Seminis Vegetable Seeds, Inc. Form S-4/A

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)	Previously paid.


(3)	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 issued on September 29, 2003 (the “original notes”) that you now hold for newly issued 10 1/4% Senior Subordinated Notes due 2013 (the “new notes”), 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.

We issued an additional $140,000,000 of our 10 1/4% Senior Subordinated Notes due 2013 on January 23, 2004 (the “January Notes”). The exchange offer described in this prospectus does not relate to the January Notes. This is not an offer to exchange any of the January Notes.

Investing in the notes involves risks. See “Risk Factors” beginning on page 20.

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 Unaudited 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 over 25 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 December 26, 2003, we achieved net sales of $498.7 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 2003.

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 over 25 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 3.5% of our net seed sales in fiscal year 2003. Our ten largest customers accounted for approximately 14.0% of our net seed sales in fiscal year 2003. Furthermore, our customer base includes growers, distributors and dealers and is geographically diverse, with North and Central America representing 36.0% of our net seed sales in fiscal year 2003, and Europe, the Middle East and Africa representing 44.1% of our net seed sales during the same period. Our product portfolio is also diverse, with no seed variety accounting for more than 1.4% of our net seed sales in fiscal year 2003.

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 $50.9 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 2003, we launched over 100 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 the original notes and the 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 on September 29, 2003 of $190,000,000 of our 10 1/4% Senior Secured Notes due 2013 (referred to in this prospectus as the “original notes”) and the entering into of a new senior secured credit facility, as the “Transactions.”

On January 23, 2004, we issued an additional $140,000,000 of our 10 1/4% Senior Subordinated Notes due 2013 (referred to in this prospectus as the “January Notes”). The net proceeds of the January Notes were used to repay a portion of the funds borrowed under our new senior secured credit facility and for general corporate purposes. Concurrently with the offering of the January Notes, we amended our new senior secured credit facility. See “Description of Other Indebtedness — Description of Our New Senior Secured Credit Facility.” Throughout this prospectus, we refer to the issuance of the January Notes and the amendment to our new senior secured credit facility as the “Add-on 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)	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.”



(2)	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.



(3)	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.


(4)	In connection with the Acquisition Transactions we entered into a new senior secured credit facility that was amended on January 23, 2004 to provide for a $90.0 million term loan and a $75.0 million revolving loan. 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, 51.4% of our consolidated total assets as of December 26, 2003 and 61.8% of our consolidated net sales for the twelve months ended December 26, 2003. Our non-guarantor subsidiaries represented, in the aggregate, 62.4% of our consolidated net sales for the three months ended December 26, 2003. For the three months ended December 26, 2003, our non-guarantor subsidiaries had consolidated EBITDA of $10.1 million and consolidated net income of $7.2 million and we had consolidated EBITDA of $5.5 million and a consolidated net loss of $9.1 million.

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.


		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.”

		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.



		EBITDA of $10.1 million and consolidated net income of $7.2 million and we had consolidated EBITDA of $5.5 million and a consolidated net loss of $9.1 million.


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 December 26, 2003, assuming that the Add-on Transactions had occurred on that date, we would have had $507.5 million of indebtedness, including $41.1 million of preferred shares subject to mandatory redemption, on our consolidated balance sheet, approximately $177.5 million of which would have been senior to the notes. On the same date, as so adjusted, we would also have had an additional $72.3 million available for borrowings under the revolving credit portion of our new senior secured credit facility ($75.0 million borrowing capacity less $2.7 million of committed letters of credit).


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.”

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 unaudited pro forma consolidated financial data should be read in conjunction with our historical consolidated financial statements and related notes, “Unaudited 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, 2000 through 2003 have been derived from our audited consolidated financial statements. The summary unaudited pro forma financial data for the fiscal year ended September 30, 2003 gives effect to the Transactions and the Add-on Transactions. As a result of the Acquisition Transactions, which were consummated on September 29, 2003, the financial information below has been presented on a predecessor/ successor basis. The predecessor periods include the three months ended December 27, 2002, the 364 days ended (referred to herein as the “twelve months ended”) September 29, 2003, and the fiscal years ended September 30, 2002, 2001 and 2000, while the successor periods include the three months ended December 26, 2003 and the one day ended September 30, 2003.

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 Holdings common stock and the related purchase accounting adjustments are “pushed down” and recorded in our financial statements. As a result of these adjustments, financial information presented for the predecessor and successor periods are not directly comparable. See “Management’s Discussion and Analysis of Financial Condition and Results of Operation — Fox Paine Acquisition.”

The selected consolidated financial data as of and for the three months ended December 27, 2002 and December 26, 2003 have been derived from our unaudited consolidated financial statements. 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 unaudited pro forma financial data does not purport to represent what our results of operations or financial condition would actually have been had the Transactions and the Add-on 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. All information presented for the pro forma fiscal year ended September 30, 2003 gives effect to the Transactions, as if they had occurred on October 1, 2002.



	(2)	Cost of goods sold in fiscal year 2001 included inventory write-downs related to our Global Restructuring and Optimization Plan that were in addition to the inventory provisions that course of our business. 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. For the three months ended December 26, 2003, we recorded $11.5 million of non-cash inventory step-up amortization due to purchase accounting.



(3)	As a result of the Acquisition Transactions and associated purchase accounting treatment, a one-time $10.6 million in-process research and development charge has been expensed in the successor period for the day ended September 30, 2003.


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



	(a)	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 and $5.8 million in fiscal years 2001 and 2002. The impact of this plan also resulted in cash charges of $0.8 million and $1.5 million in fiscal years 2001 and 2002. The restricted stock award plan was terminated at the end of fiscal year 2002;



	(b)	severance charges related to our Global Restructuring and Optimization Plan impacted fiscal year 2001 by $12.0 million. A charge of $10.9 million associated with severance of an executive and other employees was recorded in the fiscal year ended September 30, 2003, of which $10.4 million was a cash charge and a charge of $0.4 million was recorded in the three months ended December 26, 2003;



	(c)	facility consolidation costs of $4.3 million incurred in fiscal year 2001 were associated with our Global Restructuring and Optimization Plan;



	(d)	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 we incurred $0.8 million of consulting fees related to our Global Restructuring and Optimization Plan;



	(e)	in the fiscal year ended September 30, 2003, we recorded $26.9 million of legal and professional fees related to the transactions detailed in this prospectus, a portion 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. We also incurred $4.3 million of



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



(6)	Interest expense, net for the fiscal year ended September 30, 2003 includes $4.3 million of non-cash interest expense related to amortization of deferred financing fees and accretion of warrants.



(7)	Reflects a non-cash charge related to interest expense from preferred shares subject to mandatory redemption.



(8)	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.



(9)	There was a deficiency of earnings to cover fixed charges for the years ended September 30, 2001 and 2002, the twelve months ended September 29, 2003 and the three months ended December 27, 2002 and December 26, 2003 of $124.8 million, $1.8 million, $44.9 million, $20.4 million and $8.0 million, respectively. There was also a deficiency of earnings to cover fixed charges on a pro forma basis for the fiscal year ended September 30, 2003 and the three months ended December 26, 2003 of $3.4 million and $10.6 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.


	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 (4)(a) above.


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


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


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


	(f)	See footnote (3) above.

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

	(i)	See footnote 4(g) above.


	(j)	See footnote (2) above.



(12)	Gives effect to the issuance on January 23, 2004 of $140.0 million of additional 10 1/4% Senior Subordinated Notes due 2013 and the application of the net proceeds therefrom, including the repayment of $100.0 million of the borrowings under the term loan portion of our new senior secured credit facility.



(13)	Deferred financing fees of $3.8 million were written-off as a result of the $100.0 million paydown of the borrowings under the term loan portion of our new senior secured credit facility.

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 December 26, 2003, after giving effect to the Add-on Transactions, we and our consolidated subsidiaries would have had approximately $507.5 million of outstanding debt (including $41.1 million of preferred shares subject to mandatory redemption and the current portion of long-term debt and excluding obligations to trade creditors). Outstanding debt would have been approximately 87.1% of our total capitalization as of December 26, 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 December 26, 2003, assuming the completion of the Add-on Transactions, we would have had unused borrowing capacity of $72.3 million under the revolving credit portion of our new

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 December 26, 2003, after giving effect to the Add-on Transactions, we would have had approximately $177.5 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 December 26, 2003, the non-guarantor foreign subsidiaries represented in the aggregate approximately 61.8% of our consolidated net sales and 51.4% of our consolidated total assets. Our non-guarantor subsidiaries represented, in the aggregate, 62.4% of our consolidated net sales for the three months ended December 26, 2003. For the three months ended December 26, 2003, our non-guarantor subsidiaries had consolidated

EBITDA of $10.1 million and consolidated net income of $7.2 million and we had consolidated EBITDA of $5.5 million and a consolidated net loss of $9.1 million. As of December 26, 2003, the liabilities of the non-guarantor foreign subsidiaries on a consolidated basis were approximately $145.6 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

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 $80.8 million, $134.5 million and $31.7 million for the fiscal years ended September 30, 2000, 2001 and 2003 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 10.1% and 11.9% of our net sales for the fiscal year ended September 30, 2003, and the three months ended December 26, 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, 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, Bolivia, Denmark, Ecuador, India, Italy, Latvia, New Zealand, South Africa, 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 33.3% of our fiscal year 2003 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 2003 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)	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.”



(3)	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.”


(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. We will pay all expenses in connection with the exchange offer.

The net proceeds from the offering of the original notes, after deducting 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)	At the time the Acquisition Transactions were consummated, the revolving credit portion of our new senior secured credit facility provided for borrowings of up to $60.0 million. As amended in the Add-on Transactions, the revolving credit portion of our new senior secured credit facility now provides for borrowings of up to $75.0 million.



(2)	This amount was borrowed pursuant to the term portion of this credit facility. $100.0 million of the term loan was repaid on January 23, 2004 in connection with the Add-on Transactions.


(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 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 December 26, 2003 on an actual basis and on a pro forma basis giving effect to the Add-on 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 “Unaudited 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 Add-on Transactions on December 26, 2003, on a pro forma basis we would have had approximately $72.3 million of unused borrowing capacity under the revolving credit portion of this credit facility ($75.0 million borrowing capacity less $2.7 million of committed letters of credit).



(2)	This item gives effect to the sale and issuance of the PIK Preferred Stock. At the date of 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. As of December 26, 2003, accrued dividends of $1.8 million have been included with the $39.3 million allocated to the PIK Preferred Stock. The value of the warrants is included in stockholders’ equity.



(3)	Deferred financing fees of $3.8 million were written-off as a result of the $100.0 million paydown of the borrowings under the term loan portion of our new senior secured credit facility.



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



(5)	Gives effect to the issuance of $140.0 million of additional 10 1/4% Senior Subordinated Notes due 2013 and the application of the net proceeds therefrom. As a result of this additional issuance, including the repayment of $100.0 million of the borrowings under the term loan portion of our new senior secured credit facility, interest expense would have increased $2.6 million on a pro forma basis for the three months ended December 26, 2003.

The following unaudited 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 Unaudited 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 table sets forth unaudited 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 unaudited pro forma financial statements have been prepared giving effect to the Transactions and the Add-on Transactions.

The Acquisition Transactions were 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 was “pushed down” and recorded in Holdings’ financial statements. 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. 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 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 unaudited pro forma condensed consolidated statement of operations gives effect to the Transactions and the Add-on Transactions as if such transactions were completed as of October 1, 2002, the beginning of our 2003 fiscal year.

The unaudited 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 and the Add-on Transactions in fact occurred on such date 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 the consummation of the Acquisition Transactions and associated purchase accounting treatment. In addition, a nonrecurring charge directly attributable to the Acquisition Transactions which will impact our statements of operations during the next 12 months has not been included in the unaudited pro forma statements of operations. Such charge relates to a $54.9 million increase in cost of goods sold due to a revaluation of inventory.

(2) Reflects the impact of the Add-on Transactions and the application of the net proceeds therefrom.

(3) Reflects a decrease of $0.8 million in cost of goods sold relating to a decrease in lease expense as a result of the purchase of leased assets.

(4) As a result of the Acquisition Transactions and associated purchase accounting treatment, a one-time non-cash $10.6 million in-process research and development charge has been expensed in the successor period for the day ended September 30, 2003.

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

(6) 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:

(7) Reflects the decrease of interest income due to the forgiveness of accrued interest as a result of the Acquisition Transactions.

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

(9) 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.

(10) Reflects reversal of deferred financing fees write-off of $2.3 million which was directly attributable to the Acquisition Transactions recorded in the period historical results.

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

(12) Reflects the net increase on interest expense of the offering of the new notes and the removal of interest expense relating to the repaid portion of the term loan. The adjustments are as follows:

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, 1999 through 2003 have been derived from our audited consolidated financial statements. As a result of the Acquisition Transactions, which were consummated on September 29, 2003, the financial information below has been presented on a predecessor/ successor basis. The predecessor periods include the 364 days ended (referred to herein as the “twelve months ended”) September 29, 2003, and the fiscal years ended September 30, 2002, 2001, 2000 and 1999, while the successor period is the one day ended September 30, 2003.

The selected consolidated financial data as of and for the three months ended December 27, 2002 and December 26, 2003 and for the twelve months ended December 26, 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.


	(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. For the three months ended December 26, 2003, we recorded $11.5 million of non-cash inventory step-up amortization due to purchase accounting.


	(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)	As a result of the Acquisition Transactions, a one-time $10.6 million in-process research and development charge has been expensed in the successor period for the day ended September 30, 2003.



	(5)	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 and $5.8 million in fiscal years 2001 and 2002. The impact of this plan also resulted in cash charges of $0.8 million and $1.5 million in fiscal years 2001 and 2002. 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 $10.9 million associated with severance of an executive and other employees was recorded in the fiscal year ended September 30, 2003, of which $10.4 million was a cash charge and a charge of $0.4 million was recorded in the three months ended December 26, 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, we incurred $0.8 million of consulting fees related to our Global Restructuring and Optimization Plan;



	(g)	in the fiscal year ended September 30, 2003, we recorded a non-cash charge of $4.3 million related to stock-based compensation to management associated with the Acquisition Transactions; and



	(h)	in the period ended December 26, 2003, we recorded a non-cash charge of $0.3 million related to stock-based compensation to management, which is computed based on our quarterly performance.


	(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, 1999, 2000, 2001 and 2002, the twelve months ended September 29, 2003 and the three months ended December 27, 2002 and December 26, 2003 of $7.0 million, $114.7 million, $124.8 million, $1.8 million, $44.9 million, $20.4 million and $8.0 million, respectively. There was also a deficiency of earnings to cover fixed charges on a pro forma basis for the fiscal year ended September 30, 2003 and the three months ended December 26, 2003 of $3.4 million and $10.6 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. 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; and



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


		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.


	(a)	See footnote (2) above.

	(b)	See footnote (3) above.


	(c)	See footnote (5)(a) above.



	(d)	See footnote (5)(b) above.



	(e)	See footnote (5)(c) above.



	(f)	See footnote (5)(d) above.



	(g)	See footnote (5)(e) above.



	(h)	See footnote (4) above.



	(i)	See footnote (5)(f) above.



	(j)	See footnote (5)(g) above.



	(k)	See footnote (5)(h) above.



	(l)	See footnote (2) above.

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 were the primary operating problems that resulted in our experiencing severe financial difficulties during fiscal year 2000 and 2001.

In February 2000, we announced a cost-saving initiative designed to streamline operations, increase utilization of facilities and improve efficiencies. The first phase of this Global Restructuring and Optimization Plan, 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.

In 2001, we initiated our Value Capture Strategy which focuses on product development, pricing optimization and marketing initiatives directed at vegetable and fruit distributors, processors and retailers. As a result of the implementation of the Global Restructuring and Optimization Plan and the Value Capture Strategy, in our 2002 and 2003 fiscal years, we significantly improved our cash flows and results of operations. This improved financial performance resulted from our ability to:



	•	Increase net sales for the second year in a row;



	•	Reduce operating expenses (exclusive of costs related to Fox Paine’s acquisition of Seminis as described below) both in dollars and as a percentage of sales for each of the last two years as compared to amounts incurred in fiscal years 2000 and 2001;



	•	Improve controls over inventory purchases and reduce production overhead expenses;



	•	Generate positive cash flows from operations;



	•	Reduce capital spending by controlling projects and consolidating facilities;



	•	Generate cash by selling non-core assets; and



	•	Prior to the Fox Paine acquisition transaction described below, pay down substantial portions of our old syndicated credit facility.

On September 29, 2003, 75.1% of Holdings common stock was acquired by Fox Paine & Company, LLC for aggregate consideration of approximately $163.2 million. Fox Paine & Company, LLC manages investment funds that provide equity capital for management buyouts, going private transactions and company

expansion and growth programs. In connection with the Acquisition Transactions, Holdings purchased and retired all of its publicly held shares of common stock, redeemed and retired all of its Class B Redeemable Preferred Stock, exchanged and cancelled all of its Class C preferred stock, purchased and retired certain shares of, and options with respect to shares of, its common stock and repaid indebtedness totaling $216.6 million of its syndicated credit facility. Additionally, Seminis Vegetable issued $190.0 million of ten year, 10 1/4% senior subordinated notes, we established a new senior secured credit facility that consisted of a $190.0 million term loan and a $60.0 million revolving loan ($7.0 million and $0 of which was outstanding at December 26, 2003 and September 30, 2003, respectively), we borrowed $17.0 million under a new mortgage on our headquarters in Oxnard, CA, and we issued 50,000 shares of paid-in-kind mandatorily redeemable preferred stock along with warrants to purchase 3.9 million shares of common stock for combined proceeds of $50.0 million. See “Description of the Acquisition Transactions” and the Notes to the Consolidated Financial Statements.

Our results for fiscal year 2003 reflected the effects of the Acquisition Transactions and are presented on a predecessor/successor basis. 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 Holdings common stock and the related purchase accounting adjustments are “pushed down” and recorded in our financial statements.

The percentage of assets acquired and liabilities assumed were originally recorded at their estimated fair values based on an independent appraisal, however, these values were in excess of the purchase price paid by Fox Paine. Accordingly, negative goodwill totaling $433.4 million was adjusted by writing-down the value of non-current assets on a proportionate basis. The following summarizes the fair values, subsequent adjustments and on-going carrying values of the net assets acquired:

The increase in inventory value will be expensed as the inventory is sold. We expect that the inventories will be sold over the 16 month period beginning on the date the Acquisition Transactions were consummated. The intangible assets will be amortized on a straight-line basis over periods between five and forty years. In-process research and development was immediately expensed and is reflected in the results of the successor entity for the one-day period ended September 30, 2003.

The Acquisition Transactions resulted in the incurrence of additional operating expenses in both the predecessor and successor companies. The main components of these operating expenses were related to transaction fees for obtaining an exchange and fairness opinion, and expenses for the buyout of existing options, severance and restricted stock.

The change in the basis of assets and liabilities as a result of the Acquisition Transactions will impact our future operating results. Fiscal year 2004 operating expenses will benefit from a reduction in depreciation

expense of approximately $7.3 million, which will reduce selling, general and administrative expenses. Fiscal year 2004 and 2005 gross margins will be lower than historical levels because of the increased basis in inventory. The increase in inventory basis of $73.2 million, resulting from the purchase accounting adjustments made in connection with the Acquisition Transactions, will be reflected in the statement of operations through decreased margins as the related inventory is sold. We expect that the related inventory will be sold over the 16 month period beginning on the date the Acquisition Transactions were consummated. Future results are also expected to be adversely impacted by increased interest expense as a result of higher average debt levels outstanding coupled with higher interest rates.

We expect continued growth in fiscal year 2004. We will continue to execute our Value Capture Strategy and will focus on opportunities, such as potential acquisitions, to achieve long term growth targets.

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

Three Months Ended December 26, 2003 Compared with Three Months Ended December 27, 2002

Net sales increased 26.4% to $101.9 million for the three months ended December 26, 2003 compared to $80.6 million for the three months ended December 27, 2002. The result was partially due to $5.9 million of positive impact of currency fluctuations relating to the strengthening of the Euro and South Korean Won versus the U.S. Dollar during the first quarter of fiscal year 2004 compared to the same period in the prior

year. In constant dollars stated at monthly average exchange rates for the first quarter of fiscal year 2003 and excluding sales from non-core businesses, sales would have increased 19.3% to $92.4 million for the first quarter of fiscal year 2004 from $77.5 million in the first quarter of fiscal year 2003. The increase was primarily a result of price increases and the availability of seed to satisfy market demand. Geographically, the sales increases were primarily in the Americas, Europe and the Middle East. The Company’s business is subject to seasonal fluctuations and, therefore, the sales for the first quarter of a fiscal year are not necessarily indicative of those to be expected in any other interim period or for a fiscal year as a whole.

Gross profit decreased 1.9% to $49.4 million for the three months ended December 26, 2003 from $50.4 million for the three months ended December 27, 2002. Gross margin percentage decreased to 48.5% for the three months ended December 26, 2003 from 62.5% for the three months ended December 27, 2002. The decrease was primarily due to $11.5 million of inventory step-up amortization due to purchase accounting. This non-cash charge will continue to have a negative impact on the gross profit for the 16 month period beginning on the date the Acquisition Transactions were consummated. Another principal factor is the additional provision in seedmen’s claim reserve that accounts for 2.5% of net sales.

Research and development expenses remained at $11.5 million for the three months ended December 26, 2003 and December 27, 2002. An increase primarily the result of currency fluctuations from research and development operations in Europe and South Korea in the first quarter of fiscal year 2004 was offset by lower depreciation expense related to the impact of the negative goodwill allocation as part of the acquisition transaction.

Selling, general and administrative expenses increased 7.5% to $45.9 million for the three months ended December 26, 2003 from $42.7 million for the three months ended December 27, 2002. The increase was primarily due to currency exchange impact on European and South Korean expenses, management fees provision, severance expense, and non-cash compensation expense of restricted stock units, offset by lower depreciation expense related to the impact of the negative goodwill allocation as part of the acquisition transaction.

Amortization of intangible assets decreased 51.9% to $1.9 million for the three months ended December 26, 2003 from $3.9 million for the three months December 27, 2002. The decrease was due to the purchase accounting impact to the intangible assets basis and amortization period resulting in a lower amortization in the current period.

Both the gain of $2.5 million for the three months ended December 26, 2003 and the loss of $0.4 million for the three months ended December 27, 2002 were primarily from fixed asset sales of our South Korean subsidiary.

Interest expense, net, increased 49.2% to $9.7 million for the three months ended December 26, 2003 from $6.5 million for the three months ended December 27, 2002. The increase was primarily due to higher debt levels and higher interest rates from the refinancing during September 2003, and the impact of Preferred PIK interest. Excluding the non-cash items, interest expense would have been $7.6 million in the current period compared to $5.6 million in the same period last year.

We had other non-operating income, including foreign currency gain (loss), net, of $9.1 million for the three months ended December 26, 2003 as compared to other non-operating expense, net, of $0.1 million for the three months ended December 27, 2002. Other non-operating income, net, for the three months ended December 26, 2003 primarily consists of foreign currency gains of $8.9 million and other income of $0.2 million. The foreign currency gain was primarily due to the effect of the strengthening of the Euro on a U.S. dollar based intercompany loan at a European subsidiary. Other non-operating expense, net, for the three months ended December 27, 2002, primarily consists of foreign currency losses of $0.2 million, offset by a minority interest benefit of $0.2 million.

Income tax expense was $1.1 million for the three months ended December 26, 2003 compared to an income tax benefit of $2.9 million for the three months ended December 27, 2002. The change was primarily due to the mix of worldwide income and losses at Seminis’ subsidiaries.

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 33.3% of its fiscal year 2003 net sales during its second fiscal quarter. Seminis has historically operated at a loss during the first and third fiscal quarters due to lower sales during such quarters. Seminis’ results in any particular quarter should not be considered indicative of those to be expected for a full year.

The results of operations for the year ended September 30, 2003, reflect the combined historical results for the twelve months ended September 29, 2003 (predecessor) and the one-day ended September 30, 2003 (successor).

Net sales increased 5.5% to $477.4 million for the year ended September 30, 2003 from $452.6 million for the year ended September 30, 2002. The increase was due to $25.9 million of favorable currency fluctuations related to the strengthening of the Euro and South Korean Won versus the U.S. Dollar during fiscal year 2003 compared to 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 for fiscal year 2002, and excluding the sales of the divested and phased out non-core businesses, net sales would have increased 0.3%. Despite a general seed price increase in all regions in which we compete, net sales were partially affected by a decrease in sales volume 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.

Gross profit increased 5.4% to $295.8 million for the year ended September 30, 2003 from $280.7 million for the year ended September 30, 2002. Gross margin was 62.0% for the years ended September 30, 2003 and September 30, 2002. The margin was positively impacted by general seed price increases in all regions in which we compete, offset by the impact of product mix from the reduction of certain high margin products in the Far East. As previously discussed, gross profit will be negatively impacted in fiscal years 2004 and 2005 by the increased basis in inventory, resulting from the purchase accounting adjustments made in connection with the Acquisition Transactions. The unfavorable non-cash impact of $73.2 million will be reflected in cost of sales in our statement of operations as the related inventory is expected to be sold over the 16 month period beginning on the date the Acquisition Transactions were consummated.

Research and development expenses increased 9.2% to $48.4 million for the year ended September 30, 2003 from $44.3 million for the year ended September 30, 2002. The increase was primarily due to the currency fluctuation impact on research and development expenses denominated in the Euro and South Korean Won, and general increases from year to year.

As a result of the Acquisition Transactions, a one-time $10.6 million in-process research and development charge has been expensed in the successor period for the day ended September 30, 2003. At the consummation date of the Acquisition Transactions, existing in-process research and development projects were assessed. Projects were analyzed by stage of development and assigned success rates based on our historical experience of the probability that such projects would yield viable products. The weighted average stage of completion for our in-process research and development projects was 65%.

The time and capital required for the development of new products represent significant industry complexities in the vegetable and fruit seed industry. Development cycles can last five to 12 years for a proprietary variety to reach commercial viability.

In our forecasting model for each project, cash flows from revenues forecasted in each period were reduced by related expected expenses, capital expenditures and the cost of working capital. The discount rates applied to a project’s cash flows were approximately 22% - 24%, based on the level of risk associated with a particular project and the current return on investment requirements of the market.

Selling, general and administrative expenses increased 23.5% to $216.0 million for the year ended September 30, 2003 from $174.9 million for the year ended September 30, 2002. The $41.1 million increase was primarily attributable to expenses related to the Acquisition Transactions. The main components of the these acquisition expenses were related to transaction fees in obtaining an exchange and fairness opinion and expenses for the buyout of existing options, severance and restricted stock. Excluding these transaction related expenses, selling, general and administrative expenses would have increased to $178.2 million primarily due to additional severance expense of $8.1 million and $12.2 million impact of currency fluctuations, offset by $7.3 million of restricted stock awards in fiscal year 2002, $3.3 million of expenses related to a divested business and general cost savings resulting from the Global Restructuring and Optimization Plan.

Amortization of intangible assets decreased 4.2% to $16.4 million for the year ended September 30, 2003 from $17.1 million for the year ended September 30, 2002. The decrease was primarily due to the effect of latter stages of accelerated amortization of intangible assets related to purchase accounting prior to the Acquisition Transactions. The decrease was partially offset by the currency impact from the fluctuation of the South Korean Won on South Korea-based intangible assets.

The gain on sale of assets of $1.9 million for the year ended September 30, 2003 was primarily due to the sale of certain South Korean assets, a Salinas property and a company-owned house in California. The gain on sale of assets of $6.0 million for the year ended September 30, 2002 was primarily due to the sale of a non-core business and asset sales of our South Korean subsidiary.

Interest expense, net, increased 13.6% to $31.5 million for the year ended September 30, 2003 from $27.7 million for the year ended September 30, 2002. The increase was primarily due to amortization of increased deferred financing fees and higher interest rates resulting from the amendment of our old syndicated

credit facility in January 2003, partially offset by the effect of lower average debt balances. Interest expense, net, for the one day ended September 30, 2003 included $2.0 million of interest income related to the forgiveness of previously recorded interest payable to Savia, S.A. de C.V., our former majority shareholder.

We had other non-operating expense, which includes foreign currency gain (loss), net, a minority interest provision and other income (loss), net, of $0.8 million for the year ended September 30, 2003 as compared to other non-operating expense, net, of $4.2 million for the year ended September 30, 2002. Other non-operating expense, net, for the year ended September 30, 2003 primarily consists of foreign currency gains of $1.4 million resulting from favorable currency fluctuations in South America and Europe and a United States Dollar denominated loan in the Netherlands, offset by $2.2 million of expenses from the write-off of deferred financing fees related to the early re-payment of our old syndicated credit facility. Other non-operating expense, net, for the year ended September 30, 2002 primarily consists of foreign currency losses of $2.2 million resulting from currency fluctuations in South America and a United States Dollar denominated loan in the Netherlands, a minority interest provision of $1.2 million, and other expenses of $0.8 million from several subsidiaries.

Income tax expense was $5.8 million, or a 22.6% effective tax-rate, for the year ended September 30, 2003 and $2.5 million, or a 13.3% effective tax rate, for the year ended September 30, 2002. The increase in the effective rate during fiscal year 2003 as compared to the prior year was primarily the result of the receipt of a $5.9 million tax refund in fiscal year 2002, for which no benefit was previously recorded, additional losses in the United States during fiscal year 2003 for which no benefit was recorded, partially offset by utilization of net operating losses in the Netherlands which had been fully reserved.

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 expense, including foreign currency gain (loss), net, of $4.2 million for the year ended September 30, 2002 as compared to other non-operating expense, net, of $2.2 million for the year ended September 30, 2001. Other non-operating expense, net, for the year ended September 30, 2002 primarily consists of foreign currency losses of $2.2 million resulting from currency fluctuations in South America and a U.S. dollar denominated loan in the Netherlands, a minority interest provision of $1.2 million and other expenses of $0.8 million from several subsidiaries. Other non-operating expense, net, for the year ended September 30, 2001, primarily resulted from a minority interest provision of $1.4 million and other expenses of $2.5 million from several subsidiaries. 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.

The following tables summarize our contractual obligations and commitments on a pro forma basis giving effect to the Add-on Transaction as if they occurred as of September 30, 2003:



	(1)	See Note 9 to our consolidated financial statements included elsewhere in this prospectus. Long-term debt has been calculated excluding preferred shares subject to mandatory redemption.



	(2)	See Note 13 to our consolidated financial statements included elsewhere in this prospectus.



	(3)	Commitments for inventory and other purchases for which inventory is the primary factor.

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.

Prior to fiscal year 2002, we had a history of not generating positive cash flows from operations and had funded our operating and investing activities primarily through borrowings under our old syndicated credit facility and equity contributions from Savia, our former majority shareholder. In fiscal year 2001, the lenders amended the credit facility which, among other things, prohibited further borrowings under the facility, rescheduled principal payments and accelerated the expiration of the facility from June 30, 2004 to June 30, 2002. Subsequent amendments extended the term of the facility to December 31, 2003. In addition, Savia announced in fiscal year 2001 that it would not make any further capital contributions to us.

Since that time, we have taken actions to improve cash flows and reduce debt levels. In connection with our Global Restructuring and Optimization Plan, we sought to improve cash flows by significantly reducing operating expenses, accelerating cash collections on accounts receivable, significantly decreasing inventory purchases and selling certain non-core assets. After the original bank amendment in May 2001, we have made all scheduled principal and interest payments, and remained in compliance with all covenants under the old syndicate credit facility. Additionally, we paid down approximately $92.6 million in outstanding borrowings during the period from May 2001 to September 2003.

In connection with the Acquisition Transactions, we purchased and retired all of our publicly held shares of common stock, redeemed and retired all of its Class B Redeemable Preferred Stock and repaid the remaining $216.6 million of principal outstanding under the old syndicated credit facility. In order to fund this payment as well as the stock repurchases and other expenses related to the Acquisition Transactions, Seminis Vegetable issued $190.0 million of ten year, 10 1/4% senior subordinated notes, we established a new senior secured credit facility that consisted of a $190.0 million term loan and a $60.0 million revolving loan ($7.0 million and $0 of which was outstanding at December 26, 2003 and September 30, 2003, respectively), we borrowed $17.0 million under a new mortgage note, and we issued 50,000 shares of paid-in-kind mandatorily redeemable preferred stock along with warrants to purchase 3.9 million shares of common stock for combined proceeds of $50.0 million.

In connection with the Add-on Transactions, Seminis Vegetable issued $140.0 million of ten year, 10 1/4% senior subordinated notes and we amended our new senior secured credit facility. The amended senior secured credit facility decreased the term loan from $190.0 million to $90.0 million, increased the revolving credit facility from $60.0 million to $75.0 million, amended pricing on the term loan and revolving credit facility and amended certain financial covenants.

The transactions surrounding the Fox Paine acquisition and the Add-on Transactions have left us with total indebtedness (excluding preferred shares subject to mandatory redemption) of $466.4 million compared to $252.5 million before these transactions.

Going forward, our principal source of liquidity will be cash flow generated from operations and borrowings under our new senior secured credit facility. Furthermore, we may consider additional borrowings through senior subordinated notes. 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.

Operating activities utilized $23.4 million in cash flow during the three months ended December 26, 2003, compared to $10.2 million utilized during the same period in the prior fiscal year. The increase in cash utilization was primarily due to approximately $11.2 million of acquisition transaction related costs which were accrued for at September 30, 2003 but subsequently paid during the three months ended December 26, 2003. Additionally, cash flow was impacted by a $4.8 million prepayment of a management fee to be amortized during fiscal year 2004, which was paid in accordance with the Fox Paine acquisition transaction’s purchase agreement.

Operating activities provided $19.1 million in cash flow during fiscal year 2003 compared to $38.1 million in cash flow provided during the prior fiscal year. The operating cash flow of fiscal year 2003 was negatively impacted by $23.1 million of fees related to the Acquisition Transactions.

Capital expenditures increased to $1.7 million for the three months ended December 26, 2003, from $1.6 million in the same period of the prior fiscal year. Other investing activities for the three months ended December 26, 2003 included $3.7 million from proceeds from the sale of assets compared to $1.6 million in the prior fiscal year. The increase in proceeds during the three months ended December 26, 2003 was primarily due to higher asset sales in our South Korean subsidiary and the sale of a company owned house.

Investing activities utilized $13.0 million in cash flow during fiscal year 2003 compared to $31.0 million in cash flow provided 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 $28.5 million of proceeds from the disposition of assets primarily related to an office building in Seoul, South Korea during the prior fiscal year, as compared to $10.2 million of proceeds from asset sales in the current year.

Capital expenditures increased to $22.7 million for fiscal year 2003 from $14.8 million in the prior fiscal year. The increase was primarily attributable to the $6.3 million purchase of assets that were previously leased in the United States. These previously leased assets were purchased because we obtained favorable debt financing rates in connection with the Acquisition Transactions.

Our total indebtedness as of December 26, 2003 was $433.4 million, of which $197.0 million were borrowings under our existing credit facility, $190.0 million of borrowings under our senior subordinated notes, and we had $17.5 million, $4.0 million, $1.3 million, $0.6 million and $23.0 million of borrowings by our United States, Italian, Spanish, French and South Korean subsidiaries, respectively.

On September 29, 2003, we entered into a new senior secured credit facility. Our new senior secured credit facility initially provided for a $190.0 million term loan and a revolving line of credit for borrowings up to an aggregate principal amount of $60.0 million. Concurrently with the offering of the January Notes, we amended our new senior secured credit facility to provide for a $90.0 million term loan and a revolving line of credit for borrowings up to an aggregate principal amount of $75.0 million. See “Description of Other Indebtedness — Description of Our New Senior Secured Credit Facility.”

Seminis Vegetable is the borrower under our new senior secured credit facility and all obligations thereunder are guaranteed by Holdings and each of our domestic subsidiaries. Additionally, borrowings are secured by a perfected lien on all of the capital stock, intercompany notes and all of our tangible and intangible properties and assets, including intellectual property subject to exceptions relating to foreign subsidiaries. We are subject to certain commitment fees under the facility as well as the maintenance of certain financial ratios and other restrictive covenants, including the payment of dividends in cash.

On September 29, 2003 and January 23, 2004, Seminis Vegetable issued $190.0 million and $140.0 million, respectively, of 10 1/4% senior subordinated notes that initially are fully and unconditionally guaranteed by Holdings and each of Seminis Vegetable’s domestic wholly-owned subsidiaries. The senior subordinated notes mature on October 1, 2013 and interest is payable semi-annually on April 1 and October 1 of each year, commencing on April 1, 2004. The guarantees of the senior subordinated notes are unsecured general obligations of Holdings and each of Seminis Vegetable’s domestic wholly-owned subsidiaries and are subordinated in right of payment to substantially all existing and future senior indebtedness of Holdings and each of Seminis Vegetable’s domestic wholly-owned subsidiaries, including obligations under our new senior

secured credit facility. Prior to maturity, Seminis Vegetable may redeem all or some of the 10 1/4% senior subordinated notes at defined redemption prices, which may include a premium. In the event of a change in control, the holders may require Seminis Vegetable to repurchase the 10 1/4% senior subordinated notes for a redemption price that may also include a premium. The senior subordinated notes will be guaranteed by any future domestic subsidiary that provides a guarantee under our new senior secured credit facility. For a more detailed description of the 10 1/4% senior subordinated notes, see “Description of the Notes.”

In March 2000, we issued a $17.2 million promissory note, which was secured by our global headquarters facility in Oxnard, CA. The variable rate of interest on the original note was based on LIBOR plus 2.5% (4.2% as of September 30, 2002). As of September 29, 2003, principal outstanding on this note totaling $11.6 million was repaid with proceeds from a new $17.0 million mortgage. Interest on the new note is based on LIBOR plus 2.0% (3.1% as of September 30, 2003), adjustable on the first day of each month. Simultaneous with entering into the new mortgage, we entered into an interest rate swap agreement (extending for a seven year term) to swap the floating interest rate for a 6.3% fixed interest rate. The loan amortizes in scheduled annual payments of approximately $0.2 million to $0.4 million, with a payment of the final remaining balance due on October 1, 2010.

Our South Korean subsidiary has a number of loan facilities maturing from the end of fiscal year 2004 to 2013. Borrowings under these facilities carry interest rates of between 4.0% and 6.5%.

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 Seeds Inc. and its foreign subsidiaries.

We entered into an interest rate swap agreement in September 2003. The purpose of the swap agreement is to hedge approximately $17.0 million of variable rate debt associated with the mortgage on our global headquarters facility in Oxnard, CA. Changes in the fair value of the hedge instrument are reflected in other comprehensive income (loss) and are the associated interest reflected in the statement of operations over the term of the mortgage.

As of December 26, 2003, we had no off-balance sheet arrangements other than $2.7 million of letters of credit commitments.

Minimum annual lease commitments under non-cancelable operating leases at December 26, 2003 are as follows:

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. We adopted FASB Statement No. 123 under the provisions of SFAS No. 148 on October 1, 2003.

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 did not 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 dividends on the mandatorily redeemable preferred stock will be expensed in the statement of operation as interest expense.

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. We entered into an interest rate swap agreement in September 2003. The purpose of the swap agreement is to hedge approximately $17.0 million of variable rate debt associated with the mortgage on our global headquarters facility in Oxnard, CA. Changes in the fair value of the hedge instrument are reflected in other comprehensive income and are reflected in the statement of operations over the term of the mortgage.

The currencies that experienced significant fluctuations in fiscal year 2003 that impacted Seminis were the European Monetary Union Euro and South Korea Won. 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.

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 $4.2 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 over 25 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 2000 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 2003, 74% 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 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 3.5% of our net seed sales in fiscal year 2003. Our ten largest customers accounted for approximately 14.0% of our net seed sales in fiscal year 2003. Furthermore, our customer base includes growers, distributors and dealers and is geographically diverse, with North and Central America representing 36.0% of our net seed sales in fiscal year 2003, and Europe, the Middle East and Africa representing 44.1% of our net seed sales during the same period. Our product portfolio is also diverse, with no seed variety accounting for more than 1.4% of our net seed sales in fiscal year 2003.

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 $50.9 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 2003, we launched over 100 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 2003, approximately 74% of our net seed sales resulted from hybrid seed and 26% from open-pollinated seed. The table below summarizes our 2003 net seed sales by product family:



	•	Hybrid Hot Pepper (North and Central America) — Represented 3.5% of our net seed sales in fiscal year 2003 ($16.0 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 2.3% of our net seed sales in fiscal year 2003 ($10.4 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 2.5% of our net seed sales in fiscal year 2003 ($11.5 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 2003.

While approximately 39.0% of our net seed sales in fiscal year 2003 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 2003.

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 or co-own 77 patents and have 97 patents pending in such areas as virus resistance, product quality, breeding technology, gene expression, cell selection and resistance genes. In addition, we have protected more than 373 plant varieties with active certificates and 186 with pending applications under plant variety protection laws, with a total PVP portfolio of 421 active certificates and 211 pending applications worldwide.

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 2003, new product sales represented approximately 20.0% 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, three in South America and 17 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 $48.4 million, $44.3 million, $52.5 million and $58.4 million of expenses related to research and development during fiscal years 2003, 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 76 plant breeders, 16 biotechnologists and 18 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 100 commercial varieties and more than 120 pre-commercial products in fiscal year 2003. Additionally, in fiscal year 2003, we released over 300 products for test marketing. 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 18 scientists in a network of laboratories throughout the world, we are currently working on more than 180 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 over 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, 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, Bolivia, China, Denmark, Ecuador, India, Italy, Latvia, New Zealand, South Africa, 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. As of December 2003, we owned, co-owned or had 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 over 174 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. We currently have protected more than 373 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 421 PVP certificates granted. We also have over 211 applications for plant variety protection pending for 186 separate varieties, 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 608 registrations and applications in 92 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 2003 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 2002 and 2003 fiscal years and are not expected to be material in 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 December 26, 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 all of these claims. Our general liability insurance carrier continues to deny coverage, and we have instituted proceedings against them.

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 Owens 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, Owens and Ouyang their attorneys’ fees. We have appealed certain aspects of the judgment, including the fee award. The California Court of Appeal partially affirmed the lower court’s ruling, and has partially reversed and remanded the case to the lower court for a redetermination of costs and fees, specifying that certain attorney’s fees and costs previously awarded to Messrs. Schmidt, Owens and Ouyang should not be payable by Seminis.

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 fourth 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. On September 24, 2003, the parties reached a memorandum of understanding that settled all of the alleged claims. The parties have finalized the settlement agreement and expect the California court to hold a hearing with respect to preliminary approval of the terms of the settlement in April 2004. The proposed settlement does not affect the terms of the Acquisition Transactions set forth herein.

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 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 since June 2001.


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


(6)	Vice President, Treasury and Investor Relations since April 2003. Mr. Osorio terminated employment with Seminis effective October 31, 2003.



(7)	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.



(8)	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.



(9)	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.

No options to purchase shares of Holdings Class A common stock were awarded during fiscal year 2003 to our Chief Executive Officer or any other of our named executive officers.

The following exercises of options to purchase shares of Holdings Class A common stock were made during fiscal year 2003 by the Chief Executive Officer or any other named executive officer:

Upon consummation of the Acquisition Transaction, each outstanding option to purchase shares of Holdings Class A common stock (other than options held by persons permitted by Seminis Acquisition to retain their options) were cancelled in exchange for a cash payment for each share of Holdings Class A common stock subject to the option equal to the excess of $3.78 over the per share exercise price of the option. Options with a per share exercise price of $3.78 or greater were cancelled without any consideration being paid for those options.

The following table sets forth information concerning unexercised options held by the named executive officers as of September 30, 2003. Based on the closing price per share of Holdings Class A common stock on the Nasdaq National Market on September 30, 2003, 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 became 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) received, 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 were cancelled without any consideration being paid for those options. The aggregate amount paid to the officers, Directors and employees in connection with the cancellation of options to purchase shares of Holdings common stock was approximately $4.3 million. Mr. Romo and the Continuing Stockholders retained 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 granted 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 was 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 was 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 were 100% vested and exercisable as of the completion of the merger. Under the terms of the employment agreements, the executives 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 became effective upon completion of the merger and has 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 is 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 is 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 is 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 became effective upon completion of the Acquisition Transactions and that 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 agreements, the foregoing base salaries will be reviewed no less frequently than annually and may be increased but not decreased.

During the employment period, each of Messrs. Mazal, Ferrari and Jimenez is 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 are entitled to receive restricted stock units that vest over a period of five years and are 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 received 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 are 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 became 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 are 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 is 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 is entitled to receive restricted stock units that vest over a period of five years and are 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

	•	Fox Paine agrees to vest all of the performance-based co-investment rights.


	•	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.


	•	Mr. Romo or Holdings materially breaches the stockholders’ agreement;

	•	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 2003 net sales of Holdings were approximately $477.4 million.

Upon consummation of the Transactions, we paid Fox Paine a transaction fee of $14.0 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. 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 2003, 2002 and 2001, we had sales of $495,000, $793,000 and $944,000, respectively, to Agrobionova, an affiliate of Savia, and a receivable of $840,000, $355,000 and $617,000 at September 30, 2003, 2002 and 2001, respectively. We had sales of $18,000 during the three months ended December 26, 2003 to Agrobionova, and a receivable of $273,000 at December 26, 2003. We also had sales of $296,000 to

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 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 $15.0 million plus interest at a rate of 10.0% per annum from July 1, 2002, less $3.0 million (Savia will 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 an additional 40,615,619 shares of Holdings Class B common stock that it owned).

Certain Transactions with and Loans to Management. In December 2003, Seminis Vegetable sold residential real property, originally acquired in October 2000, to Mr. Bernardo Jiminez, our current Director and Executive Senior Vice President and Chief Financial Officer, for $1.1 million.

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. Since the loan was repaid prior to its scheduled final maturity, we were required to pay to Mr. Ferrari the present value of the interest payments that we would have paid to Mr. Ferrari had the loan remained outstanding until its scheduled final maturity. This payment to Mr. Ferrari was made in shares of our common stock. The loan was repaid in December 2003.

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. The loan was repaid in December 2003.

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.


*	Represents less than 1%.

(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. Concurrently with the offering of the January Notes, we amended our new senior secured credit facility. The information relating to the amended new senior secured credit facility is qualified in its entirety by reference to the complete text of the documents entered into in connection therewith. The following is a description of the general terms of the amended new senior secured credit facility.

Structure. Our amended new senior secured credit facility originally consisted of a $60.0 million revolving loan and a $190.0 million term loan. Following the use of proceeds from the January Notes, $90.0 million of the term loan remained outstanding. The amendments to our new senior secured credit facility increased the revolving credit line from $60.0 million to $75.0 million ($7.0 million of which was drawn as of December 26, 2003 and $2.7 million of which was committed under letters of credit).

Guarantees and Security. Our obligations under our amended new senior secured credit facility are guaranteed by Holdings and each of our current and future domestic subsidiaries. The borrowings under our amended 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 amended 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 amended 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 under the amended new senior secured credit facility is based upon our leverage ratio and will range from 1.25% to 2.00% per annum in the case of an alternate rate loan and LIBOR plus 2.25% to LIBOR plus 3.00% per annum in the case of a LIBOR loan. The applicable rate for the revolving credit facility under the amended new senior secured credit facility is based upon our leverage ratio and will range from 1.00% to 1.75% per annum in the case of alternate rate loans and LIBOR plus 2.00% to LIBOR plus 2.75% 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 amended 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 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 1/2 years. The first quarterly installment is due on March 31, 2004, and the balance of the term loan will be due in a single bullet payment at the end of year six. The 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 amended 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

Fees. We are required to pay the lenders under the revolving credit facility of our amended new senior secured credit facility a quarterly commitment fee based on the average daily unused portion of the revolving credit facility. We are obligated to pay letter of credit participation fees based on the aggregate stated amount of outstanding letters of credit.

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

Our amended 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 amended 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 connection with the Acquisition Transactions, we entered into a mortgage 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 $23.0 million, as of December 26, 2003, under numerous loan facilities maturing from the end of fiscal year 2004 to 2013 and carrying interest rates of between 4.0% and 6.5%.

We will continue to have other subsidiary indebtedness outstanding. As of December 26, 2003, we had outstanding indebtedness of approximately €3.2 million, €1.1 million, €0.5 million and $0.5 million under borrowings by Seminis Vegetable Seeds Italia, 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 and 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 December 26, 2003, after giving pro forma effect to the Add-on Transactions, the notes would have been subordinated to $177.5 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 unused borrowing capacity of $72.3 million under the revolving credit portion of our new senior secured credit facility ($75.0 million borrowing capacity less $2.7 million of committed letters of credit).

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 December 26, 2003, the non-Guarantor Subsidiaries of the Company represented in the aggregate approximately 61.8% of our consolidated net sales and 51.4% of our consolidated total assets. Our non-guarantor subsidiaries represented, in the aggregate, 62.4% of our consolidated net sales for the three months ended December 26, 2003. For the three months ended December 26, 2003, our non-guarantor subsidiaries had consolidated EBITDA of $10.1 million and consolidated net income of $7.2 million and we had consolidated EBITDA of $5.5 million and a consolidated net loss of $9.1 million.

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 December 26, 2003, the liabilities of the Company’s non-Guarantor Subsidiaries on a consolidated basis were approximately $145.6 million.

As of the Original Notes 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 fraudulent conveyance under applicable law. See “Risk Factors — The guarantees may be voided under specific legal circumstances.”

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 connection with a transfer of notes. Holders will be required to pay all taxes due on transfer. The Company is not required to transfer or exchange any note selected for redemption. Also, the Company is not required to transfer or exchange any note for a period of 15 days before a selection of notes to be redeemed.

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, 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 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 Original Notes 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 Original Notes 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 Original Notes 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 Original Notes 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 Original Notes 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 Original Notes 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 Original Notes 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 Original Notes Issue Date of any such Indebtedness incurred after the Original Notes 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 Original Notes 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 Original Notes 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 Original Notes 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 Original Notes 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 Original Notes 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 Original Notes 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 Original Notes 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 Original Notes 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 Original Notes 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 Original Notes 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 Original Notes 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 Original Notes 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 Original Notes 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 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 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 Original Notes Issue Date, as such agreement is in effect on the Original Notes 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 Original Notes 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 Original Notes 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 Original Notes 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 Original Notes 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 Original Notes 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 consequences under the indenture except a continuing Default or Event of Default in the payment of interest or Additional Interest on, or the principal of, the notes.

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 Original Notes 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

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 original 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 Original Notes 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 Original Notes 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 Original Notes Issue Date or, if any such agreement is not in effect on the Original Notes 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 Original Notes 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 Original Notes 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 Original Notes 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 Original Notes 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 such other statements by such other entity as have been approved by a significant segment of the accounting profession, as in effect on the Original Notes Issue Date.

“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 Original Notes 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);


	(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 Original Notes 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.

“Original Notes Issue Date” means September 29, 2003, the date that the original notes were issued.

“Oxnard Mortgage” means a mortgage, whether arising before or after the Original Notes 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 Original Notes 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 Original Notes 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 Original Notes 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 such Designated Senior Debt shall at all times constitute the holders of a majority in outstanding principal amount of such Designated Senior Debt.

“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 Original Notes 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


	(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 Original Notes Issue Date or thereafter incurred.


	(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 Original Notes 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 Original Notes 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 Original Notes 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

“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 April 26, 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 26, 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 agreements 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 [ ], 2004 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 26, 2004;



	•	the exchange offer is not consummated on or prior to May 26, 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, 2003 and 2002 and for each of the three years in the period ended September 30, 2003 included in this Prospectus have been so included in reliance on the report of PricewaterhouseCoopers LLP, independent auditors, 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 flow present fairly, in all material respects, the financial position of Seminis, Inc. and its subsidiaries at September 30, 2003 and 2002 and the results of their operations and their cash flows for the day ended September 30, 2003, the twelve month period ended September 29, 2003 and the years ended September 30, 2002 and 2001 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the accompanying financial statement schedule presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. These financial statements and financial statement schedule are the responsibility of the Company’s management; our responsibility is to express an opinion on these financial statements and financial statement schedule 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 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 was 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. As a result of the acquisition transactions, which were completed on September 29, 2003 (See Note 3), Fox Paine & Company, LLC, together with its affiliates and co-investors (collectively, “Fox Paine”), became the Company’s majority shareholder.

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 the current presentation.

As a result of the acquisition transactions described in Note 3, which were completed on September 29, 2003, the Company has presented its financial position, results of operations, changes in stockholders’ equity and cash flows on a predecessor/successor basis. The successor period is the one day ended September 30, 2003 while the predecessor periods include the 364 days ended (referred to herein as the “twelve months ended”) September 29, 2003, and the fiscal years ended September 30, 2002 and 2001.

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 period, 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, adjusted for the acquisition transactions described in Note 3. 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, adjusted for the acquisition transaction as described in Note 3. 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, trademarks, product technology and customer relationships. Such costs were adjusted in fiscal year 2003 as described in Note 3. The costs of acquired germplasm, patents and trademarks are being amortized over 15 to 40 years on a straight-line basis. Other intangibles are amortized over 5 to 15 years on a straight-line basis.

Prior to fiscal year 2002, goodwill was amortized over 15 years on a straight-line basis. Upon adoption of SFAS No. 142, the Company ceased amortization of its goodwill in fiscal year 2002. There was no goodwill as a result of the acquisition transaction as described in Note 3.

Costs of computer software developed and obtained for internal use are capitalized and amortized over 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. Such costs were adjusted in fiscal year 2003 as described in Note 3.

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.

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. The resultant translation adjustments are included in accumulated other comprehensive loss as a separate component of stockholders’ equity. Income and expense items are primarily translated at average monthly rates of exchange prevailing during the fiscal year. 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, changes in foreign currency translation adjustments, changes in the minimum pension liability adjustment and changes in the fair value of derivatives which qualify as effective hedges.

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 Company is required to disclose pro forma income as if the Company elected to adopt the fair value approach of SFAS No. 123. 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 increased net loss by $1,887 for the twelve months ended September 29, 2003, decreased net income by $769 for the year ended September 30, 2002, and increased net loss by $622 for the year ended September 30, 2001.

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, No. 138 and No. 149. 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. Prior to fiscal year 2003, the Company had no derivative instruments. In September 2003, the Company purchased an interest rate swap agreement, which qualifies as a cash flow hedge under SFAS No. 133.

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 $4.4 million and $4.3 million related to customer shipping were stated on a gross basis in selling expense with a corresponding $3.6 million and $3.1 million of revenue stated in net sales in fiscal years 2003 and 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.

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 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. The company adopted this Statement as of June 28, 2003 and has classified its newly issued PIK Preferred Stock as a liability (see Note 10).

guarantees. The disclosure provisions of the Interpretation are effective for financial statements of interim or annual periods that end after December 15, 2002. The adoption of this Interpretation did not have a significant impact on our financial condition or results of operations.

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 FASB deferred the effective date for applying the provisions of FIN 46 for interests held by public entities in variable interest entities or potential variable interest entities created before February 1, 2003 until the end of the first interim or annual period ending after December 15, 2003. The adoption of this Interpretation did not have a significant impact on our financial condition or results of operations.

Prior to fiscal year 2002, the Company had a history of generating negative cash flows from operations and had funded its operating and investing activities primarily through borrowings under a syndicated credit facility and equity contributions from Savia. In fiscal year 2001, the lenders amended the credit facility which, among other things, prohibited further borrowings under the facility, rescheduled principal payments and accelerated the expiration of the facility from June 30, 2004 to June 30, 2002. (Subsequent amendments extended the term of the facility to December 31, 2003.) In addition, Savia announced in fiscal year 2001 that it would not make any further capital contributions.

Since that time, the Company has taken actions to improve cash flows and reduce debt levels. In connection with its Global Restructuring and Optimization Plan (Note 4), the Company sought to improve cash flows by significantly reducing operating expenses, accelerating cash collections on accounts receivable, significantly decreasing inventory purchases and selling certain non-core assets. After receiving the original bank amendment in May 2001, the Company made all scheduled principal and interest payments under the credit facility, remained in compliance with all covenants under the lending agreement and paid down approximately $92.6 million in outstanding borrowings during the period May 2001 to September 2003.

In connection with the Fox Paine transaction described in Note 3, the Company purchased and retired all of its publicly held shares of common stock, redeemed and retired all of its Class B Redeemable Preferred Stock, and repaid the remaining $216.6 million of principal outstanding under the senior secured credit facility. In order to fund this payment as well as the stock repurchases and other expenses related to the transaction, the Company issued $190.0 million of ten year, 10 1/4% senior subordinated notes, established a new senior secured credit facility that consisted of a $190.0 million term loan and a $60.0 million revolving loan (none of which was outstanding at September 30, 2003), borrowed $17.0 million under a new mortgage note, and issued 50 shares of paid-in-kind mandatorily redeemable preferred stock along with warrants to purchase 3.9 million shares of common stock for combined proceeds of $50.0 million.

The transactions surrounding the Fox Paine acquisition have left the Company with total indebtedness of $421.3 million compared to $252.5 million before the transaction.

available borrowings under the revolving credit portion of the new senior secured credit facility will enable the Company to meet its working capital, capital expenditure, debt service and other funding requirements for at least the next 12 months.

On May 30, 2003, the Company and certain other parties entered in to a number of agreements pursuant to which a newly incorporated entity would be formed to effect an acquisition transaction whereby the Company would become a private company with the majority of the Company’s common stock owned by Fox Paine, together with its affiliates and co-investors. On September 29, 2003, the transactions were completed. These included the following:



	•	Savia exchanged all of the outstanding shares of the Company’s Class C preferred stock and all obligations with respect to those shares for 37,669 shares of the Company’s Class A common stock and a cash payment to Savia equal to $14.0 million.



	•	The Company purchased all of its outstanding shares of Class B preferred stock, plus accrued and unpaid dividends, for $30.2 million.



	•	The Company purchased and retired 15,557 shares of its Class A common stock from public shareholders for $3.78 per share and an aggregate price of $58.8 million.



	•	The Company purchased and retired 2,319 shares of its Class B common stock from the Ball family for $3.78 per share and an aggregate price of $8.8 million.



	•	The Company purchased and retired 21,118 shares of its common stock for $3.40 per share and an aggregate price of $71.8 million.



	•	The Company purchased and canceled certain options to purchase the Company’s common stock for aggregate consideration of approximately $4.3 million.



	•	Fox Paine purchased 48 million shares of the Company’s common stock for $3.40 per share and an aggregate purchase price of $163.2 million.



	•	Two creditors of Pulsar, SA, a related entity of Savia and Seminis, purchased 8,256 shares of the Company’s common stock for $3.40 per share and an aggregate purchase price of $28.1 million.



	•	Certain affiliates of Savia and Mr. Romo and certain members of management (exclusive of Mr. Romo) essentially retained ownership of 5,407 shares and 686 shares, respectively, of the Company’s common stock. Certain management options were also retained by executives.



	•	Savia sold all of its Class A common stock (37,669 shares) and all of its Class B common stock (40,616 shares) for $3.40 and aggregate proceeds of $266.2 million.



	•	The Company sold 50 shares of newly issued 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.



	•	The Company issued two options to Mexican SPC, an affiliated company of Mr. Romo, that allow it to acquire a combined 29.6% of the fully-diluted shares of the Company’s common stock for $3.40 per share. The first option is immediately exercisable and permits Mexican SPC to acquire 14.5 million shares, or 13.8% percent. The second option allows Mexican SPC to acquire an additional 15.8% of the Company’s common stock but is only exercisable if Fox Paine achieves a 26.0% rate of return on its initial investment.

The above transactions resulted in Savia selling 100% of its interest in the Company and Fox Paine and its affiliates owning approximately 75.1% of the Company’s common stock. Based on various stockholder agreements among the shareholders, Mr. Romo retained control of the Board of Directors, however, the Company must meet certain performance targets in order for Mr. Romo to maintain control of the Board. Should the Company fail to make its operating goals for two successive quarters, Fox Paine is entitled to appoint two additional Board members which will give Fox Paine a majority of the Board positions.

The acquisition transaction results in a predecessor entity and a successor entity for purposes of reporting the results of operations and cash flows included in the accompanying financial statements. The percentage of assets acquired and liabilities assumed were originally recorded at their estimated fair values based on an independent appraisal, however, these values were in excess of the purchase price paid by Fox Paine. Accordingly, negative goodwill totaling $433.4 million was adjusted by writing-down the value of non-current assets on a proportionate basis. The following summarizes the fair values, subsequent adjustments and on-going carrying values of the net assets acquired:

The increase in inventory value will be expensed as the inventory is sold which is expected to be over the next 16 months. The intangible assets will be amortized on a straight-line basis over periods between five and forty years.

In-process research and development was immediately expensed and is reflected in the results of the successor entity for the one-day period ended September 30, 2003. At the consummation date of the acquisition transactions, existing in-process research and development projects were assessed. Projects were analyzed by stage of development and assigned success rates based on our historical experience of the probability that such projects would yield viable products. The weighted average stage of completion for our in-process research and development projects was 65%.

In our forecasting model for each project, cash flows from revenues forecasted in each period were reduced by related expected expenses, capital expenditures and the cost of working capital. The discount rates applied to a project’s cash flows were approximately 22% – 24%, based on the level of risk associated with a particular project and the current return on investment requirements of the market.

Concurrent with the acquisition transaction, the Company was required to repay its existing senior secured credit facility. On September 29, 2003, the Company refinanced approximately $274.2 million of

existing debt (including $216.6 million under its previous senior secured credit facility) through the issuance of $190.0 million in 10 1/4% senior subordinated notes, borrowing $190.0 million under a newly executed secured credit facility and borrowing $17.0 million under a new mortgage note. The excess proceeds were used to finance the acquisition transactions described above.

Reflecting the impact of the merger, recapitalization and refinancing transactions, the fiscal year 2003 and 2002 pro forma net sales would have been $477.4 million and $452.6 million, respectively, and pro forma net income would have been $24.9 million and $21.7 million, respectively. Pro forma results were calculated in accordance with SFAS No. 141, “Business Combinations” and, accordingly, exclude certain one time costs directly attributable to the transaction. Fiscal year 2003 pro forma results exclude $10.6 million write-off of in-process research and development, $54.9 million increase in cost of goods sold due to revaluation of inventory, $2.3 million write-off of deferred financing fees, $4.3 million of purchase of outstanding stock options, and approximately $26.9 million of transaction expenses.

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.

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 $0.7 million reserve balance is expected to be utilized in fiscal year 2004.

Inventories are presented net of reserves of $79,531 and $86,957 at September 30, 2003 and 2002, respectively. As described in Note 3, as part of the acquisition transactions, inventories were stepped-up by $73.2 million as of September 30, 2003. This adjustment will be expensed as the inventory is sold which is expected to be over the next 16 months.

Property, plant and equipment consist of the following at September 30, 2003 and 2002:

As described in Note 3, as part of the acquisition transactions, the cost basis and related accumulated depreciation of the Company’s fixed assets were written down by $102.6 million as of September 30, 2003.

Aggregate amortization expense was $16.3 million, $17.1 million and $19.0 million for the twelve months ended September 29, 2003 and the years ended September 30, 2002 and 2001, respectively. Estimated amortization expense for the next five years is as follows:

Changes in the net carrying amount of goodwill for the year ended September 30, 2003, are as follows:

In accordance with SFAS No. 142, goodwill was not amortized in fiscal years 2003 and 2002. Amortization expense of goodwill was $9.0 million for the year ended September 30, 2001. Had the Company accounted for its goodwill under SFAS No. 142 for fiscal year 2001, the Company’s net loss available for common stockholders would have decreased to $143,732.

In connection with the acquisition transactions described in Note 3, research and development assets totaling $10.6 million (after negative goodwill adjustments) were written off as part of research and development expenses during the one-day period ended September 30, 2003.

During fiscal years 2002 and 2003, the Company maintained a credit facility with a syndicated lending group, which originated in 1999. The Company was precluded from making any additional borrowings and was required to make certain principal payments throughout fiscal years 2002 and 2003 with any remaining amount outstanding due upon the expiration of the facility scheduled for December 31, 2003. Interest on this facility was determined using a grid formula based on the greater of the sum of the base rate and 3.5% or an interest rate that ranged from 9.0% to 10.25%. On September 29, 2003, the outstanding principal balance of $216.6 million was repaid with proceeds from the Company’s new financing arrangements and unamortized loan fees totaling $2.2 million were written-off. This charge is reflected in the predecessor results of operations for the twelve months ended September 29, 2003.

On September 29, 2003, the Company entered into a new senior secured credit facility with a group of lenders. The Senior Secured Credit Facility provides for a $190.0 million term loan and a revolving line of credit for borrowings up to an aggregate principal amount of $60.0 million. The term loan facility will mature on September 29, 2009 and will amortize in quarterly installments equal to 1.0% per annum for the first five and 3/4 years. The first quarterly payment is due on December 31, 2003, and the balance of the term loan will be due in a single payment on September 29, 2009. The $60.0 million revolving credit facility, none of

which was outstanding as of September 30, 2003, will mature on September 29, 2008 and will not amortize. Both facilities may be voluntarily prepaid in whole or in part without premium or penalty. Additionally, based upon formulas stated in the 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 recoveries and excess cash flow must be used to pay down the outstanding balance under the term loan facility.

In general, borrowings under the Senior Secured Credit Facility will bear interest, based on the Company’s option, on either a London inter-bank offered rate (LIBOR) or an alternate rate, in each case plus margin. 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 margin 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 margin for the revolving 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 the Company’s leverage ratio at that time. As of September 30, 2003, the interest on the term facility was 4.38%.

Obligations under the Senior Secured Credit Facility are guaranteed by the Company and its domestic subsidiaries. Additionally, borrowings are secured by a perfected lien on all of the capital stock, intercompany notes and all of the tangible and intangible properties and assets, including intellectual property subject to exceptions relating to foreign subsidiaries, of the Company. The Company is subject to certain commitment fees under the facility as well as the maintenance of certain financial ratios and other restrictive covenants, including the payment of dividends in cash.

On September 29, 2003, Seminis Vegetable Seeds Inc., a wholly owned subsidiary of the Company, issued $190.0 million of senior subordinated notes. The senior subordinated notes will mature on October 1, 2013; interest is payable semi-annually on April 1 and October 1 of each year, commencing on April 1, 2004. The senior subordinated notes are unsecured general obligations of the Company and are subordinated in right of payment to substantially all existing and future senior indebtedness of the Company, including senior secured credit facility indebtedness. Prior to maturity, the Company may redeem all or some of the senior subordinated notes at defined redemption prices, which may include a premium. In the event of a change in control, the holders may require the Company to repurchase the senior subordinated notes for a redemption price that may also include a premium. The majority of the Company’s domestic subsidiaries have guaranteed the Senior Subordinating Notes.

In March 2000, the Company issued a $17.2 million promissory note, which was secured by the Company’s global headquarters facility. The variable rate of interest on the original note was based on LIBOR plus 2.5% (4.2% as of September 30, 2002). As of September 29, 2003, principal outstanding on this note totaling $11.6 million was repaid with proceeds from a new $17.0 million mortgage. Interest on the new note is based on LIBOR plus 2.0% (3.1% as of September 30, 2003), adjustable on the first day of each month. Simultaneous with entering into the new mortgage, the Company entered into an interest rate swap agreement (extending for a seven year term) to swap the floating interest rate for a 6.3% fixed interest rate. The loan amortizes in scheduled annual payments of approximately $0.2 million to $0.4 million, with a payment of the final remaining balance due on October 1, 2010.

The Company’s South Korean subsidiary has a number of loan facilities maturing from the end of fiscal year 2004 to 2013. Borrowings under these facilities carry interest rates of between 4.0% and 6.5%.

Other borrowings consisted of various domestic and foreign, government and non-government loans of less than $1.5 million each, bearing interest annually at average rates of 7.35% through 2013 for fiscal years 2003, and 8.79% through 2007 for fiscal year 2002.

For the fiscal years ended September 30, 2003, 2002 and 2001, the Company incurred interest at a weighted-average rate of 7.26%, 8.90% and 11.19% per annum, respectively.

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 had no voting rights. The Company paid quarterly dividends on all issued shares of Class B Redeemable Preferred Stock at a rate of 8% per year. Dividends were cumulative if unpaid and were added to the redemption value of the shares. The liquidation value of the shares was equal to the redemption value at any point in time. Class B Redeemable Preferred Stock was not redeemable at the option of the holder. The Company had to redeem all outstanding shares of the Class B Redeemable Preferred Stock on October 1, 2005.

As part of the acquisition transactions described in Note 3, the Company redeemed all of its Class B Redeemable Preferred Stock for $30.2 million including $6.5 million of accrued dividends. At the time when the stock was redeemed, the carrying value was $25.0 million. The $1.3 million discount on the redemption of the Class B Redeemable Preferred Stock was credited to additional paid-in capital.

The Company is authorized to issue up to 200,000 shares of Class A Common Stock. Currently, no shares have been 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.

As part of the acquisition transaction described in Note 3, 2,319 shares of Class B common stock were purchased from the Ball family and retired. 2,208 shares of Class B common stock were converted into Class A common stock and remain outstanding. The remaining 40,615 shares of Class B common stock held by Savia were essentially cashed out as part of the acquisition transactions.

The Company was 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 had no voting rights and were redeemable at the option of the Company. Dividends accrued cumulatively at the rate of 10% per year and were payable quarterly. Dividends payable through January 2001 were payable by issuing additional fully paid and non-assessable shares of Class C Preferred Stock. Subsequently, the dividends were part of the accrued liabilities.

The liquidation value of Class C Preferred Stock at September 30, 2002, included $18,011 of accrued cash dividends classified in accrued liabilities. All shares of Class C Preferred Stock were subject to the exchange transaction described below.

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 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 remained due and payable and was to paid in cash by the Company in accordance with the terms of the exchange agreement. This unpaid obligation accrued interest at 10.0% and increased the liability to $17.0 million as of September 29, 2003. 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 stockholders on September 26, 2002. Although the exchange agreement was approved by the stockholders at the Annual Meeting, it was subject to customary closing conditions and approvals by creditors of Savia and the Company. As part of the acquisition transaction described in Note 3, the exchange transaction was finalized; however, only cash dividends and interest totaling $14.0 million were paid to Savia. Accrued interest totaling $2.0 million was reversed in the statement of operations and accrued dividends of $1.0 million was reversed as a credit to additional paid-in capital.

As part of the acquisition transactions described in Note 3, the Company issued 50 shares of paid-in-kind (PIK) preferred stock with an aggregate liquidation value of $50.0 million. The shares are mandatorily redeemable on October 1, 2014 and may be redeemed at the option of the Company starting after October 1, 2006 for a stated premium over the liquidation value. Additionally, the shares may be redeemed at the option of the Company or the holders upon a change in control, as defined. Holders of the PIK Preferred Stock are entitled to receive paid-in-kind dividends at the annual rate of 12% of liquidation preference per share, compounded quarterly. The dividend rate increases to 14% upon the occurrence of a specified event of default.

Purchasers of the PIK Preferred Stock were also entitled to receive warrants to purchase the Company’s common stock. Combined proceeds for the PIK Preferred Stock and the warrants totaled $50.0 million and $39.3 million was ascribed to the value of the PIK Preferred Stock. In accordance with SFAS No. 150, the value of the PIK Preferred Stock has been classified as a liability in the balance sheet as of September 30, 2003. The carrying value will be accreted to the liquidation value over the term of the debt. Any accretion, as well as all the dividends, will be recorded as an element of interest expense in the Company’s consolidated statement of operations.

In connection with the acquisition transactions described in Note 3, the Company issued warrants to purchase 3,873 shares of common stock for $0.01 per share. The warrants are immediately exercisable and will expire on September 29, 2013. The warrants were issued with the PIK Preferred Stock, and were valued at $10.7 million. This value has been included as additional paid-in capital.

In connection with the acquisition transactions described in Note 3, the Company issued two options to Mexican SPC, an affiliated company of Mr. Romo, that allow it to acquire a combined 29.6% of the fully-diluted shares of the Company’s common stock for $3.40 per share. The first option is immediately exercisable and permits Mexican SPC to acquire 14.5 million shares, or 13.8% percent. The second option allows Mexican SPC to acquire an additional 15.8% of the Company’s common stock but is only exercisable if Fox Paine achieves a 26.0% rate of return on its initial investment.

Income (loss) from continuing operations before income taxes and extraordinary items 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, 2003 and 2002 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, 2003 and 2002 was $57,832 and $57,060, respectively. The net change in the total valuation allowance for the years ended September 30, 2003 and 2002 were an increase of $772 and a decrease of $5,709, respectively. The increase in 2003 and decrease in 2002 consisted of partial utilization of NOL’s 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 $56,788 for net operating loss and foreign tax credit carryforwards include balances relating to a Netherlands net operating loss carryforward of $20,767 that has an indefinite life and a United States net operating loss carryforward of $74,707 which will expire in 2020 and 2023.

To address cash flow needs in the United States, the repatriation strategy for earnings in South Korea was changed during fiscal year 2001. Accordingly, United States tax was recorded for previously undistributed South 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 qualified 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 $1,085, $1,576 and $2,428 in fiscal years 2003, 2002 and 2001, respectively. The defined contribution savings plan also contains a profit sharing provision. Annual contributions are based on employee age and salaries totaled $900, $514 and $566 in fiscal years 2003, 2002 and 2001, 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 $22,956 at September 30, 2003 and $18,940 at September 30, 2002 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, 2003 and 2002.

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. No options were granted in fiscal year 2003. 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.

At the time of the Fox Paine acquisition, each outstanding option to purchase shares of Seminis common stock (other than options held by certain members of management who were permitted to retain their options) were cancelled in exchange for a cash payment for each share of Seminis common stock subject to the option equal to the excess of $3.78 over the per share exercise price of the option. Options with a per share exercise price of $3.78 or greater were cancelled without any consideration being paid for those options. The expense related to the purchase of these options totaled $4.3 million.

Stock option plan activity during the three years ended September 30, 2003 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 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.

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 $18, $5,624, $7,579 and $9,461 for the one day ended September 30, 2003, the twelve months ended September 29, 2003 and the fiscal years ended 2002 and 2001, respectively.

Minimum annual lease commitments under non-cancelable operating leases at September 30, 2003 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 8. 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 $0, $662 and $2,255 in fiscal year 2003, 2002 and 2001, respectively, of biotechnology research fees.

In fiscal year 2003 and 2002, we had sales of $495 and $793, respectively, to Agrobionova, an affiliate of Savia and a receivable of $840 and $355 at September 30, 2003 and 2002, respectively.

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 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 were 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.

The Company issued 11 shares of its Class C preferred stock to Savia for a total purchase price of $108.3 million. These shares accrued dividends quarterly at a rate of 10.0% per year. In October and November 2000, the Company received an additional $31.9 million and $14.0 million, respectively, of capital contributions from Savia. The Company 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 shares of Class C preferred stock and additional capital contributions. The Company has also paid dividends of $12.7 million in the form of additional shares of Class C preferred stock, which were classified as additional paid in capital. 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 into 5 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 shares to 17 shares. In connection with the acquisition transactions, Savia exchanged all of the outstanding shares of Class C preferred stock (Savia owned 100% of the outstanding shares of Class C preferred stock) and all obligations with respect to those shares for 37,669 shares of 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 ultimately received proceeds of approximately $266.2 million in respect of the 37,669 shares of Class A common stock that it received in the exchange and an additional 40,616 shares of Class B common stock that it owned).

As part of the acquisition transactions, the Company paid $17.5 million to Savia for interest and dividends on the Preferred Class C shares and transaction related fees. Additionally, the Company paid a $14.0 million transaction fee to Fox Paine which was deducted from additional paid-in capital and reimbursed Fox Paine for $7.5 million of transaction related expenses. This reimbursement was expensed in the Company’s statement of operations.

In conjunction with the 10 1/4% senior subordinated notes described in Note 9, the following summarized condensed consolidating financial information is presented for the Company, segregating guarantor subsidiaries and non-guarantor subsidiaries. The accompanying financial information in the “Guarantor Subsidiaries” column reflects the financial position, results of operations and cash flows for those subsidiaries, which guarantee the Notes. The guarantor subsidiaries are wholly owned subsidiaries of the Company and the guarantees are full, unconditional, and joint and several. Separate financial statements of the guarantor subsidiaries are not presented because management believes that such financial statements would not be material to investors.

Investments in subsidiaries in the following condensed consolidating financial information are accounted for under the equity method of accounting. Consolidating adjustments include the following:



	(1) elimination of investments in subsidiaries,



	(2) elimination of intercompany accounts,



	(3) elimination of intercompany sales between guarantor and non-guarantor subsidiaries, and



	(4) elimination of equity in earnings of subsidiaries.

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 33.3% and 33.7% of its fiscal year 2003 and 2002 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.

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 was 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. As a result of the acquisition transactions described in Note 3, which were completed on September 29, 2003, Fox Paine & Company, LLC, together with its affiliates and co-investors (collectively, “Fox Paine”), became the Company’s majority shareholder.

As a result of the acquisition transactions described in Note 3, which were completed on September 29, 2003, the Company has presented its results of operations, changes in stockholders’ equity and cash flows on a predecessor/successor basis. Periods prior to September 29, 2003 are predecessor periods, while others are successor periods.

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.

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. The Company has adopted FASB Statement No. 123 under the provisions of SFAS No. 148 on October 1, 2003.

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. The Company adopted this Statement as of June 28, 2003 and has classified its newly issued paid in kind preferred stock (“PIK Preferred Stock”) as a liability.

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 FASB deferred the effective date for applying the provisions of FIN 46 for interests held by public entities in variable interest entities or potential variable interest entities created before February 1, 2003 until the end of the first interim or annual period ending after December 15, 2003. The adoption of this Interpretation did not have a significant impact on the Company’s financial condition or results of operations.

Since that time, the Company has taken actions to improve cash flows and reduce debt levels. In connection with its Global Restructuring and Optimization Plan, the Company sought to improve cash flows by significantly reducing operating expenses, accelerating cash collections on accounts receivable, significantly decreasing inventory purchases and selling certain non-core assets. After receiving the original bank amendment in May 2001, the Company made all scheduled principal and interest payments under the credit facility, remained in compliance with all covenants under the lending agreement and paid down approximately $92.6 million in outstanding borrowings during the period May 2001 to September 2003.

In connection with the Fox Paine acquisition transaction described in Note 3, the Company purchased and retired all of its publicly held shares of common stock, redeemed and retired all of its Class B Redeemable Preferred Stock, repaid the remaining $216.6 million of principal outstanding under the senior credit facility, and paid off $11.6 million of the Oxnard mortgage. In order to fund this payment as well as the stock repurchases and other expenses related to the transaction, the Company issued $190.0 million of ten year, 10 1/4% senior subordinated notes, established a new senior secured credit facility that consisted of a $190.0 million term loan and a $60.0 million revolving loan (of which $7.0 million and $0 was outstanding at December 26, 2003 and September 30, 2003, respectively), borrowed $17.0 million under a new mortgage note, and issued 50 shares of paid-in-kind mandatorily redeemable preferred stock along with warrants to purchase 3.9 million shares of common stock for combined proceeds of $50.0 million.

The transactions surrounding the Fox Paine acquisition have left the Company with total indebtedness of $421.3 million as of September 30, 2003 compared to $252.5 million before the transaction. As of December 26, 2003, the Company’s total indebtedness was $433.4 million.

Going forward, the Company’s principal source of liquidity will be cash flow generated from operations and borrowings under the new senior secured credit facility. Furthermore, the Company may consider additional borrowings through senior subordinated notes. The Company’s principal uses of cash will be to meet debt service requirements, finance capital expenditures and provide working capital. Based on the current level of operations, management believes that remaining cash on hand, cash flow from operations and available borrowings under the revolving credit portion of the new senior secured credit facility will enable the Company to meet its working capital, capital expenditure, debt service and other funding requirements for at least the next 12 months.



	•	Savia exchanged all of the outstanding shares of the Company’s Class C preferred stock and all obligations with respect to those shares for 37,669 shares of the Company’s Class A common stock and a cash payment to Savia equal to $14.0 million.



	•	The Company purchased all of its outstanding shares of Class B preferred stock, plus accrued and unpaid dividends, for $30.2 million.



	•	The Company purchased and retired 15,557 shares of its Class A common stock from public shareholders for $3.78 per share and an aggregate price of $58.8 million.



	•	The Company purchased and retired 2,319 shares of its Class B common stock from the Ball family for $3.78 per share and an aggregate price of $8.8 million.



	•	The Company purchased and retired 21,118 shares of its common stock for $3.40 per share and an aggregate price of $71.8 million.



	•	The Company purchased and canceled certain options to purchase the Company’s common stock for aggregate consideration of approximately $4.3 million.



	•	Fox Paine purchased 48 million shares of the Company’s common stock for $3.40 per share and an aggregate purchase price of $163.2 million.



	•	Two creditors of Pulsar, SA, a related entity of Savia and Seminis, purchased 8,256 shares of the Company’s common stock for $3.40 per share and an aggregate purchase price of $28.1 million.



	•	Certain affiliates of Savia and Mr. Romo and certain members of management (exclusive of Mr. Romo) essentially retained ownership of 5,407 shares and 686 shares, respectively, of the Company’s common stock. Certain management options were also retained by executives.



	•	Savia sold all of its Class A common stock (37,669 shares) and all of its Class B common stock (40,616 shares) for $3.40 and aggregate proceeds of $266.2 million.



	•	The Company sold 50 shares of newly issued 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.



	•	The Company issued two options to Mexican SPC, an affiliated company of Mr. Romo, that allow it to acquire a combined 29.6% of the fully diluted shares of the Company’s common stock for $3.40 per share. The first option is immediately exercisable and permits Mexican SPC to acquire 14.5 million shares, or 13.8% percent. The second option allows Mexican SPC to acquire an additional 15.8% of the Company’s common stock but is only exercisable if Fox Paine achieves a 26.0% rate of return on its initial investment.

The above transactions resulted in Savia selling 100% of its interest in the Company and Fox Paine and its affiliates owning approximately 75.1% of the Company’s common stock. Based on various stockholder agreements among the shareholders, Mr. Romo retained control of the Board of Directors; however, the Company must meet certain performance targets in order for Mr. Romo to maintain control of the Board. Should the Company fail to make its operating goals for two successive quarters, Fox Paine is entitled to appoint two additional Board members which will give Fox Paine a majority of the Board positions.

assets on a proportionate basis. The following summarizes the fair values, subsequent adjustments and on-going carrying values of the net assets acquired:

The increase in inventory value will be expensed as the inventory is sold which is expected to be over a 16 month period from the date of acquisition. The intangible assets will be amortized on a straight-line basis over periods between five and forty years. In-process research and development was immediately expensed in the results of the successor entity for the one-day period ended September 30, 2003.

Concurrent with the acquisition transaction, the Company was required to repay its existing senior credit facility. On September 29, 2003, the Company refinanced approximately $274.2 million of existing debt (including $216.6 million under its previous senior credit facility) through the issuance of $190.0 million in 10 1/4% senior subordinated notes, borrowing $190.0 million under a newly executed secured credit facility and borrowing $17.0 million under a new mortgage note. The excess proceeds were used to finance the acquisition transactions described above.

Inventories are presented net of reserves of $84,375 and $79,531 at December 26, 2003 and September 30, 2003, respectively. As described in Note 3, as part of the acquisition transactions, inventories were stepped-up by $73.2 million on September 2003. In the current period, $11.5 million of the step-up was amortized and charged to cost of sales. This non-cash adjustment will continue as the inventory is expected to be sold over the next 13 months.

Intangible assets at December 26, 2003 and September 30, 2003 consist of the following:

Aggregate amortization expense was $1.9 million and $3.9 million for the three months ended December 26, 2003 and December 27, 2002, respectively. Estimated amortization expense for the next five years is as follows:

Accrued liabilities consist of the following at December 26, 2003 and September 30, 2003:

Effective October 1, 2003, the Company adopted the fair value recognition provisions of Statement of Financial Accounting Standards (“SFAS”) No. 123, “Accounting for Stock-Based Compensation” (“SFAS No. 123”), for stock-based employee compensation. Under the modified prospective method of adoption selected by the Company under the provisions of SFAS No. 148, “Accounting for Stock-Based Compensation — Transition and Disclosure,” stock-based employee compensation expense recognized in

fiscal year 2004 is the same as that which would have been recognized had the fair value recognition provisions of SFAS No. 123 been applied to all awards from its original effective date. Results of prior years have not been restated. The following table illustrates the effect on net income and earnings per share if the fair value method had been applied in each period (in thousands):

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. These policies are subject to annual renewal, revisions, 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 6. 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.

In accordance with the purchase agreement, following the Fox Paine acquisition transaction, the Company prepaid a management fee of $4.8 million in October 2003 for services rendered in fiscal year 2004. The fee is based on a formula and is amortized as services are rendered during the remainder of the fiscal year.

The Company sold a company owned house in the United States to an executive. The sale generated approximately $1.1 million in proceeds.

In conjunction with the 10 1/4% senior subordinated notes, the following summarized condensed consolidating financial information is presented for the Company, segregating guarantor subsidiaries and non-guarantor subsidiaries. The accompanying financial information in the “Guarantor Subsidiaries” column reflects the financial position, results of operations and cash flows for those subsidiaries, which guarantee the Notes. The guarantor subsidiaries are wholly owned subsidiaries of the Company and the guarantees are full, unconditional, and joint and several. Separate financial statements of the guarantor subsidiaries are not presented because management believes that such financial statements would not be material to investors.

Investments in subsidiaries in the following condensed consolidating financial information are accounted for under the equity method of accounting. Consolidating adjustments include the following:



	(1) elimination of investments in subsidiaries;



	(2) elimination of intercompany accounts;



	(3) elimination of intercompany sales between guarantor and non-guarantor subsidiaries; and



	(4) elimination of equity in earnings of subsidiaries.

On January 23, 2004, the Company issued 10 1/4% senior subordinated notes with a face value of $140.0 million, and a premium of $12.6 million over the face value. These notes have similar terms and conditions as the $190.0 million of senior subordinated notes issued on September 29, 2003. After deduction of fees and expenses, the net proceeds were approximately $149.2 million, which included $4.5 million of accrued interest that will be paid in April 2004. The net proceeds were used to pay down $115.3 million of senior secured credit facility and related interest.

Concurrently with the offering of the new notes, the Company amended the senior secured credit facility. The amended senior secured facility decreased the term loan from $190.0 million to $90.0 million, increased the revolving credit facility from $60.0 million to $75.0 million, amended pricing on term loan and revolving credit facility, and amended certain financial covenants. This refinancing transaction establishes a more conservative capital structure, significantly improves liquidity, and increases financial and operational flexibility.

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.

Schedule II ‘’Valuation and Qualifying Accounts” is filed herewith on page F-46


	(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 11^th day of March, 2004.

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:

II-12 EX-2.5 3 v94566aexv2w5.txt EXHIBIT 2.5 EXHIBIT 2.5 AMENDMENT THIS AMENDMENT (this "Amendment"), dated as of September 29, 2003, 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, 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 to the Contribution Agreement (as defined below) (the "Management Contributors," and together with Savia, the ARG Trust, CAI, and Park, the "Contributors"). Capitalized terms used herein and not otherwise defined shall have the meanings ascribed to such terms in the Contribution Agreement, dated as of May 30,2003, made by and among Parent, Savia, the ARG Trust, CAI, Mexican SPC, Emprima, Park, Mr. Romo and the Management Contributors (the "Contribution Agreement"). WHEREAS, in accordance with Section 7.4 of the Contribution Agreement, the parties hereto wish to amend the terms of the Contribution Agreement as set forth below; NOW, THEREFORE, in consideration of the foregoing and the premises, representations, warranties and agreements contained in the Contribution Agreement, the parties hereto agree as follows: FIRST: The penultimate "WHEREAS" recital shall be amended and restated in its entirety as follows: 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) the right to receive the "Purchase Price" (as such term is defined in the Gonzalez Stock Purchase Agreement) in accordance with the terms of the Gonzalez Stock Purchase Agreement to Savia, (iv) the right to receive the "Purchase Price" (as such term is defined in the Bondholder SPC Stock Purchase Agreement) in accordance with the terms of the Bondholder SPC Stock Purchase Agreement to Savia, (v) 4,365,257 shares of New Company Common Stock to the ARG Trust, (vi) 42,000 shares of New Company Common Stock to CAI, (vii) 1,000,000 shares of New Company Common Stock to Park, (viii) an aggregate of 685,505 shares of New Company Common Stock to the Management Contributors as set forth on Exhibit A hereto, and (ix) all remaining assets, including shares not purchased pursuant to the ARG Option, if any, to Savia; SECOND: The defined term "Additional Purchaser" set forth in Article I of the Contribution Agreement shall be deleted in its entirety. THIRD: The defined term "Additional Purchase Amount" set forth in Article I of the Contribution Agreement shall be deleted in its entirety. FOURTH: The defined term "Additional Sale Shares" set forth in Article I of the Contribution Agreement shall be deleted in its entirety. FIFTH: The defined term "Cash Distribution" set forth in Article I of the Contribution Agreement shall be amended and restated in its entirety as follows: "Cash Distribution" shall mean an amount equal to $235,035,136. SIXTH: The defined term "FPSH Sale Shares" set forth in Article I of the Contribution Agreement shall be amended and restated in its entirety as follows: "FPSH Sale Shares" shall mean (i) 62,716,028 shares of New Company Common Stock MINUS (ii) the PS Plug Number. SEVENTH: The following new defined terms shall be added to Article I of the Contribution Agreement: "Bondholder SPC Stock Purchase Agreement" shall mean the Stock Purchase Agreement, dated as of September 28, 2003, by and between Banca Afirme, S.A. Institution de Banca Multiple, Afirme Grupo Financiero, as Trustee, under the Administration Trust Number 243-4 (Fideicomiso De Administracion) and Parent. "Gonzalez Stock Purchase Agreement" shall mean the Stock Purchase Agreement, dated as of September 28, 2003, by and between Marcela Gonzalez and Parent. "PS Plug Number" shall mean a number of shares of New Company Common Stock equal to the quotient of (i) the aggregate cash purchase prices actually received by the Company pursuant to the Subscription Agreements, DIVIDED BY (ii) $3.40. "Subscription Agreements" shall mean (a) the Class C PIK Preferred Stock and Warrant Subscription Agreement, dated as of September 28, 2003, by and between Merger Sub and The Northwestern Mutual Life Insurance Company and (b) the Class C PIK Preferred Stock and Warrant Subscription Agreement, dated as of September 28, 2003, by and among Merger Sub, Stichting Pensioenfonds Abp and Stichting Pensioenfonds Voor De Gezondheid, Geestelijke En Maatschappelijke Belangen. EIGHTH: References in the Contribution Agreement to "6,411,953" shall be replaced by a number equal to 6,411,953 PLUS the PS Plug Number. NINTH: Section 2.4 of the Contribution Agreement shall be amended and restated in its entirety as follows: -2- 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) l,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 right to receive the "Purchase Price" (as such term is defined in the Gonzalez Stock Purchase Agreement) in accordance with the terms of the Gonzalez Stock Purchase Agreement, (iv) the right to receive the "Purchase Price" (as such term is defined in the Bondholder SPC Stock Purchase Agreement) in accordance with the terms of the Bondholder SPC Stock Purchase Agreement to Savia, and (v) 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. TENTH: Section 3.5 of the Contribution Agreement shall be amended and restated in its entirety as follows: 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 shares of which shall be designated as shares of Company Class B Preferred Stock, 25,000 shares of which may be issued and outstanding. Except (v) as set forth in the preceding sentence, (w) 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), (x) as contemplated by this Agreement, (y) as provided in the employment agreements and letter agreements set forth in Section 3.5 of the Parent Disclosure Schedule and (z) as contemplated by the Subscription Agreements, 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. ELEVENTH: The contribution by Adrian Rodriguez of 18,375 shares of Old Company Common Stock shall be deemed to be a contribution of 18,378 shares of Old Company Common Stock for all purposes of the Contribution Agreement and the Stock Purchase Agreement. TWELFTH: References in the Contribution Agreement to the Stock Purchase Agreement shall mean the Stock Purchase Agreement, as amended in accordance with the -3- amendment, of even date herewith, entered into between FPSH and Parent. THIRTEENTH: This Amendment shall be construed and enforced in accordance with the laws of the state of Delaware applicable to contracts made and to be performed wholly within such state. FOURTEENTH: This Amendment 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. -4- IN WITNESS WHEREOF the parties hereto have caused this Amendment to the Contribution Agreement to be executed by their duly authorized officers. SEMINIS ACQUISITION LLC By: /s/ Bernardo Jimenez ------------------------------------ Name: Bernardo Jimenez Title: Attorney-in-Fact 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, AFlRME GRUPO FINANCIERO, AS TRUSTEE, UNDER THE IRREVOCABLE ADMINISTRATION AND PAYMENT TRUST NUMBER 167-5 (FIDEICOMISO IRREVOCABLE DE ADMINISTRACION Y PAGO NUMERO 167-5) By: ------------------------------------ Name: Title: By: ------------------------------------ Name: Title: [SIGNATURE PAGE TO CONTRIBUTION AGREEMENT AMENDMENT] IN WITNESS WHEREOF the parties hereto have caused this Amendment to the Contribution Agreement to be executed by their duly authorized officers. SEMINIS ACQUISITION LLC By: ------------------------------------ Name: Title: SAVIA, S.A. DE C.V. By: /s/ Heriberto S. Muzza ------------------------------------ Name: Heriberto S. Muzza Title: Attorney-In-Fact By: /s/ Jose Luis Martinez ------------------------------------ Name: Jose Luis Martinez 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/ Ricardo J. Gil ------------------------------------ Name: Ricardo J. Gil Title: Delegado Fiduciario By: /s/ Beatriz Garzal ------------------------------------ Name: Beatriz Garzal Title: Delegado Fiduciario [SIGNATURE PAGE TO CONTRIBUTION AGREEMENT AMENDMENT] CONJUNTO ADMINISTRATIVO INTEGRAL, S.A. DE C.V. By: /s/ Heriberto S. Muzza ------------------------------------ Name: Heriberto S. Muzza Title: Attorney-in-Fact By: /s/ [Signature] ------------------------------------ Name: [Authorized Signatory] Title: Attorney-in-Fact DESARROLLO CONSOLIDADO DE NEGOCIOS, S.A. DE C.V. By: /s/ Gustavo Romo Garza ------------------------------------ Name: Gustavo Romo Garza Title: Attorney-in-Fact EMPRIMA, S.A. DE C.V. By: /s/ Heriberto S. Muzza ------------------------------------ Name: Heriberto S. Muzza Title: Attorney-in-Fact By: /s/ [Signature] ------------------------------------ Name: [Authorized Signatory] Title: Attorney-in-Fact [SIGNATURE PAGE TO CONTRIBUTION AGREEMENT AMENDMENT] PARK FINANCIAL GROUP LTD By: /s/ Bernardo Jimenez ------------------------------------ Name: Bernardo Jimenez Title: Authorized Officer ALFONSO ROMO GARZA /s/ Alfonso Romo Garza ----------------------------------------- BRUNO FERRARI /s/ Bruno Ferrari ----------------------------------------- GASPAR ALVAREZ /s/ Gaspar Alvarez ----------------------------------------- CHARLES EDWARD GREEN /s/ Charles Edward Green ----------------------------------------- FRANCO CAMPANA /s/ Franco Campana ----------------------------------------- JEAN PIERRE POSA /s/ Jean Pierre Posa ----------------------------------------- LUIS MAIZ /s/ Luis Maiz ----------------------------------------- MATEO MAZAL BEJA /s/ Mateo Mazal Beja ----------------------------------------- [SIGNATURE PAGE TO CONTRIBUTION AGREEMENT AMENDMENT] BERNARDO JIMENEZ /s/ Bernardo Jimenez ----------------------------------------- ADRIAN RODRIGUEZ /s/ Adrian Rodriguez ----------------------------------------- [SIGNATURE PAGE TO CONTRIBUTION AGREEMENT AMENDMENT] EX-3.1 4 v94566aexv3w1.htm EXHIBIT 3.1 Seminis Vegetable Seeds, Inc. Exhibit 3.1

1. They are the president and secretary, respectively, of PETOSEED CO., INC., a California corporation.

2. Article FIRST of the Articles of Incorporation of this corporation is amended to read as follows:

3. The foregoing Amendment of Articles of Incorporation has been duly approved by the Board of Directors.

4. The foregoing Amendment of Articles of Incorporation has been duly approved by the required vote of shareholders in accordance with Section 902 of the California Corporations Code. The total number of outstanding shares of the corporation is 23,607. The number of shares voting in favor of the amendment equalled or exceeded the vote required. The percentage vote required was more than 50%.

We further declare under penalty of perjury under the laws of the State of California that the matters set forth in this certificate are true and correct of our own knowledge.

1. They are the president and secretary, respectively, of PETOSEED CO., INC., a California corporation.

2. Article FIRST of the Articles of Incorporation of this corporation is amended to read as follows:

3. The foregoing Amendment of Articles of Incorporation has been duly approved by the Board of Directors.

We further declare under penalty of perjury under the laws of the State of California that the matters set forth in this certificate are true and correct of our own knowledge.

(b) To specialize in growing tomatoes and other vegetables for marketing seed and to process and sell vegetable seeds and other vegetable products.

(c) To carry on any business whatsoever which this corporation may deem proper or convenient in connection with any of the foregoing purposes or otherwise, or which may be calculated directly or indirectly to promote the interest of this corporation, or to enhance the value of its property or business.

(d) To borrow money; to lend money; to own real property; to own personal property; to deal in real property; to deal in personal property; to have and to exercise all the powers conferred by the laws of the State of California upon corporations formed under the laws pursuant to and under which this corporation is formed, as such laws are now in effect or may at any time hereafter be enacted or amended.

statement of both purposes and powers, and the purposes and powers stated in each clause shall, except where otherwise expressed, be in nowise limited or restricted by reference to or inference from the terms or provisions of any other clause, but shall be regarded as independent purposes.

THIRD: The County in the State of California where the principal office for the transaction of the business of the corporation is located in the County of Venture.

b. The names and addresses of the persons who are appointed to act as first directors are:

FIFTH: The total number of shares which the corporation is authorized to issue is 30,000.

The aggregate par value of said shares is $300,000, and the par value of each shares is $10.00.

No distinction shall exist between the shares of the corporation or the holders thereof.

IN WITNESS WHEREOF, the undersigned and above-named incorporators and first directors of this corporation have executed these articles of incorporation, on May 24, 1962.

On May 24, 1962, before me, a Notary Public in and for said County and State, personally appeared HOWARD B. PETO, DOROTHY A. PETO AND GEORGE B. SANDALL, known to me to be the persons whose names are subscribed to the foregoing articles of incorporation, and acknowledged to me that they executed the same.

IN WITNESS my hand and official seal.

1. That they are the President and Secretary, respectively, of PETO SEED COMPANY, INCORPORATED; a California corporation.

2. That at a meeting of the Board of Directors of said corporation, duly held at Saticoy, California, on December 3, 1974, the following resolution was adopted:

			RESOLVED that article FIRST of the Articles of Incorporation of this corporation be amended to read as follows:

			“The name of the corporation is: PETOSEED CO., INC.”

3. That the shareholders have adopted said amendment by written consent. That the wording of the amended article, as set forth in the shareholders written consent, is the same as that set forth in the directors resolution in paragraph 2 above.

4. That the number of shares represented by written consent is Twenty Three Thousand Six Hundred and Seventy (23,670). The total number of shares entitled to vote on or consent to the amendment is Twenty Three Thousand Six Hundred and Seventy (23,670).

Each of the undersigned hereby declares under penalty of perjury that the matters set forth in the foregoing certificate are true and correct.

-2- EX-3.2 5 v94566aexv3w2.htm EXHIBIT 3.2 Seminis Vegetable Seeds, Inc. Exhibit 3.2

All meetings of the shareholders shall be held at the office of the corporation in the State of California, as may be designated for that purpose from time to time by the Board of Directors.

The annual meeting of the shareholders shall be held on the 15th day of July in each year, if not a legal holiday, and if a legal holiday, then on the next succeeding business day, at the hour of 2:00 o’clock P.M., at which time the shareholders shall elect by plurality vote a Board of Directors, consider reports of the affairs of the Corporation, and transact such other business as may properly be brought before the meeting.

Special meetings of the shareholders, for any purpose or purposes whatsoever, may be called at any time by the President, or by the Board of Directors, or by any two or more members thereof, or by one or more shareholders holding not less than one-tenth (1/10) of the voting power of the corporation.

Notices of meetings, annual or special, shall be given in writing to shareholders entitled to vote by the Secretary or the Assistant Secretary, or if there be no such officer, or in case of his neglect or refusal, by any director or shareholder.

Such Notices shall be sent to the shareholder’s address appearing on the books of the corporation, or supplied by him to the corporation for the purpose of notice, not less than seven days before such meeting.

Notice of any meeting of shareholders shall specify the place, the day and the hour of meeting, and in case of special meeting, as provided by the corporations Code of California, the general nature of the business to be transacted.

When a meeting is adjourned for thirty days or more, notice of the adjourned meeting shall be given as in case of an original meeting. Save, as aforesaid, it shall not be necessary to give any notice of the adjournment or of the business to be transacted at an adjourned meeting other than by announcement at meeting at which such adjournment is taken.

The Transaction of any meeting of shareholders, however called and noticed, shall be valid as though had at a meeting duly held after regular call and notice, if a quorum be present either in

person or by proxy, and if, either before or after the meeting, each of the shareholders entitled to vote, not present in person or by proxy, sign a written waiver of notice, or a consent to the holding of such meeting, or an approval of the minutes thereof. All such waivers, consents or approvals shall be filed with the corporate records or made a part of the minutes of the meeting.

Any action which may be taken at a meeting of the shareholders, may be taken without a meeting if authorized by a writing signed by all of the holders of shares who would be entitled to vote at a meeting for such purpose, and filed with the Secretary of the corporation.

The holders of a majority of the shares entitled to vote thereat, present in person, or represented by proxy, shall be requisite and shall constitute a quorum at all meetings of the shareholders for the transaction of business except as otherwise provided by law, by the Articles of Incorporation, or by these By-Laws. If, however, such majority shall not. be present or represented at any meeting of the shareholders, the shareholders entitled to vote thereat, present in person, or by proxy, shall have power to adjourn the meeting from time to time, until the requisite amount of voting shares shall be present. At such adjourned meeting at which the requisite amount of voting shares shall be represented, any business may be transacted which might have been transacted at the meeting as originally notified.

Only persons in whose names shares entitled to vote stand on the stock records of the corporation on the day of any meeting of shareholders, unless some other day be fixed by the Board of Directors for the determination of shareholders of record, then on such other day, shall be entitled to vote at such meeting.

Every shareholder entitled to vote shall be entitled to one vote for each of said shares and shall have the right to accumulate his votes as provided in Section 2235, Corporations Code of California.

Every shareholder entitled to vote, or to execute consents, may do so, either in person or by written proxy, executed in accordance with the provisions of Section 2225 of the Corporations Code of California and filed with the Secretary of the corporation.

Subject to the limitation of the Articles of Incorporation, of the By-Laws and of the Laws of the State of California as to action to be authorized or approved by the shareholders, all corporate powers shall be exercised by or under authority of, and the business and affairs of this corporation shall be controlled by, a Board of Directors.

The authorized number of directors of the corporation shall be Five (5), until changed by amendment to the Articles of Incorporation or by an amendment to this Section 2, Article II of these By-Laws, adopted by the vote or written assent of the shareholders entitled to exercise the majority of the voting power of the corporation.

The directors shall be elected by ballot at the annual meeting of the shareholders, to serve for one year and until their successors are elected and have qualified. Their term of office shall begin immediately after election.

Vacancies In the Board of Directors may be filled by a majority of the remaining directors, though less than a quorum, or by a sole remaining director, and each director so elected shall hold office until his successor is elected at an annual meeting of shareholders or at a special meeting called for that purpose.

The shareholders may at any time elect a director to fill any vacancy not filled by the directors, and may elect the additional directors at the meeting at which an amendment of the By-Laws is voted authorizing an increase in the number of directors.

A vacancy or vacancies shall be deemed to exist in case of the death, resignation or removal of any director, or if the shareholders shall increase the authorized number of directors but shall fail at the meeting at which such increase is authorized, or at an adjournment thereof, to elect the additional director so provided for, or in case the shareholders fail at any time to elect the full number of authorized directors.

If the Board of Directors accepts the resignation of a Director tendered to take effect at a future time, the Board, or the shareholders, shall have power to elect a successor to take office when the resignation shall become effective.

No reduction of the number of directors shall have the effect of removing any director prior to the expiration of his term of office.

The entire Board of Directors or any individual director may be removed from office as provided by Section 810 of the Corporations Code of the State of California.

Meetings of the Board of Directors shall be held at the office of the corporation in the State of California, as designated for that purpose, from time to time, by resolution of the Board of Directors or written consent of all of the Members of the Board. Any meeting shall be valid, wherever held, if held by the written consent of all Members of the Board of Directors, given either before or after the meeting and filed with the Secretary of the corporation.

The organization meetings of the Board of Directors shall be held immediately following the adjournment of the annual meetings of the shareholders.

Regular meetings of the Board of Directors shall be held on January 15th, April 15th, July 15th and October 15th

If said day shall fall upon a holiday, such meetings shall be held on the next succeeding business day thereafter. No notice need be given of such regular meetings.

Special meetings of the Board of Directors for any purpose or purposes shall be called at any time by the President or if he is absent or unable or refuses to act, by any Vice-President or by any two directors.

Written notice of the time and place of special meetings shall be delivered personally to the directors or sent to each director by letter or by telegram, charges prepaid, addressed to him at his address as it is shown upon the records of the corporation, or if it is not so shown on such records or is not readily ascertainable, at the place in which the meetings of the directors are regularly held. In case such notice is mailed or telegraphed, it shall be deposited in the United States mail or delivered to the telegraph company in the place in which the principal office of the corporation is located at least forty-eight (48) hours prior to the time of the holding of the meeting. In case such notice is delivered as above provided; it shall be so delivered at least twenty-four (24) hours prior to the time of the holding of the meeting. Such mailing, telegraphing or delivery as above provided shall be due, legal and personal notice to such director.

When all of the directors are present at any directors’ meeting, however called or noticed, and sign a written consent thereto on the records of such meeting, or, if a majority of the directors are present, and if those not present sign in writing a waiver of notice of such meeting, whether prior to or after the holding of such meeting, which said waiver shall be filed with the Secretary of the corporation, the transactions thereof are as valid as if had at a meeting regularly called and noticed.

Any action required or permitted to be taken by the Board of Directors, may be taken without a meeting, and with the same force and effect as a unanimous vote of directors, if all members of the board shall individually or collectively consent in writing to such action.

Notice of the time and place of holding an adjourned meeting need not be given to absent directors if the time and place be fixed at the meeting adjourned.

A majority of the number of directors as fixed by the Articles or By-Laws shall be necessary to constitute a quorum for the transaction of business, and the action of a majority of the directors present at any meeting at which there is a quorum, when duly assembled, is valid as a corporate act; provided that a minority of the directors, in the absence of a quorum, may adjourn from time to time, but may not transact any business.

The officers of the corporation shall be a president, a vice-president, a secretary, and a treasurer. The corporation may also have, at the discretion of the board of directors, a chairman of the board, one or more additional vice-presidents, one or more assistant secretaries, one or more assistant treasurers, and such other officers as may be appointed in accordance with the provisions of Section 3 of this article. One person may hold two or more offices, except those of president and secretary.

The officers of the corporation, except such officers as may be appointed in accordance with the provisions of Section 3 or Section 5 of this article shall be chosen annually by the board of directors, and each shall hold his office until he shall resign or shall be removed or otherwise disqualified to serve, or his successor shall be elected and qualified.

The board of directors may appoint such other officers as the business of the corporation may require, each of whom shall hold office for such period, have such authority and perform such duties as are provided in the by-laws or as the board of directors may from time to time determine.

Any officer may be removed, either with or without cause, by a majority of the directors at the time in office, at any regular or special meeting of the board, or, except in case of an officer chosen by the board of directors, by any officer upon whom such power of removal may be conferred by the board of directors.

Any officer may resign at any time by giving written notice to the board of directors or to the president, or to the secretary of the corporation. Any such resignation shall take effect at the date of the receipt of such notice or at any later time specified therein; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective.

A vacancy in any office because of death, resignation, removal, disqualification or any other cause shall be filled in the manner prescribed in the by-laws for regular appointments to such office.

The chairman of the board, if there shall be such an officer, shall, if present, preside at all meetings of the board of directors, and exercise and perform such other powers and duties as may be from time to time assigned to him by the board of directors or prescribed by the by-laws.

Subject to such supervisory powers, if any, as may be given by the board of directors to the chairman of the board, if there be such an officer, the president shall be the chief executive officer of the corporation and shall, subject to the control of the board of directors, have general supervision, direction and control of the business and officers of the corporation. He shall preside at all meetings of the shareholders and in the absence of the chairman of the board, or if there be none, at all meetings of the board of directors. He shall be ex office a member of all the standing committees, including the executive committee, if any, and shall have the general powers and duties of management usually vested in the office of president of a corporation, and shall have such other powers and duties as may be prescribed by the board of directors or the by-laws.

In the absence or disability of the president, the vice presidents in order of their rank as fixed by the board of directors, or if not ranked, the vice president designated by the board of directors, shall perform all the duties of the president, and when so acting shall have all the powers of, and be subject to, all the restrictions upon, the president. The vice presidents shall have such other powers and perform such other duties as from time to time may be prescribed for them respectively by the board of directors or the by-laws.

The secretary shall keep, or cause to be kept, a book of minutes at the principal office or such other place as the board of directors may order, of all meetings of directors and shareholders, with the time and place of holding, whether regular or special, and if special, how authorized, the notice thereof given, the names of those present at directors’ meetings, the number of shares present or represented at shareholders’ meetings and the proceedings thereof.

The secretary shall keep, or cause to be kept, at the principal office or at the office of the corporation’s transfer agent, a share register, or duplicate share register, showing the names of the shareholders and their addresses; the number and classes of shares held by each; the number and date of certificates issued for the same; and the number and date of cancellation of every certificate surrendered for cancellation.

The secretary shall give, or cause to be given, notice of all the meetings of the shareholders and of the board of directors required by the by-laws or by law to be given, and he shall keep the seal of the corporation in safe custody, and shall have such other powers

and perform such other duties as may be prescribed by the board of directors or the by-laws.

The treasurer shall keep and maintain, or cause to be kept and maintained, adequate and correct accounts of the properties and business transactions of the corporation, including accounts of its assets, liabilities, receipts, disbursements, gains, losses, capital, surplus and shares. Any surplus, including earned surplus, paid-in-surplus and surplus arising from a reduction of stated capital, shall be classified according to source and shown in a separate account. The books of account shall at all reasonable times be open to inspection by any director.

The treasurer shall deposit all moneys and other valuables in the name and to the credit of the corporation with such depositaries as may be designated by the board of directors. He shall disburse the funds of the corporation as may be ordered by the board of directors, shall render to the president and directors, whenever they request it, an account of all of his transactions as treasurer and of the financial condition of the corporation, and shall have such other powers and perform such other duties as may be prescribed by the board of directors or the by-laws.

The Board of Directors may appoint an executive committee, and such other committees as may be necessary from time to time, consisting of such number of its members and with such powers as it may designate, consistent with the Articles of Incorporation and By-Laws and the General Corporation Laws of the State of California. Such committees shall hold office at the pleasure of the board.

The corporation shall maintain adequate and correct accounts, books and records of its business and properties. All of such books, records and accounts shall be kept at its principal place of business in the State of California, as fixed by the Board of Directors from time to time.

All books and records provided for in Section 3003 of the Corporations Code of California shall be open to inspection of the directors and shareholders from time to time and in the manner provided in said Section 3003.

The original or a copy of these By-Laws, as amended or otherwise altered to date, certified by the Secretary, shall be open to

inspection by the shareholders of the company, as provided, in Section 502 of the Corporations Code of California.

All checks, drafts or other orders for payment of money, notes or other evidences of indebtedness, issued in the name of or payable to the corporation, shall be signed or endorsed by such person or persons and in such manner as shall be determined from time to time by resolution of the Board of Directors.

The Board of Directors, except as in the By-Laws otherwise provided, may authorize any officer or officers, agent or agents, to enter into any contract or execute any instrument in the name of and on behalf of the corporation. Such authority may be general or confined to specific instances. Unless so authorized by the Board of Directors, no officer, agent \or employee shall have any power or authority to.bind the corporation by any contract or engagement, or to pledge its credit, or to render it liable for any purpose or to any amount.

The Board of Directors shall cause an annual report or statement to be sent to the shareholders of this corporation not later than 120 days after the close of the fiscal or calendar year in accordance with the provisions of Sections 3006 — 3010 of the Corporations Code of the State of California.

Certificates for shares shall be of such form and device as the Board of Directors may designate and shall state the name of the record holder of the shares represented thereby; its number; date of issuance; the number of shares for which it is issued; the par value, if any, or a statement that such shares are without par value; a statement of the rights, privileges, preferences and restrictions, if any; a statement as to the redemption or conversion, if any; a statement of liens or restrictions upon transfer or voting, if any; if the shares be assessable or, if assessments are collectible by personal action, a plain statement of such facts.

Every certificate for shares must be signed by the President or a Vice-President and the Secretary or an Assistant Secretary or must be authenticated by facsimiles of the signatures of the President and Secretary or by a facsimile of the signature of its President and the written signature of its Secretary or an Assistant Secretary. Before it becomes effective every certificate for shares authenticated by a facsimile of a signature must be countersigned by a transfer agent or transfer clerk and must be registered by an

incorporated bank or trust company, either domestic or foreign, as registrar of transfers.

Upon surrender to the Secretary or transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books.

Any person claiming a certificate of stock to be lost or destroyed shall make an affidavit or affirmation of that fact and advertise the same in such manner as the Board of Directors may require, and shall if the directors so require give the corporation a bond of indemnity, in form and with one or more sureties satisfactory to the Board, in at least double the value of the stock represented by said certificate, whereupon a new certificate may be issued of the same tenor and for the same number of shares as the one alleged to be lost or destroyed.

The Board of Directors may appoint one or more transfer agents or transfer clerks, and one or more registrars, which shall be an incorporated bank or trust company — either domestic or foreign, who shall be appointed at such times and places as the requirements of the corporation may necessitate and the Board of Directors may designate.

The Board of Directors may close the transfer books in their discretion for a period not exceeding thirty days preceding any meeting, annual or special, of the shareholders, or the day appointed for the payment of a dividend.

The corporate seal shall be circular in form, and shall have inscribed thereon the name of the corporation, the date of its incorporation, and the word California.

New By-Laws may be adopted or these By-Laws may be repealed or amended at their annual meeting, or at any other meeting of the shareholders called for that purpose, by a vote of shareholders entitled to exercise a majority of the voting power of the corporation, or by written assent of such shareholders.

Subject to the right of the shareholders to adopt, amend or repeal By-Laws, as provided in Section 1 of this Article VIII, the Board of Directors may adopt, amend or repeal any of these By-Laws other than a By-Law or amendment thereof changing the authorized number of directors.

Whenever an amendment or new By-Law is adopted, it shall be copied in the Book of By-Laws with the original By-Laws, in the appropriate place. If any By-Law is repealed, the fact of repeal with the date of the meeting at which the repeal was enacted or written assent was filed shall be stated in said book.

	KNOW ALL MEN BY THESE PRESENTS:

	That we, the undersigned, being all of the persons appointed in the Articles of Incorporation to act as the first Board of

	Directors of Peto Seed Company, Incorporated hereby assent to the foregoing By-Laws, and adopt the same as the By-Laws of said corporation. ‘

	IN WITNESS WHEREOF, we have hereunto set our hands this 27th day of May 1963.

That I am the duly elected, qualified and acting Secretary of Peto Seed Company, Incorporated and that the above and foregoing By-Laws were adopted as the By-Laws of said corporation on the 27th day of May 1963, by the persons appointed in the Articles of Incorporation to act as the first directors of said corporation.

That I am the duly elected, qualified and acting Secretary of and that the above and foregoing Code of By-Laws was submitted to the shareholders at their first meeting held on the day of 19 , and was ratified by the vote of share holders entitled to exercise the majority of the voting power of said corporation.

WRITTEN ASSENT OF SHAREHOLDERS OF
PETO SEED COMPANY, INCORPORATED
(A CALIFORNIA CORPORATION)
TO AMENDMENT OF BY-LAWS.

The undersigned, each holding the number of shares of said corporation entitled to vote hereinbelow indicated after its name, and constituting all of the shareholders of said corporation entitled to exercise a majority of the voting power, do hereby assent to the amendment of the by-laws of said corporation and do hereby amend the by-laws of said corporation as follows:

Section 2 of Article II of the by-laws of said corporation is hereby amended to read as follows:

The authorized number of directors of the corporation shall be five (5), until changed by amendment to the Articles of Incorporation or by an amendment to this Section 2, Article II of these By-Laws, adopted by the vote or written assent of the shareholders entitled to exercise the majority of the voting power of the corporation.

IN WITNESS WHEREOF, each of the undersigned has hereunto signed his name and following his name the date of signing and the number of shares of said corporation entitled to vote held by him of record on said date.

EX-3.3 6 v94566aexv3w3.htm EXHIBIT 3.3 Seminis Vegetable Seeds, Inc. Exhibit 3.3

The name of the corporation (which is hereinafter referred to as the “Corporation”) is:

The address of the Corporation’s registered office in the State of Delaware is The Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware 19801, County of New Castle. The name of the Corporation’s registered agent at such address is The Corporation Trust Company.

The purpose of the Corporation shall be to engage in any lawful act or activity for which corporations may be organized and incorporated under the General Corporation Law of the State of Delaware.

Section 1. The Corporation shall be authorized to issue 205,000,000 shares of capital stock, of which 200,000,000 shares shall be shares of Common Stock, $.01 par value (“Common Stock”), and 5,000,000 shares shall be shares of Preferred Stock, $.01 par value (“Preferred Stock”).

Section 2. Shares of Preferred Stock may be issued from time to time in one or more series. The Board (as defined below) is hereby authorized to fix the voting rights, if any, designations, powers, preferences and the relative, participation, optional or other rights, if any, and the qualifications, limitations or restrictions thereof, of any unissued series of Preferred Stock; and to fix the number of shares constituting such series, and to increase or decrease the number of shares of any such series (but not below the number of shares thereof then outstanding). Pursuant to the authority conferred by this Article IV, the following series of Preferred Stock have been designated, each such series consisting of such number of shares, with such voting powers and with such designations, preferences and relative, participating, optional or other special rights, and qualifications, limitations or restrictions therefor as are stated and expressed in Exhibit AA attached hereto and incorporated herein by reference:

Section 3. Except as otherwise provided by law, or by the resolution or resolutions adopted by the Board designating the rights, powers and preferences of any series of Preferred Stock, the Common Stock shall have the exclusive right to vote for the election of directors and for all other purposes. Each share of Common Stock shall have one vote, and the Common Stock shall vote together as a single class.

Unless and except to the extent that the By-Laws of the Corporation shall so require, the election of directors of the Corporation need not be by written ballot.

In furtherance and not in limitation of the powers conferred by law, the Board of Directors of the Corporation (the “Board”) is expressly authorized and empowered to make, alter and repeal the By-Laws of the Corporation by a majority vote at any regular or special meeting of the Board or by written consent, subject to the power of the stockholders of the Corporation to alter or repeal any By-Laws made by the Board.

The Corporation reserves the right at any time from time to time to amend, alter, change or repeal any provision contained in this Certificate of Incorporation, and any other provisions authorized by the laws of the State of Delaware at the time in force may be added or inserted, in the manner now or hereafter prescribed by law; and all rights, preferences and privileges of whatsoever nature conferred upon stockholders, directors or any other persons whomsoever by and pursuant to this Certificate of Incorporation in its present form or as hereafter amended are granted subject to the right reserved in this Article.

Section 1. Elimination of Certain Liability of Directors. A director of the Corporation shall not be personally liable to the Corporation 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 General Corporation Law of the State of Delaware as the same exists or may hereafter be amended.

Any repeal or modification of the foregoing paragraph shall not adversely affect any right or protection of a director of the Corporation existing hereunder with respect to any act or omission occurring prior to such repeal or modification.

(a) Right to Indemnification. Each person who was or is made a party or is threatened to be made a party to or is involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (hereinafter a “proceeding”), by reason of the fact that

he or she, or a person of whom he or she is the legal representative, is or was a director or officer of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, whether the basis of such proceeding is alleged action in an official capacity as a director, officer, employee or agent or in any other capacity while serving as a director, officer, employee or agent, shall be indemnified and held harmless by the Corporation to the fullest extent authorized by the General Corporation Law of the State of Delaware, as the same exists or may hereafter be amended (but, in the case of any such amendment, to the fullest extent permitted by law, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than said law permitted the Corporation to provide prior to such amendment), against all expense, liability and loss (including attorneys’ fees, judgments, fines, amounts paid or to be paid in settlement, and excise taxes or penalties arising under the Employee Retirement Income Security Act of 1974) reasonably incurred or suffered by such person in connection therewith and such indemnification shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of his or her heirs, executors and administrators; provided, however, that, except as provided in paragraph (b) hereof, the Corporation shall indemnity any such person seeking indemnification in connection with a proceeding (or part thereof) initiated by such person only if such proceeding (or part thereof) was authorized by the Board. The right to indemnification conferred in this Section shall be a contract right and shall include the right to be paid by the Corporation the expenses incurred in defending any such proceeding in advance of its final disposition; provided, however, that, if the General Corporation Law of the State of Delaware requires, the payment of such expenses incurred by a director or officer in his or her capacity as a director or officer (and not in any other capacity in which service was or is rendered by such person while a director or officer, including, without limitation, service to an employee benefit plan) in advance of the final disposition of a proceeding, shall be made only upon delivery to the Corporation of an undertaking, by or on behalf of such director or officer, to repay all amounts so advanced if it shall ultimately be determined that such director or officer is not entitled to be indemnified under this Section or otherwise. The Corporation may, by action of the Board, provide indemnification to employees and agents of the Corporation with the same scope and effect as the foregoing indemnification of directors and officers.

(b) Right of Claimant to Bring Suit. If a claim under paragraph (a) of this Section is not paid in full by the Corporation within thirty days after a written claim has been received by the Corporation, the claimant may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim and, if successful in whole or in part, the claimant shall be entitled to be paid also the expense of prosecuting such claim. It shall be a defense to any such action (other than an action brought to enforce a claim for expenses incurred in defending any proceeding in advance of its final disposition where the required undertaking, if any is required, has been tendered to the Corporation) that the claimant has not met the standards of conduct which make it permissible under the General Corporation Law of the State of Delaware for the Corporation to indemnify the claimant for the amount claimed, but the burden of proving such defense shall be on the Corporation. Neither the failure of the Corporation (including its Board, independent legal counsel, or its stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he or she has met the applicable standard of conduct set forth in the General Corporation Law of the State of Delaware, nor an actual determination by

the Corporation (including its Board, independent legal counsel, or its stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct.

(c) Non-Exclusivity of Rights. The right to indemnification and the payment of expenses incurred in defending a proceeding in advance of its final disposition conferred in this Section shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, provision of the Certificate of Incorporation, By-law, agreement, vote of stockholders or disinterested directors or otherwise.

(d) Insurance. The Corporation may maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the Corporation or another corporation, partnership, joint venture, trust or other enterprise against any such expense, liability or loss, whether or not the Corporation would have the power to indemnify such person against such expense, liability or loss under the General Corporation Law of the State of Delaware.

4 EX-3.4 7 v94566aexv3w4.htm EXHIBIT 3.4 Seminis Vegetable Seeds, Inc. Exhibit 3.4

Section 1.1 Delaware Office. The principal office of the Corporation in the State of Delaware shall be located in the City of Wilmington, County of New Castle, and the name and address of its registered agent is The Corporation Trust Company, Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware.

Section 1.2 Other Offices. The Corporation may have such other offices, either within or without the State of Delaware, as the Board of Directors may designate or as the business of the Corporation may from time to time require.

Section 1.3 Books and Records. The books and records of the Corporation may be kept at the Corporation’s principal executive offices at 2700 Camino del Sol, Oxnard, California 93030 or at such other locations outside the State of Delaware as may from time to time be designated by the Board of Directors.

Section 2.1 Annual Meeting. Except as otherwise provided in Section 2.8 of these Bylaws, an annual meeting of stockholders of the Corporation shall be held at such time and date in each year as the Board of Directors, the Chairman of the Board, if any, or the President may from time to time determine. The annual meeting in each year shall be held at such hour on said day and at such place within or without the State of Delaware as may be fixed by the Board of Directors, or if not so fixed, at 10:00 A.M., local time, at the principal executive offices of the Corporation.

Section 2.2 Special Meetings. Subject to the rights of the holders of any series of preferred stock, par value $.01 per share, of the Corporation (the “Preferred Stock”), or any other series or class of stock as set forth in the Certificate of Incorporation of the Corporation (the “Certificate of Incorporation”) to elect additional directors under specified circumstances, a special meeting of the holders of stock of the Corporation entitled to vote on any business to be considered at any such meeting may be called only by the Chairman of the Board, if any, or the

President or any Vice President, and shall be called by the Chairman of the Board, if any, or the President or the Secretary when directed to do so by resolution of the Board of Directors or at the written request of directors representing a majority of the total number of directors which the Corporation would at the time have if there were no vacancies (the “Whole Board”). Any such request shall state the purpose or purposes of the proposed meeting. The Board of Directors may designate the place of meeting for any special meeting of stockholders, and if no such designation is made, the place of meeting shall be the principal executive offices of the Corporation.

Section 2.3 Notice of Meetings. Whenever stockholders are required or permitted to take any action at a meeting, unless notice is waived as provided in Section 8.1 of these Bylaws, a written notice of the meeting shall be given which shall state the place, date and hour of the meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called.

Unless otherwise provided by law, and except as to any stockholder duly waiving notice, the written notice of any meeting shall be given personally or by mail, not less than ten nor more than sixty (60) days before the date of the meeting to each stockholder entitled to vote at such meeting. If mailed, notice shall be deemed given when deposited in the mail, postage prepaid, directed to the stockholder at his or her address as it appears on the records of the Corporation.

When a meeting is adjourned to another time or place, notice need not be given of the adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken. At the adjourned meeting the Corporation may transact any business which might have been transacted at the original meeting. If, however, the adjournment is for more than thirty (30) days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting.

Section 2.4 Quorum. Except as otherwise provided by law or by the Certificate of Incorporation or by the Stockholders’ Agreement, dated as of May 30, 2003, by and among Seminis Merger Corp. and the investors listed on the signature pages thereto (the “Stockholders’ Agreement”), at any meeting of stockholders the holders of a majority of the outstanding stock entitled to vote thereat, either present or represented by proxy, shall constitute a quorum for the transaction of any business, but the stockholders present, although less than a quorum, may adjourn the meeting to another time or place and, except as provided in the last paragraph of Section 2.3 of these Bylaws, notice need not be given of the adjourned meeting.

Section 2.5 Voting. Except as otherwise provided by the Stockholders’ Agreement or as otherwise set forth in the Certificate of Incorporation with respect to the right of any holder of any series of Preferred Stock or any other series or class of stock to elect additional directors under specified circumstances, whenever directors are to be elected at a meeting, they shall be elected by a plurality of the votes cast at the meeting by the holders of stock entitled to vote. Except as otherwise provided by the Stockholders’ Agreement, whenever any corporate action, other than the election of directors, is to be taken by vote of stockholders at a meeting, such corporate action shall, except as otherwise required by law or by the Certificate of

Incorporation or by these Bylaws or by the Stockholders’ Agreement, be authorized by the affirmative vote of a majority of the shares present in person or represented by proxy at the meeting and entitled to vote on the matter.

Except as otherwise provided by law, or by the Certificate of Incorporation or by the Stockholders’ Agreement, each holder of record of stock of the Corporation entitled to vote on any matter at any meeting of stockholders shall be entitled to one vote for each share of such stock standing in the name of such holder on the stock ledger of the Corporation on the record date for the determination of the stockholders entitled to vote at the meeting.

Upon the demand of any stockholder entitled to vote, the vote for directors or the vote on any other matter at a meeting shall be by written ballot, but otherwise the method of voting and the manner in which votes are counted shall be discretionary with the presiding officer at the meeting.

Section 2.6 Proxies. Each stockholder entitled to vote at a meeting of stockholders or to express consent or dissent to corporate action in writing without a meeting may authorize another person or persons to act for him or her by proxy, but no such proxy shall be voted or acted upon after three years from its date, unless the proxy provides for a longer period. Every proxy shall be signed by the stockholder or by his duly authorized attorney.

Section 2.7 List of Stockholders. The officer who has charge of the stock ledger of the Corporation shall prepare and make, at least ten (10) days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten (10) days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present.

The stock ledger shall be the only evidence as to who are the stockholders entitled to examine the stock ledger, the list required by this Section or the books of the Corporation, or to vote in person or by proxy at any meeting of stockholders.

Section 2.8 Written Consent of Stockholders in Lieu of Meeting. Except as otherwise provided by the Stockholders’ Agreement, any action required by the General Corporation Law of the State of Delaware (the “GCL”) to be taken at any annual or special meeting of stockholders of the Corporation, or any action which may be taken at any annual or special meeting of the stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt written notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have

not consented in writing. Any such written consent may be given by one or any number of substantially concurrent written instruments of substantially similar tenor signed by such stockholders, in person or by attorney or proxy duly appointed in writing, and filed with the Secretary or an Assistant Secretary of the Corporation. Any such written consent shall be effective as of the effective date thereof as specified therein, provided that such date is not more than sixty (60) days prior to the date such written consent is filed as aforesaid, or, if no such date is so specified, on the date such written consent is filed as aforesaid.

Section 3.1 Number of Directors. The Board of Directors shall initially consist of one director until changed as provided in this Section. At the effective time of the merger contemplated by the Agreement and Plan of Merger, dated as of May 30, 2003, by and among the Corporation, Seminis Acquisition LLC and Seminis Merger Corp., the Board of Directors will be as provided in the Stockholders’ Agreement. Except as otherwise required by the Certificate of Incorporation or by the Stockholders’ Agreement, the number of directors may be changed at any time and from time to time by vote at a meeting or by written consent of the holders of stock entitled to vote on the election of directors, or by a resolution of the Board of Directors passed by a majority of the Whole Board, except that no decrease shall shorten the term of any incumbent director unless such director is specifically removed pursuant to Section 3.5 of these Bylaws at the time of such decrease.

Section 3.2 Election and Term of Directors. Directors shall be elected annually, by election at the annual meeting of stockholders or by written consent of the holders of stock entitled to vote thereon in lieu of such meeting. If the annual election of directors is not held on the date designated therefor, the directors shall cause such election to be held as soon thereafter as convenient. Except as otherwise provided by the Stockholders’ Agreement, each director shall hold office from the time of his or her election and qualification until his successor is elected and qualified or until his or her earlier resignation, or removal.

Section 3.3 Vacancies and Newly Created Directorships. Except as otherwise provided by the Stockholders’ Agreement, vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by election at a meeting of stockholders or by written consent of the holders of stock entitled to vote thereon in lieu of a meeting. Except as otherwise provided by law or by the Stockholders’ Agreement, vacancies and such newly created directorships may also be filled by a majority of the directors then in office, although less than a quorum, or by a sole remaining director.

Section 3.4 Resignation. Any director may resign at any time upon written notice to the Corporation. Any such resignation shall take effect at the time specified therein or, if the time be not specified, upon receipt thereof, and the acceptance of such resignation, unless required by the terms thereof, shall not be necessary to make such resignation effective.

Section 3.5 Removal. Except as otherwise required by law, the Certificate of Incorporation or the Stockholders’ Agreement, any or all of the directors may be removed at any time, with or without cause, by vote at a meeting or by written consent of the holders of stock entitled to vote on the election of directors.

Section 3.6 Meetings. Meetings of the Board of Directors, regular or special, may be held at any place within or without the State of Delaware. Members of the Board of Directors, or of any committee designated by the Board of Directors, may participate in a meeting of the Board of Directors or such committee by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting by such means shall constitute presence in person at such meeting. An annual meeting of the Board of Directors shall be held after each annual election of directors. If such election occurs at an annual meeting of stockholders, the annual meeting of the Board of Directors shall be held at the same place and immediately following such meeting of stockholders, and no further notice thereof need be given other than this Bylaw. If an annual election of directors occurs by written consent in lieu of the annual meeting of stockholders, the annual meeting of the Board of Directors shall take place as soon after such written consent is duly filed with the Corporation as is practicable, either at the next regular meeting of the Board of Directors or at a special meeting. The Board of Directors may fix times and places for additional regular meetings of the Board of Directors and no notice of such meetings need be given. A special meeting of the Board of Directors shall be held whenever called by the Chairman of the Board, if any, or by the President or by a majority of the directors then in office, at such time and place as shall be specified in the notice or waiver thereof. Notice of each special meeting shall be given by the Secretary or by a person calling the meeting to each director by mailing the same, postage prepaid, not later than the second day before the meeting, or personally or by telegraphing or telephoning the same not later than the day before the meeting.

Section 3.7 Quorum and Voting. A whole number of directors equal to at least a majority of the Whole Board shall constitute a quorum for the transaction of business, but if there be less than a quorum at any meeting of the Board of Directors, a majority of the directors present may adjourn the meeting from time to time, and no further notice thereof need be given other than announcement at the meeting which shall be so adjourned. Except as otherwise provided by law, by the Certificate of Incorporation, by these Bylaws, or by the Stockholders’ Agreement, the vote of a majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors.

Section 3.8 Written Consent of Directors in Lieu of a Meeting. Any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting if all members of the Board of Directors or of such committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Board of Directors or such committee.

Section 3.9 Compensation. Directors may receive compensation for services to the Corporation in their capacities as directors or otherwise in such manner and in such amounts as may be fixed from time to time by the Board of Directors.

Section 3.10 Committees of the Board of Directors. Except as otherwise provided by the Stockholders’ Agreement, the Board of Directors may from time to time, by resolution passed by majority of the Whole Board, designate one or more committees, each committee to consist of one or more directors of the Corporation. Except as otherwise provided by the Stockholders’ Agreement, the Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. Except as otherwise provided by the Stockholders’ Agreement, the resolution of the Board of Directors may, in addition or alternatively, provide that in the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he, she or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. Except as otherwise provided by the Stockholders’ Agreement, any such committee, to the extent provided in the resolution of the Board of Directors, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it, except as otherwise provided by law, the Certificate of Incorporation, these Bylaws or by the Stockholders’ Agreement. Unless the resolution of the Board of Directors expressly so provides, no such committee shall have the power or authority to declare a dividend or to authorize the issuance of stock. Any such committee may adopt rules governing the method of calling and time and place of holding its meetings. Unless otherwise provided by the Board of Directors, a majority of any such committee (or the member thereof, if only one) shall constitute a quorum for the transaction of business, except as otherwise provided by the Stockholders’ Agreement, and the vote of a majority of the members of such committee present at a meeting at which a quorum is present shall be the act of such committee. Each such committee shall keep a record of its acts and proceedings and shall report thereon to the Board of Directors whenever requested so to do. Except as otherwise provided by the Stockholders’ Agreement, any or all members of any such committee may be removed, with or without cause, by resolution of the Board of Directors, passed by a majority of the Whole Board.

Section 4.1 Appointment and Term of Office. The officers of the Corporation may include a President, a Secretary and a Treasurer, and may also include a Chairman and a Vice Chairman of the Board, one or more Vice Presidents, one or more Assistant Secretaries and one or more Assistant Treasurers. Except as otherwise provided by the Stockholders’ Agreement, all such officers shall be appointed by the Board of Directors or by a duly authorized committee thereof, and shall each have such powers and duties as generally pertain to their respective offices, subject to the specific provisions of this Article IV, together with such other powers and duties as from time to time may be conferred by the Board of Directors or any committee thereof. Any number of such offices may be held by the same person, but no officer shall execute, acknowledge or verify any instrument in more than one capacity. Except as may be prescribed otherwise by the Board of Directors or a committee thereof in a particular case, all

such officers shall hold their offices at the pleasure of the Board of Directors for an unlimited term and need not be reappointed annually or at any other periodic interval. The Board of Directors may appoint, and may delegate power to appoint, such other officers, agents and employees as it may deem necessary or proper, who shall hold their offices or positions for such terms, have such authority and perform such duties as may from time to time be determined by or pursuant to authorization of the Board of Directors.

Section 4.2 Resignation and Removal. Any officer may resign at any time upon written notice to the Corporation. Any officer, agent or employee of the Corporation may be removed by the Board of Directors, or by a duly authorized committee thereof, with or without cause at any time. The Board of Directors or such a committee thereof may delegate such power of removal as to officers, agents and employees not appointed by the Board of Directors or such a committee. Such removal shall be without prejudice to a person’s contract rights, if any, but the appointment of any person as an officer, agent or employee of the Corporation shall not of itself create contract rights.

Section 4.3 Compensation and Bond. The compensation of the officers of the Corporation shall be fixed by the Board of Directors, but this power may be delegated to any officer in respect of other officers under his or her control. The Corporation may secure the fidelity of any or all of its officers, agents or employees by bond or otherwise.

Section 4.4 Chairman of the Board. The Chairman of the Board (or, in his absence, the Vice Chairman of the Board), if there be one, shall preside at all meetings of stockholders and of the Board of Directors, and shall have such other powers and duties as may be delegated to him or her by the Board of Directors.

Section 4.5 President. The President shall be the chief executive officer of the Corporation. In the absence of the Chairman of the Board (or if there be none), he or she shall preside at all meetings of the stockholders and of the Board of Directors. He or she shall have general charge of the business affairs of the Corporation. He or she may employ and discharge employees and agents of the Corporation, except such as shall be appointed by the Board of Directors, and he or she may delegate these powers. The President may vote the stock or other securities of any other domestic or foreign corporation of any type or kind which may at any time be owned by the Corporation, may execute any stockholders’ or other consents in respect thereof and may in his or her discretion delegate such powers by executing proxies, or otherwise, on behalf of the Corporation. The Board of Directors by resolution from time to time may confer like powers upon any other person or persons.

Section 4.6 Vice Presidents. Each Vice President shall have such powers and perform such duties as the Board of Directors or the President may from time to time prescribe. In the absence or inability to act of the President, unless the Board of Directors shall otherwise provide, the Vice President who has served in that capacity for the longest time and who shall be present and able to act, shall perform all the duties and may exercise any of the powers of the President.

Section 4.7 Treasurer. The Treasurer shall have charge of all funds and securities of the Corporation, shall endorse the same for deposit or collection when necessary and deposit

the same to the credit of the Corporation in such banks or depositaries as the Board of Directors may authorize. He or she may endorse all commercial documents requiring endorsements for or on behalf of the Corporation and may sign all receipts and vouchers for payments made to the Corporation. He or she shall have all such further powers and duties as generally are incident to the position of Treasurer or as may be assigned to him or her by the President or the Board of Directors.

Section 4.8 Secretary. The Secretary shall record all the proceedings of the meetings of the stockholders and directors in a book to be kept for that purpose and shall also record therein all action taken by written consent of the stockholders or directors in lieu of a meeting. He or she shall attend to the giving and serving of all notices of the Corporation. He or she shall have custody of the seal of the Corporation and shall attest the same by his or her signature whenever required. He or she shall have charge of the stock ledger and such other books and papers us the Board of Directors may direct, but he or she may delegate responsibility for maintaining the stock ledger to any transfer agent appointed by the Board of Directors. He or she shall have all such further powers and duties as generally are incident to the position of Secretary or as may be assigned to him or her by the President or the Board of Directors.

Section 4.9 Assistant Treasurers. In the absence or inability to act of the Treasurer, any Assistant Treasurer may perform all the dudes and exercise all the powers of the Treasurer. An Assistant Treasurer shall also perform such other duties as the Treasurer or the Board of Directors may assign to him or her.

Section 4.10 Assistant Secretaries. In the absence or inability to act of the Secretary, any Assistant Secretary may perform all the duties and exercise all the powers of the Secretary. An Assistant Secretary shall also perform such other duties as the Secretary or the Board of Directors may assign to him or her.

Section 4.11 Delegation of Duties. In case of the absence of any officer of the Corporation, or for any other reason that the Board of Directors may deem sufficient, the Board of Directors may confer for the time being the powers or duties, or any of them, of such officer upon any other officer or upon any director.

Section 5.1 Certificates. Certificates for stock of the Corporation shall be in such form as shall be approved by the Board of Directors and shall be signed in the name of the Corporation by the Chairman of the Board, if any, or the President or a Vice President, and by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary. Such certificates may be sealed with the seal of the Corporation or a facsimile thereof. Any of or all the signatures on a certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by

the Corporation with the same effect as if he or she were such officer, transfer agent or registrar at the date of issue.

Section 5.2 Transfers of Stock. Except as otherwise provided by the Stockholders’ Agreement, transfers of stock shall be made only upon the books of the Corporation by the holder, in person or by duly authorized attorney, and on the surrender of the certificate or certificates for the same number of shares, properly endorsed. The Board of Directors shall have the power to make all such rules and regulations, not inconsistent with the Certificate of Incorporation and these Bylaws and the GCL, as the Board of Directors may deem appropriate concerning the issue, transfer and registration of certificates for stock of the Corporation. The Board of Directors may appoint one or more transfer agents or registrars of transfers, or both, and may require all stock certificates to bear the signature of either or both.

Section 5.3 Lost. Stolen or Destroyed Certificates. The Corporation may issue a new stock certificate in the place of any certificate theretofore issued by it, alleged to have been lost, stolen or destroyed, and the Corporation may require the owner of the lost, stolen or destroyed certificate or his or her legal representative to give the Corporation a bond sufficient to indemnify it against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of any such new certificate. The Board of Directors may require such owner to satisfy other reasonable requirements as it deems appropriate under the circumstances.

Section 5.4 Stockholder Record Date. In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board of Directors may fix a record date, which record date shall not precede the date on which the resolution fixing the record date is adopted by the Board of Directors, and which shall not be more than sixty nor less than ten (10) days before the date of such meeting, nor more than sixty (60) days prior to any other action.

If no record date is fixed by the Board of Directors, (1) the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the date on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held, (2) the record date for determining stockholders entitled to express consent to corporate action in writing without a meeting, when no prior action by the Board of Directors is necessary, shall be at the close of business on the day on which the first written consent is expressed by the filing thereof with the Corporation as provided in Section 2.8 of these Bylaws, and (3) the record date for determining stockholders for any other purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto.

A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.

Only such stockholders as shall be stockholders of record on the date so fixed shall be entitled to notice of, and to vote at, such meeting and any adjournment thereof, or to give such consent, or to receive payment of such dividend or other distribution, or to exercise such rights in respect of any such change, conversion or exchange of stock, or to participate in such action, as the case may be, notwithstanding any transfer of any stock on the books of the Corporation after any record date so fixed.

Section 6.1 Seal. The seal of the Corporation shall be circular in form and shall bear, in addition to any other emblem or device approved by the Board of Directors, the name of the Corporation, the year of its incorporation and the words “Corporate Seal” and “Delaware”. The seal may be used by causing it or a facsimile thereof to be impressed or affixed or in any other manner reproduced.

Section 7.1 Waiver of Notice. Whenever notice is required to be given to any stockholder or director of the Corporation under any provision of the GCL or the Certificate of Incorporation or these Bylaws, a written waiver thereof, signed by the person or persons entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to the giving of such notice. In the case of a stockholder, such waiver of notice may be signed by such stockholder’s attorney or proxy duly appointed in writing. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders, directors or members of a committee of directors need be specified in any written waiver of notice.

Section 8.1 Checks Notes Drafts Etc. Checks, notes, drafts, acceptances, bills of exchange and other orders or obligations for the payment of money shall be signed by such officer or officers or person or persons as the Board of Directors or a duly authorized committee thereof may from time to time designate.

Section 9.1 Amendments. Except as otherwise required by the Stockholders’ Agreement, these Bylaws or any of them may be altered or repeated, and new Bylaws may be adopted, by the stockholders by vote at a meeting or by written consent without a meeting. Except as otherwise required by the Stockholders’ Agreement, the Board of Directors shall also have power, by a majority vote of the Whole Board, to alter or repeal any of these Bylaws, and to adopt new Bylaws.

These Bylaws shall be subject to the Stockholders’ Agreement and the Corporate Policies and Procedures attached as Exhibit A to the Stockholders’ Agreement, each as amended from time to time.

EX-3.5 8 v94566aexv3w5.htm EXHIBIT 3.5 Seminis Vegetable Seeds, Inc. Exhibit 3.5

CERTIFICATE OF DESIGNATION OF
PREFERENCES AND RIGHTS OF
CLASS C PIK PREFERRED STOCK

Seminis, Inc., a corporation organized and existing under the General Corporation Law of the State of Delaware (the “Corporation”), does hereby certify that, pursuant to the authority conferred upon the Board of Directors by the Certificate of Incorporation of the Corporation, and pursuant to the provisions of Section 151 of the Delaware General Corporation Law, said Board of Directors duly adopted a resolution on September 29, 2003 which approved the filing of this Certificate of Designation and which resolution remains in full force and effect as of the date hereof.

Pursuant to such resolution and the authority conferred upon the Board of Directors by the Certificate of Incorporation of the Corporation, there is hereby created a series of preferred stock, $.01 par value per share, of the Corporation, which series shall have the following powers, preferences, and relative, participating, optional or other special rights, and the qualifications, limitations or restrictions thereof, in addition to those set forth in the Certificate of Incorporation of the Corporation:

Part 1. Designation and Amount of Class C PIK Preferred Stock. 400,000 shares of the Preferred Stock shall be designated as Class C PIK Preferred Stock, $0.01 par value (“Class C PIK Preferred Stock”), of the Corporation.

2A. Except as provided below, the holders of outstanding shares of Class C PIK Preferred Stock shall, from and after the date the Class C PIK Preferred Stock is first issued by the Corporation, be entitled to receive, when, as and if declared by the Board of Directors, out of funds legally available for the purpose, cumulative paid-in-kind dividends at the annual rate of 12% of the liquidation preference per share, compounded quarterly by virtue of paying dividends on all outstanding shares of Class C PIK Preferred Stock, including those previously issued as dividends (provided that after the occurrence and during the continuance of an Event of Noncompliance, the Class C PIK Preferred Stock shall be entitled to receive, when, as and if declared by the Board of Directors, out of funds legally available for the purpose, cumulative paid-in-kind dividends at the annual rate of 14% of the liquidation preference per share,

compounded quarterly by virtue of paying dividends on all outstanding shares of Class C PIK Preferred Stock, including those previously issued as dividends), and no more, in equal quarterly payments on the 15th day of January, April, July and October in each year (each a “Distribution Payment Date”) commencing on the first Distribution Payment Date following the date the Class C PIK Preferred Stock is first issued by the Corporation. If any Distribution Payment Date occurs on a day that is not a Business Day, any accrued distributions otherwise payable on such Distribution Payment Date shall be paid on the next succeeding Business Day. The Board of Directors may fix a record date for the determination of holders of shares of Class C PIK Preferred Stock entitled to receive a payment of a dividend declared thereon, which record date shall be no more than sixty days prior to the date fixed for the payment thereof. The amount of dividends payable shall be determined on the basis of twelve 30-day months and a 360-day year. Accrued but unpaid dividends shall not bear interest; provided that if such accrued but unpaid dividends are to be paid in cash, delayed dividends shall accrue interest at the annual rate of 12% (or 14% during any Event of Non-Compliance), compounded quarterly, from the relevant Distribution Payment Date through the date actually paid.

2B. Any dividend payments made with respect to shares of Class C PIK Preferred Stock may be paid, in the sole discretion of the Corporation, in cash or in additional shares (and/or fractional shares) of Class C PIK Preferred Stock, at the rate of .12 of one share of Class C PIK Preferred Stock for each $120 of such dividends not paid in cash.

2C. During any period when the Corporation has failed to pay a quarterly dividend on the shares of Class C PIK Preferred Stock and until all unpaid dividends payable, whether or not declared, on the outstanding shares of Class C PIK Preferred Stock shall have been paid in full or declared and set apart for payment, and all redemption and Change of Control payment obligations theretofore payable and not previously paid in respect of the Class C PIK Preferred Stock have been paid in full in cash, the Corporation shall not: (i) authorize, declare, set apart for payment or pay dividends, or make any other distributions, on any shares of Junior Stock or Parity Stock, other than dividends or distributions payable in shares of Junior Stock, or (ii) redeem, purchase or otherwise acquire for consideration (or pay or make available any moneys for a sinking fund for the redemption of such shares) any shares of Junior Stock or Parity Stock, other than redemptions, purchases or other acquisitions of shares of Junior Stock or Parity Stock in exchange for any shares of Junior Stock. During any period when dividends are not so paid in full (or a sum sufficient for such full payment is not set apart for payment) upon the shares of Class C PIK Preferred Stock and any other class or series of Parity Stock, all distributions authorized or declared upon the shares of Class C PIK Preferred Stock and any such class or series of Parity Stock shall be authorized and declared pro rata so that the amount of distributions authorized or declared per share on the shares of Class C PIK Preferred Stock and such class or series of Parity Stock shall in all cases bear to each other the same ratio that accrued and unpaid distributions per share on the Class C PIK Preferred Stock and such class or series of Parity Stock bear to each other.

2D. Distributions on the shares of Class C PIK Preferred Stock, if not paid on the applicable Distribution Payment Date, will accrue whether or not distributions are authorized or declared for such Distribution Payment Date, whether or not the Corporation has earnings and whether or not there are assets legally available for the payment of such distributions. For the

avoidance of doubt, unpaid dividends on the shares of Class C PIK Preferred Stock that accrue pursuant to this Part 2D shall compound quarterly until paid.

Part 3. Liquidation Preference. In the event of the liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, the holders of shares of the Class C PIK Preferred Stock shall be entitled to receive, out of the assets of the Corporation, and in preference to and in priority over any distribution upon the shares of Common Stock and all shares of Junior Stock, an amount in cash equal to $1,000 per share, plus an amount equal to the accrued and unpaid dividends thereon, whether or not declared, to the date of liquidation, dissolution or winding up, as the case may be. If the assets of the Corporation are not sufficient to pay in full the liquidation price payable to the holders of the shares of the Class C PIK Preferred Stock and the liquidation price payable to the holders of all shares of Parity Stock (as hereinafter defined), the holders of all such shares shall share ratably in such distribution of assets in accordance with the amounts which would be payable on such distribution if the amounts to which the holders of shares of the Class C PIK Preferred Stock and the holders of shares of Parity Stock are entitled were paid in full. A merger or consolidation of the Corporation with or into any other corporation shall not be deemed a liquidation, dissolution or winding up of the Corporation. As used in this Certificate of Designation, the term “liquidation preference” shall mean $1,000 per share.

(i) Except as provided in paragraph (ii) below, shares of the Class C PIK Preferred Stock shall not be redeemable prior to October 1, 2006. Thereafter, the Corporation may redeem shares of the Class C PIK Preferred Stock, in whole or in part, at the option of the Corporation, at the per share redemption prices (expressed as a percentage of the liquidation preference thereof and payable in cash) set forth below, plus an amount in cash equal to accrued and unpaid dividends, whether or not declared, to the redemption date therefor:

(ii) At any time prior to October 1, 2014, following, or concurrent with, the occurrence of (a) a Change of Control, or (b) a Qualified IPO, the Corporation may redeem shares of the Class C PIK Preferred Stock, in whole or in part, at the option of the Corporation, 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, whether or not declared, to the redemption date therefor.

4.B. Mandatory Redemption. The Corporation shall redeem all outstanding shares of Class C PIK Preferred Stock on October 1, 2014, at a redemption price, payable in

cash, equal to the per share liquidation preference thereof, plus an amount in cash equal to accrued and unpaid dividends, whether or not declared, to the redemption date therefor.

5A. Not less than thirty nor more than sixty days prior to the date fixed for any redemption of shares of Class C PIK Preferred Stock pursuant to Part 4 hereof, a notice specifying the time and place of such redemption, whether all or less than all the outstanding shares of Class C PIK Preferred Stock are to be redeemed, the total number of shares of Class C PIK Preferred Stock being redeemed, and the number of shares held by the holder to be redeemed shall be given by first class mail, postage prepaid, to the holders of record of shares of the Class C PIK Preferred Stock to be redeemed at their respective addresses as the same shall appear on the books of the Corporation, but no failure to mail such notice or any defect therein or in the mailing thereof shall affect the validity of the proceedings for redemption. Any notice which was mailed in the manner herein provided shall be conclusively presumed to have been duly given whether or not the holder receives the notice and the shares specified in such notice shall be deemed to have been called for redemption as of the date such notice was mailed.

5B. Unless the Corporation shall fail to pay, upon surrender of the certificates evidencing the shares to be redeemed, the redemption price of any shares of the Class C PIK Preferred Stock called for redemption as provided herein, from and after the date fixed for the redemption of such shares of Class C PIK Preferred Stock by the Corporation, the holders of such shares called for redemption shall cease to be stockholders with respect to such shares and shall have no interest in or claims against the Corporation by virtue thereof and shall have no voting or other rights with respect to such shares, except the right to receive the moneys payable upon such redemption from the Corporation, without interest thereon, upon surrender (and endorsement, if required by the Corporation) of their certificates, and the shares evidenced thereby shall no longer be deemed to be outstanding.

Part 6. Redemption Procedure. In every case of redemption of less than all of the then outstanding shares of Class C PIK Preferred Stock pursuant to Part 4 hereof, such redemption shall be made as nearly as practicable pro rata among the holders thereof according to the number of shares of Class C PIK Preferred Stock held by the respective holders, and otherwise (but not affecting the pro rata allocation) in such manner as may be prescribed by resolution of the Board of Directors, provided that only whole shares shall be selected for redemption.

7.A. Unless the holders of a majority of the then outstanding shares of Class C PIK Preferred Stock otherwise consent, the Corporation shall not approve or recommend a Change of Control unless, in connection with the Change of Control, the Corporation is not prohibited in any respect (including pursuant to restrictions contained in any instruments of indebtedness to which the Corporation or any of its subsidiaries is a party) from making and consummating a Change of Control Offer (as defined below). If a Change of Control occurs, then the Corporation (or its successor) shall notify the holders of the Class C PIK Preferred Stock in writing of such occurrence and shall make an offer to purchase (the “Change of Control

Offer”), at the holders’ option, all or any of the then outstanding shares of Class C PIK Preferred Stock at a purchase price (expressed as a percentage of the liquidation preference) (the “Change of Control Price”), equal to 101% of the liquidation preference, plus an amount in cash equal to accrued and unpaid dividends, whether or not declared, to the Change of Control Payment Date.

7.B. The Change of Control Offer shall be made by the Corporation (or its successor) by mailing a notice thereof within twenty (20) days following the date of consummation of the Change of Control (the “Change of Control Date”) to holders of shares of the Class C PIK Preferred Stock at their last registered address, which notice shall set forth:

(i) that a Change of Control has occurred and that each holder of shares of Class C PIK Preferred Stock has the right to require the Corporation (or its successor) to repurchase for cash such holder’s shares of Class C PIK Preferred Stock for the Change of Control Price, plus an amount in cash equal to accrued and unpaid dividends, whether or not declared, to the Change of Control Payment Date;

	(ii)		the Change of Control Payment Date;

	(iii)		a description of the Change of Control; and

	(iv)		a description of the procedures to be followed by such holder in order to have its shares of Class C PIK Preferred Stock repurchased.

The Change of Control Offer shall remain open from the time of mailing until the Business Day preceding the Change of Control Payment Date.

7.C. Subject to applicable law, the Corporation (or its successor) shall fix the date for such repurchase (the “Change of Control Payment Date”) on a date no earlier than thirty (30) but no more than sixty (60) days after the date the Change of Control Offer is made as set forth above.

7.D. The Corporation (or its successor) will comply with any securities laws and regulations, to the extent such laws and regulations are applicable, in the event that the Corporation (or its successor) is required to make a Change of Control Offer and to repurchase shares of the Class C PIK Preferred Stock in connection with a Change of Control.

7.E. On the Change of Control Payment Date, unless the Corporation (or its successor) defaults in the payment for the shares of Class C PIK Preferred Stock tendered pursuant to the Change of Control Offer, dividends will cease to accrue with respect to the shares of Class C PIK Preferred Stock tendered. All rights of holders of such tendered shares will terminate, except for the right to receive payment therefor, on the Change of Control Payment Date.

8.A. Upon the occurrence of an Event of Noncompliance described in clause (d) or clause (e) of the definition of Event of Noncompliance, all of the then outstanding shares of Class C PIK Preferred Stock shall immediately be automatically put to the Corporation at the

redemption price set forth in Part 4.A. (such price to be determined based upon the applicable time period) in cash, plus an amount in cash equal to accrued and unpaid dividends, whether or not declared, to the date of redemption, provided, however, that the Corporation’s obligation to redeem the shares of the Class C PIK Preferred Stock shall be subject to the prior satisfaction of any and all obligations pursuant to (i) the Credit Agreement or any replacement financing thereof and (ii) the Indenture and any replacement financing thereof.

8.B. Upon the occurrence of a default in the performance of, or compliance with, any term of Material Indebtedness, as a result of which default such Material Indebtedness has become, or has been declared, due and payable before its stated maturity or before its regularly scheduled dates of payment (an “Acceleration”), then, unless such Acceleration is rescinded, on the date that is 181 days following the repayment of such obligations under the Material Indebtedness as is then required by the holders thereof to be retired or terminated, the holders of the then outstanding shares of Class C PIK Preferred Stock shall have the right to immediately put to the Corporation at the redemption price set forth in Part 4.A. (such price to be determined based upon the applicable time period) in cash, plus an amount in cash equal to accrued and unpaid dividends, whether or not declared, to the date of redemption.

8.C. Upon the redemption of the shares of Class C PIK Preferred Stock pursuant to Part 8.A. or 8.B., unless the Corporation defaults in the payment for the shares of Class C PIK Preferred Stock put pursuant to Part 8.A. or 8.B., dividends will cease to accrue with respect to the shares of Class C PIK Preferred Stock redeemed. All rights of holders of such put shares will terminate, except for the right to receive payment therefor.

Part 9. Voting Rights. The holders of shares of the Class C PIK Preferred Stock shall be entitled to vote as a class upon any proposed amendment to the terms of this Certificate of Designation (or any proposed amendment to the Corporation’s certificate of incorporation), including by way of merger, consolidation or otherwise, if the amendment would increase or decrease the aggregate number of authorized shares of the Class C PIK Preferred Stock, increase or decrease the par value of such shares of Class C PIK Preferred Stock or alter or change the powers, preferences, or special rights of the shares of Class C PIK Preferred Stock so as to effect them adversely. Except as set forth in this Certificate of Designation or as required by law, holders of shares of the Class C PIK Preferred Stock shall have no voting rights.

Part 10. No Conversion Rights. The shares of the Class C PIK Preferred Stock shall not be convertible into any other securities of the Corporation.

Part 11. Rank. The Class C PIK Preferred Stock shall, with respect to dividend distributions and distributions upon the voluntary or involuntary liquidation, winding up and dissolution of the Corporation, rank (A) junior to the shares of the Corporation’s Class B Redeemable Preferred Stock, par value $0.01 per share, (B) senior to all classes of common stock of the Corporation (including, without limitation, the Common Stock) and all Junior Stock, and (C) pari passu with any Parity Stock. The Corporation may authorize, create and issue (a) Parity Stock, including shares of Class C PIK Preferred Stock, having an aggregate liquidation preference of up to an amount that is less than the aggregate amount of the liquidation preference of the shares of the Class C PIK Preferred Stock initially issued to The Northwestern Mutual Life Insurance Company and outstanding on the date hereof and all paid in kind

dividends (and dividends on dividends) with respect thereto, and (b) Junior Stock without the consent of the holders of shares of the Class C PIK Preferred Stock. The Corporation shall not authorize, create or issue any additional series or classes of Preferred Stock that rank senior to the shares of the Class C PIK Preferred Stock as to the payment of dividends, liquidation preference and redemption rights without the approval of the affirmative vote of at least a majority of the then outstanding shares of the Class C PIK Preferred Stock.

Part 12. Restrictions on Transfer. No sale, offer, assignment, transfer, pledge, hypothecation, encumbrance or other disposition (each, a “disposition”) of any shares of Class C PIK Preferred Stock shall be permitted without the prior written consent of the Corporation, other than dispositions to an Affiliate of the transferring holder of shares of Class C PIK Preferred Stock, provided, however, that dispositions to a Person or group of Affiliated Persons of shares of Class C PIK Preferred Stock with an aggregate liquidation preference equal to or greater than $10 million per disposition (it being understood that a disposition to a Person or group of Affiliated Persons by a single Person or two Affiliated Persons shall count as a single disposition) shall be permitted by this Certificate of Designation without consent of the Corporation, provided, further, however, that in no event shall any holder of shares of Class C PIK Preferred Stock dispose of any shares of Class C PIK Preferred Stock to any Person who is engaged to a material extent in the business of the Corporation or any of its subsidiaries.

13.A. Incurrence of Indebtedness. Unless, by the affirmative vote of at least a majority of the then outstanding shares of the Class C PIK Preferred Stock, the holders of the shares of the Class C PIK Preferred Stock agree, in any instance, to waive compliance therewith, for so long as any shares of the Class C PIK Preferred Stock remain outstanding, the Corporation agrees and covenants that the Company (as defined in the Indenture) will, and the Corporation will cause the Company (as defined in the Indenture) to, perform and comply with the provisions of Section 4.09 of the Indenture (including the replacement text with respect to Section 4.09(a) contained herein), which provisions, as well as related defined terms contained therein (except as specified below), are hereby incorporated by reference herein with the same effect as if each and every such provision were set forth herein in its entirety and all of which provisions shall be deemed to be made under this Certificate of Designation for the benefit of the holders of shares of Class C PIK Preferred Stock, provided, however, that for purposes of this Certificate of Designation, Section 4.09(a) of the Indenture shall be replaced in its entirety with the following text:

“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 Fixed Charge Coverage 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 have been at least 1.5 to 1.0, 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.”

For purposes of this Part 13.A., (i) the phrases “Fixed Charge Coverage Ratio,” “Fixed Charges” and “Officers’ Certificate” shall have the meanings set forth in Part 14 of this Certificate of Designation, (ii) capitalized terms used in the definitions of “Fixed Charge Coverage Ratio” and “Fixed Charges” shall have the meanings ascribed to such terms in the Indenture, and (iii) other capitalized terms used in the replacement Section 4.09(a) text above and capitalized terms used in Section 4.09 of the Indenture and any related section shall have the meanings ascribed to such terms in the Indenture, provided, however, that for purposes of this Part 13. A. the definition of “Disqualified Stock” shall be revised to replace the phrase “91 days after the date on which the Notes mature” to “91 days after the mandatory redemption date set forth in Part 4.B.”

13.B. Restricted Payments. Unless, by the affirmative vote of at least a majority of the then outstanding shares of the Class C PIK Preferred Stock, the holders of the shares of the Class C PIK Preferred Stock agree, in any instance, to waive compliance therewith, for so long as any shares of the Class C PIK Preferred Stock remain outstanding, the Corporation agrees and covenants that the Company (as defined in the Indenture) will, and the Corporation will cause the Company (as defined in the Indenture) to, perform and comply with the provisions of Section 4.10 of the Indenture, which provisions, as well as related defined terms contained therein (except as specified below), are hereby incorporated by reference herein with the same effect as if each and every such provision were set forth herein in its entirety and all of which provisions shall be deemed to be made under this Certificate of Designation for the benefit of the holders of shares of Class C PIK Preferred Stock, provided, however, that the references in Section 4.10 of the Indenture to the phrase “Total Leverage Ratio” shall be replaced by the phrase “Fixed Charge Coverage Ratio” and the phrases “Fixed Charge Coverage Ratio” and “Fixed Charges” shall have the meanings set forth in Part 14 of this Certificate of Designation. For purposes of this Part 13.B., (i) capitalized terms used in Section 4.10 of the Indenture and any related section shall have the meanings ascribed to such terms in the Indenture, provided, however, that for purposes of this Part 13.B. the definition of “Disqualified Stock” shall be revised to replace the phrase “91 days after the date on which the Notes mature” to “91 days after the mandatory redemption dale set forth in Part 4.B.”

13.C. Transactions with Affiliates. Unless, by the affirmative vote of at least a majority of the then outstanding shares of the Class C PIK Preferred Stock, the holders of the shares of the Class C PIK Preferred Stock agree, in any instance, to waive compliance therewith, for so long as any shares of the Class C PIK Preferred Stock remain outstanding, the Corporation

agrees and covenants that the Company (as defined in the Indenture) will, and the Corporation will cause the Company (as defined in the Indenture) to, perform and comply with the provisions of Section 4.14 of the Indenture, which provisions, as well as related defined terms contained therein (except as specified below), are hereby incorporated by reference herein with the same effect as if each and every such provision were set forth herein in its entirety and all of which provisions shall be deemed to be made under this Certificate of Designation for the benefit of the holders of shares of Class C PIK Preferred Stock. For purposes of this Part 13.C., capitalized terms used in Section 4.14 of the Indenture and any related section shall have the meanings ascribed to such terms in the Indenture, provided, however, that for purposes of this Part 13.C. the definition of “Disqualified Stock” shall be revised to replace the phrase “91 days after the date on which the Notes mature” to “91 days after the mandatory redemption date set forth in Part 4.B.”

13.D. General. To the extent that any provision of the Indenture incorporated by reference in Part 13. A, 13.B or 13.C above (i) permits the Trustee or any Holder or Noteholder (as all of such capitalized terms are defined in the Indenture) to waive compliance with such provision or (ii) requires that a document, opinion or other instrument or any event or condition be acceptable or satisfactory to the Trustee or any Holder or Noteholder (as all such capitalized terms are defined in the Indenture), for purposes of Parts 13.A, 13.B and 13.C hereof, (x) such provision shall be complied with only if it is specifically waived by the holders of a majority of the shares of Class C PIK Preferred Stock in writing and (y) such document, opinion or other instrument and such event or condition shall be acceptable or satisfactory only if it is acceptable or satisfactory to the holders of a majority of the shares of Class C PIK Preferred Stock. No termination of, or amendment to, the covenants or agreements or defined terms of the Indenture incorporated by reference in Part 13.A, 13.B or 13.C and no release of the Company (as such term is defined in the Indenture) with respect to such covenants or agreements or defined terms made pursuant to the Indenture shall be effective to terminate or amend such covenants or agreements or defined terms or release the Company (as such term is defined in the Indenture) with respect to this Certificate of Designation without the prior written approval of the holders of a majority of the shares of Class C PIK Preferred Stock. Notwithstanding any termination or expiration of the Indenture, the Corporation shall cause the Company (as such term is defined in the Indenture) to continue to observe the covenants therein contained and incorporated by reference in Parts 13.A, 13.B and 13.C hereof for the benefit of the holders of shares of Class C PIK Preferred Stock. All such incorporated covenants shall be in addition to the express covenants contained herein and shall not be limited by the express covenants contained herein (except as expressly modified in this Certificate of Designation) nor shall such incorporated covenants be a limitation on the express covenants contained herein.

Part 14. Certain Definitions. As used herein, the following terms heretofore not defined shall have the following respective meanings:

“Affiliate” shall mean, with respect to a specified Person, 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.

“Business Day” shall mean 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.

“Change of Control” shall have the meaning ascribed to it in the Indenture and any capitalized terms used in the definition of “Change of Control” in the Indenture shall have the meanings ascribed to such terms in the Indenture.

“Common Stock” shall mean the shares of the Common Stock, $.01 par value, of the Corporation.

“Credit Agreement” shall mean the $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 therein, 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.

“Event of Noncompliance” shall mean the occurrence of any of the following events, for any reason whatsoever (and whether such occurrence shall be voluntary or involuntary or come about or be effected by operation of law or otherwise):


	(a) the Corporation defaults in any payment, when due, with respect to any shares of Class C PIK Preferred Stock and such default continues for thirty (30) days; or

	(b) the Corporation fails to perform or observe any agreement, term or condition contained herein, or there shall have occurred any breach or violation of any covenant, agreement or term set forth in Part 13 hereof, and such failure, breach or violation shall not be remedied within thirty (30) days after the Corporation has actual knowledge of such failure, breach or violation or has received written notice from holders of shares of Class C PIK Preferred Stock representing at least 50% of the aggregate liquidation preference of the then outstanding shares of Class C PIK Preferred Stock; or

	(c) the Corporation or a subsidiary of the Corporation that is the principal borrower with respect to Material Indebtedness makes an assignment for the benefit of creditors generally; or

	(d) any decree or order for relief in respect of the Corporation or a subsidiary of the Corporation that is the principal borrower with respect to Material Indebtedness is entered under any bankruptcy, reorganization, insolvency, readjustment of debt, dissolution or liquidation or similar law, whether now or hereafter in effect (herein called the “Bankruptcy Law”), of any jurisdiction; or

	(e) the Corporation or a subsidiary of the Corporation that is the principal borrower with respect to Material Indebtedness petitions or applies to any tribunal for, or consents to, the appointment of, or taking possession by, a trustee, receiver, custodian,

liquidator or similar official of the Corporation, or of any substantial part of the assets of the Corporation, or commences a voluntary case under the Bankruptcy Law of the United States, or any proceedings relating to the Corporation under the Bankruptcy Law of any other jurisdiction or any involuntary proceeding under any Bankruptcy Law shall be commenced and continue unstayed and in effect for 60 days.

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

“Fixed Charges” means, with respect to any specified Person for any period, the sum, without duplication, of:

(1) the consolidated interest expense of such Person and its Restricted Subsidiaries for such period, whether paid or accrued, 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; plus

(2) the consolidated interest of such Person and its Restricted Subsidiaries that was capitalized during such period; plus

(3) any interest actually paid by the Company or any of its Restricted Subsidiaries under any Guarantee of Indebtedness or other obligation of any other Person; plus

(4) the product of (a) all dividends, whether paid or accrued and whether or not in cash, on any series of preferred stock of such Person or any of its Restricted Subsidiaries, other than dividends on Equity Interests payable solely in Equity Interests of the Company (other than Disqualified Stock) or to the Company or a Restricted Subsidiary of the Company, times (b) a fraction, the numerator of which is one and the denominator of which is one minus the then current combined federal, state and local statutory tax rate of such Person, expressed as a decimal, in each case, on a consolidated basis and in accordance with GAAP.

“Fixed Charge Coverage Ratio” means with respect to any specified Person for any period, the ratio of the Consolidated Cash Flow of such Person and its Restricted Subsidiaries for such period to the Fixed Charges of such Person and its Restricted Subsidiaries for such 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 Fixed Charge Coverage ratio is being calculated and on or prior to the date on which the event for which calculation of the Fixed Charge Coverage ratio is made (the “Calculation Date”), then the Fixed Charge Coverage ratio shall 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 shall 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 shall 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 shall 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, shall be excluded;

(3) the Fixed Charges attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses disposed of prior to the Calculation Date, shall be excluded, but only to the extent that the obligations giving rise to such Fixed Charges shall not be obligations of the specified Person or any of its Restricted Subsidiaries following the Calculation Date;

(4) 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 determined a discontinued operation that would have required adjustment pursuant to this definition, then the Fixed Charge Coverage 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;

(5) any Person that is a Restricted Subsidiary of the Company on the Calculation Date shall be deemed to have been a Restricted Subsidiary at all times during the applicable four- quarter reference period;

(6) any Person that is not a Restricted Subsidiary of the Company on the Calculation Date shall be deemed not to have been a Restricted Subsidiary at any time during the applicable four-quarter reference period; and

(7) if any Indebtedness bears a floating rate of interest, the interest expense on such Indebtedness shall 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).

“Indenture” shall mean the Indenture, dated as of September 29, 2003, by and among Seminis Vegetable Seeds, Inc., the guarantors named therein and Wells Fargo Bank, National Association, as trustee, as in effect on September 29, 2003.

“Junior Stock” shall mean any shares of a series of the Preferred Stock which is by its terms expressly made junior to the shares of the Class C PIK Preferred Stock at the time outstanding as to the payment of dividends, liquidation preference or redemption rights.

“Material Indebtedness” shall mean indebtedness pursuant to the Credit Agreement and any replacement financing thereof and the Indenture and any replacement financing thereof, provided that no replacement financing of the Credit Agreement (or any replacement financing thereof) or the Indenture (or any replacement financing thereof) shall be deemed to be Material Indebtedness if such replacement financing was obtained or financed after the occurrence of and during the pendency of an Acceleration of the Credit Agreement (or any replacement financing thereof) then in effect or the Indenture (or any replacement financing thereof) then in effect.

“Officers’ Certificate” means a certificate signed by an officer of the specified Person and delivered to each holder of shares of Class C PIK Preferred Stock.

“Parity Stock” shall mean any shares of a series of the Preferred Stock which is by its terms not expressly made junior or senior to the Class C PIK Preferred Stock at the time outstanding as to payment of dividends, liquidation preference or redemption rights.

“Person” shall mean an individual, corporation, limited liability company, partnership, association, trust, unincorporated organization, other entity or “group” (as defined in the Exchange Act).

“Qualified IPO” shall mean one or more underwritten public offerings of common equity securities of the Corporation pursuant to an effective registration statement filed under the Securities Act of 1933, as amended (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 the Corporation and which results in the listing of the common equity securities of the Corporation on a national securities exchange or authorization for quotation on the Nasdaq National Market System.

IN WITNESS WHEREOF, Seminis, Inc. has caused this Certificate of Designation to be executed by its duly authorized officer on September 29, 2003.

EX-3.6 9 v94566aexv3w6.htm EXHIBIT 3.6 Seminis Vegetable Seeds, Inc. Exhibit 3.6

The purpose of the corporation is to engage in any lawful act or activity for which a corporation may be organized under the General Corporation Law of the State of California, other than the banking business, the trust company business or the practice of a profession permitted to be incorporated by the California Corporations Code.

Name and address in the State of California of this corporation’s initial agent for service of process is:

This corporation is authorized to issue only one class of shares of stock, and the total number of shares of stock which this corporation is authorized to issue is Ten Thousand (10,000).

EX-3.7 10 v94566aexv3w7.htm EXHIBIT 3.7 Seminis Vegetable Seeds, Inc. Exhibit 3.7

Subject to the provisions of the General Corporation Law of the California Corporations Code, effective January 1, 1977 (to which the various Section numbers quoted herein relate), and subject to any limitation in the Articles of Incorporation and the Bylaws relating to action required to be approved by the shareholders (Sec. 153) or by the outstanding shares (Sec. 152), the business and affairs of this corporation shall be managed by and all corporate powers shall be exercised by or under direction of the Board of Directors.

Each Director shall exercise such powers and otherwise perform such duties in good faith, in the manner such Director believes to be in the best interest of the corporation, and with such care, including reasonable inquiry, using ordinary prudence, as a person in a like position would use under similar circumstances (Sec. 309).

This number may be changed by amendment to the Articles of Incorporation or by an amendment to this Section 2, Article I, of these Bylaws, adopted by the vote or written assent of the shareholders entitled to exercise majority voting power as provided in Sec. 212.

The Directors shall be elected by ballot at the annual meeting of the shareholders, to serve for one year or until their successors are elected and have qualified. Their term of office shall begin immediately after election.

Vacancies in the Board of Directors may be filled by a majority of the remaining Directors, though less than a quorum, or by a sole remaining Director, and each Director so elected shall hold office until his successor is elected at an annual meeting of shareholders or at a special meeting called for that purpose.

The shareholders may at any time elect a Director to fill any vacancy not filled by the Directors and may elect the additional Directors at the meeting at which an amendment of the Bylaws is voted authorizing an increase in the number of Directors.

The vacancy or vacancies shall be deemed to exist in case of the death, resignation, or removal of any Director or if the shareholders shall increase the authorized number of Directors, but shall fail at the meeting at which such increase is authorized, or at a continuance thereof, to elect the additional Director so provided for, or in case the shareholders fail at any time to elect the full number of authorized Directors.

If the Board of Directors accepts the resignation of a Director tendered to take effect at a future time, the Board or the shareholders shall have power to elect a successor to take office when the resignation shall become effective.

No reduction of the number of Directors shall have the effect of removing any Director prior to the expiration of his term of office.

The entire Board of Directors or any individual Director may be removed from office as provided by Secs. 302, 303, and 304 of the Corporations Code of the state of California. In the event less than all of the Directors are removed, the remaining Board members may elect a successor Director or Directors to fill such vacancy or vacancies for the remaining unexpired term of the Director or Directors so removed.

Meetings of the Board of Directors may be called by the President, or any Vice President, or the Secretary, or any two (2) Directors, and shall be held at the principal executive office of the corporation in the State of California, unless some other place is designated in the notice of the meeting. Members of the Board may participate in a meeting through use of a conference telephone or similar communications equipment so long as all members participating in such a meeting can hear one another. Accurate minutes of any meeting of the Board or any committee thereof shall be maintained as required by Sec. 213 of the Code by the Secretary or other officer designated for that purpose.

The organization meetings of the Board of Directors shall be held immediately following the adjournment of the annual meetings of the shareholders. One order of business at these organization meetings shall be the election of officers as provided for in Article II.

Regular meetings of the Board of Directors shall be held at the corporate offices, or such other place as may be designated by the Board of Directors, as follows:

If said day shall fall upon a holiday, such meetings shall be held on the next succeeding business day thereafter. No notice need be given of such regular meetings.

Special meetings of the Board may be called at any time by the President or, if he is absent or unable or refuses to act, by any Vice President or the Secretary or by any two (2) Directors.

At least 48 hours’ notice of the time and place of special meetings shall be delivered personally to the Directors or personally communicated to them by a corporate officer by telephone or telegraph. If the notice is sent to a Director by letter, it shall be addressed to him at his address as it is shown upon the records of the corporation (or if it is not so shown on such records or is not readily ascertainable, at the place in which the meetings of the Directors are regularly held). In case such notice is mailed, it shall be deposited in the United States mail, postage prepaid, in the place in which the principal executive office of the corporation is located, at least four (4) days prior to the time of the holding of the meeting. Such mailing, telegraphing, telephoning, or delivery as above provided shall be due, legal, and personal notice to such Director.

When all of the Directors are present at any Directors’ meeting, however called or noticed, and either:

	(1)		sign a written consent thereto on the records of such meeting; or,

	(2)		if a majority of the Directors is present and if those not present sign a waiver of notice of such meeting or a consent to holding the meeting or an approval of the minutes thereof,

			whether prior to or after the holding of such meeting, which said waiver, consent, or approval shall be filed with the Secretary of the corporation; or

	(3)		if a Director attends a meeting without notice but without protesting the lack of notice to him prior to or at the commencement of the meeting;

then the transactions thereof are as valid as any at a meeting regularly called and noticed.

Any action required or permitted to be taken by the Board of Directors may be taken without a meeting and with the same force and effect as if taken by a unanimous vote of Directors, if authorized by a writing signed individually or collectively by all members of the Board. Such consent shall be filed with the regular minutes of the Board.

A majority of the number of Directors as fixed by the Articles of Incorporation or Bylaws shall be necessary to constitute a quorum for the transaction of business, and the action of a majority of the Directors present at any meeting at which there is a quorum, when duly assembled, is valid as a corporate act; provided that a minority of the Directors, in the absence of a quorum, may adjourn from time to time, but may not transact any business. A meeting at which a quorum is initially present may continue to transact business, notwithstanding the withdrawal of Directors, if any action taken is approved by a majority of the required quorum for such meeting.

Notice of the time and place of holding a continued meeting need not be given to absent Directors if the time and place be fixed at a meeting continued and held within 24 hours, but if continued more than 24 hours, notice shall be given to all Directors not present at the time of the continuance.

Directors, as such, shall not receive any stated salary for their services, but by resolution of the Board a fixed sum and expense of attendance, if any, may be allowed for attendance at each regular and special meeting of the Board; provided that nothing herein contained shall be construed to preclude any Director from serving the company in any other capacity and receiving compensation therefor.

Any Director may resign effective upon giving written notice to the President, the Secretary, or the Board of Directors of the corporation, unless the notice specifies a later time for the effectiveness of such resignation. If the resignation is effective at a future time, a successor may be elected to take office when the resignation becomes effective.

The officers of the corporation shall be a President, a Vice President, a Secretary, and a Chief Financial Officer. The corporation may also have, at the discretion of the Board of Directors, additional Vice Presidents, one or more Assistant Secretaries, and such other officers as may be appointed in accordance with the provisions of Section 3 of this Article. One person may hold two or more offices.

The officers of the corporation, except such officers as may be appointed in accordance with the provisions of Section 2 or Section 5 of this Article, shall be chosen annually by the Board of Directors, and each shall hold his office until he shall resign or shall be removed or otherwise disqualified to serve, or his successor shall be elected and qualified.

The Board of Directors may appoint such other officers as the business of this corporation may require, each of whom shall hold office for such period, have such authority and perform such duties as are provided in the Bylaws, or as the Board of Directors may from time to time determine.

Any officer may be removed, either with or without cause, by a majority of the Directors in office at that time, at any regular or special meeting of the Board. In the case of an officer not chosen by the Board of Directors, any officer upon whom a power of removal is conferred by the Board of Directors may remove such officer.

A vacancy in any office because of death, resignation, removal, disqualification, or any other cause shall be filled in the manner prescribed by the Bylaws for regular appointments to such office.

The President shall be the Chief Executive Officer of the corporation and shall, subject to the control of the Board of Directors, have general supervision, direction, and control of the business and officers of the corporation. He shall preside at all meetings of the shareholders and at all meetings of the Board of Directors. He shall be ex office a member of all the standing committees, including the Executive Committee, if any, and shall have the general powers and duties of management usually vested in the office of president of a corporation and shall have such other powers and duties as may be prescribed by the Board of Directors or the Bylaws. The President’s authority is subject to the terms of Article V, Section 5, of these Bylaws.

In the absence or disability of the President, the Vice President (s), in order of their rank as fixed by the Board of Directors, or, if not ranked, the Vice President designated by the Board of Directors, shall perform all the duties of the President, and when so acting shall have all the powers of and be subject to all restrictions upon the President. The Vice President(s) shall have such other powers and perform such other duties as from time to time may be prescribed for them respectively by the Board of Directors or the Bylaws.

The Secretary shall keep or cause to be kept a book of minutes at the principal office, or such other place as the Board of Directors may order, of all meetings of Directors and shareholders, with the time and place of holding; whether regular or special, and if special, how authorized; the notice thereof given; the names of those present at Directors’ meetings; the number of shares present or represented at shareholders’ meetings; and the proceedings thereof.

The Secretary shall keep or cause to be kept, at the principal office or at the office of the corporation’s transfer agent, a share register or duplicate share register showing the names of the shareholders and their addresses; the number and classes of shares held by each; the number and date of certificates issued for the same; and the number and date of cancellation of every certificate surrendered for cancellation.

The Secretary shall give or cause to be given notice of all the meetings of the shareholders and of the Board of Directors required to be given by the Bylaws or Bylaw, and he shall keep the seal of the corporation in safe custody and shall have such other powers and perform such other duties as may be prescribed by the Board of Directors or by the Bylaws.

The Chief Financial Officer shall keep and maintain, or cause to be kept and maintained, in accordance with generally accepted accounting principles, adequate and correct accounts of the properties and business transactions of the corporation, including accounts of its assets, liabilities, receipts, disbursements, gains, losses, capital, earnings (or surplus), and shares. The books of account shall at all reasonable times be open to inspection by any Director.

This officer shall deposit all monies and other valuables in the name and to the credit of the corporation with such depositaries as may be designated by the Board of Directors. He shall disburse the funds of the corporation as may be ordered by the Board of Directors; shall render to the President and Directors, whenever they request it, an account of all of his transactions and of the financial condition of the corporation; and shall have such other powers and perform such other duties as may be prescribed by the Board of Directors or the Bylaws.

Meetings of the shareholders shall be held at the principal executive office of the corporation, in the State of California, unless some other appropriate and convenient location be designated for that purpose from time to time by the Board of Directors.

The annual meetings of the shareholders shall be held, each year, at the time and on the day following:

If this day shall be a legal holiday, then the meeting shall be held on the next succeeding business day, at the same hour. At the annual meeting, the shareholders shall elect a Board of Directors, consider reports of the affairs of the corporation, and transact such other business as may be properly brought before the meeting.

Special meetings of the shareholders may be called at any time by the Board of Directors, the President, the Vice President, the Secretary, or by one or more shareholders holding not less than one tenth (1/10) of the voting power of the corporation. Except as next provided, notice shall be given as for the annual meeting.

Upon receipt of a written request addressed to the President, Vice President, or Secretary, mailed or delivered personally to such officer by any person (other than a Board member) entitled to call a special meeting of shareholders, such officer shall cause notice to be given to the shareholders entitled to vote, not less than 35 nor more than 60 days after the receipt of such request, that a meeting will be held at a time requested by the person or persons calling the meeting. If such notice is not given within 20 days after receipt of such request, the person calling the meeting may give notice thereof in the manner provided by these Bylaws or apply to the Superior Court as provided in Sec. 305(c).

Notice of meetings, annual or special, shall be given in writing, not less than 10 nor more than 60 days before the date of the meeting, to shareholders entitled to vote thereat, by the Secretary or the Assistant Secretary or, if there be no such officer, or in the case of his neglect or refusal, by any Director or shareholder.

Such notices or any reports shall be given personally or by mail or other means of written communication as provided in Sec. 601 of the Code and shall be sent to the shareholder’s address appearing on the books of the corporation, or supplied by him to the corporation for the purpose of notice, and in the absence thereof, as provided in Sec. 601 of the Code.

Notice of any meeting of shareholders shall specify the place, the day, and the hour of meeting, and (1) in the case of a special meeting, the general nature of the business to be transacted exclusively; or (2) in the case of an annual meeting, those matters which the Board at date of mailing intends to present for action by the shareholders. At any meetings where Directors are to be elected, notice shall include the names of the nominees, if any, intended at date of Notice to be presented by management for election.

If a shareholder supplies no address, notice shall be deemed to have been given to him if mailed to the place where the principal executive office of the company, in California, is situated, or published at least once in some newspaper of general circulation in the county of said principal office.

Notice shall be deemed given at the time it is delivered personally or deposited in the mail or sent by other means of written communication. The officer given such notice or report shall prepare and file an affidavit or declaration thereof.

When a meeting is continued for 45 days or more, notice of the continued meeting shall be given as in case of an original meeting. Save, as aforesaid, it shall not be necessary to give any notice of continuance or of the business to be transacted at a continued meeting other than by announcement at the meeting at which such continuance is taken.

The transactions of any meeting of shareholders, however called and noticed, shall be valid as though transacted at a meeting duly held after regular call and notice, if a quorum be present in person or by proxy and if, either before or after the meeting, each of the shareholders entitled to vote, not present in person or by proxy, signs a written waiver of notice or a consent to the holding of such meeting or an approval of the minutes thereof. All such waivers, consents, or approvals shall be filed with the corporate records or made a part of the minutes of the meeting. Attendance shall constitute a waiver of notice unless objection shall be made as provided in Sec. 601(e).

Any action which may be taken at a meeting of the shareholders may be taken without a meeting or notice of meeting if authorized by a writing signed by all of the shareholders entitled to vote at a meeting for such purpose and filed with the Secretary of the corporation, provided further that while ordinarily Directors may only be elected by unanimous written consent under Sec. 603 (d), if the Directors fail to fill a vacancy, then a Director to fill that vacancy may be elected by the written consent of persons holding a majority of shares entitled to vote for the election of Directors.

Unless otherwise provided in the General Corporation Law or the Articles, any action which may be taken at any annual or special meeting of shareholders may be taken without a meeting in the following circumstances:

	(1)		All shareholders entitled to vote upon the action consent in writing to such action; or

	(2)		Consent of all shareholders entitled to vote thereon has been previously solicited in writing and a required majority of share holders entitled to vote thereon has consented in writing to such action; or

	(3)		There has not been a previous solicitation in writing of all shareholders entitled to vote thereon, but a required majority of share holders entitled to vote thereon consents in writing to such action, and either one of the following circumstances exists:

	(i)		The action authorized is pursuant to either Sec. 310 (material financial interest of director in a transaction), or Sec. 317 (indemnification of agent), or Sec. 1201 (reorganization), or Sec. 2007 (winding up and dissolving), and all non-consenting shareholders entitled to vote thereon are given notice at least 10 days prior to consummation of the action authorized; and

	(ii)		The action is other than one described in (3) (i) of this section, and prompt notice of the taking of such action is given to all non-consenting shareholders entitled to vote thereon.

Directors may be elected without a meeting only pursuant to subsection (1) of this section.

Any shareholder giving a written consent, or the shareholder’s proxyholders, or a transferee of the shares of a personal representative of the shareholder or their respective proxyholders, may revoke the consent by a writing received by the corporation prior to the time that written consents of the number of shares required to authorize the proposed action have been filed with the Secretary of the corporation, but may not do so thereafter. Such revocation is effective upon its receipt by the Secretary of the corporation.

The holders of a majority entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the shareholders for the transaction of business except as otherwise provided by law, by the Articles of Incorporation, or by these Bylaws. If, however, such majority

shall not be present or represented at any meeting of the shareholders, the shareholders entitled to vote thereat, present in person or by proxy, shall have the power to continue the meeting from time to time until the requisite amount of voting shares shall be present. At such continued meeting at which the requisite amount of voting shares shall be represented, any business may be transacted which might have been transacted at a meeting as originally notified.

If a quorum be initially present, the shareholders may continue to transact business until adjournment, notwithstanding the withdrawal of enough shareholders to leave less than a quorum, if any action taken is approved by a majority of the shares required to initially constitute a quorum.

Only persons in whose names shares entitled to vote stand on the stock records of the corporation on the day before the day of any meeting of shareholders shall be entitled to vote at such meeting, unless the Board of Directors shall fix some other day for the determination of shareholders of record.

Every shareholder entitled to vote at any election of Directors may cumulate his votes and give one candidate a number of votes equal to the number of Directors to be elected multiplied by the number of votes to which the shareholder’s shares are entitled, or distribute them on the same principle among as many candidates as the shareholder thinks fit, provided the candidate’s name has been placed in nomination prior to the voting and any shareholder has given notice at the meeting prior to the voting of his intent to cumulate his votes.

The candidates receiving the highest number of votes, up to the number of Directors to be elected, are elected.

Every shareholder entitled to vote or to execute consents may do so, either in person or by written proxy, executed in accordance with the provisions of Secs. 604 and 705 of the Code and filed with the Secretary of the corporation.

The President or, in the absence of the President, any Vice President shall call the meeting of the shareholders to order and shall act as chairman of the meeting. In the absence of the President and all of the Vice Presidents, shareholders shall appoint a chairman for such meeting. The Secretary of the corporation shall act as Secretary of all meetings of the shareholders, but in the absence of the Secretary at any meeting of the shareholders, the presiding officer may appoint any person to act as Secretary of the meeting.

In advance of any meeting of shareholders, the Board of Directors may, if it so elects, appoint inspectors of election to act at such meeting or any continuances thereof. If inspectors of election be not so appointed, the chairman of any such meeting may and on the request of any shareholder or his proxy shall make such appointment at the meeting, in which case the number of inspectors shall be either one or three as determined by a majority of the shareholders represented at the meeting. The purpose of such inspectors shall be to verify proxies, ballots, votes, and all matters pertaining to elections of officers or approval of matters submitted to the shareholders. If the Board chooses to use such inspectors, it shall, by resolution, set forth the duties and responsibilities of such inspectors.

Certificates for shares shall be of such form and device as the Board of Directors may designate and shall state the name of the record holder of the shares represented thereby; its number; date of issuance; the number of shares for which it is issued; a statement of the rights, privileges, preferences, and restrictions, if any; a statement as to the redemption or conversion privileges, if any; a statement of liens or restrictions upon transfer or voting, if any; if the shares be assessable, or, if assessments are collectible by personal action, a plain statement of such facts.

Every certificate for shares must be signed by the President or a Vice President and the Secretary or must be authenticated by facsimiles of the signatures of the President and Secretary or a facsimile of the signature of the President and the written signature of the Secretary. Before it becomes effective, every certificate for shares authenticated by a facsimile of a signature must be countersigned by a transfer agent or transfer clerk and must be registered by an incorporated bank or trust company, either domestic or foreign, as registrar of transfers.

Upon surrender to the Secretary or transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignment, or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate, and record the transaction upon its books.

Any person claiming that a certificate of stock is lost or destroyed shall make an affidavit or affirmation of that fact and shall, if the Directors so require, give the corporation a bond of indemnity, in form and with one or more sureties satisfactory to the Board, in at least double the value of the stock represented by said certificates, whereupon a new certificate may be issued in the same tenor and for the same number of shares as the one alleged to be lost or destroyed.

The Board of Directors may appoint one or more transfer agents or transfer clerks, and one or more registrars (an incorporated bank or trust company, either domestic or foreign), who shall be appointed at such times and places as the requirements of the corporation may necessitate and the Board of Directors may designate.

In order that the corporation may determine the shareholders entitled to notice of any meeting or to vote, or entitled to receive payment of any dividend, or when any change or conversion or exchange of shares shall go into effect, or other distribution or allotment of any rights or entitlement to exercise any rights in respect of any other lawful action, the Board may fix, in advance, a record date, which shall not be more than 60 days nor less than 10 days prior to the date of such meeting nor more than 60 days prior to any other action.

(1) The record date for determining shareholders entitled to notice of or to vote at a meeting of shareholders shall be at the close of business on the business day next preceding the day on which notice is given or, if notice is waived, at the close of business on the business day next preceding the day on which the meeting is held.

(2) The record date for determining shareholders entitled to give consent to corporate action in writing without a meeting, when no prior action by the Board is necessary, shall be the day on which the first written consent is given.

(3) The record date for determining shareholders for any other purpose shall be at the close of business on the day on which the Board adopts the resolution relating thereto, or the 60th day prior to the date of such other action, whichever is later.

In the event any shares of this corporation are issued pursuant to a permit or exemption therefrom requiring the imposition of a legend condition, the person or persons issuing or transferring said shares shall make sure said legend appears on the certificate and on the stub relating thereto in the stock record book, and shall not be required to transfer any shares free of such legend unless an amendment to such permit, or a new permit, be first issued so authorizing such a deletion.

The corporation shall maintain, in accordance with generally accepted accounting principles, adequate and correct accounts, books, and records of its business and properties. All of such books, records, and accounts shall be kept at its principal executive office in the State of California as fixed by the Board of Directors from time to time.

All books and records provided for in Sec. 1500 shall be open to inspection by the Directors and shareholders from time to time and in the manner provided in Sec. 1600 – 1602.

The original or a copy of these Bylaws, as amended or otherwise altered to date, certified by the Secretary, shall be kept at the corporation’s principal executive office and shall be open to inspection by the shareholders of the company at all reasonable times during office hours as provided in Sec. 213 of the Corporations Code.

All checks, drafts, or other orders for payment of money, notes, or other evidences of indebtedness, issued in the name of or payable to the corporation, shall be signed or endorsed by such person or persons and in such manner as shall be determined from time to time by resolution of the Board of Directors.

The Board of Directors, except as otherwise provided in the Bylaws, may authorize any officer or officers, agent or agents, to enter into any contract or execute any instrument in the name of and on behalf of the corporation. Such authority may be general or confined to specific instances. Unless so authorized by the Board of Directors, no officer, agent, or employee shall have any power or authority to bind the corporation by any contract or agreement, or to pledge its credit, or to render it liable for any purpose or to any amount, except as provided in Sec. 313 of the Corporations Code.

New Bylaws may be adopted or these Bylaws may be repealed or amended at the annual meeting, or at any other meeting of the shareholders called for that purpose, by a vote of shareholders entitled to exercise a majority of the voting power of the corporation or by written assent of such shareholders.

Subject to the right of the shareholders to adopt, amend, or repeal Bylaws, as provided in Section 1 of this Article VI and the limitations of Sec. 204 (a) (5) and Sec. 212, the Board of Directors may adopt, amend, or repeal any of these Bylaws other than a Bylaw or amendment thereof changing the authorized number of Directors.

“Sec.” references herein refer to the equivalent sections of the General Corporation Law of the California Corporations Code effective January 1, 1977, as amended.

Shares of other corporations standing in the name of this corporation may be voted or represented and all incidents thereto may be exercised on behalf of the corporation by the President or any Vice President and the Secretary.

The corporation may indemnify any Director, officer, agent, or employee as to those liabilities and on those terms and conditions as are specified in Sec. 317. In any event, the corporation shall have the right to purchase and maintain insurance on behalf of any such persons whether or not the corporation would have the power to indemnify such person against the liability insured against.

I am the duly elected, qualified, and acting Secretary of the above-named corporation. The foregoing Bylaws were adopted as the Bylaws of said corporation on the date set forth below by the person(s) appointed in the Articles of Incorporation to act as the First Director(s) of said corporation.

IN WITNESS WHEREOF, I have hereunto set my hand affixed the corporate seal this 14th day of November, 1994.

17 EX-3.8 11 v94566aexv3w8.htm EXHIBIT 3.8 Seminis Vegetable Seeds, Inc. Exhibit 3.8

Pursuant to Section 1006 of the Iowa Business Corporation Act, the undersigned corporation adopts the following amendment regarding the name of the corporation.

	3.		The above-reference amendment was duly adopted by the board of directors on June 11, 2000.

	4.		The above-referenced amendment was unanimously adopted by the shareholders on June 11, 2000. Six Hundred Sixty Eight and Eight Tonth (668.8) shares voted for the amendment and zero (0) shares voted against the amendment. The number of shares cast for the amendment was sufficient for approval by the shareholders.

Pursuant to section 1006 of the Iowa Business Corporation Act, the undersigned corporation, presently known as

adopts the following amendment to the corporation’s Articles of Incorporation:

Article I, which states, “The name of the corporation is Mike Brayton Seeds, Inc.,” is deleted, and shall hereafter state as follows:

The foregoing amendment was adopted on September 10, 1991, in accordance with the Iowa Business Corporation Act.

	1.		The shareholder designations are: Class A voting stock and class B non-voting stock.

	2.		The number of shares outstanding are: Class A, 572 shares; Class B, 36 shares.

	3.		The number of votes entitled to be cast are: Class A, 572 shares; Class B, 0 shares.

	4.		The number of votes represented at the shareholder meeting are: Class A, 572 shares; Class B, 36 shares.

	5.		The number of undisputed votes cast on the amendment were: Class A, 572 votes for the amendment and no votes against.

We, the undersigned persons, acting as incorporators of a corporation organized under the Iowa Business Corporation Act, Chapter 496A, Iowa Code (1962), hereby adopt the following Articles of Incorporation for such corporation.

The corporation shall have unlimited power to engage in, and to do any lawful act concerning, any and all lawful business for which corporations may be organized under this act. The corporate existence of the corporation shall commence June 30, 1964.

The aggregate number of shares which the corporation shall have authority to issue is 1500 shares having a par value of $100.00 each.

The address of the initial registered office of the corporation is 430 N. Franklin Avenue, in the City of Ames, Story County, Iowa, and the name of its initial registered agent at such address is E. L. Brayton.

All conveyances and mortgages of real property made by the corporation shall be executed by the president and countersigned by the secretary with an impression of the corporate seal attached, if the corporation has a seal, and all releases of mortgages, liens, judgments and other claims that are required by law to be made of record may be executed by the president, vice-president or secretary of the corporation.

The number of directors constituting the initial board of directors is two and the names and addresses of the persons who are to serve as directors until the first annual meeting of shareholders or until their successors are elected and shall qualify are:

On this 20th day of June, 1964, before me, Donald L. Smith, personally appeared E. L. Brayton and John H. Brayton, to me known to be the persons named in and who executed the foregoing Articles of Incorporation, and acknowledged that they executed the same as their voluntary act and deed.

EX-3.9 12 v94566aexv3w9.htm EXHIBIT 3.9 Seminis Vegetable Seeds, Inc. Exhibit 3.9

The organization meeting of the Board of Directors of Mike Brayton Seeds, Inc., an Iowa corporation organized under the Iowa Business Corporation Act, was held at the offices of the Company in the City of Ames, Story County, Iowa, on the 30th day of June, 1964, at 2:30 o’clock P. M., all Directors being present; namely, E. L. Brayton and John H. Brayton.

Upon motion duly made, seconded and unanimously carried, E. L. Brayton was chosen Chairman of the meeting and John H. Brayton was chosen Secretary of the meeting.

Thereupon the Secretary of the meeting presented a set of By-Laws prepared by counsel for the Corporation which was read, and upon motion made, seconded and unanimously carried the following resolution was adopted:

RESOLVED that the following By-Laws be and they are hereby adopted as the By-Laws of this Corporation:

1. ANNUAL MEETING. The annual meeting of the shareholders shall be held on the last Monday in June in each year beginning with the year 1965 at the hour of 10:00 o’clock A. M. for the purpose of electing Directors and for the transaction of such other business as may come before the meeting, said meeting to be held at the registered office of this Corporation.

2. SPECIAL MEETINGS. Special meetings of the shareholders for any purpose or purposes may be called by the President or by any officer for any time or place.

3. NOTICE OF SPECIAL MEETING. Notice of meeting written or printed and stating the place, day and hour of any special meeting shall be delivered not less than ten days before the date of the meeting, either personally or by mail, to each shareholder of record entitled to vote at such meeting. The giving of such notice may be waived by the shareholders.

4. INFORMAL ACTION. Any action required to be taken at a meeting of the shareholders or any other action which may be taken at a meeting of the shareholders may be taken without a meeting if a consent, in writing, setting forths the action so taken, shall be signed by all of the shareholders entitled to vote with respect to the subject matter thereof.

5. MEETING OF ALL SHAREHOLDERS. If all of the shareholders shall meet at any time and place and consent to the holding of a meeting at such time and place, such meeting shall be valid without call or notice, and at such meeting any corporate action may be taken.

1. GENERAL POWERS. The business and affairs of the Corporation shall be managed by its Board of Directors.

2. NUMBER OF DIRECTORS. The number of Directors of the Corporation shall be not less than two or more than five. Each Director shall bold office until the next annual meeting of shareholders and until his

successor shall have been elected and qualified. Directors need not be shareholders of the Corporation.

3. REGULAR MEETINGS. A regular meeting of the Board of Directors shall be held without other notice than this By-Law immediately after, and at the same place as, the annual meeting of shareholders.

4. SPECIAL MEETINGS. Special meetings of the Board of Directors may be called by or at the request of the President or any two Directors. The person or persons authorized to call special meetings of the Board of Directors may fix any place for holding such meeting.

5. NOTICE. Notice of any special meeting of the Board of Directors shall be given at least two days prior thereto by written notice delivered personally or mailed to each Director. Any Director may waive notice of any meeting and the attendance of a Director at a meeting shall constitute a waiver of notice thereof.

6. VACANCIES. Any vacancy occurring in the Board of Directors may be filled by the affirmative vote of the majority of the remaining Directors.

7. INFORMAL ACTION. Any action required to be taken at a meeting of the Directors or any other action which may be taken at a meeting of the Directors may be taken without a meeting if a consent, in writing, setting forth the action so taken, shall be signed by all of the Directors entitled to vote in respect to the subject matter thereof.

1. NUMBER OF OFFICERS. The officers of the Corporation shall be a President, one or more Vice-Presidents (the number thereof to be determined by the Board of Directors), a Secretary, and a Treasurer, each of whom shall be elected by the Board of Directors. Any two or more offices may be held by the same person.

2. ELECTION AND TERM OF OFFICE. The officers of the Corporation to be elected by the Board of Directors shall be elected annually at the first meeting of the Board of Directors held after the annual meeting of the shareholders. Each officer shall hold office until his successor shall have been duly elected and shall have qualified.

3. VACANCIES. A vacancy in any office may be filled by the Board of Directors for the unexpired portion of the term.

4. POWERS. The officers shall in general perform all duties incident to their offices and such duties ordinarily associated therewith, plus such other duties as may be prescribed by the Board of Directors from time to time.

The business year shall begin on the first day of July and end on the Thirtieth day of June in each year.

No contract or other act of the Corporation shall be invalid by reason of the fact that any officer or Director of the Corporation may have a

conflicting interest to the interest of the Corporation therein and no officer or Director of this Corporation shall be disqualified by reason of any such conflicting financial interest.

These By-Laws may be altered, amended or repealed and new By-Laws may be adopted by the Board of Directors at any regular or special meeting of the Board of Directors.

As the next order of business the Chairman called for the nomination of officers; the following persons were nominated for the officers of the Corporation to serve for the term provided by the By-Laws: President and Treasurer, E. L. Brayton, and Vice-President and Secretary, John H. Brayton.

There being no further nominations, nominations were closed and Directors proceeded to vote on the nominees. All Directors present having voted and the vote having been counted, the Chairman announced that the aforesaid nominees had been elected to the offices set before their respective names by the affirmative vote of all Directors of the Corporation to serve for the terms provided in the By-Laws.

Upon motion duly made, seconded and unanimously carried, the following resolution was adopted;

WHEREAS, this corporation has a need for operating capital in the sum of $20,000. 00; and

WHEREAS, the following persons are concurrently herewith making cash contributions to the capital of this corporation in the sums set opposite their names:

NOW; THEREFORE. BE IT RESOLVED that the officers of this corporation be and they are hereby authorized and directed to issue shares of the capital stock of this corporation, having a par value of $100. 00 per share, to the following persons in the number of shares set opposite their names:

Upon motion duly made, seconded and unanimously carried, the following resolution was adopted;

WHEREAS, it is the purpose of Mike Brayton Seeds, Inc. to take over and continue the business heretofore conducted by the limited partnership of Mike Brayton Seeds; and

WHEREAS, such purpose can be most effectively accomplished by this corporation if it purchases the accounts receivable, the inventory, and the depreciable assets of said limited partnership and assume liability for accounts payable by said limited partnership; and

WHEREAS, said limited partnership as of the close of business on June 30, 1964, owned accounts receivable in the sum of $ 6, 394. 98; owned inventory having a cost value of $926. 00; owned depreciable

assets having a depreciated or book value of $3, 989.26; and was liable for accounts payable in the sum of $6,188.82.

NOW, THEREFORE, BE IT RESOLVED that the officers of this corporation be and they are hereby authorized and directed to purchase for this corporation from the limited partnership of Mike Brayton Seeds (1) accounts receivable, (2) inventory, and (3) depreciable assets having an aggregate value of $11, 310.24, and by way of consideration therefor to assume on behalf of this corporation liability for all accounts payable of said limited partnership in the sum of $6,188. 82 and to pay cash to said limited partnership in the sum of $5,121. 42 all on June 30, 1964.

Upon motion duly made, seconded and unanimously carried the following resolution was adopted:

BE IT RESOLVED that Ames Trust and Savings Bank, Ames, Iowa, be and it is hereby designated a depositary of this corporation and that funds so deposited may be withdrawn upon a check, draft, note or order of the corporation.

BE IT FURTHER RESOLVED that all checks, drafts, notes or orders drawn against said account be signed and countersigned by any one of the following: (1) E. L. Brayton, President and Treasurer, or (2) John H. Brayton, Vice-President and Secretary, whose signatures shall be duly certified to said bank, and that no checks, drafts, notes or orders drawn against said Bank shall be valid unless so signed.

BE IT FURTHER RESOLVED that said Bank is hereby authorized and directed to honor and pay any checks, drafts, notes or orders so drawn whether such checks, drafts, notes or orders be payable to the order of any such person signing and/ or countersigning said checks, drafts, notes or orders, or any of such persons in their individual capacities or not, and whether such checks, drafts, notes or orders are deposited to the individual credit of the person so signing and/ or countersigning said checks, drafts, notes or orders, or to the individual credit of any of the other officers or not. This resolution shall continue in force and said Bank may consider the facts concerning the holders of said offices, respectively, and their signatures to be and continue as set forth in the certificate of the Secretary accompanying a copy of this resolution when delivered to said Bank or in any similar subsequent certificate, until written notice to the contrary is duly served on said Bank.

There being no further business to come before the meeting, on motion duly made, seconded and unanimously carried, the meeting adjourned.

Pursuant to the provisions of the Iowa Business Corporation Act and particularly Section 496A.58, Code of Iowa (1985), the undersigned corporation hereby files the following Articles of Amendment to its Articles of Incorporation:

I. ISSUANCE OF SHARES. Article III of the Articles of Incorporation which states “The aggregate number of shares which the corporation shall have authority to issue is 1500 shares having a par value of $100.00 each.”, is hereby deleted. Article III of the Articles of Incorporation shall hereafter state as follows:

		There shall be two authorized classes of capital stock in the corporation, to-wit; Class A common and Class B common.

		(a) The aggregate number of shares of Class A common stock authorized to be issued is 1500 shares having a par value of $100.00 each. The holders of Class A common stock shall be entitled to all the usual rights, preferences and privileges attendant to common stock ownership as granted by these Articles of Incorporation and the State of Iowa, including voting rights.

		(b) The aggregate number of shares of Class B common stock authorized to be issued is 500 shares having a par value of $100.00 each. The holders of Class B common stock shall not be entitled to any voting rights. Class B common stockholders shall, nonetheless, be entitled to all other rights, preferences and privileges attendant to common stock ownership under the laws of the State of Iowa on an equal basis with holders of Class A common stock.

II. VOTE OF SHARES. There are 608 shares of stock outstanding of the corporation, the owners of which are entitled to vote on the articles of amendment. The owners of all shares of stock outstanding voted in favor of the foregoing articles of amendment.

III. EFFECTIVE DATE. The effective date of the articles of amendment shall be the date on which the secretary of state issues the certificate of amendment.

I, David H. Smith, being first duly sworn on oath, depose and state that I am the President of Mike Brayton Seeds, Inc., and that I executed the foregoing articles of amendment to the articles of incorporation as the president of the corporation and the statements contained therein are true.

Subscribed and sworn to before the undersigned by the said David H. Smith this 29 day of June, 1987.

[STAMP] EX-3.10 13 v94566aexv3w10.htm EXHIBIT 3.10 Seminis Vegetable Seeds, Inc. Exhibit 3.10

The undersigned, as Secretary of State of Texas, hereby certifies that Articles of Incorporation for the above corporation duly signed pursuant to the provisions of the Texas Business Corporation Act, have been received in this Office and are found to conform to law.

ACCORDINGLY the undersigned, as such Secretary of State, and by virtue of the authority vested in the Secretary by law, hereby issues this Certificate of Incorporation and attaches hereto a copy of the Articles of Incorporation.

Issuance of this Certificate of Incorporation does not authorize the use of a corporate name in this State in violation of the rights of another under the federal Trademark Act of 1946, the Texas trademark law, the Assumed Business or Professional Name Act, or the common law.

I, the undersigned natural person, of the age of eighteen (18) years or more, acting as incorporator under the Texas Business Corporation Act, do hereby adopt the following Articles of Incorporation for such Corporation.

The purposes for which the Corporation is organized is the transaction of any or all lawful business for which corporations may be incorporated under the Texas Business Corporation Act.

The Corporation is authorized to issue one (1) class of shares of stock, being its common stock. the total number of shares that the Corporation is authorized to issue is 100,000 shares. Said shares shall have no par value. No distinction shall exist between the shares of the Corporation or between the holders thereof.

The Corporation will not commence business until it has received for the issuance of its shares consideration of the value of ONE THOUSAND ($1,000.00) DOLLARS, consisting of money, labor done, or property actually received.

The street address of the initial Registered Office of the Corporation is 416 S. Missouri Ave., Weslaco, Texas 78596 and the name of the Initial Registered Agent at such address is Walter H. Baxter, III.

The number of directors constituting the initial Board of Directors of the Corporation is five (5) and the name and addresses of the persons who are to serve as the initial directors are:

BEFORE ME, the undersigned, a Notary Public, personally appeared WALTER H. BAXTER, III, who being by me first duly sworn, severally declared that he is the person who signed the foregoing document as incorporator, and that the statements contained therein are true on this 2nd day of July, 1990.

IN WITNESS WHEREOF, I have hereunto set my hand and seal the day and year above written.

EX-3.11 14 v94566aexv3w11.htm EXHIBIT 3.11 Seminis Vegetable Seeds, Inc. Exhibit 3.11

The registered office of the corporation is located at 416 S. Missouri Ave., Weslaco, Hidalgo County, Texas, and the name of the registered agent of the corporation at such address is WALTER H. BAXTER, III.

The principal office of the corporation shall be at 416 S. Missouri Ave, Weslaco, Hidalgo County, Texas 78596, provided that the Board of Directors shall have power to change the location of the principal office in its discretion.

All meetings of the shareholders shall be held at the principal office of the corporation or any other place within or without this State, as may be designated for that purpose from time to time by the Board of Directors.

The annual meeting of the shareholders shall be held each year at the corporation’s principal office at 10:00 A.M. on the 15th day of January of each year hereafter. If this day falls on a legal holiday, the annual meeting shall be held at the same time on the next following business day thereafter.

Notice of the meeting, stating the place, day and hour of the meeting, and, in case of a special meeting, the purpose or purposes for which the meeting is called, shall be given in writing to each shareholder entitled to vote at the meeting at least ten (10) but not more than fifty (50) days before the date of the meeting either personally or — by mail or other means of written communication, addressed to the shareholder at his address appearing on the books of the corporation or given by him to the corporation for the purpose of notice. Notice of adjourned meetings is not necessary unless the meeting is adjourned for thirty (30) days or more, in which case notice of the adjourned meeting shall be given as in the case of any special meeting.

Special meetings of the shareholders for any purpose or purposes whatsoever may be called at any time by the President, or by the Board of Directors, or by any two (2) or more Directors, or by one or more of the shareholders, holding not less than one-third (1/3) of all the shares entitled to vote at the meeting.

A majority of the voting shares constitutes a quorum for the transaction of business. Business may be continued after withdrawal of enough shareholders to leave less than a quorum.

Only the persons in whose names shares appear on the share records of the corporation on the date on which notice of the

meeting is mailed shall be entitled to vote at such meeting, unless some other day is fixed by the Board of Directors for the determination of shareholders of record. Each shareholder is entitled to a number of votes equal to the number of Directors to be elected, multiplied by the number shares which he is entitled to vote. Voting for the election of Directors shall be by voice unless any shareholder demands a ballot vote before the voting begins.

Every person entitled to vote or execute consents may do so either in person or by written proxy executed in writing by the shareholder or his duly authorized attorney in fact.

No defect in the calling or noticing of a shareholder’s meeting will affect the validity of any action at the meeting if a quorum was present, and if each shareholder not present in person or by proxy signs a written waiver of notice, consent to the holding of a meeting, and such approval of the minutes, either before or after the meeting, and such waivers, consents or approvals are filed with the corporate records or made a part of the minutes of the meeting.

Action may be taken by shareholders without a meeting if each shareholder entitled to vote signs a written consent to the action and such consents are filed with the Secretary of the corporation.

The Directors shall act only as a board and an individual Director shall have no power as such. All corporate powers of the corporation shall be exercised by, or under the authority of, and the business and affairs of the corporation shall be controlled by the Board of Directors, subject, however, to such limitations as are imposed by law, the Articles of Incorporation or these Bylaws, as to actions to be authorized or approved by the shareholders. The Board of Directors may, by contract or otherwise, give general or limited or special power and authority to the officers and employees of the corporation to transact the general business, or any special business, of the corporation, and may give powers of attorney to agents of the corporation to transact any special business requiring such authorization.

The authorized number of Directors of this corporation shall be five (5). The Directors need not be shareholders of this corporation or residents of Texas. The number of Directors may be increased or decreased from time to time by amendment to these Bylaws but no decrease shall have the effect of shortening the term of any incumbent Directors. Any directorship to be filled by reason of an increase in the number of Directors shall be filled by election at an annual meeting or at a special meeting of shareholders called for that purpose.

The Directors shall be elected annually by the shareholders entitled to vote, and shall hold office until their respective successors are elected, or until their death, resignation or removal.

Vacancies in the Board of Directors may be filled by a majority of the remaining Directors, though less than a quorum, or by a sole remaining Director. The shareholders may elect a Director at any time to fill any vacancy not filled by the Directors.

The entire Board of Directors or any individual Director may be removed from office with or without cause by vote of the holders of a majority of the shares entitled to vote for directors, at any regular or special meeting of such shareholders.

All meetings of the Board of Directors shall be held at the principal office of the corporation or at such place within or without the State as may be designated from time to time by resolution of the Board or by written consent of all of the members of the Board.

Regular meetings of the Board of Directors shall be held, without call or notice, immediately following each annual meeting

of the shareholders of this corporation, and at such other times as the Directors may determine.

Special meetings of the Board of Directors for any purpose shall be called at any time by the President or, if he is absent or unable or refuses to act, by any Vice President or any two Directors. Written notices of the special meetings, stating the time, and in general terms the purpose or purposes thereof, shall be mailed or telegraphed or personally delivered to each Director not later than the day before the day appointed for the meeting.

A majority of the authorized number of Directors shall be necessary to constitute a quorum for the transaction of business, except to adjourn as hereinafter provided. Every act or decision done or made by a majority of the Directors present shall be regarded as the act of the Board of Directors, unless a greater number be required by law or by the Articles of Incorporation.

Any action required or permitted to be taken by the Board of Directors, may be taken without a meeting, and with the same force and effect as a unanimous vote of Directors, if all members of the Board shall individually or collectively consent in writing to such action.

A quorum of the Directors may adjourn any Directors’ meeting to meet again at a stated day and hour. Notice of the time and

place of holding an adjourned meeting need not be given to absent Directors if the time and place is fixed at the meeting adjourned. In the absence of a quorum, a majority of the Directors present at any Directors’ meeting, either regular or special, may adjourn from time to time until the time fixed for the next regular meeting of the Board.

The President, or, in his absence, any Director selected by the Directors present, shall preside at meetings of the Board of Directors. The Secretary of the corporation, or in his absence, any person appointed by the presiding officer, shall act as Secretary of the Board of Directors.

Directors and members of the committees may receive such compensation, if any, for their service, and such reimbursement for expenses, as may be fixed or determined by resolution of the Board.

The Board of Directors may authorize the corporation to pay expenses incurred by, or to satisfy a judgment or fine rendered or levied against present or former Directors, officers, or employees of this corporation as provided by Article 2.02(A)(16) of the Business Corporation Act.

The officers of the corporation shall be a President, one Vice President, a Secretary, a Treasurer, and such assistants and other officers as the Board of Directors shall from time to time determine. Any two offices may be held by one person. All officers shall be elected by and hold office at the pleasure of the Board of Directors, which shall fix the compensation and tenure of the officers.

The officers of the corporation shall have the powers and duties generally ascribed to the respective offices, and such additional authority or duty as may from time to time be established by the Board of Directors.

The Board of Directors may, in its discretion, determine the method and designate the signatory officer or officers, or other person or persons, to execute any corporate instrument or document, or to sign the corporate name without limitation, except where otherwise provided by law, and such execution or signature shall be binding upon the corporation.

Certificates for shares of the corporation shall be issued only when fully paid.

The corporation shall deliver certificates representing all shares to which shareholders are entitled, which certificates shall be in such form and device as the Board of Directors may provide. Each certificate shall bear upon its face the statement that the corporation is organized in Texas, the name in which it is issued, the number and class of shares and series, and the par value or a statement that the shares are without par value. The certificates shall be signed by the President or a Vice President and the Secretary or an Assistant Secretary, which signatures may be in facsimile if the certificates are to be countersigned by a transfer agent or registered by a registrar, and the seal of the corporation shall be affixed thereto. The certificates shall contain on the faces or backs such recitations or references as are required by law.

No new certificates shall be issued until the former certificate for the shares represented thereby shall have been surrendered and cancelled, except in the case of lost or destroyed certificates for which the Board of Directors may order new certificates to be issued upon such terms, conditions, and guarantees as the Board may see fit to impose, including the filing of sufficient indemnity.

Shares of the corporation may be transferred by endorsement by the signature of the owner, his agent, attorney, or legal

representative, and the delivery of the certificate. The transferee in any transfer of shares shall be deemed to have full notice of, and to consent to, the Bylaws of the corporation to the same extent as if he had signed a written consent thereto.

1. Neither record title nor beneficial ownership of any shares of the corporation may be transferred except in accordance with the terms hereof.

2. In the event that any shareholder of the corporation (such shareholder being referred to herein as the “Option Shareholder”):

		a. Shall propose to sell, pledge, exchange or otherwise dispose of any shares of the corporation or any interests therein owned by him, whether for cash or other consideration,

		b. Shall become insolvent or shall file a voluntary petition under the Federal Bankruptcy Act or any state insolvency act,

		c. Shall be adjudicated a bankrupt under the Federal Bankruptcy Code by judgment which has become final,

		d. Shall have a final judgment for damages entered against him which is not discharged within thirty (30) days after such judgment has become final,

		e. Shall suffer an attachment, sequestration or garnishment to be levied against any of the shares of the corporation, or any interests therein, owned by him and the same is not dissolved or such shares replevied within thirty (30) days,

		f. Shall suffer any of the shares of the corporation or any interests therein owned by him to be transferred or encumbered in any other way whatever, whether voluntarily or by operation of law,

		g. Shall die or become disabled or contract any mental or physical incapacity which gives rise to the appointment of a guardian or conservator,

in any such events, such Option Shareholder or his legal representative, shall promptly deliver to the Secretary of the corporation written notice (the “Option Notice”) setting forth in detail the circumstances of such event. In the case of a voluntary sale or disposition, the Option Notice shall state the name and address of the proposed transferee and the proposed consideration for the transfer. The Secretary shall forthwith mail copies of the Option Notice to each shareholder of record of the corporation at his most recent address shown on the books of the corporation. If such Option Shareholder or his legal representative shall fail to deliver such notice to the Secretary of the corporation, the Secretary of the corporation, upon being advised of any such events, shall prepare and send such a notice on his own initiative.

4. In any of the events described in Paragraph Three (3), a special meeting of the shareholders of the Corporation shall be called by the Secretary of the Corporation upon not less than ten (10) days notice. Such meeting shall be held at the executive offices of the Corporation in Weslaco, Texas, or any other location as designated by a majority of the shareholders of record., not

later than thirty (30) days after the receipt by the Secretary of the Corporation of the Option Notice. At such meeting all shares of the Corporation owned by the Option Shareholder shall be subject to purchase on the part of the corporation, on the terms hereinafter set forth. Such option may be exercised by the Corporation as to the whole or any part of such shares. At such meeting, in voting upon the question of whether to exercise such option in whole or in part, all shares of the Corporation owned of record or beneficially by the Option Shareholder shall be voted in the same manner as the majority of the other outstanding and entitled to vote at such meeting. Such option shall expire to the extent not exercised by vote of the shareholders at such meeting.

5. If all of the shares of the Corporation owned by the Option Shareholder are not purchased by the Corporation in accordance with the provisions of Paragraph Four (4), then all shares of the Corporation owned by the Option Shareholder and not so purchased by the Corporation shall be subject to an option on the part of each of the other shareholders of the Corporation to purchase a proportionate part of such shares, upon the terms hereinafter set forth. Such option shall expire to the extent not exercised at the meeting of the shareholders called pursuant to the provisions of Paragraph Four (4). The term “proportionate part” shall mean that portion of the shares of the Corporation offered for sale which the number of shares of the Corporation owned by each of the shareholders desiring to purchase bears to the total

number of outstanding shares of the Corporation owned by all shareholders desiring to purchase.

6. If the event giving rise to the option should be a proposed voluntary sale or other disposition for cash of shares of the Corporation, the price to be paid for any shares owned by the Option Shareholder purchased in accordance with the terms and provisions of Paragraphs Four (4) and Five (5) hereof shall be equal to the proposed cash consideration which would be paid in connection with such proposed voluntary sale or other disposition as stated in the Option Notice. In the event of a proposed sale, exchange or other disposition other than for cash or in the event of any of the other events mentioned in Paragraph Three (3) above, the price to be paid for any shares of the Corporation owned by the Option Shareholder and purchased in accordance with Paragraphs Four (4) and Five (5) above shall be determined as follows:

During the month of August in each year commencing with the year 1994, the Board of Directors of the Corporation sitting as a Board of Appraisers shall meet and determine the fair market value per share of the shares of the Corporation. Written notice of such determination shall be delivered to each shareholder of record of the Corporation. In the event that any Option Shareholder has only partial ownership of any shares of the Corporation, the Board of Directors of the Corporation, sitting as the Board of Appraisers, shall decide what portion of the full purchase price for a share of the Corporation determined as herein provided shall be paid per share for the interest of the Option Shareholder in such shares.

The purchase price of any shares of the Corporation or any interests therein purchased under the terms and provisions hereof shall be payable in cash to the Option Shareholder within sixty (60) days after the meeting of shareholders called in accordance

with Paragraph Four (4) hereof, against delivery to the respective purchasers of certificates representing the shares purchased, duly endorsed for transfer, with all necessary federal and state documentary stamp tax affixed.

7. If the event giving rise to the option is a proposed voluntary sale or other disposition, any shares of the Corporation owned by the Option Shareholder which neither the Corporation nor the other shareholders of the Corporation purchase as herein provided may be transferred to the persons and upon terms and conditions no more favorable than those set forth in the Option Notice, such transfer to be consummated within ninety (90) days after actual receipt of the Option Notice by the Secretary of the Corporation, and not otherwise. If the event specified in such notice is an event other than a voluntary sale or disposition, any shares of the Corporation owned by the Option Shareholder which neither the Corporation nor the other shareholders of the Corporation purchase as herein provided shall no longer be subject to purchase hereunder by reason of the particular event specified in the notice.

8. The terms and provisions hereof shall be binding on any person who may acquire any shares of the Corporation or any interests therein, whether by voluntary transfer or by operation of law, and no person shall be permitted to become a holder of record of any of the shares of the Corporation or any interest therein without first expressly acknowledging in writing that such shares will continue to be subject to the terms and provisions hereof.

9. Any notice or communication required or permitted to be delivered to any shareholder of the Corporation under the terms delivered to any shareholder of the Corporation under the terms and provisions hereof shall be deemed to be delivered, whether actually received or not, when deposited in the United States mail, postage prepaid, certified, return receipt requested, addressed to such person at his most recent address shown on the books of the Corporation.

10. All certificates representing shares of the Corporation shall be endorsed substantially to the following effect:

These shares are subject to restrictions on their transfer contained in the Bylaws of the Corporation. The Corporation will furnish to the record holder of this certificate without charge upon written request to the Corporation at its principal place of business or registered office a copy of the Bylaws.

11. Whenever under the terms hereof the shares of any shareholder or the Corporation shall be purchased, such shareholder, or his legal representative, shall execute and deliver all documents that may be reasonably necessary to accomplish the transfer of such shares in accordance with the terms and provisions hereof.

12. The terms and provisions hereof shall terminate and be of no further force and effect after the expiration of twenty-one (21) years after the date of approval of these Bylaws or at such earlier date as the Corporation may be dissolved. However if the corporation is still in existence in 21 years and Walter H. Baxter, III is still a shareholder same or similar provisions will be adopted.

13. The terms and provisions hereof shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, personal representatives and assigns.

The Shareholders of the Corporation shall have the preemptive right to purchase shares of the Corporation as provided in the Texas Business Corporation Act, to-wit:

The shareholders of a Corporation shall have a preemptive right to acquire additional, unissued, or treasury shares of the Corporation, or securities of the Corporation convertible into or carrying a right to subscribe to or acquire shares, except to the extent limited or denied by the Texas Business Corporation Act as presently existing.

All books and records provided for by statute shall be open to inspection of the shareholders from time to time and to the extent expressly provided by statute, and not otherwise. The Directors may examine such books and records at all reasonable times.

The Board of Directors may close the transfer books in their discretion for a period not exceeding fifty (50) days preceding any meeting, annual or special, of the shareholders, or the day appointed for the payment of a dividend.

The Board of Directors may declare at any annual, regular or special meeting of the Board and the Corporation may pay, dividends on the outstanding shares in cash, property or in the shares of the Corporation to the extent permitted by, and subject to the provisions of, the laws of the State of Texas.

Before payment of any dividend there may be set aside out of any funds of the Corporation available for dividends such sum or sums as the Directors from time to time in their absolute discretion think proper as a reserve fund to meet contingencies or for equalizing dividends or for repairing or maintaining any property of the Corporation or for such other purpose as the directors shall think conducive to the interest reserve in the manner in which it was created.

The fiscal year of the Corporation shall begin on the 1st day of January of each year.

The Board of Directors shall present, at each annual meeting of the shareholders, a full and clear statement of the business and condition of the Corporation.

The power to alter, amend, or repeal these Bylaws is vested in the Directors, subject to repeal or change by action of the shareholders.

18 EX-4.4 15 v94566aexv4w4.txt EXHIBIT 4.4 EXHIBIT 4.4 [DATE] FORM OF EXCHANGE AGENT AGREEMENT Wells Fargo Bank, National Association MAC E2818-176 17th Floor 707 Wilshire Blvd. Los Angeles, CA 90017-3501 Attn: Ms. Jeanie Mar Ladies and Gentlemen: Seminis Vegetable Seeds, Inc., a company incorporated under the laws of California (the "Company"), Seminis, Inc., a company incorporated under the laws of Delaware (the "Parent"), Petoseed International, Inc., a company incorporated under the laws of California ("Petoseed"), PGI Alfalfa, Inc., a company incorporated under the laws of Iowa ("PGI") and Baxter Seed Co., Inc., a company incorporated under the laws of Texas ("Baxter", and together with the Parent, Petoseed and PGI, the "Guarantors") propose to make an offer (the "Exchange Offer") to exchange all of their outstanding original 10-1/4% Senior Subordinated Notes due 2013 issued on September 29, 2003 and related guarantees (the "Old Notes") for their new 10-1/4% Senior Subordinated Notes due 2013 and related guarantees (the "New Notes"). The terms and conditions of the Exchange Offer as currently contemplated are set forth in a prospectus, dated _______, 2004 (the "Prospectus"), proposed to be distributed to all record holders of the Old Notes. The Old Notes and the New Notes are collectively referred to herein as the "Notes". The Company and the Guarantors hereby appoint Wells Fargo Bank, National Association, to act as exchange agent (the "Exchange Agent") in connection with the Exchange Offer. References hereinafter to "you" shall refer to Wells Fargo Bank, National Association. The Exchange Offer is expected to be commenced by the Company and the Guarantors on or about ______, 2004. The Letter of Transmittal accompanying the Prospectus (or in the case of book-entry securities, the Automated Tender Offer Program ("ATOP") of the Book-Entry Transfer Facility (as defined below)) is to be used by the holders of the Old Notes to accept the Exchange Offer and contains instructions with respect to the delivery of certificates for Old Notes tendered in connection therewith. The Exchange Offer shall expire at 5:00 p.m., New York City time, on ______, 2004 or on such subsequent date or time to which the Company may extend the Exchange Offer (the "Expiration Date"). Subject to the terms and conditions set forth in the Prospectus, the Company expressly reserves the right to extend the Exchange Offer from time to time and may extend the Exchange Offer by giving oral (promptly confirmed in writing) or written notice to you before 9:00 a.m., New York City time, on the business day following the previously scheduled Expiration Date. The Company expressly reserves the right to amend or terminate the Exchange Offer, and not to accept for exchange any Old Notes not theretofore accepted for exchange, upon the occurrence of any of the conditions of the Exchange Offer specified in the Prospectus under the caption "The Exchange Offer -- Conditions to the Exchange Offer." The Company will give oral (promptly confirmed in writing) or written notice of any amendment, termination or nonacceptance to you as promptly as practicable. In carrying out your duties as Exchange Agent, you are to act in accordance with the following instructions: 1. You will perform such duties and only such duties as are specifically set forth in the section of the Prospectus captioned "The Exchange Offer" or as specifically set forth herein; provided, however, that in no way will your general duty to act in good faith be discharged by the foregoing. 2. You will establish a book-entry account with respect to each of the Old Notes at The Depository Trust Company (the "Book-Entry Transfer Facility") for purposes of the Exchange Offer within two business days after the date of the Prospectus, and any financial institution that is a participant in the Book-Entry Transfer Facility's systems may make book-entry delivery of the Old Notes by causing the Book-Entry Transfer Facility to transfer such Old Notes into your account for such Old Notes in accordance with the Book-Entry Transfer Facility's procedure for such transfer. 3. You are to examine each of the Letters of Transmittal and certificates for Old Notes (or confirmation of book-entry transfer into your account at the Book-Entry Transfer Facility) and any other documents delivered or mailed to you by or for holders of the Old Notes to ascertain whether: (i) the Letters of Transmittal and any such other documents are duly executed and properly completed in accordance with instructions set forth therein; and (ii) the Old Notes have otherwise been properly tendered. In each case where the Letter of Transmittal or any other document has been improperly completed or executed or any of the certificates for Old Notes are not in proper form for transfer or some other irregularity in connection with the acceptance of the Exchange Offer exists, you will endeavor to inform the presenters of the need for fulfillment of all requirements and to take any other action as may be reasonably necessary or advisable to cause such irregularity to be corrected. 4. With the approval of the Chief Executive Officer, any Executive Senior Vice President or any Vice President of the Company or any other party designated in writing by such an officer (such approval, if given orally, to be promptly confirmed in writing), you are authorized to waive any irregularities in connection with any tender of Old Notes pursuant to the Exchange Offer. 5. Tenders of Old Notes may be made only as set forth in the Letter of Transmittal and in the section of the Prospectus captioned "The Exchange Offer - -- Procedures for Tendering Your Original Notes", and Old Notes shall be considered properly tendered to you only when tendered in accordance with the procedures set forth therein. Notwithstanding the provisions of this Section 5, Old Notes which the Chief Executive 2 Officer, any Executive Senior Vice President or any Vice President of the Company, or any other party designated in writing by such an officer, shall approve as having been properly tendered shall be considered to be properly tendered (such approval, if given orally, shall be promptly confirmed in writing). 6. You shall advise the Company with respect to any Old Notes received subsequent to the Expiration Date and accept its instructions with respect to disposition of such Old Notes. 7. You shall accept tenders: (a) in cases where the Old Notes are registered in two or more names only if signed by all named holders; (b) in cases where the signing person (as indicated on the Letter of Transmittal) is acting in a fiduciary or a representative capacity only when proper evidence of his or her authority so to act is submitted; and (c) from persons other than the registered holder of Old Notes, provided that customary transfer requirements, including payment of any applicable transfer taxes, are fulfilled. You shall accept partial tenders of Old Notes where so indicated and as permitted in the Letter of Transmittal and deliver certificates for Old Notes to the registrar for split-up and return any untendered Old Notes to the holder (or such other person as may be designated in the Letter of Transmittal) as promptly as practicable after expiration or termination of the Exchange Offer. 8. Upon satisfaction or waiver of all of the conditions to the Exchange Offer, the Company will notify you (such notice, if given orally, to be promptly confirmed in writing) of its acceptance, promptly after the Expiration Date, of all Old Notes properly tendered and you, on behalf of the Company, will exchange such Old Notes for New Notes and cause such Old Notes to be cancelled. Delivery of New Notes will be made on behalf of the Company by you at the rate of $1,000 principal amount of New Notes for each $1,000 principal amount of the corresponding series of Old Notes tendered promptly after notice (such notice, if given orally, to be promptly confirmed in writing) of acceptance of said Old Notes by the Company; provided, however, that in all cases, Old Notes tendered pursuant to the Exchange Offer will be exchanged only after timely receipt by you of certificates for such Old Notes (or confirmation of book-entry transfer into your account at the Book-Entry Transfer Facility), a properly completed and duly executed Letter of Transmittal (or manually signed facsimile thereof) with any required signature guarantees and any other required documents. You shall issue New Notes only in denominations of $1,000 or any integral multiple thereof. 9. Tenders pursuant to the Exchange Offer are irrevocable, except that, subject to the terms and upon the conditions set forth in the Prospectus and the Letter of Transmittal, Old Notes tendered pursuant to the Exchange Offer may be withdrawn at any time prior to the Expiration Date. 3 10. The Company shall not be required to exchange any Old Notes tendered if any of the conditions set forth in the Exchange Offer are not met. Notice of any decision by the Company not to exchange any Old Notes tendered shall be given (if given orally, to be promptly confirmed in writing) by the Company to you. 11. If, pursuant to the Exchange Offer, the Company does not accept for exchange all or part of the Old Notes tendered because of an invalid tender, the occurrence of certain other events set forth in the Prospectus under the caption "The Exchange Offer -- Conditions to the Exchange Offer" or otherwise, you shall as soon as practicable after the expiration or termination of the Exchange Offer return those certificates for unaccepted Old Notes (or effect appropriate book-entry transfer), together with any related required documents and the Letters of Transmittal relating thereto that are in your possession, to the persons who deposited them. 12. All certificates for reissued Old Notes, unaccepted Old Notes or New Notes shall be forwarded by first-class mail. 13. You are not authorized to pay or offer to pay any concessions, commissions or solicitation fees to any broker, dealer, bank or other persons or to engage or utilize any person to solicit tenders. 14. As Exchange Agent hereunder you: (a) shall not be liable for any action or omission to act unless the same constitutes your own gross negligence, willful misconduct or bad faith; (b) shall have no duties or obligations other than those specifically set forth herein or as may be subsequently agreed to in writing between you and the Company; (c) will be regarded as making no representations and having no responsibilities as to the validity, sufficiency, value or genuineness of any of the certificates or the Old Notes represented thereby deposited with you pursuant to the Exchange Offer, and will not be required to and will make no representation as to the validity, value or genuineness of the Exchange Offer; (d) shall not be obligated to take any legal action hereunder which might in your judgment involve any expense or liability, unless you shall have been furnished with indemnity satisfactory to you; (e) may conclusively rely on and shall be protected in acting in reliance upon any certificate, instrument, opinion, notice, letter, telegram or other document or security delivered to you and believed by you to be genuine and to have been signed or presented by the proper person or persons; (f) may act upon any tender, statement, request, document, agreement, certificate 4 or other instrument whatsoever not only as to its due execution and validity and effectiveness of its provisions, but also as to the truth and accuracy of any information contained therein, which you shall in good faith believe to be genuine or to have been signed or presented by the proper person or persons; (g) may conclusively rely on and shall be protected in acting in good faith upon written or oral instructions from any authorized officer of the Company; (h) may consult with counsel of your selection with respect to any questions relating to your duties and responsibilities and the advice or opinion of such counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted to be taken by you hereunder in good faith and in accordance with the advice or opinion of such counsel; and (i) shall not advise any person tendering Old Notes pursuant to the Exchange Offer as to the wisdom of making such tender or as to the market value or decline or appreciation in market value of any Old Notes; provided, however, that in no way will your general duty to act in good faith and without gross negligence or willful misconduct be limited by the foregoing. 15. You shall take such action as may from time to time be requested by the Company (and such other action as you may deem appropriate) to furnish copies of the Prospectus, Letter of Transmittal and Notice of Guaranteed Delivery (as defined in the Prospectus), or such other forms as may be approved from time to time by the Company, to all persons requesting such documents and to accept and comply with telephone requests for information relating to the Exchange Offer, provided that such information shall relate only to the procedures for accepting (or withdrawing from) the Exchange Offer. The Company will furnish you with copies of such documents on your request. All other requests for information relating to the Exchange Offer shall be directed to the Company, Attention: [_____________], [Title]. 16. You shall advise the Company by facsimile transmission, Attention: [___________], [Title], at facsimile number [____________] and Attention: Juliet L. Ream, General Counsel, at facsimile number (805) 918-2530, and such other person or persons as the Company may request, daily (and more frequently during the week immediately preceding the Expiration Date if requested) up to and including the Expiration Date, as to the number of Old Notes which have been tendered pursuant to the Exchange Offer and the items received by you pursuant to this Agreement, separately reporting and giving cumulative totals as to items properly received and items improperly received. In addition, you will also inform, and cooperate in making available to, the Company or any such other person or persons upon oral request made from time to time prior to the Expiration Date of such other information as they may reasonably request. Such cooperation shall include, without limitation, the granting by you to the Company and such person as the Company may request of access to those persons on your staff who are responsible for receiving tenders, in order to ensure that immediately prior to the Expiration Date the Company shall have received information in sufficient detail to enable it to 5 decide whether to extend the Exchange Offer. You shall prepare a final list of all persons whose tenders were accepted, the aggregate principal amount of Old Notes tendered and the aggregate principal amount of Old Notes accepted, and you shall deliver said list to the Company. 17. Letters of Transmittal and Notices of Guaranteed Delivery shall be stamped by you as to the date and, after the expiration of the Exchange Offer, the time, of receipt thereof and shall be preserved by you for a period of time at least equal to the period of time you preserve other records pertaining to the transfer of securities. You shall dispose of unused Letters of Transmittal and other surplus materials by returning them to the Company. 18. For services rendered as Exchange Agent hereunder, you shall be entitled to such compensation as set forth on Schedule I attached hereto. The provisions of this section shall survive the termination of this Agreement. 19. You hereby acknowledge receipt of the Prospectus and the Letter of Transmittal. Any inconsistency between this Agreement, on the one hand, and the Prospectus and the Letter of Transmittal (as they may be amended from time to time), on the other hand, shall be resolved in favor of the latter two documents, except with respect to your duties, liabilities and indemnification as Exchange Agent. 20. The Company covenants and agrees to fully indemnify and hold you harmless against any and all loss, liability, cost or expense, including attorneys' fees and expenses, incurred without gross negligence, willful misconduct or bad faith on your part, arising out of or in connection with any act, omission, delay or refusal made by you in reliance upon any signature, endorsement, assignment, certificate, order, request, notice, instruction or other instrument or document believed by you to be valid, genuine and sufficient, and in accepting any tender or effecting any transfer of Old Notes believed by you in good faith to be authorized, and in delaying or refusing in good faith to accept any tenders or effect any transfer of Old Notes. In no case shall the Company be liable under this indemnity with respect to any claim against you unless the Company shall be notified by you, by letter or cable or by facsimile which is confirmed by letter, of the written assertion of a claim against you or of any other action commenced against you, promptly after you shall have received any such written assertion or notice of commencement of action. The Company shall be entitled to participate at its own expense in the defense of any such claim or other action and, if the Company so elects, the Company shall assume the defense of any suit brought to enforce any such claim. In the event that the Company shall assume the defense of any such suit, the Company shall not be liable for the fees and expenses of any additional counsel thereafter retained by you, so long as the Company shall retain counsel reasonably satisfactory to you to defend such suit; provided, that the Company shall not be entitled to assume the defense of any such action if the named parties to such action include both you and the Company and representation of both parties by the same legal counsel would, in the written opinion of your counsel, be inappropriate due to actual or potential conflicting interests between you and the Company. You understand and agree that the Company shall not be liable under this paragraph for the fees and expenses of more than one legal counsel for you. The provisions of this section shall survive the termination of this Agreement. 6 21. You hereby expressly waive any lien, encumbrance or right of set-off whatsoever that you may have with respect to funds deposited with you for the payment of transfer taxes by reasons of amounts, if any, borrowed by the Company, the Guarantors or any of their subsidiaries or affiliates pursuant to any loan or credit agreement with you or for compensation owed to you hereunder. 22. You shall arrange to comply with all requirements under the tax laws of the United States, including those relating to missing tax identification numbers, and shall file any appropriate reports with the Internal Revenue Service. 23. You shall deliver or cause to be delivered, in a timely manner to each governmental authority to which any transfer taxes are payable in respect of the exchange of Old Notes and, upon receipt of a written approval from the Company, shall deliver or cause to be delivered, in a timely manner to each governmental authority to which any transfer taxes are payable in respect of the exchange of Old Notes, your check in the amount of all transfer taxes so payable, and the Company shall reimburse you for the amount of any and all transfer taxes payable in respect of the exchange of Old Notes; provided, however, that you shall reimburse the Company for amounts refunded to you in respect of your payment of any such transfer taxes, at such time as such refund is received by you. 24. This Agreement and your appointment as Exchange Agent hereunder shall be construed and enforced in accordance with the laws of the State of New York applicable to agreements made and to be performed entirely within such state, and without regard to conflicts of law principles. 25. This Agreement shall be binding upon and inure solely to the benefit of each party hereto, and shall inure to the benefit of, and the obligations created hereby shall be binding upon, the successor and assigns of each of the parties hereto. Nothing in this Agreement, express or implied, is intended to or shall confer upon any other person any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement. Without limitation of the foregoing, the parties hereto expressly agree that no holder of Old Notes or New Notes shall have any right, benefit or remedy of any nature whatsoever under, or by reason of, this Agreement. 26. This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original and all of which together shall constitute one and the same agreement. 27. In case any provision of this Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. 28. This Agreement shall not be deemed or construed to be modified, amended, rescinded, cancelled or waived, in whole or in part, except by a written instrument signed by a duly authorized representative of the party to be charged. This Agreement may not be modified orally. 7 29. Unless otherwise provided herein, all notices, requests and other communications to any party hereunder shall be in writing (including facsimile or similar writing) and shall be given to such party, addressed to it, at its address or telecopy number set forth below: If to the Company: Seminis Vegetable Seeds, Inc. 2700 Camino del Sol Oxnard, CA 93030 Facsimile: (805) 918-2530 Attention: Chief Legal Counsel with copies to: Milbank, Tweed, Hadley & McCloy 1 Chase Manhattan Plaza New York, NY 10005 Facsimile: (212) 822-5530 Attention: Howard Kelberg If to the Exchange Agent: Wells Fargo Bank, National Association MAC E2818-176 17th Floor 707 Wilshire Blvd. Los Angeles, CA 90017-3501 Facsimile: (213) 614-3355 Attention: Ms. Jeanie Mar 30. Unless terminated earlier by the parties hereto, this Agreement shall terminate 90 days following the Expiration Date. Notwithstanding the foregoing, Sections 18, 19, 20, 21 and 24 shall survive the termination of this Agreement. Upon any termination of this Agreement, you shall promptly deliver to the Company any certificates for Securities, funds or property then held by you as Exchange Agent under this Agreement. 31. This Agreement shall be binding and effective as of the date hereof. 8 Please acknowledge receipt of this Agreement and confirm the arrangements herein provided by signing and returning the enclosed copy. SEMINIS VEGETABLE SEEDS, INC. By: --------------------------- Name: Title: SEMINIS, INC. By: --------------------------- Name: Title: PETOSEED INTERNATIONAL, INC. By: --------------------------- Name: Title: PGI ALFALFA, INC. By: --------------------------- Name: Title: BAXTER SEED CO., INC. By: --------------------------- Name: Title: Accepted as of the date first above written: WELLS FARGO BANK, NATIONAL ASSOCIATION, as Exchange Agent By: --------------------------- Name: Title: 9 EX-4.5 16 v94566aexv4w5.htm EXHIBIT 4.5 Seminis Vegetable Seeds, Inc. Exhibit 4.5

Citigroup Global Markets 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 ¼ % 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”) dated as of September 29, 2003, pursuant to which $190,00,000 of notes of the same series (the “Initial Notes”) were previously issued among the Company, Seminis, Inc., a Delaware corporation (the “Parent”), as guarantor, the other guarantors listed on the signature pages thereof (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:

“Act” shall mean the Securities Act of 1933, as amended, and the rules and regulations of the Commission promulgated thereunder.

“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.

“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.

“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.

“Initial Placement” shall have the meaning set forth in the preamble hereto.

“Initial Purchaser” shall have the meaning set forth in the preamble hereto.

“Majority Holders” shall mean the Holders of a majority of the aggregate principal amount of Securities and Exchange Securities registered under a Registration Statement.

“Managing Underwriters” shall mean the investment banker or investment bankers and manager or managers that shall administer an underwritten offering.

“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.

“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 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.

“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.


	(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;

	(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

	(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 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 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;

(b) any Registration Statement required by this Agreement is not declared effective by the Commission on or prior to the applicable Effectiveness Deadline;

(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 (d) 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:


	(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.


	(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 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 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.

(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.

(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 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 thereto; and (B) each closing under any underwriting or similar agreement as and to the extent required thereunder.

(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 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 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 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 o r 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 Exchange 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 Exchange Security, applicable to the Security that was exchangeable into such Exchange 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 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.

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. For the purposes of this Section 10, the Majority Holders will not include holders of the Initial Notes.

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 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.

The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.

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.”

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.”

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.]

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.

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-5.1 17 v94566aexv5w1.txt EXHIBIT 5.1 EXHIBIT 5.1 [Letterhead of Milbank, Tweed, Hadley & McCloy, LLP] [Date] Seminis Vegetable Seeds, Inc. Seminis, Inc. Petoseed International, Inc. PGI Alfalfa, Inc. Baxter Seed Co., Inc. 2700 Camino del Sol Oxnard, CA 93030 Ladies and Gentlemen: We have acted as New York counsel to Seminis Vegetable Seeds, Inc. (the "COMPANY"), Seminis, Inc. (the "PARENT"), Petoseed International, Inc. (the "CALIFORNIA SUBSIDIARY"), PGI Alfalfa, Inc. ("PGI") and Baxter Seed Co., Inc. ("BAXTER", and together with the California Subsidiary and PGI, the "SUBSIDIARY GUARANTORS", and the Subsidiary Guarantors, together with the Parent, the "GUARANTORS") in connection with the registration under the Securities Act of 1933, as amended, (the "ACT") on Form S-4 filed with the Securities and Exchange Commission (the "REGISTRATION STATEMENT"), of $190,000,000 in aggregate principal amount of 10_% Senior Subordinated Notes due 2013 (the "EXCHANGE NOTES") of the Company, and the related guarantees of the Exchange Notes (the "EXCHANGE GUARANTEES") by the Guarantors to be issued in exchange for an equal aggregate principal amount of the Company's outstanding 10_% Senior Subordinated Notes due 2013 issued on September 29, 2003 (the "ORIGINAL NOTES") and the related guarantees pursuant to (i) the Indenture, dated as of September 29, 2003 (the "INDENTURE"), between the Company, the Guarantors and Wells Fargo Bank, National Association, as trustee (the "TRUSTEE"), and (ii) the Registration Rights Agreement, dated as of September 29, 2003 (the "REGISTRATION RIGHTS AGREEMENT"), among the Company, the Guarantors and Citigroup Global Markets Inc., CIBC World Markets Corp., Rabo Securities USA, Inc. and Harris Nesbitt Corp., as initial purchasers of the Original Notes. In rendering the opinions expressed below, we have examined such corporate records, certificates and other documents, and such questions of law, as we have considered necessary or appropriate for the purposes of this opinion. In our examination, we have assumed the genuineness of all signatures, the authenticity of all documents submitted to us as originals and the conformity with authentic original documents of all documents submitted to us as copies. As to various questions of fact material to such opinions, we have, when relevant facts were not independently established, relied upon certificates of officers and representatives of the Company and the Guarantors and public officials, statements contained in the Registration Statement and other documents as we have deemed necessary as a basis for such opinions. Based upon and subject to the foregoing and subject also to the comments and qualifications set forth below, and having considered such questions of law as we have deemed necessary as a basis for the opinions expressed below, we are of the opinion that: 1. The Exchange Notes, when executed, delivered and authenticated in accordance with the provisions of the Indenture and when exchanged by the holders thereof for the Original Notes in the manner contemplated by the Registration Statement and in accordance with the terms of the Registration Rights Agreement and the Indenture, will constitute valid and legally binding obligations of the Company, enforceable against the Company in accordance with their terms, subject to the qualification that enforceability of the obligations of the Company thereunder may be limited by (i) bankruptcy, fraudulent conveyance or transfer, insolvency, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally, and (ii) the application of general principles of equity (regardless of whether considered in a proceeding at law or in equity) including, without limitation, (a) the possible unavailability of specific performance, injunctive relief or any other equitable remedy and (b) concepts of good faith, reasonableness, fair dealing and materiality. 2. Each of the Exchange Guarantees to be endorsed on the Exchange Notes, assuming the due authorization, execution and delivery thereof by each of the parties thereto (other than the Parent and the California Subsidiary), when duly endorsed on the Exchange Notes by each of the Guarantors in accordance with the provisions of the Indenture and when the Exchange Notes are executed, delivered and authenticated in accordance with the provisions of the Indenture and exchanged by the holders thereof for the Original Notes in the manner contemplated by the Registration Statement and in accordance with the terms of the Registration Rights Agreement and the Indenture, will constitute valid and legally binding obligations of each of the Guarantors, enforceable against each of the Guarantors in accordance with their terms, subject to the qualification that (i) enforceability of the obligations of each of the Guarantors thereunder may be limited by (x) bankruptcy, fraudulent conveyance or transfer, insolvency, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally, and (y) the application of general principles of equity (regardless of whether considered in a proceeding at law or in equity) including, without limitation, (a) the possible unavailability of specific performance, injunctive relief or any other equitable remedy and (b) concepts of good faith, reasonableness, fair dealing and materiality, and (ii) the waiver of defenses by the Guarantors in such guarantees may be limited by principles of public policy in New York. We express no opinion as to (i) the applicability to the obligations of any Subsidiary Guarantor under the applicable Guarantee of such Subsidiary Guarantor of (or the enforceability of such obligations under) Section 548 of Chapter 11 of Title 11 of the United States Code, as amended, Article 10 of the New York Debtor and Creditor Law, as amended, or any other provision of law relating to fraudulent conveyances, transfers or obligations or (ii) any provisions of the law of the jurisdiction of incorporation of any Subsidiary Guarantor restricting dividends, loans or other distributions by a corporation or other business entity or association for the benefit of its stockholders or similar persons. To the extent that the obligations of the Company and the Guarantors under the Exchange Notes, Exchange Guarantees and the Indenture, as applicable, may be dependent upon such matters, we have assumed for purposes of this opinion that (i) the Trustee is duly organized, validly existing and in good standing under the laws of its jurisdiction of organization; (ii) the Trustee has been duly qualified to engage in the activities contemplated by the Indenture; (iii) the Indenture has been duly authorized, executed and delivered by the Trustee and constitutes a legal, valid and binding obligation of the Trustee, enforceable against the Trustee in accordance with its terms; (iv) the Trustee is in compliance generally and with respect to acting as Trustee under the Indenture, with all applicable laws and regulations; and (v) the Trustee has the requisite organizational and legal power and authority to perform its obligations under the Indenture. The foregoing opinions are limited to matters involving the Federal laws of the United States of America, the Delaware General Corporation Law, the California General Corporation Law and the law of the State of New York, and we do not express any opinion as to the laws of any other jurisdiction. We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the reference to us under the heading "Validity of the Notes" in the Prospectus contained in such Registration Statement. In giving such consent, we do not thereby admit that we are in the category of persons whose consent is required under Section 7 of the Act. This opinion is furnished to you in connection with the filing of the Registration Statement, and is not be used, circulated, quoted or otherwise relied on for any other purpose. Very truly yours, EX-5.2 18 v94566aexv5w2.txt EXHIBIT 5.2 EXHIBIT 5.2 [ON LETTERHEAD STATIONERY OF HEIDMAN, REDMOND, ET. AL. LAW FIRM] [Date] Seminis Vegetable Seeds, Inc. Seminis, Inc. Petoseed International, Inc. PGI Alfalfa, Inc. Baxter Seed Co., Inc. 2700 Camino del Sol Oxnard, CA 93030 Ladies and Gentlemen: We have acted as special Iowa counsel to PGI Alfalfa, Inc., an Iowa corporation (the "Iowa Subsidiary") in connection with the preparation, execution, and delivery of a Registration Rights Agreement dated September 29, 2003 between the Company, the other guarantors named therein and the initial purchasers named therein, and the Indenture dated as of September 29, 2003, among the Company, the Iowa Subsidiary, the other guarantors named therein and the Trustee, Wells Fargo Bank, N.A. In that connection, we have examined (a) the articles of incorporation of the Iowa Subsidiary and all amendments thereto (the "Articles"), (b) the by-laws of the Iowa Subsidiary (the "By-laws"), (c) the resolutions of the directors of the Iowa Subsidiary regarding this transaction, (d) the Indenture, Registration Rights Agreement, Guarantee, Exchange Notes and Exchange Guarantees (collectively the "Basic Documents"), (e) such other corporate documents, official records and other instruments, and such laws and regulations, as we have deemed necessary in order to render this opinion, and as to factual matters we have relied upon the certificates of officers of the Iowa Subsidiary. All capitalized terms used herein, except as otherwise defined herein, are used with the same meaning as defined in or used in the Basic Documents. Based solely on the foregoing, and reliance thereon without further investigation, and subject to the limitations and qualifications contained herein, we are of the opinion that as of the date hereof: HEIDMAN, REDMOND, FREDREGILL, PATTERSON, PLAZA, DYKSTRA & PRAHL, L.L.P. PGI Alfalfa, Inc. - Exchange Guarantees opinion letter of special Iowa counsel [Date] Page 2 1. The Exchange Guarantees to be endorsed on the Exchange Notes to which the Iowa Subsidiary is a party have been duly and validly authorized by the Iowa Subsidiary. 2. The Exchange Guarantees to be endorsed on the Exchange Notes to which the Iowa Subsidiary is a party, when duly endorsed on the Exchange Notes in the manner contemplated by the Registration Statement and in accordance with the terms of the Registration Rights Agreement and the Indenture and when the Exchange Notes are executed, delivered and authenticated in accordance with the terms of the Indenture will constitute valid and legally binding obligations of the Iowa Subsidiary enforceable against the Iowa Subsidiary under Iowa law and in the courts of Iowa in accordance with the their terms, subject to the qualification that (i) enforceability of the obligations of the Iowa Subsidiary thereunder may be limited by (x) bankruptcy, fraudulent conveyance or transfer, insolvency, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally, and (y) the application of general principles of equity (regardless of whether considered in a proceeding in law or equity) including, without limitation (a) the possible unavailability of specific performance, injunctive relief or any other equitable remedy and (b) concepts of good faith, reasonableness, fair dealing and materiality, and (ii) the waiver of defenses by the Iowa Subsidiary in the guarantees may be limited by principles of public policy in Iowa. In our examination we have assumed the genuineness of all signatures, the authenticity of all documents submitted to us as originals, and the conformity with the original documents of the documents submitted to us as copies. We have relied upon the documents we have examined with respect to the accuracy of material factual matters contained herein and said matters were not independently established by us. In rendering the foregoing opinion, we advise you that (a) as to certain factual matters contained herein, we are relying exclusively upon the certificates of officers of the Iowa Subsidiary and we disclaim any undertaking to further investigate such factual matters; and (b) we do not render any opinion as to legal matters governed by laws other than those of the State of Iowa, or corporate or commercial laws generally in effect. HEIDMAN, REDMOND, FREDREGILL, PATTERSON, PLAZA, DYKSTRA & PRAHL, L.L.P. PGI Alfalfa, Inc. - Exchange Guarantees opinion letter of special Iowa counsel [Date] Page 3 The foregoing opinion is for the benefit of the parties to whom this opinion is addressed and may not be disclosed to or relied upon any other person or entity without our express written consent, except this opinion may be disclosed to the attorneys and agents of the parties to whom it is addressed. We hereby consent to the filing of this opinion as an exhibit to the Registration Statement. In giving such consent, we do not thereby admit that we are in the category of persons whose consent is required under Section 7 of the Act. Very truly yours, EX-5.3 19 v94566aexv5w3.txt EXHIBIT 5.3 EXHIBIT 5.3 [LETTERHEAD OF GREENBERG TRAURIG, LLP] [Date] To Addressees on Attached Schedule A Re: Exchange Guarantees of the $190,000,000 10 1/4% Senior Subordinated Notes Due 2013 by Seminis Vegetable Seeds, Inc. ("Seminis Vegetable"). Ladies and Gentlemen: We have acted as special counsel to Baxter Seed Co., Inc., a Texas corporation ("Baxter"), a subsidiary of Seminis Vegetable, for the purpose of delivering this opinion letter in connection with the registration of the guarantees (the "Exchange Guarantees") of the $190,000,000 10 1/4% Senior Subordinated Notes due 2013 (the "Exchange Notes"). I. DOCUMENT REVIEW As such special counsel, we have reviewed the following documents, certificates and instruments: (a) the Exchange Notes; (b) a Certificate issued by the Office of the Secretary of State of the State of Texas (the "Texas Filing Office") relating to the active status of Baxter; (c) a copy of the Articles of Incorporation of Baxter, filed with the Texas Filing Office on July 3, 1990 (the "Articles of Incorporation") and the Bylaws of Baxter (the "Bylaws" and, together with the Articles of Incorporation, the "Baxter Organizational Documents"); and (d) the Assistant Secretary's Certificate of Baxter certifying to, among other things, (i) the unanimous written consent of the board of directors of Baxter, (ii) the Baxter Organizational Documents and (iii) the incumbency of certain officers of Baxter. In addition, we have examined such other instruments, certificates and documents as we have deemed necessary as a basis for the opinions set forth below. II. OPINION Based on the foregoing and subject to the assumptions and qualifications set forth below, we are of the opinion that each of the Exchange Guarantees to be endorsed on the Exchange Notes has been duly and validly authorized by Baxter. III. ASSUMPTIONS AND QUALIFICATIONS The opinion expressed in Section II above is subject to the following assumptions and qualifications: (a) We have assumed that each document submitted to us for review is accurate and complete, each such document that is an original is authentic, each such document that is a copy conforms to an authentic original, all signatories to such documents (other than signatories of Baxter) have been duly authorized, and all signatures on each document are genuine. As to any facts material to the opinions expressed herein, we have made no independent investigation of such facts and have relied upon certificates of governmental officials and the appropriate representatives of Baxter. (b) We have assumed that with respect to the opinion set forth in Section II above, the Exchange Notes, when issued (i) will be issued in accordance with the Registration Rights Agreement, dated as of September 29, 2003, among Seminis Vegetable, Baxter, the other guarantors party thereto, and Citigroup Global Markets Inc., for itself and on behalf of CIBC World Markets Corp., Rabo Securities USA, Inc. and Harris Nesbitt Corp., (ii) will be issued in the form substantially similar to the form provided to the board of directors and approved in the resolutions attached to the Assistant Secretary's Certificate described in paragraph (d) of Section I above, (iii) will constitute the legal, valid, and binding agreement of each party thereto enforceable against each such party thereto, (iv) will be duly and validly authorized by each party thereto (other than as specifically set forth in the opinion in Section II above with respect to Baxter), and (v) will be duly and validly executed and delivered by each party thereto. (c) Subject to the remainder of this paragraph, we express no opinion as to the laws of any jurisdiction other than the substantive laws of the State of Texas. IV. CONCLUSION This letter (i) has been furnished to you at your request, (ii) is rendered in connection with the registration of the Exchange Guarantees and may not be relied upon by any person other than the addressee hereof without our prior written consent, and (iii) is rendered as of the date hereof, and we undertake no, and hereby disclaim any, obligation to advise you of any changes in or any new developments which might affect any matters or opinions set forth herein. Respectfully submitted, SCHEDULE A ADDRESSEE Seminis Vegetable Seeds, Inc. Seminis, Inc. Petoseed International, Inc. PGI Alfalfa, Inc. Baxter Seed Co., Inc. 2700 Camino del Sol Oxnard, CA 93030 EX-10.2 20 v94566aexv10w2.txt EXHIBIT 10.2 Exhibit 10.2 EXECUTION COPY AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT DATED AS OF SEPTEMBER 29, 2003 BY AND AMONG SEMINIS, INC. AND THE INVESTORS LISTED ON THE SIGNATURE PAGES HERETO TABLE OF CONTENTS

-i- 2.7 Additional Provisions Relating to Restrictions on Transfers.................................... 27 2.7.l Legends............................................................................... 27 2.7.2 Copy of Agreement..................................................................... 27 2.7.3 Termination of Restrictions........................................................... 27 2.8 Treatment of Hurdle Co-Investment Rights....................................................... 28 ARTICLE III REGISTRATION RIGHTS................................................................................ 28 3.1 Piggyback and Demand Registrations............................................................. 28 3.1.1 Piggyback Registrations............................................................... 28 3.1.2 Demand Registrations.................................................................. 29 3.1.3 Expenses.............................................................................. 30 3.1.4 Priority in Piggyback and Demand Registrations........................................ 30 3.1.5 Underwriting Requirements............................................................. 31 3.2 Registration Procedures........................................................................ 31 3.3 Indemnification................................................................................ 34 3.4 Holdback Agreement............................................................................. 37 3.5 Deferral....................................................................................... 38 ARTICLE IV MANAGEMENT INVESTOR PUT AND CALL RIGHTS.............................................................. 38 4.1 Call Rights.................................................................................... 38 4.2 Put Rights..................................................................................... 39 4.3 Withholdings................................................................................... 40 ARTICLE V CORPORATE GOVERNANCE.................................................................................. 40 5.1 Business Plans................................................................................. 40 5.1.1 2004 Annual Business Plan............................................................. 40 5.1.2 Initial Three-Year Business Plan...................................................... 41 5.1.3 Annual Business Plans - Romo Control.................................................. 42 5.1.4 Annual Business Plans - FPSH Control.................................................. 42 5.1.5 Amendments............................................................................ 43 5.1.6 Deadlock Mechanics.................................................................... 43 5.1.7 Good Faith Efforts.................................................................... 44 5.2 Board of Directors............................................................................. 44 5.2.1 Initial Composition................................................................... 44 5.2.2 Default Composition................................................................... 45

-ii- 5.2.3 Committee Designation................................................................. 45 5.2.4 Voting Obligation..................................................................... 46 5.3 Approval Rights................................................................................ 46 5.3.1 FPSH Approval Rights.................................................................. 46 5.3.2 Basic Romo Approval Rights............................................................ 48 5.3.3 Additional Romo Approval Rights....................................................... 49 5.4 Information Rights............................................................................. 49 ARTICLE VI BUSINESS OPPORTUNITIES............................................................................... 49 6.1 Business Investment Offers..................................................................... 49 6.2 Company Determinations......................................................................... 50 6.3 Permitted Opportunity.......................................................................... 50 6.4 Exceptions..................................................................................... 50 6.5 Affiliates of FPSH............................................................................. 50 ARTICLE VII MISCELLANEOUS....................................................................................... 51 7.1 Term........................................................................................... 51 7.2 No Voting or Conflicting Agreements............................................................ 51 7.3 Ownership Interests in Certain Persons......................................................... 52 7.4 Specific Performance........................................................................... 52 7.5 Notices........................................................................................ 52 7.6 Representative Capacity........................................................................ 52 7.7 Successors and Assigns......................................................................... 53 7.8 Recapitalizations and Exchanges Affecting Common Stock......................................... 53 7.9 Governing Law; Consent to Jurisdiction; Waiver of Jury Trial................................... 53 7.10 Descriptive Headings, Etc...................................................................... 54 7.11 Amendment...................................................................................... 54 7.12 Severability................................................................................... 54

-iii- 7.13 Further Assurances............................................................................. 55 7.14 Complete Agreement; Counterparts............................................................... 55 7.15 Certain Transactions and Fees.................................................................. 55 7.16 No Third-Party Beneficiaries................................................................... 55 7.17 Sophisticated Investors........................................................................ 55

Exhibits Exhibit A - Corporate Policies and Procedures Exhibit B - Sample Calculation of IRR Hurdle Exhibit C - Targets Exhibit D - Restricted Persons Schedules Schedule I Stockholder holdings of Common Stock, Co-Investment Rights, Warrants and Options after closing of transactions contemplated by the Contribution Agreement, Merger Agreement and FPSH Stock Purchase Agreement Schedule II Ownership Interests in Certain Persons -iv- AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT, dated as of September 29, 2003 (the "Agreement"), by and among SEMINIS, INC., a Delaware corporation (the "Company"), FOX PAINE CAPITAL FUND II, L.P., a Delaware limited partnership, FOX PAINE CAPITAL FUND II CO-INVESTORS, L.P., a Delaware limited partnership, E AND A `J' TRUST, FPC INVESTMENT GP, FPSH COINVESTMENT FUND I, LLC, a Delaware limited liability company, FPSH COINVESTMENT FUND II, LLC, a Delaware limited liability company, FPSH COINVESTMENT FUND III, LLC, a Delaware limited liability company, FPSH COINVESTMENT FUND IV, LLC, a Delaware limited liability company, FPSH COINVESTMENT FUND V, LLC, a Delaware limited liability company, ALFONSO ROMO GARZA ("Mr. Romo"), GASPAR ALVAREZ, FRANCO CAMPANA, BRUNO FERRARI, CHARLES EDWARD GREEN, LUIS MAIZ, MATEO MAZAL, BERNARDO JIMENEZ BARRERA, ADRIAN RODRIGUEZ MACEDO, JOSE MANUEL MADERO, JEAN PIERRE POSA, 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 organized under the United Mexican States (the "ARG Trust"), CONJUNTO ADMINISTRATIVO INTEGRAL, S.A. DE C.V., a corporation (sociedad anonima de capital variable) organized under the United Mexican States ("CAI"), EMPRIMA, S.A. DE C.V., a corporation (sociedad anonima de capital variable) organized under the United Mexican States ("Emprima"), PARK FINANCIAL GROUP, LTD, (BVI), a British Virgin Islands Company ("Park"), DESARROLLO CONSOLIDADO DE NEGOCIOS, S.A. DE C.V., a corporation (sociedad anonima de capital variable) organized under the United Mexican States (the "Rights Holder"), SAVIA, S.A. DE C.V., a corporation (sociedad anonima de capital variable) organized under the United Mexican States ("Savia"), BANCA AFIRME, S.A. INSTITUCION DE BANCA MULTIPLE, AFIRME GRUPO FINANCIERO, AS TRUSTEE, UNDER THE ADMINISTRATION TRUST NUMBER 243-4 (FIDEICOMISO DE ADMINISTRACION), a trust organized under the United Mexican States ("Bondholder SPC"), THE IRREVOCABLE ADMINISTRATION AND PAYMENT TRUST NUMBER 131-4 ENTERED INTO BY BANCA AFIRME, S.A., INSTITUCION DE BANCA MULTIPLE, AFIRME GRUPO FINANCIERO, IN ITS CAPACITY AS TRUSTEE AND PULSAR INTERNACIONAL, S.A. DE C.V., EXECUTED ON JULY 23, 2001, AS AMENDED, a trust organized under the United Mexican States (the "Pulsar Administration and Payment Trust"), MARCELA GONZALEZ, THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY ("NML"), STICHTING PENSIOENFONDS ABP ("ABP") and STICHTING PENSIOENFONDS VOOR DE GEZONDHEID, GEESTELIJKE EN MAATSCHAPPELIJKE BELANGEN ("PGGM"). Employees, directors, consultants and certain other Persons (as defined below) having significant business relationships with the Company and its Affiliates (as defined below) may be issued shares of Common Stock (as defined below) (or other equity securities of the Company) or securities convertible into or exchangeable for Common Stock (or other equity securities of the Company) subject to the terms of this Agreement, and, if so issued, the Company, without the consent of any other party hereto, may amend this Agreement to allow any such Person the Company so chooses to become a party hereto and list such Person on Schedule I hereto, subject to such Person becoming a signatory to this Agreement. The parties hereto (other than the Company) and any other Person who shall hereafter acquire shares of Common Stock (or other equity securities of the Company) or securities convertible into or exchangeable for Common Stock (or other equity securities of the Company) pursuant to the provisions of, and/or subject to the restrictions and rights set forth in, this Agreement (including through participation in certain Company stock or option plans) are sometimes hereinafter referred to individually as a "Stockholder" or collectively as the "Stockholders." RECITALS WHEREAS, as of the Effective Date (as defined below), the Company had authorized 200,000,000 shares of Common Stock, par value $0.01 per share ("Common Stock"), each share of which is entitled to one vote on all Stockholder matters as more specifically provided in the restated certificate of incorporation, as amended, of the Company (the "Certificate"), and of which 63,961,879 shares of Common Stock were issued and outstanding immediately after the Effective Date; WHEREAS, the Company has reserved, as of the Effective Date, shares of Common Stock for issuance pursuant to the Amended and Restated Seminis, Inc. 1998 Stock Option Plan (the "1998 Stock Incentive Plan"), shares of Common Stock for issuance in connection with grants of restricted stock units (the "Restricted Stock Units"), shares of Common Stock for issuance pursuant to the Co-Investment Rights (as defined below) and shares of Common Stock for issuance pursuant to certain warrants to purchase shares of Common Stock; WHEREAS, pursuant to the Agreement and Plan of Merger, dated as of May 30, 2003, by and among the Company, Seminis Acquisition LLC, a Delaware limited liability company ("Parent") and Seminis Merger Corp., a Delaware corporation ("Merger Sub") (the "Merger Agreement"), Merger Sub merged with and into the Company (the "Merger") with the Company as the surviving corporation in the Merger; WHEREAS, pursuant to the Contribution Agreement, dated as of May 30, 2003, as amended, by and among Parent, Savia, the ARG Trust, the Rights Holder, Emprima, CAI, Park, Mr. Romo and certain members of management of the Company and Savia, the ARG Trust, CAI, Park, Savia and certain members of management of the Company and Savia received shares of Common Stock immediately following the Merger; WHEREAS, pursuant to the FPSH Stock Purchase Agreement, dated as of May 30, 2003, by and among FPSH, the ARG Trust, Parent and Merger Sub (as amended from time to time, the "FPSH Stock Purchase Agreement"), immediately following the Merger, FPSH purchased the FPSH Sale Shares (as defined in the FPSH Stock Purchase Agreement) from Parent and the ARG Trust purchased 900,737 shares of Common Stock from Parent; WHEREAS, pursuant to the Stock Purchase Agreement, dated as of September 28, 2003, by and between Marcela Gonzalez and Parent, immediately following the Merger, Marcela Gonzalez purchased 805,598 shares of Common Stock from Parent; -2- WHEREAS, pursuant to the Stock Purchase Agreement, dated as of September 29, 2003, by and between Bondholder SPC and Parent, immediately following the Merger, Bondholder SPC purchased 3,606,666 shares of Common Stock from Parent; WHEREAS, immediately following the Merger, Savia Transferred to the Pulsar Administration and Payment Trust 3,844,117 shares of Common Stock and the ARG Trust Transferred to Emprima 4,365,257 shares of Common Stock; WHEREAS, in connection with the Merger and the transactions contemplated by the FPSH Stock Purchase Agreement, the Company entered into the Co-Investment Rights Agreements with the Rights Holder and FPSH; WHEREAS, pursuant to the Class C PIK Preferred Stock and Warrant Subscription Agreement, dated as of September 28, 2003, by and between Merger Sub and NML, immediately following the Merger, NML purchased 40,000 shares of Class C PIK Preferred Stock, $.0l par value, of the Company (the "Class C PIK Preferred Stock") and entered into a warrant agreement with the Company, of even date herewith, pursuant to which NML received warrants to purchase 2,980,839 shares of Common Stock; WHEREAS, pursuant to the Class C PIK Preferred Stock and Warrant Subscription Agreement, dated as of September 28, 2003, by and among Merger Sub, ABP and PGGM, immediately following the Merger, (i) ABP purchased 8,571 shares of Class C PIK Preferred Stock, and entered into a warrant agreement with the Company, of even date herewith, pursuant to which ABP received warrants to purchase 638,719 shares of Common Stock and (ii) PGGM purchased 1,429 shares of Class C PIK Preferred Stock, and entered into a warrant agreement with the Company, of even date herewith, pursuant to which PGGM received warrants to purchase 106,491 shares of Common Stock; and WHEREAS, the parties hereto desire to restrict the sale, assignment, transfer, encumbrance or other disposition of the Common Stock (or other equity securities of the Company) or securities convertible into or exchangeable for Common Stock (or other equity securities of the Company) that the parties hereto shall own, or may hereafter acquire, and to provide for certain rights and obligations in respect thereof as hereinafter provided. NOW, THEREFORE, in consideration of the premises and of the terms and conditions contained herein, the parties hereto agree as follows: ARTICLE I DEFINITIONS As used in this Agreement, the following terms shall have the meanings ascribed to them below: "ABP" shall have the meaning ascribed to it in the Preamble hereto. "Affected Holder" shall have the meaning ascribed to it in Section 7.11 hereof. -3- "Affiliate" of a Person shall mean another Person, directly or indirectly, controlled by, controlling or under common control with such first Person. The term "Affiliated" shall have a correlative meaning. "Agreement" shall have the meaning ascribed to it in the Preamble hereto. "Annual Business Plan" shall mean, with respect to a particular fiscal year, a detailed one-year business, operating and strategic plan for the Company, which plan shall show in reasonable detail (i) the revenues, expenses and capital expenditures projected for the Company's business during such period, (ii) the receipts and disbursements projected for the Company's business during such period, (iii) the sales and net working capital milestones to be used to determine executive bonuses and the vesting of restricted stock units for such period, and (iv) such other appropriate items. "Approved Annual Business Plan" shall mean an Annual Business Plan adopted in accordance with Section 5.1 of this Agreement as such Approved Annual Business Plan may be amended from time to time in accordance with Section 5.1 of this Agreement. "Approved Business Plan" shall mean the Approved Annual Business Plan or the Approved Three-Year Business Plan, if any, in effect from time to time in accordance with Section 5.2.1 or Section 5.2.2 of this Agreement. "Approved Three-Year Business Plan" shall mean a Three-Year Business Plan adopted in accordance with Section 5.1 of this Agreement as such Approved Three-Year Business Plan may be amended from time to time in accordance with Section 5.1 of this Agreement. "ARG Trust" shall have the meaning ascribed to it in the Preamble hereto. "Bondholder SPC" shall have the meaning ascribed to it in the Preamble hereto. "Business" shall have the meaning ascribed to it in Section 6.1 hereof. "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. "Business Investment Offer" shall have the meaning ascribed to it in Section 6.1 hereof. "Buy-Out Note" shall mean an unsecured promissory note of the Company, or a direct or indirect subsidiary thereof, which shall have a stated maturity of (i) five (5) years or (ii) if at the end of such period there exists, or payment of such note would result in, an event of default (or an event which with notice or lapse of time or both would constitute an event of default) under any indebtedness of the Company or any of its subsidiaries, the first date on which such event of default ceases to exist or would cease to be a result, shall accrue interest at 6.0% per annum, shall be prepayable at the option of the Company or such subsidiary at any time, in whole or in part, at its principal amount plus any accrued and unpaid interest, shall provide for -4- the reimbursement of reasonable expenses incurred by the holder to enforce the terms of the note and shall accelerate upon the earlier of a Change of Control or the consummation of an IPO. "CAI" shall have the meaning ascribed to it in the Preamble hereto. "Call Right" shall have the meaning ascribed to it in Section 4.1 hereof. "Called Shares" shall have the meaning ascribed to it in Section 4.1 hereof. "Cause" with respect to a Management Investor, shall have the meaning ascribed to it in such Management Investor's Employment Agreement or any analogous provision of any employment, compensation or benefit agreement or arrangement, if any, and if not so defined, shall be based upon the good faith determination of the Compensation Committee of the Board of Directors of the Company. "Certificate" shall have the meaning ascribed to it in the Recitals hereof. "Change of Control" shall mean (i) the acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) other than FPSH and its Affiliates and/or Mr. Romo and his Affiliates of a majority of the outstanding voting stock of the Company or (ii) the sale of or other disposition (other than by way of merger or consolidation) of all or substantially all of the assets of the Company and its subsidiaries taken as a whole to any Person or group of Persons, other than to a Person (or group of Persons) a majority of the outstanding voting stock (or other interests) of which are beneficially owned by FPSH and its Affiliates and/or Mr. Romo and his Affiliates. "Claims" shall mean losses, claims, damages or liabilities, joint or several, actions or proceedings (whether commenced or threatened). "Class C PIK Preferred Stock" shall have the meaning ascribed to it in the Recitals hereof. "Co-Investment Rights" shall mean the 15% Co-Investment Rights, the SPC Hurdle Co-Investment Rights and the FPSH Hurdle Co-Investment Rights, taken together. "Co-Investment Rights Agreements" shall mean the 15% Co-Investment Rights Agreement, the SPC Hurdle Co-Investment Rights Agreement and the FPSH Hurdle Co-Investment Rights Agreements, taken together. "Co-Investor Transferee" shall have the meaning ascribed to it in Section 2.3.2 hereof. "Common Stock" shall have the meaning ascribed to it in the Recitals hereof. "Company" shall have the meaning ascribed to it in the Preamble hereto. "Corporate Policies and Procedures" shall mean the corporate policies and procedures of the Company (including rules of ethics and good business practices) mutually adopted by FPSH and Mr. Romo prior to the Effective Date and attached hereto as Exhibit A. -5- "Cost Per Share" shall mean $3.40; provided that, with respect to any shares of Common Stock (i) issued or sold by the Company following the Effective Date, the Cost Per Share shall be equal to the actual cost paid for such shares or (ii) granted as Restricted Stock, a Restricted Stock Unit or otherwise for non-cash consideration, the Cost Per Share shall be an amount reasonably determined by the Board of Directors of the Company in light of all circumstances. "Demand Registration" shall have the meaning ascribed to it in Section 3.1.2 hereof. "E and A `J' Trust Hurdle Co-Investment Rights Agreement" shall mean the Agreement by and between E and A `J' Trust and the Company, of even date herewith, relating to the E and A `J' Trust Hurdle Co-Investment Rights. "E and A `J' Trust Hurdle Co-Investment Rights" shall mean the rights granted pursuant to the E and A `J' Trust Hurdle Co-Investment Rights Agreement, of even date herewith. "Effective Date" shall have the meaning ascribed to it in Section 7.1.1 hereof. "Employment Agreement" shall mean, with respect to a Management Investor, the employment agreement entered into by the Company and/or any of its subsidiaries and such Management Investor, as may be amended from time to time. Collectively, with each other Employment Agreement, the "Employment Agreements." "Emprima" shall have the meaning set forth in the Preamble hereto. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder. "Fair Market Value" shall mean, as of any given date, the mean between the highest and lowest reported sales prices of the Common Stock on the New York Stock Exchange or, if not listed on such exchange, on any other national securities exchange on which the Common Stock is listed or, if not so listed, on the Nasdaq National Market. If such sales prices are not so available, the Fair Market Value of the Common Stock shall be as reasonably determined by the Board of Directors of the Company in light of all circumstances. "15% Co-Investment Rights" shall mean the rights granted pursuant to the 15% Co-Investment Rights Agreement, of even date herewith, between the Rights Holder and the Company. "15% Co-Investment Rights Agreement" shall mean the agreement by and between the Rights Holder and the Company, of even date herewith, relating to the 15% Co-Investment Rights. "Final Sale" shall have the meaning ascribed to it in Section 2.6.1(b) hereof. "fiscal year" shall mean, with respect to the Company, the twelve-month period beginning October 1 and ending September 30. -6- "FPC GP Hurdle Co-Investment Rights Agreement" shall mean the Agreement by and between FPC Investors GP and the Company, of even date herewith, relating to the FPC GP Hurdle Co-Investment Rights. "FPC GP Hurdle Co-Investment Rights" shall mean the rights granted pursuant to the FPC GP Hurdle Co-Investment Rights Agreement, of even date herewith. "FPSH" shall mean Fox Paine Capital Fund II, L.P., Fox Paine Capital Fund II Co-Investors, L. P., E and A `J' Trust, FPC Investment GP, FPSH Coinvestment Fund I, LLC, FPSH Coinvestment Fund II, LLC, FPSH Coinvestment Fund III, LLC, FPSH Coinvestment Fund IV, LLC, FPSH Coinvestment Fund V, LLC, any FPSH Affiliate Transferees and any Co-Investor Transferees, taken together. "FPSH Affiliate Transferee" shall have the meaning ascribed to it in Section 2.3.1 hereof. "FPSH Coinvestment Fund I Hurdle Co-Investment Rights Agreement" shall mean the Agreement by and between FPSH Coinvestment Fund I, LLC and the Company, of even date herewith, relating to the FPSH Coinvestment Fund I Hurdle Co-Investment Rights. "FPSH Coinvestment Fund I Hurdle Co-Investment Rights" shall mean the rights granted pursuant to the FPSH Coinvestment Fund I Hurdle Co-Investment Rights Agreement, of even date herewith. "FPSH Coinvestment Fund II Hurdle Co-Investment Rights Agreement" shall mean the Agreement by and between FPSH Coinvestment Fund II, LLC and the Company, of even date herewith, relating to the FPSH Coinvestment Fund II Hurdle Co-Investment Rights. "FPSH Coinvestment Fund II Hurdle Co-Investment Rights" shall mean the rights granted pursuant to the FPSH Coinvestment Fund II Hurdle Co-Investment Rights Agreement, of even date herewith. "FPSH Coinvestment Fund III Hurdle Co-Investment Rights Agreement" shall mean the Agreement by and between FPSH Coinvestment Fund III, LLC and the Company, of even date herewith, relating to the FPSH Coinvestment Fund III Hurdle Co-Investment Rights. "FPSH Coinvestment Fund III Hurdle Co-Investment Rights" shall mean the rights granted pursuant to the FPSH Coinvestment Fund III Hurdle Co-Investment Rights Agreement, of even date herewith. "FPSH Coinvestment Fund IV Hurdle Co-Investment Rights Agreement" shall mean the Agreement by and between FPSH Coinvestment Fund IV, LLC and the Company, of even date herewith, relating to the FPSH Coinvestment Fund IV Hurdle Co-Investment Rights. -7- "FPSH Coinvestment Fund IV Hurdle Co-Investment Rights" shall mean the rights granted pursuant to the FPSH Coinvestment Fund IV Hurdle Co-Investment Rights Agreement, of even date herewith. "FPSH Coinvestment Fund V Hurdle Co-Investment Rights Agreement" shall mean the Agreement by and between FPSH Coinvestment Fund V, LLC and the Company, of even date herewith, relating to the FPSH Coinvestment Fund V Hurdle Co-Investment Rights. "FPSH Coinvestment Fund V Hurdle Co-Investment Rights" shall mean the rights granted pursuant to the FPSH Coinvestment Fund V Hurdle Co-Investment Rights Agreement, of even date herewith. "FPSH Designee" shall have the meaning ascribed to it in Section 5.2.1 hereof. "FPSH Drag-Along Right" shall have the meaning ascribed to it in Section 2.5.1 hereof. "FPSH Drag-Along Seller" shall have the meaning ascribed to it in Section 2.5.2 hereof. "FPSH Drag Sale" shall have the meaning ascribed to it in Section 2.5 hereof. "FPSH Hurdle Co-Investment Rights" shall mean the rights granted pursuant to the FPSH Hurdle Co-Investment Rights Agreements, of even date herewith. "FPSH Hurdle Co-Investment Rights Agreements" shall mean the Fund II Hurdle Co-Investment Rights Agreement, the Fund II Co-Investors Hurdle Co-Investment Rights Agreement, the E and A `J' Hurdle Co-Investment Rights Agreement, the FPC GP Hurdle Co-Investment Rights Agreement, the FPSH Coinvestment Fund I Hurdle Co-Investment Rights Agreement, the FPSH Coinvestment Fund II Hurdle Co-Investment Rights Agreement, the FPSH Coinvestment Fund III Hurdle Co-Investment Rights Agreement, the FPSH Coinvestment Fund IV Hurdle Co-Investment Rights Agreement and the FPSH Coinvestment Fund V Hurdle Co-Investment Rights Agreement. "FPSH Initiated Third-Party Sale" shall have the meaning ascribed to it in Section 2.4.2(c) hereof. "FPSH Invested Capital" shall mean $163,234,496. "FPSH Representative" shall have the meaning ascribed to it in Section 7.6.1 hereof. "FPSH Sale Initiative" shall have the meaning ascribed to it in Section 2.4.2(a) hereof. "FPSH Sale Notice" shall have the meaning ascribed to it in Section 2.4.2(a) hereof. "FPSH Sale Price" shall have the meaning ascribed to it in Section 2.4.2(a) hereof. "FPSH Stock Purchase Agreement" shall have the meaning ascribed to it in the Recitals hereof. -8- "FPSH Transfer Shares" shall have the meaning ascribed to it in Section 2.4.2(a) hereof. "Fund II Co-Investors Hurdle Co-Investment Rights Agreement" shall mean the Agreement by and between Fox Paine Capital Fund II Co-Investors, L.P. and the Company, of even date herewith, relating to the Fund II Co-Investors Hurdle Co-Investment Rights. "Fund II Co-Investors Hurdle Co-Investment Rights" shall mean the rights granted pursuant to the Fund II Co-Investors Hurdle Co-Investment Rights Agreement, of even date herewith. "Fund II Hurdle Co-Investment Rights Agreement" shall mean the Agreement by and between Fox Paine Capital Fund II, L.P. and the Company, of even date herewith, relating to the Fund II Hurdle Co-Investment Rights. "Fund II Hurdle Co-Investment Rights" shall mean the rights granted pursuant to the Fund II Hurdle Co-Investment Rights Agreement, of even date herewith. "Good Reason" with respect to a Management Investor, shall have the meaning ascribed to it in such Management Investor's Employment Agreement or any analogous provision of any employment, compensation or benefit agreement or arrangement, if any, and if not so defined, shall be based upon the good faith determination of the Compensation Committee of the Board of Directors of the Company. "Hurdle Co-Investment Rights" shall mean the FPSH Hurdle Co-Investment Rights and the SPC Hurdle Co-Investment Rights, taken together. "Indemnification Agreement" shall mean the Indemnification Agreement, dated May 30, 2003, by and among FPSH, the ARG Trust, the Rights Holder, Desarrollo Empresarial Regiomontano, S.A. de C.V., Emprima, Park, Savia, and Mr. Romo. "Initiating Party" shall have the meaning ascribed to it in Section 3.1.2 hereof. "IPO" shall mean an underwritten initial public offering or public offerings (on a cumulative basis) of shares of Common Stock pursuant to a registration statement or registration statements under the Securities Act with aggregate gross proceeds to the Company and any selling Stockholders of at least $100 million. "IRR Hurdle" shall mean an annual compounded internal rate of return on the FPSH Invested Capital (after return of an amount equal to the FPSH Invested Capital) of 26%. The IRR Hurdle shall not be deemed to be satisfied unless FPSH receives actual cash proceeds from the sale or other disposition of the IRR Shares (or has the ability to immediately sell the IRR Shares for actual cash proceeds), as well as cash dividends or other cash distributions in respect of the IRR Shares, such that FPSH has received a return of the full amount of the FPSH Invested Capital, plus a 26% annually compounded internal rate of return on the FPSH Invested Capital, calculated from the date hereof through the date of each sale, disposition or distribution of, or ability to immediately sell, the IRR Shares for actual cash proceeds. Attached hereto as Exhibit B is a sample calculation of the IRR Hurdle. -9- "IRR Shares" shall mean the shares of Common Stock purchased with the FPSH Invested Capital. "Management Investors" shall mean Gaspar Alvarez, Franco Campana, Bruno Ferrari, Charles Edward Green, Luis Maiz, Mateo Mazal, Bernardo Jimenez Barrera, Adrian Rodriguez Macedo, Jose Manuel Madero and Jean Pierre Posa. "Management Transferees" shall have the meaning ascribed to it in Section 2.3.3 hereof. "Merger" shall have the meaning ascribed to it in the Recitals hereof. "Merger Agreement" shall have the meaning ascribed to it in the Recitals hereof. "Merger Sub" shall have the meaning ascribed to it in the Recitals hereof. "Mr. Romo" shall have the meaning ascribed to it in the Preamble hereto. "Multi-Step FPSH Majority Buyer" shall have the meaning ascribed to it in Section 2.6.1(b) hereof. "Multi-Step FPSH Majority Sale" shall have the meaning ascribed to it in Section 2.6.1(b) hereof. "NASD" shall mean the National Association of Securities Dealers, Inc. "Nasdaq" shall mean The Nasdaq Stock Market, Inc. "1998 Stock Incentive Plan" shall have the meaning ascribed to it in the Recitals hereof. "NML" shall have the meaning ascribed to it in the Preamble hereto. "NML Initiating Party" shall have the meaning ascribed to it in Section 3.1.2 hereof. "Offer Shares" shall have the meaning ascribed to it in Section 2.6.1(a), Section 2.6.1(b) and Section 2.6.1(c) hereof. "Offeree Stockholders" shall have the meaning ascribed to it in Section 2.6.1(a), Section 2.6.1(b) and Section 2.6.1(c) hereof. "Options" shall mean options to purchase shares of Common Stock from the Company. "Parent" shall have the meaning ascribed to it in the Recitals hereof. "Park" shall have the meaning ascribed to it in the Preamble hereto. -10- "Permanent Disability" with respect to a Management Investor, shall have the meaning ascribed to it in such Management Investor's Employment Agreement or any analogous provision of any employment, compensation or benefit agreement or arrangement, if any, and if not so defined, shall be based upon the good faith determination of the Compensation Committee of the Board of Directors of the Company. "Person" shall mean an individual, corporation, partnership, limited liability company, joint venture, trust, unincorporated organization, government (or any department or agency thereof) or other entity. "Piggyback Notice" shall have the meaning ascribed to it in Section 3.1.1 hereof. "Piggyback Registration" shall have the meaning ascribed to it in Section 3.1.1 hereof. "Proposed Transferee" means a Person or group (as defined in Section 13(d)(3) of the Exchange Act) other than any Stockholders or their Affiliates (whether any such Affiliate is such prior to or upon consummation of the proposed Transfer, but not solely by virtue of becoming a party to this Agreement) to whom Common Stock is proposed to be Transferred pursuant to the terms of Section 2.4, 2.5 or 2.6.3(a). "PGGM" shall have the meaning ascribed to it in the Preamble hereto. "PS Equity" shall have the meaning ascribed to it in Section 2.4.2(b) hereof. "PS Permitted Transferees" shall mean Transferees of NML, ABP or PGGM, as applicable, permitted by Section 2.3.1 and Section 2.3.8. "Pulsar Administration and Payment Trust" shall have the meaning ascribed to it in the Preamble hereto. "Put Options" shall have the meaning ascribed to it in Section 4.2 hereof. "Put Right" shall have the meaning ascribed to it in Section 4.2 hereof. "Put Shares" shall have the meaning ascribed to it in Section 4.2 hereof. "Registrable Securities" shall mean shares of Common Stock; provided, however, as to any particular Registrable Securities, once issued, such securities shall cease to be Registrable Securities when (i) a registration statement with respect to the sale of such securities shall have become effective under the Securities Act and such securities shall have been disposed of in accordance with such registration statement, (ii) such securities shall have been sold pursuant to Rule 144 (or any successor provision under the Securities Act), under the Securities Act, (iii) such securities shall have been otherwise transferred and new certificates for such securities not bearing a legend restricting further transfer shall have been delivered by the Company, or (iv) such securities shall have ceased to be outstanding (and, in the case of shares of Common Stock underlying Options, or underlying Options or warrants granted otherwise, such shares of Common Stock shall have ceased to be outstanding after issuance pursuant to the exercise of such Options or warrants). -11- "Registration Expenses" shall mean any and all expenses incident to performance of or compliance with Article III, including, without limitation, (i) all SEC and stock exchange or NASD registration and filing fees, (ii) all fees and expenses of complying with securities or "blue sky" laws (including reasonable fees and disbursements of counsel for the underwriters in connection with "blue sky" qualifications of the Registrable Securities), (iii) all printing, messenger and delivery expenses, (iv) the fees and disbursements of counsel for the Company and of the Company's independent public accountants, including the expenses of any special audits and/or "cold comfort" letters required by or incident to such performance and compliance, (v) the reasonable fees and disbursements of one counsel retained by the Stockholders, such counsel to be chosen by the Stockholders (by vote of a plurality of the shares of such Stockholders being registered) as a group in connection with each such registration, (vi) any fees and disbursements of underwriters customarily paid by issuers or sellers of securities and the reasonable fees and expenses of any special experts retained in connection with the requested registration, including any fee payable to a qualified independent underwriter within the meaning of the rules of the NASD, but excluding underwriting discounts and commissions and transfer taxes, if any, (vii) internal expenses of the Company (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties) and (viii) securities acts liability insurance (if the Company elects to obtain such insurance). "Required Third-Party Sale" shall have the meaning ascribed to it in Section 2.4.1(c) and Section 2.4.2(c) hereof. "Restricted Person" shall have the meaning ascribed to it in Section 2.1.4 hereof. "Restricted Stock" means shares of restricted stock. "Restricted Stock Units" shall have the meaning ascribed to it in the Recitals hereof. "Rights Holder" shall have the meaning ascribed to it in the Preamble hereto. "Romo Designee" shall have the meaning ascribed to it in Section 5.2.1 hereof. "Romo Initiated Third-Party Sale" shall have the meaning ascribed to it in Section 2.4.1(c) hereof. "Romo Persons" shall mean Mr. Romo, the Rights Holder, the ARG Trust, Emprima, CAI, the Pulsar Administration and Payment Trust and Park. "Romo Representative" shall have the meaning ascribed to it in Section 5.1.1 hereof. "Romo Sale Initiative" shall have the meaning ascribed to it in Section 2.4.1(a) hereof. "Romo Sale Notice" shall have the meaning ascribed to it in Section 2.4.1(a) hereof. -12- "Romo Sale Price" shall have the meaning ascribed to it in Section 2.4.1(a) hereof. "Romo Transfer Shares" shall have the meaning ascribed to it in Section 2.4.1(a) hereof. "Romo Transferees" shall have the meaning ascribed to it in Section 2.3.5 hereof. "Rule 144" shall mean Rule 144 under the Securities Act. "Savia" shall have the meaning ascribed to it in the Preamble hereto. "SEC" shall mean the Securities and Exchange Commission, "Section 3.1 Sale Number" shall have the meaning ascribed to it in Section 3.1.4 hereof. "Securities Act" shall mean the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder. "SPC Co-Investment Rights" shall mean the 15% Co-Investment Rights and the SPC Hurdle Co-Investment Rights, taken together. "SPC Hurdle Co-Investment Rights" shall mean the rights granted pursuant to the SPC Hurdle Co-Investment Rights Agreement, to be dated as of the Effective Date, between the Rights Holder and the Company. "SPC Hurdle Co-Investment Rights Agreement" shall mean the agreement by and between the Rights Holders and the Company, to be dated as of the Effective Date, relating to the SPC Hurdle Co-Investment Rights. "Stockholder" shall have the meaning ascribed to it in the Preamble hereto. "Supermajority of the Board" shall mean a majority of the Board of Directors of the Company consisting of at least one Romo Designee and at least one FPSH Designee. "2003 Stub Period" shall have the meaning ascribed to it in Section 5.1 hereof. "Tag-Along Right" shall have the meaning ascribed to it in Section 2.6.3(a) hereof. "Tag-Along Seller" shall have the meaning ascribed to it in Section 2.6.3(b) hereof. "Tag-Along Shares" shall have the meaning ascribed to it in Section 2.6.2 hereof. "Tag Carve-Out Sale" shall have the meaning ascribed to it in Section 2.6.1(a) hereof. -13- "Tag Notice" shall have the meaning ascribed to it in Section 2.6.1(a), Section 2.6.1(b) and Section 2.6.1(c) hereof. "Targets" shall mean the targets set forth on Exhibit C hereto. "Target Default" shall mean (i) the failure of the Company to achieve, during a calendar quarter, at least 90% of the corresponding Target for the trailing twelve months, together with (ii) the failure of the Company to achieve, in the immediately following calendar quarter, at least 90% of the corresponding Target for the trailing twelve months. "Three-Year Business Plan" shall mean a detailed three-year business, operating and strategic plan for the Company which shall show in reasonable detail (i) the revenues, expenses and capital expenditures projected for the Company's business during such period, (ii) the receipts and disbursements projected for the Company's business during such period and (iii) such other appropriate items, in each case on an annual basis. "TPS Drag-Along Right" shall have the meaning ascribed to it in Section 2.4.3 hereof. "TPS Drag-Along Seller" shall have the meaning ascribed to it in Section 2.4.4 hereof. "Transfer" shall mean to sell, assign, pledge or encumber or otherwise transfer, directly or indirectly, whether or not for consideration. "Transferee" shall mean any Person to whom a Transfer is made, regardless of the method of Transfer. "Transferor" shall mean any Person by whom a Transfer is made, regardless of the method of Transfer. "2003 Stub Period" shall have the meaning ascribed to it in Section 5.1.1 hereof. "Violation" shall have the meaning ascribed to it in Section 3.3(a) hereof. "Warrants" shall mean warrants to purchase shares of Common Stock from the Company. ARTICLE II RESTRICTIONS ON TRANSFERS OF STOCK 2.1 General Limitations on Transfers. 2.1.1 Transfers Generally. (a) Other than Transfers made pursuant to Section 2.3 (Certain Permitted Transfers), Section 2.5 (FPSH Drag Sale) and Section 2.3.8 (NML/ABP/PGGM Permitted Sales) (and, in each case, in compliance with such other -14- applicable provisions of this Article II), no Stockholder shall, at any time prior to the three-year anniversary of the Effective Date, Transfer any shares of Common Stock, Options, Warrants or Co-Investment Rights and any Transfer by any Stockholder of any shares of Common Stock, Options, Warrants or Co-Investment Rights in violation of this sentence shall be null and void. Following the three-year anniversary of the Effective Date, Stockholders may generally Transfer shares of Common Stock, Options, Warrants or Co-Investment Rights, subject to compliance with applicable provisions of this Article II and subject to any restrictions contained in any other agreement or plan governing equity of the Company, and any Transfer by any Stockholder of any shares of Common Stock, Options, Warrants or Co-Investment Rights in violation of such provisions shall be null and void. (b) As used in this Agreement, Common Stock shall include any shares of Restricted Stock or any Restricted Stock Units granted to any Management Investors; provided, however, that, to the extent the Transfer thereof is otherwise prohibited or restricted, no rights to Transfer, including pursuant to Sections 2.3, 2.4, 2.5 and 2.6 and Article III, shall be granted hereunder. 2.1.2 Recordation. The Company shall not record upon its books any Transfer of shares of Common Stock, Options, Warrants or Co-Investment Rights held or owned by any of the Stockholders to any other Person, except Transfers in accordance with this Agreement. 2.1.3 Obligations of Transferees. No Transfer of shares of Common Stock, Options, Warrants or Co-Investment Rights by a Stockholder otherwise permitted pursuant to this Agreement (other than pursuant to a Piggyback Registration, Demand Registration or pursuant to Section 2.4, Section 2.5 or Section 2.6 (if, in the case of a Transfer pursuant to Section 2.6, 100% of the shares of Common Stock and securities convertible into or exercisable for any shares of Common Stock (including exercisable Co-Investment Rights, if any) are Transferred)) shall be effective unless (a) the Transferee (including a Transferee pursuant to Section 2.3) shall have executed an appropriate document in form and substance reasonably satisfactory to the Company confirming that (i) the Transferee takes such shares subject to all the terms and conditions of this Agreement to the same extent as its Transferor was bound by and entitled to the benefits of such provisions, and (ii) the shares shall bear legends, substantially in the forms required by Section 2.7, and (b) such document shall have been delivered to and approved (as described above) by the Company prior to such Transferee's acquisition of shares of Common Stock, Options, Warrants or Co-Investment Rights, such approval not to be unreasonably withheld or delayed. 2.1.4 Transfers to Restricted Persons. Notwithstanding anything to the contrary in this Agreement, (a) without the consent of a Supermajority of the Board with respect to Transfers by Stockholders other than FPSH or any Romo Person or any Romo Transferee, (b) without the consent of Mr. Romo with respect to Transfers by FPSH, and (c) without the consent of FPSH with respect to Transfers by any Romo Person or any Romo Transferee: no Stockholder shall, at any time, directly or indirectly, Transfer any shares of Common Stock, Options, Warrants or Co-Investment Rights to any Person listed in Exhibit D of this Agreement (as such Exhibit D may be amended as mutually agreed in good faith by Mr. Romo and FPSH from time to time based on changes in the relevant industry) (any such listed Person, a "Restricted Person") or to any Affiliate of any such Restricted Person unless such Transfer (a) is made pursuant to, and in accordance with, Section 2.4, Section 2.5 or Section 2.6 (if, in the case -15- of a Transfer pursuant to Section 2.6, 100% of the shares of Common Stock and securities convertible into or exercisable for any shares of Common Stock (including exercisable Co-Investment Rights, if any) are Transferred), (b) is made in accordance with the terms of this Agreement and is made pursuant to a widely distributed, underwritten public offering registered under the Securities Act (or an underwritten offering pursuant to the exercise of such other Stockholders' piggyback registration rights pursuant to Section 3.1.1) or pursuant to a sale effected through an open market, non-directed broker's transaction pursuant to Rule 144 in which the seller does not know that the buyer is a Restricted Person, or (c) is made pursuant to a liquidation or dissolution of any of the entities comprising FPSH. 2.2 Compliance with Securities Laws. No Stockholder shall Transfer any shares of Common Stock, Options, Warrants or Co-Investment Rights unless the Transfer is made in accordance with the terms of this Agreement and (a) the Transfer is pursuant to an effective registration statement under the Securities Act and in compliance with any other applicable federal securities laws and state securities or "blue sky" laws or (b) such Stockholder shall have furnished the Company with (i) an opinion of counsel, if reasonably requested by the Company, which opinion and counsel shall be reasonably satisfactory to the Company, to the effect that no such registration is required because of the availability of an exemption from registration under the Securities Act and under any applicable state securities or "blue sky" laws and that the Transfer otherwise complies with this Agreement and any other applicable federal securities laws and state securities or "blue sky" laws and (ii) such representations and covenants of such Stockholder as are reasonably requested by the Company to ensure compliance with any applicable federal securities laws and state securities or "blue sky" laws. 2.3 Certain Permitted Transfers. 2.3.1 FPSH/NML/ABP/PGGM Affiliate Transfers. The restrictions contained in Section 2.1.1 shall not apply to any Transfer by FPSH to an Affiliate of FPSH or to any direct or indirect equity holder of FPSH (but if such equity holder is not an Affiliate of FPSH, the exception to the restrictions contained in Section 2.1.1 shall only apply to the extent Transfers are made on a pro rata basis to the equity holders of the Transferring entity); provided, however, that, if FPSH shall have Transferred any shares of Common Stock, Options, Warrants or Co-Investment Rights to an Affiliate of FPSH or to any direct or indirect equity holder of FPSH (each, an "FPSH Affiliate Transferee") and, thereafter, such FPSH Affiliate Transferee ceases to be an Affiliate of FPSH (other than in connection with a liquidation or dissolution of the relevant Affiliate of FPSH), then such FPSH Affiliate Transferee shall, within 30 days from the date on which such FPSH Affiliate Transferee ceased to be an Affiliate of FPSH, Transfer such shares of Common Stock, Options, Warrants or Co-Investment Rights back to FPSH or one or more Affiliates of FPSH. The restrictions contained in Section 2.1.1 shall not apply to any Transfer by NML, ABP, PGGM or any of their respective PS Permitted Transferees to any of their respective Affiliates. 2.3.2 Co-Investor Transfers. The restrictions contained in Section 2.1.1 shall not apply to any Transfer prior to the six-month anniversary of this Agreement by FPSH to (a) any limited partner or Affiliates thereof in any investment fund Affiliated with Fox Paine & Co., LLC, or (b) any financing sources or Affiliates thereof in connection with the transactions -16- contemplated by the Merger Agreement (any Transferee pursuant to this Section 2.3.2, a "Co-Investor Transferee"). 2.3.3 Transfers by Management Investors. The restrictions contained in Section 2.1.1 shall not apply to any Transfer by a Management Investor: (a) to or among such Management Investor's spouse, children (including adopted), grandchildren (including adopted) or other living descendants, or executors, administrators, testamentary trustees or to a trust or family partnership of which there are no principal (i.e., corpus) beneficiaries or partners other than the grantor or one or more of such Management Investor, spouse or described relatives, executors, administrators, testamentary trustees, or by the laws of descent and distribution and provided that, in the case of a trust, the existing beneficiaries and/or trustee(s) and/or grantor(s) of such trust have the power to act with respect to the trust's assets without court approval and, in the case of a family partnership, that the partners thereof have the power to act with respect to the partnership's assets without court approval and the partnership is not permitted to (i) distribute assets to Persons who are not among the relatives listed above or (ii) have partners who are not among the relatives listed above, and, in any case, all the partners agree, for the benefit of the Company and FPSH, not to amend such provisions; (b) to a legal representative of such Management Investor in the event such Management Investor becomes mentally incompetent or to such Management Investor's personal representative following the death of such Management Investor; or (c) with the prior written approval of the Company, which approval may be granted or withheld by a Supermajority of the Board, in its sole and absolute discretion. Transferees to whom Transfers are permitted pursuant to this Section 2.3.3 are referred to herein as "Management Transferees." For purposes of this Section 2.3.3 only, Marcela Gonzalez shall be treated as a Management Investor and shall have the same rights regarding Transfers as are set forth in this Section 2.3.3. Marcela Gonzalez shall also have the right to make Transfers to her mother and her sisters in the same manner as the other Transfers permitted by this Section 2.3.3. 2.3.4 Transfers by FPSH Affiliate Transferees, Co-Investor Transferees and Management Transferees. The restrictions contained in Section 2.1.1 shall not apply to any Transfer by (a) an FPSH Affiliate Transferee to FPSH or to another FPSH Affiliate Transferee, (b) a Management Transferee of a Management Investor to such Management Investor or to another Management Transferee of such Management Investor, or (c) a Co-Investor Transferee to FPSH or to an FPSH Affiliate Transferee. 2.3.5 Romo Family Transfers. The restrictions contained in Section 2.1.1 shall not apply to any Transfer by any Romo Person: (a) to any other Romo Person, (b) to or among Mr. Romo's spouse, children (including adopted), grandchildren (including adopted) or other living descendants, or executors, administrators, testamentary trustees or to a trust or family partnership of which there are no principal (i.e., corpus) beneficiaries or partners other than the grantor or one or more of Mr. Romo, his spouse or described relatives, executors, administrators, testamentary trustees, or by the laws of descent and distribution and provided that, in the case of a trust, the existing beneficiaries and/or trustee(s) and/or grantor(s) of such trust have the power to act with respect to the trust's assets without court approval and, in the case of a family partnership, that the partners thereof have the power to act with respect to the partnership's assets without court approval and the partnership is not permitted to (i) distribute assets to Persons who are not among the relatives listed above or (ii) have partners who are not among the relatives listed above, and, in any case, all the partners agree, for the benefit of the Company and FPSH, not to amend such provisions; (c) to a legal representative of Mr. Romo in the event Mr. Romo -17- becomes mentally incompetent or to Mr. Romo's personal representative following his death; or (d) with the prior written approval of FPSH, which approval may be granted or withheld by FPSH in its sole and absolute discretion. Transferees to whom Transfers are permitted pursuant to this Section 2.3.5 are referred to herein as "Romo Transferees." The restrictions contained in Section 2.1.1 shall not apply to any Transfer by a Romo Transferee to another Romo Transferee. 2.3.6 Transfers to Romo Persons or FPSH. The restrictions contained in Section 2.1.1 shall not apply to any Transfer by the Bondholder SPC, a Romo Person, a Management Investor, a Romo Transferee, FPSH, or a Management Transferee to a Romo Person or to FPSH, provided, however, that (a) any such Transfers by any Management Investor or Management Transferee shall be offered on a proportionate basis to (i) FPSH, on the one hand, and (ii) the Romo Persons, on the other hand, and (b) any such Transfers by the Bondholder SPC may be made only to a Romo Person. The restrictions contained in Section 2.1.1 shall not apply to the Transfer by the ARG Trust of 4,365,257 shares of Common Stock to Emprima or to the Transfer by Savia of 3,844,117 shares of Common Stock to the Pulsar Administration and Payment Trust, which Transfers shall occur following the closing of the transactions contemplated by the FPSH Stock Purchase Agreement. In addition, the restrictions contained in Section 2.1 shall not apply to the Transfer by the Pulsar Administration and Payment Trust to Bondholder SPC of 1,617,647 shares of Common Stock. 2.3.7 Pledges. The restrictions contained in Section 2.1.1 shall not apply to (a) the security interest granted by Emprima, for the benefit of the Pulsar Administration and Payment Trust, with respect to Emprima's 4,365,257 shares of Common Stock, (b) the escrow of the SPC Co-Investment Rights by the Rights Holder, for the benefit of FPSH, pursuant to the Indemnification Agreement, or (c) the escrow of Park's 1,000,000 shares of Common Stock, by Park, for the benefit of FPSH, pursuant to the Indemnification Agreement. 2.3.8 NML/ABP/PGGM Permitted Sales. Notwithstanding anything to the contrary contained in this Article II, subject to the terms of this Agreement, including compliance with Sections 2.1.3, 2.1.4 and 2.2, prior to the three-year anniversary of this Agreement, (a) NML and any of its PS Permitted Transferees shall be permitted to make Transfers to a Person or group of Affiliated Persons of Warrants and/or shares of Common Stock that together represent 25% (taking into account any adjustments) or more of the aggregate number of Warrants owned by NML on the Effective Date, and (b) ABP and PGGM and their PS Permitted Transferees shall collectively be permitted to make Transfers to a Person or group of Affiliated Persons of Warrants and/or shares of Common Stock that together represent 100% (taking into account any adjustments) of the aggregate number of Warrants collectively owned by ABP and PGGM on the Effective Date. 2.3.9 General. Any restrictions contained in this Article II shall be in addition to and not in lieu or limitation of any restrictions on the ownership or Transfer of shares of Common Stock (including with respect to any Restricted Stock) or securities convertible into or exercisable for any shares of Common Stock contained in any stock subscription agreement or employment agreement or any analogous provision of any employment, compensation or benefit agreement or arrangement or other agreement between the Company or any of its Affiliates and any Stockholder; provided, however, that, upon the termination of any such employment agreement or other such agreement or arrangement or lapsing of such restrictions, the restrictions and provisions contained herein shall continue in full force and effect pursuant to this -18- Agreement. Any permitted Transfer under this Section 2.3 shall be subject to the terms of this Agreement, including compliance with Sections 2.1.3, 2.1.4 and 2.2. 2.4 Sale Initiatives. 2.4.1 Romo Sale Initiative. (a) On or after the three-year anniversary of the Effective Date, Mr. Romo may offer to sell to FPSH and to the Company (a "Romo Sale Initiative") all of the shares of Common Stock or securities convertible into or exercisable for any shares of Common Stock (including the SPC Co-Investment Rights) owned or controlled by the Romo Persons and the Romo Transferees and the Bondholder SPC and each such Stockholder hereby agrees to such sale (the "Romo Transfer Shares") at a price per share of Common Stock (the "Romo Sale Price") proposed by Mr. Romo that would satisfy or exceed the IRR Hurdle if 100% of the shares of Common Stock or securities convertible into or exercisable for any shares of Common Stock (including the Co-Investment Rights) of the Company were sold at such per share price, provided, however, that the Rights Holder may agree to the vesting of less than 100% of the Hurdle Co-Investment Rights (with such reduced vesting of the SPC Hurdle Co-Investment rights, the FPSH Hurdle Co-Investment Rights and any unvested Restricted Stock Units occurring on a pro rata basis) in order to cause FPSH to achieve the IRR Hurdle after giving effect to the vesting of the reduced Hurdle Co-Investment Rights and the vesting of all other rights and options to purchase Common Stock. Notice of a Romo Sale Initiative must be provided to FPSH and to the Company in writing (a "Romo Sale Notice") and must state a bona fide intention to sell the Romo Transfer Shares, specifying the cash price for such sale. (b) Each of FPSH and the Company shall be entitled to assign to a third party the right to purchase the Romo Transfer Shares in connection with its exercise of its rights hereunder. Within thirty days from the date of receipt of a Romo Sale Notice, FPSH and the Company shall each deliver a written notice to Mr. Romo stating whether FPSH (or its assignee) or the Company (or its assignee), as the case may be, elects to purchase the Romo Transfer Shares at the price and on the terms specified in the Romo Sale Notice. In the event that both FPSH (or its assignee) and the Company (or its assignee) elect to purchase the Romo Transfer Shares, the election of FPSH (or its assignee) shall prevail. The Romo Designees shall not be entitled to vote in the determination by the Board of Directors of the Company regarding the Company's rights hereunder. Any election to purchase hereunder shall be binding upon delivery and irrevocable without Mr. Romo's consent. If the Company, FPSH or an assignee of the Company or FPSH (as the case may be), elects to purchase the Romo Sale Shares, the applicable parties shall have 120 days to consummate such sale and if they fail to consummate such sale within the 120 day period, no sale shall occur. (c) If FPSH and the Company decline a Romo Sale Initiative, FPSH and Mr. Romo shall work together, for up to 180 days from the date of receipt by Mr. Romo of the later provided written notice of decline, to sell to a third party (a "Romo Initiated Third-Party Sale") 100% of the shares of Common Stock and securities convertible into or exercisable for any shares of Common Stock (including the Co-Investment Rights, subject to any such reduced vesting) at a price per share of Common Stock at or above the Romo Sale Price. Each of FPSH and Mr. Romo shall use its respective reasonable best efforts (which shall include enlisting and -19- engaging members of the Company's senior management in such effort) to effect a Romo Initiated Third-Party Sale. If a bona fide written offer from a third-party for a Romo Initiated Third-Party Sale has been made at a price per share of Common Stock equal to or greater than the Romo Sale Price, then either Mr. Romo or FPSH may require a Romo Initiated Third-Party Sale at such price (a "Required Third-Party Sale") pursuant to Sections 2.4.3 and 2.4.4 below. (d) If FPSH and the Company decline a Romo Sale Initiative and a Romo Initiated Third-Party Sale is not completed within the 180-day time frame, Mr. Romo shall have the right to commence additional Romo Sale Initiatives, provided, however, that Mr. Romo may not commence more than one Romo Sale Initiative in any 365-day period and may not commence a Romo Sale Initiative during the pendency of an FPSH Sale Initiative (as defined below). (e) The Hurdle Co-Investment Rights shall not vest pursuant to this Section 2.4.1 or Section 2.4.3 unless a Romo Sale Initiative or a Required Third-Party Sale is completed and if any such sale is completed, the Hurdle Co-Investment Rights shall only vest to the extent provided in this Section 2.4.1. 2.4.2 FPSH Sale Initiative. (a) On or after the three-year anniversary of the Effective Date, FPSH may offer to sell to Mr. Romo and to the Company (an "FPSH Sale Initiative") all of the shares of Common Stock or securities convertible into or exercisable for any shares of Common Stock owned or controlled by FPSH (the "FPSH Transfer Shares") at a price per share of Common Stock proposed by FPSH (the "FPSH Sale Price") so long as FPSH agrees to vest 100% of the Hurdle Co-Investment Rights in connection with the consummation of such sale. Notice of an FPSH Sale Initiative must be provided to Mr. Romo and to the Company in writing (an "FPSH Sale Notice") and must state a bona fide intention to sell the FPSH Transfer Shares, specifying a cash price for such sale. (b) Each of Mr. Romo and the Company shall be entitled to assign to a third party the right to purchase the FPSH Transfer Shares in connection with an exercise of its rights hereunder. Within thirty days from the date of receipt of an FPSH Sale Notice, Mr. Romo and the Company shall each deliver a written notice to FPSH stating whether Mr. Romo (or his assignee) or the Company (or its assignee), as the case may be, elects to purchase the FPSH Transfer Shares at the price and on the terms specified in the FPSH Sale Notice. In the event that both Mr. Romo (or his assignee) and the Company (or its assignee) elect to purchase the FPSH Sale Shares, the election of Mr. Romo (or his assignee) shall prevail. The FPSH Designees shall not be entitled to vote in the determination by the Board of Directors of the Company regarding the Company's rights hereunder. Any such election to purchase hereunder shall be binding upon delivery and irrevocable without the consent of FPSH. If the Company, Mr. Romo or an assignee of the Company or Mr. Romo (as the case may be), elects to purchase the FPSH Sale Shares, then the Company, Mr. Romo or an assignee of the Company or Mr. Romo (as the case may be) shall have the right to require NML, ABP, PGGM and their respective PS Permitted Transferees to sell to the Company, Mr. Romo or an assignee of the Company or Mr. Romo (as the case may be) all of the shares of Common Stock and Warrants owned or controlled by NML, ABP, PGGM and their respective PS Permitted Transferees (the "PS Equity"), on the same terms and conditions and at the same price (in the case of Warrants, the purchase price of each Warrant -20- shall be equal to the purchase price attributable to the number of shares of Common Stock issuable upon exercise of such Warrant less the exercise price thereof) applicable to the FPSH Sale Shares. If the Company, Mr. Romo or an assignee of the Company or Mr. Romo (as the case may be), elects to purchase the FPSH Sale Shares (whether or not such party also elects to purchase the PS Equity), the applicable parties shall have 120 days to consummate such sale and if they fail to consummate such sale within the 120 day period, no sale shall occur. (c) If Mr. Romo and the Company decline an FPSH Sale Initiative, FPSH and Mr. Romo shall work together for up to 180 days from the date of receipt by FPSH of the later provided written notice of decline, to sell to a third party (an "FPSH Initiated Third-Party Sale") 100% of the shares of Common Stock and securities convertible into or exercisable for any shares of Common Stock (including the Co-Investment Rights) at a price per share of Common Stock at or above the FPSH Sale Price. Each of FPSH and Mr. Romo shall use its respective reasonable best efforts (which shall include enlisting and engaging members of the Company's senior management in such effort) to effect an FPSH Initiated Third-Party Sale. If a bona fide written offer from a third party for an FPSH Initiated Third-Party Sale has been made at a price per share of Common Stock equal to or greater than the FPSH Sale Price, then either party may require an FPSH Initiated Third-Party Sale at such price (a "Required Third-Party Sale") pursuant to Sections 2.4.3 and 2.4.4 below. (d) If Mr. Romo and the Company decline an FPSH Sale Initiative and an FPSH Initiated Third-Party Sale is not completed within the 180-day time frame, FPSH shall have the right to commence additional FPSH Sale Initiatives, provided, however, that FPSH may not commence more than one FPSH Sale Initiative in any 365-day period and may not commence an FPSH Sale Initiative during the pendency of a Romo Sale Initiative. (e) The Hurdle Co-Investment Rights shall not vest pursuant to this Section 2.4.2 or 2.4.3 unless an FPSH Sale Initiative or a Required Third-Party Sale is completed. 2.4.3 Required Third-Party Sale. If either FPSH or Mr. Romo proposes to make a Required Third-Party Sale pursuant to Section 2.4.1(c) or Section 2.4.2(c), in a bona fide arm's-length transaction or series of related transactions to a Proposed Transferee, including pursuant to a stock sale, merger, business combination, recapitalization, consolidation, reorganization, restructuring or similar transaction, such party shall have (and shall exercise) the right (a "TPS Drag-Along Right"), exercisable upon 30 days' prior written notice to the other Stockholders, to require the other Stockholders to sell all of their shares of Common Stock, Options, Warrants and Co-Investment Rights (to the extent then vested or concurrently being vested), to the Proposed Transferee on the same terms and conditions and at the same price (in the case of Options and Warrants, the purchase price of each Option and Warrant shall be equal to the purchase price attributable to the number of shares of Common Stock issuable upon exercise of such Option or Warrant less the exercise price thereof; in the case of Co-Investment Rights, the purchase price of each Co-Investment Right shall be equal to the purchase price attributable to the number of shares of Common Stock issuable upon exercise of such Co-Investment Right (to the extent then vested or concurrently being vested) less the exercise price thereof) as FPSH and Mr. Romo would receive in connection with such transaction. 2.4.4 TPS Sale Agreement. Each Stockholder selling shares of Common Stock, Options, Warrants or Co-Investment Rights pursuant to Section 2.4.3 (a "TPS Drag-Along -21- Seller") agrees to cooperate in consummating such a sale, including, without limitation, by becoming a party to the sales agreement and all other appropriate related agreements, delivering, at the consummation of such sale, stock certificates and other instruments for such shares of Common Stock, Options, Warrants or Co-Investment Rights duly endorsed for transfer, free and clear of all liens and encumbrances, and voting or consenting in favor of such transaction (to the extent a vote or consent is required) and taking any other necessary or appropriate action in furtherance thereof, including the execution and delivery of any other appropriate agreements, certificates, instruments and other documents. The foregoing notwithstanding, in connection with such sale, a TPS Drag-Along Seller, as such, shall not be required to make any representations and warranties with respect to the Company or the Company's business or with respect to any other seller. In addition, each TPS Drag-Along Seller shall be severally responsible for its proportionate share of the third-party expenses of sale incurred by the Company, FPSH and Mr. Romo in connection with such sale. Such monetary obligations and liabilities shall include (to the extent such obligations are incurred) monetary obligations and liabilities for indemnification (including for (a) breaches of representations and warranties made in connection with such sale by the Company or any other seller with respect to the Company or the Company's business and (b) breaches of covenants in effect prior to closing), and shall also include amounts paid into escrow or subject to holdbacks, and amounts subject to post-closing purchase price adjustments, provided that all such obligations are equally applicable on a several and not joint basis to each TPS Drag-Along Seller based on the consideration received by such TPS Drag-Along Seller (treating any exercise price of unexercised Options or unexercised Warrants or unexercised Co-Investment Rights as consideration received). The foregoing notwithstanding, (a) without the written consent of a TPS Drag-Along Seller, the amount of such obligations and liabilities for which such TPS Drag-Along Seller shall be responsible shall not exceed the gross proceeds received by such TPS Drag-Along Seller in such sale (treating any exercise price of unexercised Options or unexercised Warrants or unexercised Co-Investment Rights as proceeds received) and (b) a TPS Drag-Along Seller shall not be responsible for the fraud of any other seller or any indemnification obligations and liabilities for breaches of representations and warranties made by any other seller with respect to such other seller's (i) ownership of and title to shares of capital stock of the Company, (ii) organization, (iii) authority and (iv) conflicts and consents. 2.4.5 No Liability. Notwithstanding any other provision contained in this Section 2.4, there shall be no liability on the part of the Company or FPSH or Mr. Romo in the event that a Required Third-Party Sale pursuant to this Section 2.4 is not consummated for any reason whatsoever, provided, however, that this Section 2.4.5 shall not relieve the Company or FPSH or Mr. Romo of any liability for the breach of this Agreement or any other agreement. 2.5 FPSH Drag Sale. Notwithstanding anything to the contrary contained in this Agreement, during such time as FPSH has the right to nominate a majority of the members of the Board of Directors of the Company pursuant to Section 5.1.2, FPSH may require a sale of 100% of the shares of Common Stock and securities convertible into or exercisable for any shares of Common Stock (including the Co-Investment Rights) (an "FPSH Drag Sale") (a) prior to the three-year anniversary of the Effective Date, if (i) Mr. Romo is no longer Chief Executive Officer of the Company or is no longer performing for the Company the customary functions of a chief executive officer, and (ii) FPSH agrees to vest 100% of the Hurdle Co-Investment Rights, and (b) on or after the three-year anniversary of the Effective Date, if FPSH agrees to vest the -22- greatest percentage (between 0% and 100%) of the Hurdle Co-Investment Rights (vesting the unvested Restricted Stock Units, the SPC Hurdle Co-Investment Rights and the FPSH Hurdle Co-Investment Rights on a pro rata basis) as would result in FPSH achieving the IRR Hurdle after giving effect to the vesting of such percentage of the Hurdle Co-Investment Rights and the vesting of all other rights and options to purchase Common Stock. The Hurdle Co-Investment Rights shall not vest pursuant to this Section 2.5 unless an FPSH Drag Sale is completed and if any such sale is completed, the Hurdle Co-Investment Rights shall only vest to the extent provided herein. 2.5.1 Exercise. If FPSH proposes to make an FPSH Drag Sale, in a bona fide arm's-length transaction or series of related transactions to a Proposed Transferee, including pursuant to a stock sale, merger, business combination, recapitalization, consolidation, reorganization, restructuring or similar transaction, FPSH shall have (and shall exercise) the right (an "FPSH Drag-Along Right"), exercisable upon 30 days' prior written notice to the other Stockholders, to require the other Stockholders to sell all of their shares of Common Stock, Options, Warrants and Co-Investment Rights (to the extent then vested or concurrently being vested), to the Proposed Transferee on the same terms and conditions and at the same price (in the case of Options and Warrants, the purchase price of each Option and Warrant shall be equal to the purchase price attributable to the number of shares of Common Stock issuable upon exercise of such Option or Warrant less the exercise price thereof; in the case of Co-Investment Rights, the purchase price of each Co-Investment Right shall be equal to the purchase price attributable to the number of shares of Common Stock issuable upon exercise of such Co-Investment Right (to the extent then vested or concurrently being vested) less the exercise price thereof) as FPSH would receive in connection with such transaction. 2.5.2 Sale Agreement. Each Stockholder selling shares of Common Stock, Options, Warrants or Co-Investment Rights pursuant to a transaction contemplated by this Section 2.5 (an "FPSH Drag-Along Seller") agrees to cooperate in consummating such a sale, including, without limitation, by becoming a party to the sales agreement and all other appropriate related agreements, delivering, at the consummation of such sale, stock certificates and other instruments for such shares of Common Stock, Options, Warrants or Co-Investment Rights duly endorsed for transfer, free and clear of all liens and encumbrances, and voting or consenting in favor of such transaction (to the extent a vote or consent is required) and taking any other necessary or appropriate action in furtherance thereof, including the execution and delivery of any other appropriate agreements, certificates, instruments and other documents. The foregoing notwithstanding, in connection with such sale, an FPSH Drag-Along Seller, as such, shall not be required to make any representations and warranties with respect to the Company or the Company's business or with respect to any other seller. In addition, each FPSH Drag-Along Seller shall be severally responsible for its proportionate share of the third-party expenses of sale incurred by FPSH in connection with such sale. Such monetary obligations and liabilities shall include (to the extent such obligations are incurred) monetary obligations and liabilities for indemnification (including for (a) breaches of representations and warranties made in connection with such sale by the Company or any other seller with respect to the Company or the Company's business and (b)breaches of covenants in effect prior to closing), and shall also include amounts paid into escrow or subject to holdbacks, and amounts subject to post-closing purchase price adjustments, provided that all such obligations are equally applicable on a several and not joint basis to each FPSH Drag-Along Seller based on the consideration received by such -23- FPSH Drag-Along Seller (treating any exercise price of unexercised Options or unexercised Warrants or unexercised Co-Investment Rights as consideration received). The foregoing notwithstanding, (a) without the written consent of an FPSH Drag-Along Seller, the amount of such obligations and liabilities for which such FPSH Drag-Along Seller shall be responsible shall not exceed the gross proceeds received by such FPSH Drag-Along Seller in such sale (treating any exercise price of unexercised Options or unexercised Warrants or unexercised Co-Investment Rights as proceeds received) and (b) an FPSH Drag-Along Seller shall not be responsible for the fraud of any other seller or any indemnification obligations and liabilities for breaches of representations and warranties made by any other seller with respect to such other seller's (i) ownership of and title to shares of capital stock of the Company, (ii) organization, (iii) authority and (iv) conflicts and consents. 2.5.3 No Liability. Notwithstanding any other provision contained in this Section 2.5, there shall be no liability on the part of the Company or FPSH in the event that the sale pursuant to this Section 2.5 is not consummated for any reason whatsoever, provided, however, that this Section 2.5.3 shall not relieve the Company or FPSH of any liability for the breach of this Agreement or any other agreement. The decision whether to effect a Transfer pursuant to this Section 2.5 shall be in the sole and absolute discretion of FPSH. 2.6 Tag-Along Rights. Terms that are defined more than once in this Section 2.6 shall be applied to each Person based on the Section applicable to such Person at such time. 2.6.1 Tag Notice. (a) Single-Step Sale. On or after the three-year anniversary of the Effective Date, if FPSH proposes to sell to one or more Affiliated Persons in a single transaction a majority of the aggregate outstanding shares of Common Stock that it owns on the Effective Date, other than (i) to an FPSH Affiliate Transferee, (ii) pursuant to Section 2.4 (Sale Initiatives), (iii) pursuant to Section 2.5 (FPSH Drag Sale), (iv) pursuant to a Piggyback Registration, or (v) pursuant to a Demand Registration (clauses (i) through (v), collectively, "Tag Carve-Out Sales"), then FPSH shall first give written notice (the "Tag Notice") to the Company and to each of the other Stockholders at the Effective Date (such other Stockholders, the "Offeree Stockholders"), stating that FPSH desires to make such sale, referring to Section 2.6, specifying the number of shares of Common Stock proposed to be sold by FPSH pursuant to the offer (the "Offer Shares"), and, specifying the price, the form of consideration, name and description of the purchaser and the material terms pursuant to which such sale is proposed to be made. (b) Multi-Step Sale. On or after the three-year anniversary of the Effective Date, if FPSH engages in a series of bona fide sales (other than any Tag Carve-Out Sales) to a Person or Affiliated Persons, the last of which bona fide sale (the "Final Sale") would result in such Person or Affiliated Persons (together, a "Multi-Step FPSH Majority Buyer") acquiring from FPSH, in the aggregate, a majority of the aggregate outstanding shares of Common Stock that FPSH owns on the Effective Date (a "Multi-Step FPSH Majority Sale"), then, FPSH shall first give written notice (the "Tag Notice") to the Company and to each of the other Stockholders at the Effective Date (the "Offeree Stockholders"), stating that FPSH desires to make such Final Sale, referring to Section 2.6, specifying the Offer Shares, and, specifying the price, the form of consideration, name and description of the purchaser and the material terms pursuant to which -24- such Final Sale is proposed to be made. In the event of a Multi-Step FPSH Majority Sale, (i) the Tag-Along Rights pursuant to this Section 2.6.1(b) shall be based upon the price, the form of consideration, and the other material terms pursuant to which such Final Sale is proposed to be made, and (ii) "Offer Shares" shall be deemed to include all shares of Common Stock (A) previously sold by FPSH to the Multi-Step FPSH Majority Buyer and (B) proposed to be sold by FPSH to the Multi-Step FPSH Majority Buyer in the Final Sale. (c) NML/ABP/PGGM Tag Sale. After such time as FPSH has sold, in the aggregate, 5% of the aggregate outstanding shares of Common Stock that FPSH owns on the Effective Date, each time that FPSH proposes to sell shares of Common Stock, other than (i) to an FPSH Affiliate Transferee, (ii) pursuant to Section 2.5 (FPSH Drag Sale), (iii) pursuant to a Piggyback Registration, or (iv) pursuant to a Demand Registration, then FPSH shall first give written notice (the "Tag Notice") to the Company and to NML, ABP and PGGM and any of their respective PS Permitted Transferees (collectively, the "Offeree Stockholders"), stating that FPSH desires to make such sale, referring to Section 2.6, specifying the number of shares of Common Stock proposed to be sold by FPSH pursuant to the offer (the "Offer Shares"), and, specifying the price, the form of consideration, name and description of the purchaser and the material terms pursuant to which such sale is proposed to be made. If and to the extent that Tag-Along Rights are triggered by Section 2.6.1(a) or Section 2.6.1(b), then NML, ABP and PGGM and any of their respective PS Permitted Transferees shall have the right to participate in such sales only to the extent contemplated by this Section 2.6.1(c) and not pursuant to Section 2.6.1(a) or Section 2.6.1(b). 2.6.2 Tag-Along Election. Within seven Business Days of the date of receipt of the Tag Notice, each Offeree Stockholder shall deliver to FPSH and to the Company a written notice stating whether the Offeree Stockholder elects to sell any of its shares of Common Stock up to its pro rata portion of its Common Stock (equal to (a) the total number of shares of Common Stock owned by such Offeree Stockholder, plus the total number of shares of Common Stock then issuable upon exercise of Options, Warrants and Co-Investment Rights then exercisable by such Offeree Stockholder, multiplied by (b) a fraction, (i) the numerator of which is the number of Offer Shares and (ii) the denominator of which is the total number of shares of Common Stock held by FPSH plus the total number of shares of Common Stock then issuable upon exercise or conversion of any convertible securities (including Options, Warrants and FPSH Hurdle Co-Investment Rights), if applicable, then exercisable or convertible by FPSH plus (in the case of a Multi-Step FPSH Majority Sale and for purposes of Section 2.6.1(b) only) the total number of shares of Common Stock, if any, previously Transferred by FPSH to a Multi-Step FPSH Majority Buyer) to such Proposed Transferee on the same terms, purchase price and conditions as FPSH (with respect to each Offeree Stockholder, its "Tag-Along Shares"). An election pursuant to the first sentence of this Section 2.6.2 shall constitute an irrevocable commitment by the Offeree Stockholder making such election to sell such Tag-Along Shares to the Proposed Transferee if the sale of Offer Shares to the Proposed Transferee occurs on the terms contemplated hereby. Such terms may include a maximum number of shares such Proposed Transferee is willing to purchase, and, in such case, FPSH and the Offeree Stockholder(s) selling shares pursuant hereto shall be cut back pro rata based on the number of shares each such Stockholder is electing to sell. 2.6.3 Seller's Rights to Transfer. -25- (a) Third-Party Sale; Tag-Along Buyer. A sale to a Proposed Transferee pursuant to this Section 2.6 shall only be consummated if the Proposed Transferee shall purchase, within 120 days of the date of the Tag Notice, concurrently with and on the same terms and conditions and at the same price as the Offer Shares, all of each Offeree Stockholder's Tag-Along Shares with respect to such sale, in accordance with their elections pursuant to Section 2.6.2, and subject to the last sentence thereof (the "Tag-Along Right"). (b) Sale Agreement. Each Offeree Stockholder electing to sell Tag-Along Shares (a "Tag-Along Seller") agrees to cooperate in consummating such a sale, including, without limitation, by becoming a party to the sale agreement and all other appropriate related agreements, delivering, at the consummation of such sale, stock certificates and other instruments for such Common Stock (or other equity securities of the Company) duly endorsed for transfer, free and clear of all liens and encumbrances, and voting or consenting in favor of such transaction (to the extent a vote or consent is required) and taking any other necessary or appropriate action in furtherance thereof, including the execution and delivery of any other appropriate agreements, certificates, instruments and other documents. The foregoing notwithstanding, in connection with such sale, a Tag-Along Seller, as such, shall not be required to make any representations and warranties with respect to the Company or the Company's business or with respect to any other seller. In addition, each Tag-Along Seller shall be severally responsible for its proportionate share of the third-party expenses of sale incurred by the sellers in connection with such sale and the monetary obligations and liabilities incurred by the sellers in connection with such sale. Such monetary obligations and liabilities shall include (to the extent such obligations are incurred) obligations and liabilities for indemnification (including for (i) breaches of representations and warranties made in connection with such sale by the Company or any other seller with respect to the Company or the Company's business, and (ii) breaches of covenants in effect prior to closing), and shall also include amounts paid into escrow or subject to holdbacks, and amounts subject to post-closing purchase price adjustments, provided that all such obligations are equally applicable on a several and not joint basis to each Tag-Along Seller based on the consideration received by such Tag-Along Seller (treating any exercise price of unexercised Options or unexercised Warrants or unexercised Co-Investment Rights as consideration received). The foregoing notwithstanding, (i) without the written consent of a Tag-Along Seller, the amount of such obligations and liabilities for which such Tag-Along Seller shall be responsible shall not exceed the gross proceeds received by such Tag-Along Seller in such sale (treating any exercise price of unexercised Options or unexercised Warrants or unexercised Co-Investment Rights as proceeds received) and (ii) a Tag-Along Seller shall not be responsible for the fraud of any other seller or for any indemnification obligations and liabilities for breaches of representations and warranties made by any other seller with respect to such other seller's (A) ownership of and title to shares of capital stock of the Company, (B) organization, (C) authority and (D) conflicts and consents. Notwithstanding anything to the contrary in this Section 2.6, FPSH shall be entitled to require any Tag-Along Seller of vested Options, Warrants, Co-Investment Rights or other equity rights convertible into Common Stock to exercise such vested Options, Warrants, Co-Investment Rights or other equity rights concurrent with the consummation of any sale contemplated by this Section 2.6 to the extent necessary to participate in such sale. (c) No Liability. Notwithstanding any other provision contained in this Section 2.6.3, there shall be no liability on the part of the Company or FPSH in the event that the -26- sale pursuant to this Section 2.6.3 is not consummated for any reason whatsoever, provided, however, that this Section 2.6.3(c) shall not relieve the Company or FPSH of any liability for the breach of this Agreement or any other agreement. The decision whether to effect a Transfer pursuant to this Section 2.6.3 shall be in the sole and absolute discretion of FPSH. 2.7 Additional Provisions Relating to Restrictions on Transfers. 2.7.l Legends. Each of the Stockholders hereby agrees that each outstanding certificate representing shares of Common Stock held or owned by such Stockholder or its Transferee, including any certificate representing shares of Common Stock acquired in accordance with the provisions of this Agreement or employment agreements with Management Investors, any certificates representing shares of Common Stock issued upon exercise of Options, Warrants or Co-Investment Rights and any Options, Warrants or Co-Investment Rights, in any case, subject to the provisions of this Agreement and issued prior to the date when the applicable restrictions are terminated pursuant to Section 2.7.3, shall bear endorsements reading substantially as follows: (a) The securities represented by this certificate have not been registered under the Securities Act of 1933, as amended, or under the securities laws of any state and may not be transferred, sold or otherwise disposed of except while such a registration is in effect or pursuant to an exemption from registration under said Act and applicable state securities laws. (b) The securities represented by this certificate are subject to the terms and conditions set forth in an Amended and Restated Stockholders' Agreement, dated as of September 29, 2003, as amended from time to time, copies of which may be obtained from the issuer or from the holder of this security. No transfer of such securities will be made on the books of the issuer unless accompanied by evidence of compliance with the terms of such agreement. Each outstanding certificate representing shares of Common Stock shall also bear any legend required by the terms of any subscription agreement, the 1998 Stock Incentive Plan or as the Company may otherwise deem appropriate. 2.7.2 Copy of Agreement. A copy of this Agreement shall be filed with the corporate secretary of the Company, and kept with the records of the Company, and shall be made available for inspection by any Stockholder at the principal executive offices of the Company. 2.7.3 Termination of Restrictions. The restriction referred to in the endorsement required pursuant to Section 2.7.1 (a) shall cease and terminate as to any particular shares of Common Stock when, in the reasonable opinion of counsel for the Company, such restriction is no longer required in order to assure compliance with the Securities Act and the state securities or "blue sky" laws. The Company or the Company's counsel, at their election, may request from any Stockholder a certificate or an opinion of such Stockholder's counsel with respect to any relevant matters in connection with the removal of the endorsement set forth in Section 2.7.1(a) from such Stockholder's stock certificates, any such certificate or opinion of counsel to be -27- reasonably satisfactory to the Company and its counsel. The restrictions referred to in Section 2.7.1(b) shall cease and terminate as to any particular shares of Common Stock when, in the reasonable opinion of counsel for the Company, the provisions of this Agreement are no longer applicable to such shares or this Agreement shall have terminated in accordance with its terms. Any other restrictions referred to in any other legends required pursuant to Section 2.7.1 shall cease and terminate when, in the reasonable opinion of counsel for the Company, such restrictions are no longer applicable. Whenever such restrictions shall cease and terminate as to any shares of Common Stock or Options or Warrants or Co-Investment Rights, the Stockholder holding such shares shall be entitled to receive from the Company, without expense (other than applicable transfer taxes, if any, if such unlegended shares are being delivered and transferred to any Person other than the registered holder thereof), new certificates for a like number of shares of Common Stock or like number of Options or like number of Warrants or like number of Co-Investment Rights not bearing the relevant legend(s) set forth or referred to in Section 2.7.1. 2.8 Treatment of Hurdle Co-Investment Rights. In any instance contemplated by this Article II in which the Hurdle Co-Investment Rights may be subject to reduced vesting in order to cause FPSH to achieve the IRR Hurdle, FPSH and the Rights Holder may mutually agree in writing, in their sole discretion, to any alternative means of causing FPSH to achieve the IRR Hurdle (and/or to waive satisfaction of any conditions to vesting thereof), including, without limitation, (a) the Rights Holder or another Romo Person Transferring some or all of the SPC Co-Investment Rights or Common Stock owned by such Romo Person to FPSH, (b) any Romo Person making a cash payment to FPSH, and/or (c) FPSH waiving or amending the terms of vesting of the Hurdle Co-Investment Rights. ARTICLE III REGISTRATION RIGHTS 3.1 Piggyback and Demand Registrations. 3.1.1 Piggyback Registrations. Following the three-year anniversary of the Effective Date, if the Company proposes to register for sale by the Company under the Securities Act any of its equity securities (other than a registration on Form S-4 or Form S-8, or any successor or similar forms), or any shares of Common Stock of an Initiating Party pursuant to a Demand Registration under Section 3.1.2, in a manner that would permit registration of Registrable Securities for sale to the public under the Securities Act, the Company will each such time promptly give written notice to all Stockholders who beneficially own any Registrable Securities of its intention to do so, of the registration form of the SEC that has been selected by the Company and of such holders' rights under this Section 3.1 (the "Piggyback Notice"). The Company will use its reasonable best efforts to include, and to cause the underwriter or underwriters, if applicable, to include, in the proposed offering, on the same terms and conditions as the securities of the Company included in such offering, all Registrable Securities that the Company has been requested in writing, within 15 calendar days after the Piggyback Notice is given, to register by the Stockholders thereof (each such registration pursuant to this Section 3.1.1, a "Piggyback Registration"); provided, however, that (a) if, at any time after giving a -28- Piggyback Notice and prior to the effective date of the registration statement filed in connection with such registration, the Company shall determine for any reason not to register such equity securities (or, in the case of a Demand Registration, the Initiating Party thereof so determines), the Company may, at its election (or, in the case of a Demand Registration, where the Initiating Party thereof so determines, the Company shall), give written notice of such determination to all Stockholders who beneficially own any Registrable Securities and, thereupon, shall be relieved of its obligation to register any Registrable Securities in connection with such abandoned registration, and (b) in case of a determination by the Company to delay registration of its equity securities (or, in the case of a Demand Registration, the Initiating Party thereof so determines) the Company shall be permitted to (or, in the case of a Demand Registration where the Initiating Party thereof so determines, the Company, for a period not to exceed 60 days, shall) delay the registration of such Registrable Securities for the same period as the delay in registering such other equity securities (provided that clauses (a) and (b) above shall not relieve the Company of its obligations under Section 3.1.2). In the case of any registration of Registrable Securities in an underwritten offering pursuant to this Section 3.1.1, all Stockholders proposing to distribute their securities pursuant to this Section 3.1.l shall, at the request of the Company (or, in the case of a Demand Registration, the Initiating Party thereof), enter into an agreement in customary form with the underwriter or underwriters selected by the reasonable agreement of FPSH and Mr. Romo (or, in the case of a Demand Registration, selected in accordance with Section 3.1.2). Notwithstanding the foregoing, following an IPO, the Company shall not be obligated to effect registration of Registrable Securities for which Piggyback Registration is requested by a Stockholder if, at the time of such request, all such Registrable Securities are eligible for sale to the public by the requesting Stockholder without registration under Rule 144, with such sale not being limited by the volume restrictions thereunder. 3.1.2 Demand Registrations. Upon the request of (a) FPSH, (b) Mr. Romo or (c) the holders of a majority of the Warrants and shares of Common Stock, taken together, held by NML and its PS Permitted Transferees at such time (each of the parties referred to in clauses (a), (b) and (c), an "Initiating Party," and the party and/or parties described in clause (c), the "NML Initiating Party"), the Company shall use its reasonable best efforts to register under the Securities Act Registrable Securities held by the Initiating Party (including, at the election of such Initiating Party, in an underwritten offering) and any other Stockholders participating in such Demand Registration (provided, however, that the aggregate expected market value of all such Registrable Securities included in such registration is greater than or equal to $50 million, and provided, further, that if shares of Common Stock are not publicly traded, the aggregate expected market value of all Common Stock included in such registration is greater than or equal to $100 million) and bear all expenses in connection with such offering in a manner consistent with Section 3.1.3 and shall enter into such other agreements in furtherance thereof (each such registration pursuant to this Section 3.1.2, a "Demand Registration"), and the Company shall provide customary indemnifications in such instances (in a manner consistent with the indemnification provision of this Article III) to the Initiating Party, other Stockholders included in such registration and any such underwriters, provided, however, that no offering contemplated hereby shall be completed prior to the three-year anniversary of the Effective Date and provided further that NML and its PS Permitted Transferees shall not have the right to initiate a Demand Registration until after the occurrence of an IPO. FPSH shall have the right to initiate up to an aggregate of six Demand Registrations pursuant to this Section 3.1.2; provided, however, that the Company shall not be obligated to effect a Demand Registration within nine months of the -29- effectiveness of another registration under this Section 3.1. Together, the Romo Persons shall have the right to initiate an aggregate of four Demand Registrations pursuant to this Section 3.1.2; provided, however, that the Company shall not be obligated to effect a Demand Registration within nine months of the effectiveness of another registration under this Section 3.1. The NML Initiating Party shall have the right to initiate an aggregate of two Demand Registrations; provided, however, that the Company shall not be obligated to effect a Demand Registration within nine months of the effectiveness of another registration under this Section 3.1. A registration shall not count as a Demand Registration unless and until the registration statement relating thereto has been declared effective by the SEC and not withdrawn. If any Demand Registration requested by FPSH is in the form of an underwritten offering, FPSH shall designate the underwriter or underwriters to be utilized in connection with such offering, provided, however, that if the ARG Trust or the Rights Holder participates in the offering, such underwriter or underwriters shall be reasonably acceptable to Mr. Romo. If the Demand Registration requested by a Romo Person is in the form of an underwritten offering, Mr. Romo shall designate an underwriter or underwriters to be utilized in connection with such offering, provided, however, that if FPSH participates in the offering, such underwriter or underwriters shall be reasonably acceptable to FPSH. If the Demand Registration requested by the NML Initiating Party is in the form of an underwritten offering, the Stockholder proposing to sell the largest number of shares of Common Stock shall designate an underwriter or underwriters to be utilized in connection with such offering, provided, however, that such underwriter or underwriters shall be reasonably acceptable to the Company. 3.1.3 Expenses. The Company shall pay all Registration Expenses in connection with each registration of Registrable Securities requested pursuant to this Section 3.1; provided, however, that each Stockholder shall pay all underwriting discounts and commissions and transfer taxes, if any, relating to the sale or disposition of such Stockholder's Registrable Securities pursuant to a registration statement effected pursuant to this Section 3.1. 3.1.4 Priority in Piggyback and Demand Registrations. If the managing underwriter for a registration pursuant to this Section 3.1 shall advise the Company in writing that, in its opinion, the number of securities requested to be included in such registration exceeds the number (the "Section 3.1 Sale Number") that can be sold in an orderly manner in such offering within a price range acceptable to the Company (or, in the case of a Demand Registration, to the Initiating Party thereof), the Company shall include in such offering (a) first, all the securities the Company proposes to register for its own sale, and (b) second, to the extent that the securities the Company proposes to register are less than the Section 3.1 Sale Number, all Registrable Securities requested to be included by all Stockholders; provided, however, that, if the number of such Registrable Securities exceeds (i) the Section 3.1 Sale Number less (ii) the number of securities included pursuant to clause (a) above, then the number of such Registrable Securities included in such registration shall be allocated pro rata among all requesting Stockholders, on the basis of the relative number of shares of such Registrable Securities each such Stockholder then holds. If there is any reduction or exclusion of Registrable Securities pursuant to this Section 3.1.4 in connection with a Demand Registration, such registration shall not be deemed to be a Demand Registration for purposes of determining the maximum number of Demand Registrations the Company is obligated to effect for an Initiating Party pursuant to Section 3.1.2. -30- 3.1.5 Underwriting Requirements. In connection with any offering involving any underwriting of securities in a Piggyback Registration or a Demand Registration, the Company shall not be required to include any Stockholder's Registrable Securities in such underwriting unless such Stockholder accepts the terms of the underwriting as agreed upon between the Company (as well as the Initiating Party in the case of a Demand Registration) and the underwriters in such quantities and on such terms as set forth in Section 3.1.1, and such Stockholder agrees to sell such Stockholder's securities on the basis provided therein and completes and/or executes all questionnaires, indemnities, lock-ups, underwriting agreements and other documents (including powers of attorney and custody arrangements) customarily required generally of all selling Stockholders, in each case, in customary form and substance, which are requested to be executed in connection therewith. 3.2 Registration Procedures. If and whenever the Company is required to use its reasonable best efforts to effect or cause the registration of any Registrable Securities under the Securities Act as provided in this Article III, the Company will, as soon as practicable: (a) prepare and file with the SEC the requisite registration statement with respect to such Registrable Securities and use its reasonable best efforts to cause such registration statement to become and remain effective; (b) prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective for such period as the Company shall deem appropriate and to comply with the provisions of the Securities Act with respect to the sale or other disposition of all securities covered by such registration statement during such period; (c) furnish to each seller of such Registrable Securities and each underwriter such number of copies of such registration statement and of each amendment and supplement thereto (in each case including all exhibits), such number of copies of the prospectus included in such registration statement (including each preliminary prospectus and summary prospectus), in conformity with the requirements of the Securities Act, and such other documents as such seller may reasonably request; (d) promptly notify each Stockholder that holds Registrable Securities covered by such registration statement, (i) when such registration statement or any post-effective amendment or supplement thereto becomes effective, (ii) of the issuance by the SEC or any state securities authority of any stop order, injunction or other order or requirement suspending the effectiveness of such registration statement (and take all reasonable action to prevent the entry of such stop order or to remove it if entered, or the initiation of any proceedings for that purpose), or (iii) of the happening of any event as a result of which the registration statement, as then in effect, the prospectus related thereto or any document included therein by reference includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances under which they were made and promptly file such amendments and supplements which may be required on -31- account of such event and use its reasonable best efforts to cause each such amendment and supplement to become effective; (e) promptly furnish to counsel for each underwriter, if any, and to the selling Stockholders of Registrable Securities copies of any written request by the SEC or any state securities authority for amendments or supplements to a registration statement and prospectus or for additional information; (f) use reasonable best efforts to obtain the withdrawal of any order suspending the effectiveness of a registration statement at the earliest possible time; (g) use its best efforts to cause all such Registrable Securities covered by such registration statement to be listed on the principal securities exchange or authorized for quotation on Nasdaq, if any, on which similar equity securities issued by the Company are then listed or authorized for quotation, or eligible for listing or quotation, if the listing or authorization for quotation of such securities is then permitted under the rules of such exchange or the NASD; (h) enter into an underwriting agreement with the underwriter of such offering in the form customary for such underwriter for similar offerings, including such representations and warranties by the Company, provisions regarding the delivery of opinions of counsel for the Company and accountants' letters, provisions regarding indemnification and contribution, and such other terms and conditions as are at the time customarily contained in such underwriter's underwriting agreements for similar offerings (the sellers of Registrable Securities that are to be distributed by such underwriter(s) may, at their option, require that any or all of the representations and warranties by, and the other agreements on the part of, the Company to and for the benefit of such underwriter(s) shall also be made to and for the benefit of such sellers of Registrable Securities); (i) make available for inspection by representatives of the selling Stockholders who hold Registrable Securities and any underwriters participating in any disposition pursuant hereto and any counsel or accountant retained by such Stockholders or underwriters, all relevant financial and other records, pertinent corporate documents and properties of the Company and cause the respective officers, directors and employees of the Company to supply all information reasonably requested by any such representative, underwriter, counsel or accountant in connection with a registration pursuant hereto; provided, however, that, with respect to records, documents or information which the Company determines, in good faith, to be confidential and as to which the Company notifies such representatives, underwriters, counsel or accountants in writing of such confidentiality, such representatives, underwriters, counsel or accountants shall not disclose such records, documents or information unless (i) the release of such records, documents or information is ordered pursuant to a subpoena or other order from a court of competent jurisdiction, (ii) such records, documents or information have previously been generally made available to the public, or (iii) the disclosure of such records, documents or information is necessary, in the written opinion of outside legal counsel, to avoid or correct a material misstatement or omission in the registration statement and then only after reasonable request has been made to the Company to make -32- such disclosure and the Company has denied such request. Each selling Stockholder of such Registrable Securities agrees that information obtained by it as a result of such inspections shall be deemed confidential and shall not be used by it as the basis for any market transactions in the securities of the Company or its Affiliates (or for such Stockholder's business purposes or for any reason other than in connection with a registration hereunder) unless and until such information is made generally available (other than by such Stockholder or where such Stockholder knows that such information became publicly available as a result of a breach of any confidentiality arrangement) to the public. Each selling Stockholder of such Registrable Securities further agrees that it will, upon learning that disclosure of such records is sought, give notice to the Company and allow the Company, at its expense, to undertake appropriate action to prevent disclosure of the records deemed confidential; (j) permit any beneficial owner of Registrable Securities who, in the sole judgment, exercised in good faith, of such holder, might be deemed to be a controlling Person of the Company, to participate in the preparation of such registration or comparable statement and to require the insertion therein of material, furnished to the Company in writing, that in the judgment of such holder, as aforesaid, should be included; and (k) make reasonably available its employees and personnel and otherwise provide reasonable assistance to the underwriters (taking into account the needs of the Company's businesses and the requirements of the marketing process) in the marketing of Registrable Securities in any underwritten offering. The Company may require each seller of Registrable Securities as to which any registration is being effected to furnish the Company such information regarding such seller and the distribution of such securities as the Company may from time to time reasonably request in writing. The Company shall not be required to register or qualify any Registrable Securities covered by such registration statement under any state securities or "blue sky" laws of such jurisdictions other than as it deems necessary in connection with the chosen method of distribution or to take any other actions or do any other things other than those it reasonably deems necessary or advisable to consummate such distribution, and the Company shall not for any such purpose be required to qualify generally to do business as a foreign corporation in any jurisdiction wherein it would not otherwise be obligated to be so qualified, to subject itself to taxation in any such jurisdiction or to consent to general service of process in any such jurisdiction. Each beneficial owner of Registrable Securities agrees that upon receipt of any notice from the Company of the happening of any event of the kind described in clauses (d)(ii) and (d)(iii) above, such beneficial owner will forthwith discontinue disposition of Registrable Securities pursuant to the registration statement covering such Registrable Securities until such beneficial owner's receipt of the copies of the supplemented or amended prospectus contemplated by clause (d) above, and, if so directed by the Company, such beneficial owner will deliver to the Company (at the Company's expense) all copies, other than permanent file copies then in such beneficial owner's possession, of the prospectus covering such Registrable Securities that was in effect prior to such amendment or supplement. -33- 3.3 Indemnification. (a) In the event of any registration of any Registrable Securities pursuant to this Article III, the Company will, and hereby does, indemnify and hold harmless, to the fullest extent permitted by law, the seller of any Registrable Securities covered by such registration statement, its directors, officers, fiduciaries, employees and stockholders or members or general and limited partners (and the directors, officers, fiduciaries, employees and stockholders or members or general and limited partners thereof), each other Person who participates as an underwriter or a qualified independent underwriter, if any, in the offering or sale of such securities, each director, officer, fiduciary, employee and stockholder or general and limited partner of such underwriter or qualified independent underwriter, and each other Person (including any such Person's directors, officers, fiduciaries, employees and stockholders or members or general and limited partners), if any, who controls such seller or any such underwriter or qualified independent underwriter, within the meaning of the Securities Act, against any and all Claims in respect thereof and expenses (including reasonable fees and expenses of counsel and any amounts paid in any settlement effected with the Company's consent, which consent shall not be unreasonably withheld or delayed) to which each such indemnified party may become subject under the Securities Act, the Exchange Act or otherwise, insofar as such Claims or expenses arise out of or are based upon any of the following actual or alleged statements, omissions or violations (each, a "Violation"): (i) any untrue statement or alleged untrue statement of a material fact contained in any registration statement under which such securities were registered pursuant to this Agreement under the Securities Act or 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, (ii) any untrue statement or alleged untrue statement of a material fact contained in any preliminary, final or summary prospectus or any amendment or supplement thereto, together with the documents incorporated by reference therein, or the omission or alleged omission to state therein a 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, or (iii) any violation by the Company of any federal, state or common law rule or regulation applicable to the Company and relating to action required of or inaction by the Company in connection with any such registration, and the Company will reimburse any such indemnified party for any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such Claim as such expenses are incurred; provided, however, that the Company shall not be liable to any such indemnified party in any such case to the extent such Claim or expense arises out of or is based upon any Violation that occurs in reliance upon and in conformity with written information furnished to the Company or its representatives by or on behalf of such indemnified party expressly stating that such information is for use therein. (b) Each holder of Registrable Securities that are included in the securities as to which any Demand Registration or Piggyback Registration is being effected (and, if the Company requires as a condition to including any Registrable Securities in any registration statement filed in connection with any Demand Registration or Piggyback Registration, any underwriter and qualified independent underwriter, if any) shall, severally and not jointly, indemnify and hold harmless (in the same manner and to the same extent as set forth in Section 3.3 (a)), to the fullest extent permitted by law, the Company, its directors, officers, fiduciaries, -34- employees and stockholders (and the directors, officers, fiduciaries, employees and stockholders or members or general and limited partners thereof) and each Person (including any such Person's directors, officers, fiduciaries, employees and stockholders or members or general and limited partners), if any, controlling the Company within the meaning of the Securities Act and all other prospective sellers and their directors, officers, fiduciaries, employees and stockholders or general and limited partners and respective controlling Persons (including any such Person's directors, officers, fiduciaries, employees and stockholders or members or general and limited partners) against any and all Claims and expenses (including reasonable fees and expenses of counsel and any amounts paid in any settlement effected with the consent of the indemnifying party, which consent shall not be unreasonably withheld or delayed) to which each such indemnified party may become subject under the Securities Act, the Exchange Act or otherwise, insofar as such Claims or expenses arise out of or are based upon any Violation that occurs in reliance upon and in conformity with written information furnished to the Company or its representatives by or on behalf of such holder or underwriter or qualified independent underwriter, if any, expressly stating that such information is for use in connection with any registration statement, preliminary, final or summary prospectus or amendment or supplement or document incorporated by reference into any of the foregoing; provided, however, that the aggregate amount which any such holder, underwriter or qualified independent underwriter shall be required to pay pursuant to this Section 3.3(b) and Sections 3.3(c) and 3.3(e) shall be limited to (i) in the case of any such holder, the amount of the gross proceeds received by such holder upon the sale of the Registrable Securities pursuant to the registration statement giving rise to such claim and (ii) in the case of any such underwriter or qualified independent underwriter, the amount of the total sales price of the Registrable Securities sold through or by it pursuant to the registration statement giving rise to such claim. (c) Indemnification similar to that specified in Sections 3.3(a) and 3.3(b) (with appropriate modifications) shall be given by the Company and each seller of Registrable Securities (and, if the Company requires as a condition to including any Registrable Securities in any registration statement filed in connection with any Demand Registration or Piggyback Registration, any underwriter and qualified independent underwriter, if any) with respect to any required registration or other qualification of securities under any state securities or "blue sky" laws. (d) Any Person entitled to indemnification under this Agreement shall notify promptly the indemnifying party in writing of the commencement of any action or proceeding with respect to which a claim for indemnification may be made pursuant to this Section 3.3, but the failure of any indemnified party to provide such notice shall not relieve the indemnifying party of its obligations under the preceding paragraphs of this Section 3.3, except to the extent the indemnifying party is prejudiced thereby and shall not relieve the indemnifying party from any liability that it may have to any indemnified party otherwise than under this Section 3.3. In case any action or proceeding is brought against an indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate therein and, unless in the reasonable opinion of outside counsel to the indemnified party a conflict of interest between such indemnified and indemnifying parties may exist in respect of such claim, to assume the defense thereof jointly with any other indemnifying party similarly notified, to the extent that it chooses, with counsel reasonably satisfactory to such indemnified party, and after notice from the indemnifying party to such indemnified party that it -35- so chooses, the indemnifying party shall not be liable to such indemnified party for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation; provided, however, that (i) if the indemnifying party fails to take reasonable steps necessary to defend diligently the action or proceeding within 20 days after receiving notice from such indemnified party that the indemnified party believes it has failed to do so; or (ii) if such indemnified party who is a defendant in any action or proceeding that is also brought against the indemnifying party reasonably shall have concluded that there may be one or more legal defenses available to such indemnified party which are not available to the indemnifying party; or (iii) if representation of both parties by the same counsel is otherwise inappropriate under applicable standards of professional conduct, then, in any such case, the indemnified party shall have the right to assume or continue its own defense as set forth above (but with no more than one firm of counsel for all indemnified parties in each jurisdiction, except to the extent any indemnified party or parties reasonably shall have concluded that there may be legal defenses available to such party or parties that are not available to the other indemnified parties or to the extent representation of all indemnified parties by the same counsel is otherwise inappropriate under applicable standards of professional conduct) and the indemnifying party shall be liable for any expenses therefor. No indemnifying party shall, without the written consent of the indemnified party, which consent shall not be unreasonably withheld, effect the settlement or compromise of, or consent to the entry of any judgment with respect to, any pending or threatened action or claim in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified party is an actual or potential party to such action or claim) unless such settlement, compromise or judgment (A) includes an unconditional release of the indemnified party from all liability arising out of such action or claim and (B) does not include a statement as to or an admission of fault, culpability or a failure to act, by or on behalf of any indemnified party. (e) If for any reason the foregoing indemnity is unavailable or is insufficient to hold harmless an indemnified party under Sections 3.3(a), 3.3(b) or 3.3(c), then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of any Claim in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and the indemnified party on the other hand from the relevant offering of securities. If, however, the allocation provided in the immediately preceding sentence is not permitted by applicable law, or if the indemnified party failed to give the notice required by Section 3.3(d) above and the indemnifying party is prejudiced thereby, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party in such proportion as is appropriate to reflect not only such relative fault of but also the relative benefits received by the indemnifying party, on the one hand, and the indemnified party, on the other hand, as well as any other relevant equitable considerations. The relative fault shall be determined by reference to, among other things, whether the Violation relates to information supplied by the indemnifying party or the indemnified party and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such Violation. The parties hereto agree that it would not be just and equitable if contributions pursuant to this Section 3.3(e) were to be determined by pro rata allocation or by any other method of allocation that does not take account of the equitable considerations referred to in the preceding sentences of this Section 3.3(e). The amount paid or payable in respect of any Claim shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such Claim. No Person guilty of fraudulent -36- misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. Notwithstanding anything in this Section 3.3(e) to the contrary, no indemnifying party (other than the Company) shall be required pursuant to this Section 3.3(e) to contribute any amount in excess of (i) in the case of an indemnifying party that is a holder of Registrable Securities, the gross proceeds received by such indemnifying party from the sale of Registrable Securities in the offering to which the losses, claims, damages or liabilities of the indemnified parties relate, or (ii) in the case of an indemnifying party that is an underwriter or a qualified independent underwriter, the amount of the total sales price of the Registrable Securities sold through or by it in the offering to which the losses, claims, damages or liabilities of the indemnified parties relate, less, in any such case referred to in clauses (i) and (ii) above, the amount of all indemnification and contribution payments made pursuant to Sections 3.3(b) and (c) and this Section 3.3(e), as the case may be, in connection with such offering. (f) The indemnity agreements contained herein shall be in addition to any other rights to indemnification or contribution that any indemnified party may have pursuant to law or contract and shall remain operative and in full force and effect regardless of any investigation made or omitted by or on behalf of any indemnified party and shall survive the transfer of the Registrable Securities by any such party. (g) The indemnification and contribution required by this Section 3.3 shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills are received or expense, loss, damage or liability is incurred. (h) In connection with underwritten offerings, the Company will use reasonable best efforts to negotiate terms of indemnification that are reasonably favorable to the various sellers pursuant thereto, as appropriate under the circumstances. 3.4 Holdback Agreement. (a) If requested in writing by the Company or the underwriter of any underwritten offering affording Stockholders registration rights pursuant to Section 3.1 (whether or not some or all of such Stockholder's Registrable Securities are subject to a cutback pursuant to Section 3.1.4), including, without limitation, an IPO, each Stockholder agrees not to effect any public sale or distribution, including any sale pursuant to Rule 144, of any Registrable Securities or any other equity security of the Company or of any security convertible into or exchangeable or exercisable for any equity security of the Company (in each case, other than as part of such underwritten public offering) within 14 days before or 180 days after the effective date of a registration statement affording Stockholders registration rights pursuant to Section 3.1 (including where subject to a cutback pursuant to Section 3.1.4), or for such shorter period as the sole or lead managing underwriter or the Company shall request, in any such case, unless consented to by such underwriter or the Company, as applicable. Any restriction imposed pursuant to this Section 3.4(a) shall be imposed on equal terms with respect to FPSH, on the one hand, and the Romo Persons and Romo Transferees, on the other hand. (b) If requested in writing by the underwriter of any offering in connection with an underwritten Demand Registration, the Company agrees not to effect any public sale or -37- distribution (other than public sales or distributions solely by and for the account of the Company of securities issued (i) pursuant to any employee or director benefit or similar plan or any dividend reinvestment plan or (ii) in any acquisition by the Company) of any Registrable Securities or any other equity security of the Company or of any security convertible into or exchangeable or exercisable for any equity security of the Company (in each case, other than as part of such underwritten public offering), within 14 days before or 180 days after the effective date of a registration statement filed in connection with a Demand Registration, or for such shorter period as the sole or lead managing underwriter shall request, in any such case, unless consented to by such underwriter. 3.5 Deferral. Notwithstanding anything to the contrary contained herein, the Company shall not be obligated to prepare and file, or cause to become effective, any registration statement pursuant to Section 3.1.2 at any time when, in the good faith judgment of the Board of Directors of the Company, the filing thereof at the time requested or the effectiveness thereof after filing should be delayed to permit the Company to include in the registration statement the Company's financial statements (and any required audit opinion thereon) for the then immediately preceding fiscal year or fiscal quarter, as the case may be. The filing of a registration statement by the Company cannot be deferred pursuant to the provisions of the immediately preceding sentence beyond the time that such financial statements (or any required audit opinion thereon) would be required to be filed with the SEC as part of the Company's Annual Report on Form 10-K or Quarterly Report on Form 10-Q, as the case may be, if the Company were then obligated to file such reports. Notwithstanding anything to the contrary contained herein, the Company shall not be obligated to file a registration statement, or cause a registration statement previously filed pursuant to Section 3.1 to become effective, and may suspend sales by the holders of Registrable Securities under any registration that has previously become effective, at any time when, in the good faith judgment of the Board of Directors of the Company, it reasonably believes that the effectiveness of such registration statement or the offering of securities pursuant thereto would materially adversely affect a pending or proposed acquisition, merger, recapitalization, consolidation, reorganization or similar transaction or negotiations, discussions or pending proposals with respect thereto; provided, however, that deferrals pursuant to this sentence shall not exceed, in the aggregate, 180 days in any calendar year. The filing of a registration statement, or any amendment or supplement thereto, by the Company cannot be deferred, and the rights of holders of Registrable Securities to make sales pursuant to an effective registration statement cannot be suspended, pursuant to the provisions of the immediately preceding sentence for more than 30 days after the abandonment or the consummation of any of the foregoing proposals or transactions, unless invoked under new circumstances. ARTICLE IV MANAGEMENT INVESTOR PUT AND CALL RIGHTS 4.1 Call Rights. If, prior to the consummation of an IPO, a Management Investor dies or the Management Investor's employment by the Company or, if applicable, an Affiliate thereof, terminates for any reason (including due to a Permanent Disability), the Company shall -38- have the right (a "Call Right"), at its election, subject to different or additional requirements, if any, of the state securities laws, rules or regulations pursuant to which particular shares of Common Stock were qualified or exempted from qualification, to purchase at any time or from time to time, all or any part of the Management Investor's shares of Common Stock (including any shares held by its Management Transferees) (the shares so purchased, the "Called Shares"), provided, however, that in no event shall a Call Right with respect to Called Shares be exercised after the date which is nine (9) months after such Management Investor's death or the termination of such Management Investor's employment with the Company or, if applicable, an Affiliate thereof. The price to be paid for any Called Shares shall be equal to (a) in the case of any termination other than by the Company or, if applicable, an Affiliate thereof for Cause, the aggregate Fair Market Value of such Called Shares determined as of the date of exercise of the Call Right with respect to such Called Shares, and (b) in the case of termination by the Company or, if applicable, an Affiliate thereof for Cause, the lower of (1) the aggregate Fair Market Value of such Called Shares determined as of the date of exercise of the Call Right with respect to such Called Shares, and (2) the sum of each of the products of (x) the number of Called Shares having the same Cost Per Share (subject to adjustment to reflect any adjustments to the Common Stock made to reflect any merger, reorganization, consolidation, recapitalization, spin-off, stock dividend, stock split, extraordinary distribution with respect to the Common Stock or other change in corporate structure affecting the Common Stock, as the Board of Directors of the Company reasonably shall deem fair and appropriate) and (y) such Cost Per Share. The Company shall pay the purchase price for the Common Stock repurchased pursuant to Section 4.1 in cash to the extent that the Company is permitted or required to purchase such shares for cash (under both applicable law and the Company's and its Affiliates' indebtedness and contractual arrangements and agreements). The Company shall fund any amount not so permitted to be paid in cash with a Buy-Out Note. A Supermajority of the Board may, in its discretion, assign the rights and obligations of the Company under Section 4.1 to any other Person, but no such assignment shall relieve the Company of its obligations hereunder to the extent not satisfied by such assignee. 4.2 Put Rights. Subject to any waiver of the rights provided in this Section 4.2 contained in the Employment Agreement or any analogous provision of any employment, compensation or benefit agreement or arrangement, if any, of any Management Investor, if, prior to the consummation of an IPO, a Management Investor dies or the Management Investor's employment by the Company or, if applicable, an Affiliate thereof, is terminated by the Company or, if applicable, an Affiliate thereof, without Cause or is terminated due to a Permanent Disability, or with Good Reason, the Management Investor or the Management Investor's legal representative or trustee, as the case may be, shall have the right (a "Put Right"), to require the Company to purchase all (but not less than all) of the Management Investor's Common Stock (including any shares held by its Management Transferees) (such shares on each particular Put Right exercise date, the "Put Shares") and all (but not less than all) of the Management Investor's Options (such Options on each particular Put Right exercise date, the "Put Options") provided that in no event shall a Put Right be exercised after the date which is six (6) months after such Management Investor's death or the termination of such Management Investor's employment with the Company or, if applicable, an Affiliate thereof. The price to be paid for any Put Shares shall be equal to the aggregate Fair Market Value of such Put Shares determined as of the date of exercise of the Put Right with respect to such Put Shares. The price -39- to be paid for any Put Option shall be equal to the aggregate Fair Market Value of the shares of Common Stock (determined as of the date of exercise of the Put Right with respect to such Put Option) underlying such Put Option, less (i) the product of the per share exercise price and the number of shares subject to the Put Option, and (ii) applicable withholdings. The Company shall pay the purchase price (less exercise price and applicable withholdings with respect to Options) for the Common Stock and the Options repurchased pursuant to this Section 4.2 in cash to the extent that the Company is permitted or required to purchase such shares for cash (under both applicable law and the Company's and its Affiliates' indebtedness and contractual arrangements and agreements). The Company shall fund any amount not so permitted to be paid in cash with a Buy-Out Note. A Supermajority of the Board may, in its discretion, assign the rights and obligations of the Company under this Section 4.2 to any other Person, but no such assignment shall relieve the Company of its obligations hereunder to the extent not satisfied by such assignee. 4.3 Withholdings. 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 a Management Investor to elect to pay the Company any such required withholding taxes. If such Management Investor so elects, the payment by such Management Investor of such taxes shall be a condition to the receipt of amounts payable to such Management Investor 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 such Management Investor. ARTICLE V CORPORATE GOVERNANCE 5.1 Business Plans. 5.1.1 2004 Annual Business Plan. Prior to the Effective Date, an individual appointed by Mr. Romo (the "Romo Representative") and the FPSH Representative shall work together to mutually approve and adopt an Annual Business Plan for fiscal year 2004 (and, to the extent applicable, for any period following the Effective Date remaining in fiscal year 2003 (such period, the "2003 Stub Period")). If, prior to the Effective Date, each of the Romo Representative and the FPSH Representative mutually approves and adopts an Annual Business Plan for fiscal year 2004 (and, to the extent applicable, for the 2003 Stub Period), such plan shall become an Approved Annual Business Plan for such period for purposes of this Agreement. If the Romo Representative and the FPSH Representative fail to adopt an Annual Business Plan for fiscal year 2004 (and, to the extent applicable, for the 2003 Stub Period) prior to the Effective Date, an Annual Business Plan for fiscal year 2004 (and, to the extent applicable, for the 2003 Stub Period) may thereafter be approved and adopted as follows: (a) During (i) such time as Mr. Romo has the right to nominate a majority of the members of the Board of Directors of the Company, and (ii) such time as FPSH has the right to nominate a -40- majority of the members of the Board of Directors of the Company and prior to the occurrence of a Target Default, by the approval of a Supermajority of the Board. (b) During such time as FPSH has the right to nominate a majority of the members of the Board of Directors of the Company and following the occurrence of a Target Default, subject to Section 5.3.2 (a), (b) and (c) of this Agreement, by the approval of the Board of Directors of the Company. If an Annual Business Plan for fiscal year 2004 (and, to the extent applicable, for the 2003 Stub Period) is approved and adopted in accordance with this Section 5.1.l, such plan shall become an Approved Annual Business Plan for such period for purposes of this Agreement. If an Annual Business Plan for fiscal year 2004 (and, to the extent applicable, for the 2003 Stub Period) is not approved and adopted in accordance with this Section 5.1.1, the Company will operate without any Annual Business Plan during such fiscal year in accordance with Section 5.2 of this Agreement. 5.1.2 Initial Three-Year Business Plan. Prior to the Effective Date, the Romo Representative and the FPSH Representative shall work together to mutually approve and adopt a Three-Year Business Plan for fiscal years 2004, 2005 and 2006 (and, to the extent applicable, for the 2003 Stub Period). If, prior to the Effective Date, each of the Romo Representative and the FPSH Representative mutually approves and adopts a Three-Year Business Plan for fiscal years 2004, 2005 and 2006 (and, to the extent applicable, for the 2003 Stub Period), such plan shall become the Approved Three-Year Business Plan for such period for purposes of this Agreement. If the Romo Representative and the FPSH Representative fail to adopt a Three-Year Business Plan for fiscal years 2004, 2005 and 2006 (and, to the extent applicable, for the 2003 Stub Period) prior to the Effective Date, a Three-Year Business Plan for fiscal years 2004, 2005 and 2006 (and, to the extent applicable, for the 2003 Stub Period) may thereafter be approved and adopted as follows: (a) During (i) such time as Mr. Romo has the right to nominate a majority of the members of the Board of Directors of the Company, and (ii) such time as FPSH has the right to nominate a majority of the members of the Board of Directors of the Company and prior to the occurrence of a Target Default, by the approval of a Supermajority of the Board. (b) During such time as FPSH has the right to nominate a majority of the members of the Board of Directors of the Company and following the occurrence of a Target Default, subject to Section 5.3.2 (a), (b) and (c) of this Agreement, by the approval of the Board of Directors of the Company. If a Three-Year Business Plan for fiscal years 2004, 2005 and 2006 (and, to the extent applicable, for the 2003 Stub Period) is approved and adopted in accordance with this Section 5.1.2, such plan shall become an Approved Three-Year Business Plan for such period for purposes of this Agreement. If a Three-Year Business Plan for fiscal years 2004, 2005 and 2006 (and, to the extent applicable, for the 2003 Stub Period) is not approved and adopted in accordance with this Section 5.1.2, the Company will operate without any Three-Year Business Plan during such period in accordance with Section 5.2 of this Agreement. Each of the Romo Representative, the FPSH Representative, the Romo Designees and the FPSH Designees shall use good faith efforts to cause the adoption and approval of a Three-Year Business Plan for fiscal -41- years 2004, 2005 and 2006 (and, to the extent applicable, for the 2003 Stub Period). None of the foregoing Persons shall unreasonably withhold approval of a Three-Year Business Plan. 5.1.3 Annual Business Plans - Romo Control. During such time as Mr. Romo has the right to nominate a majority of the members of the Board of Directors of the Company, with respect to each of fiscal years 2005, 2006, 2007 and 2008, the following principles shall apply with respect to the approval and adoption of an Annual Business Plan: (a) not less than forty-five (45) days before the start of each fiscal year of the Company, management shall submit to the Board of Directors of the Company a proposed Annual Business Plan for such fiscal year; (b) the approval and adoption of an Annual Business Plan shall require the approval of a Supermajority of the Board, provided, however, that if the Company has not failed to achieve the Targets for any of the preceding four fiscal quarters, and if the proposed Annual Business Plan is for the next fiscal year and reasonably projects that the Company will achieve the Targets for each fiscal quarter covered by the proposed Annual Business Plan, then the FPSH Designees shall not unreasonably withhold approval of such proposed Annual Business Plan; (c) if a Supermajority of the Board approves an Annual Business Plan, the plan shall become the Approved Annual Business Plan for such fiscal year for purposes of this Agreement; and (d) if a Super-majority of the Board does not approve an Annual Business Plan for a particular fiscal year, the Company will operate without any Annual Business Plan during such fiscal year in accordance with Section 5.2.1 of this Agreement. 5.1.4 Annual Business Plans - FPSH Control. During such time as FPSH has the right to nominate a majority of the members of the Board of Directors of the Company, with respect to each of fiscal years 2005, 2006, 2007 and 2008, the following principles will apply with respect to the approval and adoption of an Annual Business Plan: (a) Pre-Target Default. Not less than forty-five (45) days before the start of each fiscal year of the Company, management shall submit to the Board of Directors of the Company a proposed Annual Business Plan for such fiscal year. Prior to the occurrence of a Target Default, the adoption of an Annual Business Plan shall require the approval of a Supermajority of the Board. Prior to the occurrence of a Target Default, if a Supermajority of the Board approves an Annual Business Plan, the plan shall become the Approved Annual Business Plan for such fiscal year for purposes of this Agreement. Prior to the occurrence of a Target Default, if a Supermajority of the Board does not approve an Annual Business Plan for a particular fiscal year, the Company will operate without any Annual Business Plan during such fiscal year in accordance with Section 5.2.2 of this Agreement. (b) Post-Target Default. Not less than forty-five (45) days before the start of each fiscal year of the Company, management shall submit to the Board of Directors of the Company a proposed Annual Business Plan for such fiscal year. Following the occurrence of a Target Default, the adoption of an Annual Business Plan shall require the approval of the Board of Directors of the Company, provided, however, that any item contained in a proposed Annual Business Plan that would require approval pursuant to Section 5.3.2(a), (b) or (c) of this Agreement shall require the approval of Mr. Romo, provided, further, however, that the foregoing shall not prevent the Board of Directors of the Company from approving and adopting an Annual Business Plan with respect to all matters other than those specified by Sections 5.3.2(a), (b) and (c). Following the occurrence of a Target Default, if the Board of Directors of the Company approves an Annual -42- Business Plan, the plan shall become the Approved Annual Business Plan for such fiscal year for purposes of this Agreement. 5.1.5 Amendments. (a) During (i) such time as Mr. Romo has the right to nominate a majority of the members of the Board of Directors of the Company, and (ii) such time as FPSH has the right to nominate a majority of the members of the Board of Directors of the Company and prior to the occurrence of a Target Default, an Approved Annual Business Plan or an Approved Three-Year Business Plan may be amended (including, with respect to an Approved Three-Year Business Plan, by extending the fiscal years covered by such Approved Three-Year Business Plan) by the approval of a Supermajority of the Board, provided, however, that no such approval shall be required to decrease or shift financial allocations, commitments or expenditures in an amount equal to or less than $250,000 individually, or $1,000,000 in the aggregate. An Approved Annual Business Plan or Approved Three-Year Business Plan as amended in accordance with this Section 5.1.5(a) shall be the Approved Annual Business Plan or Approved Three-Year Business Plan, as applicable, for purposes of this Agreement for the period covered by such plan. (b) During such time as FPSH has the right to nominate a majority of the members of the Board of Directors of the Company and following the occurrence of a Target Default, an Approved Annual Business Plan or an Approved Three-Year Business Plan may be amended (including, with respect to an Approved Three-Year Business Plan, by extending the fiscal years covered by such Approved Three-Year Business Plan) by the approval of the Board of Directors, provided, however, that any item contained in a proposed amendment that would require approval pursuant to Section 5.3.2(a), (b) or (c) of this Agreement shall require the approval of Mr. Romo, provided, further, however, that the foregoing shall not prevent the Board of Directors of the Company from approving and adopting an amendment with respect to an Approved Annual Business Plan or an Approved Three-Year Business Plan with respect to all matters other than those contemplated by Sections 5.3.2(a), (b) and (c). An Approved Annual Business Plan or Approved Three-Year Business Plan as amended in accordance with this Section 5.1.5(b) shall be the Approved Annual Business Plan or Approved Three-Year Business Plan, as applicable, for purposes of this Agreement for the period covered by such plan. 5.1.6 Deadlock Mechanics. In the event that the adoption of an Annual Business Plan or a Three-Year Business Plan or the amendment of an Approved Annual Business Plan or an Approved Three-Year Business Plan requires the approval of a Supermajority of the Board and such approval is not obtained upon initial presentation of such approval item to the Board of Directors of the Company, the following procedures shall apply: Within, twenty days following the submission of such approval item to the Board of Directors of the Company, management shall consult with and take into account the objections of any member of the Board of Directors of the Company and shall attempt to modify any proposed Annual Business Plan, proposed Three-Year Business Plan, proposed amendment to an Approved Annual Business Plan or proposed amendment to an Approved Three-Year Business Plan, as applicable, in an effort to secure the approval of a Super-majority of the Board. If, approval by a Supermajority of the Board is not thereafter obtained, within 30 days after the initial submission of the approval item, the FPSH Representative and the Romo Representative shall hold discussions to attempt to resolve any remaining differences. Whether or not approval -43- by a Supermajority of the Board is thereafter obtained, the Company will operate in accordance with Section 5.2 of this Agreement. 5.1.7 Good Faith Efforts. Each of the Romo Representative, the FPSH Representative, the Romo Designees and the FPSH Designees shall use good faith efforts in connection with the proposal, adoption and approval procedures described in this Section 5.1. 5.2 Board of Directors. 5.2.1 Initial Composition. Following the Effective Date, the Board of Directors of the Company shall consist of seven members. Except as otherwise provided in Section 5.2.2, Mr. Romo shall have the right to nominate a majority of the members of the Board of Directors of the Company, as described herein, which initially shall include Mr. Romo (Chairman of the Board of Directors of the Company and Chief Executive Officer of the Company) and three other members to be designated by Mr. Romo (any member of the Board of Directors of the Company designated by Mr. Romo, including Mr. Romo, a "Romo Designee"). So long as Mr. Romo has the right to nominate a majority of the members of the Board of Directors of the Company, FPSH shall have the right to nominate a number of directors equal to the number nominated by Mr. Romo minus one and such number shall initially include Mr. W. Dexter Paine, III as Vice Chairman of the Board of Directors of the Company and two other members to be designated by FPSH (any member of the Board of Directors of the Company designated by FPSH, including Mr. Paine, an "FPSH Designee"). In addition, FPSH and Mr. Romo may agree to nominate additional mutually agreeable independent members of the Board of Directors of the Company, provided, however, that, except as otherwise provided in Section 5.2.2, Mr. Romo shall be permitted to nominate additional directors in order to maintain a majority of the Board of Directors of the Company. Subject to Section 5.3.1, so long as Mr. Romo has the right to nominate a majority of the members of the Board of Directors of the Company, the Board of Directors of the Company shall be entitled to operate the business of the Company in accordance with the following principles: (a) if, during a particular fiscal year, there is an Approved Annual Business Plan, the Board of Directors of the Company shall be entitled to operate the business of the Company in accordance with such Approved Annual Business Plan; (b) if, during any particular fiscal year, there is no Approved Annual Business Plan, but there is an Approved Three-Year Business Plan covering such fiscal year, then, during any such fiscal year, the Board of Directors of the Company shall be entitled to operate the business of the Company in accordance with the Approved Three-Year Business Plan, provided, however, that any single capital expenditure equal to or greater than $500,000 or any series of related capital expenditures equal to or greater than $500,000 shall require the approval of a Supermajority of the Board; and (c) if, during any fiscal year, there is no Approved Annual Business Plan and no Approved Three-Year Business Plan, all decisions regarding the operation of the business shall be subject to approval by a Supermajority of the Board. -44- 5.2.2 Default Composition. If (a) Mr. Romo or the Company materially breaches this Agreement (and such breach is not cured within ten Business Days after the date Mr. Romo received notice of the breach); (b) a Target Default occurs, (c) Mr. Romo is no longer employed as Chief Executive Officer of the Company or is no longer performing for the Company the customary functions of a chief executive officer, or (d) the Romo Designees or the senior executive management of the Company fail, within twenty Business Days after receiving notice of such failure, to enforce in good faith the Corporate Policies and Procedures (it being understood that so long as the Romo Designees and the senior executive management use good faith efforts to enforce the Corporate Policies and Procedures, the failure of an employee of the Company to comply with such Corporate Policies and Procedures shall not, by itself, result in FPSH receiving the rights and privileges associated with majority control), FPSH shall thereafter have all customary rights and privileges associated with majority control (including the right to choose executive management of the Company) and will have the right to nominate a majority of the members of the Board of Directors of the Company (including the Chairman), provided that Mr. Romo shall continue to have the right to nominate at least three members of the Board of Directors of the Company. In addition, FPSH and Mr. Romo may agree to nominate additional mutually agreeable independent members of the Board of Directors of the Company, provided, however, that FPSH shall be permitted to add additional directors in order to maintain a majority of the Board of Directors of the Company. Subject to Sections 5.3.2 and 5.3.3, so long as FPSH has the right to nominate a majority of the members of the Board of Directors of the Company, the Board of Directors of the Company shall be entitled to operate the business of the Company in accordance with the following principles: (a) if, during a particular fiscal year, there is an Approved Actual Business Plan, the Board of Directors of the Company shall be entitled to operate the business of the Company in accordance with such Approved Actual Business Plan; (b) if, during any particular fiscal year, there is no Approved Actual Business Plan, but there is an Approved Three-Year Business Plan covering such fiscal year, then, during any such fiscal year, the Board of Directors of the Company shall be entitled to operate the business of the Company in accordance with the Approved Three-Year Business Plan, provided, however, that any single capital expenditure equal to or greater than $500,000 or any series of related capital expenditures equal to or greater than $500,000 shall require the approval of the Board of Directors of the Company, provided, further, however, that the first proviso shall not apply following the occurrence of a Target Default; and (c) if, during any particular fiscal year, there is no Approved Actual Business Plan and no Approved Three-Year Business Plan, all decisions regarding the operation of the business shall be subject to approval by the Board of Directors of the Company. 5.2.3 Committee Designation. The parties shall take all necessary action as is required under applicable law to assure that each Committee of the Board of Directors of the Company, including an Audit Committee, Compensation Committee and Executive Committee shall be comprised as follows: (a) unless Mr. Romo and Mr. Paine mutually agree otherwise, the Executive Committee shall consist of two individuals, including (i) the chief executive officer of the Company, and (ii) Mr. Saul Fox or Mr. Paine; and (b) each of the other Committees of the Board of Directors of the Company shall consist of three individuals, including one FPSH Designee, one Romo Designee and one individual mutually agreed upon by FPSH and Mr. -45- Romo, provided, however, that the Compensation Committee shall not include any members of the Company's executive management. During the intervals between meetings of the Board of Directors of the Company, the Executive Committee shall have and may exercise all the powers and authority of the Board of Directors of the Company in the management of the business and the affairs of the Company, except as otherwise provided by law, the Certificate, the Bylaws of the Company, or this Agreement. 5.2.4 Voting Obligation. Each of the Stockholders entitled to vote in the election of directors to the Board of Directors of the Company agrees that it shall vote its Common Stock or execute consents, as the case may be, and take all other necessary action (including causing the Company to call a special meeting of Stockholders) in order to ensure that the designees that each of Mr. Romo and FPSH is entitled to nominate to the Board of Directors of the Company as set forth in this Section 5.2 are so elected. 5.3 Approval Rights. 5.3.1 FPSH Approval Rights. At any time that FPSH does not have the right to nominate a majority of the Board of Directors of the Company, in addition to approval by a majority of the Board of Directors of the Company, the approval of FPSH shall be required to approve any of the following actions by the Company: (a) the sale, transfer or other disposition of assets or businesses of the Company or its subsidiaries with a value greater than $250,000 individually, or $1,000,000 in the aggregate during any rolling twelve-month period (other than inventory in the ordinary course), other than as specifically contemplated by the Approved Business Plan; (b) the acquisition of any assets or properties (in one or more related transactions) for cash or otherwise for an amount in excess of $250,000 individually, or $1,000,000 in the aggregate during any rolling twelve-month period, other than as specifically contemplated by the Approved Business Plan; (c) changes in the capital structure of the Company or its subsidiaries (including the occurrence of an IPO or other issuances of equity); (d) other than as contemplated by the Approved Business Plan, the incurrence of any indebtedness for borrowed money, the making of any guarantee of any such indebtedness, or the prepayment, refinancing, amendment, change or increase of any indebtedness for borrowed money; (e) determinations regarding the material terms of indebtedness contemplated by the Approved Business Plan, to the extent such terms are not provided for in the Approved Business Plan; (f) capital expenditures outside of the Approved Business Plan in an amount greater than $250,000, individually, or $1,000,000 in the aggregate during any rolling twelve-month period; -46- (g) the declaration, setting aside, making or paying of any dividend or other distribution in respect of the Company's shares or equity interests, or the purchase or redemption, directly or indirectly, of such shares or equity interests (other than pursuant to this Agreement and the 1998 Stock Incentive Plan (and related agreements)); (h) investments outside of the Approved Business Plan in an amount greater than $250,000, individually, or $1,000,000 in the aggregate during any rolling twelve-month period; (i) material transactions not specifically contemplated by the Approved Business Plan; (j) annual business plans, operating plans and strategic plans to the extent they modify the Approved Business Plan, including, without limitation, increasing, decreasing or shifting financial allocations, commitments or expenditures in an amount greater than $250,000 individually, or $1,000,000 in the aggregate; (k) transactions with any executive officers, directors or Affiliates of the Company or any Stockholder (other than transactions with or among wholly-owned Subsidiaries of the Company); (l) the settlement or compromise of material litigation or administrative proceedings; (m) the replacement of the independent auditors or the making of any material change in any method of tax or financial accounting or accounting practice, except for any such change required by reason of a concurrent change in generally accepted accounting principles; (n) the commencement of any voluntary bankruptcy proceeding or termination, liquidation or dissolution of the Company; (o) the amendment, modification or waiver of any terms of any outstanding security of the Company or its subsidiaries; (p) entering into or modifying any employment agreement, severance agreement or loan arrangement with any executive officer or director of the Company or otherwise establishing or modifying any severance arrangements or plans, in each case, outside of the Approved Business Plan; (q) consulting fees outside of the Approved Business Plan in an amount greater than $250,000, individually, or $250,000 in the aggregate during any rolling twelve-month period; (r) press releases or public announcements that relate to the equity ownership of the Company or its equityholders, including FPSH; (s) amending the Corporate Policies and Procedures; (t) the amendment of the Certificate or Bylaws of the Company; -47- (u) entering into new, or amending existing, shareholder agreements (including this Agreement); (v) entering into new, or amending existing, option agreements or the Co-Investment Rights Agreements; and (w) the entry into any agreement with respect to the foregoing. 5.3.2 Basic Romo Approval Rights. During such time as FPSH controls a majority of the Board of Directors of the Company, in addition to approval by a majority of the Board of Directors of the Company, Mr. Romo's approval shall be required to approve any of the following actions by the Company: (a) the acquisition of any assets or properties (in one or more related transactions) for cash or otherwise for an amount in excess of $250,000 individually, or $1,000,000 in the aggregate during any rolling twelve-month period, other than as specifically contemplated by the Approved Business Plan; (b) other than as contemplated by the Approved Business Plan, the incurrence of any indebtedness for borrowed money (excluding replacing, refinancing or amending existing indebtedness), or the making of any guarantee of any such indebtedness; (c) determinations regarding the material terms of indebtedness contemplated by the Approved Business Plan, to the extent such terms are not provided for in the Approved Business Plan; (d) transactions with any directors or Affiliates of the Company or a Stockholder; (e) the declaration, setting aside, making or paying of any dividend or other distribution in respect of the Common Stock or equity interests of the Company, or the purchase or redemption, directly or indirectly, of such shares or equity interests (other than pursuant to this Agreement and the 1998 Stock Incentive Plan (and related agreements)); (f) sales by the Company of Common Stock or other equity interests of the Company to FPSH or its Affiliates, unless the other holders of Common Stock, Options and Co-Investment Rights as of the Effective Date (who continue through such time to own such equity) are offered the right to purchase a pro rata amount of Common Stock or other equity interests of the Company on the same terms as FPSH or its Affiliates; (g) the amendment of the Certificate or Bylaws of the Company, to the extent such amendment adversely affects Mr. Romo's rights in a manner different from the effect on the other holders of Common Stock or other equity interests of the Company or to the extent such amendment eliminates Mr. Romo's approval rights contained in this Section 5.3.2 or Section 5.3.3 or Mr. Romo's rights regarding the Board of Directors of the Company (contained in Section 5.2); and (h) the entry into any agreement with respect to the foregoing. -48- 5.3.3 Additional Romo Approval Rights. In addition to those approval rights set forth in Section 5.3.2., if FPSH controls a majority of the Board of Directors of the Company and the Company has not experienced a Target Default, in addition to approval by a majority of the Board of Directors of the Company, Mr. Romo's approval shall be required to approve any of the following actions by the Company: (a) the sale, transfer or other disposition of assets or businesses of the Company or its subsidiaries with a value greater than $250,000 individually, or $1,000,000 in the aggregate during any rolling twelve-month period (other than inventory in the ordinary course), other than as specifically contemplated by the Approved Business Plan; (b) annual business plans, operating plans and strategic plans to the extent they modify the Approved Business Plan, including, without limitation, increasing, decreasing or shifting financial allocations, commitments or expenditures in an amount greater than $250,000 individually, or $1,000,000 in the aggregate; (c) the amendment, modification or waiver of any terms of any outstanding security of the Company or its subsidiaries; and (d) the entry into any agreement with respect to the foregoing. If the Company has experienced a Target Default, FPSH shall consult with and take into account Mr. Romo's views relating to clauses (a) through (d) of this Section 5.3.3. 5.4 Information Rights. Each of Mr. Romo and FPSH shall have full access to all information regarding the Company, its operations and its personnel, irrespective of whether Mr. Romo or FPSH controls the Board of Directors of the Company, provided, however, that no access provided pursuant hereto shall interfere unreasonably with the operations of the Company. ARTICLE VI BUSINESS OPPORTUNITIES 6.1 Business Investment Offers. None of the Romo Persons or any of their respective Affiliates, on the one hand, nor FPSH or any of its Affiliates, on the other hand, shall own or acquire any assets used in, or any equity interest of any Person engaged in, the development, production or marketing of fruit or vegetable seeds (the "Business"), unless such Person or its Affiliate first offers (a "Business Investment Offer") the opportunity to acquire such assets or equity interest to the Company at the same price and on substantially the same terms and conditions (as such terms and conditions may be revised from time to time) as (or more favorable terms and conditions than) are available to such Person or its Affiliate. The offering Person or Affiliate shall notify the Company in writing, in reasonable detail (which writing may be a preliminary term sheet setting forth the general terms and conditions of the proposed transaction), of any Business Investment Offer and shall provide to the Company such -49- information as the Company may reasonably request in order to evaluate such offer, subject to any confidentiality agreement or other restriction applicable to the offering Person or Affiliate. 6.2 Company Determinations. Subject to Article V of this Agreement, the determination by the Company as to whether to accept or decline any Business Investment Offer shall be made by a majority vote of the Board of Directors of the Company, provided, however, that if (a) the Business Investment Offer is rejected by a majority of the Board of Directors of the Company, (b) the directors nominated by the Person who makes or whose Affiliate makes the Business Investment Offer voted to reject the Business Investment Offer, and (c) the Business Investment Offer would not have been rejected but for the vote of the directors referred to in clause (b), then the Person or Affiliate making such Business Investment Offer shall not be permitted to acquire the assets or equity interests covered by the Business Investment Offer. Any determination regarding a Business Investment Offer shall be communicated to the offering Person in writing within 20 Business Days of receipt by the Company of the Business Investment Offer. 6.3 Permitted Opportunity. If (a) the Company declines such Business Investment Offer (other than under the circumstances described in the proviso of the first sentence of Section 6.2), (b) the Company accepts such Business Investment Offer and fails, following good faith, active negotiations by the third-party seller with respect thereto, to enter into a binding agreement with such third-party seller to effect such acquisition of or investment in the assets or equity interest, or (c) the Company enters into a binding agreement with the third-party seller, but fails, after good faith efforts, within 180 days of the date of the binding agreement to complete such acquisition or investment, then the Person who made such offer, or any Affiliate of such Stockholder, shall be free (but only if the seller has acted in good faith with respect to its dealings with the Company in connection with the matters referred to in the foregoing clauses (b) and (c)) to effect such acquisition or investment within 180 days thereafter. 6.4 Exceptions. The limitations contained in this Article VI shall not apply to, and no Business Investment Offer shall be required in connection with the ownership or acquisition of: (a) an equity interest that constitutes less than 5% of the outstanding equity of any Person, provided, however, that such stock is listed on a national or international securities exchange or national market system; (b) less than 5% in value of any instrument of indebtedness of a Person engaged, directly or indirectly, in the Business; (c) the whole or any part of an acquired Person or business which carries on the Business, where less than 15% of such Person's revenues and net income are generated by the Business, and such Romo Person or its Affiliates or FPSH or its Affiliates, as the case may be, will dispose of such Business within one year of its acquisition, provided that such disposition may be delayed pending receipt of required regulatory approvals. 6.5 Affiliates of FPSH. The restrictions on Affiliates of FPSH contained in this Article VI shall not apply to publicly-held portfolio companies of Fox Paine & Co., LLC. -50- ARTICLE VII MISCELLANEOUS 7.1 Term. 7.1.1 This Agreement shall become effective (the "Effective Date") simultaneously with the closing of the transactions under the FPSH Stock Purchase Agreement, provided, however, that the provisions of Sections 5.1.1 and 5.1.2 relating to efforts by Mr. Paine and Mr. Romo to mutually agree upon an Annual Business Plan for fiscal year 2004 (and, to the extent applicable, for the 2003 Stub Period) and a Three-Year Business Plan for fiscal years 2004, 2005 and 2006 (and, to the extent applicable, for the 2003 Stub Period) shall be effective as of the date of this Agreement. 7.1.2 The rights and obligations of, and restrictions on, the Stockholders under Article II (Restrictions on Transfers of Stock) and Article V (Corporate Governance) shall terminate on the five-year anniversary of the Effective Date (subject, however, to all obligations of the parties hereto which must be fulfilled prior to such event); provided, however, that the rights of NML, ABP, PGGM and their PS Permitted Transferees contained under Section 2.6 shall terminate on the later of (x) the five-year anniversary of the Effective Date and (y) the occurrence of an IPO (subject, however, to all obligations of the parties hereto which must be fulfilled prior to such event). The rights and obligations of, and restrictions on, the Stockholders under Article IV (Management Investors Put and Call Rights) shall terminate upon the occurrence of an IPO (subject, however, to all obligations of the parties hereto which must be fulfilled prior to such event). The rights and obligations of, and restrictions on, the Romo Persons and their Affiliates, on the one hand, and FPSH and its Affiliates, on the other hand, under Article VI (Business Opportunities) shall terminate at such time as FPSH and its Affiliates, together with the Romo Persons, the Romo Transferees and their Affiliates, own less than a majority of the Common Stock of the Company on a fully diluted basis. Notwithstanding the foregoing, in the event the Company enters into any agreement to merge with or into any other Person or adopts any other plan of recapitalization, consolidation, reorganization or other restructuring transaction as a result of which the Stockholders (including FPSH and any Affiliates thereof) shall own less than a majority of the outstanding voting power of the entity surviving such transaction, this Agreement shall terminate. 7.1.3 Notwithstanding anything in Section 7.1.2 to the contrary, the provisions contained in Article III (Registration Rights) shall continue to remain in full force and effect until the earlier to occur of the 20th anniversary of the date hereof and the date on which there are no longer any Registrable Securities outstanding or issuable or thereafter available for or subject to issuance to any Stockholder upon exercise or conversion of any Options, Co-Investment Rights, other rights or other convertible securities; provided, however, that the provisions of Section 3.3 shall survive termination pursuant to Section 7.1.2 or this Section 7.1.3. 7.2 No Voting or Conflicting Agreements. No Stockholder shall grant any proxy or enter into or agree to be bound by any voting trust with respect to the Common Stock nor, at any time, shall any Stockholder enter into any stockholder agreements or arrangements of any kind -51- with any Person with respect to the Common Stock inconsistent with the provisions of this Agreement (whether or not such agreements and arrangements are with other Stockholders or holders of Common Stock that are not parties to this Agreement). The foregoing prohibition includes, but is not limited to, agreements or arrangements with respect to the acquisition, disposition or voting of shares of Common Stock inconsistent with the provisions of this Agreement. No Stockholder shall act, at any time, for any reason, as a member of a group or in concert with any other Persons in connection with the acquisition, disposition or voting of shares of Common Stock in any manner that is inconsistent with the provisions of this Agreement. 7.3 Ownership Interests in Certain Persons. Schedule III hereto contains a list of (a) the stockholders of each of CAI, Emprima, Park and the Rights Holder and (b) the settlor and beneficiaries of the ARG Trust. Each of CAI, Emprima, Park, the Rights Holder and ARG Trust hereby represents and warrants that Schedule III contains a true and complete list of its respective stockholders or (in the case of the ARG Trust) beneficiaries and settlor. Mr. Romo hereby covenants that each of the Romo Persons shall at all times be controlled by Mr. Romo, another Romo Person or a Romo Transferee. 7.4 Specific Performance. The parties hereto acknowledge that there would be no adequate remedy at law if any party fails to perform any of its obligations hereunder, and, accordingly, agree that each party, in addition to any other remedy to which it may be entitled at law or in equity, shall be entitled to compel specific performance of the obligations of any other party under this Agreement in accordance with the terms and conditions of this Agreement. Any remedy under this Section 7.4 is subject to certain equitable defenses and to the discretion of the court before which any proceedings therefor may be brought. 7.5 Notices. All notices, statements, instructions or other documents required to be given hereunder shall be in writing and shall be given either personally or by overnight courier or by telecopy, addressed to the Company at its principal offices and to the other parties at their addresses (with copies as indicated) reflected on the signature pages hereto. Each party hereto, by written notice given to the other parties hereto in accordance with this Section 7.5, may change the address to which notices, statements, instructions or other documents are to be sent to such party. All notices, statements, instructions and other documents hereunder that are mailed or telecopied shall be deemed to have been given on the date of mailing or, in the case of telecopying, upon confirmation of receipt. 7.6 Representative Capacity. 7.6.1 Fox Paine Capital Fund II, L.P. shall appoint a representative (the "FPSH Representative") as the representative of FPSH to act on behalf of FPSH in accordance with this Agreement, provided, however, that Fox Paine Capital Fund II, L.P. may replace the representative at any time so long as notice of such replacement is provided in accordance with Section 7.5 of this Agreement. -52- 7.6.2 The Bondholder SPC, Marcela Gonzalez, the Rights Holder, CAI, Emprima, Park, the Pulsar Administration and Payment Trust, Savia and the ARG Trust hereby appoint Mr. Romo as their representative to act on their behalf in accordance with this Agreement, provided, however, that they may replace Mr. Romo as their representative at any time after Mr. Romo's death or disability so long as notice of such replacement is provided in accordance with Section 7.5 of this Agreement. 7.7 Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the parties, and their respective permitted successors and assigns. If any Stockholder or any Transferee of any Stockholder shall acquire any shares of Common Stock in any manner, whether by operation of law or otherwise, such shares shall be held subject to all of the terms of this Agreement, and, by taking and holding such shares, such Person shall be conclusively deemed to have agreed to be bound by and to perform all of the terms and provisions of this Agreement. 7.8 Recapitalizations and Exchanges Affecting Common Stock. The provisions of this Agreement shall apply, to the full extent set forth herein with respect to Common Stock, to any and all shares of capital stock or equity securities of the Company or any successor or assign of the Company (whether by merger, consolidation, sale of assets or otherwise) that may be issued in respect of, in exchange for, or in substitution of, Common Stock, or that may be issued by reason of any stock dividend, stock split, reverse stock split, combination, recapitalization, reclassification or otherwise. Upon the occurrence of any of such events, numbers of shares and amounts hereunder and any other appropriate terms shall be appropriately adjusted, as determined in good faith by the Board of Directors of the Company. 7.9 Governing Law; Consent to Jurisdiction; Waiver of Jury Trial. (a) This Agreement shall be governed and construed and enforced 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. 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 Management Investors, the ARG Trust, CAI, Emprima, Park, Marcela Gonzalez, the Bondholder SPC, Mr. Romo, the Pulsar Administration and Payment Trust, Savia, the Rights Holder, ABP and PGGM 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 -53- 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. 7.10 Descriptive Headings, Etc. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning of terms contained herein. Unless the context of this Agreement otherwise requires, references to "hereof," "herein," "hereby," "hereunder" and similar terms shall refer to this entire Agreement. 7.11 Amendment. Except as otherwise provided herein, this Agreement may not be amended or supplemented, except by an instrument in writing signed by the Company, each representative appointed pursuant to Section 7.6 and by Stockholders holding a majority of the then outstanding shares of Common Stock held by all Stockholders; provided, however, that any amendment, supplement or modification of this Agreement that adversely affects the rights and obligations of the Stockholders generally under Section 2.6 shall also require the approval of FPSH and a majority of the outstanding shares of Common Stock held by the Stockholders party hereto; and provided, further, that any amendment, supplement or modification of this Agreement that adversely affects the rights and obligations of any Stockholder (an "Affected Holder") or group thereof, as a class, differently than those of the other Stockholders shall also require the approval of Affected Holders holding a majority of the outstanding shares of Common Stock held by all such Affected Holders. The foregoing notwithstanding, (a) the Company, without the consent of any other party hereto, may amend Schedule I and the signature pages hereto, in order to add any other Management Investor or other party that becomes a holder of Common Stock or securities convertible into or exercisable for Common Stock, and (b) the Rights Holder and FPSH may, without the consent of any other party hereto, amend or waive the terms of vesting of the Hurdle Co-Investment Rights contained herein. 7.12 Severability. If any term or provision of this Agreement shall to any extent be invalid or unenforceable, the remainder of this Agreement shall not be affected thereby, and each term and provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law. Upon the determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties shall negotiate in good faith to modify this Agreement so as to effect their original intent as closely as possible in an acceptable manner to the end that transactions contemplated hereby are fulfilled to the extent possible. -54- 7.13 Further Assurances. The parties hereto shall from time to time execute and deliver all such further documents and do all acts and things as the other parties may reasonably require to effectively carry out or better evidence or perfect the full intent and meaning of this Agreement, including, to the extent necessary or appropriate, using all reasonable efforts to cause the amendment of the Certificate or the Bylaws of the Company in order to provide for the enforcement of this Agreement in accordance with its terms. In furtherance and not in limitation of the foregoing, in the event of any amendment, modification or termination of this Agreement in accordance with its terms, the Stockholders shall cause the Board of Directors of the Company to meet within 30 days following such amendment, modification or termination or as soon thereafter as is practicable for the purpose of amending the Certificate and Bylaws of the Company, as may be required as a result of such amendment, modification or termination, and, to the extent required by law, proposing such amendments to the Stockholders entitled to vote thereon, and such action shall be the first action to be taken at such meeting. 7.14 Complete Agreement; Counterparts. This Agreement (together with the Stock Incentive Plans and the other agreements referred to herein and therein) constitutes the entire agreement and supersede all other agreements and understandings, both written and oral, among the parties or any of them, with respect to the subject matter hereof. This Agreement may be executed by any one or more of the parties hereto in any number of counterparts, each of which shall be deemed to be an original, but all such counterparts shall together constitute one and the same instrument. 7.15 Certain Transactions and Fees. The parties hereto agree that each of Fox Paine & Company, LLC and the Rights Holder shall have the right to receive the fees provided for in the Management Fee Letter Agreement, of even date herewith, by and among the Company, Fox Paine &Company, LLC and the Rights Holder. 7.16 No Third-Party Beneficiaries. The provisions of this Agreement shall be only for the benefit of the parties to this Agreement, and no other Person (other than any indemnified party with respect to Section 3.3 and other than as provided in Section 2.4 and Section 7.15) shall have any third-party beneficiary or other right hereunder. 7.17 Sophisticated Investors. Each of the Stockholders hereby represents that it has acquired Common Stock, Co-Investment Rights, Options, Warrants or other equity securities of the Company for investment purposes only, and not with a view to, or for, any public resale or other distribution thereof. Each of the Stockholders is an "accredited investor" as such term is defined in the regulations promulgated under the Securities Act and by reason of its business and financial experience, it has such knowledge, sophistication and experience in business and financial matters as to be capable of evaluating the merits and risks of an investment in Common Stock, Co-Investment Rights, Options, Warrants or other equity securities of the Company, is able to bear the economic risk of such investment and is able to afford a complete loss of such investment. -55- IN WITNESS WHEREOF, the parties hereto have caused this instrument to be duly executed on the date first written above. SEMINIS, INC. By: /s/ Enrique Osorio ---------------------------------------------- Name: Enrique Osorio Title: Treasurer Vice President [SIGNATURE PAGE TO AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT] IN WITNESS WHEREOF, the parties hereto have caused this instrument to be duly executed on the date first written above. FOX PAINE CAPITAL FUND II, L.P. By: Fox Paine Capital Fund II GP, LLC, its general partner By: Fox Paine Capital Management II, LLC, its manager By: /s/ Dexter Paine ---------------------------------------------- Name: Dexter Paine Title: Manager Address: c/o Fox Paine & Company, LLC 950 Tower Lane, Suite 1150 Foster City, CA 94404 Fax No.: (650) 295-4032 With copies to: Wachtell, Lipton, Rosen & Katz 51 West 52nd Street New York, New York 10019 Attention: Mitchell S. Presser, Esq. Fax No.: 212-403-2000 [SIGNATURE PAGE TO AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT] IN WITNESS WHEREOF, the parties hereto have caused this instrument to be duly executed on the date first written above. FOX PAINE CAPITAL FUND II, CO-INVESTORS, L.P. By: Fox Paine Capital Fund II GP, LLC, its general partner By: Fox Paine Capital Management II, LLC, its manager By: /s/ Dexter Paine ---------------------------------------------- Name: Dexter Paine Title: Manager Address: c/o Fox Paine & Company, LLC 950 Tower Lane, Suite 1150 Foster City, CA 94404 Fax No.: (650) 295-4032 With copies to: Wachtell, Lipton, Rosen & Katz 51 West 52nd Street New York, New York 10019 Attention: Mitchell S. Presser, Esq. Fax No.: 212-403-2000 [SIGNATURE PAGE TO AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT] IN WITNESS WHEREOF, the parties hereto have caused this instrument to be duly executed on the date first written above. E AND A `J' TRUST By: Fox Paine Capital Fund II GP, LLC, its general partner By: Fox Paine Capital Management II, LLC, its manager By: /s/ Dexter Paine ---------------------------------------------- Name: Dexter Paine Title: Manager Address: c/o Fox Paine & Company, LLC 950 Tower Lane, Suite 1150 Foster City, CA 94404 Fax No.: (650) 295-4032 With copies to: Wachtell, Lipton, Rosen & Katz 51 West 52nd Street New York, New York 10019 Attention: Mitchell S. Presser, Esq. Fax No.: 212-403-2000 [SIGNATURE PAGE TO AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT] IN WITNESS WHEREOF, the parties hereto have caused this instrument to be duly executed on the date first written above. FPC INVESTMENT GP By: Fox Paine Capital Fund II GP, LLC, its general partner By: Fox Paine Capital Management II, LLC, its manager By: /s/ Dexter Paine ---------------------------------------------- Name: Dexter Paine Title: Manager Address: c/o Fox Paine & Company, LLC 950 Tower Lane, Suite 1150 Foster City, CA 94404 Fax No.: (650) 295-4032 With copies to: Wachtell, Lipton, Rosen & Katz 51 West 52nd Street New York, New York 10019 Attention: Mitchell S. Presser, Esq. Fax No.: 212-403-2000 [SIGNATURE PAGE TO AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT] IN WITNESS WHEREOF, the parties hereto have caused this instrument to be duly executed on the date first written above. FPSH COINVESTMENT FUND I, LLC By: Fox Paine Capital Fund, II GP, LLC, its Manager By: /s/ Dexter Paine ---------------------------------------------- Name: Dexter Paine Title: Manager Address: c/o Fox Paine & Company, LLC 950 Tower Lane, Suite 1150 Foster City, CA 94404 Fax No.: (650) 295-4032 With copies to: Wachtell, Lipton, Rosen & Katz 51 West 52nd Street New York, New York 10019 Attention: Mitchell S. Presser, Esq. Fax No.: 212-403-2000 [SIGNATURE PAGE TO AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT] IN WITNESS WHEREOF, the parties hereto have caused this instrument to be duly executed on the date first written above. FPSH COINVESTMENT FUND II, LLC By: Fox Paine Capital Fund, II GP, LLC, its Manager By: /s/ Dexter Paine ---------------------------------------------- Name: Dexter Paine Title: Manager Address: c/o Fox Paine & Company, LLC 950 Tower Lane, Suite 1150 Foster City, CA 94404 Fax No.: (650) 295-4032 With copies to: Wachtell, Lipton, Rosen & Katz 51 West 52nd Street New York, New York 10019 Attention: Mitchell S. Presser, Esq. Fax No.: 212-403-2000 [SIGNATURE PAGE TO AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT] IN WITNESS WHEREOF, the parties hereto have caused this instrument to be duly executed on the date first written above. FPSH COINVESTMENT FUND III, LLC By: Fox Paine Capital Fund, II GP, LLC, its Manager By: /s/ Dexter Paine ---------------------------------------------- Name: Dexter Paine Title: Manager Address: c/o Fox Paine & Company, LLC 950 Tower Lane, Suite 1150 Foster City, CA 94404 Fax No.: (650) 295-4032 With copies to: Wachtell, Lipton, Rosen & Katz 51 West 52nd Street New York, New York 10019 Attention: Mitchell S. Presser, Esq. Fax No.: 212-403-2000 [SIGNATURE PAGE TO AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT] IN WITNESS WHEREOF, the parties hereto caused this instrument to be duly executed on the date first written above. FPSH COINVESTMENT FUND IV, LLC By: Fox Paine Capital Fund, II GP, LLC, its Manager By: /s/ Dexter Paine ---------------------------------------------- Name: Dexter Paine Title: Manager Address: c/o Fox Paine & Company, LLC 950 Tower Lane, Suite 1150 Foster City, CA 94404 Fax No.: (650) 295-4032 With copies to: Wachtell, Lipton, Rosen & Katz 51 West 52nd Street New York, New York 10019 Attention: Mitchell S. Presser, Esq. Fax No.: 212-403-2000 [SIGNATURE PAGE TO AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT] IN WITNESS WHEREOF, the parties hereto have caused this instrument to be duly executed on the date first written above. FPSH COINVESTMENT FUND V, LLC By: Fox Paine Capital Fund, II GP, LLC, its Manager By: /s/ Dexter Paine ---------------------------------------------- Name: Dexter Paine Title: Manager Address: c/o Fox Paine & Company, LLC 950 Tower Lane, Suite 1150 Foster City, CA 94404 Fax No.: (650) 295-4032 With copies to: Wachtell, Lipton, Rosen & Katz 51 West 52nd Street New York, New York 10019 Attention: Mitchell S. Presser, Esq. Fax No.: 212-403-2000 [SIGNATURE PAGE TO AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT] IN WITNESS WHEREOF, the parties hereto have caused this instrument to be duly executed on the date first written above. 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/ Ricardo J. Gil ---------------------------------------------- Name: Ricardo J. Gil Title: Delegado Fiduciario By: /s/ Beatriz Garzal ---------------------------------------------- Name: Beatriz Garzal Title: Delegado Fiduciario [SIGNATURE PAGE TO AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT] JEAN PIERRE POSA ------------------------------------------------- Address: BANCA AFIRME, S.A., INSTITUCION DE BANCA MULTIPLE, AFIRME GRUPO FINANCIERO, AS TRUSTEE, UNDER THE ADMINISTRATION TRUST NUMBER 243-4 (FIDEICOMISO DE ADMINISTRACION NUMBER 243-4) By: /s/ Ricardo J. Gil ---------------------------------------------- Name: Ricardo J. Gil Title: Delegado Fiduciario By: /s/ Beatriz Garzal ---------------------------------------------- Name: Beatriz Garzal Tile: Delegado Fiduciario [SIGNATURE PAGE TO AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT] IN WITNESS WHEREOF, the parties hereto have caused this instrument to be duly executed on the date first written above. CONJUNTO ADMINISTRATIVO INTEGRAL, S.A. DE C.V. By: /s/ Heriberto S. Muzza ---------------------------------------------- Name: Heriberto S. Muzza Title: Attorney-in-Fact By: /s/ [Authorized Signatory] ---------------------------------------------- Name: [Authorized Signatory] Title: Attorney-in-Fact [SIGNATURE PAGE TO AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT] IN WITNESS WHEREOF, the parties hereto have caused this instrument to be duly executed on the date first written above. DESARROLLO CONSOLIDADO DE NEGOCIOS, S.A. de C.V. By: /s/ Gustavo Romo Garza ---------------------------------------------- Name: Gustavo Romo Garza Title: Attorney-in-Fact [SIGNATURE PAGE TO AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT] IN WITNESS WHEREOF, the parties hereto have caused this instrument to be duly executed on the date first written above. EMPRIMA, S.A. DE C.V. By: /s/ Heriberto S. Muzza ---------------------------------------------- Name: Heriberto S. Muzza Title: Attorney-in-Fact By: /s/ [Authorized Signatory] ---------------------------------------------- Name: [Authorized Signatory] Title: Attorney-in-Fact [SIGNATURE PAGE TO AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT] IN WITNESS WHEREOF, the parties hereto have caused this instrument to be duly executed on the date first written above. THE IRREVOCABLE ADMINISTRATION AND PAYMENT TRUST NUMBER 131-4 ENTERED INTO BY BANCA AFIRME, S.A., INSTITUClON DE BANCA MULTIPLE, AFIRME GRUPO FINANCIERO, IN ITS CAPACITY AS TRUSTEE AND PULSAR INTERNACIONAL, S.A. DE C.V., EXECUTED ON JULY 23, 2001, AS AMENDED By: /s/ Ricardo J. Gil ---------------------------------------------- Name: Ricardo J. Gil Title: Delegado Fiduciario By: /s/ Beatriz Garzal ---------------------------------------------- Name: Beatriz Garzal Tile: Delegado Fiduciario [SIGNATURE PAGE TO AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT] IN WITNESS WHEREOF, the parties hereto have caused this instrument to be duly executed on the date first written above. PARK FINANCIAL GROUP LTD. By: /s/ Bernardo Jimenez ---------------------------------------------- Name: Bernardo Jimenez Title: Authorized Officer [SIGNATURE PAGE TO AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT] IN WITNESS WHEREOF, parties hereto have caused this instrument to be duly executed on the date first written above. SAVIA, S.A. DE C.V. By: /s/ Heriberto S. Muzza ---------------------------------------------- Name: Heriberto S. Muzza Title: Attorney-in-Fact By: /s/ Jose Luis Martinez ---------------------------------------------- Name: Jose Luis Martinez Title Attorney-in-Fact [SIGNATURE PAGE TO AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT] IN WITNESS WHEREOF, the parties hereto have caused this instrument to be duly executed on the date first written above. SAVIA, S.A. DE C.V. By: /s/ Bernardo Jimenez ---------------------------------------------- Name: Bernardo Jimenez Title: Attorney-in-Fact [SIGNATURE PAGE TO AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT] IN WITNESS WHEREOF, the parks hereto have caused this instrument to be duly executed on the date first written above. GASPAR ALVAREZ /s/ Gaspar Alvarez ------------------------------------------------- [SIGNATURE PAGE TO AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT] IN WITNESS WHEREOF, the parties hereto have caused this instrument to be duly executed on the date first written above. MATEO MAZAL BEJA /s/ Mateo Mazal Beja ------------------------------------------------- [SIGNATURE PAGE TO AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT] IN WITNESS WHEREOF, the parties hereto have caused this instrument to be duly executed on the date first written above. FRANCO CAMPANA /s/ Franco Campana ------------------------------------------------- [SIGNATURE PAGE TO AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT] IN WITNESS WHEREOF, the parties hereto have caused this instrument to be duly executed on the date first written above. BRUNO FERRARI /s/ Bruno Ferrari ------------------------------------------------- [SIGNATURE PAGE TO AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT] IN WITNESS WHEREOF, the parties hereto have caused this instrument to be duly executed on the date first written above. ALFONSO ROMO GARZA /s/ Alfonso Romo Garza ------------------------------------------------- [SIGNATURE PAGE TO AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT] IN WITNESS WHEREOF, the parties hereto have caused this instrument to be duly executed on the date first written above. MARCELA GONZALEZ /s/ Marcela Gonzalez ------------------------------------------------- [SIGNATURE PAGE TO AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT] IN WITNESS WHEREOF, the parties hereto have caused this instrument to be duly executed on the date first written above. CHARLES EDWARD GREEN /s/ Charles Edward Green ------------------------------------------------- [SIGNATURE PAGE TO AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT] IN WITNESS WHEREOF, the parties hereto have caused this instrument to be duly executed on the date first written above. BERNARDO JIMENEZ /s/ Bernardo Jimenez ------------------------------------------------- [SIGNATURE PAGE TO AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT] IN WITNESS WHEREOF, the parties hereto have caused this instrument to be duly executed on the date first written above. LUIZ MAIZ /s/ Luiz Maiz ------------------------------------------------- [SIGNATURE PAGE TO AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT] IN WITNESS WHEREOF, the parties hereto have caused this instrument to be duly executed on the date first written above. JEAN PIERRE POSA /s/ Jean Pierre Posa ------------------------------------------------- [SIGNATURE PAGE TO AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT] IN WITNESS WHEREOF, the parties hereto have caused this instrument to be duly executed on the date first written above. ADRIAN RODRIGUEZ /s/ Adrian Rodriguez ------------------------------------------------- [SIGNATURE PAGE TO AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT] IN WITNESS WHEREOF, the parties hereto have caused this instrument to be duly executed on the date first written above. THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY By: /s/ Mark E. Kishler ---------------------------------------------- Name: Mark E. Kishler Title: Its Authorized Representative Address: The Northwestern Mutual Life Insurance Company 720 East Wisconsin Avenue Milwaukee, Wisconsin 53202 Fax No.: (414) 665-5714 With copies to: Schiff Hardin & Waite 6600 Sears Tower Chicago, Illinois 60606 Attention: Drew Kling, Esq. Fax No.: (312) 258-5700 [SIGNATURE PAGE TO AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT] IN WITNESS WHEREOF, the parties hereto have caused this instrument to be duly executed on the date first written above. STICHTING PENSIOENFONDS ABP, duly represented by NIB Capital Private Equity N.V. By: /s/ [Authorized Signatory] ---------------------------------------------- Name: [Authorized Signatory] Title: Head of Legal Affairs By: /s/ [Authorized Signatory] ---------------------------------------------- Name: [Authorized Signatory] Title: Managing Partner Stichting Pensioenfonds ABP c/o NIB Capital Private Equity Jachthavenweg 118 1081 KJ AMSTERDAM The Netherlands Attn: W. Borgdorff Fax: +31 20 540 7503 With copies to: NIB Capital Private Equity 600 Fifth Avenue, 17th Floor New York, New York 10020 Attn: Henry Robin/Jason Block Fax: (212) 332-6241 and Ropes & Gray LLP 45 Rockefeller Plaza, 11th Floor New York, New York 10111 Attn: Daniel C. Kolb Fax: (212) 841-5725 [SIGNATURE PAGE TO AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT] IN WITNESS WHEREOF, the parties hereto have caused this instrument to be duly executed on the date first written above. STICHTING PENSIOENFONDS VOOR DE GEZONDHEID, GEESTELIJKE EN MAATSCHAPPELIJKE BELANGEN, duly represented by NIB Capital Private Equity N.V. By: /s/ [Authorized Signatory] ---------------------------------------------- Name: [Authorized Signatory] Title: Head of Legal Affairs By: /s/ [Authorized Signatory] ---------------------------------------------- Name: [Authorized Signatory] Title: Managing Partner Stichting Pensioenfonds de Gezondheid, Geestelijke en Maatschappelijke Belangen c/o NIB Capital Private Equity N.V. Jachthavenweg 118 1081 KJ AMSTERDAM The Netherlands Attn: W. Borgdorff Fax: +31 20 540 7503 With copies to: NIB Capital Private Equity 600 Fifth Avenue, 17th Floor New York, New York 10020 Attn: Henry Robin/Jason Block Fax: (212) 332-6241 and Ropes & Gray LLP 45 Rockefeller Plaza, 11th Floor New York, New York 10111 Attn: Daniel C. Kolb Fax: (212) 841-5725 [SIGNATURE PAGE TO AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT] Exhibit A CORPORATE POLICIES AND PROCEDURES ACTIONS REQUIRING APPROVAL Neither Seminis, Inc. (the "Company"), any of its subsidiaries nor any of their respective executive officers or employees shall take any of the following actions (i) without the authorization of the Board of Directors of the Company, with respect to items marked "BD," and (ii) without providing information about such action to the Executive Committee and receiving approval from the CEO, with respect to items marked "EC." References to the "Budget" shall be the Approved Business Plan as in effect from time to time in accordance with the Stockholders' Agreement. The items enumerated herein shall not supersede, and shall be subject to, the approval rights set forth in Section 5.3 of the Stockholders' Agreement. General 1. implement or approve any annual business plans, operating plans and strategic plans for the Company to the extent the modify the Approved Business Plan, or amend any Budget for the Company previously approved by the Board of Directors, if such action must be approved by the Supermajority of the Board of Directors (BD); 2. enter into any new line of business (BD); 3. materially amend any Budget (EC); 4. adopt an operating plan or budget (including any marketing, corporate overhead and sales plans or budgets) or any amendment thereto not consistent with the annual Budget (BD); 5. adopt a capital expenditure budget or any amendment thereto not consistent with the annual Budget, as amended from time to time (BD); 6. make, modify or approve plans, practices or policies of the Company or any subsidiary of the Company material to the operations or governance of the Company or its subsidiaries (EC); 7. amend or waive any material term of any agreement or transaction that required, or would have required had such agreement or transaction been entered into after the adoption hereof, Board approval hereunder (BD); 8. modify the Corporate Policies and Procedures of the Company (BD); 9. cast any votes with respect to non-wholly owned investments or subsidiaries, or grant any proxy with respect to the voting of any shares held by the Company or any subsidiary of the Company as to an action or transaction that would require Board approval hereunder if such action were to be taken by the Company (EC); or 10. authorize, commit or agree to take any action covered hereby, except in accordance with the provisions hereof (BD). Capital Stock, Debt Securities, Dividends and Shareholders Meetings 1. acquire, repurchase, redeem, cancel, sell, issue or otherwise dispose of any indebtedness (as defined under GAAP) or equity interest of the Company or any of its subsidiaries, or any other securities convertible into or exchangeable for, or any rights, warrants or options to acquire any shares of capital stock of the Company or any of its subsidiaries (other than the issuance of shares of capital stock or securities by wholly owned subsidiaries of the Company, not explicitly provided for in the Budget) (BD); 2. declare, set aside, make or pay any dividend or other distribution in respect of the Company's shares or equity interests, or purchase or redeem, directly or indirectly, such shares or equity interests (other than pursuant to the Stockholders' Agreement, the 1998 Stock Incentive Plan (and related agreements) and employment agreements existing on the date hereof) (BD); 3. amend, modify or waive any material term of any outstanding equity security or indebtedness (as defined under GAAP) of the Company or any of its subsidiaries other than such securities or indebtedness of wholly owned subsidiaries owned by the Company and its wholly owned subsidiaries (BD); or 4. call, convene, give notice of or hold any meeting of stockholders of the Company, or determine matters, resolutions, proposals to be considered at any meeting of stockholders of the Company (BD). Reorganizations, Consolidations, Liquidations and Mergers and Acquisitions 1. agree to enter into or consummate any mergers, consolidations, reorganizations, recapitalizations or other business combinations (BD); 2. make any non-binding bid on any acquisition, divestiture, joint venture or alliance in excess of $250,000 (EC); 3. make any acquisition, divestiture, joint venture or alliance or any agreements or commitments relating thereto, involving the commitment or transfer by the Company or any of its subsidiaries of value in excess of $250,000 not explicitly provided for in the Budget (BD); 4. make or dispose of any investment in another entity (other than direct or indirect wholly owned subsidiaries of the Company), not explicitly provided for in the Budget, or cash management in accordance with cash management policies of the Company (BD); 5. commence the termination, liquidation or dissolution of the Company, or enter into any agreement or arrangement relating thereto (BD); 6. propose or institute proceedings to adjudicate the Company or any subsidiary of the Company, as bankrupt, or consent to the filing of a bankruptcy proceeding against the Company or any subsidiary of the Company, or file a petition or answer or consent seeking reorganization of the Company or any subsidiary of the Company under any applicable bankruptcy or insolvency laws, or consent to the filing of any such petition against the Company or any subsidiary of the Company, or consent to the appointment of a receiver or liquidator or trustee or assignee in bankruptcy or insolvency of the Company or any subsidiary of the Company, or make an assignment for the benefit of creditors of the Company or any subsidiary of the Company or admit in writing the Company's or any subsidiary of the Company's inability to pay its debts generally as they become due (BD); 7. propose that the Company or any subsidiary of the Company be wound-up or that any liquidation proceedings be commenced (BD); or 8. adopt or materially amend the cash management policies of the Company and its subsidiaries (EC). Commercial Transactions Make, permit or approve any of the following transactions: 1. payments by the Company or any subsidiary of the Company outside the ordinary course of business in excess of $250,000 not otherwise specifically provided for in the Budget (BD); 2. execute any trade, buy or sell, or commit to buy or sell, assets or property with a value in excess of $250,000 in the aggregate outside the ordinary course of business and not otherwise specifically provided for in the Budget (BD); 3. enter into any lease involving (i) payments in excess of $100,000 per year or (ii) obligations of the Company or any of its subsidiaries beyond one year in excess of $250,000 in the aggregate not otherwise specifically provided for in the Budget (BD); 4. capital expenditures in excess of $100,000 not otherwise specifically provided for in the Budget (EC); or 5. effect any transaction outside of the ordinary course of business in excess of $250,000 and not otherwise specifically provided for in the Budget (BD). Indebtedness and Liens Make, permit or approve any of the following transactions: 1. mortgage or otherwise encumber or subject to any lien any assets of the Company or any of its subsidiaries (BD); or 2. lend any money or assets of the Company (including any loans made to directors, officers or employees of the Company or any of its subsidiaries), other than incidental amounts, such as travel expenses, not in excess of $500 relating to expenses incurred in the ordinary course of business (BD). Transactions with Affiliated Parties 1. enter into any transaction with any shareholder, executive officer, director or any affiliate or relative thereof of the Company or of any of its subsidiaries, other than transactions with and among wholly owned subsidiaries or otherwise provided for in the Budget (BD); 2. hire, renew, promote or elect, the chief executive or any other Company executive officers not otherwise approved by the Compensation Committee (BD); 3. create new executive officer positions of the Company not otherwise approved by the Compensation Committee (BD); 4. make, amend or approve compensation and benefit plans, programs and policies of the Company or any of its subsidiaries, including option and equity-based or profit sharing plans, or approve any grant under any option or equity-based or profit sharing plan not otherwise approved by the Compensation Committee (BD); 5. make or approve severance agreements or arrangements involving payments by the Company or any of its subsidiaries in excess of $150,000 not otherwise approved by the Compensation Committee (BD); 6. enter into any agreement providing for the indemnification of any officer, director, employee, agent or representative of the Company or indemnification of another company, partnership, joint venture, trust or other enterprise (BD); or 7. purchase or obtain insurance for the benefit of any officer, director, employee, agent or representative of the Company or another company, partnership, joint venture, trust or other enterprise not otherwise explicitly contemplated by the Budget (BD). Litigation 1. commence or settle litigation with a cost or expected value in excess of $100,000 or otherwise pay, settle, discharge, waive or satisfy any claim, liability or obligation other than the payment, discharge or satisfaction thereof in the ordinary course of business consistent with past practice (the Board may create a separate basket for Seedman's claims) (BD). Regulatory 1. make any filing with or any report to any regulatory agency relating to or referring to the Company's stockholders or capital structure or, if publicly filed or otherwise reasonably expected to become publicly available, financial circumstances (BD). Taxation and Audits 1. materially change any of the Company's tax, accounting, bookkeeping or record-keeping principles, elections or positions (BD); or 2. review, accept, approve or change the Company's external auditors or auditors' reports (BD). Miscellaneous 1. approve consultant fees or investment banking fees in excess of $250,000 (BD); or 2. issue any press releases or other public announcements, or give any media interview relating to or referring to the Company's stockholders, financial circumstances or capital structure (BD). GUIDELINES FOR APPROPRIATE CONDUCT INTRODUCTION As a company team member, you are expected to accept certain responsibilities, follow acceptable business principles in matters of conduct and exhibit a high degree of integrity at all times. This Guideline covers a wide range of practices. It does not cover every issue that may arise, but it sets out basic principles to guide all employees of Seminis, Inc. and its Subsidiaries (collectively, the "Company"). All of our employees must conduct themselves according to these Guidelines and seek to avoid even the appearance of improper behavior that might be harmful to themselves, co-workers, or the Company; might be viewed unfavorably by current or potential customers; or might be viewed unfavorably by the public at large in any of the many countries where the Company does business or is subject to regulation. Employees, officers, directors and consultants are encouraged to observe the highest standards of professionalism at all times and comply with the practices described below. Although consultants are expected to abide by these Guidelines, they shall act solely as independent contractors and nothing herein contained shall at any time be so construed as to create a relationship of employer and employee, partnership, principal and agent, or joint venturer. Additionally, all contracts the Company shall enter into with its agents following the date on which the Company adopts these Guidelines shall incorporate and attach a copy of these Guidelines, unless specifically approved otherwise in writing by the Company's General Counsel. 1. Compliance with Laws, Rules and Regulations Obeying the law, both in letter and in spirit, is the foundation on which this Company's ethical standards are built. All employees must respect and obey the laws of the cities, states and countries in which we operate. Although not all employees are expected to know, the details of these laws, it is important to know enough to determine when to seek advice from higher authorities. 2. Conflicts of Interest A "conflict of interest" exists when a person's private interest interferes in any way - or even appears to interfere - with the interests of the Company. A conflict can arise when an employee, officer or director takes actions or has interests that may make it difficult to perform his or her Company work objectively and effectively. Conflicts of interest may also arise when an employee, officer or director, or members of his or her family, receives personal benefits as a result of his or her position in the Company. It is almost always a conflict of interest for a Company employee to work simultaneously for a competitor, customer or supplier. You are not allowed to work for a competitor as a consultant or board member. The best policy is to avoid any direct or indirect business connection with our customers, suppliers or competitors, except on our behalf. In addition, engaging in a competitive activity may result in the loss of benefits under your employment agreement, restricted stock units or other incentive awards. Conflicts of interest are prohibited as a matter of Company policy. Conflicts of interest are not always clear-cut, so if you have a question, or if a situation raises any doubt, you should promptly consult with higher levels of local management or with the Company's General Counsel. Conflicts, or potential conflicts, can often be dealt with if disclosed early and completely. Employees, officers and directors are prohibited from taking for themselves personally opportunities that are presented or discovered through the use of corporate property, information or position. No employee may use corporate property, information, or position for personal gain, and no employee may compete with the Company, directly or indirectly. Employees, officers and directors owe a duty to the Company to advance its legitimate interests when the opportunity to do so arises. 3. Competition and Fair Dealing We seek to outperform our competition fairly and honestly. We seek competitive advantages through superior performance, never through unethical or illegal business practices. Stealing proprietary information, possessing and using trade secret information that was obtained without the owner's consent, or inducing such disclosures by past or present employees of other companies is prohibited. Each employee should endeavor to respect the rights of and deal fairly with the Company's customers, suppliers, competitors and employees. No employee should take unfair advantage of anyone through manipulation, concealment, abuse of privileged information, misrepresentation of material facts, or any other intentional unfair-dealing practice. To maintain the Company's valuable reputation, compliance with our quality processes and safety requirements is essential. In the context of ethics, it is a quality requirement that our products and services be designed and manufactured to meet our obligations to customers. All inspection and testing documents must be handled in accordance with all applicable regulations. The purpose of business entertainment and gifts in a commercial setting is to create good will and sound working relationships, not to gain unfair advantage with customers. Employees may never give or receive cash gifts. No gift or entertainment should ever be offered, given, provided or accepted by any Company employee, family member of an employee or permanent consultant unless it is appropriately modest in value; fully consistent with all laws or regulations; is consistent with customary business practices (including the practices of the Company); and cannot be construed as a bribe or improper inducement. Company employees and permanent consultants may not, under any circumstances, solicit any third party to violate the above on behalf of the Company or any affiliate of the Company. National laws and international treaties penalize illicit payments, especially to government officials, political figures, and their families. Penalties for violating these obligations can be severe - including imprisonment for individuals and potentially devastating financial penalties and negative publicity for companies. The Company emphasizes its insistence upon scrupulous adherence to all applicable standards regarding gifts and entertainment by all employees, and permanent consultants. Please discuss with your supervisor any gifts or plans that you are not certain are appropriate. 4. Discrimination and Harassment The diversity of the Company's employees is a tremendous asset. We are firmly committed to providing equal opportunity in all aspects of employment and will not tolerate any illegal discrimination or harassment of any kind. Examples include derogatory comments based on racial or ethnic characteristics and unwelcome sexual advances. Employees should immediately report any improper discrimination or harassment to the appropriate supervisor or to the Corporate Vice-President for Human Resources. 5. Health and Safety The Company strives to provide each employee with a safe and healthful work environment. Each employee has responsibility for maintaining a safe and healthy workplace for all employees by following safety and health rules and practices and reporting accidents, injuries and unsafe equipment, practices or conditions. Violence and threatening behavior are not permitted under any circumstances. Employees should report to work in condition to perform their duties, free from the influence of illegal drugs or alcohol. The use of illegal drugs in the workplace will not be tolerated. 6. Record-Keeping The Company requires honest and accurate recording and reporting of information in order to make responsible business decisions. Only the true and actual number of hours worked should be reported. Never shift costs to other customers or inappropriate work order numbers. Many employees regularly use business expense accounts, which must be documented and recorded accurately. If you are not sure whether a certain expense is legitimate, ask your supervisor or your controller. Rules and guidelines are available from the Accounting Department. All of the Company's books, records, accounts and financial statements must be maintained in reasonable detail, must appropriately reflect the Company's transactions and must conform both to applicable legal requirements and to the Company's system of internal controls. Unrecorded or "off the books" funds or assets should not be maintained unless permitted by applicable law or regulation. Business records and communications often become public, and we should avoid exaggeration, derogatory remarks, guesswork, or inappropriate characterizations of people and companies that can be misunderstood. This applies equally to e-mail, internal memos, and formal reports. Records should always be retained or destroyed according to the Company's record retention policies. In accordance with those policies, in the event of litigation or governmental investigation please consult the General Counsel. 7. Confidentiality Employees must maintain the confidentiality of confidential information entrusted to them by the Company or its customers, except when disclosure is authorized by the General Counsel or required by laws or regulations. Confidential information includes all non-public information that might be of use to competitors, or harmful to the Company or its customers, if disclosed. It also includes information that suppliers and customers have entrusted to us. The obligation to preserve confidential information continues even after employment ends. 8. Protection and Proper Use of Company Assets All employees should endeavor to protect the Company's assets and ensure their efficient use. Theft, carelessness, and waste have a direct impact on the Company's profitability. Any suspected incident of fraud or theft should be immediately reported for investigation. In no event should Company equipment be used for non-Company business unless expressly authorized by (i) the appropriate supervisors; or (ii) under specific guidelines issued by the Company. Loyalty to the Company also requires that employees help preserve Company assets, which include physical assets and also proprietary information. Proprietary information includes intellectual property such as trade secrets, patents, trademarks, and copyrights, as well as business, marketing and service plans, engineering and manufacturing ideas, designs, databases, records, salary information and any unpublished financial data and reports. Any unauthorized use or distribution of this information would violate Company policy. It could also be illegal and result in civil or even criminal penalties. All employees should do their best to make sure that Company property under their control is properly used and protected by adequate controls and safeguards. 9. Payments to Government Personnel As noted in section 3, national laws and international treaties impose criminal penalties, including extradition and imprisonment, for improper attempts to influence foreign government officials. The U. S. Foreign Corrupt Practices Act ("FCPA") has set a standard that has been or is being adopted by more and more countries and in a number of treaties. The Company reaffirms its commitment to doing business on the highest ethical basis in this context, as in all others. Regardless of what competitors may do (or we may be told they do), no employee may engage in improper payments, gifts or conveying inappropriate advantage to any government official, political party official, or member of their family. The Company will not endorse or ratify any such action. The Company, through the General Counsel, will provide guidance to employees and permanent consultants on appropriate means of dealing with foreign government officials. If you have any questions about the propriety of a proposed gift, payment, service or request, please consult your local management or the General Counsel. 10. Waivers of the Code of Business Conduct and Ethics The Company discourages waivers of this Code except in extraordinary circumstances. Any waiver of this Code for executive offices or directors may be made only by a Supermajority of the Board of Directors (as defined in the Amended and Restated Stockholders' Agreement, dated 29, 2003, among the Company and the parties listed on the signature pages thereto) and will be promptly disclosed as required by law. Any waiver of this Code must be documented in writing and included in the books and records of the Company in full. 11. Reporting any Illegal or Unethical Behavior Employees are encouraged to talk to their supervisors when in doubt about the best course of action in a particular situation. In the rare instances where it would be inappropriate to discuss the matter with a supervisor, employees are encouraged to contact the General Counsel with any concerns. It is the policy of the Company not to allow retaliation for reports of misconduct by others made in good faith by employees. Employees are expected to cooperate in internal investigations of misconduct. 12. Compliance Procedures We must all work to ensure that we follow the guidelines for appropriate conduct. However, in some situations it is difficult to resolve the application of relevant laws, regulations or Company policies to a particular set of circumstances or proposed course of action. Since we cannot anticipate every situation that will arise, it is important that we have a way to approach a new question or problem. These are the steps to keep in mind: - Get all the facts. In order to reach intelligent solutions, we must be as fully informed as possible. - Discuss the problem with your supervisor. This is the basic guidance for all situations. In many cases, your supervisor will have a broader perspective and be more knowledgeable about the question, and will appreciate being brought into the decision making process. Remember that it is your supervisor's responsibility to help solve problems. - If necessary, approach the General Counsel or Corporate Vice-President for Human Resources, as applicable under these guidelines. In many cases, they will have a broader perspective and more experience with your questions or concerns. - You may report ethical violations in confidence and without fear of retaliation. If your situation requires that your identity be kept secret, reasonable steps will be taken to protect your anonymity. The Company does not permit retaliation of any kind against employees for good faith reports of ethical violations. - Always ask first, act later. If you are unsure of what to do in any situation, seek guidance before you act. EXHIBIT B SAMPLE CALCULATION OF IRR HURDLE IRR Hurdle = (FPSH Invested Capital) (1.26)y (1+.26(d)/365) where y = the number of full years that have elapsed since the Effective Date and d = the number of days that have elapsed in a partial year Assuming: - that FPSH Invested Capital = $240,000,000; and - a measurement date three years and 272 days from the Effective Date IRR Hurdle = ($240,000,000) (1.26) to the power of 3 (1+.26(272)/365) = $573,109,368.3 EXHIBIT C TARGETS FIGURES IN MILLIONS
TOTAL CONCEPT 1Q 2Q 3Q 4Q FY EBITDA FY2003: Quarterly (0.9) 52.4 20.2 20.8 92.5 YTD (0.9) 51.5 71.7 92.5 LTM TARGET 92.5 LTM MINIMUM 83.3 EBITDA FY2004: Quarterly 0.7 53.0 27.0 28.8 109.5 YTD 0.7 53.7 80.7 109.5 LTM TARGET 94.1 94.7 101.5 109.5 LTM MINIMUM 84.7 85.2 91.4 98.6 EBITDA FY2005: Quarterly 1.0 58.0 32.0 35.4 126.4 YTD 1.0 59.0 91.0 126.4 LTM TARGET 109.8 114.8 119.8 126.4 LTM MINIMUM 98.8 103.3 107.8 113.8 EBITDA FY2006: Quarterly 1.1 62.9 34.7 38.4 137.1 YTD 1.1 64.0 98.7 137.1 LTM TARGET 126.5 131.4 134.1 137.1 LTM MINIMUM 113.8 118.3 120.7 123.4 EBITDA FY2007: Quarterly 1.2 67.4 37.2 41.1 146.9 YTD 1.2 68.6 105.7 146.9 LTM TARGET 137.2 141.7 144.2 146.9 LTM MINIMUM 123.5 127.5 129.7 132.2
"EBITDA" shall mean for any period, Operating Income (Loss) as defined in U.S. GAAP for such period plus all amounts deducted in arriving at such Operating Income (Loss) amount in respect of (a) all amounts properly charged for depreciation of fixed assets and amortization of intangible assets during such period, (b) legal, professional and other fees incurred in connection with Seminis' efforts to refinance its debt, or related to the recapitalization, merger and privatization transactions, (c) one-time expenses related to severance payments under certain management employment contracts, (d) 50% of security and incremental personal travel expenses related to Mr. Romo that do not exceed $2,425,000, (e) non-cash expenses related to the Restricted Stock Units as defined in the Stockholders' Agreement, (f) management fees paid to Fox Paine and Mexican SPC, (g) one-time expenses related to restructuring plans, (h) noncash charges for the impairment of long-lived assets, (i) minus (in the case of gains) or plus (in the case of losses) on sale of assets, and (j) restricted stock award charges incurred in the Company's fiscal year ended September 30, 2002. EXHIBIT D RESTRICTED PERSONS SEMINIS GLOBAL COMPETITORS Syngenta Limagrain Sakata Takii Nunza /Bayer (Sunseeds &Nunheims) Bejo Rijk Zwaan Hazera Heinz (Heinzseed) SEMINIS REGIONAL COMPETITORS: Brotherton Bakker Brothers Enza Zaden De Ruiter Nong Woo Known-You Alliance Topseed Isla Feltrin Hortec Daehnfeldt SCHEDULE I HOLDINGS OF COMMON STOCK, OPTIONS, WARRANTS AND CO-INVESTMENT RIGHTS AFTER CLOSING OF TRANSACTIONS CONTEMPLATED BY MERGER AGREEMENT AND FPSH STOCK PURCHASE AGREEMENT The individual holdings of Common Stock of each Stockholder immediately after the closing of the transactions contemplated in the Merger Agreement and the FPSH Stock Purchase Agreement (not assuming the exercise of any Options, Warrants or Co-Investment Rights) are as follows:
Number of Shares of Common Stock Held After Name Closing ---- ------- Fox Paine Capital Fund II, L. P. ............................. 34,833,237 Fox Paine Capital Fund II Co-Investors, L.P................... 830,222 E and A `J' Trust ............................................ 252,676 FPC Investment GP ............................................ 180,483 FPSH Coinvestment Fund I, LLC ................................ 147,058 FPSH Coinvestment Fund II, LLC ............................... 2,352,941 FISH Coinvestment Fund III, LLC............................... 590,000 FPSH Coinvestment Fund IV, LLC................................ 1,470,588 FPSH Coinvestment Fund V, LLC................................. 7,352,941 Emprima, S.A. de C.V.......................................... 4,365,257 Irrevocable Administration and Payment Trust Number 131-4 entered into by Banca Afirme, S.A., Institution de Banca Multiple, Afirme Grupo Financiero, in its capacity as Trustee and Pulsar International, S.A. de C.V., executed on July 23, 2001, as amended ............ 3,844,117 Banca Afirme, S.A., Institution de Banca Multiple, Afirme Grupo Financiero, as Trustee, under the Administration Trust Number 243-4 (Fideicomiso de Administration)......................................... 3,606,666 Park Financial Group ......................................... 1,000,000 Banca Atirme, S.A., Institution de Banca Multiple, Afirme Grupo Financiero, as trustee, under the Irrevocable Administration and Payment Trust Number 167-5 (Fideicomiso Irrevocable de Administration y Pago Numero 167-5)........................................... 900,737 Marcela Gonzalez ............................................. 805,598 Conjunto Administrativo Integral, S.A. de. C.V................ 42,000 Gaspar Alvarez ............................................... 36,103 Bernardo Jimenez Barrera ..................................... 8,000 Franco Campana ............................................... 13,208 Bruno Ferrari ................................................ 1,010,047 Charles Edward Green ......................................... 3 1,608 Adrian Rodriguez Macedo ...................................... 18,378 Luis Maiz..................................................... 195,000 Mateo Mazal .................................................. 53,000 Jean Pierre Posa.............................................. 22,014 - ------------ ------------- Total 63,961,879
SCHEDULE I The individual holdings of Co-Investment Rights immediately after the closing of the transactions contemplated in the Merger Agreement and the FPSH Stock Purchase Agreement are as follows:
Number of Co-Investment Rights Name Held After Closing ---- ------------------ Desarrollo Consolidado de Negocios, S.A. de C.V... 14,453,036 (vested) Desarrollo Consolidado de Negocios, S.A. de C.V... 16,560,091 (unvested) Fox Paine Capital Fund II, L.P.................... 1,197,958 (unvested) Fox Paine Capital Fund II Co-Investors, L.P....... 28,552 (unvested) E and A `J' Trust................................. 8,690 (unvested) FPC Investment GP................................. 6,207 (unvested) FPSH Coinvestment Fund I, LLC..................... 5,058 (unvested) FPSH Coinvestment Fund II, LLC.................... 80,921 (unvested) FPSH Coinvestment Fund III, LLC................... 20,291 (unvested) FPSH Coinvestment Fund IV, LLC.................... 50,575 (unvested) FPSH Coinvestment Fund V, LLC..................... 252,877 (unvested)
SCHEDULE I The individual holdings of Warrants immediately after the closing of the transactions contemplated in the Merger Agreement and the FPSH Stock Purchase Agreement are as follows:
Number of Warrants Held Name After Closing ---- ------------- The Northwestern Mutual Life Insurance Company....... 2,980,839 (vested) Stichting Pensioenfonds ABP ......................... 638,719 (vested) Stichting Pensioenfonds Voor De Gezondheid, Geestelijke En Maatschappelijke Belangen............. 106,491 (vested) FPSH Coinvestment Fund I ............................ 147,059 (vested)
SCHEDULE I The individual holdings of Options immediately after the closing of the transactions in the contemplated FISH Stock Purchase Agreement are as set forth below. All of the following Options are vested.
# OF # OF # OF GRANT GRANT ISO/ OPTIONS OPTIONS OPTIONS REMAINING EMPLOYEE NAME DATE PRICE NQSO GRANTED EXERCISE FORFEITED OPTIONS ------------- ---- ----- ---- ------- -------- --------- -------- Jimenez Barrera, Bernardo 10/15/99 7.625 NQSO 3,000 3,000 Jimenez Barrera, Bernardo 10/16/00 1.36 NQSO 3,000 3,000 Jimenez Barrera, Bernardo 08/09/01 1.18 NQSO 6,000 6,000 Jimenez Barrera, Bernardo 04/08/02 1.28 NQSO 15,000 15,000 Mazal Beja, Mateo 04/08/02 1.28 NQSO 15,000 15,000 Rodriguez Macedo, Adrian 08/09/01 1.18 NQSO 6,000 6,000 Rodriguez Macedo, Adrian 04/08/02 1.28 NQSO 15,000 15,000 Alvarez Martinez, Gaspar 08/29/00 1.56 ISO 1,200 1,200 Alvarez Martinez, Gaspar 10/16/00 1.36 ISO 4,000 4,000 Alvarez Martinez, Gaspar 08/09/01 1.18 ISO 15,000 15,000 Alvarez Martinez, Gaspar 04/08/02 1.28 ISO 141,540 141,540 Campana, Franco 10/15/99 7.625 ISO 2,750 2,750 Campana, Franco 08/29/00 1.56 ISO 2,298 2,298 Campana, Franco 10/16/00 1.36 ISO 7,000 7,000 Campana, Franco 08/09/01 1.18 ISO 15,000 15,000 Campana, Franco 04/08/02 1.28 ISO 85,965 85,965 Ferrari, Bruno 07/01/98 18.71 NQSO 14,100 14,100 Ferrari, Bruno 10/15/99 7.625 ISO 16,500 16,500 Ferrari, Bruno 08/29/00 1.56 NQSO 27,243 27,243 Ferrari, Bruno 10/16/00 1.36 NQSO 15,000 15,000 Ferrari, Bruno 08/09/01 1.18 NQSO 25,000 25,000 Ferrari, Bruno 04/08/02 1.28 NQSO 241,875 241,875 Green, Charles E 07/01/98 18.71 ISO 5,741 5,741 Green, Charles E 10/15/99 7.625 ISO 8,000 8,000 Green, Charles E 08/29/00 1.56 ISO 25,272 25,272 Green, Charles B 10/16/00 1.36 ISO 15,000 15,000 Green, Charles E 08/09/01 1.18 ISO 25,000 25,000 Green, Charles E 04/08/02 1.28 ISO 135,370 135,370 Posa Mambour, Jean-Pierre 07101/98 18.71 ISO 5,364 5,364 Posa Mambour, Jean-Pierre 10/15/99 7.625 NQSO 7,000 7,000 Posa Mambour, Jean-Pierre 08/29/00 1.56 NQSO 11,794 11,794 Posa Mambour, Jean-Pierre 10/16/00 1.36 NQSO 7,000 7,000 Posa Mambour, Jean-Pierre 08/09/01 1.18 NQSO 15,000 15,000 Posa Mambour, Jean-Pierre 04108/02 1.28 NQSO 83,345 83,345 Romo Garza, Alfonso Carlos 10/15/99 7.625 NQSO 80,000 80,000 Romo Garza, Alfonso Carlos 10/16/00 1.36 NQSO 80,000 80,000 Romo Garza, Alfonso Carlos 08/09/01 1.18 NQSO 96,000 96,000 Romo Garza, Alfonso Carlos 04/08/02 1.28 NQSO 460,715 460,715 - ------------------------------------------------------------------------------------------------------------------------- Total 1,738,072 1,738,072 - -------------------------------------------------------------------------------------------------------------------------
SCHEDULE II OWNERSHIP INTERESTS IN CERTAIN PERSON a. STOCKHOLDERS CAI: Alfonso Romo Garza Gerardo Mahuad Mendez Emprima: CAI, Desarrollo Empresarial Regiomontano, S.A. de C.V. Alejandro Torres Quiroga Park. Crescent Investment Services, Ltd. DCN: Gustavo Romo Garza Mateo Mazal Beja b. BENEFICIARIES AND SETTLOR OF THE ARG TRUST SETTLOR: Alfonso Romo Garza Beneficiaries: California Commerce Bank Aladin, N.V. Servasa, S.A. de C.V. EX-10.11 21 v94566aexv10w11.txt EXHIBIT 10.11 EXHIBIT 10.11 EXECUTION COPY AMENDMENT NO. 1, dated as of January 15, 2004 (this "Amendment No. 1"), to the Credit Agreement dated as of September 29, 2003 (the "Credit Agreement") among Seminis Vegetable Seeds, Inc., a California corporation (the "Borrower"); Seminis, Inc., a Delaware corporation (the "Parent Guarantor"); the Lenders party thereto; 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"). Capitalized terms used and not otherwise defined herein shall have the meanings assigned to them in the Credit Agreement. WHEREAS, pursuant to Section 10.08 of the Credit Agreement, the Borrower and the Lenders desire to amend certain provisions of the Credit Agreement, such that the terms of the Credit Agreement shall be as set forth in the conformed copy of the Credit Agreement attached hereto as Exhibit A (the "Amended Credit Agreement"), giving effect to this Amendment No. 1; WHEREAS, the consent of the Requisite Lenders is necessary to effect certain covenant and other amendments of this Amendment No. 1, while the consent of all Lenders is necessary to effect certain pricing amendments of this Amendment No. 1; NOW, THEREFORE, in consideration of the promises and covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound hereby, agree as follows: SECTION 1. AMENDMENTS. The Credit Agreement (including Schedules 1.01(b), 1.01(c), 1.01(d), 1.01(e), 3.22(d) and 5.18(a) thereto) is hereby amended as set forth in the Amended Credit Agreement. Each Lender party hereto hereby consents to the amendment of the Security Agreement to the extent provided in Section 4.03(d)(ii) of the Amended Credit Agreement. SECTION 2. REPRESENTATIONS AND WARRANTIES. The Borrower and the Parent Guarantor represent and warrant to the Lenders as of the Covenant Effective Date (as defined below), that: (a) The execution and delivery of this Amendment No. 1 by the Borrower and the Parent Guarantor has been duly authorized. (b) The representations and warranties set forth in the Credit Agreement, are true and correct in all material respects with the same effect as if made on the Covenant Effective Date except to the extent such representations and warranties expressly relate to an earlier date. (c) At the time of and after giving effect to this Amendment No. 1, no Default or Event of Default has occurred and is continuing. SECTION 3. CONDITIONS TO EFFECTIVENESS. (a) This Amendment No. 1 shall become effective to the extent set forth in Section 4.03 of the Amended Credit Agreement on the date (the "Covenant Effective Date") on which each of the conditions set forth in Section 4.03 is satisfied (or waived in accordance with Section 4.03 of the Amended Credit Agreement). (b) This Amendment No. 1 shall become effective to the extent set forth in Section 4.04 of the Amended Credit Agreement on the date (the "Pricing Effective Date") on which each of the conditions set forth in Section 4.04 is satisfied (or waived in accordance with Section 4.04 of the Amended Credit Agreement). SECTION 4. COUNTERPARTS. This Amendment No. 1 may be executed in any number of counterparts and by different parties hereto on separate counterparts, each of which when so executed and delivered shall be deemed to be an original, but all of which when taken together shall constitute a single instrument. Delivery of an executed counterpart of a signature page of this Amendment No. 1 by facsimile transmission shall be effective as delivery of a manually executed counterpart hereof. SECTION 5. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. SECTION 6. HEADINGS. The headings of this Amendment No. 1 are for purposes of reference only and shall not limit or otherwise affect the meaning hereof. [SIGNATURE PAGES FOLLOW] -2- EXECUTION COPY IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 1 to be duly executed as of the date first above written. SEMINIS VEGETABLE SEEDS, INC. as Borrower By: /s/ Gaspar Alvarez ------------------------------------------------ Name: Gaspar Alvarez Title: Vice President, Finance and Worldwide Corporate Comptroller SEMINIS, INC. as Parent Guarantor By: /s/ Bernardo Jimenez ------------------------------------------------ Name: Bernardo Jimenez Title: Chief Financial Officer 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: Vice President HARRIS TRUST AND SAVINGS BANK, as Joint Lead Arranger, Joint Bookrunner, Syndication Agent and Lender By: /s/ Jennifer Wendron ------------------------------------------------ Name: Jennifer Wendron Title: Vice President 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 COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A., "RABOBANK INTERNATIONAL", NEW YORK BRANCH, As Co-Documentation Agent and as Lender By: /s/ Brett Delfino ------------------------------------------------ Name: Brett Delfino Title: Executive Director By: /s/ Ivan Rodriguez ------------------------------------------------ Name: Ivan Rodriguez Title: Vice President American Express Certificate Company By: American Express Asset Management Group Inc. as Collateral Manager ---------------------------------------------------- as a Lender By: /s/ Yvonne E. Stevens ------------------------------------------------ Name: Yvonne E. Stevens Title: Senior Managing Director AMMC CDO II, LIMITED By: American Money Management Corp., as Collateral Manager By: /s/ David P. Meyer ------------------------------------------------ Name: David P. Meyer Title: Vice President ANTARES CAPITAL CORPORATION ---------------------------------------------------- as a Lender By: /s/ David Mahon ------------------------------------------------ Name: David Mahon Title: Director APEX (IDM) COD I, LTD. ELC (CAYMAN) LTD. 1999-II BABSON CLO LTD. 2003-I SUFFIELD CLO, LIMITED By: David L. Babson & Company Inc. as Collateral Manager By: /s/ Adrienne Musgnug ------------------------------------------------ Name: Adrienne Musgnug Title: Managing Director APEX (Trimaran) CDO I, LTD. By: Trimaran Advisors, L.L.C. ---------------------------------------------------- as a Lender By: /s/ David M. Millison ------------------------------------------------ Name: David M. Millison Title: Managing Director By: Callidus Debt Partners CLO Fund II, Ltd. By: Its Collateral Manager, Callidus Capital Management, LLC ------------------------------------------------ as a Lender By: /s/ Mavis Taintor ------------------------------------------------ Name: Mavis Taintor Title: Managing Director Centurion CDO II, Ltd. By: American Express Asset Management Group Inc. as Collateral Manager ---------------------------------------------------- as a Lender By: /s/ Leanne Stavrakis ------------------------------------------------ Name: Leanne Stavrakis Title: Director - Operations Centurion CDO VI, Ltd. By: American Express Asset Management Group, Inc., As Collateral Manager ---------------------------------------------------- as a Lender By: /s/ Leanne Stavrakis ------------------------------------------------ Name: Leanne Stavrakis Title: Director - Operations Citibank, NA ---------------------------------------------------- as a Lender By: /s/ Rosemary M. Bell ------------------------------------------------ Name: Rosemary M. Bell Title: Director & Vice President COLUMBIA FLOATING RATE ADVANTAGE FUND (f/k/a Liberty Floating Rate Advantage Fund) By: Columbia Management Advisors, Inc. As Advisor ---------------------------------------------------- as a Lender By: /s/ Kathleen A. Zam ------------------------------------------------ Name: Kathleen A. Zam Title: Senior Vice President COLUMBIA FLOATING RATE LIMITED LIABILITY COMPANY (f/k/a Stein Roe Floating Rate Limited Liability Company) By: Columbia Management Advisors, Inc. As Advisor ---------------------------------------------------- as a Lender By: /s/ Kathleen A. Zam ------------------------------------------------ Name: Kathleen A. Zam Title: Senior Vice President Denali Capital LLC, managing member of DC Fund- ing Partners, portfolio manager for DENALI CAPITAL CLO I, LTD., or an affiliate ---------------------------------------------------- as a Lender By: /s/ John P. Thacker ------------------------------------------------ Name: John P. Thacker Title: Chief Credit Officer Denali Capital LLC, managing member of DC Fund- ing Partners, portfolio manager for DENALI CAPITAL CLO II, LTD., or an affiliate ---------------------------------------------------- as a Lender By: /s/ John P. Thacker ------------------------------------------------ Name: John P. Thacker Title: Chief Credit Officer Denali Capital LLC, managing member of DC Fund- ing Partners, portfolio manager for DENALI CAPITAL CLO III, LTD., or an affiliate ---------------------------------------------------- as a Lender By: /s/ John P. Thacker ------------------------------------------------ Name: John P. Thacker Title: Chief Credit Officer EATON VANCE INSTITUTIONAL SENIOR LOAN FUND By: EATON VANCE MANAGEMENT AS INVESTMENT ADVISOR ---------------------------------------------------- as a Lender By: /s/ Michael B. Botthof ------------------------------------------------ Name: Michael B. Botthof Title: Vice President EATON VANCE SENIOR FLOATING-RATE TRUST By: EATON VANCE MANAGEMENT AS INVESTMENT ADVISOR ---------------------------------------------------- as a Lender By: /s/ Michael B. Botthof ------------------------------------------------ Name: Michael B. Botthof Title: Vice President EATON VANCE SENIOR INCOME TRUST By: EATON VANCE MANAGEMENT AS INVESTMENT ADVISOR ---------------------------------------------------- as a Lender By: /s/ Michael B. Botthof ------------------------------------------------ Name: Michael B. Botthof Title: Vice President Flagship CLO 2001-1 ---------------------------------------------------- as a Lender By: Flagship Capital Management, Inc. By: /s/ Eric S. Meyer ------------------------------------------------ Name: Eric S. Meyer Title: Director Flagship CLO II ---------------------------------------------------- as a Lender By: Flagship Capital Management, Inc. By: /s/ Eric S. Meyer ------------------------------------------------ Name: Eric S. Meyer Title: Director FORTIS CAPITAL CORP., as Lender By: /s/ [Authorized Signatory] ------------------------------------------------ Name: [Authorized Signatory] Title: FORTIS CAPITAL CORP., as Lender By: /s/ [Authorized Signatory] ------------------------------------------------ Name: [Authorized Signatory] Title: Vice President GENERAL ELECTRIC CAPITAL CORPORATION as a Lender By: /s/ Karl Kieffer ------------------------------------------------ Name: Karl Kieffer Title: Duly Authorized Signatory GRAYSON & CO By: BOSTON MANAGEMENT AND RESEARCH AS INVESTMENT ADVISOR ---------------------------------------------------- as a Lender By: /s/ Michael B. Botthof ------------------------------------------------ Name: Michael B. Botthof Title: Vice President GULF STREAM-COMPASS CLO 2003-1 LTD. By: Gulf Stream Asset Management LLC As Collateral Manager ---------------------------------------------------- as a Lender By: /s/ Barry K. Love ------------------------------------------------ Name: Barry K. Love Title: Chief Credit Officer Hanover Square CLO Ltd. By: Blackstone Dept. Advisors L.P. As Collateral Manager ---------------------------------------------------- as a Lender By: /s/ Dean T. Criares ------------------------------------------------ Name: Dean T. Criares Title: Managing Director Harbour View CLO IV, Ltd. ---------------------------------------------------- as a Lender By: /s/ Lisa Chaffer ------------------------------------------------ Name: LISA CHAFFER Title: Manager Harbour View CLO V, Ltd. ---------------------------------------------------- as a Lender By: /s/ Lisa Chaffer ------------------------------------------------ Name: LISA CHAFFER Title: Manager IDS Life Insurance Company By: American Express Asset Management Group, Inc. as Collateral Manager ---------------------------------------------------- as a Lender By: /s/ Yvonne E. Stevens ------------------------------------------------ Name: Yvonne E. Stevens Title: Senior Managing Director IKB Capital Corporation, as Lender By: /s/ David Snyder ------------------------------------------------ Name: David Snyder Title: President IKB Capital Corporation JP Morgan Chase Bank, as trustee of the Antares Funding Trust created under the Trust Agreement dated as of November 30, 1999 ------------------------------------------------ as a Lender By: /s/ Leslie Hundley ------------------------------------------------ Name: Leslie Hundley Title: Officer KZH CYPRESSTREE-1 LLC ---------------------------------------------------- as a Lender By: /s/ Hi Hua ------------------------------------------------ Name: Hi Hua Title: Authorized Agent KZH ING-2 LLC ---------------------------------------------------- as a Lender By: /s/ Hi Hua ------------------------------------------------ Name: Hi Hua Title: Authorized Agent KZH STERLING LLC ---------------------------------------------------- as a Lender By: /s/ Hi Hua ------------------------------------------------ Name: Hi Hua Title: Authorized Agent LAVONARK III CDO ---------------------------------------------------- as a Lender By: /s/ Aladdin Capital Management ------------------------------------------------ Name: [Authorized Signatory] Title: Director - Research LASALLE BANK N.A., AS CUSTODIAN ---------------------------------------------------- as a Lender By: /s/ Lora Peloquin ------------------------------------------------ Name: Lora Peloquin Title: First Vice President MAPLEWOOD (CAYMAN) LIMITED By: David L. Babson & Company Inc. under delegated authority from Massachusetts Mutual Life Insurance Company as Investment Manager By: /s/ Adrienne Musgnug ------------------------------------------------ Name: Adrienne Musgnug Title: Managing Director MARINER CDO 2002, LTD. ---------------------------------------------------- as a Lender By: /s/ David Mahon ------------------------------------------------ Name: David Mahon Title: Vice President MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY By: David L. Babson & Company Inc. as Investment Adviser By: /s/ Adrienne Musgnug ------------------------------------------------ Name: Adrienne Musgnug Title: Managing Director MERRILL LYNCH CAPITAL, a division of MERRILL LYNCH BUSINESS FINANCIAL SERVICES INC. ---------------------------------------------------- as a Lender By: /s/ Sheila C. Weimer ------------------------------------------------ Name: Sheila C. Weimer Title: Vice President Nureen Diversified Dividend and Income Fund [LENDER], as Lender By: /s/ Lenny Mason ------------------------------------------------ Name: Lenny Mason Title: Portfolio Manager Nureen Senior Income Fund [LENDER], as Lender By: /s/ Lenny Mason ------------------------------------------------ Name: Lenny Mason Title: Portfolio Manager OAK HILL CREDIT PARTNERS I, LIMITED By: Oak Hill CLO Management I, LLC As Investment Manager By: /s/ Scott D. Krase ------------------------------------------------ Name: Scott D. Krase Title: Vice President OAK HILL CREDIT PARTNERS II, LIMITED By: Oak Hill CLO Management II, LLC As Investment Manager By: /s/ Scott D. Krase ------------------------------------------------ Name: Scott D. Krase Title: Vice President OAK HILL CREDIT PARTNERS III, LIMITED By: Oak Hill CLO Management III, LLC As Investment Manager By: /s/ Scott D. Krase ------------------------------------------------ Name: Scott D. Krase Title: Vice President OAK HILL SECURITIES FUND II, L.P. By: Oak Hill Securities GenPar II, L.P. its General Partner By: Oak Hill Securities MGP II, Inc., its General Partner By: /s/ Scott D. Krase ------------------------------------------------ Name: Scott D. Krase Title: Vice President OAK HILL SECURITIES FUND, L.P. By: Oak Hill Securities GenPar, L.P. its General Partner By: Oak Hill Securities MGP, Inc., its General Partner By: /s/ Scott D. Krase ------------------------------------------------ Name: Scott D. Krase Title: Vice President Oppenheimer Senior Floating Rate Fund ---------------------------------------------------- as a Lender By: /s/ Lisa Chaffee ------------------------------------------------ Name: LISA CHAFFEE Title: Manager PROMETHEUS INVESTMENT FUND NO. 1 LTD BY: HVB CREDIT ADVISORS, LLC By: /s/ Arika Lakhmi ------------------------------------------------ Name: Arika Lakhmi Title: Associate Director By: /s/ Elizabeth Tallmadge ------------------------------------------------ Name: Elizabeth Tallmadge Title: Managing Director Chief Investment Officer SENIOR DEBT PORTFOLIO By: Boston Management and Research as Investment Advisor ---------------------------------------------------- as a Lender By: /s/ Michael Botthof ------------------------------------------------ Name: Michael Botthof Title: Vice President Sequils-Centurion V, Ltd. By: American Express Asset Management Group Inc. As Collateral Manager ---------------------------------------------------- as a Lender By: /s/ Leanne Stavrakis ------------------------------------------------ Name: Leanne Stavrakis Title: Director - Operations SIERRA CLO I, LTD ---------------------------------------------------- as a Lender By: /s/ John M. Casparian ------------------------------------------------ Name: John M. Casparian Title: Chief Operating Officer Centre Pacific LLP (Manager) SRF 2000, INC. ---------------------------------------------------- as a Lender By: /s/ Diana M. Himes ------------------------------------------------ Name: Diana M. Himes Title: Assistant Vice President SRF TRADING, INC. ---------------------------------------------------- as a Lender By: /s/ Diana M. Himes ------------------------------------------------ Name: Diana M. Himes Title: Assistant Vice President STANWICH LOAN FUNDING LLC ---------------------------------------------------- as a Lender By: /s/ Diana M. Himes ------------------------------------------------ Name: Diana M. Himes Title: Assistant Vice President The Sumitomo Trust & Banking Co., Ltd. By: /s/ Elizabeth A. Quirk ------------------------------------------------ Name: Elizabeth A. Quirk Title: Vice President SunAmerica Senior Floating Rate Fund Inc. By: Stanfield Capital Partners LLC as subadvisor ---------------------------------------------------- as a Lender By: /s/ Christopher A. Bondy ------------------------------------------------ Name: Christopher A. Bondy Title: Partner TOLLI & CO. By: Eaton Vance Management as Investment Advisor ------------------------------------------------ as a Lender By: /s/ Michael B. Botthof ------------------------------------------------ Name: Michael B. Botthof Title: Vice President TORONTO DOMININ (NEW YORK), INC. ---------------------------------------------------- as a Lender By: /s/ Michelle Manning ------------------------------------------------ Name: Michelle Manning Title: Vice President TRS I LLC as Lender By: /s/ Deborah O'Keeffe ------------------------------------------------ Name: Deborah O'Keeffe Title: Vice President TRS CALLISTO, LLC ---------------------------------------------------- as Lender By: /s/ Deborah O'Keeffe ------------------------------------------------ Name: Deborah O'Keeffe Title: Vice President Trumbull THC, Ltd. ---------------------------------------------------- as a Lender By: /s/ Michelle Manning ------------------------------------------------ Name: Michelle Manning Title: Attorney-in-Fact UBS AG, Stamford Branch By: UBS Securities LLC, as Agent [Authorized Signatory] ---------------------------------------------------- as a Lender By: /s/ Jennifer L. Poccia ------------------------------------------------ Name: Jennifer L. Poccia Title: Associate Director Banking Products Services Union Square CDO Ltd. By: Blackstone Debt Advisors L.P. As Collateral Manager ---------------------------------------------------- as a Lender By: /s/ Dean T. Criares ------------------------------------------------ Name: Dean T. Criares Title: Managing Director Venture CDO 2002, Limited By its investment advisor, MJX Asset Management, LLC as a Lender By: /s/ [Authorized Signatory] ------------------------------------------------ Name: [Authorized Signatory] Title: Venture III CDO Limited By its investment advisor, MJX Asset Management, LLC as a Lender By: /s/ [Authorized Signatory] ------------------------------------------------ Name: [Authorized Signatory] Title: CONFORMED COPY $165,000,000 CREDIT AGREEMENT DATED AS OF SEPTEMBER 29, 2003, AS AMENDED BY AMENDMENT NO. 1 THERETO DATED AS OF JANUARY 15, 2004 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.................................................... 31 SECTION 1.03. Terms Generally........................................................................... 32 ARTICLE II THE CREDITS SECTION 2.01. Credit Commitments........................................................................ 32 SECTION 2.02. Procedure for Borrowing................................................................... 33 SECTION 2.03. Conversion and Continuation Options for Loans............................................. 34 SECTION 2.04. Swingline Loans........................................................................... 34 SECTION 2.05. Optional and Mandatory Prepayments of Loans; Repayments of Term B Loans................... 36 SECTION 2.06. Letters of Credit......................................................................... 38 SECTION 2.07. Repayment of Loans; Evidence of Debt...................................................... 42 SECTION 2.08. Interest Rates and Payment Dates.......................................................... 43 SECTION 2.09. Computation of Interest................................................................... 43 SECTION 2.10. Fees...................................................................................... 43 SECTION 2.11. Termination, Reduction or Adjustment of Commitments....................................... 44 SECTION 2.12. Inability to Determine Interest Rate; Unavailability of Deposits; Inadequacy of Interest Rate..................................................... 45 SECTION 2.13. Pro Rata Treatment and Payments........................................................... 45 SECTION 2.14. Illegality................................................................................ 46 SECTION 2.15. Requirements of Law....................................................................... 47 SECTION 2.16. Taxes..................................................................................... 48 SECTION 2.17. Indemnity................................................................................. 50 SECTION 2.18. Change of Lending Office.................................................................. 50 SECTION 2.19. Sharing of Setoffs........................................................................ 50 SECTION 2.20. Assignment of Commitments Under Certain Circumstances..................................... 51 ARTICLE III REPRESENTATIONS AND WARRANTIES SECTION 3.01. Organization, etc......................................................................... 51 SECTION 3.02. Due Authorization, Non-Contravention, etc................................................. 52 SECTION 3.03. Government Approval, Regulation, etc...................................................... 52 SECTION 3.04. Validity, etc............................................................................. 52 SECTION 3.05. Representations and Warranties in the Merger Agreement.................................... 52 SECTION 3.06. Financial Information..................................................................... 52 SECTION 3.07. No Material Adverse Effect................................................................ 53 SECTION 3.08. Litigation................................................................................ 53
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Page ---- SECTION 3.09. Compliance with Laws and Agreements....................................................... 53 SECTION 3.10. Subsidiaries.............................................................................. 53 SECTION 3.11. Ownership of Real Properties.............................................................. 53 SECTION 3.12. Ownership of Personal Property............................................................ 54 SECTION 3.13. Taxes..................................................................................... 54 SECTION 3.14. Pension and Welfare Plans................................................................. 54 SECTION 3.15. Environmental Warranties.................................................................. 55 SECTION 3.16. Regulations U and X....................................................................... 56 SECTION 3.17. Disclosure; Accuracy of Information; Pro Forma Balance Sheets and Projected Financial Statements............................................................ 56 SECTION 3.18. Insurance................................................................................. 57 SECTION 3.19. Labor Matters............................................................................. 57 SECTION 3.20. Solvency.................................................................................. 57 SECTION 3.21. Securities................................................................................ 58 SECTION 3.22. Indebtedness Outstanding; Certain Operating Leases Terminated............................. 58 SECTION 3.23. Security Documents........................................................................ 58 SECTION 3.24. Anti-Terrorism Laws....................................................................... 59 ARTICLE IV CONDITIONS SECTION 4.01. Conditions to Initial Credit Extension.................................................... 60 SECTION 4.02. Conditions to Each Credit Event........................................................... 66 SECTION 4.03. Conditions to Effectiveness of Amendment No. 1 with Respect to Majority Matters........... 66 SECTION 4.04. Conditions to the Effectiveness of Amendment No. 1 with Respect to the Applicable Rate Provisions ........................................................... 68 ARTICLE V AFFIRMATIVE COVENANTS SECTION 5.01. Financial Information, Reports, Notices, etc.............................................. 69 SECTION 5.02. Compliance with Laws, etc................................................................. 71 SECTION 5.03. Maintenance of Properties................................................................. 71 SECTION 5.04. Insurance................................................................................. 71 SECTION 5.05. Books and Records; Visitation Rights...................................................... 72 SECTION 5.06. Environmental Covenant.................................................................... 72 SECTION 5.07. Information Regarding Collateral.......................................................... 73 SECTION 5.08. Existence; Conduct of Business............................................................ 74 SECTION 5.09. Performance of Obligations................................................................ 74 SECTION 5.10. Additional Mortgages...................................................................... 74 SECTION 5.11. Pledge of Additional Collateral........................................................... 75 SECTION 5.12. Further Assurances........................................................................ 75 SECTION 5.13. Use of Proceeds........................................................................... 76 SECTION 5.14. Payment of Taxes.......................................................................... 76 SECTION 5.15. Equal Security for Loans and Notes........................................................ 76 SECTION 5.16. Guarantees................................................................................ 76 SECTION 5.17. Subordination of Intercompany Loans....................................................... 76
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Page ---- SECTION 5.18. Certain Post-Closing Matters.............................................................. 76 ARTICLE VI NEGATIVE COVENANTS SECTION 6.01. Indebtedness; Certain Equity Securities................................................... 77 SECTION 6.02. Liens..................................................................................... 80 SECTION 6.03. Fundamental Changes; Line of Business..................................................... 82 SECTION 6.04. Investments, Loans, Advances, Guarantees and Acquisitions................................. 82 SECTION 6.05. Asset Sales............................................................................... 84 SECTION 6.06. Sale and Leaseback Transactions........................................................... 85 SECTION 6.07. Restricted Payments....................................................................... 85 SECTION 6.08. Transactions with Affiliates.............................................................. 85 SECTION 6.09. Restrictive Agreements.................................................................... 86 SECTION 6.10. Amendments or Waivers of Certain Documents; Prepayments of Certain Indebtedness........... 87 SECTION 6.11. No Other "Designated Senior Indebtedness"................................................. 87 SECTION 6.12. Senior Leverage Ratio..................................................................... 87 SECTION 6.13. Total Leverage Ratio...................................................................... 87 SECTION 6.14. Capital Expenditures...................................................................... 87 SECTION 6.15. Limitation on Activities of Parent Guarantor and PII, LLC................................. 88 SECTION 6.16. Anti-Terrorism Law........................................................................ 88 SECTION 6.17. Embargoed Person.......................................................................... 88 SECTION 6.18. Anti-Money Laundering..................................................................... 89 ARTICLE VII EVENTS OF DEFAULT SECTION 7.01. Listing of Events of Default.............................................................. 89 SECTION 7.02. Action if Bankruptcy...................................................................... 91 SECTION 7.03. Action if Other Event of Default.......................................................... 91 SECTION 7.04. Action if Event of Termination............................................................ 92 ARTICLE VIII THE AGENTS SECTION 8.01. The Agents................................................................................ 92 ARTICLE IX GUARANTEE SECTION 9.01. Guarantee of the Parent Guarantor......................................................... 93 SECTION 9.02. Amendments, etc. with Respect to the Applicable Obligations............................... 94 SECTION 9.03. Guarantee Absolute and Unconditional...................................................... 94 SECTION 9.04. Reinstatement............................................................................. 95 SECTION 9.05. Payments.................................................................................. 95
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Page ---- SECTION 9.06. Independent Obligations................................................................... 96 SECTION 9.07. Defenses of Parent Guarantor.............................................................. 96 SECTION 9.08. Agreement to Pay; Subordination........................................................... 96 ARTICLE X MISCELLANEOUS SECTION 10.01. Notices................................................................................... 97 SECTION 10.02. Survival of Agreement..................................................................... 98 SECTION 10.03. Binding Effect............................................................................ 98 SECTION 10.04. Successors and Assigns.................................................................... 98 SECTION 10.05. Expenses; Indemnity....................................................................... 101 SECTION 10.06. Right of Setoff........................................................................... 103 SECTION 10.07. Applicable Law............................................................................ 103 SECTION 10.08. Waivers; Amendment........................................................................ 103 SECTION 10.09. Interest Rate Limitation.................................................................. 107 SECTION 10.10. Entire Agreement.......................................................................... 107 SECTION 10.11. WAIVER OF JURY TRIAL...................................................................... 107 SECTION 10.12. Severability.............................................................................. 107 SECTION 10.13. Counterparts.............................................................................. 107 SECTION 10.14. Headings.................................................................................. 107 SECTION 10.15. Jurisdiction; Consent to Service of Process............................................... 108 SECTION 10.16. Confidentiality........................................................................... 108 SECTION 10.17. Citigroup Direct Website Communications................................................... 109 SECTION 10.18. Collateral Agent as Joint Creditor........................................................ 110 SECTION 10.19. Collateral Agent as Attorney-in-Fact Regarding Foreign Collateral......................... 110
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 Officer's Certificate EXHIBIT P Subordinated Notes Indenture EXHIBIT Q Form of Mortgage Amendment

-iv- SCHEDULE 1.01(a) Certain Operating Leases to Be Terminated as of the Effective Date SCHEDULE 1.01(b) Inactive Subsidiaries as of the Amendment No. 1 Date SCHEDULE 1.01(c) Joint Venture Entities as of the Amendment No. 1 Date SCHEDULE 1.01(d) Subsidiary Loan Parties as of the Amendment No. 1 Date SCHEDULE 1.01(e) Excluded Non-U.S. Subsidiaries SCHEDULE 2.01 Lenders and Commitments 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, as amended by Amendment No. 1 thereto dated as of January 15, 2004 ("Amendment No. 1"), 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"). WHEREAS, the Borrower intends to prepay certain of its Obligations in respect of Term B Loans under the Credit Agreement dated as of September 29, 2003 (the "Pre-Amendment Credit Agreement"), among Borrower, Parent Guarantor, the Lenders party thereto, the Administrative Agent, the Co-Documentation Agents, the Syndication Agent and the Original Joint Lead Arrangers, with certain of the net proceeds from the issuance of New Subordinated Notes (as defined herein), such that after giving effect thereto, there will be at most $90.0 million of outstanding Term B Loans under the Pre-Amendment Credit Agreement; WHEREAS, in connection therewith, Borrower desires to enter into Amendment No. 1, which will amend the terms and provisions of the Pre-Amendment Credit Agreement in the form hereof in order to, among other things, reflect the modifications set forth above; and WHEREAS, the Lenders are willing to amend the Pre-Amendment Credit Agreement and are willing to extend credit to Borrower, and the other parties hereto are willing to amend the Pre-Amendment Credit Agreement, in each case upon the terms and subject to the conditions set forth herein. NOW, THEREFORE, in consideration of the promises and covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound hereby, 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. "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" means this Credit Agreement, as amended by Amendment No. 1, and as further amended, restated, amended and restated, supplemented or otherwise modified from time to time. "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-month moving average of secondary market morning offering rates in the United States for three-month 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. "Amendment No. 1" has the meaning assigned to such term in the introduction hereof. "Amendment No. 1 Date" has the meaning assigned to such term in Section 4.03 hereof. "Anti-Terrorism Law" has the meaning assigned to such term in Section 3.24. "Applicable Rate" means (1) for any Class of Loan as to which the conditions set forth in Section 4.04 shall have been satisfied, for any day the applicable rate per annum set forth in the table below (x) under the caption "ABR Loans Spread," in the case of ABR Loans, and (y) under the caption "Eurodollar Loans Spread," in the case of Eurodollar Loans, in each case based upon the Total Leverage Ratio and Senior Leverage Ratio as of the most recent determination date: -2- with respect to the Term B Loans, if the Total Leverage Ratio as of the end of the most recent fiscal quarter is less than or equal to 4.50:1.00 the percentage per annum set forth opposite the Senior Leverage Ratio at such fiscal quarter end:
Eurodollar Term B ABR Term B Senior Leverage Ratio Loans Spread Loans Spread - --------------------------------------------------- ----------------- ------------ > 2.00:1.00 2.75% 1.75% < or = 2.00:1.00 > 1.50:1.00 2.50% 1.50% < or = 1.50:1.00 2.25% 1.25%
with respect to the Term B Loans, if the Total Leverage Ratio as of the end of the most recent fiscal quarter is greater than 4.50:1.00 the percentage per annum set forth opposite the Senior Leverage Ratio at such fiscal quarter end:
Eurodollar Term B ABR Term B Loans Senior Leverage Ratio Loans Spread Spread - --------------------------------------------------- ----------------- ---------------- > 2.00:1.00 3.00% 2.00% < or = 2.00:1.00 > 1.50:1.00 2.75% 1.75% < or = 1.50:1.00 2.50% 1.50%
with respect to the Revolving Loans, if the Total Leverage Ratio as of the end of the most recent fiscal quarter is less than or equal to 4.50:1.00 the percentage per annum set forth opposite the Senior Leverage Ratio at such fiscal quarter end:
Eurodollar Revolving Loans ABR Revolving Senior Leverage Ratio Spread Loans Spread - --------------------------------------------------- ----------------- ---------------- > 2.00:1.00 2.50% 1.50% < or = 2.00:1.00 > 1.50:1.00 2.25% 1.25% < or = 1.50:1.00 2.00% 1.00%
with respect to the Revolving Loans, if the Total Leverage Ratio as of the end of the most recent fiscal quarter is greater than 4.50:1.00 the percentage per annum set forth opposite the Senior Leverage Ratio at such fiscal quarter end:
Eurodollar Revolving Loans ABR Revolving Senior Leverage Ratio Spread Loans Spread - --------------------------------------------------- ----------------- ---------------- > 2.00:1.00 2.75% 1.75% < or = 2.00:1.00 > 1.50:1.00 2.50% 1.50% < or = 1.50:1.00 2.25% 1.25%
For purposes of such calculation of the Applicable Rate, (i) the Total Leverage Ratio and Senior 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 and Senior Leverage Ratio shall be effective on the date on which the Administrative Agent shall have received the applicable financial statements and a Compliance Certificate calculating the Total Leverage -3- Ratio and Senior 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 tables 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; and (2) for any Class of Loan as to which the conditions set forth in Section 4.04 shall not have been satisfied, 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:
EURODOLLAR ABR REVOLVING LOANS REVOLVING TOTAL LEVERAGE RATIO SPREAD LOANS SPREAD - -------------------------------- ------------------ ------------ > 4.00 to 1.00 2.00% 3.00% < or = 4.00 to 1.00 1.75% 2.75% > 3.50 to 1.00 1.50% 2.50% < or = 3.50 to 1.00
For purposes of such calculation of the Applicable Rate with respect to Revolving Loans on and after 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) and (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 or 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. "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). -4- "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 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 -5- 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 Effective Date; (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 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 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 -6- (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:
Total Leverage Ratio Commitment Fee Percentage - ------------------------------ ------------------------- ~~> 3.50 to 1.0 0.50% < or = 3.50 to 1.0 0.375%~~
-7- 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 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. "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), (vii) non-cash expenses relating to Stock Plans, (viii) non-cash charges for the impairment of long-lived assets, and (ix) fees and expenses relating to the -8- New Transactions, (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 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. -9- "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. "Engagement Letter" means (a) the Securities Engagement and Amended and Restated Credit Facilities Commitment and Engagement Letter among the Parent Guarantor, the Borrower, (i) the Administrative Agent and CGMI, dated as of January 6, 2004, and (ii) CIBC and CIBC, Inc., dated as of January 14, 2004; (b) the Securities Engagement Letter among the Parent Guarantor, the Borrower and (i) Rabo Securities USA Inc., dated as of January 15, 2004, and (ii) Harris Nesbitt Corp., dated as of January 15, 2004; and (c) the Amended Credit Facilities Commitment Letter among the Parent Guarantor, the Borrower and (i) Rabobank, dated as of January 15, 2004, and (ii) Harris, dated as of January 15, 2004. "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). "Environmental Laws" means any and all applicable treaties, laws (including common law), rules, regulations, codes, ordinances, orders, decrees, judgments, injunctions or binding agreements -10- 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 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 -11- 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 -12- (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 (1) 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, (2) the New Subordinated Notes, and (3) any Permitted Unsecured Debt. "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 -13- 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. "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, -14- (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 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: -15- (a) which is of a "going concern" or similar nature; or (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 (x) Indebtedness shall exclude any obligations arising in respect of Preferred Stock and (y) the principal amount of Indebtedness issued at a premium or discount to the face amount thereof shall be the face amount thereof. "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). -16- "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. "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 -17- 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 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 -18- 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 and the Engagement 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. "Moody's" means Moody's Investors Service, Inc. -19- "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 Subscription Agreement") and (v) the Warrant Agreement or Warrant Agreements in the form attached as Exhibit B to the NIBC Preferred Subscription Agreement. -20- "New Subordinated Notes" means the 10 1/4% Senior Subordinated Notes due 2013 of the Borrower generating net proceeds of at least $100.0 million but up to $150.0 million to be issued on the Amendment No. 1 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 New Subordinated Notes. "New Subordinated Notes Documents" means the New Subordinated Notes, the indenture under which the New Subordinated Notes are issued, and all other material documents executed and delivered with respect to the New Subordinated Notes. "New Transactions" means, collectively, (i) the execution and delivery by each Loan Party of each of the Loan Documents (including without limitation this amendment of the Pre-Amendment Credit Agreement by Amendment No. 1) in each case on the Amendment No. 1 Date; (ii) the one-time issuance of the New Subordinated Notes and the use of proceeds thereof; (iii) the partial prepayment of the Term B Loans pursuant to Section 2.05(c)(ii) with at least $100.0 million of the Net Proceeds from the New Subordinated Notes; and (iv) the other transactions contemplated herby to occur on or immediately following the Amendment No. 1 Date. "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 -21- 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). "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) [Reserved], (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 after giving pro forma effect to such acquisition, the sum of (x) the Total Revolving Credit Commitment less the Revolving Credit Exposure of all Revolving Lenders and (y) Unrestricted Cash and Cash Equivalents of the Parent Guarantor and its Subsidiaries shall not be less than $25.0 million and (vii) the Borrower has delivered to the Administrative Agent an officer's 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. -22- "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; (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) [Reserved], (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 -23- 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 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. "Permitted Unsecured Debt" means Indebtedness (which may be senior or subordinated) that shall not be secured by any Lien on any Property of any Loan Party or any Subsidiary other than a Permitted Lien. "Permitted Unsecured Debt Documents" means documents governing or pursuant to which is issued any Permitted Unsecured Debt, as the same may be in effect from time to time in accordance with the terms hereof and 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. "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. "Pre-Amendment Credit Agreement" has the meaning assigned to such term in the preamble hereto. "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). -24- "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. "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. -25- "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. "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" has the meaning assigned to such term in Section 4.10(a) of the Subordinated Notes Indenture in effect on the Amendment No. 1 Date (and whether or not in effect); provided, however, clauses (3) and (4) of the definition thereof are deleted and replaced with the following (construed in accordance with the defined terms in the Subordinated Notes Indenture): "(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 loans and guarantees under the Credit Facilities, except a payment of interest or principal at the Stated Maturity thereof in accordance with the subordination provisions thereof (all such payments and other actions set forth in clauses (1) through (3) being collectively referred to as "Restricted Payments")," "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 -26- the case of Revolving Credit Commitments in effect on the Amendment No. 1 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, and as of the Amendment No. 1 Date is $75.0 million. "Revolving Credit Commitment Period" means the period from and including the Amendment No. 1 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. "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 (as amended to the extent specified in Section 4.03(d)(ii)). "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. "Senior Debt" of any Person means Indebtedness that is not by its terms subordinated to any other Indebtedness of such Person. "Senior Leverage Ratio" means, at any date, the ratio of (a) Senior Debt as of such date net of Unrestricted Cash and Cash Equivalents of the Parent Guarantor 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 Amendment No. 1 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 cal- -27- culating the Senior Leverage Ratio for any applicable period ending after December 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. "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 (1) $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, and (2) the New Subordinated Notes, including, in each case, 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 which is attached as Exhibit P 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 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 -28- 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). "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, -29- 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 Amendment No. 1 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 amount of each Lender's Term B Commitment on the Effective Date 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 aggregate amount of the Lenders' Term B Commitments is $190.0 million on the Effective Date and $90.0 million on the Amendment No. 1 Date. "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 net of Unrestricted Cash and Cash Equivalents of the Parent Guarantor 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 December 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. -30- "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). "Unrestricted Cash and Cash Equivalents" of any Person means cash and cash equivalents of such Person not reflected as restricted on such Person's balance sheet, in accordance with GAAP. "Unrestricted Subsidiary" has the meaning assigned to such term in the Subordinated Notes Indenture as in effect on the Amendment No. 1 Date (and whether or not then in effect). "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 -31- 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"). 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. -32- 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 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 Amendment No. 1 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 fi- -33- nance the reimbursement of an LC Disbursement as provided in Section 2.06(e) shall be remitted by the Administrative Agent to the Issuing Bank. 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 ten (10) 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 -34- 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 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 -35- 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 irrevocable 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 officer's 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 -36- 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 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 officer's 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 March 31, 2004, in an aggregate amount equal to the amount specified below for each such Installment Payment Date.
Installment Payment Date Installment Amount - ------------------------ ------------------ ~~March 31, 2004 $225,000 June 30, 2004 $225,000 September 30, 2004 $225,000 December 31, 2004 $225,000~~
-37-
Installment Payment Date Installment Amount - ------------------------ ------------------ March 31, 2005 $225,000 June 30, 2005 $225,000 September 30, 2005 $225,000 December 31, 2005 $225,000 March 31, 2006 $225,000 June 30, 2006 $225,000 September 30, 2006 $225,000 December 31, 2006 $225,000 March 31, 2007 $225,000 June 30, 2007 $225,000 September 30, 2007 $225,000 December 31, 2007 $225,000 March 31, 2008 $225,000 June 30, 2008 $225,000 September 30, 2008 $225,000 December 31, 2008 $225,000 March 31, 2009 $225,000 June 30, 2009 $225,000 Term B Loan Maturity Date $85,050,000
(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. -38- (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 Administrative 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, -39- 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 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 with- -40- out 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. 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 con- -41- trol, 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 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 -42- 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 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 -43- 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 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. (a) 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 permit- -44- ted 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 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 -45- 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 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 -46- 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 demand 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 author- -47- ity 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 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 -48- 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 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 re- -49- fund). 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 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 (whether or not at the time due and payable) as a result of which the unpaid principal portion of its Loans and participations in LC Disbursements (whether or not at the time 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 -50- 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 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. -51- 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; (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 Pricewaterhouse- -52- Coopers 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. 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 -53- Loan Party as of the Effective Date 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 Effective Date 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. (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 -54- 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 Effective Date, 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. 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. -55- (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. (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 con- -56- solidated 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 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. -57- 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. (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 -58- 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 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. (e) Except as set forth on Schedule 3.23(e), all information set forth on the Perfection Certificate dated September 29, 2003 is accurate and complete as of the Amendment No. 1 Date. (f) Each Loan Party is in compliance with all the terms of the Security Documents in all material respects. 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: -59- (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 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. Conditions to Initial Credit Extension. 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 -60- 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 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). -61- (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). (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 -62- 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 regulations 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]; -63- (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 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, -64- 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]; (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 Officer's 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 -65- 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 in all material respects 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). (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. SECTION 4.03. Conditions to Effectiveness of Amendment No. 1 with Respect to Majority Matters. Amendment No. 1 shall become effective, in all respects other than with respect to the amendment of the "Applicable Rate" provisions (which shall become effective pursuant to Section 4.04 hereof), on and as of the first date (the "Amendment No. 1 Date") on which all of the following conditions precedent shall have been satisfied: (a) The representations and warranties set forth in Article III hereof and in the other Loan Documents shall be true and correct in all material respects 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). (b) At the time of and immediately after such amendment, no Default or Event of Default shall have occurred and be continuing. (c) The Administrative Agent (or its counsel) shall have received from the Borrower, the Parent Guarantor and the Requisite Lenders either (i) a counterpart of Amendment No. 1 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 Amendment No. 1. -66- (d) 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) an amendment to the Security Agreement signed on behalf of each Loan Party and the Collateral Agent (which amendment shall exclude any non-U.S. Intellectual Property owned by the Loan Parties from the Collateral thereunder and shall be in form and substance reasonably acceptable to the Collateral Agent). (e) The Administrative Agent shall have received from the Borrower a Closing Certificate in the Form of Exhibit H, dated the Amendment No. 1 Date and signed on behalf of the Borrower by a Financial Officer of the Parent Guarantor. (f) 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. (g) 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 Amendment No. 1 Date substantially in the form of Exhibits L-1 and L-2, respectively (with such changes therefrom as may be reasonably acceptable to the Administrative Agent). (h) [Reserved]. (i) The issuance of the New Subordinated Notes by the Borrower generating net proceeds of not less than $100.0 million but not more than $150.0 million shall have been consummated on the Amendment No. 1 Date and shall have terms and conditions substantially consistent with and as set forth in the Offering Memorandum dated January 15, 2004. On the Amendment No. 1 Date, all New Subordinated Note Documents shall be in full force and effect. Each of the conditions precedent to the consummation of the issuance of the New Subordinated Notes as set forth in the New Subordinated Note Documents shall have been satisfied in all material respects and not waived, consented to or approved except with the consent of the Administrative Agent (such consent not to be unreasonably withheld). (j) The Lenders and their Affiliates shall have received all fees required by the Engagement Letter and, to the extent that statements or invoices therefor are presented to the Borrower at least one Business Day prior to the Amendment No. 1 Date, all other amounts due and payable pursuant to the Engagement Letter on or prior to the Amendment No. 1 Date, including, subject to the Engagement Letter, 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 Amendment No. 1 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. (k) The Collateral Agent shall have received the following in form and substance reasonably satisfactory to the Collateral Agent: (A) 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 the jurisdiction in which any Loan -67- Party is organized, 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 Amendment No. 1 Date and instead elected to receive pursuant to Section 5.18(d) hereof; and (B) evidence that all 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. (l) The Collateral Agent shall have received the following documents and instruments (to the extent that the Administrative Agent determines such documents are reasonably required due to the amendments to the Pre-Amendment Credit Agreement contemplated by Amendment No. 1): (A) with respect to each Mortgage, a Mortgage Amendment substantially in the form of Exhibit Q hereto (each a "Mortgage Amendment") duly executed and acknowledged by the applicable Loan Party, and otherwise in form for recording in the recording office where each such Mortgage was recorded, together with such certificates, affidavits, questionnaires or returns as shall be required in connection with the recording or filing thereof under applicable law, all of which shall be in form and substance reasonably satisfactory to the Collateral Agent; (B) with respect to each Mortgage Amendment, deliver a copy of the existing mortgage title insurance policy and an endorsement with respect thereto (collectively, the "Mortgage Policy") relating to the Mortgage encumbering such Mortgaged Property assuring the Collateral Agent that the Mortgage, as amended by the Mortgage Amendment is a valid and enforceable first priority lien on such Mortgaged Property in favor of the Collateral Agent for the benefit of the Secured Parties free and clear of all defects and encumbrances except Liens permitted to exist on such Mortgaged Property pursuant to the applicable Mortgage, and such Mortgage Policy shall otherwise be in form and substance reasonably satisfactory to the Collateral Agent and shall not include a survey exception or an exception for mechanics' liens, and shall provide for affirmative insurance and such reinsurance as the Collateral Agent in its discretion may reasonably requested; (C) with respect to each Mortgage Amendment, opinions of 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 as amended by the Mortgage Amendment and perfection of the Liens and security interests granted pursuant to the relevant Security Documents and such other matters incident to the transactions contemplated herein as the Agents may reasonably request and (z) shall be in form and substance reasonably satisfactory to the Agents. (m) All other conditions to effectiveness of Amendment No. 1 set forth in this Section 4.03 shall have occurred on or before February 7, 2004. SECTION 4.04. Conditions to the Effectiveness of Amendment No. 1 with Respect to the Applicable Rate Provisions. The agreement of each Lender to amend the definition of "Applicable Rate" and all related provisions is subject to the conditions precedent that all conditions precedent set -68- forth in Section 4.03 shall have been satisfied and (a) with respect to the Applicable Rate applicable to the Term B Loans, to the execution and delivery of Amendment No. 1 by all Term B Lenders under the Pre-Amendment Credit Agreement immediately before giving effect to this amendment and (b) with respect to the Applicable Rate applicable to the Revolving Loans, to the execution and delivery of Amendment No. 1 by all Revolving Lenders under the Pre-Amendment Credit Agreement immediately before giving effect to this amendment. 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; -69- (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; -70- (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 -71- Agent and the 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 ag- -72- gregate, could reasonably be expected to have a Material Adverse Effect, each applicable Loan 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 -73- 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, 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 the property located at 425B Alta Street, Gonzales, CA ("425B Alta") has not been sold in an arm's-length transaction for fair market value by June 1, 2004 (unless such time period is extended in the reasonable judgment of the Administrative Agent), deliver the following documents and instruments to the Administrative Agent with respect to each unsold property by August 1, 2004 (unless such time period is extended in the reasonable judgment of the Administrative Agent): (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); -74- (h) copies of all leases or other agreements, and subordination of such, as required by Section 4.01(s)(H); (i) a Real Property Officer's 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. -75- SECTION 5.13. Use of Proceeds. The Borrower covenants and agrees that (i) there will be no outstanding Revolving Credit Borrowings on the Amendment No. 1 Date, or, immediately prior to the Effectiveness of this Agreement, such Revolving Credit Borrowings shall be reduced to zero and (ii) all Revolving Credit Borrowings 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 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 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 pe- -76- riod set forth in Schedule 5.18(a), unless such date is extended by the Administrative Agent in its reasonable judgment. (b) [Reserved]; (c) [Reserved]; (d) [Reserved]; (e) [Reserved]; (f) [Reserved]; (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 $340.0 million so long as the at least $100.0 million of the Net Proceeds of the New Subordinated Notes is applied on the date of receipt thereof to the prepayment of the Term B Loans pursuant to Section 2.05 such that the aggregate amount of Term B Commitments is no greater than $90.0 million on the Effective Date and (B) any Permitted Refinancing thereof; provided that in the case of clause (B) only, (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; (iii) Indebtedness to Remain Outstanding and any Permitted Refinancing thereof; -77- (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 permitted by Sections 4.09(b) and (c)(11) of the Subordinated Notes Indenture (without giving effect to Section 4.09(a) 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 were incurred on the first day of the immediately preceding Test Period, the Borrower would be in compliance with the Financial Covenants; provided, further, however, for purposes of this Section 6.01(a)(vii), references in to "non-Guarantor Restricted Subsidiaries" in Section 4.09(b) of the Subordinated Notes Indenture shall be deemed references to Non-U.S. Subsidiaries; (viii) Indebtedness of (A) any Non-U.S. Subsidiary to any Loan Party; 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) (x) 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 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; and (y) any Guarantee of the Parent Guarantor of any such Indebtedness; (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 ob- -78- ligations 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) [Reserved]; (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; (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; and (xx) any Permitted Unsecured Debt and any Permitted Refinancing thereof; provided, however, that the Net Proceeds therefrom (but not any Permitted Refinancing of such Permitted Unsecured Debt) are applied as required by Section 2.05(c)(ii); 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 were incurred on -79- the first day of the immediately preceding Test Period, the Borrower would be in compliance with the Financial Covenants. (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; (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); -80- (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 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; -81- (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 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, -82- 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 Sections 6.01(a)(v) and (ix)(y); (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 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; (x) sales, transfers or other dispositions of Property or assets to the extent permitted by Section 6.05; -83- (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; (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. -84- (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. SECTION 6.07. Restricted Payments. The Loan Parties (other than the Parent Guarantor and Unrestricted Subsidiaries) will not, and will not permit any Subsidiary (other than Unrestricted Subsidiaries) 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 so long as no Default of Event of Default then exists or would arise therefrom, the Loan Parties may make Restricted Payments to the extent permitted at such time under Section 4.10 of the Subordinated Notes Indenture as in effect on the Amendment No. 1 Date (and whether or not then in effect), provided, however, that (A) for purposes of determining compliance with such Section 4.10 of the Subordinated Notes Indenture, (x) "Subordinated Indebtedness" (or references to "subordinated Indebtedness") shall be construed to mean all Indebtedness of the Parent Guarantor and its Subsidiaries which is not Senior Debt and (y) clause (A) of Section 4.10 shall be disregarded; (B) the Loan Parties may not make Restricted Payments in reliance on Section 4.10(b)(5) or (6) of the Subordinated Notes Indenture as in effect on the Amendment No. 1 Date (or any provision analogous thereto); and (C) before making a Restricted Payment in reliance on the exceptions provided in Section 4.10(a) of the Subordinated Notes Indenture, the Borrower shall deliver to the Administrative Agent from an Authorized Officer an officer's certificate setting forth the calculations permitting such Restricted Payment pursuant to Section 10.04(a)(C) of the Subordinated Notes Indenture. 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; -85- (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; (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, any other Subordinated Debt Document or any Permitted Unsecured Debt Documents 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 -86- (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 Amendment No. 1 Date, 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, any exchange of Equity Interests of the Parent Guarantor for any such Indebtedness or any Restricted Payment permitted by Section 6.07. 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. SECTION 6.12. Senior Leverage Ratio. The Borrower will not permit the Senior Leverage Ratio at the last day of any Test Period to exceed 2.50:1.00. 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 ---- ----- December 31, 2003 5.25:1.00 March 31, 2004 5.25:1.00 June 30, 2004 5.25:1.00 September 30, 2004 and at the end of each Fiscal Quarter thereafter 5.00:1.00
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 -87- 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 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, (ii) PII, LLC may hold such assets and conduct such operations as expressly permitted by the Foreign Subsidiary Restructuring Documents and (iii) the Parent Guarantor may Guarantee Indebtedness to the extent permitted by Section 6.01(a)(ix)(y). 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, -88- 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 Effective Date, based upon reasonable inquiry by any Loan Party, indirect interest, of any nature whatsoever in the Loan Parties, with the result 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 con- -89- tinue 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 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 -90- 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; (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 -91- 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, 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 -92- 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 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 Bor- -93- rower 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 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 -94- 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 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) -95- 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 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. -96- 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); (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: -97- (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. 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 -98- 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 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 -99- 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 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 -100- 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. (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, -101- 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. (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. -102- 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 or its Affiliates to or for the credit or the account of any Loan Party against any of and all the obligations of any Loan Party now or hereafter existing under this Agreement and other Loan Documents held by such Lender or its Affiliates, 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 Loan Parties' credit balances with the Lender or its Affiliates 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 Loan Parties 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 discontinuance 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: -103- (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 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, -104- 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; (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 -105- 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 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. (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. -106- 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 DOCUMENTS. 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. -107- 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. 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- -108- 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 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 -109- 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. 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] -110- 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.(1) SEMINIS VEGETABLE SEEDS, INC., as Borrower By: ___________________________________ Name: Title: - ------------------ (1) Signatures to be conformed after effectiveness of Amendment No. 1. S-1 SEMINIS, INC., as Parent Guarantor By: ___________________________________ Name: Title: S-2 CITICORP NORTH AMERICA, INC., as Administrative Agent and Lender By: _________________________________________ Name: John W. Peruzzi Title: Vice President CITIGROUP GLOBAL MARKETS INC., as Joint Lead Arranger and Joint Bookrunner By: _________________________________________ Name: John W. Peruzzi Title: Director S-3 HARRIS TRUST AND SAVINGS BANK, as Joint Lead Arranger, Joint Bookrunner, Syndication Agent and Lender By: _________________________________________ Name: Title: S-4 CIBC WORLD MARKETS CORP., as Co-Documentation Agent By: _________________________________________ Name: Title: CIBC INC., as Lender By: _________________________________________ Name: Title: S-5 COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A., "RABOBANK INTERNATIONAL", NEW YORK BRANCH, as Co-Documentation Agent and as Lender By: _________________________________________ Name: Title: By: _________________________________________ Name: Title: S-6 UNION BANK OF CALIFORNIA, N.A., as Lender By: _________________________________________ Name: Title: S-7 [LENDER], as Lender By: _________________________________________ Name: Title: S-8 EX-21.1 22 v94566aexv21w1.txt EXHIBIT 21.1 EXHIBIT 21.1 SUBSIDIARIES OF THE REGISTRANTS Asgrow Hortalizas de Guatemala, S.A., a corporation organized under the laws of Guatemala Asgrow Hortalizas SA de CV, a corporation organized under the laws of Mexico Baxter Seed Co., Inc., a corporation organized under the laws of the State of Texas Distribucao de Sementes e Represeentacoes Unipesool Ltda., a corporation organized under the laws of Portugal Horticultura de Salama SA, a corporation organized under the laws of Guatemala Hortiplant Invernaderos SA de CV, a corporation organized under the laws of Mexico LSL PlantScience, LLC, a corporation organized under the laws of the State of Delaware Petoseed International, Inc., a corporation organized under the laws of the State of California PGI Alfalfa, Inc., a corporation organized under the laws of the State of Iowa Semillas Seminis Peru, SA, a corporation organized under the laws of Peru Semillas Seminis Sudamerica SA, a corporation organized under the laws of Chile Semillias Seminis Sudamerica, Ltda. Srl., a corporation organized under the laws of Argentina Seminis Beijing Co., Ltd., a corporation organized under the laws of China Seminis Honduras Int'l S de RL de CV, a corporation organized under the laws of Honduras Seminis Hungaria Kft., a corporation organized under the laws of Hungary Seminis Japan Co., Ltd., a corporation organized under the laws of Japan Seminis Korea, Inc., a corporation organized under the laws of South Korea Seminis S.A. (Pty.), Ltd., a corporation organized under the laws of South Africa Seminis SA de CV, a corporation organized under the laws of Mexico Seminis Sebze Tohumlari, A.S., a corporation organized under the laws of Turkey Seminis Shanghai Co., Ltd., a corporation organized under the laws of China Seminis Vegetable Seeds (India), Ltd., a corporation organized under the laws of India Seminis Vegetable Seeds (Phils), Inc., a corporation organized under the laws of the Philippines Seminis Vegetable Seeds (Thailand), Ltd., a corporation organized under the laws of Thailand Seminis Vegetable Seeds Canada, Ltd., a corporation organized under the laws of Canada Seminis Vegetable Seeds Deutschland GmbH, a corporation organized under the laws of Germany Seminis Vegetable Seeds France S.A., a corporation organized under the laws of France Seminis Vegetable Seeds Iberica, S.A., a corporation organized under the laws of Spain Seminis Vegetable Seeds Italia, S.r.l., a corporation organized under the laws of Italy Seminis Vegetable Seeds Mexicana S. de R.L. de CV, a corporation organized under the laws of Mexico Seminis Vegetable Seeds New Zealand, Ltd., a corporation organized under the laws of New Zealand Seminis Vegetable Seeds Polska Sp. Z.o.o., a corporation organized under the laws of Poland Seminis Vegetable Seeds South Africa (Pty.), Ltd., a corporation organized under the laws of South Africa Seminis Vegetable Seeds U.K., Ltd., a corporation organized under the laws of the United Kingdom Seminis Vegetable Seeds, Inc., a corporation organized under the laws of the State of California SVS Belgium N.V., a corporation organized under the laws of Belgium SVS do Brasil Sementes, Ltda., a corporation organized under the laws of Brazil SVS Europe Holding BV, a corporation organized under the laws of the Netherlands SVS Europe, BV, a corporation organized under the laws of the Netherlands SVS Holland, BV, a corporation organized under the laws of the Netherlands SVS Mexicana, SA de CV, a corporation organized under the laws of Mexico EX-23.1 23 v94566aexv23w1.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 December 23, 2003, relating to the financial statements and financial statement schedule 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. /s/ PricewaterhouseCoopers LLP - ------------------------------ PricewaterhouseCoopers LLP Los Angeles, CA March 11, 2004 EX-99.1 24 v94566aexv99w1.txt EXHIBIT 99.1 EXHIBIT 99.1 LETTER OF TRANSMITTAL OFFER FOR ALL OUTSTANDING $190,000,000 10 1/4% SENIOR SUBORDINATED NOTES DUE OCTOBER 1, 2013 ISSUED ON SEPTEMBER 29, 2003 IN EXCHANGE FOR REGISTERED $190,000,000 10 1/4% SENIOR SUBORDINATED NOTES DUE OCTOBER 1, 2013 OF SEMINIS VEGETABLE SEEDS, INC. PURSUANT TO THE PROSPECTUS DATED , 2003 THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON _______, 2004 (THE "EXPIRATION DATE") UNLESS THE EXCHANGE OFFER IS EXTENDED, IN WHICH CASE THE TERM "EXPIRATION DATE" SHALL MEAN THE LATEST TIME AND DATE TO WHICH THE EXCHANGE OFFER IS EXTENDED. TENDERS MAY BE WITHDRAWN AT ANY TIME PRIOR TO THE EXPIRATION DATE. The Exchange Agent: WELLS FARGO BANK, NATIONAL ASSOCIATION By Mail, Hand Delivery or Overnight Courier: By Facsimile Transmission: Wells Fargo Bank, National (213) 614-3355 Association Attention: Corporate Trust MAC E2818-176 Administration 17th Floor 707 Wilshire Blvd. Confirm by Telephone Los Angeles, CA 90017 (213) 614-3349 FOR INFORMATION CALL: (213) 614-3349 DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS TO A FACSIMILE NUMBER OTHER THAN THE ONE LISTED ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS SET FORTH IN THIS LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED. The undersigned acknowledges receipt of the Prospectus dated __ , 2004 (the "Prospectus") of Seminis Vegetable Seeds, Inc. (the "Company"), Seminis, Inc. (the "Parent"), Petoseed International, Inc. ("Petoseed"), PGI Alfalfa, Inc. ("PGI") and Baxter Seed Co., Inc. ("Baxter", together with the Parent, Petoseed and PGI, the "Guarantors") and this Letter of Transmittal (this "Letter of Transmittal"), which, together with the Prospectus, constitutes the Company's and the Guarantors' (the Company and the Guarantors together are referred to herein as "we", "us", "their" and "our") offer (the "Exchange Offer") to exchange up to $190,000,000 aggregate principal amount of our 10 1/4% Senior Subordinated Notes due 2013 and the related guarantees (the "New Notes"), which have been registered under the Securities Act of 1933, as amended (the "Securities Act"), for up to $190,000,000 aggregate principal amount of our outstanding 10 1/4% Senior Subordinated Notes due 2013 issued on September 29, 2003 and the related guarantees (the "Outstanding Notes"). Recipients of the Prospectus should read the requirements described in such Prospectus with respect to eligibility to participate in the Exchange Offer. Capitalized terms used but not defined herein have the meaning given to them in the Prospectus. The undersigned hereby tenders the Outstanding Notes described in the box entitled "Description of Outstanding Notes" below pursuant to the terms and conditions described in the Prospectus and this Letter of Transmittal. The undersigned is the registered owner of all the Outstanding Notes and the undersigned represents that it has received from each beneficial owner of Outstanding Notes ("Beneficial Owners") a duly completed and executed form of "Instruction to Registered Holder from Beneficial Owner" accompanying this Letter of Transmittal, instructing the undersigned to take the action described in this Letter of Transmittal. This Letter of Transmittal is to be used only by a holder of Outstanding Notes (i) if certificates representing Outstanding Notes are to be forwarded herewith or (ii) if delivery of Outstanding Notes is to be made by book-entry transfer to the Exchange Agent's account at The Depository Trust Company (the "Depositary"), pursuant to the procedures set forth in the section of the Prospectus entitled "The Exchange Offer - Procedures for Tendering Your Original Notes." If delivery of the Outstanding Notes is to be made by book-entry transfer to the account maintained by the Exchange Agent at the Depositary, tenders of the Outstanding Notes must be effected in accordance with the procedures mandated by the Depositary's Automated Tender Offer Program and the procedures set forth in the Prospectus under the caption "The Exchange Offer - Book-Entry Transfer." The undersigned hereby represents and warrants that the information set forth in the box below entitled "Beneficial Owner(s)" is true and correct. Any Beneficial Owner whose Outstanding Notes are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and who wishes to tender should contact such registered holder of Outstanding Notes promptly and instruct such registered holder of Outstanding Notes to tender on behalf of the Beneficial Owner. If such Beneficial Owner wishes to tender on its own behalf, such Beneficial Owner must, prior to completing and executing this Letter of Transmittal and delivering its Outstanding Notes, either make appropriate arrangements to register ownership of the Outstanding Notes in such Beneficial Owner's name or obtain a properly completed bond power from the registered holder of Outstanding Notes. The transfer of record ownership may take considerable time. In order to properly complete this Letter of Transmittal, a holder of Outstanding Notes must (i) complete the box entitled "Description of Outstanding Notes," (ii) if appropriate, check and complete the boxes relating to Book-entry Transfer, Guaranteed Delivery, Special Issuance Instructions, Special Delivery Instructions and Beneficial Owner(s), (iii) sign this Letter of Transmittal by completing the box entitled "Sign Here" and (iv) unless an exemption applies, complete the Substitute Form W-9. Each holder of Outstanding Notes should carefully read the detailed instructions below prior to completing the Letter of Transmittal. Holders of Outstanding Notes who desire to tender their Outstanding Notes for exchange and (i) whose Outstanding Notes are not immediately available, (ii) who cannot deliver their Outstanding Notes and all other documents required hereby to the Exchange Agent on or prior to the Expiration Date or (iii) who are unable to complete the procedure for book-entry transfer on a timely basis, must tender the Outstanding Notes pursuant to the guaranteed delivery procedures set forth in the section of the Prospectus entitled "The Exchange Offer - Guaranteed Delivery Procedures." See Instruction 2 of the Instructions beginning on page 11 hereof. Holders of Outstanding Notes who wish to tender their Outstanding Notes for exchange must, at a minimum, complete columns (1), (2), if applicable (see footnote 1 to the box below), and (3) in the box below entitled "Description of Outstanding Notes" and sign the box on page 10 under the words Sign Here." If only those columns are completed, such holder of Outstanding Notes will have tendered for exchange all Outstanding Notes listed in column (3) below. If the holder of Outstanding Notes wishes to tender for exchange less than all of such Outstanding Notes, column (4) must be completed in full. In such case, such holder of Outstanding Notes should refer to instruction 5 on page 12. DESCRIPTION OF OUTSTANDING NOTES
(1) (2) (3) (4) - -------------------------------------------------------------------------------------------------------- PRINCIPAL AMOUNT NAME(S) AND ADDRESS(ES) OF REGISTERED TENDERED FOR HOLDER(S) OF OUTSTANDING NOTE(S), EXACTLY OUTSTANDING EXCHANGE (ONLY IF AS NAME(S) APPEAR(S) ON CERTIFICATE(S) FOR NOTE DIFFERENT AMOUNT OUTSTANDING NOTE OR AS THE NAME OF THE NUMBER(S) FROM COLUMN (3)) PARTICIPANT APPEARS ON THE BOOK-ENTRY (ATTACH AGGREGATE (MUST BE IN TRANSFER FACILITY'S SECURITY POSITION SIGNED LIST PRINCIPAL INTEGRAL MULTIPLES LISTING (PLEASE FILL IN, IF BLANK) IF NECESSARY)1 AMOUNT OF $1,000)2 - -------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------
- ---------- (1) Column (2) need not be completed by holders of Outstanding Notes tendering Outstanding Notes for exchange by book-entry transfer. Please check the appropriate box on the next page and provide the requested information. (2) Column (4) need not be completed by holders of Outstanding Notes who wish to tender for exchange the principal amount of Outstanding Notes listed in column (3). Completion of column (4) will indicate that the holder of Outstanding Notes wishes to tender for exchange only the principal amount of Outstanding Notes indicated in column (4). [ ] CHECK HERE IF OUTSTANDING NOTES ARE ENCLOSED HEREWITH. [ ] CHECK HERE IF OUTSTANDING NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE DEPOSITARY AND COMPLETE THE FOLLOWING (FOR USE BY ELIGIBLE INSTITUTIONS (AS HEREINAFTER DEFINED) ONLY): Name of Tendering Institution: _______________________________________ Account Number: ______________________________________________________ Transaction Code Number: _____________________________________________ [ ] CHECK HERE IF TENDERED OUTSTANDING NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY ENCLOSED HEREWITH AND COMPLETE THE FOLLOWING (FOR USE BY ELIGIBLE INSTITUTIONS ONLY): Name of Registered Holder of Outstanding Note(s): ____________________ Date of Execution of Notice of Guaranteed Delivery: __________________ Window Ticket Number (if available): _________________________________ Name of Institution which Guaranteed Delivery: _______________________ Account Number (if delivered by book-entry transfer): ________________ ATTENTION BROKER-DEALERS: IMPORTANT NOTICE CONCERNING YOUR ABILITY TO RESELL THE NEW NOTES THE SECURITIES AND EXCHANGE COMMISSION (THE "SEC") CONSIDERS BROKER-DEALERS THAT ACQUIRED OUTSTANDING NOTES DIRECTLY FROM THE COMPANY, 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 THE PROSPECTUS FOR THE EXCHANGE OFFER IN CONNECTION WITH RESALES OF THE NEW NOTES AND, ABSENT AN EXEMPTION, MUST COMPLY WITH THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF THE SECURITIES ACT IN CONNECTION WITH RESALES OF THE NEW NOTES. SUCH 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 NO-ACTION LETTERS. A BROKER-DEALER THAT HAS BOUGHT OUTSTANDING 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 FOR THE EXCHANGE OFFER. SUCH PROSPECTUS MAY BE USED BY A BROKER-DEALER TO RESELL ANY OF ITS NEW NOTES. WE WILL SEND A PROSPECTUS TO ANY BROKER-DEALER THAT REQUESTS COPIES IN THIS QUESTIONNAIRE FOR A PERIOD OF UP TO 90 DAYS AFTER THE DATE OF EXPIRATION OF THE EXCHANGE OFFER. IF THE COMPANY OR THE EXCHANGE AGENT DOES NOT RECEIVE ANY LETTERS OF TRANSMITTAL FROM BROKER-DEALERS REQUESTING ADDITIONAL COPIES OF THE PROSPECTUS FOR USE IN CONNECTION WITH RESALES OF THE NEW NOTES, THE COMPANY INTENDS TO TERMINATE THE EFFECTIVENESS OF THE REGISTRATION STATEMENT AS SOON AS PRACTICABLE AFTER THE CONSUMMATION OR TERMINATION OF THE EXCHANGE OFFER. IF THE EFFECTIVENESS OF THE REGISTRATION STATEMENT IS TERMINATED, YOU WILL NOT BE ABLE TO USE THE PROSPECTUS IN CONNECTION WITH RESALES OF NEW NOTES AFTER SUCH TIME. SEE SECTION ENTITLED "THE EXCHANGE OFFER - PURPOSE AND EFFECT OF EXCHANGE OFFER; REGISTRATION RIGHTS" CONTAINED IN THE PROSPECTUS FOR MORE INFORMATION. [ ] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE ADDITIONAL COPIES OF THE PROSPECTUS AND COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO FOR USE IN CONNECTION WITH RESALES OF NEW NOTES: Name: ______________________________________________________________________ Address: ___________________________________________________________________ Telephone No.: _____________________________________________________________ Number of Additional Copies Desired: _______________________________________ If you requested additional copies of the prospectus, YOU MUST MAIL OR SEND A PHOTOCOPY OF THIS PAGE to: By Mail, Hand Delivery or Overnight Courier: By Facsimile Transmission: Wells Fargo Bank, National (213) 614-3355 Association Attention: Corporate Trust MAC E2818-176 Administration 17th Floor 707 Wilshire Blvd. Confirm by Telephone Los Angeles, CA 90017 (213) 614-3349 SPECIAL ISSUANCE INSTRUCTIONS (SEE INSTRUCTIONS 1, 6, 7 AND 8) To be completed ONLY (i) if the New Notes issued in exchange for Outstanding Notes (or if certificates for Outstanding Notes not tendered for exchange for New Notes) are to be issued in the name of someone other than the undersigned or (ii) if Outstanding Notes tendered by book-entry transfer which are not exchanged are to be returned by credit to an account maintained at the Depositary. Issue to: ____________________________________________________________________ Name: ________________________________________________________________________ (PLEASE PRINT) Address: _____________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ (INCLUDE ZIP CODE) ______________________________________________________________________________ (TAX IDENTIFICATION OR SOCIAL SECURITY NO.) Credit Outstanding Notes not exchanged and delivered by book-entry transfer to the Depositary account set forth below: ______________________________________________________________________________ (ACCOUNT NUMBER) SPECIAL DELIVERY INSTRUCTIONS (SEE INSTRUCTIONS 1, 6, 7 AND 8) To be completed ONLY if the New Notes issued in exchange for Outstanding Notes (or if certificates for Outstanding Notes not tendered for exchange for New Notes) are to be mailed or delivered (i) to someone other than the undersigned, or (ii) to the undersigned at an address other than the address shown below the undersigned's signature. Mail or deliver to: __________________________________________________________ Name: ________________________________________________________________________ (PLEASE PRINT) Address: _____________________________________________________________________ (INCLUDE ZIP CODE) ______________________________________________________________________________ ______________________________________________________________________________ (TAX IDENTIFICATION OR SOCIAL SECURITY NO.) BENEFICIAL OWNER(S) ~~STATE OF PRINCIPAL RESIDENCE OF EACH PRINCIPAL AMOUNT OF OUTSTANDING NOTES BENEFICIAL OWNER OF OUTSTANDING NOTES HELD FOR ACCOUNT OF BENEFICIAL OWNER(S).~~

If delivery of Outstanding Notes is to be made by book-entry transfer to the account maintained by the Exchange Agent at the Depositary, then tenders of Outstanding Notes must be effected in accordance with the procedures mandated by the Depositary's Automated Tender Offer Program and the procedures set forth in the Prospectus under the caption "The Exchange Offer Book-Entry Transfer." SIGNATURES MUST BE PROVIDED BELOW PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY LADIES AND GENTLEMEN: Pursuant to the offer by Seminis Vegetable Seeds, Inc. (the "Company") Seminis, Inc. (the "Parent"), Petoseed International, Inc. ("Petoseed"), PGI Alfalfa, Inc. ("PGI") and Baxter Seed Co., Inc. ("Baxter", together with the Parent, Petoseed and PGI, the "Guarantors") upon the terms and subject to the conditions set forth in the Prospectus dated ___________, 2004 (the "Prospectus") and this Letter of Transmittal (this "Letter of Transmittal"), which, together with the Prospectus, constitutes the Company's and the Guarantors' (the Company and the Guarantors together are referred to herein as "we", "us", "their" and "our") offer (the "Exchange Offer") to exchange up to $190,000,000 aggregate principal amount of its 10 1/4% Senior Subordinated Notes due 2013 and the related guarantees (the "New Notes"), which have been registered under the Securities Act of 1933, as amended (the "Securities Act"), for up to $190,000,000 aggregate principal amount of its outstanding 10 1/4% Senior Subordinated Notes due 2013 issued on September 29, 2003 (the "Outstanding Notes"), the undersigned hereby tenders to the Company for exchange the Outstanding Notes indicated above. By executing this Letter of Transmittal and subject to and effective upon acceptance for exchange of the Outstanding Notes tendered for exchange herewith, the undersigned (i) acknowledges and agrees that the Company and the Guarantors shall have fully performed all of their obligations under that certain Registration Rights Agreement, dated as of September 29, 2003 among the Company, the Guarantors and the Initial Purchasers (as defined in the Prospectus), (ii) will have irrevocably sold, assigned and transferred to the Company all right, title and interest in, to and under all of the Outstanding Notes tendered for exchange hereby and (iii) hereby appoints Wells Fargo Bank, National Association (the "Exchange Agent") as the true and lawful agent and attorney-in-fact (with full knowledge that the Exchange Agent also acts as agent of the Company and the Guarantors) of such holder of Outstanding Notes with respect to such Outstanding Notes, with full power of substitution, to (x) deliver certificates representing such Outstanding Notes, or transfer ownership of such Outstanding Notes on the account books maintained by The Depository Trust Company (the "Depositary") (together, in any such case, with all accompanying evidences of transfer and authenticity), to the Company, (y) present and deliver such Outstanding Notes for transfer on the books of the Company, and (z) receive all benefits and otherwise exercise all rights and incidents of ownership with respect to such Outstanding Notes, all in accordance with the terms of the Exchange Offer. The power of attorney granted in this paragraph shall be deemed to be irrevocable and coupled with an interest. The undersigned hereby represents and warrants that (i) the undersigned has full power and authority to tender, exchange, assign and transfer the Outstanding Notes, and (ii) when such Outstanding Notes are accepted for exchange by the Company, the Company will acquire good and marketable title thereto, free and clear of all liens, restrictions, charges and encumbrances and not subject to any adverse claims. The undersigned will, upon receipt, execute and deliver any additional documents deemed by the Exchange Agent or the Company to be necessary or desirable to complete the exchange, assignment and transfer of the Outstanding Notes tendered for exchange hereby. The undersigned hereby further represents to the Company that (i) the New Notes to be acquired pursuant to the Exchange Offer will be acquired in the ordinary course of business of the person acquiring the New Notes, whether or not such person is the undersigned, (ii) neither the undersigned nor any person receiving any New Notes directly or indirectly from the undersigned pursuant to the Exchange Offer (if not a broker-dealer referred to in the last sentence of this paragraph) is engaging or intends to engage in the distribution of the New Notes and none of them have any arrangement or understanding with any person to participate in the distribution of the New Notes, (iii) the undersigned and each person receiving any New Notes directly or indirectly from the undersigned pursuant to the Exchange Offer acknowledge and agree that any person participating in the Exchange Offer for the purpose of distributing the New Notes (x) must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction of the New Notes acquired by such person and (y) cannot rely on the position of the staff of the Securities and Exchange Commission (the "Commission") set forth in Morgan Stanley and Co., Inc. no-action letter (available June 5, 1991) or the Exxon Capital Holdings Corporation no-action letter (available May 13, 1988) or similar letters, (iv) the undersigned and each person receiving any New Notes directly or indirectly from the undersigned pursuant to the Exchange Offer understand that a secondary resale transaction described in clause (iii) above should be covered by an effective registration statement containing the selling security holder information required by Item 507 or 508, as applicable, of Regulation S-K of the Commission and (v) neither the undersigned nor any person receiving any New Notes directly or indirectly from the undersigned pursuant to the Exchange Offer is an "affiliate" of the Company or any Guarantor, as defined under Rule 405 under the Securities Act. If the undersigned is a broker-dealer that will receive New Notes for its own account in exchange for Outstanding Notes that were acquired as a result of market making or other trading activities, it acknowledges that it will deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of such New Notes received in respect of such Outstanding Notes pursuant to the Exchange Offer; however, by so acknowledging and by delivering a prospectus, the undersigned will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. The undersigned acknowledges that, (i) for purposes of the Exchange Offer, the Company and the Guarantors will be deemed to have accepted for exchange, and to have exchanged, validly tendered Outstanding Notes, if, as and when the Company gives oral or written notice thereof to the Exchange Agent. Tenders of Outstanding Notes for exchange may be withdrawn at any time prior to the Expiration Date, and (ii) any Outstanding Notes tendered by the undersigned and not accepted for exchange will be returned to the undersigned at the address set forth above unless otherwise indicated in the box above entitled "Special Delivery Instructions." The undersigned acknowledges that the Company's acceptance of Outstanding Notes validly tendered for exchange pursuant to any one of the procedures described in the section of the Prospectus entitled "The Exchange Offer" and in the instructions hereto will constitute a binding agreement among the undersigned, the Company and the Guarantors upon the terms and subject to the conditions of the Exchange Offer. Unless otherwise indicated in the box entitled "Special Issuance Instructions," please return any Outstanding Notes not tendered for exchange in the name(s) of the undersigned. Similarly, unless otherwise indicated in the box entitled "Special Delivery Instructions," please mail any certificates for Outstanding Notes not tendered or exchanged (and accompanying documents, as appropriate) to the undersigned at the address shown below the undersigned's signature(s). In the event that either "Special Issuance Instructions" or "Special Delivery Instructions" are completed, please issue the certificates representing the New Notes issued in exchange for the Outstanding Notes accepted for exchange in the name(s) of, and return any Outstanding Notes not tendered for exchange or not exchanged to, the person(s) so indicated. The undersigned recognizes that the Company and the Guarantors have no obligation pursuant to the "Special Issuance Instructions" and "Special Delivery Instructions" to transfer any Outstanding Notes from the name of the holder of Outstanding Notes thereof if the Company does not accept for exchange any of the Outstanding Notes so tendered for exchange or if such transfer would not be in compliance with any transfer restrictions applicable to such Outstanding Notes. In order to validly tender Outstanding Notes for exchange, holders of Outstanding Notes must complete, execute and deliver this Letter of Transmittal. Except as stated in the Prospectus, all authority herein conferred or agreed to be conferred shall survive the death or incapacity of the undersigned, and any obligation of the undersigned hereunder shall be binding upon the heirs, personal representatives, successors and assigns of the undersigned. Except as otherwise stated in the Prospectus, this tender for exchange of Outstanding Notes is irrevocable. SIGN HERE X____________________________________ Date: _________________________________ SIGNATURE OF OWNER MUST BE SIGNED BY THE REGISTERED HOLDER(S) OF OUTSTANDING NOTES EXACTLY AS NAME(S) APPEAR(S) ON CERTIFICATE(S) REPRESENTING THE OUTSTANDING NOTES OR ON A SECURITY POSITION LISTING OR BY PERSON(S) AUTHORIZED TO BECOME REGISTERED OUTSTANDING NOTE HOLDER(S) BY CERTIFICATES AND DOCUMENTS TRANSMITTED HEREWITH. IF SIGNATURE IS BY TRUSTEES, EXECUTORS, ADMINISTRATORS, GUARDIANS, ATTORNEYS-IN-FACT, OFFICERS OF CORPORATIONS OR OTHERS ACTING IN A FIDUCIARY OR REPRESENTATIVE CAPACITY, PLEASE PROVIDE THE FOLLOWING INFORMATION. (SEE INSTRUCTION 6). ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ NAME(S) ______________________________________________________________________________ CAPACITY (FULL TITLE) ______________________________________________________________________________ ADDRESS (INCLUDING ZIP CODE) ______________________________________________________________________________ AREA CODE AND TELEPHONE NUMBER ______________________________________________________________________________ TAX IDENTIFICATION NUMBER GUARANTEE OF SIGNATURE(S) (SIGNATURE(S) MUST BE GUARANTEED IF REQUIRED BY INSTRUCTION 1) X_______________________________________ Date:_______________________________ AUTHORIZED SIGNATURE ______________________________________________________________________________ NAME AND TITLE INSTRUCTIONS FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER 1. GUARANTEE OF SIGNATURES. Except as otherwise provided below, all signatures on this Letter of Transmittal must be guaranteed by an institution that is an "Eligible Guarantor Institution" within the meaning of Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended, and is a member of one of the following recognized Signature Guarantee Programs (each, an "Eligible Institution"): (a) The Securities Transfer Agents Medallion Program (STAMP) (b) The New York Stock Exchange Medallion Signature Program (MSP) (c) The Stock Exchange Medallion Program (SEMP) Signatures on this Letter of Transmittal need not be guaranteed (i) if this Letter of Transmittal is signed by the registered holder(s) of the Outstanding Notes tendered herewith and such registered holder(s) have not completed the box entitled "Special Issuance Instructions" or the box entitled "Special Delivery Instructions" on this Letter of Transmittal or (ii) if such Outstanding Notes are tendered for the account of an Eligible Institution. IN ALL OTHER CASES, ALL SIGNATURES MUST BE GUARANTEED BY AN ELIGIBLE INSTITUTION. 2. DELIVERY OF THIS LETTER OF TRANSMITTAL AND OUTSTANDING NOTES; GUARANTEED DELIVERY PROCEDURES. This Letter of Transmittal is to be completed by holders of Outstanding Notes (i) if certificates are to be forwarded herewith or (ii) if tenders are to be made pursuant to the procedures for tender by book-entry transfer or guaranteed delivery set forth in the section of the Prospectus entitled "The Exchange Offer - Guaranteed Delivery Procedures." Certificates for all physically tendered Outstanding Notes or any confirmation of a book-entry transfer (a "Book-Entry Confirmation"), as well as a properly completed and duly executed copy of this Letter of Transmittal or facsimile hereof, and any other documents required by this Letter of Transmittal, must be received by the Exchange Agent at its address set forth on the cover of this Letter of Transmittal prior to the Expiration Date. Holders of Outstanding Notes who elect to tender Outstanding Notes and (i) whose Outstanding Notes are not immediately available, (ii) who cannot deliver the Letter of Transmittal, Outstanding Notes or other required documents to the Exchange Agent prior to the Expiration Date or (iii) who are unable to complete the procedure for book-entry transfer on a timely basis, may have such tender effected if (a) such tender is made by or through an Eligible Institution, (b) prior to the Expiration Date, the Exchange Agent 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 the Company (by facsimile transmission, mail or hand delivery) setting forth the name and address of the holder of such Outstanding Notes, the certificate number(s) of such Outstanding Notes and the principal amount of Outstanding Notes tendered for exchange, stating that tender is being made thereby and guaranteeing that, within five New York Stock Exchange trading days after the date of execution of the Notice of Guaranteed Delivery, this Letter of Transmittal (or a manually executed facsimile thereof), properly completed and duly executed, the certificates representing such Outstanding Notes (or a Book-Entry Confirmation), in proper form for transfer, and any other documents required by this Letter of Transmittal, will be deposited by such Eligible Institution with the Exchange Agent, and (c) a properly completed and duly executed Letter of Transmittal (or a manually executed facsimile thereof) with certificates for all tendered Outstanding Notes, or a Book-Entry Confirmation, and any other documents required by this Letter of Transmittal are received by the Exchange Agent within five New York Stock Exchange trading days after the date of execution of the Notice of Guaranteed Delivery. THE METHOD OF DELIVERY OF OUTSTANDING NOTES, THIS LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE TENDERING HOLDER OF OUTSTANDING NOTES. EXCEPT AS OTHERWISE PROVIDED BELOW, THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED OR CONFIRMED BY THE EXCHANGE AGENT. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. NEITHER THIS LETTER OF TRANSMITTAL NOR ANY OUTSTANDING NOTES SHOULD BE SENT TO THE COMPANY. No alternative, conditional or contingent tenders will be accepted. All tendering holders of Outstanding Notes, by execution of this Letter of Transmittal (or facsimile hereof, if applicable), waive any right to receive notice of the acceptance of their Outstanding Notes for exchange. 3. INADEQUATE SPACE. If the space provided in the box entitled "Description of Outstanding Notes" above is inadequate, the certificate numbers and principal amounts of the Outstanding Notes being tendered should be listed on a separate signed schedule affixed hereto. 4. WITHDRAWALS. A tender of Outstanding Notes may be withdrawn at any time prior to 5:00 p. m. New York City time on the Expiration Date by delivery of a written or an Automated Tender Offer Program electronic transmission notice of withdrawal to the Exchange Agent at the address set forth on the cover of this Letter of Transmittal prior to 5:00 p.m. New York City Time on the Expiration Date. To be effective, a notice of withdrawal of Outstanding Notes must (i) specify the name of the person who tendered the Outstanding Notes to be withdrawn (the "Depositor"), (ii) identify the Outstanding Notes to be withdrawn (including the certificate number or numbers and aggregate principal amount of such Outstanding Notes), (iii) be signed by the holder of Outstanding Notes in the same manner as the original signature on the Letter of Transmittal by which such Outstanding Notes were tendered (including any required signature guarantees) or be accompanied by documents of transfer sufficient to have the Trustee under the Indenture register the transfer of such Outstanding Notes into the name of the person withdrawing the tender, (iv) specify the name in which any such Outstanding Notes are to be registered, if different from that of the Depositor, and (v) be received by the Exchange Agent prior to the Expiration Date. Withdrawals of tenders of Outstanding Notes may not be rescinded, and any Outstanding Notes withdrawn will thereafter be deemed not validly tendered for purposes of the Exchange Offer, and no New Notes will be issued with respect thereto unless the Outstanding Notes so withdrawn are validly retendered. Properly withdrawn Outstanding Notes may be retendered by following one of the procedures described in the section of the Prospectus entitled "The Exchange Offer - Procedures for Tendering Your Original Notes" at any time prior to the Expiration Date. 5. PARTIAL TENDERS. (Not applicable to holders of Outstanding Notes who tender Outstanding Notes by book-entry transfer). Tenders of Outstanding Notes will be accepted only in integral multiples of $1,000 principal amount. If a tender for exchange is to be made with respect to less than the entire principal amount of any Outstanding Notes, fill in the principal amount of Outstanding Notes which are tendered for exchange in column (4) of the box entitled "Description of Outstanding Notes" on page 3, as more fully described in the footnotes thereto. In case of a partial tender for exchange, new certificate(s), in fully registered form, for the remainder of the principal amount of the Outstanding Notes, will be sent to the holders of Outstanding Notes unless otherwise indicated in the appropriate box on this Letter of Transmittal as promptly as practicable after the expiration or termination of the Exchange Offer. 6. SIGNATURES ON THIS LETTER OF TRANSMITTAL, POWERS OF ATTORNEY AND ENDORSEMENTS. (a) The signature(s) of the holder of Outstanding Notes on this Letter of Transmittal must correspond with the name(s) as written on the face of the Outstanding Notes without alteration, enlargement or any change whatsoever. (b) If tendered Outstanding Notes are owned of record by two or more joint owners, all such owners must sign this Letter of Transmittal. (c) If any tendered Outstanding Notes are registered in different names on several certificates, it will be necessary to complete, sign and submit as many separate copies of this Letter of Transmittal and any necessary or required documents as there are different registrations. (d) When this Letter of Transmittal is signed by the holder of the Outstanding Notes listed and transmitted hereby, no endorsements of Outstanding Notes or separate powers of attorney are required. If, however, Outstanding Notes not tendered or not accepted are to be issued or returned in the name of a person other than the holder of Outstanding Notes, then the Outstanding Notes transmitted hereby must be endorsed or accompanied by appropriate powers of attorney in a form satisfactory to the Company, in either case signed exactly as the name(s) of the holder of Outstanding Notes appear(s) on the Outstanding Notes. Signatures on such Outstanding Notes or powers of attorney must be guaranteed by an Eligible Institution (unless signed by an Eligible Institution). (e) If this Letter of Transmittal or Outstanding 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, and proper evidence satisfactory to the Company of their authority so to act must be submitted. (f) If this Letter of Transmittal is signed by a person other than the registered holder of Outstanding Notes listed, the Outstanding Notes must be endorsed or accompanied by appropriate powers of attorney, in either case signed exactly as the name(s) of the registered holder of Outstanding Notes appear(s) on the certificates. Signatures on such Outstanding Notes or powers of attorney must be guaranteed by an Eligible Institution (unless signed by an Eligible Institution). 7. TRANSFER TAXES. Except as set forth in this Instruction 7, the Company will pay all transfer taxes, if any, applicable to the transfer and exchange of Outstanding Notes pursuant to the Exchange Offer. If issuance of New Notes is to be made to, or Outstanding Notes not tendered for exchange are to be issued or returned in the name of, any person other than the registered holder of the Outstanding Notes tendered, or if a transfer tax is imposed for any reason other than the exchange of Outstanding Notes pursuant to the Exchange Offer, and satisfactory evidence of payment of such taxes or exemptions therefrom is not submitted with this Letter of Transmittal, the amount of any transfer taxes payable on account of any such transfer will be imposed on and payable by the tendering holder of Outstanding Notes prior to the issuance of the New Notes. 8. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS. If the New Notes, or if any Outstanding Notes not tendered for exchange, are to be issued or sent to someone other than the holder of Outstanding Notes or to an address other than that shown above, the appropriate boxes on this Letter of Transmittal should be completed. Holders of Outstanding Notes tendering Outstanding Notes by book-entry transfer may request that Outstanding Notes not accepted be credited to such account maintained at the Depositary as such holder of Outstanding Notes may designate. 9. IRREGULARITIES. All questions as to the form of documents and the validity, eligibility (including time of receipt), acceptance and withdrawal of Outstanding Notes will be determined by the Company, in its sole discretion, whose determination shall be final and binding. The Company reserves the absolute right to reject any or all tenders for exchange of any particular Outstanding Notes that are not in proper form, or the acceptance of which would, in the opinion of the Company (or its counsel), be unlawful. The Company reserves the absolute right to waive any defect, irregularity or condition of tender for exchange with regard to any particular Outstanding Notes. The Company's interpretation of the terms of, and conditions to, the Exchange Offer (including the instructions herein) will be final and binding. Unless waived, any defects or irregularities in connection with the Exchange Offer must be cured within such time as the Company shall determine. Neither the Company, the Guarantors, the Exchange Agent nor any other person shall be under any duty to give notice of any defects or irregularities in Outstanding Notes tendered for exchange, nor shall any of them incur any liability for failure to give such notice. A tender of Outstanding Notes will not be deemed to have been made until all defects and irregularities with respect to such tender have been cured or waived. Any Outstanding Notes received by the Exchange Agent that are not properly tendered and as to which the defects or irregularities have not been cured or waived will be returned by the Exchange Agent to the tendering holders, unless otherwise provided in this Letter of Transmittal, as soon as practicable following the Expiration Date. 10. WAIVER OF CONDITION. The Company reserves the absolute right to waive, amend or modify any of the specified conditions described under "The Exchange Offer - Expiration Date; Extensions; Amendments" in the Prospectus in the case of any Outstanding Notes tendered (except as otherwise provided in the Prospectus). 11. MUTILATED, LOST, STOLEN OR DESTROYED OUTSTANDING NOTES. If a holder of Outstanding Notes desires to tender Outstanding Notes pursuant to the Exchange Offer, but any of such Outstanding Notes has been mutilated, lost, stolen or destroyed, such holder of Outstanding Notes should contact the Trustee at the address set forth on the cover of this Letter of Transmittal for further instructions. 12. REQUESTS FOR INFORMATION OR ADDITIONAL COPIES. Requests for information about the procedure for tendering or for withstanding tenders, or for additional copies of the Prospectus and this Letter of Transmittal, may be directed to the Exchange Agent at the address or telephone number set forth on the cover of this Letter of Transmittal. IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE THEREOF, IF APPLICABLE) TOGETHER WITH CERTIFICATES, OR CONFIRMATION OF BOOK-ENTRY OR THE NOTICE OF GUARANTEED DELIVERY, AND ALL OTHER REQUIRED DOCUMENTS MUST BE RECEIVED BY THE EXCHANGE AGENT PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE. IMPORTANT TAX INFORMATION Each holder of Outstanding Notes must, unless an exemption applies, provide the Exchange Agent with such holder's correct taxpayer identification number on the Substitute Form W-9 below, with the required certifications being made under penalties of perjury. If the Exchange Agent is not provided with the correct taxpayer identification number, the holder may be subject to a $50 penalty imposed by the Internal Revenue Service in addition to being subject to backup withholding. If backup withholding applies, the Company is required to withhold 30% of any payment made to the holder of Outstanding Notes or other payee pursuant to the exchange. Backup withholding is not an additional federal income tax. Rather, the federal income tax liability of persons subject to backup withholding will be reduced by the amount of tax withheld. If withholding results in an overpayment of taxes, a refund may be obtained from the Internal Revenue Service. Certain holders of Outstanding Notes (including, among others, most corporations and certain foreign individuals) are not subject to these backup withholding requirements with respect to interest payments. A foreign individual may qualify as an exempt recipient by submitting to the Exchange Agent a properly completed internal Revenue Service Form W-SBEN, Form W-8ECI or Form W-81MY, as applicable (the terms of which the Exchange Agent will provide upon request), signed under penalty of perjury, attesting to the holder's exempt status. For payees exempt from backup withholding, see the enclosed Guidelines for Certification of Taxpayer Identification Number ("TIN") on Substitute Form W-9 (the "Guidelines") below. The holder of Outstanding Notes is required to give the Exchange Agent the TIN (e.g., social security number or employer identification number) of the record owner of the Outstanding Notes. If the Outstanding Notes are held in more than one name or are not held in the name of the actual owner, consult the enclosed Guidelines for additional guidance regarding which number to report. A holder of Outstanding Notes should consult his or her tax advisor as to his or her qualification for exemption from the backup withholding requirements and the procedure for obtaining an exemption. PAYER'S NAME: WELLS FARGO BANK, NATIONAL ASSOCIATION SUBSTITUTE FORM W-9 Department of the Treasury Internal Revenue Service Payer's Request for Taxpayer ______________________________ Identification Number (TIN) Social Security Number OR PART 1-PLEASE PROVIDE YOUR TIN ______________________________ IN THE BOX AT RIGHT AND CERTIFY Employer Identification Number BY SIGNING AND DATING BELOW. PART 2-Certification PART 3- Under penalties of perjury, I certify that: Awaiting TIN [ ] (1) The number shown on this form is my correct taxpayer identification number (or I am waiting for a number to be issued to me), and (2) I am not subject to backup withholding because (a) I am exempt from backup withholding, or (b) I have not been notified by the Internal Revenue Service (the "IRS") that I am subject to backup withholding as a result of a failure to report all interest or dividends, or (c) the IRS has notified me that I am no longer subject to backup withholding, and (3) I am a U.S. person Certification Instructions-You must cross out item (2) in Part 2 above if you have been notified by the IRS that you are currently subject to backup withholding because of underreporting interest or dividends on your tax return. However, if after being notified by the IRS that you are subject to backup withholding you received another notification from the IRS stating that you are no longer subject to backup withholding, do not cross out item (2). SIGNATURE_______________________ DATE______________________ NAME_______________________________________________________ ADDRESS____________________________________________________ CITY_____________________ STATE___________ ZIP CODE________ NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN A BACKUP WITHHOLDING OF 30% OF ANY PAYMENT MADE TO YOU PURSUANT TO THE EXCHANGE OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS. YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART 3 OF THE SUBSTITUTE FORM W-9. CERTIFICATION OF AWAITING TAXPAYER IDENTIFICATION NUMBER I certify under penalties of perjury that a taxpayer identification number has not been issued to me, and either (a) I have mailed or delivered an application to receive a taxpayer identification number to the appropriate Internal Revenue Service Center or Social Security Administration office or (b) I intend to mail or deliver an application in the near future. I understand that if I do not provide a taxpayer identification number within sixty (60) days, 30% of all reportable payments made to me thereafter will be withheld until I provide such a number. Signature:_________________________________ Date:______________________________ FOR ANY QUESTIONS REGARDING THIS LETTER OF TRANSMITTAL OR FOR ANY ADDITIONAL INFORMATION, YOU MAY CONTACT THE EXCHANGE AGENT BY TELEPHONE AT 213-614-3349 OR BY FACSIMILE AT 213-614-3355. GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE PAYER. The taxpayer identification number for an individual is the individual's Social Security number. Social Security numbers have nine digits separated by two hyphens: e.g., 000-00-0000. The taxpayer identification number for an entity is the entity's Employer Identification number. Employer Identification numbers have nine digits separated by one hyphen: e.g., 00-0000000. The table below will help determine the number to give the payer.
GIVE THE NAME AND SOCIAL FOR THIS TYPE OF ACCOUNT: SECURITY NUMBER OF - 1. Individual The individual 2. Two or more individuals The actual owner of the (joint account) account or, if combined funds, the first individual on the account(1) 3. Custodian account of a The minor(2) minor (Uniform Gift to Minors Act) 4. a. The usual revocable The grantor-trustee (1) savings trust (grantor is also trustee) b. So-called trust The actual owner(1) account that is not a legal or valid trust under state law 5. Sole proprietorship The owner(3) GIVE THE NAME AND EMPLOYER FOR THIS TYPE OF ACCOUNT: IDENTIFICATION NUMBER OF - 6. A valid trust, estate or The legal entity(4) pension trust 7. Corporate The corporation 8. Association, club, The organization religious, charitable, educational or other tax-exempt organization The broker or nominee 9. Partnership 10. A broker or registered The partnership nominee 11. Account with the The public entity Department of Agriculture in the name of a public entity (such as a state or local government, school district, or prison) that receives agricultural program payments
(1) List first and circle the name of the person whose number you furnish. (2) Circle the minor's name and furnish the minor's social security number. (3) You must show your individual name, but you may also enter your business or "doing business as" name. You may use either your SSN or TIN (if you have one). (4) List first and circle the name of the legal trust, estate, or pension trust. (Do not furnish the TIN of the personal representative or trustee unless the legal entity itself is not designated in the account title.) NOTE: If no name is circled when more than one name is listed, the number will be considered to be that of the first name listed. The Exchange Agent for the Exchange Offer is: WELLS FARGO BANK, NATIONAL ASSOCIATION By Mail, Hand Delivery or Overnight Courier: By Facsimile Transmission: Wells Fargo Bank, National (213) 614-3355 Association Attention: Corporate Trust MAC E2818-176 Administration 17th Floor 707 Wilshire Blvd. Confirm by Telephone Los Angeles, CA 90017 (213) 614-3349 FOR INFORMATION CALL: (213) 614-3349 EX-99.2 25 v94566aexv99w2.txt EXHIBIT 99.2 Exhibit 99.2 NOTICE OF GUARANTEED DELIVERY WITH RESPECT TO 10 1/4% SENIOR SUBORDINATED NOTES DUE 2013 ISSUED ON SEPTEMBER 29, 2003 CUSIP NOS. 816661 AA 0 AND U81625 AA 0 OF SEMINIS VEGETABLE SEEDS, INC. This form must be used by a holder of unregistered 10 1/4% Senior Subordinated Notes due 2013 issued on September 29, 2003 and the related guarantees (the "Outstanding Notes") of Seminis Vegetable Seeds, Inc. (the "Company"), Seminis, Inc. (the "Parent"), Petoseed International, Inc. ("Petoseed"), PGI Alfalfa, Inc. ("PGI") and Baxter Seed Co., Inc. ("Baxter", together with the Parent, Petoseed and PGI, the "Guarantors"), who wishes to tender Outstanding Notes to the Exchange Agent in exchange for 10 1/4% Senior Subordinated Notes due 2013 and the related guarantees (the "New Notes"),which have been registered under the Securities Act of 1933, as amended, pursuant to the guaranteed delivery procedures described in "The Exchange Offer - Guaranteed Delivery Procedures" of the Prospectus, dated ___________, 2004 (the "Prospectus"), and in Instruction 2 to the related Letter of Transmittal. Any holder who wishes to tender Outstanding Notes pursuant to such guaranteed delivery procedures must ensure that the Exchange Agent receives this Notice of Guaranteed Delivery prior to the Expiration Date of the Exchange Offer. Capitalized terms not defined herein have the meanings ascribed to them in the Prospectus or the Letter of Transmittal. THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON __________, 2004 (THE "EXPIRATION DATE") UNLESS THE EXCHANGE OFFER IS EXTENDED, IN WHICH CASE THE TERM "EXPIRATION DATE" SHALL MEAN THE LATEST TIME AND DATE TO WHICH THE EXCHANGE OFFER IS EXTENDED. TENDERS MAY BE WITHDRAWN AT ANY TIME PRIOR TO THE EXPIRATION DATE. The Exchange Agent: WELLS FARGO BANK, NATIONAL ASSOCIATION By Mail, Hand Delivery or Overnight Courier: By Facsimile Transmission: Wells Fargo Bank, National Association (213) 614-3355 MAC E2818-176 Attention: Corporate Trust 17th Floor Administration 707 Wilshire Blvd. Los Angeles, CA 90017 Confirm by Telephone (213) 614-3349 FOR INFORMATION CALL: (213) 614-3349 DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS TO A FACSIMILE NUMBER OTHER THAN THE ONE LISTED ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS SET FORTH IN THIS NOTICE OF GUARANTEED DELIVERY AND IN THE LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS NOTICE OF GUARANTEED DELIVERY AND THE LETTER OF TRANSMITTAL ARE COMPLETED. THIS FORM IS NOT TO BE USED TO GUARANTEE SIGNATURES. IF A SIGNATURE ON THE LETTER OF TRANSMITTAL IS REQUIRED TO BE GUARANTEED BY AN "ELIGIBLE INSTITUTION" UNDER THE INSTRUCTIONS THERETO, SUCH SIGNATURE GUARANTEE MUST APPEAR IN THE APPLICABLE SPACE PROVIDED IN THE SIGNATURE BOX ON THE LETTER OF TRANSMITTAL. Ladies and Gentlemen: The undersigned hereby tenders to the Company, upon the terms and subject to the conditions set forth in the Prospectus and the related Letter of Transmittal, receipt of which is hereby acknowledged, the principal amount of Outstanding Notes set forth below pursuant to the guaranteed delivery procedures set forth in the Prospectus and in Instruction 2 of the Letter of Transmittal. The undersigned understands that tenders of Outstanding Notes will be accepted only in authorized denominations. The undersigned understands that tenders of Outstanding Notes pursuant to the Exchange Offer may not be withdrawn after the Expiration Date. Tenders of Outstanding Notes may be withdrawn at any time prior to the Expiration Date or if the Exchange Offer is terminated or as otherwise provided in the Prospectus. All authority herein conferred or agreed to be conferred by this Notice of Guaranteed Delivery shall survive the death or incapacity of the undersigned and every obligation of the undersigned under this Notice of Guaranteed Delivery shall be binding upon the heirs, personal representatives, executors, administrators, successors, assigns, trustees in bankruptcy and other legal representatives of the undersigned. The undersigned hereby tenders the Outstanding Notes listed below:
Certificate Number(s) (If Known) of Outstanding Notes or if Outstanding Notes will be Delivered by Book-Entry Transfer at the Depository Trust Company, Aggregate Principal Amount Aggregate Principal Insert Account No. Represented Amount Tendered - ----------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------- - -----------------------------------------------------------------------------------------------------
PLEASE SIGN AND COMPLETE Signature of Registered Holder(s) or Authorized Signatory: Date: ------------- - ---------------------------------------------- - ---------------------------------------------- Name of Registered Holder(s): Address: - ------------------------------------------ ------------------------------ - ------------------------------------------ ------------------------------ - ------------------------------------------ ------------------------------ Area Code and Telephone No.: ------------------------------ This Notice of Guaranteed Delivery must be signed by the holder(s) exactly as the name(s) appear(s) on certificates for Outstanding Notes or on a security position listing as the owner of Outstanding Notes, or by person(s) authorized to become holder(s) by endorsements and documents transmitted with this Notice of Guaranteed Delivery. If signature is by a trustee, executor, administrator, guardian, attorney-in-fact, officer or other person acting in a fiduciary or representative capacity, such person must provide the following information. Please print name(s) and address(es) Name(s): ______________________________________________________________________ ______________________________________________________________________ Capacity (Full Title): ________________________________________________________ Address(es):___________________________________________________________________ ___________________________________________________________________ ___________________________________________________________________ DO NOT SEND OUTSTANDING NOTES WITH THIS FORM. ACTUAL SURRENDER OF OUTSTANDING NOTES MUST BE MADE PURSUANT TO, AND BE ACCOMPANIED BY, AN EXECUTED LETTER OF TRANSMITTAL. GUARANTEE (NOT TO BE USED FOR SIGNATURE GUARANTEE) The undersigned, a firm which is a member of a recognized signature guarantee medallion program and is an "Eligible Guarantor Institution" within the meaning of Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended, hereby guarantees deposit with the Exchange Agent of the Letter of Transmittal (or facsimile thereof), together with the Outstanding Notes tendered hereby in proper form for transfer (or confirmation of the book-entry transfer of such Outstanding Notes into the Exchange Agent's account at the Depository Trust Company pursuant to the procedures described in the Prospectus under the caption "The Exchange Offer - Guaranteed Delivery Procedures" and in the Letter of Transmittal) and any other required documents, all by 5:00 p.m., New York City time, on the fifth New York Stock Exchange trading day following the date of execution of this Notice of Guaranteed Delivery. Name of Firm:_____________________________ ___________________________________ Authorized Signature Address:__________________________________ Name:____________________________ ___________________________________ Title:___________________________ Area Code and Telephone No.:________________ Date:____________________________ DO NOT SEND OUTSTANDING NOTES WITH THIS FORM. ACTUAL SURRENDER OF OUTSTANDING NOTES MUST BE MADE PURSUANT TO, AND BE ACCOMPANIED BY, AN EXECUTED LETTER OF TRANSMITTAL. INSTRUCTIONS FOR NOTICE OF GUARANTEED DELIVERY 1. DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY. A properly completed and duly executed copy of this Notice of Guaranteed Delivery and any other documents required by this Notice of Guaranteed Delivery must be received by the Exchange Agent at its address set forth herein prior to the Expiration Date. The method of delivery of this Notice of Guaranteed Delivery and any other required documents to the Exchange Agent is at the election and sole risk of the holder, and the delivery will be deemed made only when actually received by the Exchange Agent. If delivery is by mail, registered mail with return receipt requested, properly insured, is recommended. As an alternative to delivery by mail, the holders may wish to consider using an overnight or hand delivery service. In all cases, sufficient time should be allowed to assure timely delivery. For a description of the guaranteed delivery procedures, see Instruction 2 of the Letter of Transmittal. 2. SIGNATURES ON THIS NOTICE OF GUARANTEED DELIVERY. If this Notice of Guaranteed Delivery is signed by the registered holder(s) of the Outstanding Notes referred to herein, the signature must correspond with the name(s) written on the face of the Outstanding Notes without alteration, enlargement, or any change whatsoever. If this Notice of Guaranteed Delivery is signed by a participant of the Book-Entry Transfer Facility whose name appears on a security position listing as the owner of Outstanding Notes, the signature must correspond with the name shown on the security position listing as the owner of the Outstanding Notes. If this Notice of Guaranteed Delivery is signed by a person other than the registered holder(s) of any Outstanding Notes listed or a participant of the Book-Entry Transfer Facility, this Notice of Guaranteed Delivery must be accompanied by appropriate bond powers, signed as the name of the registered holder(s) appears on the Outstanding Notes or signed as the name of the participant shown on the Book-Entry Transfer Facility's security position listing. If this Notice of Guaranteed Delivery is signed by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation, or other person acting in a fiduciary or representative capacity, such person should so indicate when signing and submit with the Notice of Guaranteed Delivery evidence satisfactory to the Company and the Guarantor of such person's authority to so act. 3. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests for assistance and requests for additional copies of the Prospectus may be directed to the Exchange Agent at the address specified in the Prospectus. Holders may also contact their broker, dealer, commercial bank, trust company, or other nominee for assistance concerning the Exchange Offer. EX-99.3 26 v94566aexv99w3.txt EXHIBIT 99.3 Exhibit 99.3 SEMINIS VEGETABLE SEEDS, INC. LETTER TO REGISTERED HOLDERS FOR OFFER FOR ALL OUTSTANDING $190,000,000 10 1/4% SENIOR SUBORDINATED NOTES DUE 2013 ISSUED ON SEPTEMBER 29, 2003 IN EXCHANGE FOR REGISTERED $190,000,000 10 1/4% SENIOR SUBORDINATED NOTES DUE 2013 THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON _________, 2004 (THE "EXPIRATION DATE") UNLESS THE EXCHANGE OFFER IS EXTENDED, IN WHICH CASE THE TERM "EXPIRATION DATE" SHALL MEAN THE LATEST TIME AND DATE TO WHICH THE EXCHANGE OFFER IS EXTENDED. TENDERS MAY BE WITHDRAWN AT ANY TIME PRIOR TO THE EXPIRATION DATE. To Registered Holders: We are enclosing herewith the material listed below relating to the offer (the "Exchange Offer") by Seminis Vegetable Seeds, Inc. (the "Company") Seminis, Inc. (the "Parent"), Petoseed International, Inc. ("Petoseed"), PGI Alfalfa, Inc. ("PGI") and Baxter Seed Co., Inc. ("Baxter", together with the Parent, Petoseed and PGI, the "Guarantors") to exchange up to $190,000,000 aggregate principal amount of their 10 1/4% Senior Subordinated Notes due 2013 and related guarantees, which have been registered under the Securities Act of 1933, as amended (the "Securities Act") (the "New Notes"), for $190,000,000 aggregate principal amount of its outstanding unregistered 10 1/4% Senior Subordinated Notes due 2013 issued on September 29, 2003 and related guarantees (the "Outstanding Notes"), upon the terms and subject to the conditions set forth in the Prospectus dated ___________, 2004 and the related Letter of Transmittal. Enclosed herewith are copies of the following documents: 1. Prospectus dated _____________, 2004; 2. Letter of Transmittal; 3. Notice of Guaranteed Delivery; 4. Instruction to Registered Holder from Beneficial Owner; 5. Letter to Clients, which may be sent to your clients for whose account you hold Outstanding Notes in your name or in the name of your nominee, to accompany the instruction form referred to above, for obtaining such client's instruction with regard to the Exchange Offer; and 6. Letter to Depository Trust Company Participants for Offer for All Outstanding Notes for the New Notes. We urge you to contact your clients promptly. Please note that the Exchange Offer will expire at 5:00 p.m., New York City time, on _________, 2004, unless extended by the Company. The Exchange Offer is not conditioned upon any minimum number of Outstanding Notes being tendered. Pursuant to the Letter of Transmittal, each holder of Outstanding Notes (a "Holder") will represent to the Company and the Guarantors that (i) the New Notes to be acquired pursuant to the Exchange Offer will be acquired in the ordinary course of business of the person acquiring the New Notes, whether or not such person is the Holder, (ii) neither the Holder nor any person receiving any New Notes directly or indirectly from the Holder pursuant to the Exchange Offer (if not a broker-dealer referred to in the last sentence of this paragraph) is engaging or intends to engage in the distribution of the New Notes and none of them have any arrangement or understanding with any person to participate in the distribution of the New Notes, (iii) the Holder and each person receiving any New Notes directly or indirectly from the Holder pursuant to the Exchange Offer acknowledge and agree that any person participating in the Exchange Offer for the purpose of distributing the New Notes (x) must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction of the New Notes acquired by such person and (y) cannot rely on the position of the staff of the Securities and Exchange Commission (the "Commission") set forth in Morgan Stanley and Co., Inc. no-action letter (available June 5, 1991) or the Exxon Capital Holdings Corporation no-action letter (available May 13, 1988) or similar letters, (iv) the Holder and each person receiving any New Notes directly or indirectly from the Holder pursuant to the Exchange Offer understand that a secondary resale transaction described in clause (iii) above should be covered by an effective registration statement containing the selling security holder information required by Item 507 or 508, as applicable, of Regulation S-K of the Commission and (v) neither the Holder nor any person receiving any New Notes directly or indirectly from the Holder pursuant to the Exchange Offer is an "affiliate" of the Company, as defined under Rule 405 under the Securities Act. If the Holder is a broker-dealer that will receive New Notes for its own account in exchange for Outstanding Notes that were acquired as a result of market making or other trading activities, it acknowledges that it will deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of such New Notes received in respect of such Outstanding Notes pursuant to the Exchange Offer; however, by so acknowledging and by delivering a prospectus, the Holder will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. The enclosed Instruction to Registered Holder from Beneficial Owner contains an authorization by beneficial owner of Outstanding Notes held by you to make the foregoing representations and warranties on behalf of such beneficial owner. The Company will not pay any fee or commission to any broker or dealer or to any other persons (other than the exchange agent for the Exchange Offer) in connection with the solicitation of tenders of Outstanding Notes pursuant to the Exchange Offer. The Company will pay all transfer taxes, if any, applicable to the exchange of Outstanding Notes pursuant to the Exchange Offer, on the transfer of Outstanding Notes to it, except as otherwise provided in Instruction 7 of the enclosed Letter of Transmittal. Any inquiries you may have relating to the Exchange Offer and additional copies of the enclosed materials may be obtained from the Exchange Agent at: Wells Fargo Bank, National Association MAC E2818-176 17th Floor 707 Wilshire Blvd. Los Angeles, CA 90017 Attention: Corporate Trust Administration By Facsimile: (213) 614-3355 By Telephone: (213) 614-3349 Very truly yours, SEMINIS VEGETABLE SEEDS, INC. NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY PERSON AS AN AGENT OF THE COMPANY OR THE EXCHANGE AGENT, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENT ON BEHALF OF EITHER OF THEM IN CONNECTION WITH THE EXCHANGE OFFER OTHER THAN THE DOCUMENTS ENCLOSED HEREWITH AND THE STATEMENTS CONTAINED HEREIN. EX-99.4 27 v94566aexv99w4.txt EXHIBIT 99.4 Exhibit 99.4 SEMINIS VEGETABLE SEEDS, INC. LETTER TO DEPOSITORY TRUST COMPANY PARTICIPANTS FOR OFFER FOR ALL OUTSTANDING $190,000,000 10 1/4% SENIOR SUBORDINATED NOTES DUE 2013 ISSUED ON SEPTEMBER 29, 2003 IN EXCHANGE FOR REGISTERED $190,000,000 10 1/4% SENIOR SUBORDINATED NOTES DUE 2013 THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON __________, 2004 (THE "EXPIRATION DATE") UNLESS THE EXCHANGE OFFER IS EXTENDED, IN WHICH CASE THE TERM "EXPIRATION DATE" SHALL MEAN THE LATEST TIME AND DATE TO WHICH THE EXCHANGE OFFER IS EXTENDED. TENDERS MAY BE WITHDRAWN AT ANY TIME PRIOR TO THE EXPIRATION DATE. To Depository Trust Company Participants: We are enclosing herewith the material listed below relating to the offer by Seminis Vegetable Seeds, Inc. (the "Company"), Seminis, Inc. (the "Parent"), Petoseed International, Inc. ("Petoseed"), PGI Alfalfa, Inc. ("PGI") and Baxter Seed Co., Inc. ("Baxter", together with the Parent, Petoseed and PGI, the "Guarantors") to exchange up to $190,000,000 aggregate principal amount of their 10 1/4% Senior Subordinated Notes due 2013 and related guarantees (the "New Notes"), which have been registered under the Securities Act of 1933, as amended (the "Securities Act"), for a like principal amount of their issued and outstanding 10 1/4% Senior Subordinated Notes due 2013 issued on September 29, 2003 and related guarantees (the "Outstanding Notes") (the "Exchange Offer") upon the terms and subject to the conditions set forth in the Company's and the Guarantors' prospectus dated _________, 2004 and the related Letter of Transmittal. We are enclosing copies of the following documents: 1. Prospectus dated ___________, 2004; 2. Letter of Transmittal; 3. Notice of Guaranteed Delivery; 4. Letter to Clients (of the Registered Holder); and 5. Instruction to Registered Holder from Beneficial Owner ("Instruction Letter"). We urge you to contact your clients promptly. Please note that the Exchange Offer will expire at 5:00 p.m., New York City time, on ______________, 2004, unless extended by the Company. The Exchange Offer is not conditioned upon any minimum number of Outstanding Notes being tendered. Pursuant to the letter of transmittal, each holder of Outstanding Notes (a "Holder") will represent to the Company that (i) the New Notes to be acquired pursuant to the Exchange Offer will be acquired in the ordinary course of business of the person acquiring the New Notes, whether or not such person is the Holder, (ii) neither the Holder nor any person receiving any New Notes directly or indirectly from the Holder pursuant to the Exchange Offer (if not a broker-dealer referred to in the last sentence of this paragraph) is engaging or intends to engage in the distribution of the New Notes and none of them have any arrangement or understanding with any person to participate in the distribution of the New Notes, (iii) the Holder and each person receiving any New Notes directly or indirectly from the Holder pursuant to the Exchange Offer acknowledge and agree that any person participating in the Exchange Offer for the purpose of distributing the New Notes (x) must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction of the New Notes acquired by such person and (y) cannot rely on the position of the staff of the Securities and Exchange Commission (the "Commission") set forth in Morgan Stanley and Co., Inc. no-action letter (available June 5, 1991) or the Exxon Capital Holdings Corporation no-action letter (available May 13, 1988) or similar letters, (iv) the Holder and each person receiving any New Notes directly or indirectly from the Holder pursuant to the Exchange Offer understand that a secondary resale transaction described in clause (iii) above should be covered by an effective registration statement containing the selling security holder information required by Item 507 or 508, as applicable, of Regulation S-K of the Commission and (v) neither the Holder nor any person receiving any New Notes directly or indirectly from the Holder pursuant to the Exchange Offer is an "affiliate" of the Company, as defined under Rule 405 under the Securities Act. If the Holder is a broker-dealer that will receive New Notes for its own account in exchange for Outstanding Notes that were acquired as a result of market making or other trading activities, it acknowledges that it will deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of such New Notes received in respect of such Outstanding Notes pursuant to the Exchange Offer; however, by so acknowledging and by delivering a prospectus, the Holder will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. The enclosed Instruction Letter contains an authorization by the beneficial owners of the Outstanding Notes for you to make the foregoing representations. The Company will not pay any fee or commission to any broker or dealer or to any other person (other than the Exchange Agent) in connection with the solicitation of tenders of Outstanding Notes pursuant to the Exchange Offer. The Company will pay or cause to be paid any transfer taxes payable on the transfer of Outstanding Notes to it, except as otherwise provided in Instruction 7 of the enclosed Letter of Transmittal. Additional copies of the enclosed material may be obtained from us. Very truly yours, SEMINIS VEGETABLE SEEDS, INC. EX-99.5 28 v94566aexv99w5.txt EXHIBIT 99.5 Exhibit 99.5 SEMINIS VEGETABLE SEEDS, INC. OFFER FOR ALL OUTSTANDING $190,000,000 10 1/4% SENIOR SUBORDINATED NOTES DUE 2013 ISSUED ON SEPTEMBER 29, 2003 FOR REGISTERED $190,000,000 10 1/4% SENIOR SUBORDINATED NOTES DUE 2013 To Our Clients: We are enclosing herewith (i) a Prospectus dated ___________, 2004 of Seminis Vegetable Seeds, Inc. (the "Company"), Seminis, Inc. (the "Parent"), Petoseed International, Inc. ("Petoseed"), PGI Alfalfa, Inc. ("PGI") and Baxter Seed Co., Inc. ("Baxter", together with the Parent, Petoseed and PGI, the "Guarantors"), (ii) a related Letter of Transmittal (which together with the Prospectus constitute the "Exchange Offer") relating to the offer by the Company and the Guarantors to exchange up to $190,000,000 aggregate principal amount of their 10 1/4%% Senior Subordinated Notes due 2013 and related guarantees (the "New Notes"), which have been registered under the Securities Act of 1933, as amended (the "Securities Act"), for $190,000,000 aggregate principal amount of their outstanding unregistered 10 1/4% Senior Subordinated Notes due 2013 issued on September 29, 2003 and the related guarantees (the "Outstanding Notes"), upon the terms and subject to the conditions set forth in the Exchange Offer and (iii) an Instruction to Registered Holder from Beneficial Owner (the "Instruction Letter"). THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON , 2004 (THE "EXPIRATION DATE") UNLESS THE EXCHANGE OFFER IS EXTENDED, IN WHICH CASE THE TERM "EXPIRATION DATE" SHALL MEAN THE LATEST TIME AND DATE TO WHICH THE EXCHANGE OFFER IS EXTENDED. TENDERS MAY BE WITHDRAWN AT ANY TIME PRIOR TO THE EXPIRATION DATE. We are the holder of record of Outstanding Notes for your account. A tender of such Outstanding Notes can be made only by us as the record holder pursuant to your instructions. The Letter of Transmittal is furnished to you for your information only and cannot be used by you to tender Outstanding Notes held by us for your account. We request instructions as to whether you wish to tender any or all of the Outstanding Notes held by us for your account pursuant to the terms and conditions of the Exchange Offer. We also request that you confirm that we may make on your behalf the representations and warranties contained in the Letter of Transmittal. In this regard, please complete the enclosed Instruction Letter and return it to us as soon as practicable. Pursuant to the Letter of Transmittal, each holder of Outstanding Notes (a "Holder") will represent to the Company and the Guarantors that (i) the New Notes to be acquired pursuant to the Exchange Offer will be acquired in the ordinary course of business of the person acquiring the New Notes, whether or not such person is the Holder, (ii) neither the Holder nor any person receiving any New Notes directly or indirectly from the Holder pursuant to the Exchange Offer (if not a broker-dealer referred to in the last sentence of this paragraph) is engaging or intends to engage in the distribution of the New Notes and none of them have any arrangement or understanding with any person to participate in the distribution of the New Notes, (iii) the Holder and each person receiving any New Notes directly or indirectly from the Holder pursuant to the Exchange Offer acknowledge and agree that any person participating in the Exchange Offer for the purpose of distributing the New Notes (x) must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction of the New Notes acquired by such person and (y) cannot rely on the position of the staff of the Securities and Exchange Commission (the "Commission") set forth in Morgan Stanley and Co., Inc. no-action letter (available June 5, 1991) or the Exxon Capital Holdings Corporation no-action letter (available May 13, 1988) or similar letters, (iv) the Holder and each person receiving any New Notes directly or indirectly from the Holder pursuant to the Exchange Offer understand that a secondary resale transaction described in clause (iii) above should be covered by an effective registration statement containing the selling security holder information required by Item 507 or 508, as applicable, of Regulation S-K of the Commission and (v) neither the Holder nor any person receiving any New Notes directly or indirectly from the Holder pursuant to the Exchange Offer is an "affiliate" of the Company or any Guarantor, as defined under Rule 405 under the Securities Act. If the Holder is a broker-dealer that will receive New Notes for its own account in exchange for Outstanding Notes that were acquired as a result of market making or other trading activities, it acknowledges that it will deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of such New Notes received in respect of such Outstanding Notes pursuant to the Exchange Offer; however, by so acknowledging and by delivering a prospectus, the Holder will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. EX-99.6 29 v94566aexv99w6.txt EXHIBIT 99.5 EXHIBIT 9.6 SEMINIS VEGETABLE SEEDS, INC. INSTRUCTION TO REGISTERED HOLDER FROM BENEFICIAL OWNER FOR OFFER FOR ALL OUTSTANDING $190,000,000 10 1/4% SENIOR SUBORDINATED NOTES DUE 2013 ISSUED ON SEPTEMBER 29, 2003 IN EXCHANGE FOR REGISTERED $1900,000,000 10 1/4% SENIOR SUBORDINATED NOTES DUE 2013 To Registered Holder: The undersigned hereby acknowledges receipt of the Prospectus dated _________, 2004 (the "Prospectus") of Seminis Vegetable Seeds, Inc. (the "Company"), Seminis, Inc. (the "Parent"), Petoseed International, Inc. ("Petoseed"), PGI Alfalfa, Inc. ("PGI") and Baxter Seed Co., Inc. ("Baxter", together with the Parent, Petoseed and PGI, the "Guarantors") and accompanying Letter of Transmittal (the "Letter of Transmittal") that together constitute the Company's and the Guarantors' offer (the "Exchange Offer") to exchange $1,000 principal amount of 10 1/4% Senior Subordinated Notes due 2013 and related guarantees (the "New Notes") of the Company and the Guarantors for each $1,000 principal amount of outstanding 10 1/4% Senior Subordinated Notes due 2013 and related guarantees (the "Outstanding Notes") of the Company and the Guarantors. Capitalized terms used but not defined have the meanings ascribed to them in the Prospectus. This will instruct you, the registered holder, as to the action to be taken by you relating to the Exchange Offer with respect to the Outstanding Notes held by you for the account of the undersigned. The aggregate face amount of the Outstanding Notes held by you for the account of the undersigned is (fill in amount): $_______. With respect to the Exchange Offer, the undersigned hereby instructs you (check one of the following boxes): [ ] To TENDER the following Outstanding Notes held by you for the account of the undersigned (insert principal amount of Outstanding Notes to be tendered (if any)): $_____________ of Outstanding Notes* or [ ] NOT to TENDER any Outstanding Notes held by you for the account of the undersigned. *New Notes and the untendered portion of Outstanding Notes must be in minimum denominations of integral multiples of $1,000. If the undersigned instructs you to tender Outstanding Notes held by you for the account of the undersigned, it is understood that you are authorized to make on behalf of the undersigned (and the undersigned, by its signature below, hereby makes to you), the representations and warranties contained in the Letter of Transmittal that are to be made with respect to the undersigned as a beneficial owner, including but not limited to the representations, that (i) the New Notes to be acquired pursuant to the Exchange Offer will be acquired in the ordinary course of business of the person acquiring the New Notes, whether or not such person is the undersigned, (ii) neither the undersigned nor any person receiving any New Notes directly or indirectly from the undersigned pursuant to the Exchange Offer (if not a broker-dealer referred to in the last sentence of this paragraph) is engaging or intends to engage in the distribution of the New Notes and none of them have any arrangement or understanding with any person to participate in the distribution of the New Notes, (iii) the undersigned and each person receiving any New Notes directly or indirectly from the undersigned pursuant to the Exchange Offer acknowledge and agree that any person participating in the Exchange Offer for the purpose of distributing the New Notes (x) must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction of the New Notes acquired by such person and (y) cannot rely on the position of the staff of the Securities and Exchange Commission (the "Commission") set forth in the Brown & Wood LLP no-action letter (available February 7, 1997), the Shearman & Sterling no-action letter (available July 2, 1993), the K-III Communications Corporation no-action letter (available May 14, 1993), the Morgan Stanley & Co. Incorporated no-action letter (available June 5, 1991) or the Exxon Capital Holdings Corporation no-action letter (available May 13, 1988) or similar letters, (iv) the undersigned and each person receiving any New Notes directly or indirectly from the undersigned pursuant to the Exchange Offer understand that a secondary resale transaction described in clause (iii) above should be covered by an effective registration statement containing the selling security holder information required by from 507 of Regulation S-K of the Commission and (v) neither the undersigned nor any person receiving any New Notes directly or indirectly from the undersigned pursuant to the Exchange Offer is an "affiliate" of the Company, as defined under Rule 405 under the Securities Act of 1933, as amended. If the undersigned is a broker-dealer that will receive New Notes for its own account in exchange fro Outstanding Notes that were acquire as a result of market making activities or other trading activities, it acknowledges that it will deliver a prospectus meeting the requirements of the Securities Act of 1933, as amended, in connection with any resale of such New Notes received in respect of such Outstanding Notes pursuant to the Exchange Offer; however, by so acknowledging and by delivering a prospectus, the undersigned will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act of 1933, as amended. SIGN HERE ________________________________________________________________________________ SIGNATURE(S) OF OWNER(S) Date:____________________________ MUST BE SIGNED BY THE REGISTERED HOLDER(S) OF OUTSTANDING NOTES EXACTLY AS NAME(S) APPEAR(S) ON CERTIFICATE(S) REPRESENTING THE OUTSTANDING NOTES OR ON A SECURITY POSITION LISTING OR BY PERSON(S) AUTHORIZED TO BECOME REGISTERED OUTSTANDING NOTE HOLDER(S) BY CERTIFICATES AND DOCUMENTS TRANSMITTED HEREWITH. IF SIGNATURE IS BY TRUSTEES, EXECUTORS, ADMINISTRATORS, GUARDIANS, ATTORNEY-IN-FACT, OFFICERS OF CORPORATIONS OR OTHERS ACTING IN A FIDUCIARY OR REPRESENTATIVE CAPACITY, PLEASE PROVIDE THE FOLLOWING INFORMATION. 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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(2)

Guarantees of the 10.25% Senior Subordinated Notes due 2013	$190,000,000	100%	$190,000,000	(3)


Prospectus Summary			1
Risk Factors			20
Forward-Looking Statements			31
Description of the Acquisition Transactions			32
Description of the Add-on Transactions			36
Use of Proceeds			37
Capitalization			39
Unaudited Pro Forma Condensed Consolidated Financial Statements			40
Selected Historical Consolidated Financial Data			45
Management’s Discussion and Analysis of Financial Condition and Results of Operations			51
Business			67
Management			83
Certain Relationships and Related Party Transactions			92
Security Ownership and Certain Beneficial Owners and Management			96
Description of Other Indebtedness			97
Description of the PIK Preferred Stock			100
Description of the Notes			102
The Exchange Offer			148
Book-Entry; Delivery and Form			157
Certain U.S. Federal Income Tax Considerations			160
ERISA Considerations			163
Plan of Distribution			164
Validity of the Notes			165
Experts			165
Where You Can Find More Information			165
Index to Consolidated Financial Statements			F-1
EXHIBIT 2.5
EXHIBIT 3.1
EXHIBIT 3.2
EXHIBIT 3.3
EXHIBIT 3.4
EXHIBIT 3.5
EXHIBIT 3.6
EXHIBIT 3.7
EXHIBIT 3.8
EXHIBIT 3.9
EXHIBIT 3.10
EXHIBIT 3.11
EXHIBIT 4.4
EXHIBIT 4.5
EXHIBIT 5.1
EXHIBIT 5.2
EXHIBIT 5.3
EXHIBIT 10.2
EXHIBIT 10.11
EXHIBIT 21.1
EXHIBIT 23.1
EXHIBIT 99.1
EXHIBIT 99.2
EXHIBIT 99.3
EXHIBIT 99.4
EXHIBIT 99.5
EXHIBIT 99.5



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 issued on September 29, 2003 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 an exchange offer is not consummated by May 26, 2004 with respect to the original notes, we will be required to use commercially reasonable efforts to file a shelf registration statement under the Securities Act of 1933 covering resales of those 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


		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, 51.4% of our consolidated total assets as of December 26, 2003 and 61.8% of our consolidated net sales for the twelve months ended December 26, 2003. Our non-guarantor subsidiaries represented, in the aggregate, 62.4% of our consolidated net sales for the three months ended December 26, 2003. For the three months ended December 26, 2003, our non-guarantor subsidiaries had consolidated



		Predecessor															Predecessor			Successor

														Pro
											Successor			Forma(11)			For the Three
																	Months Ended
		Fiscal Year Ended
		Sept. 30,						For the Twelve			For the			For the Fiscal
								Months Ended			Day Ended			Year Ended			Dec. 27,			Dec. 26,
		2001			2002			Sept. 29, 2003			Sept. 30, 2003			Sept. 30, 2003			2002			2003

Income Statement Data(1):
Net sales		$	449.9		$	452.6		$	472.7		$	4.7		$	477.4		$	80.6		$	101.9
Cost of goods sold(2)			232.1			171.9			179.7			1.9			180.0			30.2			52.5

Gross profit			217.8			280.7			293.0			2.8			296.6			50.4			49.4
Operating expenses:
	Research and development expenses		52.5			44.3			48.3			0.1			48.4			11.5			11.5
	In-process research and development(3)		—			—			—			10.6			—			—			—
	Selling, general and administrative expenses(4)		191.1			174.9			215.0			0.9			176.8			42.7			45.9
	Amortization of intangible assets(5)		28.0			17.0			16.3			—			5.3			3.9			1.9

Total operating expenses			271.6			236.2			279.6			11.6			230.5			58.1			59.3
Gain (loss) on sale of assets			0.6			6.0			1.9			—			1.9			(.4	)		2.5

Income (loss) from operations			(53.2	)		50.5			15.3			(8.8	)		68.0			(8.1	)		(7.4	)
Other income (expense):
Interest expense, net(6)			(39.1	)		(27.7	)		(32.8	)		1.2			(43.9	)		(6.5	)		(7.9	)
Interest expense from preferred shares subject to mandatory redemption(7)									—			—			(6.3	)		—			(1.8	)
Foreign currency gain (loss)			1.7			(2.2	)		1.4			—			1.4			(0.2	)		8.9
Minority interest			(1.4	)		(1.2	)		(0.7	)		—			(0.7	)		0.2			—
Other income (loss), net			(2.5	)		(0.8	)		(1.5	)		—			0.8			(0.1	)		0.2
Income tax benefit (expense)			(40.0	)		(2.5	)		(5.8	)		—			(5.8	)		2.9			(1.1	)

Net income (loss)(8)		$	(134.5	)	$	16.1		$	(24.1	)	$	(7.6	)	$	13.5		$	(11.8	)	$	(9.1	)


			Pro Forma(12)
	December 26,		December 26,
	2003		2003

Balance Sheet Data (at period end):
Cash and cash equivalents	$	27.8	$	71.0
Inventory		352.8		352.8
Total assets		704.9		752.3
Total debt		433.4		466.4
Preferred shares subject to mandatory redemption		41.1		41.1
Total stockholders’ equity(13)		78.8		75.0


		expenses related to the buy-out of options associated with the Acquisition Transactions. In the three months and twelve months ended December 26, 2003, we recorded $0.1 million and $26.9 million of legal and professional fees related to the Acquisition Transactions;


(11)	See “Unaudited Pro Forma Condensed Consolidated Financial Statements.”


	*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.*