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:


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.*