investments, Loans, Advances, Guarantees and Acquisitions. The Loan Parties will not, and will not permit any of their Subsidiaries to, directly or indirectly, purchase, hold or acquire (including pursuant to any merger with any Person that was not a wholly owned Subsidiary prior to such merger) any Equity Interests in or evidences of Indebtedness or other securities (including any option, warrant or other right to acquire any of the foregoing) of, make or permit to exist any loans or advances to, or Guarantee any obligations of, any other Person, or make up-front payments or provide other credit support for any Person or purchase or otherwise acquire (in one transaction or a series of transactions) any assets of any other Person constituting a business unit (excluding for avoidance of doubt any Capital Expenditure) (each of the foregoing, an "Investment" and collectively, "Investments"), except: (i) Permitted Investments; (ii) Investments existing on the Effective Date (or in respect of which a binding commitment to make such investment exists on the Effective Date) and set forth in on Schedule 6.04; (iii) Investments (A) by the Parent Guarantor or any of its Subsidiaries in any Loan Party (other than the Parent Guarantor); provided that any such Investment held by a Loan Party shall, subject to the last sentence of Section 5.11, be pledged pursuant to a Pledge Agreement and (B) by any Non-U.S. Subsidiary (other than IP Subsidiary) in any Non-U.S. Subsidiary; (iv) Investments made after the Effective Date by the Borrower or any of its Subsidiaries in Equity Interests in Non-U.S. Subsidiaries in an aggregate amount for all such Persons not to exceed $5.0 million at any time; (v) Investments constituting Indebtedness permitted by Sections 6.01(a)(iv), (viii), (x), (xvii) and (xix) (and, in the case of Indebtedness permitted by Sections 6.01(a)(xvii) and (xix), Equity Interests of the issuer of such Indebtedness into which such Indebtedness may have been converted by the holder thereof); (vi) Guarantees constituting Indebtedness permitted by Section 6.01(a)(v); (vii) Investments received in connection with the bankruptcy or reorganization of, or settlement of delinquent accounts and disputes with, customers and suppliers, in each case in the ordinary course of business; (viii) loans and advances to employees of the Parent Guarantor or its Subsidiaries in the ordinary course of business (including, without limitation, for travel, entertainment and relocation expenses) not to exceed (other than with respect to loans for home purchases) $1.0 million -78- in the aggregate at any time outstanding; provided that (x) to the extent such loans or advances are evidenced by promissory notes, such promissory notes shall be endorsed in blank and delivered to the Collateral Agent pursuant to the Pledge Agreement and (y) the Borrower shall and shall cause its Subsidiaries to take all actions and execute all documents reasonably requested by the Collateral Agent to confirm the Collateral Agent's security interest in such loans and advances and/or promissory notes pursuant to the applicable Security Documents; (ix) Investments constituting Permitted Acquisitions made with the proceeds of or in consideration for (A) any Excluded Equity Issuance, (B) the balance of any Equity Issuance after application to the Loans as required by Section 2.05(c)(i), (C) with respect to any Permitted Acquisition in which the Person acquired becomes upon consummation thereof a Subsidiary Loan Party or is merged with or into the Borrower or Subsidiary Loan Party, Net Proceeds of any Asset Sales permitted by Section 6.05(vi) or (vii), any Taking or Destruction or any incurrence of Indebtedness, in each case so long as such Net Proceeds are not required to be applied to the Loans under Section 2.05(c)(ii), (iii) or (iv), and (D) with respect to any Permitted Acquisition in which the Person acquired does not become upon consummation thereof a Subsidiary Loan Party or is not merged with or into the Borrower or a Subsidiary Loan Party, Net Proceeds of any Asset Sale permitted by Section 6.05(vi) or (vii), any Taking or any Destruction or incurrence of Indebtedness, in each case as long as such Asset Sale, Taking or Destruction or incurrence of Indebtedness is by a Non-U.S. Subsidiary and such Net Proceeds are not required to be applied to the Loans under Sections 2.05(c)(ii), (iii) or (iv); provided, that the aggregate amount expended for any such Permitted Acquisition shall not exceed $25.0 million and since the Effective Date for all Permitted Acquisition shall not exceed $75.0 million; (x) sales, transfers or other dispositions of Property or assets to the extent permitted by Section 6.05; (xi) other Investments of the Borrower or any Subsidiary not in excess of $5.0 million outstanding at any time; and (xii) so long as no Default exists or would arise therefrom, transfers of Equity Interests of Non-U.S. Subsidiaries to B.V. Holdco to the extent set forth in the Foreign Subsidiary Restructuring Documents. SECTION 6.05. Asset Sales. The Loan Parties will not, and will not permit any of their Subsidiaries to, directly or indirectly, sell, transfer, lease or otherwise dispose of any asset, including any Equity Interest owned by them, nor will the Borrower permit any of its Subsidiaries to, directly or indirectly, issue any additional Equity Interest in such Subsidiary, except: (i) sales of inventory or used, surplus, obsolete, outdated, inefficient or worn out equipment and other property in the ordinary course of business; (ii) sales, transfers and dispositions to the Borrower or any other Subsidiary Loan Party; provided that in connection with the foregoing, the appropriate Loan Parties shall take all actions necessary or reasonably requested by the Collateral Agent to maintain the perfection of or perfect, as the case may be, protect and preserve the Liens on the Collateral granted to the Collateral Agent pursuant to the Security Documents and otherwise comply with the provisions of Sections 5.11 and 5.12, in each case, on the terms set forth therein and to the extent applicable; (iii) the lease or sublease as lessor or sublessor of Real Property in the ordinary course of business and not constituting a sale and leaseback transaction; -79- (iv) sales of Permitted Investments on ordinary business terms; (v) Liens permitted by Section 6.02 and Investments permitted under Section 6.04; (vi) any sale, transfer or disposition of assets specified in Schedule 6.05(vi) so long as the Net Proceeds are applied as required by Section 2.05(c)(iii); (vii) sales, transfers and dispositions of assets (other than less than 100% of the Equity Interests of a Subsidiary owned by the Borrower or any Subsidiary) not otherwise permitted under this Section; provided that the aggregate fair market value of all assets sold, transferred or otherwise disposed of in reliance upon this clause (vii) shall not, in the aggregate, exceed $12.5 million during any Fiscal Year and $30.0 million in the aggregate and the Net Proceeds thereof are applied as required by Section 2.05(c)(iii); (viii) [Reserved]; (ix) so long as no Default then exists or would arise therefrom, the transfer to the IP Subsidiary of Intellectual Property of any Loan Party, so long as at all times that any such Intellectual Property is owned by the IP Subsidiary, (A) the aggregate fair market value of all such Intellectual Property (valued for each item of Intellectual Property at the date of transfer thereof) transferred by the Loan Parties does not at any time exceed $25.0 million, and (B) an agreement is executed and delivered by the IP Subsidiary providing for the payment over time of the fair market value of such Intellectual Property and such agreement is pledged to the Collateral Agent pursuant to the Security Documents. (x) any sale of the Facility encumbered by the Oxnard Mortgage in connection with the sale-leaseback thereof so long as the Net Proceeds thereof are applied as required by Section 2.05(c)(iii); and (xi) sales of the Real Property set forth in Schedule 6.05(xi), so long as the Net Proceeds are applied as required by Section 2.05(c) (iii); provided that all sales, transfers, leases and other dispositions permitted hereby shall be made for fair value and (x) for at least 50% cash consideration in the case of sales, transfers, leases and other dispositions permitted by clause (i) or (vi), (y) for 85% cash consideration in the case of sales, transfers, leases and other dispositions permitted by clauses (iv) and (vii) (including for purposes of this calculation as cash consideration the amount of (A) any liabilities assumed from a Loan Party or any Subsidiary by a purchaser or other transferee and (B) the fair market value of receivables retained by a Loan Party or any Subsidiary) and (z) for 100% cash consideration in the case of sales, transfers, leases and other dispositions permitted by clause (xi). SECTION 6.06. Sale and Leaseback Transactions. The Loan Parties will not, and will not permit any of their Subsidiaries to, directly or indirectly, enter into any arrangement, directly or indirectly, whereby they shall sell or transfer any Property, real or personal, used or useful in their business, whether now owned or hereafter acquired, and thereafter rent or lease such Property or other Property that they intend to use for substantially the same purpose or purposes as the Property sold or transferred unless (i) the sale of such Property is permitted by Section 6.05 and (ii) any Lien arising in connection with the use of such Property by any Loan Party or a Subsidiary is permitted by Section 6.02. -80- SECTION 6.07. Restricted Payments. The Loan Parties will not, and will not permit any Subsidiary to, directly or indirectly, declare or make, or agree to pay or make, directly or indirectly, any Restricted Payment, or incur any obligation (contingent or otherwise) to do so, except: (i) Subsidiaries of the Borrower may declare and pay dividends to the Borrower or another Subsidiary ratably with respect to their Equity Interests or additional shares of the same class of shares as the dividend being paid to the extent such payment complies with Section 6.01(b); provided, however, that a non-pro rata dividend shall be permitted in order to provide for the payment of taxes described in clause (b) of the definition of "Iberica Transaction"; (ii) the Parent Guarantor may pay dividends consisting solely of shares of its common stock or additional shares of the same class of shares as the dividend being paid; (iii) so long as no Default or Event of Default shall have occurred and be continuing, (A) the Parent Guarantor may purchase, redeem or acquire any of its Equity Interests or Equity Rights from any of its or its Subsidiaries' present or former officers or employees except Mr. Romo and his Affiliates (it being understood that each of the following is an independent exception): (x) upon the death or disability (but not termination of employment) of such officer or employee so long as the aggregate amount of payments under this clause (iii)(A)(x) shall not exceed $1.0 million since the Effective Date, and (y) upon the death, disability or termination of such officer or employee so long as the aggregate amount of payments under this clause (iii)(A)(y) shall not exceed in any Fiscal Year the sum of $1.0 million plus 100% of the amount from the prior Fiscal Year not expended; and (B) the Borrower may make Restricted Payments to the Parent Guarantor if the proceeds thereof are promptly used by the Parent Guarantor to make the payments referred to in the foregoing clause (A); (iv) the Borrower may make Restricted Payments to the Parent Guarantor in an amount not to exceed $1.0 million during any Fiscal Year if the proceeds thereof are promptly used by the Parent Guarantor to pay customary out-of-pocket expenses for administrative, legal and accounting services; (v) so long as no Default or Event of Default shall have occurred and be continuing, the Borrower may make Restricted Payments to the Parent Guarantor of Permitted Management Fees substantially contemporaneously with the date such payments are due; (vi) so long as no Default or Event of Default shall have occurred and be continuing, the Borrower or any of its Subsidiaries may purchase all or any portion of the minority Equity Interests in any Subsidiary that is not wholly owned (directly or indirectly) by the Borrower; (vii) the Parent Guarantor may make any Restricted Payment required by the exercise of appraisal rights by the Parent Guarantor's shareholders under Section 262 of the Delaware General Corporation Law in connection with the Merger (and the Borrower may make Restricted Payments to the Parent Guarantor to fund such Restricted Payment to the extent the Parent Guarantor does not have funds therefor if the proceeds thereof are used promptly by the Parent Guarantor to make such payment); -81- (viii) the Parent Guarantor may redeem for an amount not to exceed the liquidation value thereof, and in connection therewith pay all accrued and unpaid dividends thereon, the Parent Guarantor's Class B Redeemable Preferred Stock (and the Borrower may make Restricted Payments to the Parent Guarantor to fund such Restricted Payment to the extent the Parent Guarantor does not have funds therefor if the proceeds thereof are used promptly by the Parent Guarantor to make such payment); and (ix) so long as no Default or Event of Default shall have occurred and be continuing, the Parent Guarantor may redeem Equity Interests owned or held by Fox Paine in a dollar amount equal to the gross cash proceeds equal to the dollar amount of Preferred Stock permitted by Section 6.01(b) issued pursuant to clause (ii) of the definition of "Excluded Equity Issuance" (and the Borrower may make Restricted Payments to the Parent Guarantor to fund such Restricted Payment to the extent the Parent Guarantor does not have funds therefor if the proceeds thereof are used promptly by the Parent Guarantor to make such payment). SECTION 6.08. Transactions with Affiliates. The Loan Parties will not, and will not permit any of their Subsidiaries to, directly or indirectly, sell, lease or otherwise transfer any property or assets to, or purchase, lease or otherwise acquire any property or assets from, or otherwise engage in any other transactions with, any of their Affiliates, unless such transactions are in the ordinary course of the Borrower's business and are at prices and on terms and conditions not less favorable to the Loan Party or such Subsidiary than could be obtained on an arm's-length basis from unrelated third parties, except: (i) transactions between or among the Borrower and its Subsidiaries; (ii) any Restricted Payment permitted by Section 6.07; (iii) fees and compensation, benefits and incentive arrangements paid or provided to, and any indemnity provided on behalf of, officers, directors or employees of the Borrower or any Subsidiary as determined in good faith by the board of directors of the Borrower; (iv) loans and advances to employees of the Parent Guarantor or any Subsidiary Loan Party permitted by Section 6.04(viii); (v) the Recapitalization Transactions, including the payment of any transaction, management or other fees payable to any Person under the Management Fee Letter or otherwise in connection therewith so long as no Default or Event of Default has occurred and is continuing; and (vi) the issuance or sale of any Equity Interests of the Parent Guarantor. SECTION 6.09. Restrictive Agreements. The Loan Parties will not, and will not permit any Subsidiary to, directly or indirectly, enter into, incur or permit to exist any agreement or other arrangement that prohibits, restricts or imposes any condition upon (a) the ability of any Loan Party or any Subsidiary to create, incur or permit to exist any Lien upon any of its Property or assets, or (b) the ability of any Subsidiary to pay dividends or other distributions with respect to any of its Equity Interests or to make or repay loans or advances to the Borrower or any other Subsidiary or to Guarantee Indebtedness of the Borrower or any other Subsidiary or to transfer property to the Borrower or any of its Subsidiaries; provided that the foregoing shall not apply to: (i) conditions imposed by law, regulation, court order, rule or decree or by any Loan Document; -82- (ii) clause (a) shall not apply to assets encumbered by Permitted Liens as long as such restriction applies only to the asset encumbered by such Permitted Lien; (iii) clause (a) shall not apply to restrictions and conditions existing on the Effective Date not otherwise excepted from this Section 6.09 identified on Schedule 6.09 (but shall not apply to any amendment or modification expanding the scope of any such restriction or condition); (iv) restrictions contained in the Subordinated Notes Documents or any other Subordinated Debt Document so long as not materially more restrictive in the aggregate than the Subordinated Notes Documents; (v) any agreement in effect at the time any Person becomes a Subsidiary of the Borrower; provided that such agreement was not entered into in contemplation of such Person becoming a Subsidiary; (vi) customary restrictions and conditions contained in agreements relating to the sale of a Subsidiary (or the assets of a Subsidiary) pending such sale, provided such restrictions and conditions apply only to the Subsidiary that is to be sold (or whose assets are to be sold) and such sale is permitted hereunder; (vii) clause (a) shall not apply to Indebtedness of Non-U.S. Subsidiaries permitted by Section 6.01(a)(vii) so long as such Indebtedness does not restrict any Lien securing any of the Loan Documents; and (viii) clause (a) shall not apply to customary provisions in leases and service contracts in the ordinary course of business between the Borrower and its customers and other contracts restricting the assignment thereof. SECTION 6.10. Amendments or Waivers of Certain Documents; Prepayments of Certain Indebtedness. (a) The Loan Parties will not, and will not permit any Subsidiary to, directly or indirectly, amend or otherwise change (or waive) (i) any subordination provision (or any definition related to any subordination provision) of any Subordinated Debt Document or (ii) the terms of any Organic Document, any Recapitalization Document, any New Preferred Stock Documents, any document governing any Indebtedness outstanding as of the date hereof, any Subordinated Debt Document or the Management Fee Letter, in each case, in a manner materially adverse to the Lenders or which would increase the amounts payable by the Loan Parties thereunder or shorten the timing of such amounts payable. (b) The Loan Parties will not, and will not permit any Subsidiary to, make (or give any notice or offer in respect of) any voluntary or optional payment or mandatory prepayment or redemption or acquisition for value of (including, without limitation, by way of depositing with any trustee with respect thereto money or securities before such Indebtedness is due for the purpose of paying such Indebtedness when due) or exchange of principal of any Subordinated Debt or any Indebtedness of the type referred to in Section 6.01(a)(iii), in each case other than pursuant to any customary registered exchange offer therefor after a private placement thereof, any Permitted Refinancing or any exchange of Equity Interests of the Parent Guarantor for any such Indebtedness. SECTION 6.11. No Other "Designated Senior Indebtedness". The Loan Parties will not, and will not permit any Subsidiary to, directly or indirectly, designate, or permit the designation of, any Indebtedness (other than under this Agreement or the other Loan Documents) as "Designated Senior Indebtedness" (or any equivalent term) under any Subordinated Debt Documents. -83- SECTION 6.12. Interest Expense Coverage Ratio. The Loan Parties will not permit the Interest Expense Coverage Ratio for any Test Period ending on a date set forth below to be less than the ratio set forth below opposite such date:
Test Period Ending on Ratio - --------------------- ----- September 30, 2003 2.00:1.00 December 31, 2003 2.00:1.00 March 31, 2004 2.00:1.00 June 30, 2004 2.00:1.00 September 30, 2004 2.25:1.00 December 31, 2004 2.25:1.00 March 31, 2005 2.25:1.00 June 30, 2005 2.50:1.00 September 30, 2005 2.50:1.00 December 31, 2005 2.50:1.00 March 31, 2006 2.50:1.00 June 30, 2006 2.75:1.00 September 30, 2006 3.00:1.00 December 31, 2006 3.00:1.00 March 31, 2007 3.00:1.00 June 30, 2007 3.25:1.00 September 30, 2007 3.25:1.00 December 31, 2007 3.25:1.00 March 31, 2008 3.25:1.00 June 30, 2008 3.25:1.00 September 30, 2008 3.25:1.00 December 31, 2008 3.25:1.00 March 31, 2009 3.25:1.00 June 30, 2009 3.25:1.00
SECTION 6.13. Total Leverage Ratio. The Borrower will not permit the Total Leverage Ratio at any date set forth below to exceed the ratio set forth opposite such date:
Date Ratio ---- ----- ~~September 30, 2003 5.25:1.00 December 31, 2003 5.25:1.00~~
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Date Ratio ---- ----- March 31, 2004 5.25:1.00 June 30, 2004 5.25:1.00 September 30, 2004 5.00:1.00 December 31, 2004 4.75:1.00 March 31, 2005 4.75:1.00 June 30, 2005 4.50:1.00 September 30, 2005 4.25:1.00 December 31, 2005 4.25:1.00 March 31, 2006 4.25:1.00 June 30, 2006 4.00:1.00 September 30, 2006 3.75:1.00 December 31, 2006 3.75:1.00 March 31, 2007 3.75:1.00 June 30, 2007 3.50:1.00 September 30, 2007 3.25:1.00 December 31, 2007 3.25:1.00 March 31, 2008 3.25:1.00 June 30, 2008 3.25:1.00 September 30, 2008 3.25:1.00 December 31, 2008 3.25:1.00 March 31, 2009 3.25:1.00 June 30, 2009 3.25:1.00
SECTION 6.14. Capital Expenditures. The Borrower will not, and will not permit any of its Subsidiaries to, make or commit to make any Capital Expenditures, except that the Borrower and its Subsidiaries may make or commit to make (a) Capital Expenditures with the proceeds of (i) any Equity Issuance (including any Excluded Equity Issuance) in compliance with the requirements of Section 2.05(c)(i), and (ii) any sale, lease, transfer or other disposition of assets in compliance with the requirements of Sections 2.05(c)(iii) and 6.05(vii), (b) the Capital Expenditures to be effected as part of the Recapitalization Transactions and set forth in Schedule 6.14 and (c) other Capital Expenditures not exceeding the amount set forth below (the "Base Amount") for each of the Fiscal Years of the Borrower set forth below:
Fiscal Year Ended Base Amount - ----------------- ----------- ~~September 30, 2003 $18.0 million September 30, 2004 $20.0 million~~
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Fiscal Year Ended Base Amount - ----------------- ----------- September 30, 2005 $22.0 million September 30, 2006 $24.0 million September 30, 2007 $26.0 million September 30, 2008 $28.0 million September 30, 2009 $29.0 million
provided that for any Fiscal Year set forth above, the Base Amount set forth above may be increased by a maximum of 50% of the Base Amount for any such Fiscal Year by carrying over to any such Fiscal Year any portion of the Base Amount (without giving effect to any increase) not spent in the immediately preceding Fiscal Year, and that Capital Expenditures in any Fiscal Year shall be deemed first made from the Base Amount applicable to such Fiscal Year in any given Fiscal Year; provided, further, that for avoidance of doubt, Capital Expenditures for the Fiscal Year ended September 30, 2003 shall include Capital Expenditures made or committed to be made by the Parent Guarantor and its Subsidiaries prior to the Effective Date. SECTION 6.15. Limitation on Activities of Parent Guarantor and PII, LLC . Notwithstanding anything to the contrary set forth herein, the Parent Guarantor and PII, LLC shall not conduct any business or hold or acquire any assets and shall have no operations, except (i) the Parent Guarantor may acquire and hold Equity Interests of the Borrower and (ii) PII, LLC may hold such assets and conduct such operations as expressly permitted by the Foreign Subsidiary Restructuring Documents SECTION 6.16. Anti-Terrorism Law. The Loan Parties shall not, and shall not permit any Subsidiary to, directly or indirectly, (i) knowingly conduct any business or engage in making or receiving any contribution of funds, goods or services to or for the benefit of any Person described in Section 3.24 above, (ii) knowingly deal in, or otherwise engage in any transaction relating to, any property or interests in property blocked pursuant to the Executive Order or any other Anti-Terrorism Law, or (iii) knowingly engage in or conspire to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any Anti-Terrorism Law (and the Loan Parties shall deliver to the Lenders any certification or other evidence requested from time to time by any Lender in its reasonable discretion, confirming the Loan Parties' compliance with this Section 6.16). SECTION 6.17. Embargoed Person. At all times throughout the term of the Loans, (a) none of the funds or assets of the Loan Parties that are used to repay the Loans shall, to the knowledge of any Loan Party, constitute property of, or shall be beneficially owned directly or indirectly by, any Person subject to sanctions or trade restrictions under United States law ("Embargoed Person" or "Embargoed Persons") that is identified on (1) the "List of Specially Designated Nationals and Blocked Persons" (the "SDN List") maintained by OFAC, and/or to the knowledge of any Loan Party, as of the date thereof, based upon reasonable inquiry by such Loan Party, on any other similar list ("Other List") maintained by OFAC pursuant to any authorizing statute including, but not limited to, the International Emergency Economic Powers Act, 50 U.S.C. Sections 1701 et seq., The Trading with the Enemy Act, 50 U.S.C. App. 1 et seq., and any Executive Order or regulation promulgated thereunder, with the result that the investment in the Loan Parties (whether directly or indirectly) is prohibited by law, or the Loans made by the Lenders would be in violation of law, or (2) the Executive Order, any related enabling legislation or any other similar Executive Orders (collectively, "Executive Orders"), and (b) no Embargoed Person shall, to the knowledge of any Loan Party, have any direct interest, as of the date hereof, based upon reasonable inquiry by any Loan Party, indirect interest, of any nature whatsoever in the Loan Parties, with the result -86- that the investment in the Loan Parties (whether directly or indirectly) is prohibited by law or the Loans are in violation of law. SECTION 6.18. Anti-Money Laundering. At all times throughout the term of the Loans, to the knowledge of any Loan Party, as of the date hereof, based upon reasonable inquiry by such Loan Party, none of the funds of such Loan Party that are used to repay the Loans shall be derived from any unlawful activity with the result that the making of the Loans would be in violation of law. ARTICLE VII EVENTS OF DEFAULT SECTION 7.01. Listing of Events of Default. Each of the following events or occurrences described in this Section 7.01 shall constitute (i) an "Event of Default", if any Loans, LC Disbursements or Letters of Credit are outstanding, and (ii) an "Event of Termination", if no Loans, LC Disbursements or Letters of Credit are outstanding: (a) The Borrower shall default (i) in the payment when due of any principal of any Loan (including, without limitation, on any Installment Payment Date) or any reimbursement obligation in respect of any LC Disbursement, (ii) in the payment when due of any interest on any Loan (and such default shall continue unremedied for a period of three Business Days), or (iii) in the payment when due of any Fee described in Section 2.10 or of any other previously invoiced amount (other than an amount described in clauses (i) and (ii)) payable under this Agreement or any other Loan Document (and such default shall continue unremedied for a period of three Business Days). (b) Any representation or warranty of the Borrower, Parent Guarantor or any other Loan Party made or deemed to be made hereunder or in any other Loan Document or any other writing or certificate furnished by or on behalf of the Parent Guarantor or any other Loan Party to the Administrative Agent, the Issuing Bank or any Lender for the purposes of or in connection with this Agreement or any such other Loan Document is or shall be incorrect in any material respect when made or deemed made. (c) The Borrower shall default in the due performance and observance of any of its obligations under clause (f) of Section 5.01, clause (a) of Section 5.02 (with respect to the maintenance and preservation of the Parent Guarantor's or the Borrower's corporate existence) or Article VI. (d) The Borrower, Parent Guarantor or any other Loan Party shall default in the due performance and observance of any agreement (other than those specified in paragraphs (a) through (c) above) contained herein or in any other Loan Document, and such default shall continue unremedied for a period of 30 days after notice thereof from the Administrative Agent (given at the request of any Lender) to the Borrower. (e) A default shall occur (i) in the payment when due (subject to any applicable grace period), whether by acceleration or otherwise, of any Material Indebtedness or (ii) in the performance or observance of any obligation or condition with respect to any Material Indebtedness if the effect of such default referred to in this clause (ii) is to accelerate the maturity of any such Material Indebtedness or that enables or permits (with or without the giving of notice, the lapse of time or both) the holder or holders of any such Material Indebtedness or any trustee or -87- agent on its or their behalf to cause any such Material Indebtedness to become due, or to require the prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled maturity. (f) Any judgment or order (or combination of judgments and orders) for the payment of money equal to or in excess of $5.0 million individually or in the aggregate shall be rendered against the Borrower, Parent Guarantor or any of their Subsidiaries (excluding Inactive Subsidiaries) (or any combination thereof) and (i) enforcement proceedings shall have been commenced by any creditor upon such judgment or order and not stayed; (ii) such judgment has not been stayed, vacated or discharged within 60 days of entry; or (iii) there shall be any period (after any applicable statutory grace period) of 10 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 and such judgment is not fully insured against by a policy or policies of insurance (with reasonable or standard deductible provisions) issued by an insurer other than an Affiliate of the Borrower. (g) Any of the following events shall occur with respect to any Pension Plan: (i) the taking of any specific actions by a Loan Party, any ERISA Affiliate or any other Person to terminate a Pension Plan if, as a result of such termination, a Loan Party or any ERISA Affiliate could reasonably expect to incur a liability or obligation to such Pension Plan which, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect; or (ii) an ERISA Event, or noncompliance with respect to Foreign Plans, shall have occurred which, when taken together with all other ERISA Events and noncompliance with respect to Foreign Plans that have occurred, could, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. (h) Any Change in Control shall occur. (i) The Borrower, Parent Guarantor or any of their Subsidiaries (excluding Inactive Subsidiaries) shall (i) generally fail to pay debts as they become due; (ii) apply for, consent to, or acquiesce in the appointment of a trustee, receiver, sequestrator or other custodian for the Borrower, Parent Guarantor or any of such Subsidiaries or substantially all of the property of any thereof, or make a general assignment for the benefit of creditors; (iii) in the absence of such application, consent or acquiescence, permit or suffer to exist the appointment of a trustee, receiver, sequestrator or other custodian for the Borrower, Parent Guarantor or any of such Subsidiaries or for a substantial part of the property of any thereof, and such trustee, receiver, sequestrator or other custodian shall not be discharged or stayed within 60 days; -88- (iv) permit or suffer to exist the commencement of any bankruptcy, reorganization, debt arrangement or other case or proceeding under any bankruptcy or insolvency law, or any dissolution, winding up or liquidation proceeding, in respect of the Borrower, Parent Guarantor or any such Subsidiary (except the dissolution of PII pursuant to the terms of the Foreign Subsidiary Restructuring Documents) and, if any such case or proceeding is not commenced by the Borrower, Parent Guarantor or such Subsidiary, such case or proceeding shall be consented to or acquiesced in by the Borrower, Parent Guarantor such Subsidiary or shall result in the entry of an order for relief or shall remain for 60 days undismissed and unstayed; or (v) take any corporate or partnership action (or comparable action, in the case of any other form of legal entity) authorizing, or in furtherance of, any of the foregoing. (j) The obligations of the Parent Guarantor under its Guarantee in Article IX or of any other Loan Party under the Guarantee Agreement shall cease to be in full force and effect or the Parent Guarantor or any such other Loan Party shall repudiate its obligations thereunder. (k) Any Lien purported to be created under any Security Document shall fail or cease to be, or shall be asserted by any Loan Party not to be, a valid and perfected Lien on any material portion of the Collateral, with the priority required by the applicable Security Document. (l) The subordination provisions relating to the Subordinated Notes (the "Subordination Provisions") shall fail in any material respect to be enforceable by the Lenders (which have not effectively waived the benefits thereof) in accordance with the terms thereof or the Borrower, Parent Guarantor or any Subsidiary Loan Party shall, directly or indirectly, disavow or contest in any manner any of the Subordination Provisions. (m) The Effective Date does not occur within two Business Days of the execution and delivery of this Agreement. SECTION 7.02. Action if Bankruptcy. If any Event of Default described in clauses (i) through (v) of Section 7.01(i) shall occur, the Commitments (if not theretofore terminated) shall automatically terminate and the outstanding principal amount of all outstanding Loans and all other Obligations shall automatically be and become immediately due and payable, without notice or demand, all of which are hereby waived by the Borrower. SECTION 7.03. Action if Other Event of Default. If any Event of Default (other than any Event of Default described in clauses (i) through (v) of Section 7.01(i)) shall occur for any reason, whether voluntary or involuntary, and be continuing, the Administrative Agent, upon the direction of the Requisite Lenders, shall by written notice to the Borrower and each Lender declare all or any portion of the outstanding principal amount of the Loans and other Obligations to be due and payable and/or the Commitments (if not theretofore terminated) to be terminated, whereupon the full unpaid amount of such Loans and other Obligations which shall be so declared due and payable shall be and become immediately due and payable, without further notice, demand or presentment and/or, as the case may be, the Commitments shall terminate. SECTION 7.04. Action if Event of Termination. Upon the occurrence and continuation of any Event of Termination, the Requisite Lenders may, by notice from the Administrative Agent to the Borrower and the Lenders (except if an Event of Termination described in clauses (i) through (v) of Section 7.01(i) shall have occurred, in which case the Commitments (if not theretofore terminated) shall, -89- without notice of any kind, automatically terminate) declare their Commitments terminated, and upon such declaration the Lenders shall have no further obligation to make any Loans hereunder. Upon such termination of the Commitments, all accrued fees and expenses shall be immediately due and payable. ARTICLE VIII THE AGENTS SECTION 8.01. The Agents. Citicorp North America, Inc. is hereby appointed to act as Administrative Agent and Collateral Agent on behalf of the Lenders. Each of the Lenders and each assignee of any such Lender hereby irrevocably authorizes each of the Agents to take such actions on behalf of such Lender or assignee and to exercise such powers as are specifically delegated to such Agent by the terms and provisions hereof and of the other Loan Documents, together with such actions and powers as are reasonably incidental thereto. Each Agent is hereby expressly authorized by the Lenders, without hereby limiting any implied authority, (a) to receive on behalf of the Lenders all payments of principal of and interest on the Loans, all payments and all other amounts due to the Lenders hereunder, and promptly to distribute to each Lender its proper share of each payment so received; (b) to give notice on behalf of each of the Lenders to any of the Borrower of any Default specified in this Agreement of which such Agent has actual knowledge acquired in connection with its agency hereunder; and (c) to distribute to each Lender copies of all notices, financial statements and other materials delivered by the Borrower pursuant to this Agreement as received by such Agent. None of the Agents nor any of their Related Parties shall be liable to the Lenders as such for any action taken or omitted to be taken by any of them except to the extent finally judicially determined to have resulted from its or his or her own gross negligence or willful misconduct, or be responsible for any statement, warranty or representation herein or the contents of any document delivered in connection herewith, or be required to ascertain or to make any inquiry concerning the performance or observance by any Loan Party of any of the terms, conditions, covenants or agreements contained in any Loan Document. The Agents shall not be responsible to the Lenders for the due execution, genuineness, validity, enforceability or effectiveness of this Agreement or any other Loan Documents or other instruments or agreements. Each Agent shall in all cases be fully protected in acting, or refraining from acting, in accordance with written instructions signed by the Requisite Lenders (or, when expressly required hereby, all the Lenders) and, except as otherwise specifically provided herein, such instructions and any action or inaction pursuant thereto shall be binding on all the Lenders. Each Agent shall, in the absence of actual knowledge to the contrary, be entitled to rely on any instrument or document believed by it in good faith to be genuine and correct and to have been signed or sent by the proper person or persons. None of the Agents nor any of their Related Parties shall have any responsibility to the Loan Parties on account of the failure of or delay in performance or breach by any Lender of any of its obligations hereunder or to any Lender on account of the failure of or delay in performance or breach by any other Lender or the Loan Parties of any of their respective obligations hereunder or under any other Loan Document or in connection herewith or therewith. Each Agent may execute any and all duties hereunder by or through any of its Related Parties or any sub-agent appointed by it and shall be entitled to rely upon the advice of legal counsel selected by it with respect to all matters arising hereunder and shall not be liable for any action taken or suffered in good faith by it in accordance with the advice of such counsel. The Lenders hereby acknowledge that no Agent shall be under any duty to take any discretionary action permitted to be taken by it pursuant to the provisions of any Loan Document unless it shall be requested in writing to do so by the Requisite Lenders. Subject to the appointment and acceptance of a successor Agent as provided below, any Agent may resign at any time by notifying the Lenders, the Issuing Bank and the Borrower. Upon any -90- such resignation, the Requisite Lenders shall have the right to appoint a successor. If no successor shall have been so appointed by the Requisite Lenders and shall have accepted such appointment within 30 days after the retiring Agent gives notice of its resignation, then the retiring Agent may, on behalf of the Lenders and the Issuing Bank, appoint a successor Agent which shall be a bank with an office in New York, New York, having a combined capital and surplus of at least $500.0 million or an Affiliate of any such bank. Upon the acceptance of any appointment as an Agent hereunder by such a successor bank, such successor shall succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent and the retiring Agent shall be discharged from its duties and obligations hereunder. After an Agent's resignation hereunder, the provisions of this Article and Section 10.05 shall continue in effect for its benefit in respect of any actions taken or omitted to be taken by it while it was acting as an Agent. With respect to the Loans made by it hereunder, each Agent in its individual capacity and not as an Agent shall have the same rights and powers as any other Lender and may exercise the same as though it were not an Agent, and such Agent and its Affiliates may accept deposits from, lend money to and generally engage in any kind of business with the Borrower or any Subsidiary or other Affiliate thereof as if it were not an Agent. Each Lender acknowledges that it has, independently and without reliance upon any Agent or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon any Agent or any other Lender and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement or any other Loan Document, any related agreement or any document furnished hereunder or thereunder. Notwithstanding anything to the contrary in this Agreement, neither CGMI and Harris, as Joint Lead Arrangers and Joint Bookrunners, nor Harris, as Syndication Agent, nor CIBC and Rabobank, as Co-Documentation Agents, in such respective capacities, shall have any obligations, duties or responsibilities, or shall incur any liabilities, under this Agreement or any other Loan Document. ARTICLE IX GUARANTEE SECTION 9.01. Guarantee of the Parent Guarantor. In order to induce the Administrative Agent, the Issuing Bank, the Syndication Agent, the Co-Documentation Agents, the Joint Lead Arrangers and the Lenders to execute and deliver this Agreement and to make or maintain the Loans and to issue Letters of Credit hereunder, and in consideration thereof, the Parent Guarantor hereby unconditionally and irrevocably guarantees, as primary obligor and not merely as surety, to the Agents, for the ratable benefit of the Secured Parties, the prompt and complete payment and performance by the Borrower when due (whether at stated maturity, by acceleration or otherwise) of the Obligations, and the Parent Guarantor further agrees to pay any and all reasonable expenses (including, without limitation, all reasonable fees, charges and disbursements of counsel) which may be paid or incurred by the Agents, the Syndication Agent, the Co-Documentation Agents, the Joint Lead Arrangers, the Issuing Bank or any Lender in enforcing any of their rights under the Guarantee contained in this Article IX. The Guarantee contained in this Article IX, subject to Section 9.04, shall remain in full force and effect until all Letters of Credit have terminated, the Obligations are paid in full and the Commitments are terminated. The Parent Guarantor agrees that whenever, at any time, or from time to time, it shall make any payment to any Agent, the Syndication Agent, the Co-Documentation Agents, the Joint Lead -91- Arrangers, the Issuing Bank or any Lender on account of its liability under this Article IX, it will notify such Agent, the Syndication Agent, the Co-Documentation Agents, the Joint Lead Arrangers, the Issuing Bank or such Lender in writing that such payment is made under the Guarantee contained in this Article IX for such purpose. No payment or payments made by the Borrower or any other Person or received or collected by any Agent, the Syndication Agent, the Co-Documentation Agents, the Joint Lead Arrangers, the Issuing Bank or any Lender from the Borrower or any other Person by virtue of any action or proceeding or any setoff or appropriation or application, at any time or from time to time, in reduction of or in payment of the Obligations shall be deemed to modify, reduce, release or otherwise affect the liability of the Parent Guarantor under this Article IX, which, notwithstanding any such payment or payments, shall remain liable for the unpaid and outstanding Obligations until, subject to Section 9.04, all Letters of Credit have terminated and the Obligations are paid in full and the Commitments are terminated. SECTION 9.02. Amendments, etc. with Respect to the Applicable Obligations. The Parent Guarantor shall remain obligated under this Article IX notwithstanding that (i) without any reservation of rights against the Parent Guarantor, and (ii) without notice to or further assent by the Parent Guarantor, (x) any demand for payment of or reduction in the principal amount of any of the Obligations made by the Agents, the Syndication Agent, the Co-Documentation Agents, the Joint Lead Arrangers, the Issuing Bank or any Lender may be rescinded by the Agents, the Syndication Agent, the Co-Documentation Agents, the Joint Lead Arrangers, the Issuing Bank or such Lender, (y) any of the Obligations may be continued, and the applicable Obligations, or the liability of any other party upon or for any part thereof, or any collateral security or guarantee therefor or right of offset with respect thereto, may, from time to time, in whole or in part, be renewed, extended, amended, modified, accelerated, compromised, waived, surrendered or released by the Agents, the Syndication Agent, the Co-Documentation Agents, the Joint Lead Arrangers, the Issuing Bank or any Lender, and (z) this Agreement and any other documents executed and delivered in connection herewith may be amended, modified, supplemented or terminated, in whole or in part, as the Lenders (or the Requisite Lenders, as the case may be) may deem advisable from time to time, and any collateral security, guarantee or right of offset at any time held by the Agents, the Syndication Agent, the Co-Documentation Agents, the Joint Lead Arrangers, the Issuing Bank or any Lender for the payment of the applicable Obligations may be sold, exchanged, waived, surrendered or released. None of the Agents, the Syndication Agent, the Co-Documentation Agents, the Joint Lead Arrangers, the Issuing Bank or any Lender shall have any obligation to protect, secure, perfect or insure any Lien at any time held by it as security for the Obligations or for the Guarantee contained in this Article IX or any property subject thereto. SECTION 9.03. Guarantee Absolute and Unconditional. The Parent Guarantor waives any and all notice of the creation, renewal, extension or accrual of any of the Obligations and notice of or proof of reliance by the Agents, the Syndication Agent, the Co-Documentation Agents, the Joint Lead Arrangers, the Issuing Bank or any Lender upon the Guarantee contained in this Article IX or acceptance of the Guarantee contained in this Article IX; the Obligations, and any of them, shall conclusively be deemed to have been created, contracted or incurred, or renewed, extended, amended or waived, in reliance upon the Guarantee contained in this Article IX, and all dealings between the Parent Guarantor, on the one hand, and the Agents, the Syndication Agent, the Co-Documentation Agents, the Joint Lead Arrangers, the Issuing Bank and the Lenders, on the other, shall likewise be conclusively presumed to have been had or consummated in reliance upon the Guarantee contained in this Article IX. The Agents, the Syndication Agent, the Co-Documentation Agents, the Joint Lead Arrangers, Issuing Bank and any Lender will, to the extent permitted by applicable law, request payment of any applicable Obligation from the Borrower before making any claim against the Parent Guarantor under this Article IX, but will have no further obligation to proceed against the Borrower or to defer for any period a claim against the Parent Guarantor hereunder. Except as expressly provided in the preceding sentence, the Parent Guarantor waives diligence, presentment, protest, demand for payment and notice of default or nonpayment to or upon the Parent Guarantor or the Borrower with respect to the Obligations. The Guarantee contained in -92- this Article IX shall be construed as a continuing, absolute and unconditional guarantee of payment without regard to (a) the validity or enforceability of this Agreement or any other Loan Document, any of the Obligations or any collateral security therefor or Guarantee or right of offset with respect thereto at any time or from time to time held by any Agent, the Syndication Agent, the Co-Documentation Agents, the Joint Lead Arrangers, the Issuing Bank or any Lender, (b) the legality under applicable laws of repayment by the Borrower of any Obligations or the adoption of any applicable laws purporting to render any Obligations null and void, (c) any defense, setoff or counterclaim (other than a defense of payment or performance) which may at any time be available to or be asserted by the Parent Guarantor or the Borrower against the Agents, the Syndication Agent, the Co-Documentation Agents, the Joint Lead Arrangers, the Issuing Bank or any Lender, or (d) any other circumstance whatsoever (with or without notice to or knowledge of the Parent Guarantor or the Borrower) which constitutes, or might be construed to constitute, an equitable or legal discharge of the Borrower for any Obligations, or of the Parent Guarantor under the Guarantee contained in this Article IX, in bankruptcy or in any other instance. When any Agent, the Syndication Agent, the Co-Documentation Agents, the Joint Lead Arrangers, the Issuing Bank or any Lender is pursuing its rights and remedies under this Article IX against the Parent Guarantor, such Agent, the Syndication Agent, the Co-Documentation Agents, the Joint Lead Arrangers, the Issuing Bank or such Lender may, but shall be under no obligation to, pursue such rights and remedies as it may have against the Borrower or any other Person or against any collateral security or Guarantee for the Obligations or any right of offset with respect thereto, and any failure by any Agent, the Syndication Agent, the Co-Documentation Agents, the Joint Lead Arrangers, the Issuing Bank or any Lender to pursue such other rights or remedies or to collect any payments from the Borrower or any such other Person or to realize upon any such collateral security or Guarantee or to exercise any such right of offset, or any release of the Borrower or any such other Person or of any such collateral security, Guarantee or right of offset, shall not relieve the Parent Guarantor of any liability under this Article IX, and shall not impair or affect the rights and remedies, whether express, implied or available as a matter of law, of the Agents, the Syndication Agent, the Co-Documentation Agents, the Joint Lead Arrangers, the Issuing Bank and the Lenders against the Parent Guarantor. SECTION 9.04. Reinstatement. The Guarantee contained in this Article IX shall continue to be effective, or be reinstated, as the case may be, if at any time payment, or any part thereof, of any of the Obligations is rescinded or must otherwise be restored or returned by any Agent, the Syndication Agent, the Issuing Bank or any Lender upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Borrower or upon or as a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, the Borrower or any substantial part of its Property, or otherwise, all as though such payments had not been made. SECTION 9.05. Payments. The Parent Guarantor hereby agrees that any payments in respect of the Obligations (including, without limitation, payment obligations pursuant to Section 2.16) pursuant to this Article IX will be paid without setoff or counterclaim, at the option of the Issuing Bank or the relevant Lender(s), in Dollars at the office of the Administrative Agent specified in Section 10.01. SECTION 9.06. Independent Obligations. The obligations of the Parent Guarantor under the Guarantee contained in this Article IX are independent of the obligations of the Borrower, and a separate action or actions may be brought and prosecuted against the Parent Guarantor whether or not the Borrower is joined in any such action or actions. The Parent Guarantor waives, to the full extent permitted by law, the benefit of any statute of limitations affecting its liability hereunder or the enforcement thereof. Any payment by the Borrower or other circumstance which operates to toll any statute of limitations as to the Borrower shall operate to toll the statute of limitations as to the Parent Guarantor. SECTION 9.07. Defenses of Parent Guarantor. To the fullest extent permitted by applicable law, the Parent Guarantor waives any defense based on or arising out of any defense of any Loan -93- Party or the unenforceability of the Obligations or any part thereof from any cause, or the cessation from any cause of the liability of any Loan Party, other than the final and indefeasible payment in full in cash of the Obligations. The Collateral Agent and the other Secured Parties may, at their election, foreclose on any security held by one or more of them by one or more judicial or nonjudicial sales, accept an assignment of any such security in lieu of foreclosure, compromise or adjust any part of the Obligations, make any other accommodation with any Loan Party or any other guarantor or exercise any other right or remedy available to them against any Loan Party or any other guarantor, without affecting or impairing in any way the liability of the Parent Guarantor hereunder except to the extent the Obligations have been fully, finally and indefeasibly paid in cash. Pursuant to applicable law, the Parent Guarantor waives any defense arising out of any such election even though such election operates, pursuant to applicable law, to impair or to extinguish any right of reimbursement or subrogation or other right or remedy of the Parent Guarantor against any Loan Party or any other guarantor, as the case may be, or any security. SECTION 9.08. Agreement to Pay; Subordination. In furtherance of the foregoing and not in limitation of any other right that the Collateral Agent or any other Secured Party has at law or in equity against the Parent Guarantor by virtue hereof, upon the failure of any Loan Party to pay any Obligation when and as the same shall become due, whether at maturity, by acceleration, after notice of prepayment or otherwise, the Parent Guarantor hereby promises to and will forthwith pay, or cause to be paid, to the Collateral Agent or such other Secured Party as designated thereby in cash the amount of such unpaid Obligations. Upon payment by the Parent Guarantor of any sums to the Collateral Agent or any Secured Party as provided above, all rights of the Parent Guarantor against any Loan Party arising as a result thereof by way of right of subrogation, contribution, reimbursement, indemnity or otherwise shall in all respects be subordinate and junior in right of payment to the prior indefeasible payment in full in cash of all the Obligations. In addition, any indebtedness of any Loan Party now or hereafter held by the Parent Guarantor is hereby subordinated in right of payment to the prior payment in full in cash of the Obligations. If any amount shall erroneously be paid to the Parent Guarantor on account of (i) such subrogation, contribution, reimbursement, indemnity or similar right or (ii) any such indebtedness of any Loan Party, such amount shall be held in trust for the benefit of the Secured Parties and shall forthwith be paid to the Collateral Agent to be credited against the payment of the Obligations, whether matured or unmatured, in accordance with the terms of the Loan Documents. ARTICLE X MISCELLANEOUS SECTION 10.01. Notices. (a) Except as set forth in Section 10.17, notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail, sent by telecopy or electronic mail, as follows: (i) if to the Borrower, to it at 2700 Camino del Sol, Oxnard, CA 93030 (telecopy: (805) 918-2553) (e-mail: gaspar.alvarez@seminis.com) with a copy to Wachtell, Lipton, Rosen & Katz, 51 West 52nd Street, New York, New York 10019, attention: Mitchell S. Presser, Esq. (telecopy: (212) 403-2273) (email: mspresser@wlrk.com) and a copy to Milbank, Tweed, Hadley & McCloy LLP, 1 Chase Manhattan Plaza, New York, NY 10005, attention: Howard Kelberg, Esq. (telecopy: (212) 822-5530) (email: hkelberg@milbank.com); (ii) if to the Administrative Agent to it at Citicorp North America, Inc., 390 Greenwich St., New York, New York 10013, attention: Daniel J. Brill (telecopy: (212) 723-8547) (e-mail: daniel.j.brill@citigroup.com), with a copy to Cahill Gordon & Reindel llp, 80 Pine Street, New York, New York 10005, attention: Michael E. Michetti, Esq. (telecopy: (212) 269-5420) (email: mmichetti@cahill.com); -94- (iii) if to the Joint Lead Arrangers, to them at Citigroup Global Markets, Inc., 390 Greenwich St., New York, New York 10013, attention: Daniel J. Brill (telecopy: (212) 723-8547) (email: daniel.j.brill@citigroup.com), and at Harris Trust Savings Bank, 111 West Monroe, 20W, Chicago, Illinois 60603, attention: Jennifer A. Wendrow (telecopy: (312) 293-4280) (email: jennifer.wendrow@harrisnesbitt.com), with a copy to Cahill Gordon & Reindel llp, 80 Pine Street, New York, New York 10005, attention: Michael E. Michetti, Esq. (telecopy: (212) 269-5420) (email: mmichetti@cahill.com); (iv) if to the Issuing Bank, to it at Harris Trust Savings Bank, 111 West Monroe, 20W, Chicago, Illinois 60603, attention: Jennifer A. Wendrow (telecopy: (312) 293-4280) (email: jennifer.wendrow@harrisnesbitt.com); and (v) if to a Lender, to it at its address (or telecopy number) set forth on Schedule 2.01 or its Administrative Questionnaire or in the Assignment and Acceptance pursuant to which such Lender shall have become a party hereto. All notices and other communications given to any party hereto in accordance with the provisions of this Agreement shall be deemed to have been given on the date of receipt if delivered by hand or overnight courier service or sent by telecopy or electronic mail or on the date five Business Days after dispatch by certified or registered mail if mailed, in each case delivered, sent or mailed (properly addressed) to such party as provided in this Section 10.01 or in accordance with the latest unrevoked direction from such party given in accordance with this Section 10.01. Each Loan Party and Lender hereunder agrees to notify the Administrative Agent in writing promptly of any change to the notice information provided above or on Schedule 2.01. (b) The Borrower shall forthwith on demand indemnify each Lender against any loss or liability which that Lender incurs (and that Lender shall not be liable to the Borrower in any respect) as a consequence of: (i) any Person to whom any notice or communication under or in connection with this Agreement is sent by the Borrower by telecopy failing to receive that notice or communication (unless directly caused by that Person's gross negligence or willful default); or (ii) any telecopy communication which reasonably appears to that Lender to have been sent by the Borrower having in fact been sent by a Person other than the Borrower. SECTION 10.02. Survival of Agreement. All covenants, agreements, representations and warranties made by the Loan Parties herein and in the certificates or other instruments prepared or delivered in connection with or pursuant to this Agreement or any other Loan Document shall be considered to have been relied upon by Lenders hereto and shall survive the making by the Lenders of the Loans and issuance of any Letters of Credit, regardless of any investigation made by any such other party or on its behalf and notwithstanding that the Administrative Agent, the Issuing Bank or any Lender may have had notice or knowledge of any Default or Event of Default or incorrect representation or warranty at the time any credit is extended hereunder, and shall continue in full force and effect as long as the principal of or any accrued interest on any Loan or any Fee or any other amount payable under this Agreement or any other Loan Document is outstanding and unpaid or any Letter of Credit is outstanding and so long as the Commitments have not been terminated. The provisions of Sections 2.14, 2.15, 2.16, 10.05 and 10.16 and Article VIII shall survive and remain in full force and effect regardless of the consummation of the transactions contemplated hereby, the repayment of the Loans, the expiration or termination of the Letters of Credit and the Commitments or the termination of this Agreement or any provision hereof. -95- SECTION 10.03. Binding Effect. Subject to Section 4.01, this Agreement shall become effective when it shall have been executed by the Borrower and the Administrative Agent and when the Administrative Agent shall have received counterparts hereof which, when taken together, bear the signatures of each of the other parties hereto, and thereafter shall be binding upon and inure to the benefit of the parties hereto and their respective permitted successors and assigns. SECTION 10.04. Successors and Assigns. (a) Whenever in this Agreement any of the parties hereto is referred to, such reference shall be deemed to include the permitted successors and assigns of such party (including any Affiliate of the Issuing Bank that issues any Letter of Credit). All covenants, promises and agreements by or on behalf of the Borrower, the Agents or the Lenders that are contained in this Agreement shall bind and inure to the benefit of their respective successors and assigns. Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in clause (f) below and, solely to the extent expressly contemplated hereby, the Related Parties of each of the Agents, the Issuing Bank and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement. (b) Each Lender may assign to one or more assignees all or a portion of its interests, rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans at the time owing to it); provided, however, that (i) except in the case of an assignment to a Lender or a Lender Affiliate or in connection with the initial syndication of the Commitments and Loans, the Administrative Agent and the Borrower (and, in the case of any assignment of a Revolving Credit Commitment or any Lender's obligations in respect of its LC Exposure or Swingline Exposure, the Issuing Bank and the Swingline Lender) must give their prior written consent to such assignment (which consent shall not be unreasonably withheld or delayed and, in the case of an assignment during the occurrence and continuation of an Event of Default, the Borrower's consent need not be obtained), (ii) except in the case of an assignment to a Lender or a Lender Affiliate or in connection with the initial syndication of the Commitments and Loans, the amount of the Commitment or Loans of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Acceptance with respect to such assignment is delivered to the Administrative Agent) shall not be less than, in the case of the Term B Loans, $1.0 million and increments of $1.0 million in excess thereof and, in the case of the Revolving Loans, $5.0 million and increments of $1.0 million in excess thereof (or (A) if the aggregate amount of the Commitment or Loans of the assigning Lender is a lesser amount, the entire amount of such Commitment or Loans, or (B) in any other case, such lesser amount as Administrative Agent otherwise agrees), (iv) each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender's rights and obligations under this Agreement, except that this clause (iv) shall not be construed to prohibit the assignment of a proportionate part of all the assigning Lender's rights and obligations in respect of one Class of Commitments and Loans, (v) except in the case of the assignment to an Affiliate of such Lender, an assignment by a Lender to any Person in connection with the primary syndication of the Loans or an assignment required to be made pursuant to Section 2.20, the parties to each such assignment shall execute and deliver to the Administrative Agent an Assignment and Acceptance, together with a processing and recordation fee of $3,500 (which fee may be waived by the Administrative Agent in its sole discretion), and (vi) the assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire. Subject to acceptance and recording pursuant to paragraph (e) of this Section 10.04, from and after the effective date specified in each Assignment and Acceptance, which effective date shall be at least five Business Days after the execution thereof (unless otherwise determined by the Administrative Agent), (A) the assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Acceptance, have the rights and obligations of a Lender under this Agreement, and (B) the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Acceptance, be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all or the remaining portion of an assigning Lender's rights -96- and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of (and be subject to the requirements of) Sections 2.14, 2.15, 2.16 and 10.05 with respect to facts and circumstances occurring prior to the effective date of such assignment, as well as to any Fees accrued for its account and not yet paid). Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this paragraph shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with paragraph (f) of this Section. (c) By executing and delivering an Assignment and Acceptance, the assigning Lender thereunder and the assignee thereunder shall be deemed to confirm to and agree with each other and the other parties hereto as follows: (i) such assigning Lender warrants that it is the legal and beneficial owner of the interest being assigned thereby free and clear of any adverse claim and that its Commitment, and the outstanding balances of its Loans and participations in Swingline Loans, in each case without giving effect to assignments thereof which have not become effective, are as set forth in such Assignment and Acceptance, (ii) except as set forth in (i) above, such assigning Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement, or the execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement, any other Loan Document or any other instrument or document furnished pursuant hereto, or the financial condition of the Borrower or any Subsidiary or the performance or observance by the Borrower or any Subsidiary of any of its obligations under this Agreement, any other Loan Document or any other instrument or document furnished pursuant hereto; (iii) such assignee represents and warrants that it is legally authorized to enter into such Assignment and Acceptance; (iv) such assignee confirms that it has received a copy of this Agreement, together with copies of the most recent financial statements, if any, delivered pursuant to Section 5.01 and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance; (v) such assignee will independently and without reliance upon either Agent, such assigning Lender or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement; (vi) such assignee appoints and authorizes each Agent to take such action as agent on its behalf and to exercise such powers under this Agreement as are delegated to such Agent by the terms hereof, together with such powers as are reasonably incidental thereto; (vii) such assignee agrees that it will perform in accordance with their terms all the obligations which by the terms of this Agreement are required to be performed by it as a Lender; and (viii) Schedule 2.01 shall be deemed to be amended to reflect the assigning Lender thereunder and the assignee thereunder after giving effect thereto. (d) The Administrative Agent, acting for this purpose as an agent of the Borrower, shall maintain at one of its offices in The City of New York a copy of each Assignment and Acceptance delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitment of, and principal amount of the Loans and LC Disbursements, and participations in Swingline Loans, owing to, each Lender pursuant to the terms hereof from time to time (the "Register"). Except to the extent inconsistent with Section 2.07(d), the entries in the Register shall be conclusive and the Borrower, the Agents, the Issuing Bank and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by the Borrower, the Issuing Bank and any Lender, at any reasonable time and from time to time upon reasonable prior notice. (e) Upon its receipt of a duly completed Assignment and Acceptance executed by an assigning Lender and an assignee, an Administrative Questionnaire completed in respect of the assignee (unless the assignee shall already be a Lender hereunder), the processing and recordation fee referred to in paragraph (b) above and, if required, the written consent of the Borrower, the Issuing Bank, the Swingline -97- Lender and the Administrative Agent to such assignment, the Administrative Agent shall (i) accept such Assignment and Acceptance, (ii) record the information contained therein in the Register and (iii) give prompt notice thereof to the Lenders. No assignment shall be effective unless it has been recorded in the Register as provided in this paragraph (e). (f) Each Lender may without the consent of the Borrower, the Swingline Lender, the Issuing Bank or the Administrative Agent, sell participations to any Person (other than a natural person or the Borrower or any of the Borrower's Affiliates or Subsidiaries) (each, a "Participant") in all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans owing to it); provided, however, that (i) such Lender's obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, (iii) each Participant shall be entitled to the benefit of the cost protection provisions contained in Sections 2.14, 2.15 and 2.16 and the provisions of Section 5.01 to the same extent as if they were Lenders (subject to compliance in the conditions applicable to Lenders specified therein) and had acquired its interest by assignment pursuant to paragraph (b) of this Section 10.04 (provided that no participant shall be entitled to receive any greater amount pursuant to such Sections than the Lender would have been entitled to receive in respect of the interest transferred unless either (x) such transfer to such Participant is made with the Borrower's prior written consent (not to be unreasonably withheld) or (y) a Default or an Event of Default has occurred and is continuing at the time of such participation), and (iv) the Borrower, the Agents, the Issuing Bank and the Lenders shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement, and such Lender shall retain the sole right (which each Lender agrees will not be limited by the terms of any participation agreement or other agreement with a participant) to enforce the Loan Documents and to approve any amendment, modification or waiver of any provision of the Loan Documents (other than, without the consent of the Participant, amendments, modifications or waivers described in the first proviso of Section 10.08(b) that affect such Participant). To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 10.06 as though it were a Lender, provided such Participant agrees to be subject to Section 2.20 as though it were a Lender. (g) Any Lender or participant may, in connection with any assignment or participation or proposed assignment or participation pursuant to this Section 10.04, disclose to the assignee or participant or proposed assignee or participant any information relating to the Borrower and its Subsidiaries furnished to such Lender by or on behalf of any of the Loan Parties; provided that, prior to any such disclosure of information designated by the Borrower as confidential, each such assignee or participant or proposed assignee or participant shall execute a confidentiality agreement in form and substance consistent with provisions of Section 10.16. (h) Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank and this Section 10.04 shall not apply to any such pledge or assignment of a security interest; provided that (x) no such pledge or assignment of a security interest shall release a Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto and (y) any foreclosure or similar action shall be subject to the provisions of Section 10.04(b) concerning assignments and shall not be effective to transfer any rights under this Agreement or in any Loan, Note or other instrument evidencing the rights of a Lender under this Agreement until the requirements of Section 10.04(b) concerning assignments are fully satisfied. In order to facilitate such a pledge or assignment, the Borrower shall, at the request of the assigning Lender, duly execute and deliver to the assigning Lender a promissory note or notes evidencing the Loans made to the Borrower by the assigning Lender hereunder. -98- (i) The Borrower shall not assign or delegate any of its rights or duties hereunder without the prior written consent of the Administrative Agent and each Lender, and any attempted assignment without such consent shall be null and void. (j) The Borrower hereby expressly assumes all obligations of Seminis Acquisition, LLC under the Fee Letter as if the Borrower were a party thereto and acknowledges that such obligations constitute "Obligations" within the meaning of this Agreement. SECTION 10.05. Expenses; Indemnity. (a) The Borrower agrees to pay (i) all reasonable out-of-pocket expenses incurred by the Administrative Agent, the Collateral Agent, the Syndication Agent, the Co-Documentation Agents, the Joint Lead Arrangers, CGMI and its Affiliates, including the reasonable fees, charges and disbursements of Cahill Gordon & Reindel llp, counsel for the Administrative Agent, in connection with the syndication of the credit facilities provided for herein, the preparation and administration of this Agreement and the other Loan Documents or in connection with any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions hereby contemplated shall be consummated), (ii) all reasonable out-of-pocket expenses incurred by the Issuing Bank in connection with the issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment thereunder and (iii) all reasonable out-of-pocket expenses incurred by the Administrative Agent, the Collateral Agent, the Syndication Agent, the Co-Documentation Agents, the Joint Lead Arrangers, the Issuing Bank or any Lender in connection with the enforcement or protection of its rights in connection with this Agreement (including its rights under this Section), the other Loan Documents or the Loans made or Letters of Credit issued hereunder, including all such out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans or Letters of Credit, and, in connection with any such enforcement or protection, the fees, charges and disbursements of any other counsel for the Administrative Agent, the Collateral Agent, the Syndication Agent, the Co-Documentation Agents, the Joint Lead Arrangers, the Issuing Bank or any Lender; provided, however, that the Borrower shall not be obligated to pay for expenses incurred by a Lender in connection with the assignment of Loans to an assignee Lender (except pursuant to Section 2.20) or the sale of Loans to a participant pursuant to Section 10.04. (b) The Borrower agrees to indemnify the Administrative Agent, the Collateral Agent, the Syndication Agent, the Co-Documentation Agents, the Joint Lead Arrangers, the Issuing Bank, each Lender, each Affiliate of any of the foregoing Persons and each of their respective Related Parties (each such Person being called an "Indemnitee") against, and to hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related reasonable expenses, including reasonable counsel fees, charges and disbursements, incurred by or asserted against any Indemnitee arising out of, in any way connected with, or as a result of (i) the execution or delivery of this Agreement or any other Loan Document or any agreement or instrument contemplated thereby, the performance by the parties hereto or thereto of their respective obligations thereunder or the consummation of the Transactions and the other transactions contemplated thereby, (ii) the use of the proceeds of the Loans or Letters of Credit (including any refusal by the Issuing Bank to honor a demand for payment under a Letter of Credit if the documents presented in connection with such demand do not strictly comply with the terms of such Letter of Credit), (iii) any claim, litigation, investigation or proceeding relating to any of the foregoing, whether or not any Indemnitee is a party thereto, or (iv) any actual or alleged presence or Release or threat of Release of Hazardous Materials on, at, under or emanating from any property owned or operated by the Borrower or any of the Subsidiaries, or any Environmental Liability or Environmental Claim related in any way to the Borrower or the Subsidiaries; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related reasonable expenses are finally judicially determined to have arisen by reason of the Indemnitee's gross negligence or willful misconduct. -99- (c) To the extent that the Borrower fails to promptly pay any amount to be paid by it to any Agent, the Syndication Agent, the Co-Documentation Agents, the Joint Lead Arrangers, the Issuing Bank or the Swingline Lender under paragraph (a) or (b) of this Section, each Lender severally agrees to pay to such Agent, the Syndication Agent, the Co-Documentation Agents, the Joint Lead Arrangers, the Issuing Bank or the Swingline Lender, as the case may be, such Lender's pro rata share (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount (other than syndication expenses); provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the applicable Agent, the Syndication Agent, the Co-Documentation Agents, the Joint Lead Arrangers, the Issuing Bank or the Swingline Lender in its capacity as such. For purposes hereof, a Lender's "pro rata share" shall be determined based upon its share of the sum of the total Revolving Credit Exposures, outstanding Term B Loans and unused Commitments at the time. (d) To the extent permitted by applicable law, the Borrower shall not assert, and hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement or any agreement or instrument contemplated hereby, the Transactions, any Loan or Letter of Credit or the use of the proceeds thereof. (e) The provisions of this Section 10.05 shall remain operative and in full force and effect regardless of the expiration of the term of this Agreement, the consummation of the transactions contemplated hereby, the repayment of any of the Loans, the expiration of the Commitments, the invalidity or unenforceability of any term or provision of this Agreement or any other Loan Document, or any investigation made by or on behalf of the Administrative Agent or any Lender. All amounts due under this Section 10.05 shall be payable on written demand therefor. SECTION 10.06. Right of Setoff. If an Event of Default or Event of Termination shall have occurred and be continuing, each Lender is hereby authorized at any time and from time to time, 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 and other indebtedness at any time owing by such Lender to or for the credit or the account of the Borrower against any of and all the obligations of the Borrower now or hereafter existing under this Agreement and other Loan Documents held by such Lender, irrespective of whether or not such Lender shall have made any demand under this Agreement or such other Loan Document and although such obligations may be unmatured. In connection with exercising its rights pursuant to the previous sentence, a Lender may at any time use any of the Borrower's credit balances with the Lender to purchase at the Lender's applicable spot rate of exchange any other currency or currencies which the Lender considers necessary to reduce or discharge any amount due by the Borrower to the Lender, and may apply that currency or those currencies in or towards payment of those amounts. The rights of each Lender under this Section are in addition to other rights and remedies (including other rights of setoff) which such Lender may have. Each Lender agrees promptly to notify the Borrower and the Administrative Agent after making any such setoff. SECTION 10.07. Applicable Law. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (OTHER THAN AS EXPRESSLY SET FORTH IN OTHER LOAN DOCUMENTS) SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. SECTION 10.08. Waivers; Amendment. (a) No failure or delay of either Agent, the Syndication Agent, the Co-Documentation Agents, the Joint Lead Arrangers, the Issuing Bank or any Lender in exercising any power or right hereunder or under any Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discon- -100- tinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Agents, the Syndication Agent, the Co-Documentation Agents, the Joint Lead Arrangers, the Issuing Bank and the Lenders hereunder and under the other Loan Documents are cumulative and are not exclusive of any rights or remedies which they would otherwise have. No waiver of any provision of this Agreement or any other Loan Document or consent to any departure by the Borrower therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) below, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. Without limiting the generality of the foregoing, the making of a Loan or issuance of a Letter of Credit shall not be construed as a waiver of any Default or Event of Default regardless of whether an Agent, the Syndication Agent, the Co-Documentation Agents, the Joint Lead Arrangers, any Lender or the Issuing Bank may have had notice or knowledge of such Default or Event of Default at the time. No notice or demand on the Borrower in any case shall entitle the Borrower to any other or further notice or demand in similar or other circumstances. (b) Subject to Sections 10.08(c), 10.08(d), 10.08(e), 10.08(f) and 10.08(h), no amendment, modification, termination or waiver of any provision of any Loan Document, or consent to any departure by any Loan Party therefrom, shall in any event be effective without the written concurrence of the Requisite Lenders. (c) Subject to Section 10.08(e), 10.08(f) and 10.08(h), without the written consent of each Lender that would be directly affected thereby (whose consent shall be sufficient therefor without the consent of the Requisite Lenders), no amendment, modification, termination, waiver or consent shall be effective if the effect thereof would: (i) extend the scheduled final maturity of any Loan or Note; (ii) waive, reduce or postpone any scheduled repayment (but not prepayment); (iii) extend the stated expiration date of any Letter of Credit beyond the Revolving Credit Maturity Date; (iv) reduce the rate of interest on any Loan (other than any waiver of any increase in the interest rate applicable to any Loan pursuant to Section 2.08) or any fee payable hereunder, it being understood that any amendment or modification to the financial definitions in this Agreement shall not constitute a reduction in the rate of interest for purposes of this clause (iv); (v) extend the time for payment of any such interest or fees; (vi) reduce the principal amount of any Loan or any reimbursement obligation in respect of any Letter of Credit; (vii) amend, modify, terminate or waive any provision of Section 10.08(b), Section 10.08(c), Section 10.08(d) or Section 10.08(e) (except for technical amendments with respect to any additional extensions of credit pursuant to this Agreement which affect the protections to such additional extensions of credit of the type provided to the Revolving Credit Commitments and the Term B Loans on the Effective Date); (viii) amend the definition of "Requisite Lenders" or "Pro Rata Percentage"; provided, with the consent of Requisite Lenders, any additional extensions of credit pursuant hereto may be included in the determination of "Requisite Lenders" or "Pro Rata Percentage" on substantially -101- the same basis as the Revolving Credit Commitments, Revolving Loans, Term B Commitments and Term B Loans, are included on the Effective Date; (ix) release all or substantially all of the Collateral or all or substantially all of the Guarantors from the Guarantee except as expressly provided in the Loan Documents or subordinate the Liens in respect of all or substantially all of the Collateral under any Security Document, it being understood that additional extensions of credit under this Agreement consented to by the Requisite Lenders may be equally and ratably secured by the Collateral with the then existing secured obligations under the Security Documents; (x) consent to the assignment or transfer by any Loan Party of any of its rights and obligations under any Loan Document; or (xi) amend, modify, terminate or waive the provisions of Sections 2.13(a) or 2.19 affecting pro rata treatment or any provision hereof in a manner that would alter the pro rata allocation among the Lenders of Loan disbursements, including, without limitation, the requirements of Sections 2.02(c) and (d) and Section 2.06(d). (d) Subject to Sections 10.08(e), 10.08(f) and 10.08(h), no amendment, modification, termination, waiver or consent with respect to any provision of the Loan Documents, or consent to any departure by any Loan Party therefrom, shall: (i) increase any Revolving Credit Commitment of any Lender over the amount thereof then in effect without the consent of such Lender; provided no amendment, modification, termination, waiver or consent with respect to any condition precedent, covenant, Default or Event of Default shall constitute an increase in any Revolving Credit Commitment of any Lender; (ii) amend, modify, terminate or waive any provision hereof relating to the Swingline Sublimit or the Swingline Loans without the consent of Swingline Lender; (iii) amend the definition of "Requisite Class Lenders" without the consent of Requisite Class Lenders of each Class; provided, with the consent of the Requisite Lenders, any additional extensions of credit pursuant hereto may be included in the determination of such "Requisite Class Lenders" on substantially the same basis as the Revolving Credit Commitments, Revolving Loans, Term B Commitments and Term B Loans are included on the Effective Date; (iv) alter the required application of any repayments or prepayments as between Classes pursuant to Section 2.05 or Section 2.11 without the consent of Requisite Class Lenders of each Class which is being allocated a lesser repayment or prepayment as a result thereof; provided the Requisite Lenders may waive, in whole or in part, any prepayment so long as the application, as between Classes, of any portion of such prepayment that is still required to be made is not altered and, if additional extensions of term credit under this Agreement consented to by the Requisite Lenders are made, such new term loans may be included on a pro rata basis in the various prepayments required pursuant to Section 2.05; (v) amend, modify, terminate or waive any obligation of Lenders relating to the issuance of or purchase of participations in Letters of Credit without the written consent of Administrative Agent and of Issuing Bank; -102- (vi) amend, modify, terminate or waive any provision of Section 8.01 as the same applies to any Agent, or any other provision hereof as the same applies to the rights or obligations of any Agent, in each case without the consent of such Agent; (vii) amend, modify, terminate or waive any provision of any Loan Document specifying the number or percentage of Lenders (or Lenders of any Class) required to waive, amend or modify any rights thereunder or make any determination to grant any consent thereunder without the written consent of each Lender (or each Lender of such Class, as the case may be); (viii) amend, modify, terminate or waive the manner of application of any optional or mandatory prepayments of Loans to the remaining amortization payments of the Term B Loans without the written consent of Term B Lenders holding more than 50% of the outstanding Term B Loans; (ix) expressly amend, modify, supplement or waive any condition precedent in Section 4.02 to any Revolving Credit Borrowing without the written consent of the Requisite Revolving Lenders; or (x) increase the maximum duration of Interest Periods hereunder without the consent of all Lenders. (e) If, in connection with any proposed change, waiver, discharge or termination of or to any of the provisions of this Agreement (other than as contemplated by Section 10.08(d)(i), (ii), (v) and (vi) above), the consent of the Requisite Lenders is obtained but the consent of one or more of such other Lenders whose consent is required is not obtained, then the Borrower shall have the right, so long as all Non-Consenting Lenders whose individual consent is required are treated as described in either clause (i) or (ii) below, to either (i) replace each such Non-Consenting Lender or Lenders (or, at the option of the Borrower if the respective Lender's consent is required with respect to less than all Classes of Loans (or related Commitments), to replace only the Commitments and/or Loans of the respective Non-Consenting Lender that gave rise to the need to obtain such Lender's individual consent) with one or more assignees pursuant to, and with the effect of an assignment under, Section 2.20 so long as at the time of such replacement, each such assignee consents to the proposed change, waiver, discharge or termination or (ii) terminate such Non-Consenting Lender's Commitment (if such Lender's consent is required as a result of its Commitment) and/or repay each Class of outstanding Loans of such Lender that gave rise to the need to obtain such Lender's consent and/or cash collateralize its LC Exposure in accordance with this Agreement; provided that, unless the Commitments that are terminated and Loans that are repaid pursuant to the preceding clause (ii) are immediately replaced in full at such time through the addition of new Lenders or the increase of the Commitments and/or outstanding Loans of existing Lenders (who in each case must specifically consent thereto), then in the case of any action pursuant to the preceding clause (ii), the Requisite Lenders (determined after giving effect to the proposed action) shall specifically consent thereto. In addition, any waiver, amendment or modification of this Agreement that by its terms affects the rights or duties under this Agreement of the Revolving Lenders (but not the Term B Lenders) or the Term B Lenders (but not the Revolving Lenders) may be effected by an agreement or agreements in writing entered into by the Borrower and the requisite percentage in interest of the affected Class of Lenders that would be required to consent thereto under this Section 10.08 if such Class of Lenders were the only Class of Lenders hereunder at the time. (f) Without the consent of any other Person, the Loan Parties and the Administrative Agent and/or Collateral Agent may (in their respective sole discretion, or shall, to the extent required by any Loan Document) enter into any amendment, modification or waiver of any Loan Document, or enter into any new agreement or instrument, to effect the granting, perfection, protection, expansion or en- -103- hancement of any security interest in any Collateral or additional property to become Collateral for the benefit of the Secured Parties, or as required by local law to give effect to, or protect any security interest for the benefit of the Secured Parties, in any property or so that the security interests therein comply with applicable law. (g) Subject to Section 10.08(c)(ix), (A) any Subsidiary Loan Party shall be released from its obligations under the Loan Documents if such Subsidiary Loan Party is the subject of a sale, transfer, lease or disposition permitted by this Agreement or if such Subsidiary Loan Party becomes an Inactive Subsidiary, (B) if any property or other asset of any Loan Party constituting Collateral is sold or otherwise disposed in a transaction permitted by the terms of this Agreement (other than to a Loan Party or any of its Domestic Subsidiaries, except pursuant to Section 6.05(ix)), any Liens on such property or assets created under the Security Documents shall be released and such property or assets shall no longer constitute Collateral hereunder or thereunder for so long as not owned by a Loan Party and (C) any Lien under the Security Documents on Intellectual Property transferred to the IP Subsidiary shall be released for so long as owned by the IP Subsidiary. (h) Without the consent of the Co-Documentation Agents, the Syndication Agent, the Joint Lead Arrangers or of any Lender, the Loan Parties and the Administrative Agent and or the Collateral Agent may (in their respective sole discretion, or shall, to the extent required by any Loan Document) enter into any amendment, modification or waiver of any Loan Document, or enter into any new agreement or instrument, to effect the granting, perfection, protection, expansion or enhancement of any security interest in any Collateral or additional Property to become Collateral for the benefit of the Secured Parties, or as required by local law to give effect to, or protect any security interest for the benefit of the Secured Parties, in any Property or so that the security interests therein comply with applicable law. SECTION 10.09. Interest Rate Limitation. Notwithstanding anything herein to the contrary, if at any time the interest rate applicable to any Loan, together with all fees, charges and other amounts which are treated as interest on such Loan under applicable law (collectively the "Charges"), shall exceed the maximum lawful rate (the "Maximum Rate") which may be contracted for, charged, taken, received or reserved by the Lender holding such Loan or participation in accordance with applicable law, the rate of interest payable in respect of such Loan or participation hereunder, together with all Charges payable in respect thereof, shall be limited to the Maximum Rate and, to the extent lawful, the interest and Charges that would have been payable in respect of such Loan or participation but were not payable as a result of the operation of this Section shall be cumulated and the interest and Charges payable to such Lender in respect of other Loans or participations or periods shall be increased (but not above the Maximum Rate therefor) until such cumulated amount, together with interest thereon at the Federal Funds Effective Rate to the date of repayment, shall have been received by such Lender. SECTION 10.10. Entire Agreement. This Agreement and the other Loan Documents constitute the entire contract between the parties relative to the subject matter hereof. Any previous agreement among the parties with respect to the subject matter hereof is superseded by this Agreement and the other Loan Documents; provided that any letter agreement relating to the subject matter hereof between the Borrower and a Lender shall remain effective in accordance with its terms. Nothing in this Agreement or in the other Loan Documents, expressed or implied, is intended to confer upon any party other than the parties hereto and thereto any rights, remedies, obligations or liabilities under or by reason of this Agreement or the other Loan Documents. SECTION 10.11. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCU- -104- MENTS. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 10.11. SECTION 10.12. Severability. In the event any one or more of the provisions contained in this Agreement or in any other Loan Document should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and therein shall not in any way be affected or impaired thereby. The parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions. SECTION 10.13. Counterparts. This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original but all of which when taken together shall constitute a single contract, and shall become effective as provided in Section 10.03. Delivery of an executed signature page to this Agreement by facsimile transmission shall be as effective as delivery of a manually signed counterpart of this Agreement. SECTION 10.14. Headings. Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and are not to affect the construction of, or to be taken into consideration in interpreting, this Agreement. SECTION 10.15. Jurisdiction; Consent to Service of Process. (a) The Borrower hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of any New York State court or Federal court of the United States of America sitting in New York City, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement or the other Loan Documents, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State or, to the extent permitted by law, in such Federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement shall affect any right that the Administrative Agent, the Collateral Agent, the Issuing Bank or any Lender may otherwise have to bring any action or proceeding relating to this Agreement or the other Loan Documents against the Borrower or its properties in the courts of any jurisdiction. (b) The Borrower hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or the other Loan Documents in any New York State or Federal court referred to in paragraph (a) of this Section. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court. (c) Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 10.01. Nothing in this Agreement or any other Loan Document will affect the right of any party to this Agreement to serve process in any other manner permitted by law. -105- SECTION 10.16. Confidentiality. (a) The Loan Parties, the Lenders, the Administrative Agent and the Syndication Agent hereby agree that each of the Loan Parties, the Lenders, the Administrative Agent and the Syndication Agent and each of their respective officers, directors, employees, agents, accountants, attorneys and other advisors are, and have been from the commencement of discussions with respect to the facilities established by this Agreement (the "Facilities"), permitted to disclose to any and all Persons, without limitation of any kind, the structure and "tax aspects" (as such terms are used in Code Sections 6011, 6111 and 6112 and the regulations promulgated thereunder) of the Facilities, and all materials of any kind (including opinions or other tax analyses) that are or have been provided to the Loan Parties, such Lender, the Administrative Agent or the Syndication Agent related to such structure and tax aspects. In this regard, each of the Loan Parties, the Lenders, the Administrative Agent and the Syndication Agent acknowledges and agrees that its disclosure of the structure or tax aspects of the Facilities is not limited in any way by an express or implied understanding or agreement, oral or written (whether or not such understanding or agreement is legally binding). Furthermore, each of the Loan Parties, the Lenders, the Administrative Agent and the Syndication Agent acknowledges and agrees that it does not know or have reason to know that its use or disclosure of information relating to the structure or tax aspects of the Facilities is limited in any other manner (such as where the Facilities are claimed to be proprietary or exclusive) for the benefit of any other Person. To the extent that disclosure of the structure or tax aspects of the Facilities by the Loan Parties, the Administrative Agent, the Syndication Agent or the Lenders is limited by any existing agreement between the Loan Parties, the Administrative Agent, the Syndication Agent or the Lenders, such limitation is agreed to be void ab initio and such agreement is hereby amended to permit disclosure of the structure and tax aspects of the Facilities as provided in this paragraph (a). (b) Subject to paragraph (a) of this Section 10.16, none of the Administrative Agent, the Syndication Agent or any Lender may disclose to any Person any confidential, proprietary or non-public information of the Loan Parties furnished to the Administrative Agent, the Syndication Agent or the Lenders by the Loan Parties (such information being referred to collectively herein as the "Loan Party Information"), except that each of the Administrative Agent, the Syndication Agent and the Lenders may disclose Loan Party Information (i) to its and its affiliates' employees, officers, directors, agents, accountants, attorneys and other advisors (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Loan Party Information and instructed to keep such Loan Party Information confidential on substantially the same terms as provided herein), (ii) to the extent requested by any regulatory authority, (iii) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (iv) to any other party to this Agreement, (v) in connection with the exercise of any remedies hereunder or under any other Loan Document or any suit, action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder, (vi) subject to an agreement containing provisions substantially the same as those of this Section 10.16(b), to any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement, (vii) to the extent such Loan Party Information (A) is or becomes generally available to the public on a nonconfidential basis other than as a result of a breach of this Section 10.16(b) by the Administrative Agent, the Syndication Agent or such Lender, or (B) is or becomes available to the Administrative Agent, the Syndication Agent or such Lender on a nonconfidential basis from a source other than the Loan Parties and (viii) with the consent of the Loan Parties. Nothing in this provision shall imply that any party has waived any privilege it may have with respect to advice it has received. SECTION 10.17. Citigroup Direct Website Communications. (a) Each Loan Party hereby agrees that it will provide to the Administrative Agent all information, documents and other materials that it is obligated to furnish to the Administrative Agent pursuant to the Loan Documents, including, without limitation, all notices, requests, financial statements, financial and other reports, certificates and other information material, but excluding any such communication that (i) relates to a request for a -106- new, or a conversion of an existing, Borrowing or other extension of credit (including any election of an interest rate or interest period relating thereto), (ii) relates to the payment of any principal or other amount due under this Agreement prior to the scheduled date therefore, (iii) provides notice of any Default or Event of Default under this Agreement or (iv) is required to be delivered to satisfy any condition precedent to the effectiveness of this Agreement and/or any borrowing or other extension of credit hereunder (all such non-excluded communications being referred to herein collectively as "Communications"), by transmitting the Communications in an electronic/soft medium in a format acceptable to the Administrative Agent to oploanswebadmin@citigroup.com. In addition, each Loan Party agrees to continue to provide the Communications to the Administrative Agent in the manner specified in the Loan Documents but only to the extent requested by the Administrative Agent. (b) Each Loan Party further agrees that the Administrative Agent may make the Communications available to the Lenders by posting the Communications on Intralinks, Fixed Income Direct or a substantially similar electronic transmission systems (the "Platform"). Each Loan Party acknowledges that the distribution of material through an electronic medium is not necessarily secure and that there are confidentiality and other risks associated with such distribution. (c) THE PLATFORM IS PROVIDED "AS IS" AND "AS AVAILABLE". THE AGENT PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE COMMUNICATIONS, OR THE ADEQUACY OF THE PLATFORM AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS OR OMISSIONS IN THE COMMUNICATIONS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD-PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY THE AGENT PARTIES IN CONNECTION WITH THE COMMUNICATIONS OR THE PLATFORM. IN NO EVENT SHALL THE ADMINISTRATIVE AGENT OR ANY OF ITS AFFILIATES OR ANY OF THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, ADVISORS OR REPRESENTATIVES (COLLECTIVELY, "AGENT PARTIES") HAVE ANY LIABILITY TO THE LOAN PARTIES, ANY LENDER OR ANY OTHER PERSON OR ENTITY FOR DAMAGES OF ANY KIND, INCLUDING, WITHOUT LIMITATION, DIRECT OR INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES, LOSSES OR EXPENSES (WHETHER IN TORT, CONTRACT OR OTHERWISE) ARISING OUT OF THE LOAN PARTIES' OR THE ADMINISTRATIVE AGENT'S TRANSMISSION OF COMMUNICATIONS THROUGH THE INTERNET, EXCEPT TO THE EXTENT THE LIABILITY OF ANY AGENT PARTY IS FOUND IN A FINAL, NON-APPEALABLE JUDGMENT BY A COURT OF COMPETENT JURISDICTION TO HAVE RESULTED PRIMARILY FROM SUCH AGENT PARTY'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. (d) The Administrative Agent agrees that the receipt of the Communications by the Agent at its e-mail address set forth above shall constitute effective delivery of the Communications to the Administrative Agent for purposes of the Loan Documents. Each Lender agrees that notice to it (as provided in the next sentence) specifying that the Communications have been posted to the Platform shall constitute effective delivery of the Communications to such Lender for purposes of the Loan Documents. Each Lender agrees (i) to notify the Administrative Agent in writing (including by electronic communication) from time to time of such Lender's e-mail address to which the foregoing notice may be sent by electronic transmission and (ii) that the foregoing notice may be sent to such e-mail address. (e) Nothing herein shall prejudice the right of the Administrative Agent or any Lender to give any notice or other communication pursuant to any Loan Document in any other manner specified in such Loan Document. -107- SECTION 10.18. Collateral Agent as Joint Creditor. Each of the Loan Parties and each of the Lenders agree that the Collateral Agent shall be the joint creditor (together with the relevant Lender) of each and every obligation of the Loan Parties towards each of the Lenders under or in connection with the Loan Documents, and that accordingly the Collateral Agent will have its own independent right to demand performance by the Loan Parties of those obligations. However, any discharge of any such obligation to the Collateral Agent or the relevant Lender shall, to the same extent, discharge the corresponding obligation owing to the other. SECTION 10.19. Collateral Agent as Attorney-In-Fact Regarding Foreign Collateral. Each Lender hereby makes, constitutes and appoints the Collateral Agent the true and lawful attorney-in-fact of such Lender, with full power and authority, for, on behalf of and in the name, place and stead of the Lender, to execute any and all documents on its behalf relating to the creation and perfection of interests in foreign Collateral, such power of attorney to be revocable immediately upon notice to the Collateral Agent. [Signature Pages Follow] -108- IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written. SEMINIS VEGETABLE SEEDS, INC., as Borrower By: /s/ Enrique Fernando Osorio ----------------------------------------- Name: Enrique Fernando Osorio Title: Vice President of Treasury S-1 SEMINIS, INC., as Parent Guarantor By: /s/ Bernardo Jimenez ----------------------------------------- Name: Bernardo Jimenez Title: Executive Senior Vice President and Chief Financial Officer S-2 CITICORP NORTH AMERICA, INC., as Administrative Agent and Lender By: /s/ John W. Peruzzi ----------------------------------------- Name: John W. Peruzzi Title: Vice President CITIGROUP GLOBAL MARKETS INC., as Joint Lead Arranger and Joint Bookrunner By: /s/ John W. Peruzzi ----------------------------------------- Name: John W. Peruzzi Title: Director S-3 HARRIS TRUST AND SAVINGS BANK, as Joint Lead Arranger, Joint Bookrunner, Syndication Agent and Lender By: /s/ Jennifer Wendrow ----------------------------------------- Name: Jennifer Wendrow Title: Vice President S-4 CIBC WORLD MARKETS CORP., as Co-Documentation Agent By: /s/ Paul J. Chakmak ----------------------------------------- Name: Paul J. Chakmak Title: Managing Director CIBC INC., as Lender By: /s/ Paul J. Chakmak ----------------------------------------- Name: Paul J. Chakmak Title: Managing Director CIBC World Markets Corp., as AGENT S-5 COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A., "RABOBANK INTERNATIONAL", NEW YORK BRANCH, as Co-Documentation Agent and as Lender By: /s/ Edward J. Peyser ----------------------------------------- Name: Edward J. Peyser Title: Managing Director By: /s/ Eric Hurshman ------------------------------ Name: Eric Hurshman Title: Executive Director S-6 UNION BANK OF CALIFORNIA, N.A., as Lender By: /s/ Hagop V. Jazmadarian ----------------------------------------- Name: Hagop V. Jazmadarian Title: Vice President S-7 EX-10.3 10 v94566orexv10w3.txt EXHIBIT 10.3 EXHIBIT 10.3 PRIVILEGED AND CONFIDENTIAL EMPLOYMENT AGREEMENT AGREEMENT, made May 30, 2003, by and between Seminis Merger Corp., a Delaware corporation ("Seminis Merger Corp.") and Alfonso Romo Garza (the "Executive"). RECITALS WHEREAS Seminis Inc. (the "Company") intends to enter into an Agreement and Plan of Merger dated on May 30, 2003 by and among the Company, Seminis Acquisition LLC and Seminis Merger Corp. (the "Merger Agreement") pursuant to which, at the Effective Time (as defined in the Merger Agreement), the Company will be the surviving corporation in the Merger (as defined in the Merger Agreement); and WHEREAS in order to induce Executive to continue to serve as the President and Chief Executive Officer of Seminis Merger Corp. following such Merger, the Company desires to provide Executive with compensation and other benefits on the terms and conditions set forth in this Agreement; and WHEREAS, Executive is willing to accept such employment and perform services for the Company on the terms and conditions hereinafter set forth: NOW, THEREFORE, it is hereby agreed by and between the parties as follows: 1. Employment. 1.1 With the exception of Sections 3.4(b) and the second sentence of Section 16 of this Agreement, which shall become effective as of the date hereof, this Agreement shall become effective as of the Closing Date (as defined in the Merger Agreement) (the "Effective Date") and, except as otherwise expressly provided herein, shall be of no force or effect prior to such date, or in the event the Merger Agreement is terminated prior to the consummation of the Merger. 1.2 Subject to the terms and conditions of this Agreement, Seminis Merger Corp. agrees to employ Executive during the Term (as defined below) as its President and Chief Executive Officer. In his capacity as President and Chief Executive Officer of the Company, Executive shall report to the Company's Board of Directors (the "Board") and shall have the customary powers, responsibilities and authorities of presidents and chief executive officers of corporations of the size, type and nature of the Company, as it exists from time to time. 1.3 Subject to the terms and conditions of this Agreement, Executive hereby accepts employment as the President and Chief Executive Officer of the Company, commencing on the Effective Date. 1.4 Executive shall perform his duties under this Agreement with reasonable diligence and faithfulness, shall devote at least a majority of his business time (excluding any periods of vacation or sick leave) and attention to such duties as his primary employment, and, in any event shall devote an amount of his time reasonably necessary to perform his duties hereunder. Nothing in this Agreement shall preclude Executive from engaging in charitable and community affairs, from managing any passive investment made by him in publicly traded equity securities or other property or from continuing to serve as a member of the board of directors or as a trustee of any other corporation, association or entity with respect to which Executive serves as a director or trustee as of the date of this Agreement (as set forth on Exhibit A), or, with the prior written consent of the Committee (as defined in Section 3.2 hereof), such consent not to be unreasonably withheld, serving as a member of a board of directors or as a trustee of any other corporation, association or entity, provided, that these activities do not 2 interfere with the performance of Executive's duties and responsibilities hereunder or violate the provisions of Section 12 of this Agreement. 1.5 The Executive agrees to serve, without additional compensation, as an officer and director for each of the Company's 20% or more owned subsidiaries, partnerships, joint ventures, and limited liability companies (collectively, such entities, the "Affiliated Group"), provided, that such service does not materially interfere with the Executive's performance of his duties and responsibilities as President and Chief Executive Officer of the Company. 2. Term of Employment. Executive's term of employment under this Agreement shall commence on the Effective Date and, subject to the terms hereof, shall terminate on the earlier of (i) the fifth anniversary of the Effective Date (the "Termination Date") or (ii) the termination of Executive's employment pursuant to this Agreement (the period from the Effective Date until the termination of Executive's employment under this Agreement shall be the "Term"). This Agreement shall be renewed automatically for succeeding terms of one (1) year following the Termination Date (in which case both the Termination Date and the Term shall be extended one year on each renewal), unless either party gives written notice to the other at least 120 days prior to the applicable Termination Date of its intention not to renew. 3. Compensation. 3.1 Salary. The Company shall pay Executive an initial annual base salary of $1,000,000. The Base Salary shall be reviewed by the Company no less frequently than annually in a manner consistent with similarly situated executives of the Company and may be increased but not decreased. For all purposes under this Agreement, the term "Base Salary" shall refer to Base Salary as in effect from time to time. Base Salary shall be payable in accordance with the ordinary payroll practices of the Company. 3 3.2 Annual Bonus. During the Term, Executive shall be eligible to receive an annual bonus (the "Bonus") with a target Bonus set at 100% of Base Salary (the "Target Bonus") and a maximum Bonus of 200% of Base Salary. 100% of such Bonus shall be based upon the satisfaction of Targets (as defined in the Stockholders' Agreement, of even date herewith, by and among Seminis Merger Corp. and the Persons listed on the signature pages thereto ("Stockholders' Agreement") for each fiscal year of the Term (the "Performance Objective")). The Bonus shall be equal to the product of: (Target Bonus) (the Applicable Percentage for the Performance Objective), where the Target Bonus is expressed in dollars and the Applicable Percentage with respect to the Performance Objective is determined as follows:
APPLICABLE IF PERFORMANCE IS: PERCENTAGE: ------------------ ----------- LESS THAN 90% of Performance Objective 0% 90% of Performance Objective 50% 95% of Performance Objective 75% 100% 100% of Performance Objective 125% of Performance 200% Objective OR GREATER
4 In the event actual performance for any fiscal year falls between any threshold listed in the chart above, (e.g. 91% of Performance Objective), then the Applicable Percentage shall be adjusted accordingly using a straight line method of interpolation (e.g. if actual performance is at 91% of Performance Objective, then the Applicable Percentage shall be 55%; if actual performance is 92% of Performance Objective, then the Applicable Percentage shall be 60%, etc.). The bonus shall be applicable for fiscal years of the Company beginning after the date hereof, and Executive's annual bonus for the Company's fiscal year ending September 30, 2003, shall be based on the Company's bonus plan in effect as of the date hereof as set forth on Schedule 6.16(b) to the Merger Agreement. 3.3 Compensation Plans and Programs. Executive shall be eligible to participate in any compensation plans or programs maintained by the Company and generally made available to other senior executives of the Company, on terms comparable to those applicable to such other senior executives, provided, that such participation shall not cause the duplication of any compensation or benefits provided to Executive under this Agreement and shall not include the grant of restricted stock units as of the Effective Time. 3.4 Rollover Equity. (a) Executive shall roll over all of his Options (as defined in the Merger Agreement) into Retained Options (as defined in the Merger Agreement), and such Retained Options shall be 100% vested and exercisable as of the Closing Date and shall have substantially the same terms and conditions as the Options. (b) Notwithstanding anything to the contrary contained in this Agreement, effective as of the date hereof, Executive waives any right to be cashed out of all of his Options under the Merger Agreement or to exercise any of his Options prior to the Effective Date. 5 4. Employee Benefits. 4.1 Employee Benefit Programs, Plans and Practices. During the Term, Executive shall be entitled to participate in welfare, health and life insurance and pension benefit programs as may be in effect from time to time for senior executives of the Company generally. Executive shall not be entitled to participate in any severance plans provided to Company employees and hereby waives any rights to receive severance benefits other than as provided in this Agreement. 4.2 Vacation; Fringe Benefits; Perquisites. Executive shall be entitled to no less than twenty-five (25) business days paid vacation in each calendar year. Vacation days will accrue up to a maximum of fifty (50) days, at which time, further accruals will cease until the accrued vacation day balance falls below 50 days. Executive shall receive an after-tax annual vacation allowance of $7,700, which shall be payable in two equal installments, the first of which shall be paid during January of each year and the second of which during July. In addition, Executive shall be entitled to the perquisites and other fringe benefits generally made available to senior executives of the Company, commensurate with his position with the Company. In addition, Executive shall be entitled to receive benefits reasonably comparable to those provided to Executive as of the date of this Agreement with respect to the following matters: (a) family membership to a sport or social club of Executive's choice; (b) use of six (6) Company automobiles appropriate for Executive's position, including the costs of necessary maintenance (although Executive may incur taxable income as a result of his personal use of such vehicles); (c) private school tuition for Executive's dependant children in the school(s) of his choice (up to, but not including university education); (d) all fees and expenses incurred in connection with satisfying applicable government working requirements, including visas; and (e) bi-annual medical checkups for Executive and his spouse. 6 5. Expenses. (a) During the Term, Executive shall be entitled to receive prompt reimbursement in accordance with the Company's policies for out-of-pocket business expenses reasonably incurred in carrying out his duties and responsibilities under this Agreement, including, without limitation, reasonable expenses for travel and similar items related to such duties and responsibilities. (b) Solely to the extent that Executive's expenses for travel and security are not reimbursed by ING Comercial America, S.A. de C.V., the Executive's security expenses and travel expenses not related to his duties and responsibilities under this agreement ("Other Expenses") and which are not related primarily to leisure travel shall be reimbursed by the Company, provided, that the cost of such reimbursement shall not be more than an annual amount of $2.424 million. 6. Termination of Employment. 6.1 Termination for Death or Permanent Disability; Termination Not for Cause or for Good Reason Following FPSH Shift or Change of Control. (a) If (i) prior to the Termination Date, during the Term, Executive's employment is terminated as a result of Executive's death or as a result of Executive's Permanent Disability (as defined in Section 6.1(d) hereof) or (ii) Executive's employment is terminated (A) by the Company other than for Cause (by action of the Committee and as defined in Section 6.2(b) hereof) or (B) by Executive for Good Reason (as defined in Section 6.1(c) hereof), in either case following the occurrence of an FPSH Shift (as defined in Section 6.1 (e) hereof) or a Change of Control (as defined in Section 6.2(f) hereof), Executive shall receive: (i) such payments, if any, to which Executive is entitled under any applicable plans or programs, including but not limited to those referred to in Sections 3.3 and 4.1 hereof, in accordance with the terms of such plans or programs; 7 (ii) a cash lump sum payment in respect of accrued but unused vacation days and Base Salary and, if any such termination of employment occurs after the end of a Company fiscal year and prior to the payment of Bonuses for such fiscal year, any Bonus payments earned by Executive for such fiscal year but not yet paid; (iii) continued coverage under any employee medical plans or programs provided to Executive and his family members pursuant to Section 4.1 hereof until the earlier of the fifth anniversary of Executive's termination of employment or the date on which Executive becomes entitled to receive medical coverage under another employer's medical benefit program, provided, that Executive shall continue to be required to pay any applicable premiums of a participating employee in such plans and programs; and (iv) a cash lump sum payment equal to five (5) times the sum of the (I) Base Salary (as of immediately prior to Executive's date of termination of employment, but excluding any decrease in Base Salary causing Executive to have Good Reason), plus (II) the average annual bonus paid or payable to Executive with respect to the two (2) fiscal years immediately prior to the Executive's date of termination of employment (provided, however, that if the Executive's date of termination of employment occurs at any time during the 2002-2003 fiscal year, then the "average annual bonus" shall be deemed to be the bonus paid or payable with respect to the 2001-2002 fiscal year), less any applicable insurance benefits, provided, that any reduction for disability benefits shall be with respect to benefits received by Executive during the five-year period following Executive's date of termination of employment. (b) All payments payable by the Company to Executive pursuant to this Section 6.1 shall be paid within 30 days after the termination of Executive's employment by check payable to the order of Executive or by wire transfer to an account specified by Executive to the extent that the Company is permitted to so make such payments (under both applicable law and the Company's and its Subsidiaries' indebtedness and contractual arrangements and agreements). The Company shall fund any amount not so permitted to be paid with a Buy-Out Note (as defined in the Stockholders' Agreement). All payments payable by the Company to Executive pursuant to this Section 6.1 shall be subject to Executive entering into and not revoking a release substantially in the form set forth as Exhibit B hereto. 8 (c) For purposes of this Agreement, "Good Reason" shall mean that any of the events set forth in clauses (i) through (v) below shall occur without the written consent of Executive, provided, that (x) Executive shall provide the Company with written notice thereof within one hundred and twenty (120) days after Executive has knowledge of the occurrence of any of the events or circumstances set forth in clauses (i) through (v) below, which notice shall specifically identify the event or circumstance that Executive believes constitutes Good Reason, (y) the Company fails to correct the circumstance or event so identified within twenty (20) days after the date of delivery of the notice referred to in clause (x) above, and (z) Executive resigns his employment for Good Reason within ninety (90) days after the date of delivery of the notice referred to in (x) above: (i) a reduction in Executive's Base Salary; (ii) Executive's duties, titles, responsibilities or authority (including offices and reporting relationships) are materially diminished in comparison to the duties, titles and responsibilities or authority set forth in this Agreement, or Executive is assigned duties materially and adversely inconsistent with his position; (iii) a material reduction in fringe benefits, perquisites or other allowances provided to Executive pursuant to Section 4.2, other than (except for perquisites specifically set forth in this Agreement) as a result of a change applicable to employees of the Company generally, or any material failure to provide such benefits to Executive; (iv) the failure of the Company to obtain a satisfactory agreement from any successor to assume and agree to perform the Agreement, as contemplated in Section 10 herein; or (v) following the occurrence of a Change of Control, any requirement that executive relocate to an office more than 25 miles from the location of his principal office as of immediately prior to the Change of Control; 9 provided, however, that an FPSH Shift shall not, in and of itself, be considered Good Reason for purposes of this Agreement unless the Company takes affirmative action with respect to Executive's duties beyond the actions permitted by the Stockholders' Agreement. (d) For purposes of this Agreement, "Permanent Disability" shall mean Executive's absence from full time performance of duties due to physical or mental illness for six (6) consecutive months, that is reasonably determined to be total and permanent by a physician selected by the Company or its insurers and reasonably acceptable to Executive or his legal representative. (e) For purposes of this Agreement, "FPSH Shift" shall mean FPSH (as defined in the Stockholders' Agreement) acquires the right to have all customary rights and privileges associated with majority control pursuant to Section 5.1.2 of the Stockholders' Agreement, entitled Default Composition. (f) For purposes of this Agreement, "Change of Control" shall have the meaning ascribed to such term in the Stockholders' Agreement. 6.2 Other Terminations. In the event that Executive's employment is terminated, prior to the Termination Date, other than pursuant to Section 6.1 of this Agreement, Executive shall be entitled to receive a lump sum cash payment in respect of any earned but unpaid Base Salary and in respect of any accrued vacation days. In addition, Executive shall be entitled to such payments and benefits, if any, under any applicable plans or programs, including, but not limited to, those referred to in Sections 3.3 and 4.1 hereof, to which he is entitled pursuant to the terms of such plans or programs. (b) As used herein, the term "Cause" shall mean (i) Executive's conviction of, or plea of guilty or nolo contendere to, a felony (or a comparable level of crime in another 10 jurisdiction); provided, however, that after indictment for a felony, the Company may suspend Executive from the rendition of services, but without limiting or modifying in any other way, the Company's obligations to Executive under this Agreement, (ii) continued and repeated refusal by Executive to perform his duties hereunder after fifteen (15) days written notice of any such refusal to perform such duties or direction was given to Executive, (iii) commission by Executive of fraud against, or misappropriation of significant property belonging to, the Company, unless such action is neither willful nor injurious to the Company or any of its Subsidiaries, or other willful misconduct materially injurious to the Company or any of its Subsidiaries or (iv) during any period in which FPSH and its affiliates are the beneficial owners of 20% or more of the value of the Company's stock in the aggregate, a material breach by Executive of the provisions of the Corporate Policies and Procedures (as defined in the Stockholders' Agreement) or Section 12 of this Agreement, unless such breach is neither willful nor materially injurious to the Company or any of its Subsidiaries. Termination of Executive pursuant to this Section 6.2(b) shall be made by delivery to Executive of a copy of a resolution duly adopted by the affirmative vote of not less than a majority of the then members of the Committee at a meeting of the Committee called and held for the purpose (after 30 days prior written notice to Executive and reasonable opportunity for Executive and his counsel to be heard before the Committee prior to such vote), finding that in the reasonable judgment of the Committee, Executive was guilty of conduct set forth in any of clauses (i) through (iv) above and specifying the particulars thereof. 6.3 Resignation from all Positions. Notwithstanding any other provision of this Agreement, upon the termination of the Executive's employment for any reason, unless otherwise requested by the Board, the Executive shall immediately resign from all positions that he holds or has ever held with the Company and any other member of the Affiliated Group (and 11 with any other entities with respect to which the Company has requested the Executive to perform services), including, without limitation, the Board and all boards of directors of any member of the Affiliated Group. The Executive hereby agrees to execute any and all documentation to effectuate such resignations upon request by the Company, but he shall be treated for all purposes as having so resigned upon termination of his employment, regardless of when or whether he executes any such documentation. 6.4 Breach of Section 12. Notwithstanding anything to the contrary in this Agreement, in the event of a breach by Executive of the provisions of Section 12 of this Agreement following Executive's termination of employment, or a material breach by Executive of the provisions of Section 12 of this Agreement during Executive's employment which the Committee determines would have been Cause to terminate Executive's employment and that is discovered by the Company within six (6) months following Executive's termination of employment, Executive shall be entitled to no further payments under this Section 6, and shall repay to the Company any payments previously made under this Section 6. Any amounts repaid by Executive under this Section 6.4 will reduce (on a dollar for dollar basis) any damages payable by Executive as a result of a breach of the terms of Section 12. 7. Mitigation of Damages. Executive shall not be required to mitigate damages or the amount of any payment provided for under this Agreement by seeking other employment or otherwise after the termination of his employment hereunder, and any amounts earned by Executive, whether from self-employment, as a common-law employee or otherwise, shall not reduce the amount of any payments otherwise payable to him pursuant to this Agreement. 12 8. Notices. All notices or communications hereunder shall be in writing, addressed as follows: To the Company: Seminis, Inc. 2700 Camino del Sol Oxnard, California 93030-7967 Attn: General Counsel with a copy to: Fox Paine & Company, LLC 950 Tower Lane, Suite 1950 Foster City, California 94404 Attn: W. Dexter Paine, III To Seminis Merger Corp. Seminis Merger Corp. c/o Fox Paine & Company, LLC 950 Tower Lane, Suite 1950 Foster City, California 94404 Attn: W. Dexter Paine, III To Executive: Alfonso Romo Garza Last address in records of Company with a copy to: Milbank, Tweed, Hadley & McCloy, LLP One Chase Manhattan Plaza New York, New York 10005 Attn: Ed Rayner Any such notice or communication shall be delivered by hand or by courier or sent certified or registered mail, return receipt requested, postage prepaid, addressed as above (or to such other 13 address as such party may designate in a notice duly delivered as described above), and the third business day after the actual date of mailing shall constitute the time at which notice was given. 9. Separability; Legal Fees. If any provision of this Agreement shall be declared to be invalid or unenforceable, in whole or in part, such invalidity or unenforceability shall not affect the remaining provisions hereof which shall remain in full force and effect. Each party shall bear the costs of any legal fees and other fees and expenses which may be incurred in respect of enforcing its respective rights under this Agreement. 10. Successors and Assigns. Except as otherwise provided herein, this Agreement shall be binding upon, inure to the benefit of and be enforceable by Seminis Merger Corp. and Executive and their respective heirs, legal representatives, successors and assigns. Executive may not assign this Agreement, other than, with respect to payments in the event of Executive's death, to Executive's estate or beneficiaries. Seminis Merger Corp. may assign this Agreement to any of its affiliates in the event of any restructuring or reorganization of Seminis Merger Corp. or to a successor to all or substantially all of Seminis Merger Corp.'s assets, and the benefits of this Agreement shall inure to such entity and the obligations of this Agreement shall be binding on such entity; provided, that, if Seminis Merger Corp. assigns this Agreement to an affiliate which is not a successor to all or substantially all of its assets, Seminis Merger Corp. shall continue to guarantee the payments and benefits hereunder. If Seminis Merger Corp. shall be merged into or consolidated with another entity, the provisions of this Agreement shall be binding upon and inure to the benefit of the entity surviving such merger or resulting from such consolidation and Seminis Merger Corp. shall require any such successor, by agreement in form and substance satisfactory to Executive, to expressly assume and agree to perform this Agreement in the same manner and to the same extent that Seminis Merger Corp. would be required to perform it if no 14 such succession had taken place. For avoidance of doubt, upon the Effective Date the Company will be the successor to Seminis Merger Corp. and Executive hereby acknowledges that the provisions of Section 3.3 of the Merger Agreement shall satisfy the obligations of Seminis Merger Corp. under the immediately preceding sentence. The provisions of this Section 10 shall continue to apply to each subsequent employer of Executive in the event of any subsequent merger or consolidation of such subsequent employer. As used in this Agreement the term "affiliates" shall include any entity controlled by, controlling, or under common control with Seminis Merger Corp. or the Company, as applicable. 11. Amendment. This Agreement may only be amended by written agreement of the parties hereto. 12. Nondisclosure of Confidential Information; Work Product; Non-Disparagement; Non-Competition; Non-Solicitation. 12.1 Confidential Information of the Company and Its Affiliates. All Confidential Information relating to or obtained from the Company or its affiliates shall be held in the strictest confidence by Executive. Executive shall not, directly or indirectly, disclose, use, publish, release, transfer or otherwise make available Confidential Information of, or obtained from the Company or any of its affiliates in any form to, or for the use or benefit of, any person or entity without the Company's prior written consent, except (i) while employed by the Company, in the business of and/or for the benefit of the Company or (ii) when required to do so by a court of competent jurisdiction, by any governmental agency having supervisory authority over the business of the Company, or by any administrative body or legislative body (including a committee thereof) with jurisdiction to order Executive to divulge, disclose or make accessible such information. For purposes of this Section 12.1, "Confidential Information" shall mean all 15 information and documentation of the Company or its affiliates, whether disclosed to or accessed by Executive in connection with his employment with the Company or the Affiliated Group that is not otherwise available to the public (other than by Executive's breach of the terms hereof), including all (i) data and information of the Company or its affiliates or the customers, suppliers, contractors or other third parties doing business with any of the Company or its affiliates, including business plans, memoranda, reports, drawings, research results, research plans, inventions (patentable or otherwise), trade secrets and research products and (ii) Work Product (as defined below) created by Executive. 12.2 Executive hereby acknowledge that any ideas, concepts, designs, discoveries, techniques, research results, inventions, methodologies, know-how, improvements, discoveries, processes or products, whether or not patentable, that Executive conceives of or reduces to practice during the term of his/her employment with the Company or the Affiliated Group and which are in connection with Executive's employment or related to the nature of Executive's employment (collectively, the "Work Product") shall be, or be deemed to be, "work for hire" and owned by the Company. Furthermore, the Company shall have all right, title and interest, including worldwide ownership of copyright and patent, in and to the Work Product and all copies made from them. To the extent (a) any of the Work Product is not deemed a "work for hire" by operation of law and (b) permissible under applicable law, Executive hereby irrevocably assigns, transfers and conveys to the Company all of his right, title and interest in and to such Work Product, including all rights of patent, copyright, trade secret or other intellectual property or proprietary rights in such materials. Executive acknowledges that the Company and the successors and permitted assigns of the Company shall have the right to obtain and hold in their own name any intellectual property rights in and to such Work Product. 16 12.3 During the Term and for a period of 24 months from the date of the termination of Executive's employment for any reason (the "Restricted Period"), Executive shall not compete with the Company or the Affiliated Group, by directly or indirectly engaging in any business or activity, whether as an employee, consultant, partner, principal, agent, representative or stockholder or in any other individual, corporate or representative capacity, or render any services or provide any advice or substantial assistance to any business, person or entity, if such business, person or entity, directly or indirectly, competes (or, to Executive's knowledge after due inquiry, intends to compete or is preparing to compete during the Restricted Period) with the Business of the Company or the Affiliated Group in any material manner. It is the intention of the parties that the potential restrictions on Executive's activities imposed by this paragraph be and are reasonable in duration, scope and geography and in all other respects. For purposes of this Section 12, "Business" shall mean the business of marketing, developing, producing and researching new fruit or vegetable seeds and fruit or vegetable plants, or any other material businesses entered into by the Company or the Affiliated Group during the Term, or with respect to which the Company or the Affiliated Group has taken material steps to enter into as of the termination of Executive's employment. During the Restricted Period, Executive shall be available to consult with the Company on Company-related matters within his knowledge in person or by phone, as determined by Executive, for a period of no more than five (5) days per calendar quarter, subject to not interfering with Executive's work schedule; provided, however that for each full or partial day during which Executive provides such services (other than with respect to de minimis services of less than two (2) hours on a given day), the Company shall pay to Executive a sum of $1,000 (such limitations and payments shall not apply to any lawsuits in 17 which Executive is a named party). In addition, the Company shall promptly reimburse Executive for his reasonable expenses, if any, in providing such consulting services. 12.4 Except as is required or appropriate in the furtherance of the business of the Company or the Affiliated Group, Executive shall not, during the Restricted Period, either alone or in concert with others, directly or indirectly, (1) solicit, entice, induce or encourage (a) any customer of the Company or the Affiliated Group (including, during the Term, the Company's affiliates) to discontinue using the services or purchasing the products of the Company or the Affiliated Group (including, during the Term, the Company's affiliates), (b) any customer to refer prospective customers or business to any competitor of the Company or the Affiliated Group or (c) any person or entity that is part of any existing or proposed arrangement or has any other affiliation with the Company or the Affiliated Group (including, during the Term, the Company's affiliates) to discontinue such relationship or affiliation with the Company or its affiliates or (2) recruit or hire, or assist others in recruiting or hiring, or otherwise solicit for employment, any consultants or employees of the Company or its affiliates, or former consultants or employees of the Company or its affiliates within six (6) months following their termination of employment. 12.5 Upon request by the Company at any time during Executive's employment or upon termination of Executive's employment with the Company for any reason, Executive shall promptly (1) return to the Company or its affiliates all copies of all materials, including documentary or other recorded materials, which are in Executive's possession or control and which contain or embody any Confidential Information of the Company or its affiliates and (2) deliver to the Company or its affiliates all copies of any Work Product in Executive's possession 18 or control. Executive shall not copy, reproduce or otherwise re-create in any fashion any of the items referenced above for personal retention by Executive. 12.6 The Executive acknowledges and agrees that: (i) the purposes of the foregoing covenants are to protect the goodwill and Work Product and Confidential Information of the Company and its affiliates in connection with the transactions contemplated by the Merger Agreement, and to prevent the Executive from interfering with the business of the Company and the Affiliated Group as a result of or following termination of the Executive's employment with the Company or the Affiliated Group, as applicable, (ii) because of the nature of the business in which the Company and the Affiliated Group are engaged and because of the nature of the Work Product and Confidential Information to which the Executive has access, it would be impractical and excessively difficult to determine the actual damages to the Company and the Affiliated Group in the event the Executive breached any of the covenants of this Section 12; and (iii) remedies at law (such as monetary damages) for any breach of the Executive's obligations under this Section 12 would be inadequate. The Executive therefore agrees and consents that if the Executive commits any breach of a covenant under this Section 12 or threatens to commit any such breach, the Company, and its affiliates shall have the right (in addition to, and not in lieu of, any other right or remedy that may be available to each of them) to temporary and permanent injunctive relief from a court of competent jurisdiction, without posting and bond or other security and without the necessity of proof of actual damage. With respect to any provision of this Section 12 finally determined by a court of competent jurisdiction to be unenforceable, the Executive and the Company and its affiliates hereby agree that such court shall have jurisdiction to reform this Agreement or any provision hereof so that it is enforceable to the maximum extent permitted by law, and the parties agree to abide by such court's determination. If any of the 19 covenants of this Section 12 are determined to be wholly or partially unenforceable in any jurisdiction, such determination shall not be a bar to or in any way diminish the rights of the Company or its affiliates, as applicable, to enforce any such covenant in any other jurisdiction. 12.7 The provisions of this Section 12 shall remain in full force and effect until the expiration of the period specified herein notwithstanding he earlier termination of the Executive's employment hereunder or the Employment Period. 12.8 Executive acknowledges and agrees that the provisions of this Section 12 are in part in consideration for his sale of his interests in the Company. 13. Beneficiaries; References. Executive shall be entitled to select (and change, to the extent permitted under any applicable law) a beneficiary or beneficiaries to receive any compensation or benefit payable hereunder following Executive's death, and may change such election, in either case by giving the Company written notice thereof. In the event of Executive's death or a judicial determination of his incompetence, reference in this Agreement to Executive shall be deemed, where appropriate, to refer to his beneficiary, estate or other legal representative. Any reference to the masculine gender in this Agreement shall include, where appropriate, the feminine. 14. Survivorship. The respective rights and obligations of the parties hereunder shall survive any termination of this Agreement to the extent necessary to the intended preservation of such rights and obligations. 15. Governing Law; Consent to Jurisdiction. 15.1 Governing Law. This Agreement shall be construed, interpreted and governed in accordance with the laws of the State of Delaware, without reference to rules relating to conflicts of law. 20 15.2 Consent to Jurisdiction. The parties hereto hereby agree and consent to be subject to the exclusive jurisdiction of the courts of the State of Delaware and the United States District Court of the State of Delaware in any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the Merger. Each party hereto hereby irrevocably waives, to the fullest extent permitted by law, (i) any objection that it may now or hereafter have to laying venue of any suit, action or proceeding brought in such courts, and (ii) any claim that any suit, action or proceeding brought in such courts has been brought in an inconvenient forum. 16. Effect on Prior Agreements. This Agreement contains the entire understanding between the parties hereto and, as of the Effective Date, Executive waives all payments and benefits under any prior or other employment agreement or understanding between the Company or any affiliate of the Company and Executive, including, but not limited to, the employment agreement between SVS Mexicana S.A. de C.V. and Executive dated as of November 15, 1999 (the "Prior Agreement"). Notwithstanding the forgoing, effective as of the date hereof, Executive waives his right to, and agrees not to accept, all payments under the Prior Agreement upon voluntary termination of Executive's employment with the Company or termination of Executive's employment with the Company by the Company for Cause, and will repay to Seminis Merger Corp. on the Effective Date any such payments made, provided, that such provisions of the Prior Agreement shall again become operative in the event that the Merger Agreement is terminated prior to consummation of the Merger. 17. Withholding. The Company may withhold from any amounts payable under this Agreement such Federal, state, local or foreign taxes as shall be required to be withheld pursuant to any applicable law or regulation, or may permit Executive to elect to pay the Company any 21 such required withholding taxes. If Executive so elects, the payment by Executive of such taxes shall be a condition to the receipt of amounts payable to Executive under this Agreement. The Company shall, to the extent permitted or required by law, have the right to deduct any such taxes from any payment otherwise due to Executive. 18. Counterparts. This Agreement may be executed in two or more counterparts, each of which will be deemed an original. 22 IN WITNESS WHEREOF, as of the date first above written, the Company has caused this Agreement to be executed on its behalf by a duly authorized officer and Executive has hereunto set Executive's hand. SEMINIS MERGER CORP. By: /s/ Bernardo Jimenez Date: May 30, 2003 ---------------------------- ------------------- Name: Bernardo Jimenez Title: /s/ Alfonso Romo Garza Date: May 30, 2003 ------------------------------ ------------------- Alfonso Romo Garza 23 EXHIBIT A Savia Seminis Cementos Mexicanos ING Mexico Nacional de Drogas Grupo Meseca Grupo Comercial Chedraui G-Accion Consejo Mexicano de Hombres de Negocios Consejo Empresarial para America Latina Donald Danforth Plant Science Consejero Externo del Banco Mundial para latinoamerica y el Caribe EXHIBIT B FORM OF RELEASE AGREEMENT This Release Agreement ("Release") is entered into as of this ______day of ________, (hereinafter "Execution Date"), by and between [Employee Full Name] (hereinafter "Employee"), and Seminis, Inc. and its successors and assigns (hereinafter, the "Company"). Employee and the Company are sometimes collectively referred to herein as the "Parties". 1. Employee's employment with the Company is terminated effective [Month, Day, Year] (hereinafter "Termination Date"). 2. The company has agreed to provide employee the severance payments, awards and benefits provided for in his/her employment agreement with the company, dated as of may __, 2003, after he/she executes this release and the release becomes effective pursuant to its terms [for 40+ and does not revoke it as permitted in section 7 below, the expiration of such revocation period being] the ("effective date"). 3. Employee represents that he/she has not filed, and will not file, any complaints, lawsuits, administrative complaints or charges relating to his/her employment with, or resignation from, the Company[; provided, however, that nothing contained in this Section 3 shall prohibit Employee from bringing a claim to challenge the validity of the ADEA Release in Section 7 herein]. In consideration of the severance payments, awards and benefits described in Section 2, Employee, for himself/herself and for his/her heirs, administrators, representatives, executors, successors and assigns (collectively, "Releasers") agrees to release the Company, its subsidiaries and affiliates, and their respective parents, direct or indirect subsidiaries, divisions, affiliates and related companies or entities, regardless of its or their form of business organization, any predecessors, successors, joint ventures, and parents of any such entity, and any and all of their respective past or present shareholders, partners, directors, officers, employees, consultants, independent contractors, trustees, administrators, insurers, agents, attorneys, representatives and fiduciaries, including without limitation all persons acting by, through, under or in concert with any of them, in each instance in their capacities as representatives of the Company (collectively, the "Released Parties"), from any and all claims, charges, complaints, causes of action or demands of whatever kind or nature that Employee and his/her Releasers now have or have ever had against the Released Parties, whether known or unknown, including but not limited to: wrongful or tortious termination; constructive discharge; implied or express employment contracts and/or estoppel; discrimination and/or retaliation under any federal, state or local statute or regulation, specifically including any claims Employee may have under the Fair Labor Standards Act, the Americans with Disabilities Act, Title VII of the Civil Rights Act of 1964 as amended, and the Family and Medical Leave Act; the discrimination or other employment laws of the State of [ ](1); any claims brought under any federal or state statute or regulation for non-payment of wages or other compensation, including grants of stock options or any other equity compensation); and libel, slander, or breach of contract, other than the breach of this Release. This Release specifically excludes claims, charges, complaints, causes of action or demand that post-date the Termination Date. Notwithstanding anything herein to the contrary, expressly - ------------------------------- 1 Insert state of employment. excluded from this Release are any claims (i) for payments, awards and benefits under the Employment Agreement between the Parties dated _________, 2003, (ii) under the Stockholders' Agreement dated as of _______, 2003 by and among Seminis, Inc. and the Investors listed on the signature pages thereto, (iii) for benefits provided under Company benefit plans, incentive plans or equity plans (including, but not limited to, stock options, restricted stock units and stock grants) or (iv) for indemnification and any applicable directors and officers liability insurance coverage to which Employee was entitled with regard to service as an officer of the Company. 4. Employee agrees to keep the terms of this Release in strict confidence, but he/she may disclose the terms of this Release and provide a copy hereof to his/her immediate family and his/her financial and legal advisors. 5. Employee warrants that no promise or inducement has been offered for this Release other than as set forth herein and in the Employment Agreement and that this Release is executed without reliance upon any other promises or representations, oral or written. Any modification of this Release must be made in writing and be signed by Employee and the Company. 6. If any provision of this Release or compliance by Employee or the Company with any provision of the Release constitutes a violation of any law, or is or becomes unenforceable or void, then such provision, to the extent only that it is in violation of law, unenforceable or void, will be deemed modified to the extent necessary so that it is no longer in violation of law, unenforceable or void, and such provision will be enforced to the fullest extent permitted by law. If such modification is not possible, such provision, to the extent that it is in violation of law, unenforceable or void, will be deemed severable from the remaining provisions of this Release, which provisions will remain binding on both Employee and the Company. This Release is governed by, and construed and interpreted in accordance with the laws of the State of [ ], without regard to principles of conflicts of law. Employee consents to venue and personal jurisdiction in the State of [ ] for disputes arising under this Release. [ONLY IF THE STATE IS EMPLOYEE'S STATE OF EMPLOYMENT.] This Release represents the entire understanding with the Parties with respect to subject matter herein, no oral representations have been made or relied upon by the Parties. 7. [FOR EMPLOYEES OVER 40 ONLY -- In further recognition of the above, Employee hereby releases and discharges the Released Parties from any and all claims, actions and causes of action that he/she may have against the Released Parties, as of the date of the execution of this Release, arising under the Age Discrimination in Employment Act of 1967, as amended ("ADEA"), and the applicable rules and regulations promulgated thereunder. Employee acknowledges and understands that ADEA is a federal statute that prohibits discrimination on the basis of age in employment, benefits and benefit plans. Employee specifically agrees and acknowledges that: (A) the release in this Section 7 was granted in exchange for the receipt of consideration that exceeds the amount to which he/she would otherwise be entitled to receive upon termination of his/her employment; (B) his/her waiver of rights under this Release is knowing and voluntary as required under the Older Workers Benefit Protection Act; (B) that he/she has read and understands the terms of this Release; (C) he/she has hereby been advised in writing by the Company to consult with an attorney prior to executing this Release; (D) the Company has given him/her a period of twenty-one (21) days within which to consider this Release, which period may be waived by the Employee's voluntary execution prior to the expiration of the twenty-one day period; and (E) following his/her execution of this Release he/she has seven (7) days in which to revoke his/her release as set forth in this Section 7 only and that, if he/she chooses not to so revoke, the Release in this Section 7 shall then become effective and enforceable and the payments, awards and benefits provided herein shall then be made to him/her in accordance with the terms of this Release, as well as the terms of the Employment Agreement. To revoke this Release, Employee understands that he/she must give a written revocation to the General Counsel of the Company at [ ](2), either by hand delivery or certified mail within the seven-day period. If he/she revokes the Release, it will not become effective or enforceable and he/she will not be entitled to any benefits from the Company.] 8. EMPLOYEE ACKNOWLEDGES AND AGREES THAT HE/SHE HAS CAREFULLY READ AND VOLUNTARILY SIGNED THIS RELEASE, THAT HE/SHE HAS HAD AN OPPORTUNITY TO CONSULT WITH AN ATTORNEY OF HIS/HER CHOICE, AND THAT HE/SHE SIGNS THIS RELEASE WITH THE INTENT OF RELEASING THE RELEASED PARTIES TO THE EXTENT SET FORTH HEREIN. 9. In the event that any provision of this Release should be held to be invalid or unenforceable, each and all of the other provisions of this Release shall remain in full force and effect. If any provision of this Release is found to be invalid or unenforceable, such provision shall be modified as necessary to permit this Release to be upheld and enforced to the maximum extent permitted by law. 10. Employee acknowledges that he/she is familiar with the provisions of California Civil Code Section 1542, which provides as follows: "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS/HER FAVOR AT HE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM/HER MUST HAVE MATERIALLY AFFECTED HIS/HER SETTLEMENT WITH THE DEBTOR. EMPLOYEE BEING AWARE OF SAID CODE SECTION, HEREBY EXPRESSLY WAIVES ANY RIGHT HE/SHE MAY HAVE THEREUNDER, AS WELL AS UNDER ANY OTHER STATUTES OR COMMON LAW PRINCIPLES OF SIMILAR EFFECT." Employee being aware of said code section, hereby expressly waives any right he/she may have thereunder, as well as under any other statutes or common law principles of similar effect. 11. This Release inures to the benefit of the Company and its successors and assigns. ACCEPTED AND AGREED TO: - --------------------------------- ---------------------------------- Seminis, Inc. [Employee Full Name] Dated: Dated: --------------------------- ----------------------------- - ------------------------------- 2 Insert address. EX-10.4 11 v94566orexv10w4.txt EXHIBIT 10.4 EXHIBIT 10.4 PRIVILEGED AND CONFIDENTIAL EMPLOYMENT AGREEMENT AGREEMENT, made May 30, 2003, by and between Seminis Merger Corp., a Delaware corporation ("Seminis Merger Corp.") and Bruno Ferrari Garcia de Alba (the "Executive"). RECITALS WHEREAS Seminis, Inc. (the "Company") intends to enter into an Agreement and Plan of Merger dated May 30, 2003 by and among the Company, Seminis Acquisition LLC and Seminis Merger Corp. (the "Merger Agreement") pursuant to which, at the Effective Time (as defined in the Merger Agreement), the Company will be the surviving corporation in the Merger (as defined in the Merger Agreement); and WHEREAS in order to induce Executive to serve as the Executive Senior Vice President - World Wide Commercial of the Company following such Merger, Seminis Merger Corp. desires to provide Executive with compensation and other benefits on the terms and conditions set forth in this Agreement; and WHEREAS, Executive is willing to accept such employment and perform services for the Company on the terms and conditions hereinafter set forth: NOW, THEREFORE, it is hereby agreed by and between the parties as follows: 1. Employment. 1.1 With the exception of Section 3.5(f) and the second sentence of Section 16 of this Agreement, which shall become effective as of the date hereof, this Agreement shall become effective as of the Closing Date (as defined in the Merger Agreement) (the "Effective Date") and, except as otherwise expressly provided herein, shall be of no force or effect prior to such date, or in the event the Merger Agreement is terminated prior to the consummation of the Merger. 1.2 Subject to the terms and conditions of this Agreement, Seminis Merger Corp. agrees to employ Executive during the Term (as defined below) as Executive Senior Vice President - World Wide Commercial of the Company. In his capacity as Executive Senior Vice President - World Wide Commercial of the Company, Executive shall report to the Company's Chief Executive Officer (the "CEO") and shall have the customary powers, responsibilities and authorities of Executive Senior Vice Presidents of corporations of the size, type and nature of the Company, as it exists from time to time. 1.3 Subject to the terms and conditions of this Agreement, Executive hereby accepts employment as the Executive Senior Vice President - World Wide Commercial of the Company, commencing on the Effective Date. 1.4 Executive shall perform his duties under this Agreement with reasonable diligence and faithfulness, and shall devote his full business time (excluding any periods of vacation or sick leave) and attention to such duties. Nothing in this Agreement shall preclude Executive from engaging in charitable and community affairs, from managing any passive investment made by him in publicly traded equity securities or other property or from continuing to serve as a member of the board of directors or as a trustee of any other corporation, association or entity with respect to which Executive serves as a director or trustee as of the date of this Agreement, or, with the prior written consent of the Committee (as defined in Section 3.2 hereof), such consent not to be unreasonably withheld, serving as a member of a board of directors or as a trustee of any other corporation, association or entity, provided, that these 2 activities do not interfere with the performance of Executive's duties and responsibilities hereunder or violate the provisions of Section 12 of this Agreement. 1.5 The Executive agrees to serve, without additional compensation, as an officer and director for each of the Company's 20% or more owned subsidiaries, partnerships, joint ventures, and limited liability companies (collectively, such entities, the "Affiliated Group"), provided, that such service does not materially interfere with the Executive's performance of his duties and responsibilities as Executive Senior Vice President - World Wide Commercial of the Company. 1.6 Executive's principal location of employment shall be at the Company's offices located in Oxnard, California, provided, that Executive may be required under reasonable business circumstances to travel outside of such location in connection with performing his duties under this Agreement. 2. Term of Employment. Executive's term of employment under this Agreement shall commence on the Effective Date and, subject to the terms hereof, shall terminate on the earlier of (i) the third anniversary of the Effective Date (the "Termination Date") or (ii) the termination of Executive's employment pursuant to this Agreement (the period from the Effective Date until the termination of Executive's employment under this Agreement shall be the "Term"). This Agreement shall be renewed automatically for succeeding terms of one (1) year following the Termination Date (in which case both the Termination Date and the Term shall be extended one year on each renewal), unless either party gives written notice to the other at least 120 days prior to the applicable Termination Date of its intention not to renew. 3. Compensation and Equity Awards. 3.1 Salary. The Company shall pay Executive an initial annual base salary of $500,000. The initial annual Base Salary set forth in the preceding sentence shall be retroactive 3 from March 11, 2003 As soon as possible after the Effective Date, the Company shall pay Executive a lump sum amount equal to the amount necessary to increase Executive's Base Salary during the period commencing on March 11, 2003 through the Effective Date to an annual rate of $500,000, assuming a prior rate of base salary equal to $452,523. The Base Salary shall be reviewed by the Company no less frequently than annually in a manner consistent with similarly situated executives of the Company and may be increased but not decreased. For all purposes under this Agreement, the term "Base Salary" shall refer to Base Salary as in effect from time to time. Base Salary shall be payable in accordance with the ordinary payroll practices of the Company. 3.2 Annual Bonus. During the Term, Executive shall be eligible to receive an annual bonus (the "Bonus") with a target Bonus set at 75% of Base Salary (the "Target Bonus") and a maximum Bonus of 93.75% of Base Salary. Such Bonus shall be based upon the satisfaction of performance objectives and shall be determined on a weighted basis comprised of the following criteria: (i) Targets (as defined in the Stockholders' Agreement, of even date herewith, by and among Seminis Merger Corp. and the Persons listed on the signature pages thereto (the "Stockholders' Agreement")) - 40% (the "Target Component"); (ii) Executive performance goals established annually by the Compensation Committee (the "Committee") of the Board of Directors of the Company (the "Board") - 20% (the "Individual Component"); (iii) Milestones based upon Company net sales as set forth in the Approved Annual Business Plan (as defined in the Stockholders' Agreement) - 20% (the "Sales Component"); and 4 (iv) Milestones based upon Company net working capital as set forth in the Approved Annual Business Plan - 20% (the "Net Working Capital Component") (items (i) through (iv) collectively, the "Performance Objectives," and each, separately, a "Performance Objective"). During any fiscal year in which an Approved Annual Business Plan has been adopted in accordance with the Stockholders' Agreement, the Bonus shall be equal to the sum of: (A) (Target Bonus)(.4)(the Applicable Percentage for the Target Component), PLUS (B) (Target Bonus)(.2)(the Applicable Percentage for the Individual Component), PLUS (C) (Target Bonus)(.2)(the Applicable Percentage for the Sales Component), PLUS (D) (Target Bonus)(.2)(the Applicable Percentage for the Net Working Capital Component), where the Target Bonus is expressed in dollars and the Applicable Percentage with respect to any given Performance Objective is determined in accordance with the performance matrix below. During any fiscal year in which the Approved Annual Business Plan for such fiscal year is not approved and adopted by the Board in accordance with the Stockholders' Agreement at any point prior to or during such fiscal year, the Bonus shall be equal to the sum of (A) (Target Bonus) (.5) (the Applicable Percentage for the Target Component) PLUS (B) (Target Bonus) (.5) (the Applicable Percentage for the Individual Component), where the Target Bonus is expressed in dollars and the Applicable Percentage with respect to any given Performance Objective is determined in accordance with the performance matrix below: 5 PERFORMANCE MATRIX ------------------
APPLICABLE IF PERFORMANCE IS: PERCENTAGE: ------------------ ----------- LESS THAN 90% of Performance Objective 0% 90% of Performance Objective 50% 95% of Performance Objective 75% 100% of Performance Objective 100% 125% of Performance Objective OR GREATER 125%
In the event actual performance for any fiscal year falls between any threshold listed in the chart above, (e.g. 91% of Performance Objective), then the Applicable Percentage shall be adjusted accordingly using a straight line method of interpolation (e.g. if actual performance is at 91% of Performance Objective, then the Applicable Percentage shall be 55%; if actual performance is 92% of Performance Objective, then the Applicable Percentage shall be 60%, etc.). The bonus shall be applicable for fiscal years of the Company beginning after the date hereof, and Executive's annual bonus for the Company's fiscal year ending September 30, 2003, shall be based on the Company's bonus plan in effect as of the date hereof, as set forth on Schedule 6.16(b) to the Merger Agreement. 6 3.3 Compensation Plans and Programs. Executive shall be eligible to participate in any compensation plans or programs maintained by the Company and generally made available to other senior executives of the Company, on terms comparable to those applicable to such other senior executives, provided, that such participation shall not cause the duplication of any compensation or benefits provided to Executive under this Agreement. 3.4 Restricted Stock Units. (a) Executive shall be granted on the Effective Date 330,882 restricted stock units of the Company (the "Restricted Stock Units") that shall vest (if at all) as provided below with respect to fiscal years in which an Approved Annual Business Plan has been adopted in accordance with the Stockholders' Agreement, so long as Executive remains employed by the Company through the applicable vesting dates: FISCAL YEAR ENDING IN 2004: N = (33,088.2)(.4)(Applicable Percentage for the Target Component) + (33,088.2)(.2)(Applicable Percentage for the Individual Component) + (33,088.2)(.2)(Applicable Percentage for the Sales Component) + (33,088.2)(.2)(Applicable Percentage for the Net Working Capital Component) FISCAL YEAR ENDING IN 2005: N = (33,088.2)(.4)(Applicable Percentage for the Target Component) + (33,088.2)(.2)(Applicable Percentage for the Individual Component) + (33,088.2)(.2)(Applicable Percentage for the Sales Component) + (33,088.2)(.2)(Applicable Percentage for the Net Working Capital Component) 7 FISCAL YEAR ENDING 2006: N = (66,176.4)(.4)(Applicable Percentage for the Target Component) + (66,176.4)(.2)(Applicable Percentage for the Individual Component) + (66,176.4)(.2)(Applicable Percentage for the Sales Component) + (66,176.4)(.2)(Applicable Percentage for the Net Working Capital Component) FISCAL YEAR ENDING 2007: N = (99,264.6)(.4)(Applicable Percentage for the Target Component) + (99,264.6)(.2)(Applicable Percentage for the Individual Component) + (99,264.6)(.2)(Applicable Percentage for the Sales Component) + (99,264.6)(.2)(Applicable Percentage for the Net Working Capital Component) FISCAL YEAR ENDING 2008: N = (99,264.6)(.4)(Applicable Percentage for the Target Component) + (99,264.6)(.2)(Applicable Percentage for the Individual Component) + (99,264.6)(.2)(Applicable Percentage for the Sales Component) + (99,264.6)(.2)(Applicable Percentage for the Net Working Capital Component) in each case, where N = the number of Restricted Stock Units that shall be eligible to vest for any given period and the Applicable Percentage with respect to any given Performance Objective is determined in accordance with the performance matrix below. Notwithstanding the foregoing, during any fiscal year in which the Approved Annual Business Plan for such fiscal year is not approved and adopted by the Board in accordance with the 8 Stockholders' Agreement at any point prior to or during such fiscal year, the vesting of Restricted Stock Units shall be equal to the sum of (A) (N)(.5) (the Applicable Percentage for the Target Component) PLUS (B) (N)(.5) (the Applicable Percentage for the Individual Component), where N = the number of Restricted Stock Units that shall be eligible to vest for any given period (in the same number as set forth above for the applicable fiscal year) and the Applicable Percentage with respect to any given Performance Objective is determined in accordance with the performance matrix below. Performance Matrix
APPLICABLE IF PERFORMANCE IS: PERCENTAGE: ------------------ ----------- Less than 90% of Performance Objective 0% 90% of Performance Objective 50% 95% of Performance Objective 75% 100% of Performance Objective or greater 100%
In the event actual performance for any fiscal year falls between any threshold listed in the chart above, (e.g. 91% of Performance Objective), then the Applicable Percentage shall be adjusted accordingly using a straight line method of interpolation (e.g., if actual performance is at 91% of 9 Performance Objective, then the Applicable Percentage shall be 55%; if actual performance is 92% of Performance Objective, then the Applicable Percentage shall be 60%, etc.). To the extent conditions to vesting in any particular year are not met in such year, and some or all of the Restricted Stock Units do not vest in such year, such Restricted Stock Units shall be permanently forfeited. Notwithstanding the foregoing, in the event that prior to the fifth anniversary of the Effective Date, FPSH (as defined in the Stockholders' Agreement) achieves the IRR Hurdle (as defined in the Stockholders' Agreement) after giving effect to the vesting of all rights and options to purchase or receive shares of New Company Common Stock and the vesting of any Restricted Stock Units, the Restricted Stock Units (excepting any Restricted Stock Units that shall have been forfeited pursuant to the immediately preceding sentence) shall become vested as of such date if Executive has remained employed with the Company as of such date, provided that such vesting shall occur only to the extent that FPSH achieves the IRR Hurdle, and any reduced vesting to achieve the IRR Hurdle shall occur on a pro rata basis with other employees of the Company that have Restricted Stock Units. The Restricted Stock Units shall not constitute Rollover Equity for purposes of the put right provided for in Section 3.5 herein. (b) The Restricted Stock Units are subject to the following terms and conditions: (i) Executive will not be entitled to vote the underlying shares related to the Restricted Stock Units unless and until such shares are actually delivered to Executive. (ii) The Restricted Stock Units shall be equitably adjusted as determined by the Compensation Committee in the event of an extraordinary dividend or other corporate transaction if necessary to preserve the value of the Restricted Stock Units. Any property or dividends received upon such an 10 adjustment will be subject to the same restrictions as the Restricted Stock Units to which they relate. (iii) The Restricted Stock Units and the shares of New Company Common Stock received with respect to Restricted Stock Units will be subject to the terms of the Stockholders' Agreement. (iv) Vested Restricted Stock Units shall be converted into shares of New Company Common Stock upon the first to occur of (A) a Change of Control of the Company (as defined in the Stockholders' Agreement), (B) Executive's termination of employment, (C) the termination of the Stockholders' Agreement and (D) vesting of Restricted Stock Units, pursuant to Executive's initial election made as of the date of grant (or upon other elections to be provided by the Committee) to receive shares upon vesting. (v) Executive shall be eligible to make a tag-along election (as set forth in Section 2.6.2 of the Stockholders' Agreement) with respect to the vested Restricted Stock Units on the same terms as other Stockholders (as defined in the Stockholders' Agreement) in accordance with the terms of the Stockholders' Agreement; provided, that such tag-along election shall only be treated as being made if holders of a majority of the outstanding Restricted Stock Units elect to make the tag-along election and then all Restricted Stock Units will be treated as subject to the election. If holders of a majority of the outstanding Restricted Stock Units do not elect to make a tag-along election, then none of the Restricted Stock Units will be 11 permitted to make the tag-along election. (vi) The vested Restricted Stock Units and any Restricted Stock Units that would vest as a result of a completed Required Third Party Sale or a completed FPSH Drag Sale (as applicable) (as such terms are defined in the Stockholders' Agreement) shall be subject to the TPS Drag-Along Right (as defined in the Stockholders' Agreement) and the FPSH Drag Sale, respectively. (vii) Transfers of vested Restricted Stock Units may be made to Executive's family members on the same terms as other Company equity as set forth in the Stockholders Agreement, but shall otherwise not be transferable other than as provided therein. (c) Executive represents and warrants that he (i) has such knowledge and experience in business and financial matters with respect to investments in securities to enable him to understand and evaluate the risks of the investment contemplated hereby and form an investment decision with respect thereto and is able to bear the risk of such investment for an indefinite period and to afford a complete loss thereof, (ii) is an "accredited investor" as defined in Rule 501 of Regulation D under the Securities Act of 1933, as amended, (iii) has had the opportunity to (A) ask such questions as Executive has deemed necessary of, and to receive answers from, representatives of the Company concerning the terms of the transactions contemplated hereby (including the provisions of Section 3.4 of this Agreement) and the merits and risks of investing in securities of the Company and (B) to obtain such additional information which Company possesses or can acquire without unreasonable effort or expense and (iv) is 12 acquiring equity interests in the Company for his own account and not with a view to or for sale in connection with any distribution of securities. 3.5 Rollover Equity. (a) Executive shall roll over all of his shares of Company Common Stock (as defined in the Merger Agreement) and all of his Options (as defined in the Merger Agreement) into shares of New Company Common Stock (as defined in the Merger Agreement) and Retained Options (such rolled New Company Common Stock and Retained Options, the "Rollover Equity"), and such Retained Options shall be 100% vested and exercisable as of the Closing Date and shall have substantially the same terms and conditions as the Options. Beginning in 2004, Executive shall be permitted to "put" the shares of New Company Common Stock and Retained Options that comprise the Rollover Equity to the Company each year if (i) 100% of each Performance Objective for the immediately preceding fiscal year has been satisfied and (ii) the agreements governing the indebtedness of the Company permit the repurchase of such Rollover Equity. The put right contemplated hereby shall be applicable to the Rollover Equity only. (b) Executive shall give notice of his intention to exercise the put right described herein during the three (3) months prior to September 30 of a particular year. If the conditions to such exercise and payment have been met, the Company shall make payment in respect of the Rollover Equity as soon as practicable following the end of the applicable calendar year, but in no event later than January 31 of the following year. The per-share put price shall be based upon the fair market value of the New Company Common Stock as reasonably determined by the Board in light of all circumstances. In the case of Retained Options, the per-share put price shall be net of any applicable exercise price and withholding. The Board may, in its discretion, assign the rights and obligations of the Company under this Section 3.5 to any other person, but no such 13 assignment shall relieve the Company of its obligations hereunder to the extent not satisfied by such assignee. (c) Subject to the following sentence, in any given year, Executive may exercise the put right provided for herein with respect to no less than 25% of the aggregate number of shares of New Company Common Stock and/or Retained Options owned by Executive on the Effective Date; provided, however, that if Executive owns fewer than 25% of the aggregate number of shares of New Company Common Stock and Retained Options owned by Executive on the Effective Date, Executive may exercise the put right provided for herein with respect to all of such shares of New Company Common Stock and Options. In the event that the condition set forth in clause (i) of the second sentence of Section 3.5(a) has been met and the agreements governing the indebtedness of the Company permit the repurchase of some but not all of the aggregate amount of rollover equity (including the Rollover Equity) with respect to which executives (including Executive) have exercised put rights, the amount of rollover equity that the Company shall purchase shall be allocated among the executives (including Executive) exercising such put right on an unweighted pro rata basis. (d) If Executive's employment terminates for any reason, then the put right provided herein shall terminate; provided that the Company shall be obligated to satisfy any unfulfilled obligations with respect to any put right exercised prior to such termination; and provided further that Executive's Rollover Equity shall thereafter be subject to the post-termination put and call provisions contained in Article IV of the Stockholders' Agreement. The put right provided for herein shall terminate upon the occurrence of an IPO (as defined in the Stockholders' Agreement). 14 (e) Notwithstanding anything to the contrary contained in this Agreement, the put right provided for herein shall be subject to all other provisions in the Stockholders' Agreement. Without limiting the foregoing, Executive acknowledges that the Rollover Equity shall be subject to the TPS Drag-Along Right and the FPSH Drag Sale, each of which shall supersede the put right provided for herein. (f) Notwithstanding anything to the contrary contained in this Agreement, effective as of the date hereof, Executive waives any right to be cashed out of all of his shares of Company Common Stock and Options under the Merger Agreement or to exercise any of his Options prior to the Effective Date. 3.6 Stock Grants. If Executive remains an employee of the Company on the Effective Date the Company shall award to Executive 1,091,577 unrestricted shares of New Company Common Stock, less the number of shares of New Company Common Stock required to be withheld to satisfy all applicable Federal, state, local and foreign withholding taxes with respect to such shares. 4. Employee Benefits. 4.1 Employee Benefit Programs, Plans and Practices. During the Term, Executive shall be entitled to participate in welfare, health and life insurance and pension benefit programs as may be in effect from time to time for similarly situated executives of the Company generally. Executive shall not be entitled to participate in any severance plans provided to Company employees and hereby waives any rights to receive severance benefits other than as provided in this Agreement. 4.2 Vacation; Fringe Benefits; Perquisites. Executive shall be entitled to no less than twenty (20) business days paid vacation in each calendar year. Vacation days will accrue up to a 15 maximum of forty (40) days, at which time, further accruals will cease until the accrued vacation day balance falls below 40 days. Executive shall receive an after-tax annual vacation allowance of $7,700, which shall be payable in two equal installments, the first of which shall be paid during January of each year and the second of which during July. In addition, Executive shall be entitled to the perquisites and other fringe benefits generally made available to senior executives of the Company, commensurate with his position with the Company. In addition, Executive shall be entitled to receive benefits reasonably comparable to those provided to Executive as of the date of this Agreement with respect to the following matters: (a) family membership to a sport or social club of Executive's choice; (b) use of two (2) Company automobiles appropriate for Executive's position, including the costs of necessary maintenance (although Executive may incur taxable income as a result of his personal use of such vehicles); (c) private school tuition for Executive's dependant children in the school(s) of his choice (up to, but not including university education); (d) in the event Executive is asked by the Company to relocate, relocation reimbursement in accordance with the Company's relocation policy; (e) an annual expatriate allowance of 10% of Base Salary payable in two equal installments (in the same manner described above with respect to the vacation allowance, provided, that such allowance shall not be net of taxes); (f) all fees and expenses incurred in connection with satisfying applicable government working requirements, including visas; (g) a housing allowance of $36,000 per year net of taxes; and (h) bi-annual medical checkups for Executive and his spouse. 5. Expenses. During the Term, Executive shall be entitled to receive prompt reimbursement in accordance with the Company's policies for out-of-pocket business expenses reasonably incurred in carrying out his duties and responsibilities under this Agreement, 16 including, without limitation, reasonable expenses for travel and similar items related to such duties and responsibilities. 6. Termination of Employment. 6.1 Termination Not for Cause or for Good Reason. (a) If, following the second anniversary of the Effective Date and prior to the Termination Date, during the Term, Executive's employment is terminated (A) by the Company other than for Cause (as defined in Section 6.2(b) hereof), (B) as a result of Executive's death or as a result of Executive's Permanent Disability (as defined in Section 6.1(d) hereof), or (C) by Executive for Good Reason (as defined in Section 6.1(c) hereof), Executive shall receive: (i) such payments, if any, to which Executive is entitled under any applicable plans or programs, including but not limited to those referred to in Sections 3.3 and 4.1 hereof, in accordance with the terms of such plans or programs; (ii) a cash lump sum payment in respect of accrued but unused vacation days and Base Salary and, if any such termination of employment occurs after the end of a Company fiscal year and prior to the payment of Bonuses for such fiscal year, any Bonus payments earned by Executive for such fiscal year but not yet paid; (iii) continued coverage under any employee medical plans or programs provided to Executive and his family members pursuant to Section 4.1 hereof until the earlier of the third anniversary of Executive's termination of employment or the date on which Executive becomes entitled to receive medical coverage under another employer's medical benefit program, provided, that Executive shall continue to be required to pay any applicable premiums of a participating employee in such plans and programs; (iv) a cash lump sum payment equal to three (3) times the sum of the (I) Base Salary (as of immediately prior to the Executive's date of termination of employment, but excluding any decrease in Base Salary causing Executive to have Good Reason) plus (II) the average annual bonus paid or payable to Executive with respect to the two (2) fiscal years immediately prior to the Executive's date of termination of employment (provided, however, that if the Executive's date of termination of employment occurs at any time during the 2002-2003 fiscal year, then the "average annual bonus" shall be deemed to be the, bonus paid or payable with respect to the 2001-2002 fiscal year and if Executives date of termination occurs prior to a date upon which a determination of an annual bonus amount has been made by the Company for a prior fiscal year for Executive 17 then the "average annual bonus" shall be deemed to be the Target Bonus), less any applicable insurance benefits, provided, that any reduction for disability benefits shall be with respect to benefits received by Executive during the three-year period following Executive's date of termination of employment. (b) All payments payable by the Company to Executive pursuant to this Section 6.1 shall be paid within 30 days after the termination of Executive's employment by check payable to the order of Executive or by wire transfer to an account specified by Executive and shall be subject to Executive entering into and not revoking a release substantially in the form set forth as Exhibit A hereto. (c) For purposes of this Agreement, "Good Reason" shall mean that any of the events set forth in clauses (i) through (v) below shall occur without the written consent of Executive, provided, that (x) Executive shall provide the Company with written notice thereof within one hundred and twenty (120) days after Executive has knowledge of the occurrence of any of the events or circumstances set forth in clauses (i) through (v) below, which notice shall specifically identify the event or circumstance that Executive believes constitutes Good Reason, (y) the Company fails to correct the circumstance or event so identified within twenty (20) days after the date of delivery of the notice referred to in clause (x) above, and (z) Executive resigns his employment for Good Reason within ninety (90) days after the date of delivery of the notice referred to in (x) above: (i) a reduction in Executive's Base Salary; (ii) Executive's duties, titles, responsibilities or authority (including offices and reporting relationships) are materially diminished in comparison to the duties, titles and responsibilities or authority set forth in this Agreement, or Executive is assigned duties materially and adversely inconsistent with his position; (iii) a material reduction in fringe benefits, perquisites or other allowances provided to Executive pursuant to Section 4.2, other than (except for perquisites specifically set forth in this Agreement or the Schedules hereto) as a result of a 18 change applicable to employees of the Company generally, or any material failure to provide such benefits to Executive; (iv) the failure of the Company to obtain a satisfactory agreement from any successor to assume and agree to perform the Agreement, as contemplated in Section 10 herein; or (v) any requirement that Executive relocate to an office more than 25 miles from his office as of the Effective Date, other than as provided in Section 1.6. (d) For purposes of this Agreement, "Permanent Disability" shall mean Executive's absence from full time performance of duties due to physical or mental illness for six (6) consecutive months, that is reasonably determined to be total and permanent by a physician selected by the Company or its insurers and reasonably acceptable to Executive or his legal representative. (e) For purposes of this Agreement, Change of Control shall have the meaning ascribed to such term in the Stockholders' Agreement. 6.2 Discharge for Cause; Voluntary Termination by Executive. (a) The Company shall have the right to terminate the employment of Executive for Cause by action of the Committee. In the event that Executive's employment is terminated, prior to the Termination Date, (i) by the Company for Cause, as hereinafter defined, or (ii) by Executive other than (A) for Good Reason or (B) as a result of the Executive's death or Permanent Disability or (iii) upon a failure to renew this Agreement pursuant to Section or (iv) for any reason on or prior to the second anniversary of the Effective Date, Executive shall be entitled to receive a lump sum cash payment in respect of any earned but unpaid Base Salary and in respect of any accrued vacation days. In addition, Executive shall be entitled to such payments and benefits, if any, under any applicable plans or programs, including, but not limited to, those referred to in Sections 3.3 and 4.1 hereof, to which he is entitled pursuant to the terms of such plans or programs. 19 (b) As used herein, the term "Cause" shall mean (i) Executive's conviction of, or plea of guilty or nolo contendere to, a felony (or a comparable level of crime in another jurisdiction); provided, however, that after indictment for a felony, the Company may suspend Executive from the rendition of services, but without limiting or modifying in any other way, the Company's obligations to Executive under this Agreement, (ii) continued and repeated refusal by Executive to perform his duties hereunder after fifteen (15) days written notice of any such refusal to perform such duties or direction was given to Executive, (iii) commission by Executive of fraud against, or misappropriation of significant property belonging to, the Company, unless such action is neither willful nor injurious to the Company or any of its Subsidiaries, or other willful misconduct materially injurious to the Company or any of its Subsidiaries or (iv) during any period in which FPSH and its affiliates are the beneficial owners of 20% or more of the Company's stock in the aggregate, a material breach by Executive of the provisions of the Corporate Policies and Procedures (as defined in the Stockholders' Agreement) or Section 12 of this Agreement, unless such breach is neither willful nor materially injurious to the Company or any of its Subsidiaries. Termination of Executive pursuant to this Section 6.2(b) shall be made by delivery to Executive of a copy of a resolution duly adopted by the affirmative vote of not less than a majority of the then members of the Committee at a meeting of the Committee called and held for the purpose (after 30 days prior written notice to Executive and reasonable opportunity for Executive and his counsel to be heard before the Committee prior to such vote), finding that in the reasonable judgment of the Committee, Executive was guilty of conduct set forth in any of clauses (i) through (iv) above and specifying the particulars thereof. 6.3 Resignation from all Positions. Notwithstanding any other provision of this Agreement, upon the termination of the Executive's employment for any reason, unless 20 otherwise requested by the Board, the Executive shall immediately resign from all positions that he holds or has ever held with the Company and any other member of the Affiliated Group (and with any other entities with respect to which the Company has requested the Executive to perform services), including, without limitation, the Board and all boards of directors of any member of the Affiliated Group. The Executive hereby agrees to execute any and all documentation to effectuate such resignations upon request by the Company, but he shall be treated for all purposes as having so resigned upon termination of his employment, regardless of when or whether he executes any such documentation. 6.4 Breach of Section 12. Notwithstanding anything to the contrary in this Agreement, in the event of a breach by Executive of the provisions of Section 12 of this Agreement following Executive's termination of employment, or a material breach by Executive of the provisions of Section 12 of this Agreement during Executive's employment which the Committee determines would have been Cause to terminate Executive's employment and that is discovered by the Company within six (6) months following Executive's termination of employment, Executive shall be entitled to no further payments under this Section 6, and shall repay to the Company any payments previously made under this Section 6. Any amounts repaid by Executive under this Section 6.4 will reduce (on a dollar for dollar basis) any damages payable by Executive as a result of a breach of the terms of Section 12. 7. Mitigation of Damages. Executive shall not be required to mitigate damages or the amount of any payment provided for under this Agreement by seeking other employment or otherwise after the termination of his employment hereunder, and any amounts earned by 21 Executive, whether from self-employment, as a common-law employee or otherwise, shall not reduce the amount of any payments otherwise payable to him pursuant to this Agreement. 8. Notices. All notices or communications hereunder shall be in writing, addressed as follows: To the Company: Seminis, Inc. 2700 Camino del Sol Oxnard, California 93030-7967 Attn: General Counsel with a copy to: Fox Paine & Company, LLC 950 Tower Lane, Suite 1950 Foster City, California 94404 Attn: W. Dexter Paine, III To Seminis Merger Corp.: Seminis Merger Corp. c/o Fox paine & Company, LLC 950 Tower Lane, Suite 1950 Foster City, California 94404 Attn: W. Dexter Paine, III To Executive: Bruno Ferrari Garcia de Alba At the address most recently on file with the Company with a copy to: Milbank, Tweed, Hadley & McCloy, LLP One Chase Manhattan Plaza New York, New York 10005 Attn: Ed Rayner Any such notice or communication shall be delivered by hand or by courier or sent certified or registered mail, return receipt requested, postage prepaid, addressed as above (or to such other 22 address as such party may designate in a notice duly delivered as described above), and the third business day after the actual date of mailing shall constitute the time at which notice was given. 9. Separability; Legal Fees. If any provision of this Agreement shall be declared to be invalid or unenforceable, in whole or in part, such invalidity or unenforceability shall not affect the remaining provisions hereof which shall remain in full force and effect. Each party shall bear the costs of any legal fees and other fees and expenses which may be incurred in respect of enforcing its respective rights under this Agreement. 10. Successors and Assigns. Except as otherwise provided herein, this Agreement shall be binding upon, inure to the benefit of and be enforceable by Seminis Merger Corp. and Executive and their respective heirs, legal representatives, successors and assigns. Executive may not assign this Agreement, other than, with respect to payments in the event of Executive's death, to Executive's estate or beneficiaries. Seminis Merger Corp. may assign this Agreement to any of its affiliates in the event of any restructuring or reorganization of Seminis Merger Corp. or to a successor to all or substantially all of Seminis Merger Corp.'s assets, and the benefits of this Agreement shall inure to such entity and the obligations of this Agreement shall be binding on such entity; provided, that, if Seminis Merger Corp. assigns this Agreement to an affiliate which is not a successor to all or substantially all of its assets, Seminis Merger Corp. shall continue to guarantee the payments and benefits hereunder. If Seminis Merger Corp. shall be merged into or consolidated with another entity, the provisions of this Agreement shall be binding upon and inure to the benefit of the entity surviving such merger or resulting from such consolidation and Seminis Merger Corp. shall require any such successor, by agreement in form and substance satisfactory to Executive, to expressly assume and agree to perform this Agreement in the same manner and to the same extent that Seminis Merger Corp. would be 23 required to perform it if no such succession had taken place. For avoidance of doubt, upon the Effective Date the Company will be the successor to Seminis Merger Corp. and Executive hereby acknowledges that the provisions of Section 3.3 of the Merger Agreement shall satisfy the obligations of Seminis Merger Corp. under the immediately preceding sentence. The provisions of this Section 10 shall continue to apply to each subsequent employer of Executive in the event of any subsequent merger or consolidation of such subsequent employer. As used in this Agreement, the term "affiliates" shall include any entity controlled by, controlling, or under common control with Seminis Merger Corp. or the Company, as applicable. 11. Amendment. This Agreement may only be amended by written agreement of the parties hereto. 12. Nondisclosure of Confidential Information; Work Product; Non-Disparagement; Non-Competition; Non-Solicitation. 12.1 Confidential Information of the Company and Its Affiliates. All Confidential Information relating to or obtained from the Company or its affiliates shall be held in the strictest confidence by Executive. Executive shall not, directly or indirectly, disclose, use, publish, release, transfer or otherwise make available Confidential Information of, or obtained from the Company or any of its affiliates in any form to, or for the use or benefit of, any person or entity without the Company's prior written consent, except (i) while employed by the Company, in the business of and/or for the benefit of the Company or (ii) when required to do so by a court of competent jurisdiction, by any governmental agency having supervisory authority over the business of the Company, or by any administrative body or legislative body (including a committee thereof) with jurisdiction to order Executive to divulge, disclose or make accessible such information. For purposes of this Section 12.1, "Confidential Information" shall mean all 24 information and documentation of the Company or its affiliates, whether disclosed to or accessed by Executive in connection with his employment with the Company or the Affiliated Group that is not otherwise available to the public (other than by Executive's breach of the terms hereof), including all (i) data and information of the Company or its affiliates or the customers, suppliers, contractors or other third parties doing business with any of the Company or its affiliates, including business plans, memoranda, reports, drawings, research results, research plans, inventions (patentable or otherwise), trade secrets and research products and (ii) Work Product (as defined below) created by Executive. 12.2 Executive hereby acknowledge that any ideas, concepts, designs, discoveries, techniques, research results, inventions, methodologies, know-how, improvements, discoveries, processes or products, whether or not patentable, that Executive conceives of or reduces to practice during the term of his/her employment with the Company or the Affiliated Group and which are in connection with Executive's employment or related to the nature of Executive's employment (collectively, the "Work Product"), shall be, or be deemed to be, "work for hire" and owned by the Company. Furthermore, the Company shall have all right, title and interest, including worldwide ownership of copyright and patent, in and to the Work Product and all copies made from them. To the extent (a) any of the Work Product is not deemed a "work for hire" by operation of law and (b) permissible under applicable law, Executive hereby irrevocably assigns, transfers and conveys to the Company all of his/her right, title and interest in and to such Work Product, including all rights of patent, copyright, trade secret or other intellectual property or proprietary rights in such materials. Executive acknowledges that the Company and the successors and permitted assigns of the Company shall have the right to obtain and hold in their own name any intellectual property rights in and to such Work Product. 25 12.3 During the Term and for a period of 24 months from the date of the termination of Executive's employment for any reason (the "Restricted Period"), Executive shall not compete with the Company or the Affiliated Group, by directly or indirectly engaging in any business or activity, whether as an employee, consultant, partner, principal, agent, representative or stockholder or in any other individual, corporate or representative capacity, or render any services or provide any advice or substantial assistance to any business, person or entity, if such business, person or entity, directly or indirectly, competes (or, to Executive's knowledge after due inquiry, intends to compete or is preparing to compete during the Restricted Period) with the Business of the Company or the Affiliated Group in any material manner. It is the intention of the parties that the potential restrictions on Executive's activities imposed by this paragraph be and are reasonable in duration, scope and geography and in all other respects. For purposes of this Section 12, "Business" shall mean the business of marketing, developing, producing and researching new fruit or vegetable seeds and fruit or vegetable plants, or any other material businesses entered into by the Company or the Affiliated Group during the Term, or with respect to which the Company or the Affiliated Group has taken material steps to enter into as of the termination of Executive's employment. During the Restricted Period, Executive shall be available to consult with the Company on Company-related matters within his knowledge in person or by phone, as determined by Executive, for a period of no more than five (5) days per calendar quarter, subject to not interfering with Executive's work schedule; provided, however, that for each full or partial day during which Executive provides such services (other than with respect to de minimis services of less than two (2) hours on a given day), the Company shall pay to Executive a sum of $500 (such limitations and payments shall not apply to any lawsuits in 26 which Executive is a named party). In addition, the Company shall promptly reimburse Executive for his reasonable expenses, if any, in providing such services. 12.4 Except as is required or appropriate in the furtherance of the business of the Company or the Affiliated Group, Executive shall not, during the Restricted Period, either alone or in concert with others, directly or indirectly, (1) solicit, entice, induce or encourage (a) any customer of the Company or the Affiliated Group (including, during the Term, the Company's affiliates) to discontinue using the services or purchasing the products of the Company or the Affiliated Group (including, during the Term, the Company's affiliates), (b) any customer to refer prospective customers or business to any competitor of the Company or the Affiliated Group or (c) any person or entity that is part of any existing or proposed arrangement or has any other affiliation with the Company or the Affiliated Group (including, during the Term, the Company's affiliates) to discontinue such relationship or affiliation with the Company or its affiliates or (2) recruit or hire, or assist others in recruiting or hiring, or otherwise solicit for employment, any consultants or employees of the Company or its affiliates, or former consultants or employees of the Company or its affiliates within six (6) months following their termination of employment. 12.5 Upon request by the Company at any time during Executive's employment or upon termination of Executive's employment with the Company for any reason, Executive shall promptly (1) return to the Company or its affiliates all copies of all materials, including documentary or other recorded materials, which are in Executive's possession or control and which contain or embody any Confidential Information of the Company or its affiliates and (2) deliver to the Company or its affiliates all copies of any Work Product in Executive's 27 possession or control. Executive shall not copy, reproduce or otherwise re-create in any fashion any of the items referenced above for personal retention by Executive. 12.6 The Executive acknowledges and agrees that: (i) the purposes of the foregoing covenants are to protect the goodwill and Work Product and Confidential Information of the Company and its affiliates in connection with the transactions contemplated by the Merger Agreement, and to prevent the Executive from interfering with the business of the Company and the Affiliated Group as a result of or following termination of the Executive's employment with the Company or the Affiliated Group, as applicable, (ii) because of the nature of the business in which the Company and the Affiliated Group are engaged and because of the nature of the Work Product and Confidential Information to which the Executive has access, it would be impractical and excessively difficult to determine the actual damages to the Company and the Affiliated Group in the event the Executive breached any of the covenants of this Section 12; and (iii) remedies at law (such as monetary damages) for any breach of the Executive's obligations under this Section 12 would be inadequate. The Executive therefore agrees and consents that if the Executive commits any breach of a covenant under this Section 12 or threatens to commit any such breach, the Company, and its affiliates shall have the right (in addition to, and not in lieu of, any other right or remedy that may be available to each of them) to temporary and permanent injunctive relief from a court of competent jurisdiction, without posting and bond or other security and without the necessity of proof of actual damage. With respect to any provision of this Section 12 finally determined by a court of competent jurisdiction to be unenforceable, the Executive and the Company and its affiliates hereby agree that such court shall have jurisdiction to reform this Agreement or any provision hereof so that it is enforceable to the maximum extent permitted by law, and the parties agree to abide by such court's 28 determination. If any of the covenants of this Section 12 are determined to be wholly or partially unenforceable in any jurisdiction, such determination shall not be a bar to or in any way diminish the rights of the Company or its affiliates, as applicable, to enforce any such covenant in any other jurisdiction. 12.7 The provisions of this Section 12 shall remain in full force and effect until the expiration of the period specified herein notwithstanding he earlier termination of the Executive's employment hereunder or the Employment Period. 13. Beneficiaries; References. Executive shall be entitled to select (and change, to the extent permitted under any applicable law) a beneficiary or beneficiaries to receive any compensation or benefit payable hereunder following Executive's death, and may change such election, in either case by giving the Company written notice thereof. In the event of Executive's death or a judicial determination of his incompetence, reference in this Agreement to Executive shall be deemed, where appropriate, to refer to his beneficiary, estate or other legal representative. Any reference to the masculine gender in this Agreement shall include, where appropriate, the feminine. 14. Survivorship. The respective rights and obligations of the parties hereunder shall survive any termination of this Agreement to the extent necessary to the intended preservation of such rights and obligations. 15. Governing Law; Consent to Jurisdiction. 15.1 Governing Law. This Agreement shall be construed, interpreted and governed in accordance with the laws of the State of California, without reference to rules relating to conflicts of law. 29 15.2 Consent to Jurisdiction. The parties hereto hereby agree and consent to be subject to the exclusive jurisdiction of the courts of the State of California sitting in the County of Los Angeles and the United States District Court for the Central District of the State of California in any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the Merger. Each party hereto hereby irrevocably waives, to the fullest extent permitted by law, (i) any objection that it may now or hereafter have to laying venue of any suit, action or proceeding brought in such courts, and (ii) any claim that any suit, action or proceeding brought in such courts has been brought in an inconvenient forum. 16. Effect on Prior Agreements. This Agreement contains the entire understanding between the parties hereto and, as of the Effective Date, Executive waives all payments and benefits under any prior or other employment agreement or understanding between the Company or any affiliate of the Company and Executive, including, but not limited to, the employment agreement between Seminis Vegetable Seeds, Inc. and Executive dated as of June 1, 2001 (the "Prior Agreement"). Notwithstanding the forgoing, effective as of the date hereof, Executive waives his right to, and agrees not to accept, all payments under the Prior Agreement upon voluntary termination of Executive's employment with the Company or termination of Executive's employment with the Company by the Company for Cause, and will repay to Seminis Merger Corp. on the Effective Date any such payments made, provided, that such provisions of the Prior Agreement shall again become operative in the event that the Merger Agreement is terminated prior to consummation of the Merger. 17. Withholding. The Company may withhold from any amounts payable under this Agreement (including from shares of New Company Common Stock deliverable under Section 30 3.4(b)) such Federal, state, local or foreign taxes as shall be required to be withheld pursuant to any applicable law or regulation, or may permit Executive to elect to pay the Company any such required withholding taxes. If Executive so elects, the payment by Executive of such taxes shall be a condition to the receipt of amounts payable to Executive under this Agreement. The Company shall, to the extent permitted or required by law, have the right to deduct any such taxes from any payment otherwise due to Executive. 18. Counterparts. This Agreement may be executed in two or more counterparts, each of which will be deemed an original. 31 IN WITNESS WHEREOF, as of the date first above written, the Company has caused this Agreement to be executed on its behalf by a duly authorized officer and Executive has hereunto set Executive's hand. SEMINIS MERGER CORP. By: /s/ Bernardo Jimenez Date: May 30, 2003 ---------------------------- ---------------- Name: Bernardo Jimenez Title: President /s/ Bruno Ferrari Garcia de Alba Date: May 30, 2003 -------------------------------- ---------------- Bruno Ferrari Garcia de Alba 32 EXHIBIT A FORM OF RELEASE AGREEMENT This Release Agreement ("Release") is entered into as of this ______day of ________, (hereinafter "Execution Date"), by and between [Employee Full Name] (hereinafter "Employee"), and Seminis, Inc. and its successors and assigns (hereinafter, the "Company"). Employee and the Company are sometimes collectively referred to herein as the "Parties". 1. Employee's employment with the Company is terminated effective [Month, Day, Year] (hereinafter "Termination Date"). 2. The Company has agreed to provide Employee the severance payments, awards and benefits provided for in his/her Employment Agreement with the Company, dated as of May __, 2003, after he/she executes this Release and the Release becomes effective pursuant to its terms [FOR 40+ and does not revoke it as permitted in Section 7 below, the expiration of such revocation period being] the ("Effective Date"). 3. Employee represents that he/she has not filed, and will not file, any complaints, lawsuits, administrative complaints or charges relating to his/her employment with, or resignation from, the Company[; provided, however, that nothing contained in this Section 3 shall prohibit Employee from bringing a claim to challenge the validity of the ADEA Release in Section 7 herein]. In consideration of the severance payments, awards and benefits described in Section 2, Employee, for himself/herself and for his/her heirs, administrators, representatives, executors, successors and assigns (collectively, "Releasers") agrees to release the Company, its subsidiaries and affiliates, and their respective parents, direct or indirect subsidiaries, divisions, affiliates and related companies or entities, regardless of its or their form of business organization, any predecessors, successors, joint ventures, and parents of any such entity, and any and all of their respective past or present shareholders, partners, directors, officers, employees, consultants, independent contractors, trustees, administrators, insurers, agents, attorneys, representatives and fiduciaries, including without limitation all persons acting by, through, under or in concert with any of them, in each instance in their capacities as representatives of the Company (collectively, the "Released Parties"), from any and all claims, charges, complaints, causes of action or demands of whatever kind or nature that Employee and his/her Releasers now have or have ever had against the Released Parties, whether known or unknown, including but not limited to: wrongful or tortious termination; constructive discharge; implied or express employment contracts and/or estoppel; discrimination and/or retaliation under any federal, state or local statute or regulation, specifically including any claims Employee may have under the Fair Labor Standards Act, the Americans with Disabilities Act, Title VII of the Civil Rights Act of 1964 as amended, and the Family and Medical Leave Act; the discrimination or other employment laws of the State of [ ]1; any claims brought under any federal or state statute or regulation for non-payment of wages or other compensation, including grants of stock options or any other equity compensation); and libel, slander, or breach of contract, other than the breach of this Release. This Release specifically excludes claims, charges, complaints, causes of action or - ---------- (1) Insert state of employment. demand that post-date the Termination Date. Notwithstanding anything herein to the contrary, expressly excluded from this Release are any claims (i) for payments, awards and benefits under the Employment Agreement between the Parties dated _________, 2003, (ii) under the Stockholders' Agreement dated as of _______, 2003 by and among Seminis, Inc. and the Investors listed on the signature pages thereto, (iii) for benefits provided under Company benefit plans, incentive plans or equity plans (including, but not limited to, stock options, restricted stock units and stock grants) or (iv) for indemnification and any applicable directors and officers liability insurance coverage to which Employee was entitled with regard to service as an officer of the Company. 4. Employee agrees to keep the terms of this Release in strict confidence, but he/she may disclose the terms of this Release and provide a copy hereof to his/her immediate family and his/her financial and legal advisors. 5. Employee warrants that no promise or inducement has been offered for this Release other than as set forth herein and in the Employment Agreement and that this Release is executed without reliance upon any other promises or representations, oral or written. Any modification of this Release must be made in writing and be signed by Employee and the Company. 6. If any provision of this Release or compliance by Employee or the Company with any provision of the Release constitutes a violation of any law, or is or becomes unenforceable or void, then such provision, to the extent only that it is in violation of law, unenforceable or void, will be deemed modified to the extent necessary so that it is no longer in violation of law, unenforceable or void, and such provision will be enforced to the fullest extent permitted by law. If such modification is not possible, such provision, to the extent that it is in violation of law, unenforceable or void, will be deemed severable from the remaining provisions of this Release, which provisions will remain binding on both Employee and the Company. This Release is governed by, and construed and interpreted in accordance with the laws of the State of [ ], without regard to principles of conflicts of law. Employee consents to venue and personal jurisdiction in the State of [ ] for disputes arising under this Release. [ONLY IF THE STATE IS EMPLOYEE'S STATE OF EMPLOYMENT.] This Release represents the entire understanding with the Parties with respect to subject matter herein, no oral representations have been made or relied upon by the Parties. 7. [FOR EMPLOYEES OVER 40 ONLY -- In further recognition of the above, Employee hereby releases and discharges the Released Parties from any and all claims, actions and causes of action that he/she may have against the Released Parties, as of the date of the execution of this Release, arising under the Age Discrimination in Employment Act of 1967, as amended ("ADEA"), and the applicable rules and regulations promulgated thereunder. Employee acknowledges and understands that ADEA is a federal statute that prohibits discrimination on the basis of age in employment, benefits and benefit plans. Employee specifically agrees and acknowledges that: (A) the release in this Section 7 was granted in exchange for the receipt of consideration that exceeds the amount to which he/she would otherwise be entitled to receive upon termination of his/her employment; (B) his/her waiver of rights under this Release is knowing and voluntary as required under the Older Workers 2 Benefit Protection Act; (B) that he/she has read and understands the terms of this Release; (C) he/she has hereby been advised in writing by the Company to consult with an attorney prior to executing this Release; (D) the Company has given him/her a period of twenty-one (21) days within which to consider this Release, which period may be waived by the Employee's voluntary execution prior to the expiration of the twenty-one day period; and (E) following his/her execution of this Release he/she has seven (7) days in which to revoke his/her release as set forth in this Section 7 only and that, if he/she chooses not to so revoke, the Release in this Section 7 shall then become effective and enforceable and the payments, awards and benefits provided herein shall then be made to him/her in accordance with the terms of this Release, as well as the terms of the Employment Agreement. To revoke this Release, Employee understands that he/she must give a written revocation to the General Counsel of the Company at [ ]2, either by hand delivery or certified mail within the seven-day period. If he/she revokes the Release, it will not become effective or enforceable and he/she will not be entitled to any benefits from the Company.] 8. EMPLOYEE ACKNOWLEDGES AND AGREES THAT HE/SHE HAS CAREFULLY READ AND VOLUNTARILY SIGNED THIS RELEASE, THAT HE/SHE HAS HAD AN OPPORTUNITY TO CONSULT WITH AN ATTORNEY OF HIS/HER CHOICE, AND THAT HE/SHE SIGNS THIS RELEASE WITH THE INTENT OF RELEASING THE RELEASED PARTIES TO THE EXTENT SET FORTH HEREIN. 9. In the event that any provision of this Release should be held to be invalid or unenforceable, each and all of the other provisions of this Release shall remain in full force and effect. If any provision of this Release is found to be invalid or unenforceable, such provision shall be modified as necessary to permit this Release to be upheld and enforced to the maximum extent permitted by law. 10. Employee acknowledges that he/she is familiar with the provisions of California Civil Code Section 1542, which provides as follows: "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS/HER FAVOR AT HE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM/HER MUST HAVE MATERIALLY AFFECTED HIS/HER SETTLEMENT WITH THE DEBTOR. EMPLOYEE BEING AWARE OF SAID CODE SECTION, HEREBY EXPRESSLY WAIVES ANY RIGHT HE/SHE MAY HAVE THEREUNDER, AS WELL AS UNDER ANY OTHER STATUTES OR COMMON LAW PRINCIPLES OF SIMILAR EFFECT." Employee being aware of said code section, hereby expressly waives any right he/she may have thereunder, as well as under any other statutes or common law principles of similar effect. 11. This Release inures to the benefit of the Company and its successors and assigns. - ---------- (2) Insert address. 3 ACCEPTED AND AGREED TO: __________________________________ ___________________________________ Seminis, Inc. [Employee Full Name] Dated:____________________________ Dated:_____________________________ 4 EX-10.5 12 v94566orexv10w5.txt EXHIBIT 10.5 EXHIBIT 10.5 AMENDMENT AMENDMENT (the "Amendment"), dated August 7, 2003, to the Employment Agreement (the "Agreement"), made May 30, 2003, by and between Seminis Merger Corp., a Delaware corporation ("Seminis Merger Corp.") and Bruno Ferrari Garcia de Alba (the "Executive"). WHEREAS, the parties hereto have entered into the Agreement, pursuant to which Executive will serve as the Executive Senior Vice President - World Wide Commercial of Seminis, Inc. on the terms set forth in the Agreement; WHEREAS, the parties hereto have mutually agreed to amend the Agreement as set forth below; NOW, THEREFORE, in consideration of the foregoing and the premises, representations, warranties and agreements contained in the Agreement, the parties hereto agree as follows: FIRST: The introductory clause to Section 6.1(a) of the Agreement is hereby amended and restated in its entirety as follows: "If, prior to the Termination Date, during the Term, Executive's employment is terminated (A) by the Company other than for Cause (as defined in Section 6.2(b) hereof), (B) as a result of Executive's death or as a result of Executive's Permanent Disability (as defined in Section 6.1(d) hereof), or (C) by Executive for Good Reason (as defined in Section 6.1(c) hereof), Executive shall receive:" SECOND: This Amendment shall be construed and enforced in accordance with the laws of the state of California without regard to its laws or regulations relating to choice of law. THIRD: This Agreement may be executed in two or more counterparts, each of which shall be considered an original, but all of which together shall constitute the same instrument. IN WITNESS WHEREOF, as of the date first above written, Seminis Merger Corp. has caused this Amendment to be executed on its behalf by a duly authorized officer and Executive has hereunto set Executive's hand. SEMINIS MERGER CORP. By: /s/ Bernardo Jimenez ---------------------------------- Name: Bernardo Jimenez Title: President BRUNO FERRARI GARCIA DE ALBA /s/ Bruno Ferrari Garcia de Alba ----------------------------------- EX-10.6 13 v94566orexv10w6.txt EXHIBIT 10.6 EXHIBIT 10.6 PRIVILEGED AND CONFIDENTIAL EMPLOYMENT AGREEMENT AGREEMENT, made May 30, 2003, by and between Seminis Merger Corp., a Delaware corporation ("Seminis Merger Corp.") and Mateo Mazal Beja (the "Executive"). RECITALS WHEREAS Seminis, Inc. (the "Company") intends to enter into an Agreement and Plan of Merger dated on May 30, 2003 by and among the Company, Seminis Acquisition LLC and Seminis Merger Corp. (the "Merger Agreement") pursuant to which, at the Effective Time (as defined in the Merger Agreement), the Company will be the surviving corporation in the Merger (as defined in the Merger Agreement); and WHEREAS in order to induce Executive to serve as the Senior Vice President - Human Resources and IT of the Company following such Merger, Seminis Merger Corp. desires to provide Executive with compensation and other benefits on the terms and conditions set forth in this Agreement; and WHEREAS, Executive is willing to accept such employment and perform services for the Company on the terms and conditions hereinafter set forth: NOW, THEREFORE, it is hereby agreed by and between the parties as follows: 1. Employment. 1.1 With the exception of Section 3.5(f) of this Agreement, which shall become effective as of the date hereof, this Agreement shall become effective as of the Closing Date (as defined in the Merger Agreement) (the "Effective Date") and, except as otherwise expressly provided herein, shall be of no force or effect prior to such date, or in the event the Merger Agreement is terminated prior to the consummation of the Merger. 1.2 Subject to the terms and conditions of this Agreement, Seminis Merger Corp. agrees to employ Executive during the Term (as defined below) as Senior Vice President - Human Resources and IT of the Company. In his capacity as Senior Vice President - Human Resources and IT of the Company, Executive shall report to the Company's Chief Executive Officer (the "CEO") and shall have the customary powers, responsibilities and authorities of Senior Vice Presidents of corporations of the size, type and nature of the Company, as it exists from time to time. 1.3 Subject to the terms and conditions of this Agreement, Executive hereby accepts employment as the Senior Vice President - Human Resources and IT of the Company, commencing on the Effective Date. 1.4 Executive shall perform his duties under this Agreement with reasonable diligence and faithfulness, and shall devote his full business time (excluding any periods of vacation or sick leave) and attention to such duties. Nothing in this Agreement shall preclude Executive from engaging in charitable and community affairs, from managing any passive investment made by him in publicly traded equity securities or other property or from continuing to serve as a member of the board of directors or as a trustee of any other corporation, association or entity with respect to which Executive serves as a director or trustee as of the date of this Agreement, or, with the prior written consent of the Committee (as defined in Section 3.2 hereof), such consent not to be unreasonably withheld, serving as a member of a board of directors or as a trustee of any other corporation, association or entity, provided, that these 2 activities do not interfere with the performance of Executive's duties and responsibilities hereunder or violate the provisions of Section 12 of this Agreement. 1.5 The Executive agrees to serve, without additional compensation, as an officer and director for each of the Company's 20% or more owned subsidiaries, partnerships, joint ventures, and limited liability companies (collectively, such entities, the "Affiliated Group"), provided, that such service does not materially interfere with the Executive's performance of his duties and responsibilities as Senior Vice President - Human Resources and IT of the Company. 1.6 Executive's principal location of employment shall be at the Company's offices located in Oxnard, California, provided, that Executive may be required under reasonable business circumstances to travel outside of such location in connection with performing his duties under this Agreement. 2. Term of Employment. Executive's term of employment under this Agreement shall commence on the Effective Date and, subject to the terms hereof, shall terminate on the earlier of (i) the third anniversary of the Effective Date (the "Termination Date") or (ii) the termination of Executive's employment pursuant to this Agreement (the period from the Effective Date until the termination of Executive's employment under this Agreement shall be the "Term"). This Agreement shall be renewed automatically for succeeding terms of one (1) year following the Termination Date (in which case both the Termination Date and the Term shall be extended one year on each renewal), unless either party gives written notice to the other at least 120 days prior to the applicable Termination Date of its intention not to renew. 3. Compensation and Equity Awards. 3.1 Salary. The Company shall pay Executive an initial annual base salary of $400,000. The Base Salary shall be reviewed by the Company no less frequently than annually 3 in a manner consistent with similarly situated executives of the Company and may be increased but not decreased. For all purposes under this Agreement, the term "Base Salary" shall refer to Base Salary as in effect from time to time. Base Salary shall be payable in accordance with the ordinary payroll practices of the Company. 3.2 Annual Bonus. During the Term, Executive shall be eligible to receive an annual bonus (the "Bonus") with a target Bonus set at 65% of Base Salary (the "Target Bonus") and a maximum Bonus of 81.25% of Base Salary. Such Bonus shall be based upon the satisfaction of performance objectives and shall be determined on a weighted basis comprised of the following criteria: (i) Targets (as defined in the Stockholders' Agreement, of even date herewith, by and among Seminis Merger Corp. and the Persons listed on the signature pages thereto (the "Stockholders' Agreement")) - 40% (the "Target Component"); (ii) Executive performance goals established annually by the Compensation Committee (the "Committee") of the Board of Directors of the Company (the "Board") - 20% (the "Individual Component"); (iii) Milestones based upon Company net sales as set forth in the Approved Annual Business Plan (as defined in the Stockholders' Agreement) - 20% (the "Sales Component"); and (iv) Milestones based upon Company net working capital as set forth in the Approved Annual Business Plan - 20% (the "Net Working Capital Component") (items (i) through (iv) collectively, the "Performance Objectives," and each, separately, a "Performance Objective"). During any fiscal year in which an Approved Annual Business Plan has been adopted in accordance with the Stockholders' Agreement, the Bonus shall be equal to 4 the sum of: (A) (Target Bonus)(.4)(the Applicable Percentage for the Target Component), PLUS (B) (Target Bonus)(.2)(the Applicable Percentage for the Individual Component), PLUS (C) (Target Bonus)(.2)(the Applicable Percentage for the Sales Component), PLUS (D) (Target Bonus)(.2)(the Applicable Percentage for the Net Working Capital Component), where the Target Bonus is expressed in dollars and the Applicable Percentage with respect to any given Performance Objective is determined in accordance with the performance matrix below. During any fiscal year in which the Approved Annual Business Plan for such fiscal year is not approved and adopted by the Board in accordance with the Stockholders' Agreement at any point prior to or during such fiscal year, the Bonus shall be equal to the sum of (A) (Target Bonus) (.5) (the Applicable Percentage for the Target Component) PLUS (B) (Target Bonus) (.5) (the Applicable Percentage for the Individual Component), where the Target Bonus is expressed in dollars and the Applicable Percentage with respect to any given Performance Objective is determined in accordance with the performance matrix below: 5 PERFORMANCE MATRIX ------------------
IF PERFORMANCE IS: APPLICABLE PERCENTAGE: ------------------ ---------- LESS THAN 90% of Performance Objective 0% 90% of Performance Objective 50% 95% of Performance Objective 75% 100% of Performance Objective 100% 125% of Performance Objective OR GREATER 125%
In the event actual performance for any fiscal year falls between any threshold listed in the chart above, (e.g. 91% of Performance Objective), then the Applicable Percentage shall be adjusted accordingly using a straight line method of interpolation (e.g. if actual performance is at 91% of Performance Objective, then the Applicable Percentage shall be 55%; if actual performance is 92% of Performance Objective, then the Applicable Percentage shall be 60%, etc.). The bonus shall be applicable for fiscal years of the Company beginning after the date hereof, and Executive's annual bonus for the Company's fiscal year ending September 30, 2003, shall be based on the Company's bonus plan in effect as of the date hereof, as set forth on Schedule 6.16(b) to the Merger Agreement. 6 3.3 Compensation Plans and Programs. Executive shall be eligible to participate in any compensation plans or programs maintained by the Company and generally made available to other senior executives of the Company, on terms comparable to those applicable to such other senior executives, provided, that such participation shall not cause the duplication of any compensation or benefits provided to Executive under this Agreement. 3.4 Restricted Stock Units. (a) Executive shall be granted on the Effective Date 264,706 restricted stock units of the Company (the "Restricted Stock Units") that shall vest (if at all) as provided below with respect to fiscal years in which an Approved Annual Business Plan has been adopted in accordance with the Stockholders' Agreement, so long as Executive remains employed by the Company through the applicable vesting dates: FISCAL YEAR ENDING IN 2004: N = (26,470.6)(.4)(Applicable Percentage for the Target Component) + (26,470.6)(.2)(Applicable Percentage for the Individual Component) + (26,470.6)(.2)(Applicable Percentage for the Sales Component) + (26,470.6)(.2)(Applicable Percentage for the Net Working Capital Component) FISCAL YEAR ENDING IN 2005: N = (26,470.6)(.4)(Applicable Percentage for the Target Component) + (26,470.6)(.2)(Applicable Percentage for the Individual Component) + (26,470.6)(.2)(Applicable Percentage for the Sales Component) + (26,470.6)(.2)(Applicable Percentage for the Net Working Capital Component) FISCAL YEAR ENDING 2006: 7 N = (52,941.2)(.4)(Applicable Percentage for the Target Component) + (52,941.2)(.2)(Applicable Percentage for the Individual Component) + (52,941.2)(.2)(Applicable Percentage for the Sales Component) + (52,941.2)(.2)(Applicable Percentage for the Net Working Capital Component) FISCAL YEAR ENDING 2007: N = (79,411.8)(.4)(Applicable Percentage for the Target Component) + (79,411.8)(.2)(Applicable Percentage for the Individual Component) + (79,411.8)(.2)(Applicable Percentage for the Sales Component) + (79,411.8)(.2)(Applicable Percentage for the Net Working Capital Component) FISCAL YEAR ENDING 2008: N = (79,411.8)(.4)(Applicable Percentage for the Target Component) + (79,411.8)(.2)(Applicable Percentage for the Individual Component) + (79,411.8)(.2)(Applicable Percentage for the Sales Component) + (79,411.8)(.2)(Applicable Percentage for the Net Working Capital Component) in each case, where N = the number of Restricted Stock Units that shall be eligible to vest for any given period and the Applicable Percentage with respect to any given Performance Objective is determined in accordance with the performance matrix below. Notwithstanding the foregoing, during any fiscal year in which the Approved Annual Business Plan for such fiscal year is not approved and adopted by the Board in accordance with the Stockholders' Agreement at any point prior to or during such fiscal year, the vesting of 8 Restricted Stock Units shall be equal to the sum of (A) (N)(.5) (the Applicable Percentage for the Target Component) PLUS (B) (N)(.5) (the Applicable Percentage for the Individual Component), where N = the number of Restricted Stock Units that shall be eligible to vest for any given period (in the same number as set forth above for the applicable fiscal year) and the Applicable Percentage with respect to any given Performance Objective is determined in accordance with the performance matrix below. Performance Matrix
APPLICABLE IF PERFORMANCE IS: PERCENTAGE: ------------------ ---------- Less than 90% of 0% Performance Objective 90% of Performance 50% Objective 95% of Performance 75% Objective 100% of Performance 100% Objective or greater
In the event actual performance for any fiscal year falls between any threshold listed in the chart above, (e.g. 91% of Performance Objective), then the Applicable Percentage shall be adjusted accordingly using a straight line method of interpolation (e.g., if actual performance is at 91% of Performance Objective, then the Applicable Percentage shall be 55%; if actual performance is 9 92% of Performance Objective, then the Applicable Percentage shall be 60%, etc.). To the extent conditions to vesting in any particular year are not met in such year, and some or all of the Restricted Stock Units do not vest in such year, such Restricted Stock Units shall be permanently forfeited. Notwithstand- ing the foregoing, in the event that prior to the fifth anniversary of the Effective Date, FPSH (as defined in the Stockholders' Agreement) achieves the IRR Hurdle (as defined in the Stockholders' Agreement) after giving effect to the vesting of all rights and options to purchase or receive shares of New Company Common Stock and the vesting of any Restricted Stock Units, the Restricted Stock Units (excepting any Restricted Stock Units that shall have been forfeited pursuant to the immediately preceding sentence) shall become vested as of such date if Executive has remained employed with the Company as of such date, provided that such vesting shall occur only to the extent that FPSH achieves the IRR Hurdle, and any reduced vesting to achieve the IRR Hurdle shall occur on a pro rata basis with other employees of the Company that have Restricted Stock Units. The Restricted Stock Units shall not constitute Rollover Equity for purposes of the put right provided for in Section 3.5 herein. (b) The Restricted Stock Units are subject to the following terms and conditions: (i) Executive will not be entitled to vote the underlying shares related to the Restricted Stock Units unless and until such shares are actually delivered to Executive. (ii) The Restricted Stock Units shall be equitably adjusted as determined by the Compensation Committee in the event of an extraordinary dividend or other corporate transaction if necessary to preserve the value of the Restricted Stock Units. Any property or dividends received upon such an adjustment will be subject to the same restrictions as the Restricted Stock 10 Units to which they relate. (iii) The Restricted Stock Units and the shares of New Company Common Stock received with respect to Restricted Stock Units will be subject to the terms of the Stockholders' Agreement. (iv) Vested Restricted Stock Units shall be converted into shares of New Company Common Stock upon the first to occur of (A) a Change of Control of the Company (as defined in the Stockholders' Agreement), (B) Executive's termination of employment, (C) the termination of the Stockholders' Agreement and (D) vesting of Restricted Stock Units, pursuant to Executive's initial election made as of the date of grant (or upon other elections to be provided by the Committee) to receive shares upon vesting. (v) Executive shall be eligible to make a tag-along election (as set forth in Section 2.6.2 of the Stockholders' Agreement) with respect to the vested Restricted Stock Units on the same terms as other Stockholders (as defined in the Stockholders' Agreement) in accordance with the terms of the Stockholders' Agreement; provided, that such tag-along election shall only be treated as being made if holders of a majority of the outstanding Restricted Stock Units elect to make the tag-along election and then all Restricted Stock Units will be treated as subject to the election. If holders of a majority of the outstanding Restricted Stock Units do not elect to make a tag-along election, then none of the Restricted Stock Units will be permitted to make the tag-along election. 11 (vi) The vested Restricted Stock Units and any Restricted Stock Units that would vest as a result of a completed Required Third Party Sale or a completed FPSH Drag Sale (as applicable) (as such terms are defined in the Stockholders' Agreement) shall be subject to the TPS Drag-Along Right (as defined in the Stockholders' Agreement) and the FPSH Drag Sale, respectively. (vii) Transfers of vested Restricted Stock Units may be made to Executive's family members on the same terms as other Company equity as set forth in the Stockholders Agreement, but shall otherwise not be transferable other than as provided therein. (c) Executive represents and warrants that he (i) has such knowledge and experience in business and financial matters with respect to investments in securities to enable him to understand and evaluate the risks of the investment contemplated hereby and form an investment decision with respect thereto and is able to bear the risk of such investment for an indefinite period and to afford a complete loss thereof, (ii) is an "accredited investor" as defined in Rule 501 of Regulation D under the Securities Act of 1933, as amended, (iii) has had the opportunity to (A) ask such questions as Executive has deemed necessary of, and to receive answers from, representatives of the Company concerning the terms of the transactions contemplated hereby (including the provisions of Section 3.4 of this Agreement) and the merits and risks of investing in securities of the Company and (B) to obtain such additional information which Company possesses or can acquire without unreasonable effort or expense and (iv) is acquiring equity interests in the Company for his own account and not with a view to or for sale in connection with any distribution of securities. 12 3.5 Rollover Equity. (a) Executive shall roll over all of his shares of Company Common Stock (as defined in the Merger Agreement) and all of his Options (as defined in the Merger Agreement) into shares of New Company Common Stock (as defined in the Merger Agreement) and Retained Options (such rolled New Company Common Stock and Retained Options, the "Rollover Equity"), and such Retained Options shall be 100% vested and exercisable as of the Closing Date and shall have substantially the same terms and conditions as the Options. Beginning in 2004, Executive shall be permitted to "put" the shares of New Company Common Stock and Retained Options that comprise the Rollover Equity to the Company each year if (i) 100% of each Performance Objective for the immediately preceding fiscal year has been satisfied and (ii) the agreements governing the indebtedness of the Company permit the repurchase of such Rollover Equity. The put right contemplated hereby shall be applicable to the Rollover Equity only. (b) Executive shall give notice of his intention to exercise the put right described herein during the three (3) months prior to September 30 of a particular year. If the conditions to such exercise and payment have been met, the Company shall make payment in respect of the Rollover Equity as soon as practicable following the end of the applicable calendar year, but in no event later than January 31 of the following year. The per-share put price shall be based upon the fair market value of the New Company Common Stock as reasonably determined by the Board in light of all circumstances. In the case of Retained Options, the per-share put price shall be net of any applicable exercise price and withholding. The Board may, in its discretion, assign the rights and obligations of the Company under this Section 3.5 to any other person, but no such assignment shall relieve the Company of its obligations hereunder to the extent not satisfied by such assignee. 13 (c) Subject to the following sentence, in any given year, Executive may exercise the put right provided for herein with respect to no less than 25% of the aggregate number of shares of New Company Common Stock and/or Retained Options owned by Executive on the Effective Date; provided, however, that if Executive owns fewer than 25% of the aggregate number of shares of New Company Common Stock and Retained Options owned by Executive on the Effective Date, Executive may exercise the put right provided for herein with respect to all of such shares of New Company Common Stock and Options. In the event that the condition set forth in clause (i) of the second sentence of Section 3.5(a) has been met and the agreements governing the indebtedness of the Company permit the repurchase of some but not all of the aggregate amount of rollover equity (including the Rollover Equity) with respect to which executives (including Executive) have exercised put rights, the amount of rollover equity that the Company shall purchase shall be allocated among the executives (including Executive) exercising such put right on an unweighted pro rata basis. (d) If Executive's employment terminates for any reason, then the put right provided herein shall terminate; provided that the Company shall be obligated to satisfy any unfulfilled obligations with respect to any put right exercised prior to such termination; and provided further that Executive's Rollover Equity shall thereafter be subject to the post-termination put and call provisions contained in Article IV of the Stockholders' Agreement. The put right provided for herein shall terminate upon the occurrence of an IPO (as defined in the Stockholders' Agreement). (e) Notwithstanding anything to the contrary contained in this Agreement, the put right provided for herein shall be subject to all other provisions in the Stockholders' Agreement. Without limiting the foregoing, Executive acknowledges that the Rollover Equity shall be 14 subject to the TPS Drag-Along Right and the FPSH Drag Sale, each of which shall supersede the put right provided for herein. (f) Notwithstanding anything to the contrary contained in this Agreement, effective as of the date hereof, Executive waives any right to be cashed out of all of his shares of Company Common Stock and Options under the Merger Agreement or to exercise any of his Options prior to the Effective Date. 4. Employee Benefits. 4.1 Employee Benefit Programs, Plans and Practices. During the Term, Executive shall be entitled to participate in welfare, health and life insurance and pension benefit programs as may be in effect from time to time for similarly situated executives of the Company generally. Executive shall not be entitled to participate in any severance plans provided to Company employees and hereby waives any rights to receive severance benefits other than as provided in this Agreement. 4.2 Vacation; Fringe Benefits; Perquisites. Executive shall be entitled to no less than twenty (20) business days paid vacation in each calendar year. Vacation days will accrue up to a maximum of forty (40) days, at which time, further accruals will cease until the accrued vacation day balance falls below 40 days. Executive shall receive an after-tax annual vacation allowance of $7,700, which shall be payable in two equal installments, the first of which shall be paid during January of each year and the second of which during July. In addition, Executive shall be entitled to the perquisites and other fringe benefits generally made available to senior executives of the Company, commensurate with his position with the Company. In addition, Executive shall be entitled to receive benefits reasonably comparable to those provided to Executive as of the date of this Agreement with respect to the following matters: 15 (a) family membership to a sport or social club of Executive's choice; (b) use of two (2) Company automobiles appropriate for Executive's position, including the costs of necessary maintenance (although Executive may incur taxable income as a result of his personal use of such vehicles); (c) private school tuition for Executive's dependant children in the school(s) of his choice (up to, but not including university education); (d) in the event Executive is asked by the Company to relocate, relocation reimbursement in accordance with the Company's relocation policy; (e) an annual expatriate allowance of 10% of Base Salary payable in two equal installments (in the same manner described above with respect to the vacation allowance, provided, that such allowance shall not be net of taxes); (f) all fees and expenses incurred in connection with satisfying applicable government working requirements, including visas; (g) a housing allowance of $36,000 per year net of taxes; and (h) bi-annual medical checkups for Executive and his spouse. 5. Expenses. During the Term, Executive shall be entitled to receive prompt reimbursement in accordance with the Company's policies for out-of-pocket business expenses reasonably incurred in carrying out his duties and responsibilities under this Agreement, including, without limitation, reasonable expenses for travel and similar items related to such duties and responsibilities. 6. Termination of Employment. 6.1 Termination Not for Cause or for Good Reason. (a) If, prior to the Termination Date, during the Term, Executive's employment is terminated (A) by the Company other than for Cause (as defined in Section 6.2(b) hereof), (B) as a result of Executive's death or as a result of Executive's Permanent Disability (as defined in Section 6.1(d) hereof), or (C) by Executive for Good Reason (as defined in Section 6.1(c) hereof), Executive shall receive: 16 (i) such payments, if any, to which Executive is entitled under any applicable plans or programs, including but not limited to those referred to in Sections 3.3 and 4.1 hereof, in accordance with the terms of such plans or programs; (ii) a cash lump sum payment in respect of accrued but unused vacation days and Base Salary and, if any such termination of employment occurs after the end of a Company fiscal year and prior to the payment of Bonuses for such fiscal year, any Bonus payments earned by Executive for such fiscal year but not yet paid; (iii) continued coverage under any employee medical plans or programs provided to Executive and his family members pursuant to Section 4.1 hereof until the earlier of the third anniversary of Executive's termination of employment or the date on which Executive becomes entitled to receive medical coverage under another employer's medical benefit program, provided, that Executive shall continue to be required to pay any applicable premiums of a participating employee in such plans and programs; (iv) a cash lump sum payment equal to three (3) times the sum of the (I) Base Salary (as of immediately prior to the Executive's date of termination of employment, but excluding any decrease in Base Salary causing Executive to have Good Reason) plus (II) the average annual bonus paid or payable to Executive with respect to the two (2) fiscal years immediately prior to the Executive's date of termination of employment (provided, however, that if the Executive's date of termination of employment occurs at any time during the 2002-2003 fiscal year, then the "average annual bonus" shall be deemed to be the, bonus paid or payable with respect to the 2001-2002 fiscal year and if Executives date of termination occurs prior to a date upon which a determination of an annual bonus amount has been made by the Company for a prior fiscal year for Executive then the "average annual bonus" shall be deemed to be the Target Bonus), less any applicable insurance benefits, provided, that any reduction for disability benefits shall be with respect to benefits received by Executive during the three-year period following Executive's date of termination of employment. (b) All payments payable by the Company to Executive pursuant to this Section 6.1 shall be paid within 30 days after the termination of Executive's employment by check payable to the order of Executive or by wire transfer to an account specified by Executive and shall be subject to Executive entering into and not revoking a release substantially in the form set forth as Exhibit A hereto. (c) For purposes of this Agreement, "Good Reason" shall mean that any of the events set forth in clauses (i) through (v) below shall occur without the written consent of 17 Executive, provided, that (x) Executive shall provide the Company with written notice thereof within one hundred and twenty (120) days after Executive has knowledge of the occurrence of any of the events or circumstances set forth in clauses (i) through (v) below, which notice shall specifically identify the event or circumstance that Executive believes constitutes Good Reason, (y) the Company fails to correct the circumstance or event so identified within twenty (20) days after the date of delivery of the notice referred to in clause (x) above, and (z) Executive resigns his employment for Good Reason within ninety (90) days after the date of delivery of the notice referred to in (x) above: (i) a reduction in Executive's Base Salary; (ii) Executive's duties, titles, responsibilities or authority (including offices and reporting relationships) are materially diminished in comparison to the duties, titles and responsibilities or authority set forth in this Agreement, or Executive is assigned duties materially and adversely inconsistent with his position; (iii) a material reduction in fringe benefits, perquisites or other allowances provided to Executive pursuant to Section 4.2, other than (except for perquisites specifically set forth in this Agreement or the Schedules hereto) as a result of a change applicable to employees of the Company generally, or any material failure to provide such benefits to Executive; (iv) the failure of the Company to obtain a satisfactory agreement from any successor to assume and agree to perform the Agreement, as contemplated in Section 10 herein; or (v) any requirement that Executive relocate to an office more than 25 miles from his office as of the Effective Date. (d) For purposes of this Agreement, "Permanent Disability" shall mean Executive's absence from full time performance of duties due to physical or mental illness for six (6) consecutive months, that is reasonably determined to be total and permanent by a 18 physician selected by the Company or its insurers and reasonably acceptable to Executive or his legal representative. (e) For purposes of this Agreement, Change of Control shall have the meaning ascribed to such term in the Stockholders' Agreement. 6.2 Discharge for Cause; Voluntary Termination by Executive. (a) The Company shall have the right to terminate the employment of Executive for Cause by action of the Committee. In the event that Executive's employment is terminated, prior to the Termination Date, (i) by the Company for Cause, as hereinafter defined, or (ii) by Executive other than (A) for Good Reason or (B) as a result of the Executive's death or Permanent Disability or (iii) upon a failure to renew this Agreement pursuant to Section 2, Executive shall be entitled to receive a lump sum cash payment in respect of any earned but unpaid Base Salary and in respect of any accrued vacation days. In addition, Executive shall be entitled to such payments and benefits, if any, under any applicable plans or programs, including, but not limited to, those referred to in Sections 3.3 and 4.1 hereof, to which he is entitled pursuant to the terms of such plans or programs. (b) As used herein, the term "Cause" shall mean (i) Executive's conviction of, or plea of guilty or nolo contendere to, a felony (or a comparable level of crime in another jurisdiction); provided, however, that after indictment for a felony, the Company may suspend Executive from the rendition of services, but without limiting or modifying in any other way, the Company's obligations to Executive under this Agreement, (ii) continued and repeated refusal by Executive to perform his duties hereunder after fifteen (15) days written notice of any such refusal to perform such duties or direction was given to Executive, (iii) commission by Executive of fraud against, or misappropriation of significant property belonging to, the Company, unless 19 such action is neither willful nor injurious to the Company or any of its Subsidiaries, or other willful misconduct materially injurious to the Company or any of its Subsidiaries or (iv) during any period in which FPSH and its affiliates are the beneficial owners of 20% or more of the Company's stock in the aggregate, a material breach by Executive of the provisions of the Corporate Policies and Procedures (as defined in the Stockholders' Agreement) or Section 12 of this Agreement, unless such breach is neither willful nor materially injurious to the Company or any of its Subsidiaries. Termination of Executive pursuant to this Section 6.2(b) shall be made by delivery to Executive of a copy of a resolution duly adopted by the affirmative vote of not less than a majority of the then members of the Committee at a meeting of the Committee called and held for the purpose (after 30 days prior written notice to Executive and reasonable opportunity for Executive and his counsel to be heard before the Committee prior to such vote), finding that in the reasonable judgment of the Committee, Executive was guilty of conduct set forth in any of clauses (i) through (iv) above and specifying the particulars thereof. 6.3 Resignation from all Positions. Notwithstanding any other provision of this Agreement, upon the termination of the Executive's employment for any reason, unless otherwise requested by the Board, the Executive shall immediately resign from all positions that he holds or has ever held with the Company and any other member of the Affiliated Group (and with any other entities with respect to which the Company has requested the Executive to perform services), including, without limitation, the Board and all boards of directors of any member of the Affiliated Group. The Executive hereby agrees to execute any and all documentation to effectuate such resignations upon request by the Company, but he shall be treated for all purposes as having so resigned upon termination of his employment, regardless of when or whether he executes any such documentation. 20 6.4 Breach of Section 12. Notwithstanding anything to the contrary in this Agreement, in the event of a breach by Executive of the provisions of Section 12 of this Agreement following Executive's termination of employment, or a material breach by Executive of the provisions of Section 12 of this Agreement during Executive's employment which the Committee determines would have been Cause to terminate Executive's employment and that is discovered by the Company within six (6) months following Executive's termination of employment, Executive shall be entitled to no further payments under this Section 6, and shall repay to the Company any payments previously made under this Section 6. Any amounts repaid by Executive under this Section 6.4 will reduce (on a dollar for dollar basis) any damages payable by Executive as a result of a breach of the terms of Section 12. 7. Mitigation of Damages. Executive shall not be required to mitigate damages or the amount of any payment provided for under this Agreement by seeking other employment or otherwise after the termination of his employment hereunder, and any amounts earned by Executive, whether from self-employment, as a common-law employee or otherwise, shall not reduce the amount of any payments otherwise payable to him pursuant to this Agreement. 8. Notices. All notices or communications hereunder shall be in writing, addressed as follows: To the Company: 21 Seminis, Inc. 2700 Camino del Sol Oxnard, California 93030-7967 Attn: General Counsel with a copy to: Fox Paine & Company, LLC 950 Tower Lane, Suite 1950 Foster City, California 94404 Attn: W. Dexter Paine, III To Seminis Merger Corp.: Seminis Merger Corp. c/o Fox Paine & Company, LLC 950 Tower Lane, Suite 1950 Foster City, California 94404 Attn: W. Dexter Paine, III To Executive: Mateo Mazal Beja At the address most recently on file with the Company with a copy to: Milbank, Tweed, Hadley & McCloy, LLP One Chase Manhattan Plaza New York, NY 10005 Attn: Ed Raynor Any such notice or communication shall be delivered by hand or by courier or sent certified or registered mail, return receipt requested, postage prepaid, addressed as above (or to such other address as such party may designate in a notice duly delivered as described above), and the third business day after the actual date of mailing shall constitute the time at which notice was given. 9. Separability; Legal Fees. If any provision of this Agreement shall be declared to be invalid or unenforceable, in whole or in part, such invalidity or unenforceability shall not affect the remaining provisions hereof which shall remain in full force and effect. Each party 22 shall bear the costs of any legal fees and other fees and expenses which may be incurred in respect of enforcing its respective rights under this Agreement. 10. Successors and Assigns. Except as otherwise provided herein, this Agreement shall be binding upon, inure to the benefit of and be enforceable by Seminis Merger Corp. and Executive and their respective heirs, legal representatives, successors and assigns. Executive may not assign this Agreement, other than, with respect to payments in the event of Executive's death, to Executive's estate or beneficiaries. Seminis Merger Corp. may assign this Agreement to any of its affiliates in the event of any restructuring or reorganization of Seminis Merger Corp. or to a successor to all or substantially all of Seminis Merger Corp.'s assets, and the benefits of this Agreement shall inure to such entity and the obligations of this Agreement shall be binding on such entity; provided, that, if Seminis Merger Corp. assigns this Agreement to an affiliate which is not a successor to all or substantially all of its assets, Seminis Merger Corp. shall continue to guarantee the payments and benefits hereunder. If Seminis Merger Corp. shall be merged into or consolidated with another entity, the provisions of this Agreement shall be binding upon and inure to the benefit of the entity surviving such merger or resulting from such consolidation and Seminis Merger Corp. shall require any such successor, by agreement in form and substance satisfactory to Executive, to expressly assume and agree to perform this Agreement in the same manner and to the same extent that Seminis Merger Corp. would be required to perform it if no such succession had taken place. For avoidance of doubt, upon the Effective Date the Company will be the successor to Seminis Merger Corp. and Executive hereby acknowledges that the provisions of Section 3.3 of the Merger Agreement shall satisfy the obligations of Seminis Merger Corp. under the immediately preceding sentence. The provisions of this Section 10 shall continue to apply to each subsequent employer of Executive in 23 the event of any subsequent merger or consolidation of such subsequent employer. As used in this Agreement, the term "affiliates" shall include any entity controlled by, controlling, or under common control with Seminis Merger Corp. or the Company, as applicable. 11. Amendment. This Agreement may only be amended by written agreement of the parties hereto. 12. Nondisclosure of Confidential Information; Work Product; Non-Disparagement; Non-Competition; Non-Solicitation. 12.1 Confidential Information of the Company and Its Affiliates. All Confidential Information relating to or obtained from the Company or its affiliates shall be held in the strictest confidence by Executive. Executive shall not, directly or indirectly, disclose, use, publish, release, transfer or otherwise make available Confidential Information of, or obtained from the Company or any of its affiliates in any form to, or for the use or benefit of, any person or entity without the Company's prior written consent, except (i) while employed by the Company, in the business of and/or for the benefit of the Company or (ii) when required to do so by a court of competent jurisdiction, by any governmental agency having supervisory authority over the business of the Company, or by any administrative body or legislative body (including a committee thereof) with jurisdiction to order Executive to divulge, disclose or make accessible such information. For purposes of this Section 12.1, "Confidential Information" shall mean all information and documentation of the Company or its affiliates, whether disclosed to or accessed by Executive in connection with his employment with the Company or the Affiliated Group that is not otherwise available to the public (other than by Executive's breach of the terms hereof), including all (i) data and information of the Company or its affiliates or the customers, suppliers, contractors or other third parties doing business with any of the Company or its affiliates, 24 including business plans, memoranda, reports, drawings, research results, research plans, inventions (patentable or otherwise), trade secrets and research products and (ii) Work Product (as defined below) created by Executive. 12.2 Executive hereby acknowledge that any ideas, concepts, designs, discoveries, techniques, research results, inventions, methodologies, know-how, improvements, discoveries, processes or products, whether or not patentable, that Executive conceives of or reduces to practice during the term of his/her employment with the Company or the Affiliated Group and which are in connection with Executive's employment or related to the nature of Executive's employment (collectively, the "Work Product"), shall be, or be deemed to be, "work for hire" and owned by the Company. Furthermore, the Company shall have all right, title and interest, including worldwide ownership of copyright and patent, in and to the Work Product and all copies made from them. To the extent (a) any of the Work Product is not deemed a "work for hire" by operation of law and (b) permissible under applicable law, Executive hereby irrevocably assigns, transfers and conveys to the Company all of his/her right, title and interest in and to such Work Product, including all rights of patent, copyright, trade secret or other intellectual property or proprietary rights in such materials. Executive acknowledges that the Company and the successors and permitted assigns of the Company shall have the right to obtain and hold in their own name any intellectual property rights in and to such Work Product. 12.3 During the Term and for a period of 24 months from the date of the termination of Executive's employment for any reason (the "Restricted Period"), Executive shall not compete with the Company or the Affiliated Group, by directly or indirectly engaging in any business or activity, whether as an employee, consultant, partner, principal, agent, representative or stockholder or in any other individual, corporate or representative capacity, or render any 25 services or provide any advice or substantial assistance to any business, person or entity, if such business, person or entity, directly or indirectly, competes (or, to Executive's knowledge after due inquiry, intends to compete or is preparing to compete during the Restricted Period) with the Business of the Company or the Affiliated Group in any material manner. It is the intention of the parties that the potential restrictions on Executive's activities imposed by this paragraph be and are reasonable in duration, scope and geography and in all other respects. For purposes of this Section 12, "Business" shall mean the business of marketing, developing, producing and researching new fruit or vegetable seeds and fruit or vegetable plants, or any other material businesses entered into by the Company or the Affiliated Group during the Term, or with respect to which the Company or the Affiliated Group has taken material steps to enter into as of the termination of Executive's employment. During the Restricted Period, Executive shall be available to consult with the Company on Company-related matters within his knowledge in person or by phone, as determined by Executive, for a period of no more than five (5) days per calendar quarter, subject to not interfering with Executive's work schedule; provided, however, that for each full or partial day during which Executive provides such services (other than with respect to de minimis services of less than two (2) hours on a given day), the Company shall pay to Executive a sum of $500 (such limitations and payments shall not apply to any lawsuits in which Executive is a named party). In addition, the Company shall promptly reimburse Executive for his reasonable expenses, if any, in providing such services. 12.4 Except as is required or appropriate in the furtherance of the business of the Company or the Affiliated Group, Executive shall not, during the Restricted Period, either alone or in concert with others, directly or indirectly, (1) solicit, entice, induce or encourage (a) any customer of the Company or the Affiliated Group (including, during the Term, the Company's 26 affiliates) to discontinue using the services or purchasing the products of the Company or the Affiliated Group (including, during the Term, the Company's affiliates), (b) any customer to refer prospective customers or business to any competitor of the Company or the Affiliated Group or (c) any person or entity that is part of any existing or proposed arrangement or has any other affiliation with the Company or the Affiliated Group (including, during the Term, the Company's affiliates) to discontinue such relationship or affiliation with the Company or its affiliates or (2) recruit or hire, or assist others in recruiting or hiring, or otherwise solicit for employment, any consultants or employees of the Company or its affiliates, or former consultants or employees of the Company or its affiliates within six (6) months following their termination of employment. 12.5 Upon request by the Company at any time during Executive's employment or upon termination of Executive's employment with the Company for any reason, Executive shall promptly (1) return to the Company or its affiliates all copies of all materials, including documentary or other recorded materials, which are in Executive's possession or control and which contain or embody any Confidential Information of the Company or its affiliates and (2) deliver to the Company or its affiliates all copies of any Work Product in Executive's possession or control. Executive shall not copy, reproduce or otherwise re-create in any fashion any of the items referenced above for personal retention by Executive. 12.6 The Executive acknowledges and agrees that: (i) the purposes of the foregoing covenants are to protect the goodwill and Work Product and Confidential Information of the Company and its affiliates in connection with the transactions contemplated by the Merger Agreement, and to prevent the Executive from interfering with the business of the Company and the Affiliated Group as a result of or following termination of the Executive's employment with 27 the Company or the Affiliated Group, as applicable, (ii) because of the nature of the business in which the Company and the Affiliated Group are engaged and because of the nature of the Work Product and Confidential Information to which the Executive has access, it would be impractical and excessively difficult to determine the actual damages to the Company and the Affiliated Group in the event the Executive breached any of the covenants of this Section 12; and (iii) remedies at law (such as monetary damages) for any breach of the Executive's obligations under this Section 12 would be inadequate. The Executive therefore agrees and consents that if the Executive commits any breach of a covenant under this Section 12 or threatens to commit any such breach, the Company, and its affiliates shall have the right (in addition to, and not in lieu of, any other right or remedy that may be available to each of them) to temporary and permanent injunctive relief from a court of competent jurisdiction, without posting and bond or other security and without the necessity of proof of actual damage. With respect to any provision of this Section 12 finally determined by a court of competent jurisdiction to be unenforceable, the Executive and the Company and its affiliates hereby agree that such court shall have jurisdiction to reform this Agreement or any provision hereof so that it is enforceable to the maximum extent permitted by law, and the parties agree to abide by such court's determination. If any of the covenants of this Section 12 are determined to be wholly or partially unenforceable in any jurisdiction, such determination shall not be a bar to or in any way diminish the rights of the Company or its affiliates, as applicable, to enforce any such covenant in any other jurisdiction. 12.7 The provisions of this Section 12 shall remain in full force and effect until the expiration of the period specified herein notwithstanding he earlier termination of the Executive's employment hereunder or the Employment Period. 28 13. Beneficiaries; References. Executive shall be entitled to select (and change, to the extent permitted under any applicable law) a beneficiary or beneficiaries to receive any compensation or benefit payable hereunder following Executive's death, and may change such election, in either case by giving the Company written notice thereof. In the event of Executive's death or a judicial determination of his incompetence, reference in this Agreement to Executive shall be deemed, where appropriate, to refer to his beneficiary, estate or other legal representative. Any reference to the masculine gender in this Agreement shall include, where appropriate, the feminine. 14. Survivorship. The respective rights and obligations of the parties hereunder shall survive any termination of this Agreement to the extent necessary to the intended preservation of such rights and obligations. 15. Governing Law; Consent to Jurisdiction. 15.1 Governing Law. This Agreement shall be construed, interpreted and governed in accordance with the laws of the State of California, without reference to rules relating to conflicts of law. 15.2 Consent to Jurisdiction. The parties hereto hereby agree and consent to be subject to the exclusive jurisdiction of the courts of the State of California sitting in the County of Los Angeles and the United States District Court for the Central District of the State of California in any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the Merger. Each party hereto hereby irrevocably waives, to the fullest extent permitted by law, (i) any objection that it may now or hereafter have to laying venue of any suit, action or proceeding brought in such courts, and 29 (ii) any claim that any suit, action or proceeding brought in such courts has been brought in an inconvenient forum. 16. Effect on Prior Agreements. This Agreement contains the entire understanding between the parties hereto and, as of the Effective Date, Executive waives all payments and benefits under any prior or other employment agreement or understanding between the Company or any affiliate of the Company and Executive. 17. Withholding. The Company may withhold from any amounts payable under this Agreement (including from shares of New Company Common Stock deliverable under Section 3.4(b)) such Federal, state, local or foreign taxes as shall be required to be withheld pursuant to any applicable law or regulation, or may permit Executive to elect to pay the Company any such required withholding taxes. If Executive so elects, the payment by Executive of such taxes shall be a condition to the receipt of amounts payable to Executive under this Agreement. The Company shall, to the extent permitted or required by law, have the right to deduct any such taxes from any payment otherwise due to Executive. 18. Counterparts. This Agreement may be executed in two or more counterparts, each of which will be deemed an original. 30 IN WITNESS WHEREOF, as of the date first above written, the Company has caused this Agreement to be executed on its behalf by a duly authorized officer and Executive has hereunto set Executive's hand. SEMINIS MERGER CORP. By: /s/ Bernardo Jiminez Date: May 30, 2003 ------------------------ ----------------- Name: Bernardo Jiminez Title: President /s/ Mateo Mazal Beja Date: May 30, 2003 ------------------------ ----------------- Mateo Mazal Beja 31 EXHIBIT A FORM OF RELEASE AGREEMENT This Release Agreement ("Release") is entered into as of this ______day of ________, (hereinafter "Execution Date"), by and between [Employee Full Name] (hereinafter "Employee"), and Seminis, Inc. and its successors and assigns (hereinafter, the "Company"). Employee and the Company are sometimes collectively referred to herein as the "Parties". 1. Employee's employment with the Company is terminated effective [Month, Day, Year] (hereinafter "Termination Date"). 2. The Company has agreed to provide Employee the severance payments, awards and benefits provided for in his/her Employment Agreement with the Company, dated as of May __, 2003, after he/she executes this Release and the Release becomes effective pursuant to its terms [FOR 40+ and does not revoke it as permitted in Section 7 below, the expiration of such revocation period being] the ("Effective Date"). 3. Employee represents that he/she has not filed, and will not file, any complaints, lawsuits, administrative complaints or charges relating to his/her employment with, or resignation from, the Company[; provided, however, that nothing contained in this Section 3 shall prohibit Employee from bringing a claim to challenge the validity of the ADEA Release in Section 7 herein]. In consideration of the severance payments, awards and benefits described in Section 2, Employee, for himself/herself and for his/her heirs, administrators, representatives, executors, successors and assigns (collectively, "Releasers") agrees to release the Company, its subsidiaries and affiliates, and their respective parents, direct or indirect subsidiaries, divisions, affiliates and related companies or entities, regardless of its or their form of business organization, any predecessors, successors, joint ventures, and parents of any such entity, and any and all of their respective past or present shareholders, partners, directors, officers, employees, consultants, independent contractors, trustees, administrators, insurers, agents, attorneys, representatives and fiduciaries, including without limitation all persons acting by, through, under or in concert with any of them, in each instance in their capacities as representatives of the Company (collectively, the "Released Parties"), from any and all claims, charges, complaints, causes of action or demands of whatever kind or nature that Employee and his/her Releasers now have or have ever had against the Released Parties, whether known or unknown, including but not limited to: wrongful or tortious termination; constructive discharge; implied or express employment contracts and/or estoppel; discrimination and/or retaliation under any federal, state or local statute or regulation, specifically including any claims Employee may have under the Fair Labor Standards Act, the Americans with Disabilities Act, Title VII of the Civil Rights Act of 1964 as amended, and the Family and Medical Leave Act; the discrimination or other employment laws of the State of [ ](1); any claims brought under any federal or state statute or regulation for non-payment of wages or other compensation, including grants of stock options or any other equity compensation); and libel, slander, or breach of contract, other than the breach of this Release. This Release specifically excludes claims, charges, complaints, causes of action or - ---------- (1) Insert state of employment. demand that post-date the Termination Date. Notwithstanding anything herein to the contrary, expressly excluded from this Release are any claims (i) for payments, awards and benefits under the Employment Agreement between the Parties dated _________, 2003, (ii) under the Stockholders' Agreement dated as of _______, 2003 by and among Seminis, Inc. and the Investors listed on the signature pages thereto, (iii) for benefits provided under Company benefit plans, incentive plans or equity plans (including, but not limited to, stock options, restricted stock units and stock grants) or (iv) for indemnification and any applicable directors and officers liability insurance coverage to which Employee was entitled with regard to service as an officer of the Company. 4. Employee agrees to keep the terms of this Release in strict confidence, but he/she may disclose the terms of this Release and provide a copy hereof to his/her immediate family and his/her financial and legal advisors. 5. Employee warrants that no promise or inducement has been offered for this Release other than as set forth herein and in the Employment Agreement and that this Release is executed without reliance upon any other promises or representations, oral or written. Any modification of this Release must be made in writing and be signed by Employee and the Company. 6. If any provision of this Release or compliance by Employee or the Company with any provision of the Release constitutes a violation of any law, or is or becomes unenforceable or void, then such provision, to the extent only that it is in violation of law, unenforceable or void, will be deemed modified to the extent necessary so that it is no longer in violation of law, unenforceable or void, and such provision will be enforced to the fullest extent permitted by law. If such modification is not possible, such provision, to the extent that it is in violation of law, unenforceable or void, will be deemed severable from the remaining provisions of this Release, which provisions will remain binding on both Employee and the Company. This Release is governed by, and construed and interpreted in accordance with the laws of the State of [ ], without regard to principles of conflicts of law. Employee consents to venue and personal jurisdiction in the State of [ ] for disputes arising under this Release. [ONLY IF THE STATE IS EMPLOYEE'S STATE OF EMPLOYMENT.] This Release represents the entire understanding with the Parties with respect to subject matter herein, no oral representations have been made or relied upon by the Parties. 7. [FOR EMPLOYEES OVER 40 ONLY -- In further recognition of the above, Employee hereby releases and discharges the Released Parties from any and all claims, actions and causes of action that he/she may have against the Released Parties, as of the date of the execution of this Release, arising under the Age Discrimination in Employment Act of 1967, as amended ("ADEA"), and the applicable rules and regulations promulgated thereunder. Employee acknowledges and understands that ADEA is a federal statute that prohibits discrimination on the basis of age in employment, benefits and benefit plans. Employee specifically agrees and acknowledges that: (A) the release in this Section 7 was granted in exchange for the receipt of consideration that exceeds the amount to which he/she would otherwise be entitled to receive upon termination of his/her employment; (B) his/her waiver of rights under this Release is knowing and voluntary as required under the Older Workers 2 Benefit Protection Act; (B) that he/she has read and understands the terms of this Release; (C) he/she has hereby been advised in writing by the Company to consult with an attorney prior to executing this Release; (D) the Company has given him/her a period of twenty-one (21) days within which to consider this Release, which period may be waived by the Employee's voluntary execution prior to the expiration of the twenty-one day period; and (E) following his/her execution of this Release he/she has seven (7) days in which to revoke his/her release as set forth in this Section 7 only and that, if he/she chooses not to so revoke, the Release in this Section 7 shall then become effective and enforceable and the payments, awards and benefits provided herein shall then be made to him/her in accordance with the terms of this Release, as well as the terms of the Employment Agreement. To revoke this Release, Employee understands that he/she must give a written revocation to the General Counsel of the Company at [ ](2), either by hand delivery or certified mail within the seven-day period. If he/she revokes the Release, it will not become effective or enforceable and he/she will not be entitled to any benefits from the Company.] 8. EMPLOYEE ACKNOWLEDGES AND AGREES THAT HE/SHE HAS CAREFULLY READ AND VOLUNTARILY SIGNED THIS RELEASE, THAT HE/SHE HAS HAD AN OPPORTUNITY TO CONSULT WITH AN ATTORNEY OF HIS/HER CHOICE, AND THAT HE/SHE SIGNS THIS RELEASE WITH THE INTENT OF RELEASING THE RELEASED PARTIES TO THE EXTENT SET FORTH HEREIN. 9. In the event that any provision of this Release should be held to be invalid or unenforceable, each and all of the other provisions of this Release shall remain in full force and effect. If any provision of this Release is found to be invalid or unenforceable, such provision shall be modified as necessary to permit this Release to be upheld and enforced to the maximum extent permitted by law. 10. Employee acknowledges that he/she is familiar with the provisions of California Civil Code Section 1542, which provides as follows: "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS/HER FAVOR AT HE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM/HER MUST HAVE MATERIALLY AFFECTED HIS/HER SETTLEMENT WITH THE DEBTOR. EMPLOYEE BEING AWARE OF SAID CODE SECTION, HEREBY EXPRESSLY WAIVES ANY RIGHT HE/SHE MAY HAVE THEREUNDER, AS WELL AS UNDER ANY OTHER STATUTES OR COMMON LAW PRINCIPLES OF SIMILAR EFFECT." Employee being aware of said code section, hereby expressly waives any right he/she may have thereunder, as well as under any other statutes or common law principles of similar effect. 11. This Release inures to the benefit of the Company and its successors and assigns. - ---------- (2) Insert address. 3 ACCEPTED AND AGREED TO: __________________________________ ___________________________________ Seminis, Inc. [Employee Full Name] Dated:____________________________ Dated:_____________________________ 4 EX-10.7 14 v94566orexv10w7.txt EXHIBIT 10.7 EXHIBIT 10.7 PRIVILEGED AND CONFIDENTIAL EMPLOYMENT AGREEMENT AGREEMENT, made May 30, 2003, by and between Seminis Merger Corp., a Delaware corporation ("Seminis Merger Corp.") and Bernardo Jimenez (the "Executive"). RECITALS WHEREAS Seminis, Inc. (the "Company") intends to enter into an Agreement and Plan of Merger dated on May 30, 2003 by and among the Company, Seminis Acquisition LLC and Seminis Merger Corp. (the "Merger Agreement") pursuant to which, at the Effective Time (as defined in the Merger Agreement), the Company will be the surviving corporation in the Merger (as defined in the Merger Agreement); and WHEREAS in order to induce Executive to serve as the Executive Senior Vice President and Chief Financial Officer of the Company following such Merger, Seminis Merger Corp. desires to provide Executive with compensation and other benefits on the terms and conditions set forth in this Agreement; and WHEREAS, Executive is willing to accept such employment and perform services for the Company on the terms and conditions hereinafter set forth: NOW, THEREFORE, it is hereby agreed by and between the parties as follows: 1. Employment. 1.1 With the exception of Section 3.5(f) of this Agreement, which shall become effective as of the date hereof, this Agreement shall become effective as of the Closing Date (as defined in the Merger Agreement) (the "Effective Date") and, except as otherwise expressly provided herein, shall be of no force or effect prior to such date, or in the event the Merger Agreement is terminated prior to the consummation of the Merger. 1.2 Subject to the terms and conditions of this Agreement, Seminis Merger Corp. agrees to employ Executive during the Term (as defined below) as Executive Senior Vice President and Chief Financial Officer of the Company. In his capacity as Executive Senior Vice President and Chief Financial Officer of the Company, Executive shall report to the Company's Chief Executive Officer (the "CEO") and shall have the customary powers, responsibilities and authorities of Chief Financial Officers of corporations of the size, type and nature of the Company, as it exists from time to time. 1.3 Subject to the terms and conditions of this Agreement, Executive hereby accepts employment as the Executive Senior Vice President and Chief Financial Officer of the Company, commencing on the Effective Date. 1.4 Executive shall perform his duties under this Agreement with reasonable diligence and faithfulness, and shall devote his full business time (excluding any periods of vacation or sick leave) and attention to such duties. Nothing in this Agreement shall preclude Executive from engaging in charitable and community affairs, from managing any passive investment made by him in publicly traded equity securities or other property or from continuing to serve as a member of the board of directors or as a trustee of any other corporation, association or entity with respect to which Executive serves as a director or trustee as of the date of this Agreement, or, with the prior written consent of the Committee (as defined in Section 3.2 hereof), such consent not to be unreasonably withheld, serving as a member of a board of directors or as a trustee of any other corporation, association or entity, provided, that these 2 activities do not interfere with the performance of Executive's duties and responsibilities hereunder or violate the provisions of Section 12 of this Agreement. 1.5 The Executive agrees to serve, without additional compensation, as an officer and director for each of the Company's 20% or more owned subsidiaries, partnerships, joint ventures, and limited liability companies (collectively, such entities, the "Affiliated Group"), provided, that such service does not materially interfere with the Executive's performance of his duties and responsibilities as Executive Vice President and Chief Financial Officer of the Company. 1.6 Executive's principal location of employment shall be at the Company's offices located in Oxnard, California, provided, that Executive may be required under reasonable business circumstances to travel outside of such location in connection with performing his duties under this Agreement. 2. Term of Employment. Executive's term of employment under this Agreement shall commence on the Effective Date and, subject to the terms hereof, shall terminate on the earlier of (i) the third anniversary of the Effective Date (the "Termination Date") or (ii) the termination of Executive's employment pursuant to this Agreement (the period from the Effective Date until the termination of Executive's employment under this Agreement shall be the "Term"). This Agreement shall be renewed automatically for succeeding terms of one (1) year following the Termination Date (in which case both the Termination Date and the Term shall be extended one year on each renewal), unless either party gives written notice to the other at least 120 days prior to the applicable Termination Date of its intention not to renew. 3. Compensation and Equity Awards. 3.1 Salary. The Company shall pay Executive an initial annual base salary of $636,000. The Base Salary shall be reviewed by the Company no less frequently than annually 3 in a manner consistent with similarly situated executives of the Company and may be increased but not decreased. For all purposes under this Agreement, the term "Base Salary" shall refer to Base Salary as in effect from time to time. Base Salary shall be payable in accordance with the ordinary payroll practices of the Company. 3.2 Annual Bonus. During the Term, Executive shall be eligible to receive an annual bonus (the "Bonus") with a target Bonus set at 65% of Base Salary (the "Target Bonus") and a maximum Bonus of 81.25% of Base Salary. Such Bonus shall be based upon the satisfaction of performance objectives and shall be determined on a weighted basis comprised of the following criteria: (i) Targets (as defined in the Stockholders' Agreement, of even date herewith, by and among Seminis Merger Corp. and the Persons listed on the signature pages thereto (the "Stockholders' Agreement")) - 40% (the "Target Component"); (ii) Executive performance goals established annually by the Compensation Committee (the "Committee") of the Board of Directors of the Company (the "Board") - 20% (the "Individual Component"); (iii) Milestones based upon Company net sales as set forth in the Approved Annual Business Plan (as defined in the Stockholders' Agreement) - 20% (the "Sales Component"); and (iv) Milestones based upon Company net working capital as set forth in the Approved Annual Business Plan - 20% (the "Net Working Capital Component") (items (i) through (iv) collectively, the "Performance Objectives," and each, separately, a "Performance Objective"). During any fiscal year in which an Approved Annual Business Plan has been adopted in accordance with the Stockholders' Agreement, the Bonus shall be equal to 4 the sum of: (A) (Target Bonus)(.4)(the Applicable Percentage for the Target Component), PLUS (B) (Target Bonus)(.2)(the Applicable Percentage for the Individual Component), PLUS (C) (Target Bonus)(.2)(the Applicable Percentage for the Sales Component), PLUS (D) (Target Bonus)(.2)(the Applicable Percentage for the Net Working Capital Component), where the Target Bonus is expressed in dollars and the Applicable Percentage with respect to any given Performance Objective is determined in accordance with the performance matrix below. During any fiscal year in which the Approved Annual Business Plan for such fiscal year is not approved and adopted by the Board in accordance with the Stockholders' Agreement at any point prior to or during such fiscal year, the Bonus shall be equal to the sum of (A) (Target Bonus) (.5) (the Applicable Percentage for the Target Component) PLUS (B) (Target Bonus) (.5) (the Applicable Percentage for the Individual Component), where the Target Bonus is expressed in dollars and the Applicable Percentage with respect to any given Performance Objective is determined in accordance with the performance matrix below: 5 PERFORMANCE MATRIX
APPLICABLE IF PERFORMANCE IS: PERCENTAGE: LESS THAN 90% of Performance Objective 0% 90% of Performance Objective 50% 95% of Performance Objective 75% 100% of Performance Objective 100% 125% of Performance Objective OR GREATER 125%
In the event actual performance for any fiscal year falls between any threshold listed in the chart above, (e.g. 91% of Performance Objective), then the Applicable Percentage shall be adjusted accordingly using a straight line method of interpolation (e.g. if actual performance is at 91% of Performance Objective, then the Applicable Percentage shall be 55%; if actual performance is 92% of Performance Objective, then the Applicable Percentage shall be 60%, etc.). The bonus shall be applicable for fiscal years of the Company beginning after the date hereof, and Executive's annual bonus for the Company's fiscal year ending September 30, 2003, shall be based on the Company's bonus plan in effect as of the date hereof, as set forth on Schedule 6.16(b) to the Merger Agreement. 6 3.3 Compensation Plans and Programs. Executive shall be eligible to participate in any compensation plans or programs maintained by the Company and generally made available to other senior executives of the Company, on terms comparable to those applicable to such other senior executives, provided, that such participation shall not cause the duplication of any compensation or benefits provided to Executive under this Agreement. 3.4 Restricted Stock Units. (a) Executive shall be granted on the Effective Date 420,882 restricted stock units of the Company (the "Restricted Stock Units") that shall vest (if at all) as provided below with respect to fiscal years in which an Approved Annual Business Plan has been adopted in accordance with the Stockholders' Agreement, so long as Executive remains employed by the Company through the applicable vesting dates: FISCAL YEAR ENDING IN 2004: N = (42,088.2)(.4)(Applicable Percentage for the Target Component) + (42,088.2)(.2)(Applicable Percentage for the Individual Component) + (42,088.2)(.2)(Applicable Percentage for the Sales Component) + (42,088.2)(.2)(Applicable Percentage for the Net Working Capital Component) FISCAL YEAR ENDING IN 2005: N = (42,088.2)(.4)(Applicable Percentage for the Target Component) + (42,088.2) (.2)(Applicable Percentage for the Individual Component) + (42,088.2)(.2)(Applicable Percentage for the Sales Component) + (42,088.2)(.2)(Applicable Percentage for the Net Working Capital Component) FISCAL YEAR ENDING 2006: 7 N = (84,176.4)(.4)(Applicable Percentage for the Target Component) + (84,176.4)(.2)(Applicable Percentage for the Individual Component) + (84,176.4)(.2)(Applicable Percentage for the Sales Component) + (84,176.4)(.2)(Applicable Percentage for the Net Working Capital Component) FISCAL YEAR ENDING 2007: N = (126,264.6)(.4)(Applicable Percentage for the Target Component) + (126,264.6) (.2)(Applicable Percentage for the Individual Component) + (126,264.6)(.2)(Applicable Percentage for the Sales Component) + (126,264.6)(.2)(Applicable Percentage for the Net Working Capital Component) FISCAL YEAR ENDING 2008: N = (126,264.6)(.4)(Applicable Percentage for the Target Component) + (126,264.6 (.2)(Applicable Percentage for the Individual Component) + (126,264.6)(.2)(Applicable Percentage for the Sales Component) + (126,264.6)(.2)(Applicable Percentage for the Net Working Capital Component) in each case, where N = the number of Restricted Stock Units that shall be eligible to vest for any given period and the Applicable Percentage with respect to any given Performance Objective is determined in accordance with the performance matrix below. Notwithstanding the foregoing, during any fiscal year in which the Approved Annual Business Plan for such fiscal year is not approved and adopted by the Board in accordance with the Stockholders' Agreement at any point prior to or during such fiscal year, the vesting of 8 Restricted Stock Units shall be equal to the sum of (A) (N)(.5) (the Applicable Percentage for the Target Component) PLUS (B) (N)(.5) (the Applicable Percentage for the Individual Component), where N = the number of Restricted Stock Units that shall be eligible to vest for any given period (in the same number as set forth above for the applicable fiscal year) and the Applicable Percentage with respect to any given Performance Objective is determined in accordance with the performance matrix below. Performance Matrix
APPLICABLE IF PERFORMANCE IS: PERCENTAGE: Less than 90% of 0% Performance Objective 90% of Performance 50% 95% of Performance 75% Objective 100% of Performance 100% Objective or greater
In the event actual performance for any fiscal year falls between any threshold listed in the chart above, (e.g. 91% of Performance Objective), then the Applicable Percentage shall be adjusted accordingly using a straight line method of interpolation (e.g., if actual performance is at 91% of Performance Objective, then the Applicable Percentage shall be 55%; if actual performance is 9 92% of Performance Objective, then the Applicable Percentage shall be 60%, etc.). To the extent conditions to vesting in any particular year are not met in such year, and some or all of the Restricted Stock Units do not vest in such year, such Restricted Stock Units shall be permanently forfeited. Notwithstanding the foregoing, in the event that prior to the fifth anniversary of the Effective Date, FPSH (as defined in the Stockholders' Agreement) achieves the IRR Hurdle (as defined in the Stockholders' Agreement) after giving effect to the vesting of all rights and options to purchase or receive shares of New Company Common Stock and the vesting of any Restricted Stock Units, the Restricted Stock Units (excepting any Restricted Stock Units that shall have been forfeited pursuant to the immediately preceding sentence) shall become vested as of such date if Executive has remained employed with the Company as of such date, provided that such vesting shall occur only to the extent that FPSH achieves the IRR Hurdle, and any reduced vesting to achieve the IRR Hurdle shall occur on a pro rata basis with other employees of the Company that have Restricted Stock Units. The Restricted Stock Units shall not constitute Rollover Equity for purposes of the put right provided for in Section 3.5 herein. (b) The Restricted Stock Units are subject to the following terms and conditions: (i) Executive will not be entitled to vote the underlying shares related to the Restricted Stock Units unless and until such shares are actually delivered to Executive. (ii) The Restricted Stock Units shall be equitably adjusted as determined by the Compensation Committee in the event of an extraordinary dividend or other corporate transaction if necessary to preserve the value of the Restricted Stock Units. Any property or dividends received upon such an adjustment will be subject to the same restrictions as the Restricted Stock 10 Units to which they relate. (iii) The Restricted Stock Units and the shares of New Company Common Stock received with respect to Restricted Stock Units will be subject to the terms of the Stockholders' Agreement. (iv) Vested Restricted Stock Units shall be converted into shares of New Company Common Stock upon the first to occur of (A) a Change of Control of the Company (as defined in the Stockholders' Agreement), (B) Executive's termination of employment, (C) the termination of the Stockholders' Agreement and (D) vesting of Restricted Stock Units, pursuant to Executive's initial election made as of the date of grant (or upon other elections to be provided by the Committee) to receive shares upon vesting. (v) Executive shall be eligible to make a tag-along election (as set forth in Section 2.6.2 of the Stockholders' Agreement) with respect to the vested Restricted Stock Units on the same terms as other Stockholders (as defined in the Stockholders' Agreement) in accordance with the terms of the Stockholders' Agreement; provided, that such tag-along election shall only be treated as being made if holders of a majority of the outstanding Restricted Stock Units elect to make the tag-along election and then all Restricted Stock Units will be treated as subject to the election. If holders of a majority of the outstanding Restricted Stock Units do not elect to make a tag-along election, then none of the Restricted Stock Units will be permitted to make the tag-along election. 11 (vi) The vested Restricted Stock Units and any Restricted Stock Units that would vest as a result of a completed Required Third Party Sale or a completed FPSH Drag Sale (as applicable) (as such terms are defined in the Stockholders' Agreement) shall be subject to the TPS Drag-Along Right (as defined in the Stockholders' Agreement) and the FPSH Drag Sale, respectively. (vii) Transfers of vested Restricted Stock Units may be made to Executive's family members on the same terms as other Company equity as set forth in the Stockholders Agreement, but shall otherwise not be transferable other than as provided therein. (c) Executive represents and warrants that he (i) has such knowledge and experience in business and financial matters with respect to investments in securities to enable him to understand and evaluate the risks of the investment contemplated hereby and form an investment decision with respect thereto and is able to bear the risk of such investment for an indefinite period and to afford a complete loss thereof, (ii) is an "accredited investor" as defined in Rule 501 of Regulation D under the Securities Act of 1933, as amended, (iii) has had the opportunity to (A) ask such questions as Executive has deemed necessary of, and to receive answers from, representatives of the Company concerning the terms of the transactions contemplated hereby (including the provisions of Section 3.4 of this Agreement) and the merits and risks of investing in securities of the Company and (B) to obtain such additional information which Company possesses or can acquire without unreasonable effort or expense and (iv) is acquiring equity interests in the Company for his own account and not with a view to or for sale in connection with any distribution of securities. 12 3.5 Rollover Equity. (a) Executive shall roll over all of his shares of Company Common Stock (as defined in the Merger Agreement) and all of his Options (as defined in the Merger Agreement) into shares of New Company Common Stock (as defined in the Merger Agreement) and Retained Options (such rolled New Company Common Stock and Retained Options, the "Rollover Equity"), and such Retained Options shall be 100% vested and exercisable as of the Closing Date and shall have substantially the same terms and conditions as the Options. Beginning in 2004, Executive shall be permitted to "put" the shares of New Company Common Stock and Retained Options that comprise the Rollover Equity to the Company each year if (i) 100% of each Performance Objective for the immediately preceding fiscal year has been satisfied and (ii) the agreements governing the indebtedness of the Company permit the repurchase of such Rollover Equity. The put right contemplated hereby shall be applicable to the Rollover Equity only. (b) Executive shall give notice of his intention to exercise the put right described herein during the three (3) months prior to September 30 of a particular year. If the conditions to such exercise and payment have been met, the Company shall make payment in respect of the Rollover Equity as soon as practicable following the end of the applicable calendar year, but in no event later than January 31 of the following year. The per-share put price shall be based upon the fair market value of the New Company Common Stock as reasonably determined by the Board in light of all circumstances. In the case of Retained Options, the per-share put price shall be net of any applicable exercise price and withholding. The Board may, in its discretion, assign the rights and obligations of the Company under this Section 3.5 to any other person, but no such assignment shall relieve the Company of its obligations hereunder to the extent not satisfied by such assignee. 13 (c) Subject to the following sentence, in any given year, Executive may exercise the put right provided for herein with respect to no less than 25% of the aggregate number of shares of New Company Common Stock and/or Retained Options owned by Executive on the Effective Date; provided, however, that if Executive owns fewer than 25% of the aggregate number of shares of New Company Common Stock and Retained Options owned by Executive on the Effective Date, Executive may exercise the put right provided for herein with respect to all of such shares of New Company Common Stock and Options. In the event that the condition set forth in clause (i) of the second sentence of Section 3.5(a) has been met and the agreements governing the indebtedness of the Company permit the repurchase of some but not all of the aggregate amount of rollover equity (including the Rollover Equity) with respect to which executives (including Executive) have exercised put rights, the amount of rollover equity that the Company shall purchase shall be allocated among the executives (including Executive) exercising such put right on an unweighted pro rata basis. (d) If Executive's employment terminates for any reason, then the put right provided herein shall terminate; provided that the Company shall be obligated to satisfy any unfulfilled obligations with respect to any put right exercised prior to such termination; and provided further that Executive's Rollover Equity shall thereafter be subject to the post-termination put and call provisions contained in Article IV of the Stockholders' Agreement. The put right provided for herein shall terminate upon the occurrence of an IPO (as defined in the Stockholders' Agreement). (e) Notwithstanding anything to the contrary contained in this Agreement, the put right provided for herein shall be subject to all other provisions in the Stockholders' Agreement. Without limiting the foregoing, Executive acknowledges that the Rollover Equity shall be 14 subject to the TPS Drag-Along Right and the FPSH Drag Sale, each of which shall supersede the put right provided for herein. (f) Notwithstanding anything to the contrary contained in this Agreement, effective as of the date hereof, Executive waives any right to be cashed out of all of his shares of Company Common Stock and Options under the Merger Agreement or to exercise any of his Options prior to the Effective Date. 4. Employee Benefits. 4.1 Employee Benefit Programs, Plans and Practices. During the Term, Executive shall be entitled to participate in welfare, health and life insurance and pension benefit programs as may be in effect from time to time for similarly situated executives of the Company generally. Executive shall not be entitled to participate in any severance plans provided to Company employees and hereby waives any rights to receive severance benefits other than as provided in this Agreement. 4.2 Vacation; Fringe Benefits; Perquisites. Executive shall be entitled to no less than twenty (20) business days paid vacation in each calendar year. Vacation days will accrue up to a maximum of forty (40) days, at which time, further accruals will cease until the accrued vacation day balance falls below 40 days. Executive shall receive an after-tax annual vacation allowance of $7,700, which shall be payable in two equal installments, the first of which shall be paid during January of each year and the second of which during July. In addition, Executive shall be entitled to the perquisites and other fringe benefits generally made available to senior executives of the Company, commensurate with his position with the Company. In addition, Executive shall be entitled to receive benefits reasonably comparable to those provided to Executive as of the date of this Agreement with respect to the following matters: 15 (a) family membership to a sport or social club of Executive's choice; (b) use of two (2) Company automobiles appropriate for Executive's position, including the costs of necessary maintenance (although Executive may incur taxable income as a result of his personal use of such vehicles); (c) private school tuition for Executive's dependant children in the school(s) of his choice (up to, but not including university education); (d) in the event Executive is asked by the Company to relocate, relocation reimbursement in accordance with the Company's relocation policy; (e) an annual expatriate allowance of 10% of Base Salary payable in two equal installments (in the same manner described above with respect to the vacation allowance, provided, that such allowance shall not be net of taxes); (f) all fees and expenses incurred in connection with satisfying applicable government working requirements, including visas; (g) a housing allowance of $36,000 per year net of taxes; and (h) bi-annual medical checkups for Executive and his spouse. 5. Expenses. During the Term, Executive shall be entitled to receive prompt reimbursement in accordance with the Company's policies for out-of-pocket business expenses reasonably incurred in carrying out his duties and responsibilities under this Agreement, including, without limitation, reasonable expenses for travel and similar items related to such duties and responsibilities. 6. Termination of Employment. 6.1 Termination Not for Cause or for Good Reason. (a) If, prior to the Termination Date, during the Term, Executive's employment is terminated (A) by the Company other than for Cause (as defined in Section 6.2(b) hereof), (B) as a result of Executive's death or as a result of Executive's Permanent Disability (as defined in Section 6.1(d) hereof), or (C) by Executive for Good Reason (as defined in Section 6.1(c) hereof), Executive shall receive: 16 (i) such payments, if any, to which Executive is entitled under any applicable plans or programs, including but not limited to those referred to in Sections 3.3 and 4.1 hereof, in accordance with the terms of such plans or programs; (ii) a cash lump sum payment in respect of accrued but unused vacation days and Base Salary and, if any such termination of employment occurs after the end of a Company fiscal year and prior to the payment of Bonuses for such fiscal year, any Bonus payments earned by Executive for such fiscal year but not yet paid; (iii) continued coverage under any employee medical plans or programs provided to Executive and his family members pursuant to Section 4.1 hereof until the earlier of the third anniversary of Executive's termination of employment or the date on which Executive becomes entitled to receive medical coverage under another employer's medical benefit program, provided, that Executive shall continue to be required to pay any applicable premiums of a participating employee in such plans and programs; (iv) a cash lump sum payment equal to three (3) times the sum of the (I) Base Salary (as of immediately prior to the Executive's date of termination of employment, but excluding any decrease in Base Salary causing Executive to have Good Reason) plus (II) the average annual bonus paid or payable to Executive with respect to the two (2) fiscal years immediately prior to the Executive's date of termination of employment (provided, however, that if the Executive's date of termination of employment occurs at any time during the 2002-2003 fiscal year, then the "average annual bonus" shall be deemed to be the, bonus paid or payable with respect to the 2001-2002 fiscal year and if Executives date of termination occurs prior to a date upon which a determination of an annual bonus amount has been made by the Company for a prior fiscal year for Executive then the "average annual bonus" shall be deemed to be the Target Bonus), less any applicable insurance benefits, provided, that any reduction for disability benefits shall be with respect to benefits received by Executive during the three-year period following Executive's date of termination of employment. (b) All payments payable by the Company to Executive pursuant to this Section 6.1 shall be paid within 30 days after the termination of Executive's employment by check payable to the order of Executive or by wire transfer to an account specified by Executive and shall be subject to Executive entering into and not revoking a release substantially in the form set forth as Exhibit A hereto. (c) For purposes of this Agreement, "Good Reason" shall mean that any of the events set forth in clauses (i) through (v) below shall occur without the written consent of 17 Executive, provided, that (x) Executive shall provide the Company with written notice thereof within one hundred and twenty (120) days after Executive has knowledge of the occurrence of any of the events or circumstances set forth in clauses (i) through (v) below, which notice shall specifically identify the event or circumstance that Executive believes constitutes Good Reason, (y) the Company fails to correct the circumstance or event so identified within twenty (20) days after the date of delivery of the notice referred to in clause (x) above, and (z) Executive resigns his employment for Good Reason within ninety (90) days after the date of delivery of the notice referred to in (x) above: (i) a reduction in Executive's Base Salary; (ii) Executive's duties, titles, responsibilities or authority (including offices and reporting relationships) are materially diminished in comparison to the duties, titles and responsibilities or authority set forth in this Agreement, or Executive is assigned duties materially and adversely inconsistent with his position; (iii) a material reduction in fringe benefits, perquisites or other allowances provided to Executive pursuant to Section 4.2, other than (except for perquisites specifically set forth in this Agreement or the Schedules hereto) as a result of a change applicable to employees of the Company generally, or any material failure to provide such benefits to Executive; (iv) the failure of the Company to obtain a satisfactory agreement from any successor to assume and agree to perform the Agreement, as contemplated in Section 10 herein; or (v) any requirement that Executive relocate to an office more than 25 miles from his office as of the Effective Date. (d) For purposes of this Agreement, "Permanent Disability" shall mean Executive's absence from full time performance of duties due to physical or mental illness for six (6) consecutive months, that is reasonably determined to be total and permanent by a 18 physician selected by the Company or its insurers and reasonably acceptable to Executive or his legal representative. (e) For purposes of this Agreement, Change of Control shall have the meaning ascribed to such term in the Stockholders' Agreement. 6.2 Discharge for Cause; Voluntary Termination by Executive. (a) The Company shall have the right to terminate the employment of Executive for Cause by action of the Committee. In the event that Executive's employment is terminated, prior to the Termination Date, (i) by the Company for Cause, as hereinafter defined, or (ii) by Executive other than (A) for Good Reason or (B) as a result of the Executive's death or Permanent Disability or (iii) upon a failure to renew this Agreement pursuant to Section 2, Executive shall be entitled to receive a lump sum cash payment in respect of any earned but unpaid Base Salary and in respect of any accrued vacation days. In addition, Executive shall be entitled to such payments and benefits, if any, under any applicable plans or programs, including, but not limited to, those referred to in Sections 3.3 and 4.1 hereof, to which he is entitled pursuant to the terms of such plans or programs. (b) As used herein, the term "Cause" shall mean (i) Executive's conviction of, or plea of guilty or nolo contendere to, a felony (or a comparable level of crime in another jurisdiction); provided, however, that after indictment for a felony, the Company may suspend Executive from the rendition of services, but without limiting or modifying in any other way, the Company's obligations to Executive under this Agreement, (ii) continued and repeated refusal by Executive to perform his duties hereunder after fifteen (15) days written notice of any such refusal to perform such duties or direction was given to Executive, (iii) commission by Executive of fraud against, or misappropriation of significant property belonging to, the Company, unless 19 such action is neither willful nor injurious to the Company or any of its Subsidiaries, or other willful misconduct materially injurious to the Company or any of its Subsidiaries or (iv) during any period in which FPSH and its affiliates are the beneficial owners of 20% or more of the Company's stock in the aggregate, a material breach by Executive of the provisions of the Corporate Policies and Procedures (as defined in the Stockholders' Agreement) or Section 12 of this Agreement, unless such breach is neither willful nor materially injurious to the Company or any of its Subsidiaries. Termination of Executive pursuant to this Section 6.2(b) shall be made by delivery to Executive of a copy of a resolution duly adopted by the affirmative vote of not less than a majority of the then members of the Committee at a meeting of the Committee called and held for the purpose (after 30 days prior written notice to Executive and reasonable opportunity for Executive and his counsel to be heard before the Committee prior to such vote), finding that in the reasonable judgment of the Committee, Executive was guilty of conduct set forth in any of clauses (i) through (iv) above and specifying the particulars thereof. 6.3 Resignation from all Positions. Notwithstanding any other provision of this Agreement, upon the termination of the Executive's employment for any reason, unless otherwise requested by the Board, the Executive shall immediately resign from all positions that he holds or has ever held with the Company and any other member of the Affiliated Group (and with any other entities with respect to which the Company has requested the Executive to perform services), including, without limitation, the Board and all boards of directors of any member of the Affiliated Group. The Executive hereby agrees to execute any and all documentation to effectuate such resignations upon request by the Company, but he shall be treated for all purposes as having so resigned upon termination of his employment, regardless of when or whether he executes any such documentation. 20 6.4 Breach of Section 12. Notwithstanding anything to the contrary in this Agreement, in the event of a breach by Executive of the provisions of Section 12 of this Agreement following Executive's termination of employment, or a material breach by Executive of the provisions of Section 12 of this Agreement during Executive's employment which the Committee determines would have been Cause to terminate Executive's employment and that is discovered by the Company within six (6) months following Executive's termination of employment, Executive shall be entitled to no further payments under this Section 6, and shall repay to the Company any payments previously made under this Section 6. Any amounts repaid by Executive under this Section 6.4 will reduce (on a dollar for dollar basis) any damages payable by Executive as a result of a breach of the terms of Section 12. 7. Mitigation of Damages. Executive shall not be required to mitigate damages or the amount of any payment provided for under this Agreement by seeking other employment or otherwise after the termination of his employment hereunder, and any amounts earned by Executive, whether from self-employment, as a common-law employee or otherwise, shall not reduce the amount of any payments otherwise payable to him pursuant to this Agreement. 8. Notices. All notices or communications hereunder shall be in writing, addressed as follows: To the Company: 21 Seminis, Inc. 2700 Camino del Sol Oxnard, California 93030-7967 Attn: General Counsel with a copy to: Fox Paine & Company, LLC 950 Tower Lane, Suite 1950 Foster City, California 94404 Attn: W. Dexter Paine, III To Seminis Merger Corp.: Seminis Merger Corp. c/o Fox Paine & Company, LLC 950 Tower Lane, Suite 1950 Foster City, California 94404 Attn: W. Dexter Paine, III To Executive: Bernardo Jimenez At the address most recently on file with the Company with a copy to: Milbank, Tweed, Hadley & McCloy, LLP One Chase Manhattan Plaza New York, New York 10005 Attn: Ed Rayner Any such notice or communication shall be delivered by hand or by courier or sent certified or registered mail, return receipt requested, postage prepaid, addressed as above (or to such other address as such party may designate in a notice duly delivered as described above), and the third business day after the actual date of mailing shall constitute the time at which notice was given. 9. Separability; Legal Fees. If any provision of this Agreement shall be declared to be invalid or unenforceable, in whole or in part, such invalidity or unenforceability shall not 22 affect the remaining provisions hereof which shall remain in full force and effect. Each party shall bear the costs of any legal fees and other fees and expenses which may be incurred in respect of enforcing its respective rights under this Agreement. 10. Successors and Assigns. Except as otherwise provided herein, this Agreement shall be binding upon, inure to the benefit of and be enforceable by Seminis Merger Corp. and Executive and their respective heirs, legal representatives, successors and assigns. Executive may not assign this Agreement, other than, with respect to payments in the event of Executive's death, to Executive's estate or beneficiaries. Seminis Merger Corp. may assign this Agreement to any of its affiliates in the event of any restructuring or reorganization of Seminis Merger Corp. or to a successor to all or substantially all of Seminis Merger Corp.'s assets, and the benefits of this Agreement shall inure to such entity and the obligations of this Agreement shall be binding on such entity; provided, that, if Seminis Merger Corp. assigns this Agreement to an affiliate which is not a successor to all or substantially all of its assets, Seminis Merger Corp. shall continue to guarantee the payments and benefits hereunder. If Seminis Merger Corp. shall be merged into or consolidated with another entity, the provisions of this Agreement shall be binding upon and inure to the benefit of the entity surviving such merger or resulting from such consolidation and Seminis Merger Corp. shall require any such successor, by agreement in form and substance satisfactory to Executive, to expressly assume and agree to perform this Agreement in the same manner and to the same extent that Seminis Merger Corp. would be required to perform it if no such succession had taken place. For avoidance of doubt, upon the Effective Date the Company will be the successor to Seminis Merger Corp. and Executive hereby acknowledges that the provisions of Section 3.3 of the Merger Agreement shall satisfy the obligations of Seminis Merger Corp. under the immediately preceding sentence. The 23 provisions of this Section 10 shall continue to apply to each subsequent employer of Executive in the event of any subsequent merger or consolidation of such subsequent employer. As used in this Agreement, the term "affiliates" shall include any entity controlled by, controlling, or under common control with Seminis Merger Corp. or the Company, as applicable. 11. Amendment. This Agreement may only be amended by written agreement of the parties hereto. 12. Nondisclosure of Confidential Information; Work Product; Non-Disparagement; Non-Competition; Non-Solicitation. 12.1 Confidential Information of the Company and Its Affiliates. All Confidential Information relating to or obtained from the Company or its affiliates shall be held in the strictest confidence by Executive. Executive shall not, directly or indirectly, disclose, use, publish, release, transfer or otherwise make available Confidential Information of, or obtained from the Company or any of its affiliates in any form to, or for the use or benefit of, any person or entity without the Company's prior written consent, except (i) while employed by the Company, in the business of and/or for the benefit of the Company or (ii) when required to do so by a court of competent jurisdiction, by any governmental agency having supervisory authority over the business of the Company, or by any administrative body or legislative body (including a committee thereof) with jurisdiction to order Executive to divulge, disclose or make accessible such information. For purposes of this Section 12.1, "Confidential Information" shall mean all information and documentation of the Company or its affiliates, whether disclosed to or accessed by Executive in connection with his employment with the Company or the Affiliated Group that is not otherwise available to the public (other than by Executive's breach of the terms hereof), including all (i) data and information of the Company or its affiliates or the customers, suppliers, 24 contractors or other third parties doing business with any of the Company or its affiliates, including business plans, memoranda, reports, drawings, research results, research plans, inventions (patentable or otherwise), trade secrets and research products and (ii) Work Product (as defined below) created by Executive. 12.2 Executive hereby acknowledge that any ideas, concepts, designs, discoveries, techniques, research results, inventions, methodologies, know-how, improvements, discoveries, processes or products, whether or not patentable, that Executive conceives of or reduces to practice during the term of his/her employment with the Company or the Affiliated Group and which are in connection with Executive's employment or related to the nature of Executive's employment (collectively, the "Work Product"), shall be, or be deemed to be, "work for hire" and owned by the Company. Furthermore, the Company shall have all right, title and interest, including worldwide ownership of copyright and patent, in and to the Work Product and all copies made from them. To the extent (a) any of the Work Product is not deemed a "work for hire" by operation of law and (b) permissible under applicable law, Executive hereby irrevocably assigns, transfers and conveys to the Company all of his/her right, title and interest in and to such Work Product, including all rights of patent, copyright, trade secret or other intellectual property or proprietary rights in such materials. Executive acknowledges that the Company and the successors and permitted assigns of the Company shall have the right to obtain and hold in their own name any intellectual property rights in and to such Work Product. 12.3 During the Term and for a period of 24 months from the date of the termination of Executive's employment for any reason (the "Restricted Period"), Executive shall not compete with the Company or the Affiliated Group, by directly or indirectly engaging in any business or activity, whether as an employee, consultant, partner, principal, agent, representative or 25 stockholder or in any other individual, corporate or representative capacity, or render any services or provide any advice or substantial assistance to any business, person or entity, if such business, person or entity, directly or indirectly, competes (or, to Executive's knowledge after due inquiry, intends to compete or is preparing to compete during the Restricted Period) with the Business of the Company or the Affiliated Group in any material manner. It is the intention of the parties that the potential restrictions on Executive's activities imposed by this paragraph be and are reasonable in duration, scope and geography and in all other respects. For purposes of this Section 12, "Business" shall mean the business of marketing, developing, producing and researching new fruit or vegetable seeds and fruit or vegetable plants, or any other material businesses entered into by the Company or the Affiliated Group during the Term, or with respect to which the Company or the Affiliated Group has taken material steps to enter into as of the termination of Executive's employment. During the Restricted Period, Executive shall be available to consult with the Company on Company-related matters within his knowledge in person or by phone, as determined by Executive, for a period of no more than five (5) days per calendar quarter, subject to not interfering with Executive's work schedule; provided, however, that for each full or partial day during which Executive provides such services (other than with respect to de minimis services of less than two (2) hours on a given day), the Company shall pay to Executive a sum of $500 (such limitations and payments shall not apply to any lawsuits in which Executive is a named party). In addition, the Company shall promptly reimburse Executive for his reasonable expenses, if any, in providing such services. 12.4 Except as is required or appropriate in the furtherance of the business of the Company or the Affiliated Group, Executive shall not, during the Restricted Period, either alone or in concert with others, directly or indirectly, (1) solicit, entice, induce or encourage (a) any 26 customer of the Company or the Affiliated Group (including, during the Term, the Company's affiliates) to discontinue using the services or purchasing the products of the Company or the Affiliated Group (including, during the Term, the Company's affiliates), (b) any customer to refer prospective customers or business to any competitor of the Company or the Affiliated Group or (c) any person or entity that is part of any existing or proposed arrangement or has any other affiliation with the Company or the Affiliated Group (including, during the Term, the Company's affiliates) to discontinue such relationship or affiliation with the Company or its affiliates or (2) recruit or hire, or assist others in recruiting or hiring, or otherwise solicit for employment, any consultants or employees of the Company or its affiliates, or former consultants or employees of the Company or its affiliates within six (6) months following their termination of employment. 12.5 Upon request by the Company at any time during Executive's employment or upon termination of Executive's employment with the Company for any reason, Executive shall promptly (1) return to the Company or its affiliates all copies of all materials, including documentary or other recorded materials, which are in Executive's possession or control and which contain or embody any Confidential Information of the Company or its affiliates and (2) deliver to the Company or its affiliates all copies of any Work Product in Executive's possession or control. Executive shall not copy, reproduce or otherwise re-create in any fashion any of the items referenced above for personal retention by Executive. 12.6 The Executive acknowledges and agrees that: (i) the purposes of the foregoing covenants are to protect the goodwill and Work Product and Confidential Information of the Company and its affiliates in connection with the transactions contemplated by the Merger Agreement, and to prevent the Executive from interfering with the business of the Company and 27 the Affiliated Group as a result of or following termination of the Executive's employment with the Company or the Affiliated Group, as applicable, (ii) because of the nature of the business in which the Company and the Affiliated Group are engaged and because of the nature of the Work Product and Confidential Information to which the Executive has access, it would be impractical and excessively difficult to determine the actual damages to the Company and the Affiliated Group in the event the Executive breached any of the covenants of this Section 12; and (iii) remedies at law (such as monetary damages) for any breach of the Executive's obligations under this Section 12 would be inadequate. The Executive therefore agrees and consents that if the Executive commits any breach of a covenant under this Section 12 or threatens to commit any such breach, the Company, and its affiliates shall have the right (in addition to, and not in lieu of, any other right or remedy that may be available to each of them) to temporary and permanent injunctive relief from a court of competent jurisdiction, without posting and bond or other security and without the necessity of proof of actual damage. With respect to any provision of this Section 12 finally determined by a court of competent jurisdiction to be unenforceable, the Executive and the Company and its affiliates hereby agree that such court shall have jurisdiction to reform this Agreement or any provision hereof so that it is enforceable to the maximum extent permitted by law, and the parties agree to abide by such court's determination. If any of the covenants of this Section 12 are determined to be wholly or partially unenforceable in any jurisdiction, such determination shall not be a bar to or in any way diminish the rights of the Company or its affiliates, as applicable, to enforce any such covenant in any other jurisdiction. 28 12.7 The provisions of this Section 12 shall remain in full force and effect until the expiration of the period specified herein notwithstanding he earlier termination of the Executive's employment hereunder or the Employment Period. 13. Beneficiaries; References. Executive shall be entitled to select (and change, to the extent permitted under any applicable law) a beneficiary or beneficiaries to receive any compensation or benefit payable hereunder following Executive's death, and may change such election, in either case by giving the Company written notice thereof. In the event of Executive's death or a judicial determination of his incompetence, reference in this Agreement to Executive shall be deemed, where appropriate, to refer to his beneficiary, estate or other legal representative. Any reference to the masculine gender in this Agreement shall include, where appropriate, the feminine. 14. Survivorship. The respective rights and obligations of the parties hereunder shall survive any termination of this Agreement to the extent necessary to the intended preservation of such rights and obligations. 15. Governing Law; Consent to Jurisdiction. 15.1 Governing Law. This Agreement shall be construed, interpreted and governed in accordance with the laws of the State of California, without reference to rules relating to conflicts of law. 15.2 Consent to Jurisdiction. The parties hereto hereby agree and consent to be subject to the exclusive jurisdiction of the courts of the State of California sitting in the County of Los Angeles and the United States District Court for the Central District of the State of California in any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the Merger. Each party hereto hereby 29 irrevocably waives, to the fullest extent permitted by law, (i) any objection that it may now or hereafter have to laying venue of any suit, action or proceeding brought in such courts, and (ii) any claim that any suit, action or proceeding brought in such courts has been brought in an inconvenient forum. 16. Effect on Prior Agreements. This Agreement contains the entire understanding between the parties hereto and, as of the Effective Date, Executive waives all payments and benefits under any prior or other employment agreement or understanding between the Company or any affiliate of the Company and Executive. 17. Withholding. The Company may withhold from any amounts payable under this Agreement (including from shares of New Company Common Stock deliverable under Section 3.4(b)) such Federal, state, local or foreign taxes as shall be required to be withheld pursuant to any applicable law or regulation, or may permit Executive to elect to pay the Company any such required withholding taxes. If Executive so elects, the payment by Executive of such taxes shall be a condition to the receipt of amounts payable to Executive under this Agreement. The Company shall, to the extent permitted or required by law, have the right to deduct any such taxes from any payment otherwise due to Executive. 18. Counterparts. This Agreement may be executed in two or more counterparts, each of which will be deemed an original. 30 IN WITNESS WHEREOF, as of the date first above written, the Company has caused this Agreement to be executed on its behalf by a duly authorized officer and Executive has hereunto set Executive's hand. SEMINIS MERGER CORP. By /s/ Alejandro Sanchez Mujica Date: May 30, 2003 ---------------------------- ------------------ Name: Alejandro Sanchez Mujica Title: Vice President /s/ Bernardo Jimenez Date: May 30, 2003 ------------------------------- ------------------ Bernardo Jimenez 31 EXHIBIT A FORM OF RELEASE AGREEMENT This Release Agreement ("Release") is entered into as of this ______day of ________, (hereinafter "Execution Date"), by and between [Employee Full Name] (hereinafter "Employee"), and Seminis, Inc. and its successors and assigns (hereinafter, the "Company"). Employee and the Company are sometimes collectively referred to herein as the "Parties". 1. Employee's employment with the Company is terminated effective [Month, Day, Year] (hereinafter "Termination Date"). 2. The Company has agreed to provide Employee the severance payments, awards and benefits provided for in his/her Employment Agreement with the Company, dated as of May __, 2003, after he/she executes this Release and the Release becomes effective pursuant to its terms [FOR 40+ and does not revoke it as permitted in Section 7 below, the expiration of such revocation period being] the ("Effective Date"). 3. Employee represents that he/she has not filed, and will not file, any complaints, lawsuits, administrative complaints or charges relating to his/her employment with, or resignation from, the Company[; provided, however, that nothing contained in this Section 3 shall prohibit Employee from bringing a claim to challenge the validity of the ADEA Release in Section 7 herein]. In consideration of the severance payments, awards and benefits described in Section 2, Employee, for himself/herself and for his/her heirs, administrators, representatives, executors, successors and assigns (collectively, "Releasers") agrees to release the Company, its subsidiaries and affiliates, and their respective parents, direct or indirect subsidiaries, divisions, affiliates and related companies or entities, regardless of its or their form of business organization, any predecessors, successors, joint ventures, and parents of any such entity, and any and all of their respective past or present shareholders, partners, directors, officers, employees, consultants, independent contractors, trustees, administrators, insurers, agents, attorneys, representatives and fiduciaries, including without limitation all persons acting by, through, under or in concert with any of them, in each instance in their capacities as representatives of the Company (collectively, the "Released Parties"), from any and all claims, charges, complaints, causes of action or demands of whatever kind or nature that Employee and his/her Releasers now have or have ever had against the Released Parties, whether known or unknown, including but not limited to: wrongful or tortious termination; constructive discharge; implied or express employment contracts and/or estoppel; discrimination and/or retaliation under any federal, state or local statute or regulation, specifically including any claims Employee may have under the Fair Labor Standards Act, the Americans with Disabilities Act, Title VII of the Civil Rights Act of 1964 as amended, and the Family and Medical Leave Act; the discrimination or other employment laws of the State of [ ](1); any claims brought under any federal or state statute or regulation for non-payment of wages or other compensation, including grants of stock options or any other equity compensation); and libel, slander, or breach of contract, other than the breach of this Release. This Release specifically excludes claims, charges, complaints, causes of action or - -------- (1) Insert state of employment. demand that post-date the Termination Date. Notwithstanding anything herein to the contrary, expressly excluded from this Release are any claims (i) for payments, awards and benefits under the Employment Agreement between the Parties dated _________, 2003, (ii) under the Stockholders' Agreement dated as of _______, 2003 by and among Seminis, Inc. and the Investors listed on the signature pages thereto, (iii) for benefits provided under Company benefit plans, incentive plans or equity plans (including, but not limited to, stock options, restricted stock units and stock grants) or (iv) for indemnification and any applicable directors and officers liability insurance coverage to which Employee was entitled with regard to service as an officer of the Company. 4. Employee agrees to keep the terms of this Release in strict confidence, but he/she may disclose the terms of this Release and provide a copy hereof to his/her immediate family and his/her financial and legal advisors. 5. Employee warrants that no promise or inducement has been offered for this Release other than as set forth herein and in the Employment Agreement and that this Release is executed without reliance upon any other promises or representations, oral or written. Any modification of this Release must be made in writing and be signed by Employee and the Company. 6. If any provision of this Release or compliance by Employee or the Company with any provision of the Release constitutes a violation of any law, or is or becomes unenforceable or void, then such provision, to the extent only that it is in violation of law, unenforceable or void, will be deemed modified to the extent necessary so that it is no longer in violation of law, unenforceable or void, and such provision will be enforced to the fullest extent permitted by law. If such modification is not possible, such provision, to the extent that it is in violation of law, unenforceable or void, will be deemed severable from the remaining provisions of this Release, which provisions will remain binding on both Employee and the Company. This Release is governed by, and construed and interpreted in accordance with the laws of the State of [ ], without regard to principles of conflicts of law. Employee consents to venue and personal jurisdiction in the State of [ ] for disputes arising under this Release. [ONLY IF THE STATE IS EMPLOYEE'S STATE OF EMPLOYMENT.] This Release represents the entire understanding with the Parties with respect to subject matter herein, no oral representations have been made or relied upon by the Parties. 7. [FOR EMPLOYEES OVER 40 ONLY -- In further recognition of the above, Employee hereby releases and discharges the Released Parties from any and all claims, actions and causes of action that he/she may have against the Released Parties, as of the date of the execution of this Release, arising under the Age Discrimination in Employment Act of 1967, as amended ("ADEA"), and the applicable rules and regulations promulgated thereunder. Employee acknowledges and understands that ADEA is a federal statute that prohibits discrimination on the basis of age in employment, benefits and benefit plans. Employee specifically agrees and acknowledges that: (A) the release in this Section 7 was granted in exchange for the receipt of consideration that exceeds the amount to which he/she would otherwise be entitled to receive upon termination of his/her employment; (B) his/her waiver of rights under this Release is knowing and voluntary as required under the Older Workers 2 Benefit Protection Act; (B) that he/she has read and understands the terms of this Release; (C) he/she has hereby been advised in writing by the Company to consult with an attorney prior to executing this Release; (D) the Company has given him/her a period of twenty-one (21) days within which to consider this Release, which period may be waived by the Employee's voluntary execution prior to the expiration of the twenty-one day period; and (E) following his/her execution of this Release he/she has seven (7) days in which to revoke his/her release as set forth in this Section 7 only and that, if he/she chooses not to so revoke, the Release in this Section 7 shall then become effective and enforceable and the payments, awards and benefits provided herein shall then be made to him/her in accordance with the terms of this Release, as well as the terms of the Employment Agreement. To revoke this Release, Employee understands that he/she must give a written revocation to the General Counsel of the Company at [ ](2), either by hand delivery or certified mail within the seven-day period. If he/she revokes the Release, it will not become effective or enforceable and he/she will not be entitled to any benefits from the Company.] 8. EMPLOYEE ACKNOWLEDGES AND AGREES THAT HE/SHE HAS CAREFULLY READ AND VOLUNTARILY SIGNED THIS RELEASE, THAT HE/SHE HAS HAD AN OPPORTUNITY TO CONSULT WITH AN ATTORNEY OF HIS/HER CHOICE, AND THAT HE/SHE SIGNS THIS RELEASE WITH THE INTENT OF RELEASING THE RELEASED PARTIES TO THE EXTENT SET FORTH HEREIN. 9. In the event that any provision of this Release should be held to be invalid or unenforceable, each and all of the other provisions of this Release shall remain in full force and effect. If any provision of this Release is found to be invalid or unenforceable, such provision shall be modified as necessary to permit this Release to be upheld and enforced to the maximum extent permitted by law. 10. Employee acknowledges that he/she is familiar with the provisions of California Civil Code Section 1542, which provides as follows: "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS/HER FAVOR AT HE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM/HER MUST HAVE MATERIALLY AFFECTED HIS/HER SETTLEMENT WITH THE DEBTOR. EMPLOYEE BEING AWARE OF SAID CODE SECTION, HEREBY EXPRESSLY WAIVES ANY RIGHT HE/SHE MAY HAVE THEREUNDER, AS WELL AS UNDER ANY OTHER STATUTES OR COMMON LAW PRINCIPLES OF SIMILAR EFFECT." Employee being aware of said code section, hereby expressly waives any right he/she may have thereunder, as well as under any other statutes or common law principles of similar effect. 11. This Release inures to the benefit of the Company and its successors and assigns. - ---------- (2) Insert address. 3 ACCEPTED AND AGREED TO: __________________________________ __________________________________ Seminis, Inc. [Employee Full Name] Dated:____________________________ Dated:____________________________ 4 EX-10.8 15 v94566orexv10w8.txt EXHIBIT 10.8 EXHIBIT 10.8 PRIVILEGED AND CONFIDENTIAL EMPLOYMENT AGREEMENT AGREEMENT, made May 30, 2003 by and between Seminis Merger Corp., a Delaware corporation ("Seminis Merger Corp.") and Gaspar Alvarez (the "Executive"). RECITALS WHEREAS Seminis, Inc. (the "Company") intends to enter into an Agreement and Plan of Merger dated on May 30, 2003 by and among the Company, Seminis Acquisition LLC and Seminis Merger Corp. (the "Merger Agreement") pursuant to which, at the Effective Time (as defined in the Merger Agreement), the Company will be the surviving corporation in the Merger (as defined in the Merger Agreement); and WHEREAS in order to induce Executive to serve the Company in the position set forth on Schedule 1.2 hereto following such Merger, Seminis Merger Corp. desires to provide Executive with compensation and other benefits on the terms and conditions set forth in this Agreement; and WHEREAS, Executive is willing to accept such employment and perform services for the Company on the terms and conditions hereinafter set forth: NOW, THEREFORE, it is hereby agreed by and between the parties as follows: 1. Employment. 1.1 With the exception of Section 3.5(f) and the second sentence of Section 16 of this Agreement, which shall become effective as of the date hereof, this Agreement shall become effective as of the Closing Date (as defined in the Merger Agreement) (the "Effective Date") and, except as otherwise expressly provided herein, shall be of no force or effect prior to such date, or in the event the Merger Agreement is terminated prior to the consummation of the Merger. 1.2 Subject to the terms and conditions of this Agreement, Seminis Merger Corp. agrees to employ Executive during the Term (as defined below) in the position set forth on Schedule 1.2 hereto, and shall have powers, responsibilities and authorities substantially similar to the powers, responsibilities and authority that are customary of such position at corporations of the size, type and nature of the Company, as it exists from time to time. 1.3 Subject to the terms and conditions of this Agreement, Executive hereby accepts employment with the Company in the position set forth on Schedule 1.2 hereto, commencing on the Effective Date. 1.4 Executive shall perform his duties under this Agreement with reasonable diligence and faithfulness, and shall devote his full business time (excluding any periods of vacation or sick leave) and attention to such duties. Nothing in this Agreement shall preclude Executive from engaging in charitable and community affairs, from managing any passive investment made by him in publicly traded equity securities or other property or from continuing to serve as a member of the board of directors or as a trustee of any other corporation, association or entity with respect to which Executive serves as a director or trustee as of the date of this Agreement, or, with the prior written consent of the Committee (as defined in Section 3.2 hereof), such consent not to be unreasonably withheld, serving as a member of a board of directors or as a trustee of any other corporation, association or entity, provided, that these activities do not interfere with the performance of Executive's duties and responsibilities hereunder or violate the provisions of Section 12 of this Agreement. 2 1.5 The Executive agrees to serve, without additional compensation, as an officer and director for each of the Company's 20% or more owned subsidiaries, partnerships, joint ventures, and limited liability companies (collectively, such entities, the "Affiliated Group"), provided, that such service does not materially interfere with the Executive's performance of the duties and responsibilities of his position with the Company. 1.6 Executive's principal location of employment shall be at the location set forth on Schedule 1.6 hereto, provided, that Executive may be required under reasonable business circumstances to travel outside of such location in connection with performing his duties under this Agreement. 2. Term of Employment. Executive's term of employment under this Agreement shall commence on the Effective Date and, subject to the terms hereof, shall terminate on the earlier of (i) the third anniversary of the Effective Date (the "Termination Date") or (ii) the termination of Executive's employment pursuant to this Agreement (the period from the Effective Date until the termination of Executive's employment under this Agreement shall be the "Term"). This Agreement shall be renewed automatically for succeeding terms of one (1) year following the Termination Date (in which case both the Termination Date and the Term shall be extended one year on each renewal), unless either party gives written notice to the other at least 120 days prior to the applicable Termination Date of its intention not to renew. 3. Compensation and Equity Awards. 3.1 Salary. The Company shall pay Executive the initial annual base salary set forth on Schedule 3.1 hereto. The Base Salary shall be reviewed by the Company no less frequently than annually in a manner consistent with similarly situated executives of the Company and may be increased but not decreased. For all purposes under this Agreement, the term "Base Salary" 3 shall refer to Base Salary as in effect from time to time. Base Salary shall be payable in accordance with the ordinary payroll practices of the Company. 3.2 Annual Bonus. During the Term, Executive shall be eligible to receive an annual bonus (the "Bonus") with a target Bonus set at 55% of Base Salary (the "Target Bonus") and a maximum Bonus of 68.75% of Base Salary. Such Bonus shall be based upon the satisfaction of performance objectives and shall be determined on a weighted basis comprised of the following criteria: (i) Targets (as defined in the Stockholders' Agreement, of even date herewith, by and among Seminis Merger Corp. and the Persons listed on the signature pages thereto (the "Stockholders' Agreement")) - 40% (the "Target Component"); (ii) Executive performance goals established annually by the Compensation Committee (the "Committee") of the Board of Directors of the Company (the "Board") - 20% (the "Individual Component"); (iii) Milestones based upon Company net sales as set forth in the Approved Annual Business Plan (as defined in the Stockholders' Agreement) - 20% (the "Sales Component"); and (iv) Milestones based upon Company net working capital as set forth in the Approved Annual Business Plan - 20% (the "Net Working Capital Component") (items (i) through (iv) collectively, the "Performance Objectives," and each, separately, a "Performance Objective"). During any fiscal year in which an Approved Annual Business Plan has been adopted in accordance with the Stockholders' Agreement, the Bonus shall be equal to the sum of: (A) (Target Bonus)(.4)(the Applicable Percentage for the Target Component), PLUS (B) (Target Bonus)(.2)(the Applicable Percentage for the Individual Component), PLUS (C) 4 (Target Bonus)(.2)(the Applicable Percentage for the Sales Component), PLUS (D) (Target Bonus)(.2)(the Applicable Percentage for the Net Working Capital Component), where the Target Bonus is expressed in dollars and the Applicable Percentage with respect to any given Performance Objective is determined in accordance with the performance matrix below. During any fiscal year in which the Approved Annual Business Plan for such fiscal year is not approved and adopted by the Board in accordance with the Stockholders' Agreement at any point prior to or during such fiscal year, the Bonus shall be equal to the sum of (A) (Target Bonus) (.5) (the Applicable Percentage for the Target Component) PLUS (B) (Target Bonus) (.5) (the Applicable Percentage for the Individual Component), where the Target Bonus is expressed in dollars and the Applicable Percentage with respect to any given Performance Objective is determined in accordance with the performance matrix below: 5 PERFORMANCE MATRIX
APPLICABLE IF PERFORMANCE IS: PERCENTAGE: ------------------ ----------- LESS THAN 90% of Performance 0% Objective 90% of Performance 50% Objective 95% of Performance 75% Objective 100% of Performance 100% Objective 125% of Performance 125% Objective OR GREATER
In the event actual performance for any fiscal year falls between any threshold listed in the chart above, (e.g. 91% of Performance Objective), then the Applicable Percentage shall be adjusted accordingly using a straight line method of interpolation (e.g. if actual performance is at 91% of Performance Objective, then the Applicable Percentage shall be 55%; if actual performance is 92% of Performance Objective, then the Applicable Percentage shall be 60%, etc.). The bonus shall be applicable for fiscal years of the Company beginning after the date hereof, and Executive's annual bonus for the Company's fiscal year ending September 30, 2003, shall be based on the Company's bonus plan in effect as of the date hereof, as set forth on Schedule 6.16(b) to the Merger Agreement. 6 3.3 Compensation Plans and Programs. Executive shall be eligible to participate in any compensation plans or programs maintained by the Company and generally made available to other senior executives of the Company, on terms comparable to those applicable to such other senior executives, provided, that such participation shall not cause the duplication of any compensation or benefits provided to Executive under this Agreement. 3.4 Restricted Stock Units. (a) Executive shall be granted on the Effective Date the number of restricted stock units of the Company (the "Restricted Stock Units") set forth on Schedule 3.4(a) hereto. The Restricted Stock Units shall vest (if at all) as provided below with respect to fiscal years in which an Approved Annual Business Plan has been adopted in accordance with the Stockholders' Agreement, so long as Executive remains employed by the Company through the applicable vesting dates: FISCAL YEAR ENDING IN 2004: N = ("Total 1" (as set forth on Schedule 3.4(b) hereto))(.4)(Applicable Percentage for the Target Component) + (Total 1)(.2)(Applicable Percentage for the Individual Component) + (Total 1)(.2)(Applicable Percentage for the Sales Component) + (Total 1)(.2)(Applicable Percentage for the Net Working Capital Component) FISCAL YEAR ENDING IN 2005: N = (Total 1)(.4)(Applicable Percentage for the Target Component) + (Total 1)(.2)(Applicable Percentage for the Individual Component) + (Total 1)(.2)(Applicable Percentage for the Sales Component) + (Total 1)(.2)(Applicable Percentage for the Net Working Capital Component) FISCAL YEAR ENDING 2006: 7 N = ("Total 2" (as set forth on Schedule 3.4(b) hereto))(.4)(Applicable Percentage for the Target Component) + (Total 2)(.2)(Applicable Percentage for the Individual Component) + (Total 2)(.2)(Applicable Percentage for the Sales Component) + (Total 2)(.2)(Applicable Percentage for the Net Working Capital Component) FISCAL YEAR ENDING 2007: N = ("Total 3" (as set forth on Schedule 3.4(b) hereto))(.4)(Applicable Percentage for the Target Component) + (Total 3)(.2)(Applicable Percentage for the Individual Component) + (Total 3)(.2)(Applicable Percentage for the Sales Component) + (Total 3)(.2)(Applicable Percentage for the Net Working Capital Component) FISCAL YEAR ENDING 2008: N = (Total 3)(.4)(Applicable Percentage for the Target Component) + (Total 3)(.2)(Applicable Percentage for the Individual Component) + (Total 3)(.2)(Applicable Percentage for the Sales Component) + (Total 3)(.2)(Applicable Percentage for the Net Working Capital Component) in each case, where N = the number of Restricted Stock Units that shall be eligible to vest for any given period and the Applicable Percentage with respect to any given Performance Objective is determined in accordance with the performance matrix below. Notwithstanding the foregoing, during any fiscal year in which the Approved Annual Business Plan for such fiscal year is not approved and adopted by the Board in accordance with the Stockholders' Agreement at any point prior to or during such fiscal year, the vesting of Restricted Stock Units shall be equal to the sum of (A) (N)(.5) (the Applicable Percentage for the 8 Target Component) PLUS (B) (N)(.5) (the Applicable Percentage for the Individual Component), where N = the number of Restricted Stock Units that shall be eligible to vest for any given period (in the same number as set forth above for the applicable fiscal year) and the Applicable Percentage with respect to any given Performance Objective is determined in accordance with the performance matrix below. Performance Matrix
APPLICABLE IF PERFORMANCE IS: PERCENTAGE: ------------------ ----------- Less than 90% of 0% Performance Objective 90% of 50% Performance Objective 95% of 75% Performance Objective 100% of 100% Performance Objective or greater
In the event actual performance for any fiscal year falls between any threshold listed in the chart above, (e.g. 91% of Performance Objective), then the Applicable Percentage shall be adjusted accordingly using a straight line method of interpolation (e.g., if actual performance is at 91% of Performance Objective, then the Applicable Percentage shall be 55%; if actual performance is 92% of Performance Objective, then the Applicable Percentage shall be 60%, etc.). To the 9 extent conditions to vesting in any particular year are not met in such year, and some or all of the Restricted Stock Units do not vest in such year, such Restricted Stock Units shall be permanently forfeited. Notwithstanding the foregoing, in the event that prior to the fifth anniversary of the Effective Date, FPSH (as defined in the Stockholders' Agreement) achieves the IRR Hurdle (as defined in the Stockholders' Agreement) after giving effect to the vesting of all rights and options to purchase or receive shares of New Company Common Stock and the vesting of any Restricted Stock Units, the Restricted Stock Units (excepting any Restricted Stock Units that shall have been forfeited pursuant to the immediately preceding sentence) shall become vested as of such date if Executive has remained employed with the Company as of such date, provided that such vesting shall occur only to the extent that FPSH achieves the IRR Hurdle, and any reduced vesting to achieve the IRR Hurdle shall occur on a pro rata basis with other employees of the Company that have Restricted Stock Units. The Restricted Stock Units shall not constitute Rollover Equity for purposes of the put right provided for in Section 3.5 herein. (b) The Restricted Stock Units are subject to the following terms and conditions: (i) Executive will not be entitled to vote the underlying shares related to the Restricted Stock Units unless and until such shares are actually delivered to Executive. (ii) The Restricted Stock Units shall be equitably adjusted as determined by the Compensation Committee in the event of an extraordinary dividend or other corporate transaction if necessary to preserve the value of the Restricted Stock Units. Any property or dividends received upon such an adjustment will be subject to the same restrictions as the Restricted Stock Units to which they relate. 10 (iii) The Restricted Stock Units and the shares of New Company Common Stock received with respect to Restricted Stock Units will be subject to the terms of the Stockholders' Agreement. (iv) Vested Restricted Stock Units shall be converted into shares of New Company Common Stock upon the first to occur of (A) a Change of Control of the Company (as defined in the Stockholders' Agreement), (B) Executive's termination of employment, (C) the termination of the Stockholders' Agreement and (D) vesting of Restricted Stock Units, pursuant to Executive's initial election made as of the date of grant (or upon other elections to be provided by the Committee) to receive shares upon vesting. (v) Executive shall be eligible to make a tag-along election (as set forth in Section 2.6.2 of the Stockholders' Agreement) with respect to the vested Restricted Stock Units on the same terms as other Stockholders (as defined in the Stockholders' Agreement) in accordance with the terms of the Stockholders' Agreement; provided, that such tag-along election shall only be treated as being made if holders of a majority of the outstanding Restricted Stock Units elect to make the tag-along election and then all Restricted Stock Units will be treated as subject to the election. If holders of a majority of the outstanding Restricted Stock Units do not elect to make a tag-along election, then none of the Restricted Stock Units will be permitted to make the tag-along election. (vi) The vested Restricted Stock Units and any Restricted Stock Units that 11 would vest as a result of a completed Required Third Party Sale or a completed FPSH Drag Sale (as applicable) (as such terms are defined in the Stockholders' Agreement) shall be subject to the TPS Drag-Along Right (as defined in the Stockholders' Agreement) and the FPSH Drag Sale, respectively. (vii) Transfers of vested Restricted Stock Units may be made to Executive's family members on the same terms as other Company equity as set forth in the Stockholders Agreement, but shall otherwise not be transferable other than as provided therein. (c) Executive represents and warrants that he (i) has such knowledge and experience in business and financial matters with respect to investments in securities to enable him to understand and evaluate the risks of the investment contemplated hereby and form an investment decision with respect thereto and is able to bear the risk of such investment for an indefinite period and to afford a complete loss thereof, (ii) is an "accredited investor" as defined in Rule 501 of Regulation D under the Securities Act of 1933, as amended, (iii) has had the opportunity to (A) ask such questions as Executive has deemed necessary of, and to receive answers from, representatives of the Company concerning the terms of the transactions contemplated hereby (including the provisions of Section 3.4 of this Agreement) and the merits and risks of investing in securities of the Company and (B) to obtain such additional information which Company possesses or can acquire without unreasonable effort or expense and (iv) is acquiring equity interests in the Company for his own account and not with a view to or for sale in connection with any distribution of securities. 12 3.5 Rollover Equity. (a) Executive shall roll over all of his shares of Company Common Stock (as defined in the Merger Agreement) and all of his Options (as defined in the Merger Agreement) into shares of New Company Common Stock (as defined in the Merger Agreement) and Retained Options (such rolled New Company Common Stock and Retained Options, the "Rollover Equity"), and such Retained Options shall be 100% vested and exercisable as of the Closing Date and shall have substantially the same terms and conditions as the Options. Beginning in 2004, Executive shall be permitted to "put" the shares of New Company Common Stock and Retained Options that comprise the Rollover Equity to the Company each year if (i) 100% of each Performance Objective for the immediately preceding fiscal year has been satisfied and (ii) the agreements governing the indebtedness of the Company permit the repurchase of such Rollover Equity. The put right contemplated hereby shall be applicable to the Rollover Equity only. (b) Executive shall give notice of his intention to exercise the put right described herein during the three (3) months prior to September 30 of a particular year. If the conditions to such exercise and payment have been met, the Company shall make payment in respect of the Rollover Equity as soon as practicable following the end of the applicable calendar year, but in no event later than January 31 of the following year. The per-share put price shall be based upon the fair market value of the New Company Common Stock as reasonably determined by the Board in light of all circumstances. In the case of Retained Options, the per-share put price shall be net of any applicable exercise price and withholding. The Board may, in its discretion, assign the rights and obligations of the Company under this Section 3.5 to any other person, but no such assignment shall relieve the Company of its obligations hereunder to the extent not satisfied by such assignee. 13 (c) Subject to the following sentence, in any given year, Executive may exercise the put right provided for herein with respect to no less than 25% of the aggregate number of shares of New Company Common Stock and/or Retained Options owned by Executive on the Effective Date; provided, however, that if Executive owns fewer than 25% of the aggregate number of shares of New Company Common Stock and Retained Options owned by Executive on the Effective Date, Executive may exercise the put right provided for herein with respect to all of such shares of New Company Common Stock and Options. In the event that the condition set forth in clause (i) of the second sentence of Section 3.5(a) has been met and the agreements governing the indebtedness of the Company permit the repurchase of some but not all of the aggregate amount of rollover equity (including the Rollover Equity) with respect to which executives (including Executive) have exercised put rights, the amount of rollover equity that the Company shall purchase shall be allocated among the executives (including Executive) exercising such put right on an unweighted pro rata basis. (d) If Executive's employment terminates for any reason, then the put right provided herein shall terminate; provided that the Company shall be obligated to satisfy any unfulfilled obligations with respect to any put right exercised prior to such termination; and provided further that Executive's Rollover Equity shall thereafter be subject to the post-termination put and call provisions contained in Article IV of the Stockholders' Agreement. The put right provided for herein shall terminate upon the occurrence of an IPO (as defined in the Stockholders' Agreement). (e) Notwithstanding anything to the contrary contained in this Agreement, the put right provided for herein shall be subject to all other provisions in the Stockholders' Agreement. Without limiting the foregoing, Executive acknowledges that the Rollover Equity shall be 14 subject to the TPS Drag-Along Right and the FPSH Drag Sale, each of which shall supersede the put right provided for herein. (f) Notwithstanding anything to the contrary contained in this Agreement, effective as of the date hereof, Executive waives any right to be cashed out of all of his shares of Company Common Stock and Options under the Merger Agreement or to exercise any of his Options prior to the Effective Date. 4. Employee Benefits. 4.1 Employee Benefit Programs, Plans and Practices. During the Term, Executive shall be entitled to participate in welfare, health and life insurance and pension benefit programs as may be in effect from time to time for similarly situated executives of the Company generally. Executive shall not be entitled to participate in any severance plans provided to Company employees and hereby waives any rights to receive severance benefits other than as provided in this Agreement. 4.2 Vacation; Fringe Benefits; Perquisites. Executive shall be entitled to no less than twenty (20) business days paid vacation in each calendar year. Vacation days will accrue up to a maximum of forty (40) days, at which time, further accruals will cease until the accrued vacation day balance falls below 40 days. In addition, Executive shall be entitled to the perquisites and other fringe benefits generally made available to similarly situated executives of the Company, commensurate with his position with the Company. In addition, Executive shall be entitled to receive benefits reasonably comparable to those provided to Executive as of the date of this Agreement as set forth on Schedule 4.2 hereto. 5. Expenses. During the Term, Executive shall be entitled to receive prompt reimbursement in accordance with the Company's policies for out-of-pocket business expenses 15 reasonably incurred in carrying out his duties and responsibilities under this Agreement, including, without limitation, reasonable expenses for travel and similar items related to such duties and responsibilities. 6. Termination of Employment. 6.1 Termination Not for Cause or for Good Reason. (a) If, prior to the Termination Date, during the Term, Executive's employment is terminated (A) by the Company other than for Cause (as defined in Section 6.2(b) hereof), (B) as a result of Executive's death or as a result of Executive's Permanent Disability (as defined in Section 6.1(d) hereof), or (C) by Executive for Good Reason (as defined in Section 6.1(c) hereof), Executive shall receive: (i) such payments, if any, to which Executive is entitled under any applicable plans or programs, including but not limited to those referred to in Sections 3.3 and 4.1 hereof, in accordance with the terms of such plans or programs; (ii) a cash lump sum payment in respect of accrued but unused vacation days and Base Salary and, if any such termination of employment occurs after the end of a Company fiscal year and prior to the payment of Bonuses for such fiscal year, any Bonus payments earned by Executive for such fiscal year but not yet paid; (iii) continued coverage under any employee medical plans or programs provided to Executive and his family members pursuant to Section 4.1 hereof until the earlier of the second anniversary of Executive's termination of employment or the date on which Executive becomes entitled to receive medical coverage under another employer's medical benefit program, provided, that Executive shall continue to be required to pay any applicable premiums of a participating employee in such plans and programs; (iv) a cash lump sum payment equal to two (2) times the sum of the (I) Base Salary (as of immediately prior to the Executive's date of termination of employment, but excluding any decrease in Base Salary causing Executive to have Good Reason) plus (II) the average annual bonus paid or payable to Executive with respect to the two (2) fiscal years immediately prior to the Executive's date of termination of employment (provided, however, that if the Executive's date of termination of employment occurs at any time during the 2002-2003 fiscal year, then the "average annual bonus" shall be deemed to be the, bonus paid or payable with respect to the 2001-2002 fiscal year and if Executives date of termination occurs prior to a date upon which a determination of an annual bonus amount has been made by the Company for a prior fiscal year for Executive 16 then the "average annual bonus" shall be deemed to be the Target Bonus), less any applicable insurance benefits, provided, that any reduction for disability benefits shall be with respect to benefits received by Executive during the two-year period following Executive's date of termination of employment. (b) All payments payable by the Company to Executive pursuant to this Section 6.1 and the last sentence of Section 6.2(a) shall be paid within 30 days after the termination of Executive's employment by check payable to the order of Executive or by wire transfer to an account specified by Executive and shall be subject to Executive entering into and not revoking a release substantially in the form set forth as Exhibit A hereto. (c) For purposes of this Agreement, "Good Reason" shall mean that any of the events set forth in clauses (i) through (v) below shall occur without the written consent of Executive, provided, that (x) Executive shall provide the Company with written notice thereof within one hundred and twenty (120) days after Executive has knowledge of the occurrence of any of the events or circumstances set forth in clauses (i) through (v) below, which notice shall specifically identify the event or circumstance that Executive believes constitutes Good Reason, (y) the Company fails to correct the circumstance or event so identified within twenty (20) days after the date of delivery of the notice referred to in clause (x) above, and (z) Executive resigns his employment for Good Reason within ninety (90) days after the date of delivery of the notice referred to in (x) above: (i) a reduction in Executive's Base Salary; (ii) Executive's duties, titles, responsibilities or authority are materially diminished in comparison to the duties, titles and responsibilities or authority set forth in this Agreement, or Executive is assigned duties materially and adversely inconsistent with his position; (iii) a material reduction in fringe benefits, perquisites or other allowances provided to Executive pursuant to Section 4.2, other than (except for benefits specifically set forth in Schedule 4.2 of this Agreement) as a result of a change 17 applicable to employees of the Company generally, or any material failure to provide such benefits to Executive; (iv) the failure of the Company to obtain a satisfactory agreement from any successor to assume and agree to perform the Agreement, as contemplated in Section 10 herein, or (v) any requirement that Executive relocate to an office more than 25 miles from his office as of the Effective Date. (d) For purposes of this Agreement, "Permanent Disability" shall mean Executive's absence from full time performance of duties due to physical or mental illness for six (6) consecutive months, that is reasonably determined to be total and permanent by a physician selected by the Company or its insurers and reasonably acceptable to Executive or his legal representative. (e) For purposes of this Agreement, Change of Control shall have the meaning ascribed to such term in the Stockholders' Agreement. 6.2 Discharge for Cause; Voluntary Termination by Executive. (a) The Company shall have the right to terminate the employment of Executive for Cause by action of the Committee. In the event that Executive's employment is terminated, prior to the Termination Date, (i) by the Company for Cause, as hereinafter defined, or (ii) by Executive other than (A) for Good Reason, or (B) as a result of the Executive's death or Permanent Disability or (iii) upon a failure to renew this Agreement pursuant to Section 2, Executive shall be entitled to receive a lump sum cash payment in respect of any earned but unpaid Base Salary and in respect of any accrued vacation days. In addition, Executive shall be entitled to such payments and benefits, if any, under any applicable plans or programs, including, but not limited to, those referred to in Sections 3.3 and 4.1 hereof, to which he is entitled pursuant to the terms of such plans or programs. Notwithstanding the foregoing, if Executive voluntarily terminates his employment 18 other than for Good Reason prior to the first anniversary of the Effective Date, the Company shall pay Executive severance equal to three-twelfths of Base Salary plus twenty (20) days times number of complete years of service (assuming a service beginning year of 1977) times Base Salary divided by three hundred and sixty-five (365). (b) As used herein, the term "Cause" shall mean (i) Executive's conviction of, or plea of guilty or nolo contendere to, a felony (or a comparable level of crime in another jurisdiction); provided, however, that after indictment for a felony, the Company may suspend Executive from the rendition of services, but without limiting or modifying in any other way, the Company's obligations to Executive under this Agreement, (ii) continued and repeated refusal by Executive to perform his duties hereunder after fifteen (15) days written notice of any such refusal to perform such duties or direction was given to Executive, (iii) commission by Executive of fraud against, or misappropriation of significant property belonging to, the Company, unless such action is neither willful nor injurious to the Company or any of its Subsidiaries, or other willful misconduct materially injurious to the Company or any of its Subsidiaries or (iv) during any period in which FPSH and its affiliates are the beneficial owners of 20% or more of the value of the Company's stock in the aggregate, a material breach by Executive of the provisions of the Corporate Policies and Procedures (as defined in the Stockholders' Agreement) or Section 12 of this Agreement, unless such breach is neither willful nor materially injurious to the Company or any of its Subsidiaries. Termination of Executive pursuant to this Section 6.2(b) shall be made by delivery to Executive of a copy of a resolution duly adopted by the affirmative vote of not less than a majority of the then members of the Committee at a meeting of the Committee called and held for the purpose (after 30 days prior written notice to Executive and reasonable opportunity for Executive and his counsel to be heard before the Committee prior to 19 such vote), finding that in the reasonable judgment of the Committee, Executive was guilty of conduct set forth in any of clauses (i) through (iv) above and specifying the particulars thereof. 6.3 Resignation from all Positions. Notwithstanding any other provision of this Agreement, upon the termination of the Executive's employment for any reason, unless otherwise requested by the Board, the Executive shall immediately resign from all positions that he holds or has ever held with the Company and any other member of the Affiliated Group (and with any other entities with respect to which the Company has requested the Executive to perform services), including, without limitation, all boards of directors of any member of the Affiliated Group. The Executive hereby agrees to execute any and all documentation to effectuate such resignations upon request by the Company, but he shall be treated for all purposes as having so resigned upon termination of his employment, regardless of when or whether he executes any such documentation. 6.4 Breach of Section 12. Notwithstanding anything to the contrary in this Agreement, in the event of a breach by Executive of the provisions of Section 12 of this Agreement following Executive's termination of employment, or a material breach by Executive of the provisions of Section 12 of this Agreement during Executive's employment which the Committee determines would have been Cause to terminate Executive's employment and that is discovered by the Company within six (6) months following Executive's termination of employment, Executive shall be entitled to no further payments under this Section 6, and shall repay to the Company any payments previously made under this Section 6. Any amounts repaid by Executive under this Section 6.4 will reduce (on a dollar for dollar basis) any damages payable by Executive as a result of a breach of the terms of Section 12. 20 7. Mitigation of Damages. Executive shall not be required to mitigate damages or the amount of any payment provided for under this Agreement by seeking other employment or otherwise after the termination of his employment hereunder, and any amounts earned by Executive, whether from self-employment, as a common-law employee or otherwise, shall not reduce the amount of any payments otherwise payable to him pursuant to this Agreement. 8. Notices. All notices or communications hereunder shall be in writing, addressed as follows: To the Company: Seminis, Inc. 2700 Camino del Sol Oxnard, California 93030-7967 Attn: General Counsel with a copy to: To Seminis Merger Corp.: Seminis Merger Corp. c/o Fox Paine & Company, LLC 950 Tower Lane, Suite 1950 Foster City, California 94404 Attn: W. Dexter Paine, III To Executive: Gaspar Alvarez At the address most recently on file with the Company with a copy to: Milbank, Tweed, Handley & McCloy, LLP One Chase Manhattan Plaza New York, New York 10005 Attn: Ed Rayner 21 Any such notice or communication shall be delivered by hand or by courier or sent certified or registered mail, return receipt requested, postage prepaid, addressed as above (or to such other address as such party may designate in a notice duly delivered as described above), and the third business day after the actual date of mailing shall constitute the time at which notice was given. 9. Separability; Legal Fees. If any provision of this Agreement shall be declared to be invalid or unenforceable, in whole or in part, such invalidity or unenforceability shall not affect the remaining provisions hereof which shall remain in full force and effect. Each party shall bear the costs of any legal fees and other fees and expenses which may be incurred in respect of enforcing its respective rights under this Agreement. 10. Successors and Assigns. Except as otherwise provided herein, this Agreement shall be binding upon, inure to the benefit of and be enforceable by Seminis Merger Corp. and Executive and their respective heirs, legal representatives, successors and assigns. Executive may not assign this Agreement, other than, with respect to payments in the event of Executive's death, to Executive's estate or beneficiaries. Seminis Merger Corp. may assign this Agreement to any of its affiliates in the event of any restructuring or reorganization of Seminis Merger Corp. or to a successor to all or substantially all of Seminis Merger Corp.'s assets, and the benefits of this Agreement shall inure to such entity and the obligations of this Agreement shall be binding on such entity; provided, that, if Seminis Merger Corp. assigns this Agreement to an affiliate which is not a successor to all or substantially all of its assets, Seminis Merger Corp. shall continue to guarantee the payments and benefits hereunder. If the Company shall be merged into or consolidated with another entity, the provisions of this Agreement shall be binding upon and inure to the benefit of the entity surviving such merger or resulting from such consolidation and Seminis Merger Corp. shall require any such successor, by agreement in form and substance 22 satisfactory to Executive, to expressly assume and agree to perform this Agreement in the same manner and to the same extent that Seminis Merger Corp. would be required to perform it if no such succession had taken place. For avoidance of doubt, upon the Effective Date the Company will be the successor to Seminis Merger Corp. and Executive hereby acknowledges that the provisions of Section 3.3 of the Merger Agreement shall satisfy the obligations of Seminis Merger Corp. under the immediately preceding sentence. The provisions of this Section 10 shall continue to apply to each subsequent employer of Executive in the event of any subsequent merger or consolidation of such subsequent employer. As used in this Agreement, the term "affiliates" shall include any entity controlled by, controlling, or under common control with Seminis Merger Corp. or the Company, as applicable. 11. Amendment. This Agreement may only be amended by written agreement of the parties hereto. 12. Nondisclosure of Confidential Information; Work Product; Non-Disparagement; Non-Competition; Non-Solicitation. 12.1 Confidential Information of the Company and Its Affiliates. All Confidential Information relating to or obtained from the Company or its affiliates shall be held in the strictest confidence by Executive. Executive shall not, directly or indirectly, disclose, use, publish, release, transfer or otherwise make available Confidential Information of, or obtained from the Company or any of its affiliates in any form to, or for the use or benefit of, any person or entity without the Company's prior written consent, except (i) while employed by the Company, in the business of and/or for the benefit of the Company or (ii) when required to do so by a court of competent jurisdiction, by any governmental agency having supervisory authority over the business of the Company, or by any administrative body or legislative body (including a 23 committee thereof) with jurisdiction to order Executive to divulge, disclose or make accessible such information. For purposes of this Section 12.1, "Confidential Information" shall mean all information and documentation of the Company or its affiliates, whether disclosed to or accessed by Executive in connection with his employment with the Company or the Affiliated Group that is not otherwise available to the public (other than by Executive's breach of the terms hereof), including all (i) data and information of the Company or its affiliates or the customers, suppliers, contractors or other third parties doing business with any of the Company or its affiliates, including business plans, memoranda, reports, drawings, research results, research plans, inventions (patentable or otherwise), trade secrets and research products and (ii) Work Product (as defined below) created by Executive. 12.2 Executive hereby acknowledge that any ideas, concepts, designs, discoveries, techniques, research results, inventions, methodologies, know-how, improvements, discoveries, processes or products, whether or not patentable, that Executive conceives of or reduces to practice during the term of his/her employment with the Company or the Affiliated Group and which are in connection with Executive's employment or related to the nature of Executive's employment (collectively, the "Work Product"), shall be, or be deemed to be, "work for hire" and owned by the Company. Furthermore, the Company shall have all right, title and interest, including worldwide ownership of copyright and patent, in and to the Work Product and all copies made from them. To the extent (a) any of the Work Product is not deemed a "work for hire" by operation of law and (b) permissible under applicable law, Executive hereby irrevocably assigns, transfers and conveys to the Company all of his/her right, title and interest in and to such Work Product, including all rights of patent, copyright, trade secret or other intellectual property or proprietary rights in such materials. Executive acknowledges that the Company and the 24 successors and permitted assigns of the Company shall have the right to obtain and hold in their own name any intellectual property rights in and to such Work Product. 12.3 During the Term and for a period of 24 months from the date of the termination of Executive's employment for any reason (the "Restricted Period"), Executive shall not compete with the Company or the Affiliated Group, by directly or indirectly engaging in any business or activity, whether as an employee, consultant, partner, principal, agent, representative or stockholder or in any other individual, corporate or representative capacity, or render any services or provide any advice or substantial assistance to any business, person or entity, if such business, person or entity, directly or indirectly, competes (or, to Executive's knowledge after due inquiry, intends to compete or is preparing to compete during the Restricted Period) with the Business of the Company or the Affiliated Group in any material manner. It is the intention of the parties that the potential restrictions on Executive's activities imposed by this paragraph be and are reasonable in duration, scope and geography and in all other respects. For purposes of this Section 12, "Business" shall mean the business of marketing, developing, producing and researching new fruit or vegetable seeds and fruit or vegetable plants, or any other material businesses entered into by the Company or the Affiliated Group during the Term, or with respect to which the Company or the Affiliated Group has taken material steps to enter into as of the termination of Executive's employment. During the Restricted Period, Executive shall be available to consult with the Company on Company-related matters within his knowledge in person or by phone, as determined by Executive, for a period of no more than five (5) days per calendar quarter, subject to not interfering with Executive's work schedule; provided, however, that for each full or partial day during which Executive provides such services (other than with respect to de minimis services of less than two (2) hours on a given day), the Company shall pay 25 to Executive a sum of $500 (such limitations and payments shall not apply to any lawsuits in which Executive is a named party). In addition, the Company shall promptly reimburse Executive for his reasonable expenses, if any, in providing such services. 12.4 Except as is required or appropriate in the furtherance of the business of the Company or the Affiliated Group, Executive shall not, during the Restricted Period, either alone or in concert with others, directly or indirectly, (1) solicit, entice, induce or encourage (a) any customer of the Company or the Affiliated Group (including, during the Term, the Company's affiliates) to discontinue using the services or purchasing the products of the Company or the Affiliated Group (including, during the Term, the Company's affiliates), (b) any customer to refer prospective customers or business to any competitor of the Company or the Affiliated Group or (c) any person or entity that is part of any existing or proposed arrangement or has any other affiliation with the Company or the Affiliated Group (including, during the Term, the Company's affiliates) to discontinue such relationship or affiliation with the Company or its affiliates or (2) recruit or hire, or assist others in recruiting or hiring, or otherwise solicit for employment, any consultants or employees of the Company or its affiliates, or former consultants or employees of the Company or its affiliates within six (6) months following their termination of employment. 12.5 Upon request by the Company at any time during Executive's employment or upon termination of Executive's employment with the Company for any reason, Executive shall promptly (1) return to the Company or its affiliates all copies of all materials, including documentary or other recorded materials, which are in Executive's possession or control and which contain or embody any Confidential Information of the Company or its affiliates and (2) deliver to the Company or its affiliates all copies of any Work Product in Executive's 26 possession or control. Executive shall not copy, reproduce or otherwise re-create in any fashion any of the items referenced above for personal retention by Executive. 12.6 The Executive acknowledges and agrees that: (i) the purposes of the foregoing covenants are to protect the goodwill and Work Product and Confidential Information of the Company and its affiliates in connection with the transactions contemplated by the Merger Agreement, and to prevent the Executive from interfering with the business of the Company and the Affiliated Group as a result of or following termination of the Executive's employment with the Company or the Affiliated Group, as applicable, (ii) because of the nature of the business in which the Company and the Affiliated Group are engaged and because of the nature of the Work Product and Confidential Information to which the Executive has access, it would be impractical and excessively difficult to determine the actual damages to the Company and the Affiliated Group in the event the Executive breached any of the covenants of this Section 12; and (iii) remedies at law (such as monetary damages) for any breach of the Executive's obligations under this Section 12 would be inadequate. The Executive therefore agrees and consents that if the Executive commits any breach of a covenant under this Section 12 or threatens to commit any such breach, the Company, and its affiliates shall have the right (in addition to, and not in lieu of, any other right or remedy that may be available to each of them) to temporary and permanent injunctive relief from a court of competent jurisdiction, without posting and bond or other security and without the necessity of proof of actual damage. With respect to any provision of this Section 12 finally determined by a court of competent jurisdiction to be unenforceable, the Executive and the Company and its affiliates hereby agree that such court shall have jurisdiction to reform this Agreement or any provision hereof so that it is enforceable to the maximum extent permitted by law, and the parties agree to abide by such court's 27 determination. If any of the covenants of this Section 12 are determined to be wholly or partially unenforceable in any jurisdiction, such determination shall not be a bar to or in any way diminish the rights of the Company or its affiliates, as applicable, to enforce any such covenant in any other jurisdiction. 12.7 The provisions of this Section 12 shall remain in full force and effect until the expiration of the period specified herein notwithstanding he earlier termination of the Executive's employment hereunder or the Employment Period. 13. Beneficiaries; References. Executive shall be entitled to select (and change, to the extent permitted under any applicable law) a beneficiary or beneficiaries to receive any compensation or benefit payable hereunder following Executive's death, and may change such election, in either case by giving the Company written notice thereof. In the event of Executive's death or a judicial determination of his incompetence, reference in this Agreement to Executive shall be deemed, where appropriate, to refer to his beneficiary, estate or other legal representative. Any reference to the masculine gender in this Agreement shall include, where appropriate, the feminine. 14. Survivorship. The respective rights and obligations of the parties hereunder shall survive any termination of this Agreement to the extent necessary to the intended preservation of such rights and obligations. 15. Governing Law; Consent to Jurisdiction. 15.1 Governing Law. This Agreement shall be construed, interpreted and governed in accordance with the laws of the State of California, without reference to rules relating to conflicts of law. 28 15.2 Consent to Jurisdiction. The parties hereto hereby agree and consent to be subject to the exclusive jurisdiction of the courts of the State of California sitting in the County of Los Angeles and the United States District Court for the Central District of the State of California in any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the Merger. Each party hereto hereby irrevocably waives, to the fullest extent permitted by law, (i) any objection that it may now or hereafter have to laying venue of any suit, action or proceeding brought in such courts, and (ii) any claim that any suit, action or proceeding brought in such courts has been brought in an inconvenient forum. 16. Effect on Prior Agreements. This Agreement contains the entire understanding between the parties hereto and, as of the Effective Date, Executive waives all payments and benefits under any prior or other employment agreement or understanding between the Company or any affiliate of the Company and Executive, including, but not limited to, the employment agreement between Seminis Vegetable Seeds, Inc. and Executive executed as of July 1, 2001 (the "Prior Agreement"). Notwithstanding the forgoing, effective as of the date hereof, Executive waives his right to, and agrees not to accept all payments under the Prior Agreement upon voluntary termination of Executive's employment with the Company or termination of Executive's employment with the Company by the Company for Cause, and will repay to Seminis Merger Corp. on the Effective Date any such payments made, provided, that such provisions of the Prior Agreement shall again become operative in the event that the Merger Agreement is terminated prior to consummation of the Merger. 17. Withholding. The Company may withhold from any amounts payable under this Agreement (including from shares of New Company Common Stock deliverable under Section 29 3.4(b)) such Federal, state, local or foreign taxes as shall be required to be withheld pursuant to any applicable law or regulation, or may permit Executive to elect to pay the Company any such required withholding taxes. If Executive so elects, the payment by Executive of such taxes shall be a condition to the receipt of amounts payable to Executive under this Agreement. The Company shall, to the extent permitted or required by law, have the right to deduct any such taxes from any payment otherwise due to Executive. 18. Counterparts. This Agreement may be executed in two or more counterparts, each of which will be deemed an original. 30 IN WITNESS WHEREOF, as of the date first above written, the Company has caused this Agreement to be executed on its behalf by a duly authorized officer and Executive has hereunto set Executive's hand. SEMINIS MERGER CORP. By /s/ Bernardo Jimenez Date: May 30, 2003 --------------------- --------------- Name: Bernardo Jimenez Title: President /s/ Gaspar Alvarez Date: 05/30/03 ------------------------ --------------------- Gaspar Alvarez 31 EXHIBIT A FORM OF RELEASE AGREEMENT This Release Agreement ("Release") is entered into as of this ______day of ________, (hereinafter "Execution Date"), by and between [Employee Full Name] (hereinafter "Employee"), and Seminis, Inc. and its successors and assigns (hereinafter, the "Company"). Employee and the Company are sometimes collectively referred to herein as the "Parties". 1. Employee's employment with the Company is terminated effective [Month, Day, Year] (hereinafter "Termination Date"). 2. The Company has agreed to provide Employee the severance payments, awards and benefits provided for in his/her Employment Agreement with the Company, dated as of May __, 2003, after he/she executes this Release and the Release becomes effective pursuant to its terms [FOR 40+ and does not revoke it as permitted in Section 7 below, the expiration of such revocation period being] the ("Effective Date"). 3. Employee represents that he/she has not filed, and will not file, any complaints, lawsuits, administrative complaints or charges relating to his/her employment with, or resignation from, the Company[; provided, however, that nothing contained in this Section 3 shall prohibit Employee from bringing a claim to challenge the validity of the ADEA Release in Section 7 herein]. In consideration of the severance payments, awards and benefits described in Section 2, Employee, for himself/herself and for his/her heirs, administrators, representatives, executors, successors and assigns (collectively, "Releasers") agrees to release the Company, its subsidiaries and affiliates, and their respective parents, direct or indirect subsidiaries, divisions, affiliates and related companies or entities, regardless of its or their form of business organization, any predecessors, successors, joint ventures, and parents of any such entity, and any and all of their respective past or present shareholders, partners, directors, officers, employees, consultants, independent contractors, trustees, administrators, insurers, agents, attorneys, representatives and fiduciaries, including without limitation all persons acting by, through, under or in concert with any of them, in each instance in their capacities as representatives of the Company (collectively, the "Released Parties"), from any and all claims, charges, complaints, causes of action or demands of whatever kind or nature that Employee and his/her Releasers now have or have ever had against the Released Parties, whether known or unknown, including but not limited to: wrongful or tortious termination; constructive discharge; implied or express employment contracts and/or estoppel; discrimination and/or retaliation under any federal, state or local statute or regulation, specifically including any claims Employee may have under the Fair Labor Standards Act, the Americans with Disabilities Act, Title VII of the Civil Rights Act of 1964 as amended, and the Family and Medical Leave Act; the discrimination or other employment laws of the State of [ ](1); any claims brought under any federal or state statute or regulation for non-payment of wages or other compensation, including grants of stock options or any other equity compensation); and libel, slander, or breach of contract, other than the breach of this Release. This Release specifically excludes claims, charges, complaints, causes of action or - ---------- (1) Insert state of employment. demand that post-date the Termination Date. Notwithstanding anything herein to the contrary, expressly excluded from this Release are any claims (i) for payments, awards and benefits under the Employment Agreement between the Parties dated _________, 2003, (ii) under the Stockholders' Agreement dated as of _______, 2003 by and among Seminis, Inc. and the Investors listed on the signature pages thereto, (iii) for benefits provided under Company benefit plans, incentive plans or equity plans (including, but not limited to, stock options, restricted stock units and stock grants) or (iv) for indemnification and any applicable directors and officers liability insurance coverage to which Employee was entitled with regard to service as an officer of the Company. 4. Employee agrees to keep the terms of this Release in strict confidence, but he/she may disclose the terms of this Release and provide a copy hereof to his/her immediate family and his/her financial and legal advisors. 5. Employee warrants that no promise or inducement has been offered for this Release other than as set forth herein and in the Employment Agreement and that this Release is executed without reliance upon any other promises or representations, oral or written. Any modification of this Release must be made in writing and be signed by Employee and the Company. 6. If any provision of this Release or compliance by Employee or the Company with any provision of the Release constitutes a violation of any law, or is or becomes unenforceable or void, then such provision, to the extent only that it is in violation of law, unenforceable or void, will be deemed modified to the extent necessary so that it is no longer in violation of law, unenforceable or void, and such provision will be enforced to the fullest extent permitted by law. If such modification is not possible, such provision, to the extent that it is in violation of law, unenforceable or void, will be deemed severable from the remaining provisions of this Release, which provisions will remain binding on both Employee and the Company. This Release is governed by, and construed and interpreted in accordance with the laws of the State of [ ], without regard to principles of conflicts of law. Employee consents to venue and personal jurisdiction in the State of [ ] for disputes arising under this Release. [ONLY IF THE STATE IS EMPLOYEE'S STATE OF EMPLOYMENT.] This Release represents the entire understanding with the Parties with respect to subject matter herein, no oral representations have been made or relied upon by the Parties. 7. [FOR EMPLOYEES OVER 40 ONLY -- In further recognition of the above, Employee hereby releases and discharges the Released Parties from any and all claims, actions and causes of action that he/she may have against the Released Parties, as of the date of the execution of this Release, arising under the Age Discrimination in Employment Act of 1967, as amended ("ADEA"), and the applicable rules and regulations promulgated thereunder. Employee acknowledges and understands that ADEA is a federal statute that prohibits discrimination on the basis of age in employment, benefits and benefit plans. Employee specifically agrees and acknowledges that: (A) the release in this Section 7 was granted in exchange for the receipt of consideration that exceeds the amount to which he/she would otherwise be entitled to receive upon termination of his/her employment; (B) his/her waiver of rights under this Release is knowing and voluntary as required under the Older Workers 2 Benefit Protection Act; (B) that he/she has read and understands the terms of this Release; (C) he/she has hereby been advised in writing by the Company to consult with an attorney prior to executing this Release; (D) the Company has given him/her a period of twenty-one (21) days within which to consider this Release, which period may be waived by the Employee's voluntary execution prior to the expiration of the twenty-one day period; and (E) following his/her execution of this Release he/she has seven (7) days in which to revoke his/her release as set forth in this Section 7 only and that, if he/she chooses not to so revoke, the Release in this Section 7 shall then become effective and enforceable and the payments, awards and benefits provided herein shall then be made to him/her in accordance with the terms of this Release, as well as the terms of the Employment Agreement. To revoke this Release, Employee understands that he/she must give a written revocation to the General Counsel of the Company at [ ](2), either by hand delivery or certified mail within the seven-day period. If he/she revokes the Release, it will not become effective or enforceable and he/she will not be entitled to any benefits from the Company.] 8. EMPLOYEE ACKNOWLEDGES AND AGREES THAT HE/SHE HAS CAREFULLY READ AND VOLUNTARILY SIGNED THIS RELEASE, THAT HE/SHE HAS HAD AN OPPORTUNITY TO CONSULT WITH AN ATTORNEY OF HIS/HER CHOICE, AND THAT HE/SHE SIGNS THIS RELEASE WITH THE INTENT OF RELEASING THE RELEASED PARTIES TO THE EXTENT SET FORTH HEREIN. 9. In the event that any provision of this Release should be held to be invalid or unenforceable, each and all of the other provisions of this Release shall remain in full force and effect. If any provision of this Release is found to be invalid or unenforceable, such provision shall be modified as necessary to permit this Release to be upheld and enforced to the maximum extent permitted by law. 10. Employee acknowledges that he/she is familiar with the provisions of California Civil Code Section 1542, which provides as follows: "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS/HER FAVOR AT HE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM/HER MUST HAVE MATERIALLY AFFECTED HIS/HER SETTLEMENT WITH THE DEBTOR. EMPLOYEE BEING AWARE OF SAID CODE SECTION, HEREBY EXPRESSLY WAIVES ANY RIGHT HE/SHE MAY HAVE THEREUNDER, AS WELL AS UNDER ANY OTHER STATUTES OR COMMON LAW PRINCIPLES OF SIMILAR EFFECT." Employee being aware of said code section, hereby expressly waives any right he/she may have thereunder, as well as under any other statutes or common law principles of similar effect. 11. This Release inures to the benefit of the Company and its successors and assigns. - ---------- (2) Insert address. 3 ACCEPTED AND AGREED TO: __________________________________ ___________________________________ Seminis, Inc. [Employee Full Name] Dated:____________________________ Dated:_____________________________ 4 SCHEDULES TO TIER III EMPLOYMENT AGREEMENT: GASPAR ALVAREZ SCHEDULE 1.2 POSITION Vice President - Finance and World Wide Corporate Comptroller SCHEDULE 1.6 LOCATION OF EMPLOYMENT The Company's offices in Oxnard, California SCHEDULE 3.1 BASE SALARY $262,051 SCHEDULE 3.4(a) RESTRICTED STOCK UNITS 173,416 SCHEDULE 3.4(b) Total 1: 17,341.6 Total 2: 34,683.2 Total 3: 52,024.8 SCHEDULE 4.2 (a) all fees and expenses incurred in connection with satisfying applicable government working requirements, including visas; (b) an after-tax annual vacation allowance of $7,700, which shall be payable in two equal installments, the first of which shall be paid during January of each year and the second of which during July. (c) family membership to a sport or social club of Executive's choice; (d) use of a Company automobile appropriate for Executive's position, including the costs of necessary maintenance (although Executive may incur taxable income as a result of his personal use of such vehicles). EX-10.9 16 v94566orexv10w9.txt EXHIBIT 10.9 EXHIBIT 10.9 PRIVILEGED AND CONFIDENTIAL EMPLOYMENT AGREEMENT AGREEMENT, made May 30, 2003, by and between Seminis Merger Corp., a Delaware corporation ("Seminis Merger Corp.") and Jose Manuel Madero Garza (the "Executive"). RECITALS WHEREAS Seminis, Inc. (the "Company") intends to enter into an Agreement and Plan of Merger dated on May 30, 2003 by and among the Company, Seminis Acquisition LLC and Seminis Merger Corp. (the "Merger Agreement") pursuant to which, at the Effective Time (as defined in the Merger Agreement), the Company will be the surviving corporation in the Merger (as defined in the Merger Agreement); and WHEREAS in order to induce Executive to serve the Company in the position set forth on Schedule 1.2 hereto following such Merger, Seminis Merger Corp. desires to provide Executive with compensation and other benefits on the terms and conditions set forth in this Agreement; and WHEREAS, Executive is willing to accept such employment and perform services for the Company on the terms and conditions hereinafter set forth: NOW, THEREFORE, it is hereby agreed by and between the parties as follows: 1. Employment. 1.1 With the exception of Section 3.5(f) and the second sentence of Section 16 of this Agreement, which shall become effective as of the date hereof, this Agreement shall become effective as of the Closing Date (as defined in the Merger Agreement) (the "Effective Date") and, except as otherwise expressly provided herein, shall be of no force or effect prior to such date, or in the event the Merger Agreement is terminated prior to the consummation of the Merger. 1.2 Subject to the terms and conditions of this Agreement, Seminis Merger Corp. agrees to employ Executive during the Term (as defined below) in the position set forth on Schedule 1.2 hereto, and shall have powers, responsibilities and authorities substantially similar to the powers, responsibilities and authority that are customary of such position at corporations of the size, type and nature of the Company, as it exists from time to time. 1.3 Subject to the terms and conditions of this Agreement, Executive hereby accepts employment with the Company in the position set forth on Schedule 1.2 hereto, commencing on the Effective Date. 1.4 Executive shall perform his duties under this Agreement with reasonable diligence and faithfulness, and shall devote his full business time (excluding any periods of vacation or sick leave) and attention to such duties. Nothing in this Agreement shall preclude Executive from engaging in charitable and community affairs, from managing any passive investment made by him in publicly traded equity securities or other property or from continuing to serve as a member of the board of directors or as a trustee of any other corporation, association or entity with respect to which Executive serves as a director or trustee as of the date of this Agreement, or, with the prior written consent of the Committee (as defined in Section 3.2 hereof), such consent not to be unreasonably withheld, serving as a member of a board of directors or as a trustee of any other corporation, association or entity, provided, that these activities do not interfere with the performance of Executive's duties and responsibilities hereunder or violate the provisions of Section 12 of this Agreement. 2 1.5 The Executive agrees to serve, without additional compensation, as an officer and director for each of the Company's 20% or more owned subsidiaries, partnerships, joint ventures, and limited liability companies (collectively, such entities, the "Affiliated Group"), provided, that such service does not materially interfere with the Executive's performance of the duties and responsibilities of his position with the Company. 1.6 Executive's principal location of employment shall be at the location set forth on Schedule 1.6 hereto, provided, that Executive may be required under reasonable business circumstances to travel outside of such location in connection with performing his duties under this Agreement. 2. Term of Employment. Executive's term of employment under this Agreement shall commence on the Effective Date and, subject to the terms hereof, shall terminate on the earlier of (i) the third anniversary of the Effective Date (the "Termination Date") or (ii) the termination of Executive's employment pursuant to this Agreement (the period from the Effective Date until the termination of Executive's employment under this Agreement shall be the "Term"). This Agreement shall be renewed automatically for succeeding terms of one (1) year following the Termination Date (in which case both the Termination Date and the Term shall be extended one year on each renewal), unless either party gives written notice to the other at least 120 days prior to the applicable Termination Date of its intention not to renew. 3. Compensation and Equity Awards. 3.1 Salary. The Company shall pay Executive the initial annual base salary set forth on Schedule 3.1 hereto. The Base Salary shall be reviewed by the Company no less frequently than annually in a manner consistent with similarly situated executives of the Company and may be increased but not decreased. For all purposes under this Agreement, the term "Base Salary" 3 shall refer to Base Salary as in effect from time to time. Base Salary shall be payable in accordance with the ordinary payroll practices of the Company. 3.2 Annual Bonus. During the Term, Executive shall be eligible to receive an annual bonus (the "Bonus") with a target Bonus set at 55% of Base Salary (the "Target Bonus") and a maximum Bonus of 68.75% of Base Salary. Such Bonus shall be based upon the satisfaction of performance objectives and shall be determined on a weighted basis comprised of the following criteria: (i) Targets (as defined in the Stockholders' Agreement, of even date herewith, by and among Seminis Merger Corp. and the Persons listed on the signature pages thereto (the "Stockholders' Agreement")) - 40% (the "Target Component"); (ii) Executive performance goals established annually by the Compensation Committee (the "Committee") of the Board of Directors of the Company (the "Board") - 20% (the "Individual Component"); (iii) Milestones based upon Company net sales as set forth in the Approved Annual Business Plan (as defined in the Stockholders' Agreement) - 20% (the "Sales Component"); and (iv) Milestones based upon Company net working capital as set forth in the Approved Annual Business Plan - 20% (the "Net Working Capital Component") (items (i) through (iv) collectively, the "Performance Objectives," and each, separately, a "Performance Objective"). During any fiscal year in which an Approved Annual Business Plan has been adopted in accordance with the Stockholders' Agreement, the Bonus shall be equal to the sum of: (A) (Target Bonus)(.4)(the Applicable Percentage for the Target Component), PLUS (B) (Target Bonus)(.2)(the Applicable Percentage for the Individual Component), PLUS (C) 4 (Target Bonus)(.2)(the Applicable Percentage for the Sales Component), PLUS (D) (Target Bonus)(.2)(the Applicable Percentage for the Net Working Capital Component), where the Target Bonus is expressed in dollars and the Applicable Percentage with respect to any given Performance Objective is determined in accordance with the performance matrix below. During any fiscal year in which the Approved Annual Business Plan for such fiscal year is not approved and adopted by the Board in accordance with the Stockholders' Agreement at any point prior to or during such fiscal year, the Bonus shall be equal to the sum of (A) (Target Bonus) (.5) (the Applicable Percentage for the Target Component) PLUS (B) (Target Bonus) (.5) (the Applicable Percentage for the Individual Component), where the Target Bonus is expressed in dollars and the Applicable Percentage with respect to any given Performance Objective is determined in accordance with the performance matrix below: 5 PERFORMANCE MATRIX
IF PERFORMANCE APPLICABLE IS: PERCENTAGE: LESS THAN 90% of Performance 0% Objective 90% of Performance 50% Objective 95% of Performance 75% Objective 100% of Performance 100% Objective 125% of Performance 125% Objective OR GREATER
In the event actual performance for any fiscal year falls between any threshold listed in the chart above, (e.g. 91% of Performance Objective), then the Applicable Percentage shall be adjusted accordingly using a straight line method of interpolation (e.g. if actual performance is at 91% of Performance Objective, then the Applicable Percentage shall be 55%; if actual performance is 92% of Performance Objective, then the Applicable Percentage shall be 60%, etc.). The bonus shall be applicable for fiscal years of the Company beginning after the date hereof, and Executive's annual bonus for the Company's fiscal year ending September 30, 2003, shall be based on the Company's bonus plan in effect as of the date hereof, as set forth on Schedule 6.16(b) to the Merger Agreement. 6 3.3 Compensation Plans and Programs. Executive shall be eligible to participate in any compensation plans or programs maintained by the Company and generally made available to other senior executives of the Company, on terms comparable to those applicable to such other senior executives, provided, that such participation shall not cause the duplication of any compensation or benefits provided to Executive under this Agreement. 3.4 Restricted Stock Units. (a) Executive shall be granted on the Effective Date the number of restricted stock units of the Company (the "Restricted Stock Units") set forth on Schedule 3.4(a) hereto. The Restricted Stock Units shall vest (if at all) as provided below with respect to fiscal years in which an Approved Annual Business Plan has been adopted in accordance with the Stockholders' Agreement, so long as Executive remains employed by the Company through the applicable vesting dates: FISCAL YEAR ENDING IN 2004: N = ("Total 1" (as set forth on Schedule 3.4(b) hereto))(.4)(Applicable Percentage for the Target Component) + (Total 1)(.2)(Applicable Percentage for the Individual Component) + (Total 1)(.2)(Applicable Percentage for the Sales Component) + (Total 1)(.2)(Applicable Percentage for the Net Working Capital Component) FISCAL YEAR ENDING IN 2005: N = (Total 1)(.4)(Applicable Percentage for the Target Component) + (Total 1)(.2)(Applicable Percentage for the Individual Component) + (Total 1)(.2)(Applicable Percentage for the Sales Component) + (Total 1)(.2)(Applicable Percentage for the Net Working Capital Component) 7 FISCAL YEAR ENDING 2006: N = ("Total 2" (as set forth on Schedule 3.4(b) hereto))(.4)(Applicable Percentage for the Target Component) + (Total 2)(.2)(Applicable Percentage for the Individual Component) + (Total 2)(.2)(Applicable Percentage for the Sales Component) + (Total 2)(.2)(Applicable Percentage for the Net Working Capital Component) FISCAL YEAR ENDING 2007: N = ("Total 3" (as set forth on Schedule 3.4(b) hereto))(.4)(Applicable Percentage for the Target Component) + (Total 3)(.2)(Applicable Percentage for the Individual Component) + (Total 3)(.2)(Applicable Percentage for the Sales Component) + (Total 3)(.2)(Applicable Percentage for the Net Working Capital Component) FISCAL YEAR ENDING 2008: N = (Total 3)(.4)(Applicable Percentage for the Target Component) + (Total 3)(.2)(Applicable Percentage for the Individual Component) + (Total 3)(.2)(Applicable Percentage for the Sales Component) + (Total 3)(.2)(Applicable Percentage for the Net Working Capital Component) in each case, where N = the number of Restricted Stock Units that shall be eligible to vest for any given period and the Applicable Percentage with respect to any given Performance Objective is determined in accordance with the performance matrix below. Notwithstanding the foregoing, during any fiscal year in which the Approved Annual Business Plan for such fiscal year is not approved and adopted by the Board in accordance with the Stockholders' Agreement at any point prior to or during such fiscal year, the vesting of Restricted Stock Units shall be equal to the sum of (A) (N)(.5) (the Applicable Percentage for the 8 Target Component) PLUS (B) (N)(.5) (the Applicable Percentage for the Individual Component), where N = the number of Restricted Stock Units that shall be eligible to vest for any given period (in the same number as set forth above for the applicable fiscal year) and the Applicable Percentage with respect to any given Performance Objective is determined in accordance with the performance matrix below. Performance Matrix
IF PERFORMANCE APPLICABLE IS: PERCENTAGE: Less than 90% of 0% Performance Objective 90% of 50% Performance Objective 95% of 75% Performance Objective 100% of 100% Performance Objective or greater
In the event actual performance for any fiscal year falls between any threshold listed in the chart above, (e.g. 91% of Performance Objective), then the Applicable Percentage shall be adjusted accordingly using a straight line method of interpolation (e.g., if actual performance is at 91% of Performance Objective, then the Applicable Percentage shall be 55%; if actual performance is 92% of Performance Objective, then the Applicable Percentage shall be 60%, etc.). To the 9 extent conditions to vesting in any particular year are not met in such year, and some or all of the Restricted Stock Units do not vest in such year, such Restricted Stock Units shall be permanently forfeited. Notwithstanding the foregoing, in the event that prior to the fifth anniversary of the Effective Date, FPSH (as defined in the Stockholders' Agreement) achieves the IRR Hurdle (as defined in the Stockholders' Agreement) after giving effect to the vesting of all rights and options to purchase or receive shares of New Company Common Stock and the vesting of any Restricted Stock Units, the Restricted Stock Units (excepting any Restricted Stock Units that shall have been forfeited pursuant to the immediately preceding sentence) shall become vested as of such date if Executive has remained employed with the Company as of such date, provided that such vesting shall occur only to the extent that FPSH achieves the IRR Hurdle, and any reduced vesting to achieve the IRR Hurdle shall occur on a pro rata basis with other employees of the Company that have Restricted Stock Units. The Restricted Stock Units shall not constitute Rollover Equity for purposes of the put right provided for in Section 3.5 herein. (b) The Restricted Stock Units are subject to the following terms and conditions: (i) Executive will not be entitled to vote the underlying shares related to the Restricted Stock Units unless and until such shares are actually delivered to Executive. (ii) The Restricted Stock Units shall be equitably adjusted as determined by the Compensation Committee in the event of an extraordinary dividend or other corporate transaction if necessary to preserve the value of the Restricted Stock Units. Any property or dividends received upon such an adjustment will be subject to the same restrictions as the Restricted Stock Units to which they relate. 10 (iii) The Restricted Stock Units and the shares of New Company Common Stock received with respect to Restricted Stock Units will be subject to the terms of the Stockholders' Agreement. (iv) Vested Restricted Stock Units shall be converted into shares of New Company Common Stock upon the first to occur of (A) a Change of Control of the Company (as defined in the Stockholders' Agreement), (B) Executive's termination of employment, (C) the termination of the Stockholders' Agreement and (D) vesting of Restricted Stock Units, pursuant to Executive's initial election made as of the date of grant (or upon other elections to be provided by the Committee) to receive shares upon vesting. (v) Executive shall be eligible to make a tag-along election (as set forth in Section 2.6.2 of the Stockholders' Agreement) with respect to the vested Restricted Stock Units on the same terms as other Stockholders (as defined in the Stockholders' Agreement) in accordance with the terms of the Stockholders' Agreement; provided, that such tag-along election shall only be treated as being made if holders of a majority of the outstanding Restricted Stock Units elect to make the tag-along election and then all Restricted Stock Units will be treated as subject to the election. If holders of a majority of the outstanding Restricted Stock Units do not elect to make a tag-along election, then none of the Restricted Stock Units will be permitted to make the tag-along election. (vi) The vested Restricted Stock Units and any Restricted Stock Units that 11 would vest as a result of a completed Required Third Party Sale or a completed FPSH Drag Sale (as applicable) (as such terms are defined in the Stockholders' Agreement) shall be subject to the TPS Drag-Along Right (as defined in the Stockholders' Agreement) and the FPSH Drag Sale, respectively. (vii) Transfers of vested Restricted Stock Units may be made to Executive's family members on the same terms as other Company equity as set forth in the Stockholders Agreement, but shall otherwise not be transferable other than as provided therein. (c) Executive represents and warrants that he (i) has such knowledge and experience in business and financial matters with respect to investments in securities to enable him to understand and evaluate the risks of the investment contemplated hereby and form an investment decision with respect thereto and is able to bear the risk of such investment for an indefinite period and to afford a complete loss thereof, (ii) is an "accredited investor" as defined in Rule 501 of Regulation D under the Securities Act of 1933, as amended, (iii) has had the opportunity to (A) ask such questions as Executive has deemed necessary of, and to receive answers from, representatives of the Company concerning the terms of the transactions contemplated hereby (including the provisions of Section 3.4 of this Agreement) and the merits and risks of investing in securities of the Company and (B) to obtain such additional information which Company possesses or can acquire without unreasonable effort or expense and (iv) is acquiring equity interests in the Company for his own account and not with a view to or for sale in connection with any distribution of securities. 12 3.5 Rollover Equity. (a) Executive shall roll over all of his shares of Company Common Stock (as defined in the Merger Agreement) and all of his Options (as defined in the Merger Agreement) into shares of New Company Common Stock (as defined in the Merger Agreement) and Retained Options (such rolled New Company Common Stock and Retained Options, the "Rollover Equity"), and such Retained Options shall be 100% vested and exercisable as of the Closing Date and shall have substantially the same terms and conditions as the Options. Beginning in 2004, Executive shall be permitted to "put" the shares of New Company Common Stock and Retained Options that comprise the Rollover Equity to the Company each year if (i) 100% of each Performance Objective for the immediately preceding fiscal year has been satisfied and (ii) the agreements governing the indebtedness of the Company permit the repurchase of such Rollover Equity. The put right contemplated hereby shall be applicable to the Rollover Equity only. (b) Executive shall give notice of his intention to exercise the put right described herein during the three (3) months prior to September 30 of a particular year. If the conditions to such exercise and payment have been met, the Company shall make payment in respect of the Rollover Equity as soon as practicable following the end of the applicable calendar year, but in no event later than January 31 of the following year. The per-share put price shall be based upon the fair market value of the New Company Common Stock as reasonably determined by the Board in light of all circumstances. In the case of Retained Options, the per-share put price shall be net of any applicable exercise price and withholding. The Board may, in its discretion, assign the rights and obligations of the Company under this Section 3.5 to any other person, but no such assignment shall relieve the Company of its obligations hereunder to the extent not satisfied by such assignee. 13 (c) Subject to the following sentence, in any given year, Executive may exercise the put right provided for herein with respect to no less than 25% of the aggregate number of shares of New Company Common Stock and/or Retained Options owned by Executive on the Effective Date; provided, however, that if Executive owns fewer than 25% of the aggregate number of shares of New Company Common Stock and Retained Options owned by Executive on the Effective Date, Executive may exercise the put right provided for herein with respect to all of such shares of New Company Common Stock and Options. In the event that the condition set forth in clause (i) of the second sentence of Section 3.5(a) has been met and the agreements governing the indebtedness of the Company permit the repurchase of some but not all of the aggregate amount of rollover equity (including the Rollover Equity) with respect to which executives (including Executive) have exercised put rights, the amount of rollover equity that the Company shall purchase shall be allocated among the executives (including Executive) exercising such put right on an unweighted pro rata basis. (d) If Executive's employment terminates for any reason, then the put right provided herein shall terminate; provided that the Company shall be obligated to satisfy any unfulfilled obligations with respect to any put right exercised prior to such termination; and provided further that Executive's Rollover Equity shall thereafter be subject to the post-termination put and call provisions contained in Article IV of the Stockholders' Agreement. The put right provided for herein shall terminate upon the occurrence of an IPO (as defined in the Stockholders' Agreement). (e) Notwithstanding anything to the contrary contained in this Agreement, the put right provided for herein shall be subject to all other provisions in the Stockholders' Agreement. Without limiting the foregoing, Executive acknowledges that the Rollover Equity shall be 14 subject to the TPS Drag-Along Right and the FPSH Drag Sale, each of which shall supersede the put right provided for herein. (f) Notwithstanding anything to the contrary contained in this Agreement, effective as of the date hereof, Executive waives any right to be cashed out of all of his shares of Company Common Stock and Options under the Merger Agreement or to exercise any of his Options prior to the Effective Date. 4. Employee Benefits. 4.1 Employee Benefit Programs, Plans and Practices. During the Term, Executive shall be entitled to participate in welfare, health and life insurance and pension benefit programs as may be in effect from time to time for similarly situated executives of the Company generally. Executive shall not be entitled to participate in any severance plans provided to Company employees and hereby waives any rights to receive severance benefits other than as provided in this Agreement. 4.2 Vacation; Fringe Benefits; Perquisites. Executive shall be entitled to no less than twenty (20) business days paid vacation in each calendar year. Vacation days will accrue up to a maximum of forty (40) days, at which time, further accruals will cease until the accrued vacation day balance falls below 40 days. In addition, Executive shall be entitled to the perquisites and other fringe benefits generally made available to similarly situated executives of the Company, commensurate with his position with the Company. In addition, Executive shall be entitled to receive benefits reasonably comparable to those provided to Executive as of the date of this Agreement as set forth on Schedule 4.2 hereto. 5. Expenses. During the Term, Executive shall be entitled to receive prompt reimbursement in accordance with the Company's policies for out-of-pocket business expenses 15 reasonably incurred in carrying out his duties and responsibilities under this Agreement, including, without limitation, reasonable expenses for travel and similar items related to such duties and responsibilities. 6. Termination of Employment. 6.1 Termination Not for Cause or for Good Reason. (a) If, prior to the Termination Date, during the Term, Executive's employment is terminated (A) by the Company other than for Cause (as defined in Section 6.2(b) hereof), (B) as a result of Executive's death or as a result of Executive's Permanent Disability (as defined in Section 6.1(d) hereof), or (C) by Executive for Good Reason (as defined in Section 6.1(c) hereof), Executive shall receive: (i) such payments, if any, to which Executive is entitled under any applicable plans or programs, including but not limited to those referred to in Sections 3.3 and 4.1 hereof, in accordance with the terms of such plans or programs; (ii) a cash lump sum payment in respect of accrued but unused vacation days and Base Salary and, if any such termination of employment occurs after the end of a Company fiscal year and prior to the payment of Bonuses for such fiscal year, any Bonus payments earned by Executive for such fiscal year but not yet paid; (iii) continued coverage under any employee medical plans or programs provided to Executive and his family members pursuant to Section 4.1 hereof until the earlier of the second anniversary of Executive's termination of employment or the date on which Executive becomes entitled to receive medical coverage under another employer's medical benefit program, provided, that Executive shall continue to be required to pay any applicable premiums of a participating employee in such plans and programs; (iv) a cash lump sum payment equal to two (2) times the sum of the (I) Base Salary (as of immediately prior to the Executive's date of termination of employment, but excluding any decrease in Base Salary causing Executive to have Good Reason) plus (II) the average annual bonus paid or payable to Executive with respect to the two (2) fiscal years immediately prior to the Executive's date of termination of employment (provided, however, that if the Executive's date of termination of employment occurs at any time during the 2002-2003 fiscal year, then the "average annual bonus" shall be deemed to be the, bonus paid or payable with respect to the 2001-2002 fiscal year and if Executives date of termination occurs prior to a date upon which a determination of an annual bonus amount has been made by the Company for a prior fiscal year for Executive 16 then the "average annual bonus" shall be deemed to be the Target Bonus), less any applicable insurance benefits, provided, that any reduction for disability benefits shall be with respect to benefits received by Executive during the two-year period following Executive's date of termination of employment. (b) All payments payable by the Company to Executive pursuant to this Section 6.1 shall be paid within 30 days after the termination of Executive's employment by check payable to the order of Executive or by wire transfer to an account specified by Executive and shall be subject to Executive entering into and not revoking a release substantially in the form set forth as Exhibit A hereto. (c) For purposes of this Agreement, "Good Reason" shall mean that any of the events set forth in clauses (i) through (v) below shall occur without the written consent of Executive, provided, that (x) Executive shall provide the Company with written notice thereof within one hundred and twenty (120) days after Executive has knowledge of the occurrence of any of the events or circumstances set forth in clauses (i) through (v) below, which notice shall specifically identify the event or circumstance that Executive believes constitutes Good Reason, (y) the Company fails to correct the circumstance or event so identified within twenty (20) days after the date of delivery of the notice referred to in clause (x) above, and (z) Executive resigns his employment for Good Reason within ninety (90) days after the date of delivery of the notice referred to in (x) above: (i) a reduction in Executive's Base Salary; (ii) Executive's duties, titles, responsibilities or authority are materially diminished in comparison to the duties, titles and responsibilities or authority set forth in this Agreement, or Executive is assigned duties materially and adversely inconsistent with his position; (iii) a material reduction in fringe benefits, perquisites or other allowances provided to Executive pursuant to Section 4.2, other than (except for benefits specifically set forth in Schedule 4.2 of this Agreement) as a result of a change 17 applicable to employees of the Company generally, or any material failure to provide such benefits to Executive; (iv) the failure of the Company to obtain a satisfactory agreement from any successor to assume and agree to perform the Agreement, as contemplated in Section 10 herein, or (v) any requirement that Executive relocate to an office more than 25 miles from his office as of the Effective Date. (d) For purposes of this Agreement, "Permanent Disability" shall mean Executive's absence from full time performance of duties due to physical or mental illness for six (6) consecutive months, that is reasonably determined to be total and permanent by a physician selected by the Company or its insurers and reasonably acceptable to Executive or his legal representative. (e) For purposes of this Agreement, Change of Control shall have the meaning ascribed to such term in the Stockholders' Agreement. 6.2 Discharge for Cause; Voluntary Termination by Executive. (a) The Company shall have the right to terminate the employment of Executive for Cause by action of the Committee. In the event that Executive's employment is terminated, prior to the Termination Date, (i) by the Company for Cause, as hereinafter defined, or (ii) by Executive other than (A) for Good Reason or (B) as a result of the Executive's death or Permanent Disability or (iii) upon a failure to renew this Agreement pursuant to Section 2, Executive shall be entitled to receive a lump sum cash payment in respect of any earned but unpaid Base Salary and in respect of any accrued vacation days. In addition, Executive shall be entitled to such payments and benefits, if any, under any applicable plans or programs, including, but not limited to, those referred to in Sections 3.3 and 4.1 hereof, to which he is entitled pursuant to the terms of such plans or programs. 18 (b) As used herein, the term "Cause" shall mean (i) Executive's conviction of, or plea of guilty or nolo contendere to, a felony (or a comparable level of crime in another jurisdiction); provided, however, that after indictment for a felony, the Company may suspend Executive from the rendition of services, but without limiting or modifying in any other way, the Company's obligations to Executive under this Agreement, (ii) continued and repeated refusal by Executive to perform his duties hereunder after fifteen (15) days written notice of any such refusal to perform such duties or direction was given to Executive, (iii) commission by Executive of fraud against, or misappropriation of significant property belonging to, the Company, unless such action is neither willful nor injurious to the Company or any of its Subsidiaries, or other willful misconduct materially injurious to the Company or any of its Subsidiaries or (iv) during any period in which FPSH and its affiliates are the beneficial owners of 20% or more of the value of the Company's stock in the aggregate, a material breach by Executive of the provisions of the Corporate Policies and Procedures (as defined in the Stockholders' Agreement) or Section 12 of this Agreement, unless such breach is neither willful nor materially injurious to the Company or any of its Subsidiaries. Termination of Executive pursuant to this Section 6.2(b) shall be made by delivery to Executive of a copy of a resolution duly adopted by the affirmative vote of not less than a majority of the then members of the Committee at a meeting of the Committee called and held for the purpose (after 30 days prior written notice to Executive and reasonable opportunity for Executive and his counsel to be heard before the Committee prior to such vote), finding that in the reasonable judgment of the Committee, Executive was guilty of conduct set forth in any of clauses (i) through (iv) above and specifying the particulars thereof. 6.3 Resignation from all Positions. Notwithstanding any other provision of this Agreement, upon the termination of the Executive's employment for any reason, unless 19 otherwise requested by the Board, the Executive shall immediately resign from all positions that he holds or has ever held with the Company and any other member of the Affiliated Group (and with any other entities with respect to which the Company has requested the Executive to perform services), including, without limitation, all boards of directors of any member of the Affiliated Group. The Executive hereby agrees to execute any and all documentation to effectuate such resignations upon request by the Company, but he shall be treated for all purposes as having so resigned upon termination of his employment, regardless of when or whether he executes any such documentation. 6.4 Breach of Section 12. Notwithstanding anything to the contrary in this Agreement, in the event of a breach by Executive of the provisions of Section 12 of this Agreement following Executive's termination of employment, or a material breach by Executive of the provisions of Section 12 of this Agreement during Executive's employment which the Committee determines would have been Cause to terminate Executive's employment and that is discovered by the Company within six (6) months following Executive's termination of employment, Executive shall be entitled to no further payments under this Section 6, and shall repay to the Company any payments previously made under this Section 6. Any amounts repaid by Executive under this Section 6.4 will reduce (on a dollar for dollar basis) any damages payable by Executive as a result of a breach of the terms of Section 12. 7. Mitigation of Damages. Executive shall not be required to mitigate damages or the amount of any payment provided for under this Agreement by seeking other employment or otherwise after the termination of his employment hereunder, and any amounts earned by 20 Executive, whether from self-employment, as a common-law employee or otherwise, shall not reduce the amount of any payments otherwise payable to him pursuant to this Agreement. 8. Notices. All notices or communications hereunder shall be in writing, addressed as follows: To the Company: Seminis, Inc. 2700 Camino del Sol Oxnard, California 93030-7967 Attn: General Counsel with a copy to: Fox Paine & Company, LLC 950 Tower Lane, Suite 1950 Foster City, California 94404 Attn: W. Dexter Paine, III To Seminis Merger Corp.: Seminis Merger Corp. c/o Fox Paine & Company, LLC 950 Tower Lane, Suite 1950 Foster City, California 94404 Attn: W. Dexter Paine, III To Executive: Jose Manuel Madero Garza At the address most recently on file with the Company with a copy to: Milbank, Tweed, Hadley & McCloy, LLP One Chase Manhattan Plaza New York, New York 10005 Attn: Ed Rayner Any such notice or communication shall be delivered by hand or by courier or sent certified or registered mail, return receipt requested, postage prepaid, addressed as above (or to such other 21 address as such party may designate in a notice duly delivered as described above), and the third business day after the actual date of mailing shall constitute the time at which notice was given. 9. Separability; Legal Fees. If any provision of this Agreement shall be declared to be invalid or unenforceable, in whole or in part, such invalidity or unenforceability shall not affect the remaining provisions hereof which shall remain in full force and effect. Each party shall bear the costs of any legal fees and other fees and expenses which may be incurred in respect of enforcing its respective rights under this Agreement. 10. Successors and Assigns. Except as otherwise provided herein, this Agreement shall be binding upon, inure to the benefit of and be enforceable by Seminis Merger Corp. and Executive and their respective heirs, legal representatives, successors and assigns. Executive may not assign this Agreement, other than, with respect to payments in the event of Executive's death, to Executive's estate or beneficiaries. Seminis Merger Corp. may assign this Agreement to any of its affiliates in the event of any restructuring or reorganization of Seminis Merger Corp. or to a successor to all or substantially all of Seminis Merger Corp.'s assets, and the benefits of this Agreement shall inure to such entity and the obligations of this Agreement shall be binding on such entity; provided, that, if Seminis Merger Corp. assigns this Agreement to an affiliate which is not a successor to all or substantially all of its assets, Seminis Merger Corp. shall continue to guarantee the payments and benefits hereunder. If the Company shall be merged into or consolidated with another entity, the provisions of this Agreement shall be binding upon and inure to the benefit of the entity surviving such merger or resulting from such consolidation and Seminis Merger Corp. shall require any such successor, by agreement in form and substance satisfactory to Executive, to expressly assume and agree to perform this Agreement in the same manner and to the same extent that Seminis Merger Corp. would be required to perform it if no 22 such succession had taken place. For avoidance of doubt, upon the Effective Date the Company will be the successor to Seminis Merger Corp. and Executive hereby acknowledges that the provisions of Section 3.3 of the Merger Agreement shall satisfy the obligations of Seminis Merger Corp. under the immediately preceding sentence. The provisions of this Section 10 shall continue to apply to each subsequent employer of Executive in the event of any subsequent merger or consolidation of such subsequent employer. As used in this Agreement, the term "affiliates" shall include any entity controlled by, controlling, or under common control with Seminis Merger Corp. or the Company, as applicable. 11. Amendment. This Agreement may only be amended by written agreement of the parties hereto. 12. Nondisclosure of Confidential Information; Work Product; Non-Disparagement; Non-Competition; Non-Solicitation. 12.1 Confidential Information of the Company and Its Affiliates. All Confidential Information relating to or obtained from the Company or its affiliates shall be held in the strictest confidence by Executive. Executive shall not, directly or indirectly, disclose, use, publish, release, transfer or otherwise make available Confidential Information of, or obtained from the Company or any of its affiliates in any form to, or for the use or benefit of, any person or entity without the Company's prior written consent, except (i) while employed by the Company, in the business of and/or for the benefit of the Company or (ii) when required to do so by a court of competent jurisdiction, by any governmental agency having supervisory authority over the business of the Company, or by any administrative body or legislative body (including a committee thereof) with jurisdiction to order Executive to divulge, disclose or make accessible such information. For purposes of this Section 12.1, "Confidential Information" shall mean all 23 information and documentation of the Company or its affiliates, whether disclosed to or accessed by Executive in connection with his employment with the Company or the Affiliated Group that is not otherwise available to the public (other than by Executive's breach of the terms hereof), including all (i) data and information of the Company or its affiliates or the customers, suppliers, contractors or other third parties doing business with any of the Company or its affiliates, including business plans, memoranda, reports, drawings, research results, research plans, inventions (patentable or otherwise), trade secrets and research products and (ii) Work Product (as defined below) created by Executive. 12.2 Executive hereby acknowledge that any ideas, concepts, designs, discoveries, techniques, research results, inventions, methodologies, know-how, improvements, discoveries, processes or products, whether or not patentable, that Executive conceives of or reduces to practice during the term of his/her employment with the Company or the Affiliated Group and which are in connection with Executive's employment or related to the nature of Executive's employment (collectively, the "Work Product"), shall be, or be deemed to be, "work for hire" and owned by the Company. Furthermore, the Company shall have all right, title and interest, including worldwide ownership of copyright and patent, in and to the Work Product and all copies made from them. To the extent (a) any of the Work Product is not deemed a "work for hire" by operation of law and (b) permissible under applicable law, Executive hereby irrevocably assigns, transfers and conveys to the Company all of his/her right, title and interest in and to such Work Product, including all rights of patent, copyright, trade secret or other intellectual property or proprietary rights in such materials. Executive acknowledges that the Company and the successors and permitted assigns of the Company shall have the right to obtain and hold in their own name any intellectual property rights in and to such Work Product. 24 12.3 During the Term and for a period of 24 months from the date of the termination of Executive's employment for any reason (the "Restricted Period"), Executive shall not compete with the Company or the Affiliated Group, by directly or indirectly engaging in any business or activity, whether as an employee, consultant, partner, principal, agent, representative or stockholder or in any other individual, corporate or representative capacity, or render any services or provide any advice or substantial assistance to any business, person or entity, if such business, person or entity, directly or indirectly, competes (or, to Executive's knowledge after due inquiry, intends to compete or is preparing to compete during the Restricted Period) with the Business of the Company or the Affiliated Group in any material manner. It is the intention of the parties that the potential restrictions on Executive's activities imposed by this paragraph be and are reasonable in duration, scope and geography and in all other respects. For purposes of this Section 12, "Business" shall mean the business of marketing, developing, producing and researching new fruit or vegetable seeds and fruit or vegetable plants, or any other material businesses entered into by the Company or the Affiliated Group during the Term, or with respect to which the Company or the Affiliated Group has taken material steps to enter into as of the termination of Executive's employment. During the Restricted Period, Executive shall be available to consult with the Company on Company-related matters within his knowledge in person or by phone, as determined by Executive, for a period of no more than five (5) days per calendar quarter, subject to not interfering with Executive's work schedule; provided, however, that for each full or partial day during which Executive provides such services (other than with respect to de minimis services of less than two (2) hours on a given day), the Company shall pay to Executive a sum of $500 (such limitations and payments shall not apply to any lawsuits in 25 which Executive is a named party). In addition, the Company shall promptly reimburse Executive for his reasonable expenses, if any, in providing such services. 12.4 Except as is required or appropriate in the furtherance of the business of the Company or the Affiliated Group, Executive shall not, during the Restricted Period, either alone or in concert with others, directly or indirectly, (1) solicit, entice, induce or encourage (a) any customer of the Company or the Affiliated Group (including, during the Term, the Company's affiliates) to discontinue using the services or purchasing the products of the Company or the Affiliated Group (including, during the Term, the Company's affiliates), (b) any customer to refer prospective customers or business to any competitor of the Company or the Affiliated Group or (c) any person or entity that is part of any existing or proposed arrangement or has any other affiliation with the Company or the Affiliated Group (including, during the Term, the Company's affiliates) to discontinue such relationship or affiliation with the Company or its affiliates or (2) recruit or hire, or assist others in recruiting or hiring, or otherwise solicit for employment, any consultants or employees of the Company or its affiliates, or former consultants or employees of the Company or its affiliates within six (6) months following their termination of employment. 12.5 Upon request by the Company at any time during Executive's employment or upon termination of Executive's employment with the Company for any reason, Executive shall promptly (1) return to the Company or its affiliates all copies of all materials, including documentary or other recorded materials, which are in Executive's possession or control and which contain or embody any Confidential Information of the Company or its affiliates and (2) deliver to the Company or its affiliates all copies of any Work Product in Executive's 26 possession or control. Executive shall not copy, reproduce or otherwise re-create in any fashion any of the items referenced above for personal retention by Executive. 12.6 The Executive acknowledges and agrees that: (i) the purposes of the foregoing covenants are to protect the goodwill and Work Product and Confidential Information of the Company and its affiliates in connection with the transactions contemplated by the Merger Agreement, and to prevent the Executive from interfering with the business of the Company and the Affiliated Group as a result of or following termination of the Executive's employment with the Company or the Affiliated Group, as applicable, (ii) because of the nature of the business in which the Company and the Affiliated Group are engaged and because of the nature of the Work Product and Confidential Information to which the Executive has access, it would be impractical and excessively difficult to determine the actual damages to the Company and the Affiliated Group in the event the Executive breached any of the covenants of this Section 12; and (iii) remedies at law (such as monetary damages) for any breach of the Executive's obligations under this Section 12 would be inadequate. The Executive therefore agrees and consents that if the Executive commits any breach of a covenant under this Section 12 or threatens to commit any such breach, the Company, and its affiliates shall have the right (in addition to, and not in lieu of, any other right or remedy that may be available to each of them) to temporary and permanent injunctive relief from a court of competent jurisdiction, without posting and bond or other security and without the necessity of proof of actual damage. With respect to any provision of this Section 12 finally determined by a court of competent jurisdiction to be unenforceable, the Executive and the Company and its affiliates hereby agree that such court shall have jurisdiction to reform this Agreement or any provision hereof so that it is enforceable to the maximum extent permitted by law, and the parties agree to abide by such court's 27 determination. If any of the covenants of this Section 12 are determined to be wholly or partially unenforceable in any jurisdiction, such determination shall not be a bar to or in any way diminish the rights of the Company or its affiliates, as applicable, to enforce any such covenant in any other jurisdiction. 12.7 The provisions of this Section 12 shall remain in full force and effect until the expiration of the period specified herein notwithstanding he earlier termination of the Executive's employment hereunder or the Employment Period. 13. Beneficiaries; References. Executive shall be entitled to select (and change, to the extent permitted under any applicable law) a beneficiary or beneficiaries to receive any compensation or benefit payable hereunder following Executive's death, and may change such election, in either case by giving the Company written notice thereof. In the event of Executive's death or a judicial determination of his incompetence, reference in this Agreement to Executive shall be deemed, where appropriate, to refer to his beneficiary, estate or other legal representative. Any reference to the masculine gender in this Agreement shall include, where appropriate, the feminine. 14. Survivorship. The respective rights and obligations of the parties hereunder shall survive any termination of this Agreement to the extent necessary to the intended preservation of such rights and obligations. 15. Governing Law; Consent to Jurisdiction. 15.1 Governing Law. This Agreement shall be construed, interpreted and governed in accordance with the laws of the State of California, without reference to rules relating to conflicts of law. 28 15.2 Consent to Jurisdiction. The parties hereto hereby agree and consent to be subject to the exclusive jurisdiction of the courts of the State of California sitting in the County of Los Angeles and the United States District Court for the Central District of the State of California in any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the Merger. Each party hereto hereby irrevocably waives, to the fullest extent permitted by law, (i) any objection that it may now or hereafter have to laying venue of any suit, action or proceeding brought in such courts, and (ii) any claim that any suit, action or proceeding brought in such courts has been brought in an inconvenient forum. 16. Effect on Prior Agreements. This Agreement contains the entire understanding between the parties hereto and, as of the Effective Date, Executive waives all payments and benefits under any prior or other employment agreement or understanding between the Company or any affiliate of the Company and Executive, including, but not limited to, the employment agreement between Seminis Vegetable Seeds, Inc. and Executive dated as of July 18, 2002 (the "Prior Agreement"). Notwithstanding the forgoing, effective as of the date hereof, Executive waives his right to, and agrees not to accept all payments under the Prior Agreement upon voluntary termination of Executive's employment with the Company or termination of Executive's employment with the Company by the Company for Cause, and will repay to Seminis Merger Corp. on the Effective Date any such payments made, provided, that such provisions of the Prior Agreement shall again become operative in the event that the Merger Agreement is terminated prior to consummation of the Merger. 17. Withholding. The Company may withhold from any amounts payable under this Agreement (including from shares of New Company Common Stock deliverable under Section 29 3.4(b)) such Federal, state, local or foreign taxes as shall be required to be withheld pursuant to any applicable law or regulation, or may permit Executive to elect to pay the Company any such required withholding taxes. If Executive so elects, the payment by Executive of such taxes shall be a condition to the receipt of amounts payable to Executive under this Agreement. The Company shall, to the extent permitted or required by law, have the right to deduct any such taxes from any payment otherwise due to Executive. 18. Counterparts. This Agreement may be executed in two or more counterparts, each of which will be deemed an original. 30 IN WITNESS WHEREOF, as of the date first above written, the Company has caused this Agreement to be executed on its behalf by a duly authorized officer and Executive has hereunto set Executive's hand. SEMINIS MERGER CORP. By /s/ Bernardo Jimenez Date: May 30, 2003 ---------------------------- ------------ Name: Bernardo Jimenez Title: President /s/ Jose Manuel Madero Garza Date: May 30, 2003 ---------------------------- ------------ Jose Manuel Madero Garza 31 EXHIBIT A FORM OF RELEASE AGREEMENT This Release Agreement ("Release") is entered into as of this ______day of ________, (hereinafter "Execution Date"), by and between [Employee Full Name] (hereinafter "Employee"), and Seminis, Inc. and its successors and assigns (hereinafter, the "Company"). Employee and the Company are sometimes collectively referred to herein as the "Parties". 1. Employee's employment with the Company is terminated effective [Month, Day, Year] (hereinafter "Termination Date"). 2. The Company has agreed to provide Employee the severance payments, awards and benefits provided for in his/her Employment Agreement with the Company, dated as of May __, 2003, after he/she executes this Release and the Release becomes effective pursuant to its terms [FOR 40+ and does not revoke it as permitted in Section 7 below, the expiration of such revocation period being] the ("Effective Date"). 3. Employee represents that he/she has not filed, and will not file, any complaints, lawsuits, administrative complaints or charges relating to his/her employment with, or resignation from, the Company[; provided, however, that nothing contained in this Section 3 shall prohibit Employee from bringing a claim to challenge the validity of the ADEA Release in Section 7 herein]. In consideration of the severance payments, awards and benefits described in Section 2, Employee, for himself/herself and for his/her heirs, administrators, representatives, executors, successors and assigns (collectively, "Releasers") agrees to release the Company, its subsidiaries and affiliates, and their respective parents, direct or indirect subsidiaries, divisions, affiliates and related companies or entities, regardless of its or their form of business organization, any predecessors, successors, joint ventures, and parents of any such entity, and any and all of their respective past or present shareholders, partners, directors, officers, employees, consultants, independent contractors, trustees, administrators, insurers, agents, attorneys, representatives and fiduciaries, including without limitation all persons acting by, through, under or in concert with any of them, in each instance in their capacities as representatives of the Company (collectively, the "Released Parties"), from any and all claims, charges, complaints, causes of action or demands of whatever kind or nature that Employee and his/her Releasers now have or have ever had against the Released Parties, whether known or unknown, including but not limited to: wrongful or tortious termination; constructive discharge; implied or express employment contracts and/or estoppel; discrimination and/or retaliation under any federal, state or local statute or regulation, specifically including any claims Employee may have under the Fair Labor Standards Act, the Americans with Disabilities Act, Title VII of the Civil Rights Act of 1964 as amended, and the Family and Medical Leave Act; the discrimination or other employment laws of the State of [ ](1); any claims brought under any federal or state statute or regulation for non-payment of wages or other compensation, including grants of stock options or any other equity compensation); and libel, slander, or breach of contract, other than the breach of this Release. This Release specifically excludes claims, charges, complaints, causes of action or - -------- (1) Insert state of employment. demand that post-date the Termination Date. Notwithstanding anything herein to the contrary, expressly excluded from this Release are any claims (i) for payments, awards and benefits under the Employment Agreement between the Parties dated _________, 2003, (ii) under the Stockholders' Agreement dated as of _______, 2003 by and among Seminis, Inc. and the Investors listed on the signature pages thereto, (iii) for benefits provided under Company benefit plans, incentive plans or equity plans (including, but not limited to, stock options, restricted stock units and stock grants) or (iv) for indemnification and any applicable directors and officers liability insurance coverage to which Employee was entitled with regard to service as an officer of the Company. 4. Employee agrees to keep the terms of this Release in strict confidence, but he/she may disclose the terms of this Release and provide a copy hereof to his/her immediate family and his/her financial and legal advisors. 5. Employee warrants that no promise or inducement has been offered for this Release other than as set forth herein and in the Employment Agreement and that this Release is executed without reliance upon any other promises or representations, oral or written. Any modification of this Release must be made in writing and be signed by Employee and the Company. 6. If any provision of this Release or compliance by Employee or the Company with any provision of the Release constitutes a violation of any law, or is or becomes unenforceable or void, then such provision, to the extent only that it is in violation of law, unenforceable or void, will be deemed modified to the extent necessary so that it is no longer in violation of law, unenforceable or void, and such provision will be enforced to the fullest extent permitted by law. If such modification is not possible, such provision, to the extent that it is in violation of law, unenforceable or void, will be deemed severable from the remaining provisions of this Release, which provisions will remain binding on both Employee and the Company. This Release is governed by, and construed and interpreted in accordance with the laws of the State of [ ], without regard to principles of conflicts of law. Employee consents to venue and personal jurisdiction in the State of [ ] for disputes arising under this Release. [ONLY IF THE STATE IS EMPLOYEE'S STATE OF EMPLOYMENT.] This Release represents the entire understanding with the Parties with respect to subject matter herein, no oral representations have been made or relied upon by the Parties. 7. [FOR EMPLOYEES OVER 40 ONLY -- In further recognition of the above, Employee hereby releases and discharges the Released Parties from any and all claims, actions and causes of action that he/she may have against the Released Parties, as of the date of the execution of this Release, arising under the Age Discrimination in Employment Act of 1967, as amended ("ADEA"), and the applicable rules and regulations promulgated thereunder. Employee acknowledges and understands that ADEA is a federal statute that prohibits discrimination on the basis of age in employment, benefits and benefit plans. Employee specifically agrees and acknowledges that: (A) the release in this Section 7 was granted in exchange for the receipt of consideration that exceeds the amount to which he/she would otherwise be entitled to receive upon termination of his/her employment; (B) his/her waiver of rights under this Release is knowing and voluntary as required under the Older Workers 2 Benefit Protection Act; (B) that he/she has read and understands the terms of this Release; (C) he/she has hereby been advised in writing by the Company to consult with an attorney prior to executing this Release; (D) the Company has given him/her a period of twenty-one (21) days within which to consider this Release, which period may be waived by the Employee's voluntary execution prior to the expiration of the twenty-one day period; and (E) following his/her execution of this Release he/she has seven (7) days in which to revoke his/her release as set forth in this Section 7 only and that, if he/she chooses not to so revoke, the Release in this Section 7 shall then become effective and enforceable and the payments, awards and benefits provided herein shall then be made to him/her in accordance with the terms of this Release, as well as the terms of the Employment Agreement. To revoke this Release, Employee understands that he/she must give a written revocation to the General Counsel of the Company at [ ](2), either by hand delivery or certified mail within the seven-day period. If he/she revokes the Release, it will not become effective or enforceable and he/she will not be entitled to any benefits from the Company.] 8. EMPLOYEE ACKNOWLEDGES AND AGREES THAT HE/SHE HAS CAREFULLY READ AND VOLUNTARILY SIGNED THIS RELEASE, THAT HE/SHE HAS HAD AN OPPORTUNITY TO CONSULT WITH AN ATTORNEY OF HIS/HER CHOICE, AND THAT HE/SHE SIGNS THIS RELEASE WITH THE INTENT OF RELEASING THE RELEASED PARTIES TO THE EXTENT SET FORTH HEREIN. 9. In the event that any provision of this Release should be held to be invalid or unenforceable, each and all of the other provisions of this Release shall remain in full force and effect. If any provision of this Release is found to be invalid or unenforceable, such provision shall be modified as necessary to permit this Release to be upheld and enforced to the maximum extent permitted by law. 10. Employee acknowledges that he/she is familiar with the provisions of California Civil Code Section 1542, which provides as follows: "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS/HER FAVOR AT HE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM/HER MUST HAVE MATERIALLY AFFECTED HIS/HER SETTLEMENT WITH THE DEBTOR. EMPLOYEE BEING AWARE OF SAID CODE SECTION, HEREBY EXPRESSLY WAIVES ANY RIGHT HE/SHE MAY HAVE THEREUNDER, AS WELL AS UNDER ANY OTHER STATUTES OR COMMON LAW PRINCIPLES OF SIMILAR EFFECT." Employee being aware of said code section, hereby expressly waives any right he/she may have thereunder, as well as under any other statutes or common law principles of similar effect. 11. This Release inures to the benefit of the Company and its successors and assigns. - ------------------------- (2) Insert address. 3 ACCEPTED AND AGREED TO: __________________________________ ___________________________________ Seminis, Inc. [Employee Full Name] Dated:____________________________ Dated:_____________________________ 4 SCHEDULES TO TIER III EMPLOYMENT AGREEMENT: JOSE MANUEL MADERO SCHEDULE 1.2 POSITION Vice President, Supply-Delivery Chain SCHEDULE 1.6 LOCATION OF EMPLOYMENT The Company's offices in Oxnard, California SCHEDULE 3.1 BASE SALARY $200,000 The initial annual Base Salary set forth above shall be retroactive from April 1, 2003. As soon as possible after the Effective Date, the Company shall pay Executive a lump sum amount equal to the amount necessary to increase Executive's Base Salary during the period commencing on April 1, 2003 through the Effective Date to an annual rate of $200,000, assuming a prior rate of base salary equal to $156,150. SCHEDULE 3.4(A) RESTRICTED STOCK UNITS 132,353 SCHEDULE 3.4(b) VESTING OF RESTRICTED STOCK UNITS Total 1: 13,235.3 Total 2: 26,470.6 Total 3: 39,705.9 SCHEDULE 4.2 (a) In the event of a termination of Executive's employment entitling Executive to severance payments under Section 6.1 of this Agreement, the Company shall pay to Executive an amount equal to the cost of the enrollment fee to the American School Foundation in Monterrey for the Executive's three children upon his return to Mexico, provided, that Executive elects to so enroll his children within one (1) year following such termination of employment. If the children are not able to enter the school due to space limitations, the Company shall reimburse a comparable enrollment fee in another educational institution. (b) a housing allowance of $36,000 per year net of taxes, which shall be reduced over time as follows: 1st year with Seminis 100%, or $36,000 net per year 2nd year with Seminis 75%, or $27,000 net per year 3rd year with Seminis 50%, or $18,000 net per year 4th year with Seminis 25%, or $9,000 net per year Every year thereafter 0%, or $0 per year (c) all fees and expenses incurred in connection with satisfying applicable government working requirements, including visas; and (d) a family membership to a sport or social club of Executive's choice; (e) use of a Company automobile appropriate for Executive's position, including the costs of necessary maintenance (although Executive may incur taxable income as a result of his personal use of such vehicles); (f) an after-tax annual vacation allowance of $7,700, which shall be payable in two equal installments, the first of which shall be paid during January of each year and the second of which during July. EX-10.10 17 v94566orexv10w10.txt EXHIBIT 10.10 EXHIBIT 10.10 PRIVILEGED AND CONFIDENTIAL EMPLOYMENT AGREEMENT AGREEMENT, made May 30, 2003, by and between Seminis Merger Corp., a Delaware corporation ("Seminis Merger Corp.") and C. Edward Green (the "Executive"). RECITALS WHEREAS Seminis, Inc. (the "Company") intends to enter into an Agreement and Plan of Merger dated on May 30, 2003 by and among the Company, Seminis Acquisition LLC and Seminis Merger Corp. (the "Merger Agreement") pursuant to which, at the Effective Time (as defined in the Merger Agreement), the Company will be the surviving corporation in the Merger (as defined in the Merger Agreement); and WHEREAS in order to induce Executive to serve the Company in the position set forth on Schedule 1.2 hereto following such Merger, Seminis Merger Corp. desires to provide Executive with compensation and other benefits on the terms and conditions set forth in this Agreement; and WHEREAS, Executive is willing to accept such employment and perform services for the Company on the terms and conditions hereinafter set forth: NOW, THEREFORE, it is hereby agreed by and between the parties as follows: 1. Employment. 1.1 With the exception of Section 3.5(f) of this Agreement, which shall become effective as of the date hereof, this Agreement shall become effective as of the Closing Date (as defined in the Merger Agreement) (the "Effective Date") and, except as otherwise expressly provided herein, shall be of no force or effect prior to such date, or in the event the Merger Agreement is terminated prior to the consummation of the Merger. 1.2 Subject to the terms and conditions of this Agreement, Seminis Merger Corp. agrees to employ Executive during the Term (as defined below) in the position set forth on Schedule 1.2 hereto, and shall have powers, responsibilities and authorities substantially similar to the powers, responsibilities and authority that are customary of such position at corporations of the size, type and nature of the Company, as it exists from time to time. 1.3 Subject to the terms and conditions of this Agreement, Executive hereby accepts employment with the Company in the position set forth on Schedule 1.2 hereto, commencing on the Effective Date. 1.4 Executive shall perform his duties under this Agreement with reasonable diligence and faithfulness, and shall devote his full business time (excluding any periods of vacation or sick leave) and attention to such duties. Nothing in this Agreement shall preclude Executive from engaging in charitable and community affairs, from managing any passive investment made by him in publicly traded equity securities or other property or from continuing to serve as a member of the board of directors or as a trustee of any other corporation, association or entity with respect to which Executive serves as a director or trustee as of the date of this Agreement, or, with the prior written consent of the Committee (as defined in Section 3.2 hereof), such consent not to be unreasonably withheld, serving as a member of a board of directors or as a trustee of any other corporation, association or entity, provided, that these activities do not interfere with the performance of Executive's duties and responsibilities hereunder or violate the provisions of Section 12 of this Agreement. 2 1.5 The Executive agrees to serve, without additional compensation, as an officer and director for each of the Company's 20% or more owned subsidiaries, partnerships, joint ventures, and limited liability companies (collectively, such entities, the "Affiliated Group"), provided, that such service does not materially interfere with the Executive's performance of the duties and responsibilities of his position with the Company. 1.6 Executive's principal location of employment shall be at the location set forth on Schedule 1.6 hereto, provided, that Executive may be required under reasonable business circumstances to travel outside of such location in connection with performing his duties under this Agreement. 2. Term of Employment. Executive's term of employment under this Agreement shall commence on the Effective Date and, subject to the terms hereof, shall terminate on the earlier of (i) the third anniversary of the Effective Date (the "Termination Date") or (ii) the termination of Executive's employment pursuant to this Agreement (the period from the Effective Date until the termination of Executive's employment under this Agreement shall be the "Term"). This Agreement shall be renewed automatically for succeeding terms of one (1) year following the Termination Date (in which case both the Termination Date and the Term shall be extended one year on each renewal), unless either party gives written notice to the other at least 120 days prior to the applicable Termination Date of its intention not to renew. 3. Compensation and Equity Awards. 3.1 Salary. The Company shall pay Executive the initial annual base salary set forth on Schedule 3.1 hereto. The Base Salary shall be reviewed by the Company no less frequently than annually in a manner consistent with similarly situated executives of the Company and may be increased but not decreased. For all purposes under this Agreement, the term "Base Salary" 3 shall refer to Base Salary as in effect from time to time. Base Salary shall be payable in accordance with the ordinary payroll practices of the Company. 3.2 Annual Bonus. During the Term, Executive shall be eligible to receive an annual bonus (the "Bonus") with a target Bonus set at 55% of Base Salary (the "Target Bonus") and a maximum Bonus of 68.75% of Base Salary. Such Bonus shall be based upon the satisfaction of performance objectives and shall be determined on a weighted basis comprised of the following criteria: (i) Targets (as defined in the Stockholders' Agreement, of even date herewith, by and among Seminis Merger Corp. and the Persons listed on the signature pages thereto (the "Stockholders' Agreement")) - 40% (the "Target Component"); (ii) Executive performance goals established annually by the Compensation Committee (the "Committee") of the Board of Directors of the Company (the "Board") - 20% (the "Individual Component"); (iii) Milestones based upon Company net sales as set forth in the Approved Annual Business Plan (as defined in the Stockholders' Agreement) - 20% (the "Sales Component"); and (iv) Milestones based upon Company net working capital as set forth in the Approved Annual Business Plan - 20% (the "Net Working Capital Component") (items (i) through (iv) collectively, the "Performance Objectives," and each, separately, a "Performance Objective"). During any fiscal year in which an Approved Annual Business Plan has been adopted in accordance with the Stockholders' Agreement, the Bonus shall be equal to the sum of: (A) (Target Bonus)(.4)(the Applicable Percentage for the Target Component), PLUS (B) (Target Bonus)(.2)(the Applicable Percentage for the Individual Component), PLUS (C) 4 (Target Bonus)(.2)(the Applicable Percentage for the Sales Component), PLUS (D) (Target Bonus)(.2)(the Applicable Percentage for the Net Working Capital Component), where the Target Bonus is expressed in dollars and the Applicable Percentage with respect to any given Performance Objective is determined in accordance with the performance matrix below. During any fiscal year in which the Approved Annual Business Plan for such fiscal year is not approved and adopted by the Board in accordance with the Stockholders' Agreement at any point prior to or during such fiscal year, the Bonus shall be equal to the sum of (A) (Target Bonus) (.5) (the Applicable Percentage for the Target Component) PLUS (B) (Target Bonus) (.5) (the Applicable Percentage for the Individual Component), where the Target Bonus is expressed in dollars and the Applicable Percentage with respect to any given Performance Objective is determined in accordance with the performance matrix below: 5 PERFORMANCE MATRIX
APPLICABLE IF PERFORMANCE IS: PERCENTAGE: ------------------ ----------- LESS THAN 90% of Performance Objective 0% 90% of Performance Objective 50% 95% of Performance Objective 75% 100% of Performance Objective 100% 125% of Performance Objective OR GREATER 125%
In the event actual performance for any fiscal year falls between any threshold listed in the chart above, (e.g. 91% of Performance Objective), then the Applicable Percentage shall be adjusted accordingly using a straight line method of interpolation (e.g. if actual performance is at 91% of Performance Objective, then the Applicable Percentage shall be 55%; if actual performance is 92% of Performance Objective, then the Applicable Percentage shall be 60%, etc.). The bonus shall be applicable for fiscal years of the Company beginning after the date hereof, and Executive's annual bonus for the Company's fiscal year ending September 30, 2003, shall be based on the Company's bonus plan in effect as of the date hereof, as set forth on Schedule 6.16(b) to the Merger Agreement. 6 3.3 Compensation Plans and Programs. Executive shall be eligible to participate in any compensation plans or programs maintained by the Company and generally made available to other senior executives of the Company, on terms comparable to those applicable to such other senior executives, provided, that such participation shall not cause the duplication of any compensation or benefits provided to Executive under this Agreement. 3.4 Restricted Stock Units. (a) Executive shall be granted on the Effective Date the number of restricted stock units of the Company (the "Restricted Stock Units") set forth on Schedule 3.4(a) hereto. The Restricted Stock Units shall vest (if at all) as provided below with respect to fiscal years in which an Approved Annual Business Plan has been adopted in accordance with the Stockholders' Agreement, so long as Executive remains employed by the Company through the applicable vesting dates: FISCAL YEAR ENDING IN 2004: N = ("Total 1" (as set forth on Schedule 3.4(b) hereto))(.4)(Applicable Percentage for the Target Component) + (Total 1)(.2)(Applicable Percentage for the Individual Component) + (Total 1)(.2)(Applicable Percentage for the Sales Component) + (Total 1)(.2)(Applicable Percentage for the Net Working Capital Component) FISCAL YEAR ENDING IN 2005: N = (Total 1)(.4)(Applicable Percentage for the Target Component) + (Total 1)(.2)(Applicable Percentage for the Individual Component) + (Total 1)(.2)(Applicable Percentage for the Sales Component) + (Total 1)(.2)(Applicable Percentage for the Net Working Capital Component) FISCAL YEAR ENDING 2006: 7 N = ("Total 2" (as set forth on Schedule 3.4(b) hereto))(.4)(Applicable Percentage for the Target Component) + (Total 2)(.2)(Applicable Percentage for the Individual Component) + (Total 2)(.2)(Applicable Percentage for the Sales Component) + (Total 2)(.2)(Applicable Percentage for the Net Working Capital Component) FISCAL YEAR ENDING 2007: N = ("Total 3" (as set forth on Schedule 3.4(b) hereto))(.4)(Applicable Percentage for the Target Component) + (Total 3)(.2)(Applicable Percentage for the Individual Component) + (Total 3)(.2)(Applicable Percentage for the Sales Component) + (Total 3)(.2)(Applicable Percentage for the Net Working Capital Component) FISCAL YEAR ENDING 2008: N = (Total 3)(.4)(Applicable Percentage for the Target Component) + (Total 3)(.2)(Applicable Percentage for the Individual Component) + (Total 3)(.2)(Applicable Percentage for the Sales Component) + (Total 3)(.2)(Applicable Percentage for the Net Working Capital Component) in each case, where N = the number of Restricted Stock Units that shall be eligible to vest for any given period and the Applicable Percentage with respect to any given Performance Objective is determined in accordance with the performance matrix below. Notwithstanding the foregoing, during any fiscal year in which the Approved Annual Business Plan for such fiscal year is not approved and adopted by the Board in accordance with the Stockholders' Agreement at any point prior to or during such fiscal year, the vesting of Restricted Stock Units shall be equal to the sum of (A) (N)(.5) (the Applicable Percentage for the 8 Target Component) PLUS (B) (N)(.5) (the Applicable Percentage for the Individual Component), where N = the number of Restricted Stock Units that shall be eligible to vest for any given period (in the same number as set forth above for the applicable fiscal year) and the Applicable Percentage with respect to any given Performance Objective is determined in accordance with the performance matrix below. Performance Matrix
APPLICABLE IF PERFORMANCE IS: PERCENTAGE: ------------------ ----------- Less than 90% of 0% Performance Objective 90% of Performance 50% Objective 95% of Performance 75% Objective 100% of Performance 100% Objective or greater
In the event actual performance for any fiscal year falls between any threshold listed in the chart above, (e.g. 91% of Performance Objective), then the Applicable Percentage shall be adjusted accordingly using a straight line method of interpolation (e.g., if actual performance is at 91% of Performance Objective, then the Applicable Percentage shall be 55%; if actual performance is 92% of Performance Objective, then the Applicable Percentage shall be 60%, etc.). To the 9 extent conditions to vesting in any particular year are not met in such year, and some or all of the Restricted Stock Units do not vest in such year, such Restricted Stock Units shall be permanently forfeited. Notwithstanding the foregoing, in the event that prior to the fifth anniversary of the Effective Date, FPSH (as defined in the Stockholders' Agreement) achieves the IRR Hurdle (as defined in the Stockholders' Agreement) after giving effect to the vesting of all rights and options to purchase or receive shares of New Company Common Stock and the vesting of any Restricted Stock Units, the Restricted Stock Units (excepting any Restricted Stock Units that shall have been forfeited pursuant to the immediately preceding sentence) shall become vested as of such date if Executive has remained employed with the Company as of such date, provided that such vesting shall occur only to the extent that FPSH achieves the IRR Hurdle, and any reduced vesting to achieve the IRR Hurdle shall occur on a pro rata basis with other employees of the Company that have Restricted Stock Units. The Restricted Stock Units shall not constitute Rollover Equity for purposes of the put right provided for in Section 3.5 herein. (b) The Restricted Stock Units are subject to the following terms and conditions: (i) Executive will not be entitled to vote the underlying shares related to the Restricted Stock Units unless and until such shares are actually delivered to Executive. (ii) The Restricted Stock Units shall be equitably adjusted as determined by the Compensation Committee in the event of an extraordinary dividend or other corporate transaction if necessary to preserve the value of the Restricted Stock Units. Any property or dividends received upon such an adjustment will be subject to the same restrictions as the Restricted Stock Units to which they relate. 10 (iii) The Restricted Stock Units and the shares of New Company Common Stock received with respect to Restricted Stock Units will be subject to the terms of the Stockholders' Agreement. (iv) Vested Restricted Stock Units shall be converted into shares of New Company Common Stock upon the first to occur of (A) a Change of Control of the Company (as defined in the Stockholders' Agreement), (B) Executive's termination of employment, (C) the termination of the Stockholders' Agreement and (D) vesting of Restricted Stock Units, pursuant to Executive's initial election made as of the date of grant (or upon other elections to be provided by the Committee) to receive shares upon vesting. (v) Executive shall be eligible to make a tag-along election (as set forth in Section 2.6.2 of the Stockholders' Agreement) with respect to the vested Restricted Stock Units on the same terms as other Stockholders (as defined in the Stockholders' Agreement) in accordance with the terms of the Stockholders' Agreement; provided, that such tag-along election shall only be treated as being made if holders of a majority of the outstanding Restricted Stock Units elect to make the tag-along election and then all Restricted Stock Units will be treated as subject to the election. If holders of a majority of the outstanding Restricted Stock Units do not elect to make a tag-along election, then none of the Restricted Stock Units will be permitted to make the tag-along election. (vi) The vested Restricted Stock Units and any Restricted Stock Units that 11 would vest as a result of a completed Required Third Party Sale or a completed FPSH Drag Sale (as applicable) (as such terms are defined in the Stockholders' Agreement) shall be subject to the TPS Drag-Along Right (as defined in the Stockholders' Agreement) and the FPSH Drag Sale, respectively. (vii) Transfers of vested Restricted Stock Units may be made to Executive's family members on the same terms as other Company equity as set forth in the Stockholders Agreement, but shall otherwise not be transferable other than as provided therein. (c) Executive represents and warrants that he (i) has such knowledge and experience in business and financial matters with respect to investments in securities to enable him to understand and evaluate the risks of the investment contemplated hereby and form an investment decision with respect thereto and is able to bear the risk of such investment for an indefinite period and to afford a complete loss thereof, (ii) is an "accredited investor" as defined in Rule 501 of Regulation D under the Securities Act of 1933, as amended, (iii) has had the opportunity to (A) ask such questions as Executive has deemed necessary of, and to receive answers from, representatives of the Company concerning the terms of the transactions contemplated hereby (including the provisions of Section 3.4 of this Agreement) and the merits and risks of investing in securities of the Company and (B) to obtain such additional information which Company possesses or can acquire without unreasonable effort or expense and (iv) is acquiring equity interests in the Company for his own account and not with a view to or for sale in connection with any distribution of securities. 12 3.5 Rollover Equity. (a) Executive shall roll over 31,608 of his shares of Company Common Stock (as defined in the Merger Agreement) and all of his Options (as defined in the Merger Agreement) into shares of New Company Common Stock (as defined in the Merger Agreement) and Retained Options (such rolled New Company Common Stock and Retained Options, the "Rollover Equity"), and such Retained Options shall be 100% vested and exercisable as of the Closing Date and shall have substantially the same terms and conditions as the Options. Beginning in 2004, Executive shall be permitted to "put" the shares of New Company Common Stock and Retained Options that comprise the Rollover Equity to the Company each year if (i) 100% of each Performance Objective for the immediately preceding fiscal year has been satisfied and (ii) the agreements governing the indebtedness of the Company permit the repurchase of such Rollover Equity. The put right contemplated hereby shall be applicable to the Rollover Equity only. (b) Executive shall give notice of his intention to exercise the put right described herein during the three (3) months prior to September 30 of a particular year. If the conditions to such exercise and payment have been met, the Company shall make payment in respect of the Rollover Equity as soon as practicable following the end of the applicable calendar year, but in no event later than January 31 of the following year. The per-share put price shall be based upon the fair market value of the New Company Common Stock as reasonably determined by the Board in light of all circumstances. In the case of Retained Options, the per-share put price shall be net of any applicable exercise price and withholding. The Board may, in its discretion, assign the rights and obligations of the Company under this Section 3.5 to any other person, but no such assignment shall relieve the Company of its obligations hereunder to the extent not satisfied by such assignee. 13 (c) Subject to the following sentence, in any given year, Executive may exercise the put right provided for herein with respect to no less than 25% of the aggregate number of shares of New Company Common Stock and/or Retained Options owned by Executive on the Effective Date; provided, however, that if Executive owns fewer than 25% of the aggregate number of shares of New Company Common Stock and Retained Options owned by Executive on the Effective Date, Executive may exercise the put right provided for herein with respect to all of such shares of New Company Common Stock and Options. In the event that the condition set forth in clause (i) of the second sentence of Section 3.5(a) has been met and the agreements governing the indebtedness of the Company permit the repurchase of some but not all of the aggregate amount of rollover equity (including the Rollover Equity) with respect to which executives (including Executive) have exercised put rights, the amount of rollover equity that the Company shall purchase shall be allocated among the executives (including Executive) exercising such put right on an unweighted pro rata basis. (d) If Executive's employment terminates for any reason, then the put right provided herein shall terminate; provided that the Company shall be obligated to satisfy any unfulfilled obligations with respect to any put right exercised prior to such termination; and provided further that Executive's Rollover Equity shall thereafter be subject to the post-termination put and call provisions contained in Article IV of the Stockholders' Agreement. The put right provided for herein shall terminate upon the occurrence of an IPO (as defined in the Stockholders' Agreement). (e) Notwithstanding anything to the contrary contained in this Agreement, the put right provided for herein shall be subject to all other provisions in the Stockholders' Agreement. Without limiting the foregoing, Executive acknowledges that the Rollover Equity shall be 14 subject to the TPS Drag-Along Right and the FPSH Drag Sale, each of which shall supersede the put right provided for herein. (f) Notwithstanding anything to the contrary contained in this Agreement, effective as of the date hereof, Executive waives any right to be cashed out of all of his Options and 31,608 of his shares of Company Common Stock under the Merger Agreement or to exercise any of his Options prior to the Effective Date. 4. Employee Benefits. 4.1 Employee Benefit Programs, Plans and Practices. During the Term, Executive shall be entitled to participate in welfare, health and life insurance and pension benefit programs as may be in effect from time to time for similarly situated executives of the Company generally. Executive shall not be entitled to participate in any severance plans provided to Company employees and hereby waives any rights to receive severance benefits other than as provided in this Agreement. 4.2 Vacation; Fringe Benefits; Perquisites. Executive shall be entitled to no less than twenty (20) business days paid vacation in each calendar year. Vacation days will accrue up to a maximum of forty (40) days, at which time, further accruals will cease until the accrued vacation day balance falls below 40 days. In addition, Executive shall be entitled to the perquisites and other fringe benefits generally made available to similarly situated executives of the Company, commensurate with his position with the Company. In addition, Executive shall be entitled to receive benefits reasonably comparable to those provided to Executive as of the date of this Agreement as set forth on Schedule 4.2 hereto. 5. Expenses. During the Term, Executive shall be entitled to receive prompt reimbursement in accordance with the Company's policies for out-of-pocket business expenses 15 reasonably incurred in carrying out his duties and responsibilities under this Agreement, including, without limitation, reasonable expenses for travel and similar items related to such duties and responsibilities. 6. Termination of Employment. 6.1 Termination Not for Cause or for Good Reason. (a) If, prior to the Termination Date, during the Term, Executive's employment is terminated (A) by the Company other than for Cause (as defined in Section 6.2(b) hereof), (B) as a result of Executive's death or as a result of Executive's Permanent Disability (as defined in Section 6.1(d) hereof), or (C) by Executive for Good Reason (as defined in Section 6.1(c) hereof), Executive shall receive: (i) such payments, if any, to which Executive is entitled under any applicable plans or programs, including but not limited to those referred to in Sections 3.3 and 4.1 hereof, in accordance with the terms of such plans or programs; (ii) a cash lump sum payment in respect of accrued but unused vacation days and Base Salary and, if any such termination of employment occurs after the end of a Company fiscal year and prior to the payment of Bonuses for such fiscal year, any Bonus payments earned by Executive for such fiscal year but not yet paid; (iii) continued coverage under any employee medical plans or programs provided to Executive and his family members pursuant to Section 4.1 hereof until the earlier of the second anniversary of Executive's termination of employment or the date on which Executive becomes entitled to receive medical coverage under another employer's medical benefit program, provided, that Executive shall continue to be required to pay any applicable premiums of a participating employee in such plans and programs; (iv) a cash lump sum payment equal to two (2) times the sum of the (I) Base Salary (as of immediately prior to the Executive's date of termination of employment, but excluding any decrease in Base Salary causing Executive to have Good Reason) plus (II) the average annual bonus paid or payable to Executive with respect to the two (2) fiscal years immediately prior to the Executive's date of termination of employment (provided, however, that if the Executive's date of termination of employment occurs at any time during the 2002-2003 fiscal year, then the "average annual bonus" shall be deemed to be the, bonus paid or payable with respect to the 2001-2002 fiscal year and if Executives date of termination occurs prior to a date upon which a determination of an annual bonus amount has been made by the Company for a prior fiscal year for Executive 16 then the "average annual bonus" shall be deemed to be the Target Bonus), less any applicable insurance benefits, provided, that any reduction for disability benefits shall be with respect to benefits received by Executive during the two-year period following Executive's date of termination of employment. (b) All payments payable by the Company to Executive pursuant to this Section 6.1 shall be paid within 30 days after the termination of Executive's employment by check payable to the order of Executive or by wire transfer to an account specified by Executive and shall be subject to Executive entering into and not revoking a release substantially in the form set forth as Exhibit A hereto. (c) For purposes of this Agreement, "Good Reason" shall mean that any of the events set forth in clauses (i) through (v) below shall occur without the written consent of Executive, provided, that (x) Executive shall provide the Company with written notice thereof within one hundred and twenty (120) days after Executive has knowledge of the occurrence of any of the events or circumstances set forth in clauses (i) through (v) below, which notice shall specifically identify the event or circumstance that Executive believes constitutes Good Reason, (y) the Company fails to correct the circumstance or event so identified within twenty (20) days after the date of delivery of the notice referred to in clause (x) above, and (z) Executive resigns his employment for Good Reason within ninety (90) days after the date of delivery of the notice referred to in (x) above: (i) a reduction in Executive's Base Salary; (ii) Executive's duties, titles, responsibilities or authority are materially diminished in comparison to the duties, titles and responsibilities or authority set forth in this Agreement, or Executive is assigned duties materially and adversely inconsistent with his position; (iii) a material reduction in fringe benefits, perquisites or other allowances provided to Executive pursuant to Section 4.2, other than (except for benefits specifically set forth in Schedule 4.2 of this Agreement) as a result of a change 17 applicable to employees of the Company generally, or any material failure to provide such benefits to Executive; (iv) the failure of the Company to obtain a satisfactory agreement from any successor to assume and agree to perform the Agreement, as contemplated in Section 10 herein, or (v) any requirement that Executive relocate to an office more than 25 miles from his office as of the Effective Date. (d) For purposes of this Agreement, "Permanent Disability" shall mean Executive's absence from full time performance of duties due to physical or mental illness for six (6) consecutive months, that is reasonably determined to be total and permanent by a physician selected by the Company or its insurers and reasonably acceptable to Executive or his legal representative. (e) For purposes of this Agreement, Change of Control shall have the meaning ascribed to such term in the Stockholders' Agreement. 6.2 Discharge for Cause; Voluntary Termination by Executive. (a) The Company shall have the right to terminate the employment of Executive for Cause by action of the Committee. In the event that Executive's employment is terminated, prior to the Termination Date, (i) by the Company for Cause, as hereinafter defined, or (ii) by Executive other than (A) for Good Reason or (B) as a result of the Executive's death or Permanent Disability or (iii) upon a failure to renew this Agreement pursuant to Section 2, Executive shall be entitled to receive a lump sum cash payment in respect of any earned but unpaid Base Salary and in respect of any accrued vacation days. In addition, Executive shall be entitled to such payments and benefits, if any, under any applicable plans or programs, including, but not limited to, those referred to in Sections 3.3 and 4.1 hereof, to which he is entitled pursuant to the terms of such plans or programs. 18 (b) As used herein, the term "Cause" shall mean (i) Executive's conviction of, or plea of guilty or nolo contendere to, a felony (or a comparable level of crime in another jurisdiction); provided, however, that after indictment for a felony, the Company may suspend Executive from the rendition of services, but without limiting or modifying in any other way, the Company's obligations to Executive under this Agreement, (ii) continued and repeated refusal by Executive to perform his duties hereunder after fifteen (15) days written notice of any such refusal to perform such duties or direction was given to Executive, (iii) commission by Executive of fraud against, or misappropriation of significant property belonging to, the Company, unless such action is neither willful nor injurious to the Company or any of its Subsidiaries, or other willful misconduct materially injurious to the Company or any of its Subsidiaries or (iv) during any period in which FPSH and its affiliates are the beneficial owners of 20% or more of the value of the Company's stock in the aggregate, a material breach by Executive of the provisions of the Corporate Policies and Procedures (as defined in the Stockholders' Agreement) or Section 12 of this Agreement, unless such breach is neither willful nor materially injurious to the Company or any of its Subsidiaries. Termination of Executive pursuant to this Section 6.2(b) shall be made by delivery to Executive of a copy of a resolution duly adopted by the affirmative vote of not less than a majority of the then members of the Committee at a meeting of the Committee called and held for the purpose (after 30 days prior written notice to Executive and reasonable opportunity for Executive and his counsel to be heard before the Committee prior to such vote), finding that in the reasonable judgment of the Committee, Executive was guilty of conduct set forth in any of clauses (i) through (iv) above and specifying the particulars thereof. 6.3 Resignation from all Positions. Notwithstanding any other provision of this Agreement, upon the termination of the Executive's employment for any reason, unless 19 otherwise requested by the Board, the Executive shall immediately resign from all positions that he holds or has ever held with the Company and any other member of the Affiliated Group (and with any other entities with respect to which the Company has requested the Executive to perform services), including, without limitation, all boards of directors of any member of the Affiliated Group. The Executive hereby agrees to execute any and all documentation to effectuate such resignations upon request by the Company, but he shall be treated for all purposes as having so resigned upon termination of his employment, regardless of when or whether he executes any such documentation. 6.4 Breach of Section 12. Notwithstanding anything to the contrary in this Agreement, in the event of a breach by Executive of the provisions of Section 12 of this Agreement following Executive's termination of employment, or a material breach by Executive of the provisions of Section 12 of this Agreement during Executive's employment which the Committee determines would have been Cause to terminate Executive's employment and that is discovered by the Company within six (6) months following Executive's termination of employment, Executive shall be entitled to no further payments under this Section 6, and shall repay to the Company any payments previously made under this Section 6. Any amounts repaid by Executive under this Section 6.4 will reduce (on a dollar for dollar basis) any damages payable by Executive as a result of a breach of the terms of Section 12. 7. Mitigation of Damages. Executive shall not be required to mitigate damages or the amount of any payment provided for under this Agreement by seeking other employment or otherwise after the termination of his employment hereunder, and any amounts earned by 20 Executive, whether from self-employment, as a common-law employee or otherwise, shall not reduce the amount of any payments otherwise payable to him pursuant to this Agreement. 8. Notices. All notices or communications hereunder shall be in writing, addressed as follows: To the Company: Seminis, Inc. 2700 Camino del Sol Oxnard, California 93030-7967 Attn: General Counsel with a copy to: Fox Paine & Company, LLC 950 Tower Lane, Suite 1950 Foster City, California 94404 Attn: W. Dexter Paine, III To Seminis Merger Corp.: Seminis Merger Corp. c/o Fox Paine & Company, LLC 950 Tower Lane, Suite 1950 Foster City, California 94404 Attn: W. Dexter Paine, III To Executive: C. Edward Green At the address most recently on file with the Company with a copy to: Milbank, Tweed, Hadley & McCloy, LLP One Chase Manhattan Plaza New York, NY 10005 Attn: Ed Rayner Any such notice or communication shall be delivered by hand or by courier or sent certified or registered mail, return receipt requested, postage prepaid, addressed as above (or to such other 21 address as such party may designate in a notice duly delivered as described above), and the third business day after the actual date of mailing shall constitute the time at which notice was given. 9. Separability; Legal Fees. If any provision of this Agreement shall be declared to be invalid or unenforceable, in whole or in part, such invalidity or unenforceability shall not affect the remaining provisions hereof which shall remain in full force and effect. Each party shall bear the costs of any legal fees and other fees and expenses which may be incurred in respect of enforcing its respective rights under this Agreement. 10. Successors and Assigns. Except as otherwise provided herein, this Agreement shall be binding upon, inure to the benefit of and be enforceable by Seminis Merger Corp. and Executive and their respective heirs, legal representatives, successors and assigns. Executive may not assign this Agreement, other than, with respect to payments in the event of Executive's death, to Executive's estate or beneficiaries. Seminis Merger Corp. may assign this Agreement to any of its affiliates in the event of any restructuring or reorganization of Seminis Merger Corp. or to a successor to all or substantially all of Seminis Merger Corp.'s assets, and the benefits of this Agreement shall inure to such entity and the obligations of this Agreement shall be binding on such entity; provided, that, if Seminis Merger Corp. assigns this Agreement to an affiliate which is not a successor to all or substantially all of its assets, Seminis Merger Corp. shall continue to guarantee the payments and benefits hereunder. If the Company shall be merged into or consolidated with another entity, the provisions of this Agreement shall be binding upon and inure to the benefit of the entity surviving such merger or resulting from such consolidation and Seminis Merger Corp. shall require any such successor, by agreement in form and substance satisfactory to Executive, to expressly assume and agree to perform this Agreement in the same manner and to the same extent that Seminis Merger Corp. would be required to perform it if no 22 such succession had taken place. For avoidance of doubt, upon the Effective Date the Company will be the successor to Seminis Merger Corp. and Executive hereby acknowledges that the provisions of Section 3.3 of the Merger Agreement shall satisfy the obligations of Seminis Merger Corp. under the immediately preceding sentence. The provisions of this Section 10 shall continue to apply to each subsequent employer of Executive in the event of any subsequent merger or consolidation of such subsequent employer. As used in this Agreement, the term "affiliates" shall include any entity controlled by, controlling, or under common control with Seminis Merger Corp. or the Company, as applicable. 11. Amendment. This Agreement may only be amended by written agreement of the parties hereto. 12. Nondisclosure of Confidential Information; Work Product; Non-Disparagement; Non-Competition; Non-Solicitation. 12.1 Confidential Information of the Company and Its Affiliates. All Confidential Information relating to or obtained from the Company or its affiliates shall be held in the strictest confidence by Executive. Executive shall not, directly or indirectly, disclose, use, publish, release, transfer or otherwise make available Confidential Information of, or obtained from the Company or any of its affiliates in any form to, or for the use or benefit of, any person or entity without the Company's prior written consent, except (i) while employed by the Company, in the business of and/or for the benefit of the Company or (ii) when required to do so by a court of competent jurisdiction, by any governmental agency having supervisory authority over the business of the Company, or by any administrative body or legislative body (including a committee thereof) with jurisdiction to order Executive to divulge, disclose or make accessible such information. For purposes of this Section 12.1, "Confidential Information" shall mean all 23 information and documentation of the Company or its affiliates, whether disclosed to or accessed by Executive in connection with his employment with the Company or the Affiliated Group that is not otherwise available to the public (other than by Executive's breach of the terms hereof), including all (i) data and information of the Company or its affiliates or the customers, suppliers, contractors or other third parties doing business with any of the Company or its affiliates, including business plans, memoranda, reports, drawings, research results, research plans, inventions (patentable or otherwise), trade secrets and research products and (ii) Work Product (as defined below) created by Executive. 12.2 Executive hereby acknowledge that any ideas, concepts, designs, discoveries, techniques, research results, inventions, methodologies, know-how, improvements, discoveries, processes or products, whether or not patentable, that Executive conceives of or reduces to practice during the term of his/her employment with the Company or the Affiliated Group and which are in connection with Executive's employment or related to the nature of Executive's employment (collectively, the "Work Product"), shall be, or be deemed to be, "work for hire" and owned by the Company. Furthermore, the Company shall have all right, title and interest, including worldwide ownership of copyright and patent, in and to the Work Product and all copies made from them. To the extent (a) any of the Work Product is not deemed a "work for hire" by operation of law and (b) permissible under applicable law, Executive hereby irrevocably assigns, transfers and conveys to the Company all of his/her right, title and interest in and to such Work Product, including all rights of patent, copyright, trade secret or other intellectual property or proprietary rights in such materials. Executive acknowledges that the Company and the successors and permitted assigns of the Company shall have the right to obtain and hold in their own name any intellectual property rights in and to such Work Product. 24 12.3 During the Term and for a period of 24 months from the date of the termination of Executive's employment for any reason (the "Restricted Period"), Executive shall not compete with the Company or the Affiliated Group, by directly or indirectly engaging in any business or activity, whether as an employee, consultant, partner, principal, agent, representative or stockholder or in any other individual, corporate or representative capacity, or render any services or provide any advice or substantial assistance to any business, person or entity, if such business, person or entity, directly or indirectly, competes (or, to Executive's knowledge after due inquiry, intends to compete or is preparing to compete during the Restricted Period) with the Business of the Company or the Affiliated Group in any material manner. It is the intention of the parties that the potential restrictions on Executive's activities imposed by this paragraph be and are reasonable in duration, scope and geography and in all other respects. For purposes of this Section 12, "Business" shall mean the business of marketing, developing, producing and researching new fruit or vegetable seeds and fruit or vegetable plants, or any other material businesses entered into by the Company or the Affiliated Group during the Term, or with respect to which the Company or the Affiliated Group has taken material steps to enter into as of the termination of Executive's employment. During the Restricted Period, Executive shall be available to consult with the Company on Company-related matters within his knowledge in person or by phone, as determined by Executive, for a period of no more than five (5) days per calendar quarter, subject to not interfering with Executive's work schedule; provided, however, that for each full or partial day during which Executive provides such services (other than with respect to de minimis services of less than two (2) hours on a given day), the Company shall pay to Executive a sum of $500 (such limitations and payments shall not apply to any lawsuits in 25 which Executive is a named party). In addition, the Company shall promptly reimburse Executive for his reasonable expenses, if any, in providing such services. 12.4 Except as is required or appropriate in the furtherance of the business of the Company or the Affiliated Group, Executive shall not, during the Restricted Period, either alone or in concert with others, directly or indirectly, (1) solicit, entice, induce or encourage (a) any customer of the Company or the Affiliated Group (including, during the Term, the Company's affiliates) to discontinue using the services or purchasing the products of the Company or the Affiliated Group (including, during the Term, the Company's affiliates), (b) any customer to refer prospective customers or business to any competitor of the Company or the Affiliated Group or (c) any person or entity that is part of any existing or proposed arrangement or has any other affiliation with the Company or the Affiliated Group (including, during the Term, the Company's affiliates) to discontinue such relationship or affiliation with the Company or its affiliates or (2) recruit or hire, or assist others in recruiting or hiring, or otherwise solicit for employment, any consultants or employees of the Company or its affiliates, or former consultants or employees of the Company or its affiliates within six (6) months following their termination of employment. 12.5 Upon request by the Company at any time during Executive's employment or upon termination of Executive's employment with the Company for any reason, Executive shall promptly (1) return to the Company or its affiliates all copies of all materials, including documentary or other recorded materials, which are in Executive's possession or control and which contain or embody any Confidential Information of the Company or its affiliates and (2) deliver to the Company or its affiliates all copies of any Work Product in Executive's 26 possession or control. Executive shall not copy, reproduce or otherwise re-create in any fashion any of the items referenced above for personal retention by Executive. 12.6 The Executive acknowledges and agrees that: (i) the purposes of the foregoing covenants are to protect the goodwill and Work Product and Confidential Information of the Company and its affiliates in connection with the transactions contemplated by the Merger Agreement, and to prevent the Executive from interfering with the business of the Company and the Affiliated Group as a result of or following termination of the Executive's employment with the Company or the Affiliated Group, as applicable, (ii) because of the nature of the business in which the Company and the Affiliated Group are engaged and because of the nature of the Work Product and Confidential Information to which the Executive has access, it would be impractical and excessively difficult to determine the actual damages to the Company and the Affiliated Group in the event the Executive breached any of the covenants of this Section 12; and (iii) remedies at law (such as monetary damages) for any breach of the Executive's obligations under this Section 12 would be inadequate. The Executive therefore agrees and consents that if the Executive commits any breach of a covenant under this Section 12 or threatens to commit any such breach, the Company, and its affiliates shall have the right (in addition to, and not in lieu of, any other right or remedy that may be available to each of them) to temporary and permanent injunctive relief from a court of competent jurisdiction, without posting and bond or other security and without the necessity of proof of actual damage. With respect to any provision of this Section 12 finally determined by a court of competent jurisdiction to be unenforceable, the Executive and the Company and its affiliates hereby agree that such court shall have jurisdiction to reform this Agreement or any provision hereof so that it is enforceable to the maximum extent permitted by law, and the parties agree to abide by such court's 27 determination. If any of the covenants of this Section 12 are determined to be wholly or partially unenforceable in any jurisdiction, such determination shall not be a bar to or in any way diminish the rights of the Company or its affiliates, as applicable, to enforce any such covenant in any other jurisdiction. 12.7 The provisions of this Section 12 shall remain in full force and effect until the expiration of the period specified herein notwithstanding he earlier termination of the Executive's employment hereunder or the Employment Period. 13. Beneficiaries; References. Executive shall be entitled to select (and change, to the extent permitted under any applicable law) a beneficiary or beneficiaries to receive any compensation or benefit payable hereunder following Executive's death, and may change such election, in either case by giving the Company written notice thereof. In the event of Executive's death or a judicial determination of his incompetence, reference in this Agreement to Executive shall be deemed, where appropriate, to refer to his beneficiary, estate or other legal representative. Any reference to the masculine gender in this Agreement shall include, where appropriate, the feminine. 14. Survivorship. The respective rights and obligations of the parties hereunder shall survive any termination of this Agreement to the extent necessary to the intended preservation of such rights and obligations. 15. Governing Law; Consent to Jurisdiction. 15.1 Governing Law. This Agreement shall be construed, interpreted and governed in accordance with the laws of the State of California, without reference to rules relating to conflicts of law. 28 15.2 Consent to Jurisdiction. The parties hereto hereby agree and consent to be subject to the exclusive jurisdiction of the courts of the State of California sitting in the County of Los Angeles and the United States District Court for the Central District of the State of California in any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the Merger. Each party hereto hereby irrevocably waives, to the fullest extent permitted by law, (i) any objection that it may now or hereafter have to laying venue of any suit, action or proceeding brought in such courts, and (ii) any claim that any suit, action or proceeding brought in such courts has been brought in an inconvenient forum. 16. Effect on Prior Agreements. This Agreement contains the entire understanding between the parties hereto and, as of the Effective Date, Executive waives all payments and benefits under any prior or other employment agreement or understanding between the Company or any affiliate of the Company and Executive. 17. Withholding. The Company may withhold from any amounts payable under this Agreement (including from shares of New Company Common Stock deliverable under Section 3.4(b)) such Federal, state, local or foreign taxes as shall be required to be withheld pursuant to any applicable law or regulation, or may permit Executive to elect to pay the Company any such required withholding taxes. If Executive so elects, the payment by Executive of such taxes shall be a condition to the receipt of amounts payable to Executive under this Agreement. The Company shall, to the extent permitted or required by law, have the right to deduct any such taxes from any payment otherwise due to Executive. 18. Counterparts. This Agreement may be executed in two or more counterparts, each of which will be deemed an original. 29 IN WITNESS WHEREOF, as of the date first above written, the Company has caused this Agreement to be executed on its behalf by a duly authorized officer and Executive has hereunto set Executive's hand. SEMINIS MERGER CORP. By: /s/ Bernardo Jimenez Date: May 30, 2003 ---------------------- ------------- Name: Bernardo Jimenez Title: President /s/ C. Edward Green Date: May 30, 2003 ------------------- ------------ C. Edward Green 30 EXHIBIT A FORM OF RELEASE AGREEMENT This Release Agreement ("Release") is entered into as of this ______day of ________, (hereinafter "Execution Date"), by and between [Employee Full Name] (hereinafter "Employee"), and Seminis, Inc. and its successors and assigns (hereinafter, the "Company"). Employee and the Company are sometimes collectively referred to herein as the "Parties". 1. Employee's employment with the Company is terminated effective [Month, Day, Year] (hereinafter "Termination Date"). 2. The Company has agreed to provide Employee the severance payments, awards and benefits provided for in his/her Employment Agreement with the Company, dated as of May __, 2003, after he/she executes this Release and the Release becomes effective pursuant to its terms [FOR 40+ and does not revoke it as permitted in Section 7 below, the expiration of such revocation period being] the ("Effective Date"). 3. Employee represents that he/she has not filed, and will not file, any complaints, lawsuits, administrative complaints or charges relating to his/her employment with, or resignation from, the Company[; provided, however, that nothing contained in this Section 3 shall prohibit Employee from bringing a claim to challenge the validity of the ADEA Release in Section 7 herein]. In consideration of the severance payments, awards and benefits described in Section 2, Employee, for himself/herself and for his/her heirs, administrators, representatives, executors, successors and assigns (collectively, "Releasers") agrees to release the Company, its subsidiaries and affiliates, and their respective parents, direct or indirect subsidiaries, divisions, affiliates and related companies or entities, regardless of its or their form of business organization, any predecessors, successors, joint ventures, and parents of any such entity, and any and all of their respective past or present shareholders, partners, directors, officers, employees, consultants, independent contractors, trustees, administrators, insurers, agents, attorneys, representatives and fiduciaries, including without limitation all persons acting by, through, under or in concert with any of them, in each instance in their capacities as representatives of the Company (collectively, the "Released Parties"), from any and all claims, charges, complaints, causes of action or demands of whatever kind or nature that Employee and his/her Releasers now have or have ever had against the Released Parties, whether known or unknown, including but not limited to: wrongful or tortious termination; constructive discharge; implied or express employment contracts and/or estoppel; discrimination and/or retaliation under any federal, state or local statute or regulation, specifically including any claims Employee may have under the Fair Labor Standards Act, the Americans with Disabilities Act, Title VII of the Civil Rights Act of 1964 as amended, and the Family and Medical Leave Act; the discrimination or other employment laws of the State of [ ](1); any claims brought under any federal or state statute or regulation for non-payment of wages or other compensation, including grants of stock options or any other equity compensation); and libel, slander, or breach of contract, other than the breach of this Release. This Release specifically excludes claims, charges, complaints, causes of action or - ---------- (1) Insert state of employment. demand that post-date the Termination Date. Notwithstanding anything herein to the contrary, expressly excluded from this Release are any claims (i) for payments, awards and benefits under the Employment Agreement between the Parties dated _________, 2003, (ii) under the Stockholders' Agreement dated as of _______, 2003 by and among Seminis, Inc. and the Investors listed on the signature pages thereto, (iii) for benefits provided under Company benefit plans, incentive plans or equity plans (including, but not limited to, stock options, restricted stock units and stock grants) or (iv) for indemnification and any applicable directors and officers liability insurance coverage to which Employee was entitled with regard to service as an officer of the Company. 4. Employee agrees to keep the terms of this Release in strict confidence, but he/she may disclose the terms of this Release and provide a copy hereof to his/her immediate family and his/her financial and legal advisors. 5. Employee warrants that no promise or inducement has been offered for this Release other than as set forth herein and in the Employment Agreement and that this Release is executed without reliance upon any other promises or representations, oral or written. Any modification of this Release must be made in writing and be signed by Employee and the Company. 6. If any provision of this Release or compliance by Employee or the Company with any provision of the Release constitutes a violation of any law, or is or becomes unenforceable or void, then such provision, to the extent only that it is in violation of law, unenforceable or void, will be deemed modified to the extent necessary so that it is no longer in violation of law, unenforceable or void, and such provision will be enforced to the fullest extent permitted by law. If such modification is not possible, such provision, to the extent that it is in violation of law, unenforceable or void, will be deemed severable from the remaining provisions of this Release, which provisions will remain binding on both Employee and the Company. This Release is governed by, and construed and interpreted in accordance with the laws of the State of [ ], without regard to principles of conflicts of law. Employee consents to venue and personal jurisdiction in the State of [ ] for disputes arising under this Release. [ONLY IF THE STATE IS EMPLOYEE'S STATE OF EMPLOYMENT.] This Release represents the entire understanding with the Parties with respect to subject matter herein, no oral representations have been made or relied upon by the Parties. 7. [FOR EMPLOYEES OVER 40 ONLY -- In further recognition of the above, Employee hereby releases and discharges the Released Parties from any and all claims, actions and causes of action that he/she may have against the Released Parties, as of the date of the execution of this Release, arising under the Age Discrimination in Employment Act of 1967, as amended ("ADEA"), and the applicable rules and regulations promulgated thereunder. Employee acknowledges and understands that ADEA is a federal statute that prohibits discrimination on the basis of age in employment, benefits and benefit plans. Employee specifically agrees and acknowledges that: (A) the release in this Section 7 was granted in exchange for the receipt of consideration that exceeds the amount to which he/she would otherwise be entitled to receive upon termination of his/her employment; (B) his/her waiver of rights under this Release is knowing and voluntary as required under the Older Workers 2 Benefit Protection Act; (B) that he/she has read and understands the terms of this Release; (C) he/she has hereby been advised in writing by the Company to consult with an attorney prior to executing this Release; (D) the Company has given him/her a period of twenty-one (21) days within which to consider this Release, which period may be waived by the Employee's voluntary execution prior to the expiration of the twenty-one day period; and (E) following his/her execution of this Release he/she has seven (7) days in which to revoke his/her release as set forth in this Section 7 only and that, if he/she chooses not to so revoke, the Release in this Section 7 shall then become effective and enforceable and the payments, awards and benefits provided herein shall then be made to him/her in accordance with the terms of this Release, as well as the terms of the Employment Agreement. To revoke this Release, Employee understands that he/she must give a written revocation to the General Counsel of the Company at [ ](2), either by hand delivery or certified mail within the seven-day period. If he/she revokes the Release, it will not become effective or enforceable and he/she will not be entitled to any benefits from the Company.] 8. EMPLOYEE ACKNOWLEDGES AND AGREES THAT HE/SHE HAS CAREFULLY READ AND VOLUNTARILY SIGNED THIS RELEASE, THAT HE/SHE HAS HAD AN OPPORTUNITY TO CONSULT WITH AN ATTORNEY OF HIS/HER CHOICE, AND THAT HE/SHE SIGNS THIS RELEASE WITH THE INTENT OF RELEASING THE RELEASED PARTIES TO THE EXTENT SET FORTH HEREIN. 9. In the event that any provision of this Release should be held to be invalid or unenforceable, each and all of the other provisions of this Release shall remain in full force and effect. If any provision of this Release is found to be invalid or unenforceable, such provision shall be modified as necessary to permit this Release to be upheld and enforced to the maximum extent permitted by law. 10. Employee acknowledges that he/she is familiar with the provisions of California Civil Code Section 1542, which provides as follows: "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS/HER FAVOR AT HE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM/HER MUST HAVE MATERIALLY AFFECTED HIS/HER SETTLEMENT WITH THE DEBTOR. EMPLOYEE BEING AWARE OF SAID CODE SECTION, HEREBY EXPRESSLY WAIVES ANY RIGHT HE/SHE MAY HAVE THEREUNDER, AS WELL AS UNDER ANY OTHER STATUTES OR COMMON LAW PRINCIPLES OF SIMILAR EFFECT." Employee being aware of said code section, hereby expressly waives any right he/she may have thereunder, as well as under any other statutes or common law principles of similar effect. 11. This Release inures to the benefit of the Company and its successors and assigns. - ---------- (2) Insert address. 3 ACCEPTED AND AGREED TO: _________________________________ ___________________________________ Seminis, Inc. [Employee Full Name] Dated:___________________________ Dated:_____________________________ 4 SCHEDULES TO TIER III EMPLOYMENT AGREEMENT: C. EDWARD GREEN SCHEDULE 1.2 POSITION Senior Vice President, Research and Development SCHEDULE 1.6 LOCATION OF EMPLOYMENT The Company's offices in Woodland, California SCHEDULE 3.1 BASE SALARY $265,921 SCHEDULE 3.4(a) RESTRICTED STOCK UNITS 175,977 SCHEDULE 3.4(b) ~~Total 1: 17,597.7 Total 2: 35,195.4 Total 3: 52,793.1~~

SCHEDULE 4.2 (a) family membership to a sport or social club of Executive's choice; (b) use of a Company automobile appropriate for Executive's position, including the costs of necessary maintenance (although Executive may incur taxable income as a result of his personal use of such vehicles); EX-23.1 18 v94566orexv23w1.txt EXHIBIT 23.1 EXHIBIT 23.1 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the use in this Registration Statement on Form S-4 of Seminis, Inc. and its subsidiaries of our report dated January 13, 2003, except as to Note 17, for which the date is September 5, 2003 relating to the financial statements of Seminis, Inc. and its subsidiaries, which appears in such Registration Statement. We also consent to the reference to us under the heading "Experts" in such Registration Statement. PricewaterhouseCoopers LLP Los Angeles, CA November 14, 2003 EX-25.1 19 v94566orexv25w1.txt EXHIBIT 25.1 EXHIBIT 25.1 ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ----------------------------- FORM T-1 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE ----------------------------- CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2)[ ] WELLS FARGO BANK, NATIONAL ASSOCIATION (Exact name of trustee as specified in its charter) NOT APPLICABLE 94-1347393 (Jurisdiction of incorporation or (I.R.S. Employer organization if not a U.S. national Identification No.) bank) 420 MONTGOMERY STREET SAN FRANCISCO, CA 94163 (Address of principal executive offices) (Zip code) WELLS FARGO & COMPANY LAW DEPARTMENT, TRUST SECTION MAC N9305-172 SIXTH AND MARQUETTE, 17TH FLOOR MINNEAPOLIS, MN 55479 (agent for services) ----------------------------- SEMINIS VEGETABLE SEEDS, INC. (Exact name of obligor as specified in its charter) CALIFORNIA 95-2252858 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 2700 CAMINO DEL SOL 93030 OXNARD, CALIFORNIA (Address of principal executive offices) (Zip code) SEMINIS, INC. Delaware 36-0769130 PETOSEED INTERNATIONAL, INC. California 77-0388028 PGI ALFALFA, INC. Iowa 42-0888575 2700 Camino Del Sol, Oxnard, CA 93030 (Address of principal executive officers) BAXTER SEED CO., INC. Texas 74-2576381 416 S. Missouri Avenue, Weslaco TX 78596 (Address of principal executive officers) ----------------------------- 10.25% SENIOR SUBORDINATED NOTES DUE 2013 (Title of the indenture securities) ================================================================================ Item 1. General Information. Furnish the following information as to the trustee: (a) Name and address of each examining or supervising authority to which it is subject. Comptroller of the Currency, Treasury Department Washington, D.C. 20230 Federal Deposit Insurance Corporation Washington, D.C. 20429 Federal Reserve Bank of San Francisco San Francisco, CA 94120 (b) Whether it is authorized to exercise corporate trust powers. The trustee is authorized to exercise corporate trust powers. Item 2. Affiliations with Obligor. If the obligor is an affiliate of the trustee, describe each such affiliation. None with respect to the trustee. No responses are included for Items 3-14 of this Form T-1 because the obligor is not in default as provided under Item 13. Item 15. Foreign Trustee. Not applicable. Item 16. List of Exhibits. List below all exhibits filed as a part of this Statement of Eligibility. Wells Fargo Bank incorporates by reference into this Form T-1 exhibits attached hereto. Exhibit 1. A copy of the Articles of Association of the trustee now in effect. * Exhibit 2. A copy of the Comptroller of the Currency Certificate of Corporate Existence for Wells Fargo Bank, National Association, dated November 28, 2001. * Exhibit 3. A copy of the authorization of the trustee to exercise corporate trust powers. A copy of the Comptroller of the Currency Certificate of Corporate Existence (with Fiduciary Powers) for Wells Fargo Bank, National Association, dated November 28, 2001. * Exhibit 4. Copy of By-laws of the trustee as now in effect. * Exhibit 5. Not applicable. Exhibit 6. The consents of United States institutional trustees required by Section 321(b) of the Act. Exhibit 7. Attached is a copy of the latest report of condition of the trustee published pursuant to law or the requirements of its supervising or examining authority. Exhibit 8. Not applicable. Exhibit 9. Not applicable. * Incorporated by reference to exhibit number 25 filed with registration statement number 333-87398. SIGNATURE Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the trustee, Wells Fargo Bank, National Association, a national banking association organized and existing under the laws of the United States of America, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of Los Angeles and State of California on the day of 14th of November, 2003. WELLS FARGO BANK, NATIONAL ASSOCIATION /s/ Jeanie Mar ------------------------------------------ Name: Jeanie Mar Title: Vice President EXHIBIT 6 November 14, 2003 Securities and Exchange Commission Washington, D.C. 20549 Gentlemen: In accordance with Section 321(b) of the Trust Indenture Act of 1939, as amended, the undersigned hereby consents that reports of examination of the undersigned made by Federal, State, Territorial, or District authorities authorized to make such examination may be furnished by such authorities to the Securities and Exchange Commission upon its request thereof. Very truly yours, WELLS FARGO BANK, NATIONAL ASSOCIATION /s/ Jeanie Mar ------------------------------------------ Jeanie Mar Vice President EXHIBIT 7 Consolidated Report of Condition of Wells Fargo Bank National Association of 420 Montgomery Street, San Francisco, CA 94163 And Foreign and Domestic Subsidiaries, at the close of business June 30, 2003, filed in accordance with 12 U.S.C. Section 161 for National Banks.
Dollar Amounts In Millions -------------- ASSETS Cash and balances due from depository institutions: Noninterest-bearing balances and currency and coin $ 8,465 Interest-bearing balances 1,204 Securities: Held-to-maturity securities 0 Available-for-sale securities 4,842 Federal funds sold and securities purchased under agreements to resell: Federal funds sold in domestic offices 248 Securities purchased under agreements to resell 75 Loans and lease financing receivables: Loans and leases held for sale 38,852 Loans and leases, net of unearned income 124,292 LESS: Allowance for loan and lease losses 1,329 Loans and leases, net of unearned income and allowance 122,963 Trading Assets 8,514 Premises and fixed assets (including capitalized leases) 1,589 Other real estate owned 68 Investments in unconsolidated subsidiaries and associated companies 268 Customers' liability to this bank on acceptances outstanding 44 Intangible assets Goodwill 5,379 Other intangible assets 4,311 Other assets 6,646 --------- Total assets $ 203,468 ========= LIABILITIES Deposits: In domestic offices $98,307 Noninterest-bearing 30,424 Interest-bearing 67,883 In foreign offices, Edge and Agreement subsidiaries, and IBFs 14,763 Noninterest-bearing 2 Interest-bearing 14,761 Federal funds purchased and securities sold under agreements to repurchase: Federal funds purchased in domestic offices 36,354 Securities sold under agreements to repurchase 457

Dollar Amounts In Millions -------------- Trading liabilities 6,242 Other borrowed money (includes mortgage indebtedness and obligations under capitalized leases) 13,937 Bank's liability on acceptances executed and outstanding 44 Subordinated notes and debentures 6,134 Other liabilities 7,612 --------- Total liabilities $ 183,850 Minority interest in consolidated subsidiaries 39 EQUITY CAPITAL Perpetual preferred stock and related surplus 0 Common stock 520 Surplus (exclude all surplus related to preferred stock) 13,289 Retained earnings 5,459 Accumulated other comprehensive income 311 Other equity capital components 0 --------- Total equity capital 19,579 --------- Total liabilities, minority interest, and equity capital $ 203,468 =========
I, James E. Hanson, Vice President of the above-named bank do hereby declare that this Report of Condition has been prepared in conformance with the instructions issued by the appropriate Federal regulatory authority and is true to the best of my knowledge and belief. James E. Hanson Vice President We, the undersigned directors, attest to the correctness of this Report of Condition and declare that it has been examined by us and to the best of our knowledge and belief has been prepared in conformance with the instructions issued by the appropriate Federal regulatory authority and is true and correct. Carrie L. 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California	0100	95-2252858
(State or other jurisdiction of incorporation or organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification Number)


Delaware	0100	36-0769130
(State or other jurisdiction of incorporation or organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification Number)


California	0100	77-0388028
(State or other jurisdiction of incorporation or organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification Number)


Iowa	0100	42-0888575
(State or other jurisdiction of incorporation or organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification Number)


Texas	0100	74-2576381
(State or other jurisdiction of incorporation or organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification Number)


Juliet L. Ream, Esq. General Counsel Seminis Vegetable Seeds, Inc. 2700 Camino del Sol Oxnard, California 93030-7967 (805) 647-1572 (Name, address, including zip code, and telephone number, including area code, of agent for service)		Copy to: Howard S. Kelberg, Esq. Milbank, Tweed, Hadley & McCloy LLP 1 Chase Manhattan Plaza New York, NY 10005 (212) 530-5000





		Proposed Maximum	Proposed Maximum
	Amount To Be	Offering Price	Aggregate	Amount of
Title of Each Class of Securities To Be Registered	Registered	Per Unit(1)	Offering Price(1)	Registration Fee


10.25% Senior Subordinated Notes due 2013	$190,000,000	100%	$190,000,000	$15,371

Guarantees of the 10.25% Senior Subordinated Notes due 2013	$190,000,000	100%	$190,000,000	(2)


PROSPECTUS SUMMARY
RISK FACTORS
FORWARD-LOOKING STATEMENTS
DESCRIPTION OF THE ACQUISITION TRANSACTIONS
USE OF PROCEEDS
CAPITALIZATION
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
BUSINESS
MANAGEMENT
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
SECURITY OWNERSHIP AND CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
DESCRIPTION OF OTHER INDEBTEDNESS
DESCRIPTION OF THE PIK PREFERRED STOCK
DESCRIPTION OF THE NOTES
THE EXCHANGE OFFER
BOOK-ENTRY; DELIVERY AND FORM
CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS
ERISA CONSIDERATIONS
PLAN OF DISTRIBUTION
VALIDITY OF THE NOTES
EXPERTS
WHERE YOU CAN FIND MORE INFORMATION
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
	REPORT OF INDEPENDENT AUDITORS
	CONSOLIDATED BALANCE SHEETS
	CONSOLIDATED STATEMENTS OF OPERATIONS
	CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
	CONSOLIDATED STATEMENTS OF CASH FLOWS
	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
	CONSOLIDATED BALANCE SHEETS
	CONSOLIDATED STATEMENTS OF OPERATIONS
	CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
	CONSOLIDATED STATEMENTS OF CASH FLOWS
	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
PART II INFORMATION NOT REQUIRED IN PROSPECTUS
	Item 20. Indemnification of Directors and Officers
	Item 21. Exhibits and Financial Statement Schedules
	Item 22. Undertakings
EXHIBIT 2.1
EXHIBIT 2.2
EXHIBIT 2.3
EXHIBIT 2.4
EXHIBIT 4.1
EXHIBIT 4.2
EXHIBIT 10.1
EXHIBIT 10.3
EXHIBIT 10.4
EXHIBIT 10.5
EXHIBIT 10.6
EXHIBIT 10.7
EXHIBIT 10.8
EXHIBIT 10.9
EXHIBIT 10.10
EXHIBIT 23.1
EXHIBIT 25.1


Notes Offered for Exchange		We are offering $190,000,000 in principal amount of our new 10 1/4% Senior Subordinated Notes due 2013 in exchange for an equal aggregate principal amount of our original 10 1/4% Senior Subordinated Notes due 2013 on a one-for-one basis. The new notes have substantially the same terms as the original notes you hold, except that the new notes have been registered under the Securities Act of 1933, as amended, referred to as the Securities Act of 1933, and will be freely tradable.

Exchange and Registration Rights		At the time we sold investors the original notes, we entered into a registration rights agreement that requires us to make this exchange offer.

		After the exchange offer is complete, you will no longer be entitled to exchange your original notes for registered notes. If the exchange offer is not consummated by May 27, 2004, we will be required to use commercially reasonable efforts to file a shelf registration statement under the Securities Act of 1933 covering resales of your original notes and to use commercially reasonable efforts to cause the shelf registration statement to be declared effective under the Securities Act. We do not currently expect to have to file a shelf registration statement.

		If either an exchange offer registration statement or a shelf registration statement, if required, is not completed within the specified time periods, we will be required to pay penalty interest on the original notes.

The Exchange Offer		We are offering to exchange $1,000 principal amount of new notes for each $1,000 principal amount of your original notes. In order to be exchanged, your original notes must be properly tendered and accepted. All original notes that are validly tendered and not withdrawn will be exchanged.

Ability to Resell Notes		We believe that the new notes issued in the exchange offer may be offered for resale, resold and otherwise transferred by you without compliance with the registration and prospectus delivery provisions of the Securities Act of 1933 if:

		• the notes issued in the exchange offer are being acquired in the ordinary course of your business;

		• you are not participating, do not intend to participate and have no arrangement with any person to participate in the distribution of notes issued to you in the exchange offer; and

		• you are not our affiliate.

		By tendering your original notes as described below, you will be making representations to this effect. See “The Exchange Offer — Representations We Need From You Before You May Participate in the Exchange Offer.”

		Each broker-dealer that receives new notes for its own account in exchange for original notes, where such original notes were acquired by such broker-dealer as a result of market-making activi-


		Holders who hold their positions through Euroclear and Clearstream, Luxembourg must adhere to the procedures described in “The Exchange Offer — Procedures for Tendering Your Original Notes.”

Special Procedures for Beneficial Owners		If you beneficially own original notes registered in the name of a broker, dealer, commercial bank, trust company or other nominee and you wish to tender your original notes in the exchange offer, you should contact the registered holder promptly and instruct it to tender on your behalf.

Guaranteed Delivery Procedures for Tendering Original Notes		If you wish to tender your original notes and the original notes are not immediately available, or time will not permit your original notes or other required documents to reach Wells Fargo before the expiration date, or the procedure for book-entry transfer cannot be completed on a timely basis, you may tender your original notes according to the guaranteed delivery procedures set forth under “The Exchange Offer — Guaranteed Delivery Procedures.”

Withdrawal Rights		You may withdraw the tender of your original notes at any time prior to 5:00 p.m. New York City time, on the expiration date.

U.S. Tax Considerations		The exchange of original notes for new notes will not be treated as a taxable transaction for U.S. Federal income tax purposes. Rather, the notes you receive in the exchange offer will be treated as a continuation of your investment in the original notes. For additional information regarding U.S. Federal income tax considerations, you should read the discussion under “Tax Considerations–United States Taxation of Holders.”

Use of Proceeds		We will not receive any proceeds from the issuance of the notes in the exchange offer. We will pay all expenses incidental to the exchange offer. For a description of the use of proceeds of the original notes, see “Use of Proceeds.”

Exchange Agent		Wells Fargo Bank, National Association is serving as the exchange agent. Its address, telephone number and facsimile number are:

		Wells Fargo Bank, National Association

		MAC E2818-176

		17th Floor

		707 Wilshire Blvd.

		Los Angeles, CA 90017
		Attn: Corporate Trust Administration

		Telephone: (213) 614-3349
		Fax: (213) 614-3355


Issuer		Seminis Vegetable Seeds, Inc.

Notes Offered		The terms of the new notes will be identical in all material respects to the terms of the original notes, except that the new notes will not contain transfer restrictions and will not contain the provisions for an increase in the interest rate related to defaults in our agreement to carry out this exchange offer.

Maturity Date		October 1, 2013.

Interest Payment Dates		April 1 and October 1.

Optional Redemption		On or prior to October 1, 2008, we may redeem some or all of the notes at a redemption price equal to 100% of the principal amount of notes redeemed plus a make-whole premium plus accrued and unpaid interest, if any, to but not including the date of redemption. See “Description of the Notes — Optional Redemption.”

		After October 1, 2008, we may redeem all or part of the notes at any time at the redemption prices set forth in the section “Description of the Notes — Optional Redemption,” plus accrued and unpaid interest, if any, to the date of redemption.

		On or prior to October 1, 2006, we may redeem up to 35% of the notes with the proceeds of certain sales of equity securities and the cash contribution of equity capital to us at 110.250% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of redemption. See “Description of the Notes — Optional Redemption.”

Change of Control		Upon the occurrence of a change of control, you will have the right, as a holder of notes, to require us to repurchase all of your notes at a repurchase price equal to 101% of their principal amount, plus accrued and unpaid interest, if any, to but not including the date of repurchase. We may not have enough funds or the terms of our other debt may prevent us from purchasing the notes. See “Description of the Notes — Repurchase at the Option of Holders — Change of Control.”

Guarantees		Holdings and each of our wholly-owned domestic subsidiaries will jointly and severally guarantee the notes on an unsecured senior subordinated basis. Each of our future domestic subsidiaries that provide guarantees under our new senior secured credit facility (other than those subsidiaries that we designate as unrestricted subsidiaries) will jointly and severally guarantee the notes on an unsecured senior subordinated basis. A substantial portion of our subsidiaries, consisting in large part of our foreign subsidiaries, will not guarantee the notes. Our non-guarantor subsidiaries represented, in the aggregate, 58.1% of our consolidated total assets as at June 27, 2003 and 61.1% of our consolidated net sales, 78.1% of our consolidated net income and 40.9% of our consolidated EBITDA for the twelve months ended June 27, 2003.


Ranking		The notes will rank junior to all of our existing and future senior indebtedness, will rank pari passu with all of our future senior subordinated indebtedness and will rank senior to all of our future indebtedness that is expressly subordinated to the notes. See “Description of the Notes — Subordination.”

		The guarantees of the notes by Holdings and each subsidiary guarantor will rank junior to all existing and future senior indebtedness of Holdings and the subsidiary guarantors, respectively, will rank senior to all future indebtedness that is expressly subordinated to the guarantees and will rank pari passu with all existing and future senior subordinated unsecured indebtedness of Holdings and the subsidiary guarantors not so expressly subordinated. See “Description of the Notes — The Guarantees.”

		As of June 27, 2003, assuming that the issuance of the original notes and the other Transactions had occurred on that date, we would have had $466.3 million of indebtedness on our consolidated balance sheet, approximately $237.0 million of which would have been senior to the notes. On the same date, as so adjusted, we would also have had an additional $54.0 million available for borrowings under our new senior secured credit facility.

Certain Covenants		The indenture governing the notes contains covenants that limit, among other things, Seminis Vegetable’s ability and the ability of its restricted subsidiaries to:

		• incur additional debt;

		• pay dividends on Seminis Vegetable’s capital stock or repurchase Seminis Vegetable’s capital stock;

		• make certain investments;

		• enter into transactions with affiliates;

		• limit dividends or other payments by Seminis Vegetable’s restricted subsidiaries;

		• use assets as security in other transactions;

		• enter into sale and leaseback transactions;

		• engage in other businesses; and

		• sell assets or merge with or into other companies.

		These covenants are subject to a number of important exceptions and limitations, which are described under the heading “Description of the Notes — Certain Covenants.”


																							Twelve
																							Months
																	Nine Months Ended						Ended
		Fiscal Year Ended September 30,
																	June 28,			June 27,			June 27,
		1998			1999			2000			2001			2002			2002			2003			2003

Income Statement Data(1):
Net sales		$	428.4		$	530.6		$	474.4		$	449.9		$	452.6		$	338.9		$	352.7		$	466.4
Cost of goods sold(2)			162.8			202.3			237.1			232.1			171.9			128.3			130.4			174.0

Gross profit			265.6			328.3			237.3			217.8			280.7			210.6			222.3			292.4
Operating expenses:
	Research and development expenses(3)		49.4			62.4			58.4			52.5			44.3			32.5			35.0			46.8
	Selling, general and administrative expenses(4)		158.6			193.0			222.6			191.1			174.9			132.5			138.0			180.4
	Management fees(5)		8.5			—			—			—			—			—			—			—
	Amortization of intangible assets(6)		14.4			27.9			30.4			28.0			17.0			12.6			11.9			16.3

Total operating expenses			230.9			283.3			311.4			271.6			236.2			177.6			184.9			243.5
Gain (loss) on sale of assets			(0.1	)		1.6			10.0			0.6			6.0			5.8			1.5			1.7

Income (loss) from operations			34.6			46.6			(64.1	)		(53.2	)		50.5			38.8			38.9			50.6
Other income (expense):
Interest expense, net			(27.1	)		(41.9	)		(33.4	)		(39.1	)		(27.7	)		(21.2	)		(23.7	)		(30.2	)
Foreign currency gain (loss)			3.2			1.0			(5.4	)		1.7			(2.2	)		(1.5	)		0.2			(0.5	)
Minority interest			(0.2	)		(1.4	)		(1.2	)		(1.4	)		(1.2	)		(0.6	)		(0.2	)		(0.8	)
Other income (loss), net			(0.3	)		0.6			(1.3	)		(2.5	)		(0.8	)		1.0			(0.3	)		(2.1	)
Income tax benefit (expense)			(3.4	)		(2.5	)		24.6			(40.0	)		(2.5	)		(5.9	)		(6.0	)		(2.6	)
Extraordinary items			—			(6.8	)		—			—			—			—			—			—

Net income (loss)(7)		$	6.8		$	(4.4	)	$	(80.8	)	$	(134.5	)	$	16.1		$	10.6		$	8.9		$	14.4


			Pro Forma
	June 27,		June 27,
	2003		2003(10)

Balance Sheet Data (at period end):
Cash and cash equivalents	$	28.1	$	—
Inventories		266.2		331.4
Total assets		814.7		717.1
Total debt		274.2		466.3
Mandatorily redeemable preferred stock		31.0		—
Total stockholders’ equity		369.1		131.8


																		Twelve
														Nine Months				Months
														Ended				Ended
	Fiscal Year Ended September 30,
														June 28,		June 27,		June 27,
	1998		1999			2000			2001			2002		2002		2003		2003

Net income (loss)	$	6.8	$	(4.4	)	$	(80.8	)	$	(134.5	)	$	16.1	$	10.6	$	8.9	$	14.4
Income tax expense (benefit)		3.4		2.5			(24.6	)		40.0			2.5		5.9		6.0		2.6
Interest expense, net		27.1		41.9			33.4			39.1			27.7		21.2		23.7		30.2
Depreciation & amortization		31.3		46.9			50.1			45.1			32.5		24.0		22.9		31.4
Non-cash charges relating to restricted stock award plan(a)		—		—			—			1.8			5.8		4.4		—		1.4

EBITDA	$	68.6	$	86.9		$	(21.9	)	$	(8.5	)	$	84.6	$	66.1	$	61.5	$	80.0


	*We will require a significant amount of cash to service our debt. Our ability to generate cash depends on many factors beyond our control.*


	*Despite current indebtedness levels, we may incur substantially more debt. Incurring additional debt could further exacerbate certain risks described above.*


	*The notes and the guarantees are subordinated obligations.*


	*The guarantee of the notes provided by Holdings is of limited practical value.*


	*The notes are effectively subordinated to obligations under our new senior secured credit facility to the extent those obligations are secured.*


	*We may not be able to satisfy our obligations under our new senior secured credit facility, the notes or other indebtedness upon a change of control.*


	*The guarantees of our subsidiary guarantors may be voided under specific legal circumstances.*


	*If you do not elect to exchange your original notes for new notes, you will hold securities that are not registered and that contain restrictions on transfer.*


	*There has not been, and may not be, a public market for the notes.*


	If you fail to follow the exchange offer procedures, your original notes will not be accepted for exchange and you will continue to own original notes subject to existing transfer restrictions, which may make them more difficult to sell.


	*We have experienced losses in the past and we may experience losses in the future.*


	*Our failure to accurately forecast and manage inventory could result in an unexpected shortfall or surplus of seeds which could harm our business.*


	*We are heavily dependent on the success of our research and development and the failure to develop new and improved products could adversely affect our business.*


	*We may not be able to obtain intellectual property rights from third parties.*


	Our operations are dependent upon our ability to protect our intellectual property, plant patents and plant varieties and changes in U.S. and foreign laws could result in the loss of this protection.


	*Increased competition may result in decreased demand or lower prices for our products. Our failure to effectively compete could reduce our profitability.*


	*We are controlled by Fox Paine and Mr. Romo, whose interests in our business may be different than yours.*


	*We face other risks in connection with our international operations.*


	*We are exposed to fluctuations in foreign exchange rates, which may adversely affect our operating results and net income.*


	*Our business is subject to risks related to weather, disease and pests that could adversely affect our business and our business is seasonal.*