10-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended June 30, 2002

OR

[   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ____________ .

Commission file number 001-14335

DEL MONTE FOODS COMPANY

(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of
incorporation or organization) 13-3542950
(I.R.S. Employer
Identification Number)

One Market @ The Landmark, San Francisco, California 94105
(Address of Principal Executive Offices including Zip Code)

(415) 247-3000
(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Name of Each Exchange on Which Registered
Common Stock, par value $0.01	New York Stock Exchange
	Pacific Exchange

Securities registered pursuant to Section 12(g) of the Act: NONE

     Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes [X] No [   ]

     Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  [X]

     The aggregate market value of the voting stock held by non-affiliates of the Registrant as of August 30, 2002, based upon the closing price of the Common Stock as reported by the New York Stock Exchange on such date, was approximately $292,205,980.

     The number of shares outstanding of Common Stock, par value $0.01, as of close of business on August 30, 2002 was 52,307,131.

DOCUMENTS INCORPORATED BY REFERENCE

     The Registrant’s definitive proxy statement to be included as part of the Registrant’s Registration Statement on Form S-4, No. 333-98827, for the 2002 Annual Meeting of Stockholders is incorporated by reference in Part III of this Form 10-K to the extent stated herein.

TABLE OF CONTENTS

PART I
	Item 1. Business
	The Industry
	Item 2. Properties
	Item 3. Legal Proceedings
	Item 4. Submission of Matters to a Vote of Security Holders
		Executive Officers of Del Monte Foods Company
PART II
	Item 5. Market for Registrant’s Common Equity and Related Stockholder Matters
	Item 6. Selected Financial Data
	Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
	Item 7A. Quantitative and Qualitative Disclosures about Market Risks
	Item 8. Financial Statements and Supplementary Data
	Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures
PART III
	Item 10. Directors and Executive Officers of the Registrant
	Item 11. Executive Compensation
	Item 12. Security Ownership of Certain Beneficial Owners and Management
	Item 13. Certain Relationships and Related Transactions
PART IV
	Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
SIGNATURES
POWER OF ATTORNEY
CERTIFICATIONS
EXHIBIT INDEX
Exhibit 10.12
Exhibit 10.13
Exhibit 10.14
Exhibit 10.15
Exhibit 10.16
Exhibit 10.17
Exhibit 10.18
Exhibit 10.20
Exhibit 10.21
Exhibit 10.23
Exhibit 10.24
Exhibit 10.26
Exhibit 10.27
Exhibit 10.28
Exhibit 10.29
Exhibit 10.30
Exhibit 10.31
Exhibit 10.32
Exhibit 10.43
Exhibit 10.45
Exhibit 10.46
Exhibit 10.48
Exhibit 10.49
Exhibit 10.50
Exhibit 10.51
Exhibit 12
Exhibit 23
Exhibit 99

DEL MONTE FOODS COMPANY
For the Fiscal Year Ended June 30, 2002

TABLE OF CONTENTS

		Page
PART I
Item 1.	Business		1
Item 2.	Properties		15
Item 3.	Legal Proceedings		16
Item 4.	Submission of Matters to a Vote of Security Holders		16
	Executive Officers of Del Monte Foods Company		16
PART II
Item 5.	Market for Registrant’s Common Equity and Related Stockholder Matters		18
Item 6.	Selected Financial Data		18
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		22
Item 7A.	Quantitative and Qualitative Disclosures About Market Risks		39
Item 8.	Financial Statements and Supplementary Data		45
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosures		76
PART III
Item 10.	Directors and Executive Officers of the Registrant		77
Item 11.	Executive Compensation		77
Item 12.	Security Ownership of Certain Beneficial Owners and Management		77
Item 13.	Certain Relationships and Related Transactions		77
PART IV
Item 14.	Exhibits, Financial Statement Schedules and Reports on Form 8-K		78
Signatures			79
Power of Attorney			79
Certifications			81
Exhibit Index			82

     As used throughout this Annual Report, unless the context otherwise requires, “DMFC” means Del Monte Foods Company, and “Del Monte” or “the Company” means DMFC and its consolidated subsidiaries. “DMC” means Del Monte Corporation, a wholly-owned subsidiary of Del Monte. Del Monte’s fiscal year ends on June 30, and its fiscal quarters typically end on the last Sunday of September, December and March. As used throughout this Form 10-K, “fiscal 2002” means Del Monte’s fiscal year ended June 30, 2002; “fiscal 2001” means Del Monte’s fiscal year ended June 30, 2001 and “fiscal 2000” means Del Monte’s fiscal year ended June 30, 2000.

     Unless otherwise indicated, all statements presented in this Form 10-K regarding Del Monte brands are based on data obtained from ACNielsen. References to U.S. market share are based on equivalent case volume sold through retail grocery stores (excluding Wal-Mart Supercenters, other supercenters and club stores) with at least $2.0 million in sales. References to processed vegetables, fruit and tomato products do not include frozen products. Market share data for processed vegetables and solid tomato products include only those categories in which Del Monte competes. The data for processed fruit includes major fruit and single-serve categories in which Del Monte competes and excludes specialty and pineapple categories. References to fiscal 2002 market share refer to the 52-week period ended June 29, 2002. Fiscal 2002 market share data excludes Wal-Mart Stores, Inc. and includes share data for Del Monte’s S&W brand. Market share references within “Management’s Discussion and Analysis of Financial Condition and Results of Operations” comparing full fiscal year periods prior to fiscal 2002, exclude market share data for Wal-Mart Stores, Inc. and include market share data for S&W for the period following the March 2001 acquisition of the S&W brand by Del Monte.

     ACNielsen is an independent market research firm and makes its data available to the public at prescribed rates. We have not independently verified information obtained from ACNielsen.

     Results for fiscal years 2001, 2000, 1999 and 1998 have been reclassified to conform with Del Monte’s adoption of Emerging Issue Task Force (“EITF”) Issue No. 00-14, “Accounting for Certain Sales Incentives” (“EITF 00-14”) and EITF Issue No. 00-25, “Vendor Income Statement Characterization of Consideration to a Purchaser of the Vendor’s Products or Services” (“EITF 00-25”). These pronouncements were subsequently codified by EITF Issue No. 01-9, “Accounting for Consideration Given by a Vendor to Customer (Including a Reseller of the Vendor’s Products)” (“EITF 01-9”). Del Monte adopted EITF 00-14 and EITF 00-25 on July 1, 2001. For more information about the EITF reclassification, see Note 1 to Del Monte’s Consolidated Financial Statements for the year ended June 30, 2002.

     Unless otherwise indicated, the information presented in this Form 10-K does not reflect the proposed merger of DMC with SKF Foods Inc., a wholly-owned subsidiary of the H.J. Heinz Company, described below in “Recent Developments”.

PART I

Item 1. Business

Overview

     Del Monte manufactures and distributes premium quality, nutritious food products and is one of the largest producers and distributors of processed vegetables, fruit and tomato products in the United States. Our products are sold under the Del Monte, Contadina, S&W and other brand names. The Del Monte brand was introduced in 1892, and we believe it is one of the best known brands for processed food products in the United States. We estimate that our branded products are purchased by approximately 80% of U.S. households. Through strategic acquisitions, we have expanded our product offerings, strengthened our penetration of grocery chains, club stores, supercenters and mass merchandisers, improved market share, increased international sales opportunities and leveraged our low-cost manufacturing capabilities.

     During fiscal 2002, we generated approximately $1.3 billion in net sales and we were the brand leader in our three core categories:

• Processed vegetables — 22.8% U.S. market share, larger than the market shares of our four largest branded competitors combined;

• Processed fruit — 43.2% U.S. market share, larger than the market shares of all other branded competitors combined; and

• Solid tomato products — 21.3% U.S. market share, the largest branded marketer in the solid tomato category.

     As the brand leader in our core categories, we have a full-line, multi-category presence that we believe provides us with a substantial competitive advantage in selling to the retail grocery industry. We sell our products primarily through grocery chains, club

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stores, supercenters and mass merchandisers. Sales through these channels accounted for approximately 78.6% of our fiscal 2002 sales. We believe that club stores, supercenters and mass merchandisers, such as Wal-Mart, Sam’s and Costco, are the fastest growing channels of retail distribution. Our long-term relationships with our customers allow them to rely on our continuity of supply and value-added services, such as our category and inventory management programs, which in turn enable these customers to more effectively manage their inventory and business.

     DMC was incorporated under the laws of the State of New York in 1978. DMFC, then known as DMPF Holdings Corp., was incorporated under the laws of the State of Maryland in 1989, renamed DMFC in December 1991, and was reincorporated under the laws of the State of Delaware in 1998. Each of DMC and DMFC maintains its principal executive office at One Market @ The Landmark, San Francisco, California 94105. Del Monte’s telephone number is (415) 247-3000 and its website is www.delmonte.com.

Recent Developments

     On June 12, 2002, Del Monte and the H. J. Heinz Company (“Heinz”) entered into an Agreement and Plan of Merger (which is referred to as the “Merger Agreement”) under which Del Monte will acquire Heinz’s:

• pet food and pet snacks business in the United States and Canada and certain of Heinz’s worldwide specialty pet food businesses;

• U.S. ambient tuna and other ambient seafood products businesses;

• U.S. retail private label soup and retail private label gravy businesses;

• U.S. “College Inn” broth business; and

• U.S. infant feeding business, including certain pureed foods.

     We refer to these businesses collectively as the “Heinz Businesses”.

     Heinz will contribute the Heinz Businesses to SKF Foods Inc., a newly created, wholly-owned subsidiary of Heinz, which is referred to as “SKF Foods”, in exchange for all of the issued and outstanding shares of SKF Foods common stock, $800.0 million in cash (subject to certain adjustments) and debt securities of SKF Foods in the principal amount of $300.0 million. In addition, SKF Foods will assume all of the liabilities relating to the Heinz Businesses, subject to certain exceptions. Heinz will then spin-off SKF Foods to its shareholders. Immediately after the spin-off, DMC will merge with and into SKF Foods, which will become a wholly-owned subsidiary of DMFC. After the merger, SKF Foods will change its name to “Del Monte Corporation”.

     Immediately after the merger, Heinz shareholders and current Del Monte stockholders will own 74.5% and 25.5%, respectively, of the Del Monte common stock on a fully diluted basis determined in accordance with the exchange ratio set forth in the Merger Agreement. Heinz shareholders will receive a fraction of a share of Del Monte common stock equal to the exchange ratio for each share of SKF Foods common stock issued to them in the spin-off. The transaction is expected to be tax-free to the stockholders of both companies.

     The merger will be accounted for under the purchase method of accounting and SKF Foods will be considered the acquirer of Del Monte Corporation for accounting purposes. Accordingly, the historical combined financial statements of the Heinz Businesses will become the historical financial statements of Del Monte after the merger. After the merger is completed, Del Monte’s fiscal year will end on the Sunday closest to April 30.

     Subject to various terms and conditions, we currently anticipate that financing in an aggregate amount of up to $1.7 billion for the spin-off and the merger will be in the form of:

• a new bank facility consisting of a tranche A term loan in the amount of $250.0 million, a tranche B term loan in the amount of $800.0 million and a $350.0 million revolving credit facility; and

• debt securities with an aggregate principal amount currently expected to be $300.0 million.

     See “Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources” for a further description of the proposed financing for the spin-off and merger.

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     Richard G. Wolford, Del Monte’s current Chairman, President and Chief Executive Officer, will continue in these capacities after the completion of the merger. At the effective time of the merger, the board of directors of Del Monte will have nine members, including three directors designated by Del Monte and approved by Heinz (one of which shall be the current Chief Executive Officer of Del Monte) and six directors designated by Heinz and approved by Del Monte. Del Monte has indicated that it intends to nominate William Price, who is currently serving as a director of Del Monte, as one of its three designees to Del Monte’s board following the merger and Heinz has indicated that it intends to nominate David Williams, who is currently serving as a director of Heinz, as one of its six designees to Del Monte’s board following the merger. None of Heinz’s director designees will be directors or officers of Heinz at the time they become directors of Del Monte.

     The completion of the merger requires approval by the Del Monte stockholders of the issuance of Del Monte shares in the merger. TPG Partners, L.P. and TPG Parallel I, L.P. (which is referred to collectively as “Texas Pacific Group”), together currently own approximately 46.5% of the outstanding Del Monte common stock and have agreed with Heinz to vote to approve the issuance of shares in connection with the merger. Completion of the merger is also subject to a number of other conditions, including the receipt by Heinz of a ruling from the Internal Revenue Service that the spin-off qualifies as a tax-free transaction under the Internal Revenue Code of 1986 (which is referred to as the “Code”) and the receipt of tax opinions stating that the merger will constitute a tax-free reorganization under the Code. Subject to the approval of the Del Monte stockholders and the satisfaction or waiver (where permissible) of the other conditions to the merger, we currently anticipate that the merger will be completed during the fourth calendar quarter of 2002 or the first calendar quarter of 2003.

     On August 28, 2002, Del Monte filed a registration statement on Form S-4 containing a proxy statement-prospectus and relevant documents concerning the merger with the Securities and Exchange Commission (“SEC”). Del Monte will mail this proxy statement/prospectus to its stockholders prior to its 2002 annual meeting of stockholders. We urge you to read these documents because they contain important information about the proposed merger. You can also obtain the proxy statement-prospectus and the other documents filed with the SEC free of charge at the SEC website, www.sec.gov. In addition, you may obtain the proxy statement-prospectus and the other documents filed by the Company with the SEC by requesting them in writing from Del Monte Foods Company, P.O. Box 193575, San Francisco, CA 94119-3575, Attention: Investor Relations, or by telephone at (415) 247-3382.

     In addition, Del Monte adopted a stockholders rights plan on June 12, 2002. The rights were distributed to stockholders as a dividend at the rate of one right for each share of common stock of Del Monte held by stockholders of record as of the close of business on June 12, 2002. The rights generally will be exercisable only if a person or group acquires beneficial ownership of 15% or more of Del Monte’s common stock. The transactions contemplated by the Merger Agreement have been excluded from triggering the rights plan.

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The Industry

     The United States processed food industry is generally characterized by relatively stable growth based on modest price and population increases. We believe that fundamentals for the overall packaged food industry are favorable since these products are generally considered to be staple items purchased by consumers. While consumption growth is predicted to be modest in the United States, we believe that certain product segments that address changing consumer needs, such as the healthy snacking and packaged produce market segments, offer opportunities for faster growth.

     Food producers have been impacted by two key trends affecting their retail customers: consolidation and increased competitive pressures. Retailers are rationalizing costs in an effort to improve profitability. In addition, more traditional grocers have experienced increasing competition from rapidly growing club stores, supercenters and mass merchandisers, which offer every-day low prices. This competitive pressure has further focused retailers on increasing supply-chain efficiencies and decreasing working capital requirements. In addition, club stores, supercenters and mass merchandisers generally offer a private label store brand in addition to offering the number one and number two national or regional brands in different product categories. Sustaining strong relationships with retailers has become a critical success factor for food companies and is driving initiatives such as category and inventory management. Food companies that offer such value-added services have been able to increase shelf space, maximize distribution efficiencies, further strengthen their relationships with retailers and maintain their leadership positions.

     Although consumer consumption for certain processed food categories has historically been relatively stable, over the last few years retailers generally sold more products from their inventory and decreased purchases from food producers in an effort to reduce their inventory levels. As a result, many food producers experienced reduced shipment volumes as trade customers reduced their inventory levels, which adversely affected sales, operating margins, cash flow and working capital requirements of the food producers.

     Branded food manufacturers typically establish pricing and lead innovation in the processed food categories in which we compete. However, based on statistical information compiled by ACNielsen, private label products collectively have the largest market shares in the vegetable and solid tomato categories. The aggregate market share of the private label segment has remained relatively stable over the past several years in each of our principal product categories. We believe that the private label segment has historically been fragmented among regional vegetable and tomato producers seeking to compete principally based on price. Private label products as a group represented 45.1%, 40.2% and 31.5% of processed vegetable; major fruit, which includes cling peaches, pears and fruit cocktail/mixed fruit; and solid tomato product sales, respectively, in fiscal 2002.

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Company Products

     We have a full-line, multi-category presence with products in four processed food categories:

• Vegetables — core and specialty vegetables;

• Fruit — major, specialty, single-serve, fruit-in-glass and pineapple;

• Tomato products — solid tomato products and paste-based products; and

• Specialty products — beans and pickles.

     The following table sets forth our total net sales, expressed in dollar amounts and as percentages of our total net sales, for the periods indicated:

		Year Ended June 30,
		2002			2001			2000
		(In millions)
Net Sales:(a)
Processed vegetables(b)		$	434.0		$	418.6		$	402.8
Processed fruit(b)			546.6			548.8			498.1
Tomato and Specialty products(b)			326.0			309.2			302.4
	Subtotal domestic		1,306.6			1,276.6			1,203.3
South America			16.1			15.2			12.0
Intercompany sales			(0.3	)		(0.4	)		(0.5	)
Total net sales		$	1,322.4		$	1,291.4		$	1,214.8
As a Percentage of Net Sales:
Processed vegetables(b)			32.8	%		32.4	%		33.1	%
Processed fruit(b)			41.3			42.5			41.0
Tomato and Specialty products(b)			24.7			23.9			24.9
	Subtotal domestic		98.8			98.8			99.0
South America			1.2			1.2			1.0
Intercompany sales			(0.0	)		(0.0	)		(0.0	)
Total			100.0	%		100.0	%		100.0	%

(a)

On July 1, 2001, we adopted EITF 00-14 and EITF 00-25 (codified by EITF 01-9), which required certain costs related to coupon redemption and performance allowances previously recorded as selling, administrative and general expense in our historical consolidated financial statements to be reclassified and presented as a reduction to sales. Financial statements for prior periods presented for comparative purposes are also required to be reclassified to comply with the statement of income display of EITF 01-9. As a result, total costs of $220.6 million and $247.3 million, for the years ended June 30, 2001 and 2000, respectively, recorded as selling, general and administrative in the consolidated statements of income were reclassified and presented as a reduction to sales included in this table.

(b)

Includes sales of the entire product line across each channel of distribution, including sales to grocery chains, club stores, supercenters, mass merchandisers and other grocery retailers, as well as our foodservice, food ingredients, export and private label businesses and military and government sales.

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     We compete on the basis of providing quality products to consumers as well as value-added services, such as category and inventory management services, to grocery retailers.

     Vegetables

     We are the number one branded producer of processed vegetables in the United States. Our 22.8% U.S. market share in fiscal 2002 was larger than the market shares of our four largest branded competitors combined.

     We view the processed retail vegetable market as consisting of two distinct categories:

• Core vegetables; and

• Specialty.

     We believe that the domestic processed vegetable industry is a mature category characterized by high household penetration. We sell our core and specialty vegetable products under the Del Monte and S&W brands, as well as private label to key customers.

     The core vegetable category includes cut green beans, French-style green beans, whole kernel and cream-style corn, peas, mixed vegetables, spinach, carrots and potatoes. We offer a no-salt product line across most of our core varieties. Del Monte’s core vegetable products are distributed in substantially all retail grocery outlets, while S&W products are sold primarily in the western United States. In fiscal 2002, we held U.S. market shares of 25.2% in green beans, 22.6% in corn and 19.7% in peas.

     The specialty category includes asparagus, lima beans, wax beans, zucchini and seasoned corn products. We are one of the branded market share leaders in the specialty category. Many of our specialty vegetable products are enhanced with flavors and seasonings, such as our zucchini in tomato sauce and Fiesta corn, which is made with red and green peppers. By creating value-added products, we are able to price our specialty vegetables at a premium compared to our other vegetable products, which enables us to realize higher margins.

     Our vegetable products are sold in 14 to 15 ounce sizes, as well as in smaller can sizes known as buffet products, and larger sizes, known as family size. The buffet sizes have pull-top lids that can be opened without a can opener. We also produce six, eight and twelve can multi-packs, primarily sold to our club store, supercenters and mass merchandiser customers.

     Competitors in processed vegetables include branded and private label vegetable processors. Private label products taken as a whole command the largest share of the processed vegetable market, but their market share has remained relatively stable over the past decade. Our primary branded competitors in the market include Green Giant nationally, and regional brands such as Freshlike, Stokely and Libby’s. We believe that one of our competitive advantages in the processed vegetable category derives from our proprietary seed varieties. For example, we believe that our “Del Monte Blue Lake Green Bean” variety delivers higher yields and recovery than green bean varieties used by our competitors. In fiscal 2002, our vegetable products enjoyed an average premium of $0.22 (44.0%) per item over private label products.

     We purchase raw product from approximately 700 vegetable growers located primarily in Wisconsin, Illinois, Minnesota, Washington and Texas.

     Fruit

     We are the largest branded marketer of fruit processed in the United States. We currently compete in five distinct industry categories:

• Major fruit;

• Single-serve fruit products;

• Specialty fruit;

• Fruit-in-glass; and

• Pineapple.

     We are the branded market share leader in the processed fruit category with 43.2% market share in fiscal 2002. With single-serve plastic cups and multi-serve glass packaging, we have expanded our fruit products beyond our traditional canned product lines. We

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believe the domestic processed fruit industry is a mature category characterized by high household penetration. We sell our fruit products under the Del Monte, S&W and SunFresh brands.

     Major fruit includes cling peaches, pears and fruit cocktail/mixed fruit. We are the branded market share leader in the major fruit category with 41.3% market share in fiscal 2002. Our major fruit products are offered in can sizes ranging from 15 to 30 ounces.

     Single-serve fruit has been a substantial sales growth area for us. In single-serve diced fruit products, such as peaches, pears and mixed fruit, we have a 51.3% U.S. market share. We sell our single-serve products under the Fruit Cup, Fruit To-Go and Fruit Naturals brands.

     We are the leading brand in specialty fruit products, which include apricots, freestone and spiced peaches, mandarin oranges, cherries, grapefruit and other citrus fruit, and tropical mixed fruit. Specialty fruits are higher margin, lower volume “niche” items, which benefit from Del Monte and S&W brand recognition. Through our SunFresh brand, we have extended our specialty fruit product line into processed grapefruit and other citrus and tropical fruits.

     We are the leading marketer of fruit-in-glass products under our Orchard Select and SunFresh brands. Orchard Select is a premium fruit product packaged in glass primarily sold in the produce section of the grocery store. Orchard Select products include peaches, pears, mixed fruit and apricots. The SunFresh brand is targeted towards the breakfast food market. SunFresh products include grapefruit and other citrus, mango, papaya and mixed tropical fruit.

     We are the second leading brand of processed pineapple in the United States with a 11.9% market share in fiscal 2002. Our retail pineapple line consists of sliced, chunk, tidbits, crushed and juice products in a variety of container sizes. We also sell a significant amount of our pineapple products through the foodservice and food ingredients channels.

     The fruit industry’s highest sales volume is in the 15 to 16 ounce can size, in which we commanded an average $0.19 (19.8%) per item premium over private label products in fiscal 2002. We face competition from private label and branded competitors including Signature Fruit Company, Pacific Coast Producers (a grower cooperative), and Dole.

     We purchase raw product from approximately 500 fruit growers located in California, Oregon and Washington. We source the majority of our pineapple requirements from our former subsidiary, Del Monte Philippines, under a long-term supply agreement. The agreement provides pricing based on fixed margins.

     Tomato Products

     We are the largest branded marketer in the solid tomato category with a U.S. market share of 21.3% in fiscal 2002. We sell our tomato products under the Del Monte, Contadina and S&W brand names.

     The processed tomato category can be separated into two distinct product categories, which differ widely in terms of profitability, price sensitivity and growth potential:

• Solid tomatoes; and

• Paste-based tomato products.

     Processed solid tomato products include stewed, crushed, diced, chunky, wedges and puree products. It is the fastest growing category of our tomato business and generally has higher margins than paste-based tomato products. During fiscal 2002, our solid tomato products enjoyed an average premium of $0.34 (52.2%) per item over private label products.

     We believe that the diced tomato subcategory (which also includes chunky tomatoes and tomato wedges) has been growing at a substantially greater rate than the solid tomato category as a whole, as consumer preferences have trended toward more convenient cut and seasoned tomato products for meal preparation. The solid tomato category now includes value-added items, such as flavored and petite diced tomato products. We believe that there is opportunity to increase sales of solid tomato products through line extensions that capitalize on our manufacturing and marketing expertise.

     The paste-based tomato category includes ketchup, tomato sauce, tomato paste and spaghetti and pizza sauces. We market certain products under the Del Monte brand name using a “niche” marketing strategy targeted toward value-conscious consumers seeking a branded, high quality product. We also market certain products under the Contadina brand name, which is an established national brand

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for Italian-style tomato products. The Contadina brand also targets the food service tomato market, including small restaurants that use Contadina brand products such as finished spaghetti and pasta sauces.

     Del Monte faces competition in the tomato product category from brand name competitors including ConAgra’s Hunt’s and Rotel in the solid tomato and paste categories; Heinz and ConAgra’s Hunt’s in the ketchup subcategory; Campbell Soup’s Prego, Unilever’s Ragu, and Hunt’s in the spaghetti sauce subcategory. In addition, Del Monte faces competition from private label products in all major categories.

     We purchase raw product from approximately 20 tomato growers located in California, where approximately 90% of domestic tomatoes for processing are grown.

     Specialty Products

     Through the S&W brand, we market a line of specialty products including flavored and unflavored variety beans (which include kidney, black, garbanzo and chili beans) and baked beans (a significant part of the larger beans with meat category). The S&W bean business is primarily a western U.S. business, with estimated shares in these markets of 23.0% in variety beans and 1.6% in beans with meat in fiscal 2002. In addition, we sell Del Monte branded pickles in the western United States.

Sales, Marketing and Value-Added Services

     Sales and Marketing

     We sell our retail grocery products at the market level through independent retail brokers managed by our sales managers, and through an in-house, or direct, sales force for most club stores, supercenters and mass merchandisers. Retail brokers are independent, commissioned sales organizations which represent multiple manufacturers. During fiscal 2002, sales to these grocery customers accounted for 55.3% of our total net sales. In June 2001, we appointed Advantage Sales and Marketing (“Advantage”) to act as a single national retail grocery broker representing our products. We pay commissions to Advantage based on a percentage of sales. Advantage represents us to a broad range of grocery retailers and selected club stores. Advantage represented us on approximately 56.0% of our total net sales in fiscal 2002.

     Our club store, supercenter and mass merchandiser sales force calls on these customers, which include Wal-Mart, Sam’s, BJ’s and Target, directly (non-brokered) and is responsible for the development and implementation of sales programs for non-grocery channels of distribution. During fiscal 2002, this channel accounted for 23.3% of our total net sales. We sell to other channels, which include foodservice, food ingredients, private label and military through both our direct sales force and brokers. During fiscal 2002, these sales accounted for 21.4% of our total net sales.

     We believe that a focused and consistent marketing strategy is critical to the growth of our business. Our marketing function includes new product development, pricing strategy, consumer promotion, advertising, publicity and package design. We use consumer advertising, together with trade spending, to support awareness of new items and initial trial by consumers and to build recognition of the Del Monte, Contadina, S&W and SunFresh brand names.

     Value-Added Services

     Our category management software is designed to assist customers in managing an entire product category, including other branded and private label products in the same category. Customers using our category management services are able to more rapidly identify sales levels for various product categories so as to achieve an optimal product mix. We believe that utilization of these category management tools has contributed to increased shelf presence for our products, relative to those of our competitors.

     We also offer vendor managed inventory services which enable our customers to optimize their inventory requirements while maintaining their ability to service consumers. We manage the inventory of our products for customers who account for approximately 40% of our retail sales, or approximately 34% of our total sales. The services we provide include proprietary inventory management software that analyzes market trends to determine optimal inventory levels, and the human resources necessary to implement the software to maintain optimal inventory and service levels. We believe providing these value-added services will continue to enhance our relationships with our retail customers and will continue to help drive our long-term sales growth and competitiveness.

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Foreign Sales and Operations

     Export Markets

     The following table sets forth U.S. net sales to export markets by geographic region:

	Year Ended June 30,
	2002		2001		2000
	(In millions)
Asia	$	26.0	$	19.6	$	17.6
South America		23.6		27.6		23.0
Mexico, Central America, the Caribbean and other countries		9.6		8.7		10.2
Total net sales to export markets	$	59.2	$	55.9	$	50.8

     We sell our products in Asia to U.S. exporters for distribution in Asia, to Asian based distributors, licensees and Del Monte Philippines. Net sales to South America relate to sales to U.S. exporters for distribution in South America. Net sales to Mexico, Central America, the Caribbean and other countries are made to licensees and U.S. exporters.

     Foreign Operations

     In South America, we operate a food processing plant and have subsidiaries in Venezuela, Columbia, Ecuador and Peru. We purchase raw product, primarily vegetables, from approximately 12 growers in Venezuela. Any remaining raw product requirements are obtained through the open market. Our products in Venezuela are sold through seven local distributors. In Columbia, Ecuador and Peru, our products are sold through one national distributor in each country.

Customers

     Our products are carried by most food retailers in the U.S., and we have developed strong, long-term relationships with all major participants in the retail grocery trade. Our 15 largest customers during fiscal 2002 represented approximately 61% of our sales, with sales to one customer, Wal-Mart Stores, Inc., representing approximately 18% of sales. These top 15 customers have all been customers for at least ten years and, in some cases, for 20 years or more. In recent years, there has been significant consolidation in the grocery industry through acquisitions. We have sought to establish and strengthen our alliances with key customers by offering them sophisticated proprietary software applications to assist in managing their inventories. These customers increasingly rely on sophisticated manufacturers, such as Del Monte, as they become more diverse through consolidations.

Supply

     We own virtually no agricultural land. Each year, we buy over one million tons of fresh vegetables, fruit and tomatoes under approximately 2,500 contracts with individual growers and cooperatives located primarily in the United States. No supplier accounts for more than 5% of our total raw product requirements, and we do not consider our relationship with any particular raw product supplier to be material to our operations. Like other vegetable, fruit and tomato product processors, we are subject to market-wide raw product price fluctuations resulting from seasonal or other factors, however, historically these fluctuations have been negligible. We have maintained long-term relationships with growers to help ensure a consistent supply of raw product.

     We purchase raw product from approximately 700 vegetable growers located primarily in Wisconsin, Illinois, Minnesota, Washington and Texas. We provide the growers with planting schedules, seed, insecticide management, harvesting and hauling capabilities and actively participate in agricultural management and quality control with respect to all sources of supply. Our vegetable supply contracts are generally for a one-year term and require delivery from contracted acreage with specified quality. Prices are negotiated annually. In addition, our green beans are grown primarily on irrigated fields, which facilitates production of high quality, uniformly-sized beans.

     Our fruit and tomato growers are located primarily in California. Pear and cherry growers are also located in Oregon and Washington. Our fruit supply contracts range from one to ten years. Prices are generally negotiated with grower associations and are reset each year.

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Contracts to purchase yellow cling peaches generally require us to purchase all of the fruit produced by a particular orchard or block of trees. Contracts for other fruits require delivery of specified quantities each year. We actively participate in agricultural management, agricultural practices, quality control and ensure compliance with all pesticide/herbicide regulations.

     In conjunction with the acquisition of the rights to the SunFresh brand citrus and tropical fruits line of the UniMark Group, Inc. (“UniMark”) in fiscal 2001, we executed a five-year supply agreement under which a UniMark affiliate produces certain chilled, jarred and canned fruit products at its facility in Mexico. We purchase products under this supply agreement at market prices.

     In connection with the March 29, 1996 sale of DMC’s 50.1% interest in Del Monte Philippines, a joint venture operating primarily in the Philippines, we signed an eight-year supply agreement under which we source the majority of our pineapple requirements from Del Monte Philippines.

Production and Distribution

     Production

     We have a seasonal production cycle and produce the majority of our products between the months of June and October. Most of our seasonal plants operate at close to full capacity during the packing season. As of June 30, 2002, we operated twelve production facilities in the United States. See “Item 2 — Properties” for a listing of production facilities.

     Three of our production facilities and one distribution facility are located in California. As a result of California’s energy shortages, we proactively focused on securing sufficient electric and natural gas supplies for our production needs and implemented energy reduction projects to reduce our energy usage and costs. Although California’s power supplies remain unpredictable, all of our California production facilities have had the necessary energy to operate during the 2002 pack season. We also developed operating procedures to mitigate the risk of unexpected service interruptions during some of our pack operations. The Hanford plant is connected to a high-voltage transmission line that is an integral component of the service grid. We adopted a plan to voluntarily reduce power usage at Hanford by 5% to 20% to lessen the possibility of a total service interruption during peak operating periods. The Modesto plant is serviced by the Modesto Irrigation District (“MID”), which generates electricity locally and has long-term supply contracts for its remaining requirements. We have an electric supply contract effective through December 31, 2002. Upon the expiration of the contract, we expect to either enter into a new contract with the MID, or to default to the MID tariff rates.

     In the third quarter of fiscal 1998, we committed to a plan to consolidate processing operations in order to enhance the efficiency of our processing operations and to better meet competitive challenges. Implementation of the plan occurred in a specific sequence over a three-year period. In fiscal 1999, the tomato processing formerly performed at the Modesto facility was moved to the Hanford facility. During fiscal 1999, the Modesto tomato facility underwent reconfiguration to accommodate fruit processing which previously took place at the San Jose and Stockton facilities. We closed the Arlington vegetable processing facility in August 1998, the San Jose facility in December 1999 and the Stockton facility in September 2000. In January 2001, the Woodland bulk tomato paste processing plant was closed and the Hanford facility became the sole internal source of bulk tomato paste, a component of several of our tomato products.

     Co-packers are used for pineapple, tropical fruit salad, citrus fruits, mandarin oranges, pickles and certain other products, including several products sold under the S&W brand. From time to time, we also use co-packers to supplement supplies of certain processed vegetables, fruit, tomato and specialty products.

     Prior to December 1993, we produced almost all of the cans we used to package our products in the United States at our nine can manufacturing facilities located throughout the United States. In December 1993, we sold substantially all the assets (and certain related liabilities) of our can manufacturing business to the Silgan Container Corporation (“Silgan”). The transaction included the sale or lease of our nine can manufacturing facilities. In connection with this agreement, Silgan and Del Monte entered into a ten-year supply agreement, with optional successive five-year extensions by either party. The base term of the supply agreement has since been extended to December 21, 2006. Under the agreement and subject to certain exceptions, we must purchase all of our requirements for metal food and beverage containers in the United States from Silgan. However, we are entitled to consider competitive bids for up to 50% of our requirements. Silgan has the right to match any competitive offer. In addition, if Silgan is unable to supply all of such requirements for any reason, we are entitled to purchase the excess from another supplier. Price levels were originally set based on our costs of self-manufactured containers. Price changes under the contract reflect changes in Silgan’s costs or as otherwise negotiated. The agreement may be terminated by either party, without penalty, on notice given 12 months prior to the end of the term of the agreement. Our current total annual can usage is approximately two billion cans.

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     Distribution

     We distribute finished goods to approximately 1,900 customer destinations. See “Item 2 — Properties” for a listing of distribution centers. Customers can order products to be delivered via third party trucking, rail or on a customer pickup basis. Our distribution centers provide, among other services, casing, labeling, special packaging and cold storage. Other services we provide to customers include One Purchase Order/One Shipment, in which our most popular products are listed on a consolidated invoicing service; and the UCS Electronic Data Interchange, a paperless system of purchase orders and invoices.

Competition

     We face substantial competition throughout our product lines from numerous well-established businesses operating nationally or regionally with single or multiple branded product lines, as well as with private label manufacturers. In general, we compete on the basis of quality, breadth of product line, brand awareness and price. See “Business — The Industry” and “Business — Company Products.”

Information Services

     On November 1, 1992, we entered into a ten-year agreement with Electronic Data Systems Corporation (“EDS”) to provide services and administration in support of our information services functions for all domestic operations. The agreement expires at the end of October 2002.

     On June 30, 2002, we entered into a ten-year agreement with EDS to provide similar services beginning November 2002. Monthly payments will be based on scheduled costs for services, a portion of which will be subject to an inflation adjustment. See Note 12 to the consolidated financial statements. Total payments to EDS were $19.6 million, $17.8 million, and $17.0 million for fiscal years 2002, 2001 and 2000, respectively.

     In June 2000, we began implementing a capability improvement program to upgrade business processes and information systems. The program is being implemented in phases and is scheduled to be substantially completed by the end of fiscal year 2004. We have contracted with Accenture to manage the implementation of this program.

Research and Development

     Del Monte’s research and development organization provides product, packaging and process development, and analytical and microbiological services, as well as agricultural research and seed production. In fiscal 2002, 2001 and 2000, research and development expenditures were $7.5 million, $7.0 million and $6.6 million, respectively. These expenditures were net of revenue for services to third parties in fiscal 2002, 2001 and 2000 of $0.5 million, $0.5 million and $0.6 million, respectively. We maintain a research and development facility in Walnut Creek, California, where we develop product line extensions and conduct research in a number of areas related to our business including seed production, packaging, pest management, food science and plant breeding.

Employees

     As of June 30, 2002, we had approximately 2,800 full-time employees. In addition, approximately 9,800 individuals are hired on a temporary basis during the pack season. We consider our relations with our employees to be good.

     We have eight collective bargaining agreements with nine union locals covering approximately 7,800 of our hourly full time and seasonal employees. Two collective bargaining agreements expire in calendar 2003, and two expire in calendar 2004. For more than 20 years, Del Monte has not experienced any work stoppages or strikes.

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Intellectual Property

     We own a number of registered and unregistered trademarks for use in connection with various food products, including the following:

• Del Monte	• Fruit Cup
• Contadina	• Orchard Select
• S&W	• Tropical Select
• SunFresh	• Fruit Naturals

     These trademarks are important to us because brand name recognition and the product quality associated with our brands are key factors in the success of our products. The current registrations of these trademarks in the United States and foreign countries are effective for varying periods of time, and may be renewed periodically, provided that we, as the registered owner, or our licensees, where applicable, comply with all applicable renewal requirements including, where necessary, the continued use of the trademarks in connection with similar goods. We are not aware of any material challenge to our ownership of our major trademarks.

     We own seven issued U.S. patents covering food preservation methods, extracts and colors, and a method for sealing cans. The patents expire between 2006 and 2014 and cannot be renewed. Patents are generally not material to our business.

     We have developed a number of proprietary vegetable seed varieties, which we protect by restricting access and/or by the use of non-disclosure agreements. There is no guarantee that these means will be sufficient to protect the secrecy of our seed varieties. In addition, other companies may independently develop similar seed varieties. We have obtained U.S. plant variety protection certificates under the Plant Variety Protection Act on some of our proprietary seed varieties. Under a protection certificate, the breeder has the right, among other rights, to exclude others from offering or selling the variety or reproducing it in the United States. The protection afforded by a protection certificate generally runs for 20 years from the date of its filing and is not renewable.

     In March 2001, we acquired the worldwide rights to the S&W brand name from Tri-Valley Growers, an agricultural cooperative.

     In September 2000, we acquired the rights to the SunFresh brand of citrus and tropical fruit from UniMark.

     In December 1997, we acquired the rights to the Contadina brand from Nestle USA, Inc. for processed tomato products. Nestle retained the rights to use the Contadina brand name on refrigerated pastas and sauces through December 2002, at which time those rights will revert to Del Monte.

     We have granted various perpetual, exclusive, royalty-free licenses for use of the Del Monte name and trademark, along with certain other trademarks, patents, copyrights and trade secrets, generally outside of the United States to acquiring companies or their affiliates. In particular, Kraft Foods Inc. holds the rights to use the Del Monte trademark in Canada; Kikkoman Corporation holds the rights to use Del Monte trademarks in Asia and the South Pacific (excluding the Philippines); Cirio Del Monte Foods International and its affiliates hold the rights in Europe, Africa, the Middle East and the Indian Subcontinent. ConAgra Foods Inc., through the acquisition of International Home Foods, holds the right to use the Del Monte trademarks with respect to processed food and beverage products in Mexico. Del Monte Pan American of Panama holds similar rights in Central America and the Caribbean. Del Monte Pacific Resources Limited controls the rights in the Philippines to the Del Monte brand name. With the South America acquisition, we reacquired the rights to the Del Monte brand in South America. Fresh Del Monte Produce Inc. holds the rights to use the Del Monte name and trademark with respect to fresh fruit, vegetables and produce throughout the world. With respect to dried fruit, nuts and dried fruit and nut mixes, Premier Valley Foods holds the rights to use Del Monte trademarks in the United States, Mexico, Central America and the Caribbean.

     We retain the right to review the quality of the licensee’s products under each of our license agreements. We generally may inspect the licensees’ facilities for quality and the licensees must periodically submit samples to us for inspection. Licensees may grant sublicenses but all sublicensees are bound by these quality control standards and other terms of the license.

     We have also granted various security and tangible interests in our trademarks and related trade names, copyrights, patents, trade secrets and other intellectual property to our creditors, in connection with certain bank financing, and to our licensees, to secure certain obligations of Del Monte under the license agreements.

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Governmental Regulation; Environmental Compliance

     As a manufacturer and marketer of food products, our operations are subject to extensive regulation by various federal government agencies, including the Food and Drug Administration, the United States Department of Agriculture and the Federal Trade Commission (“FTC”), as well as state and local agencies, with respect to production processes, product attributes, packaging, labeling, storage and distribution. Under various statutes and regulations, these agencies prescribe requirements and establish standards for safety, purity and labeling. In addition, advertising of our products is subject to regulation by the FTC, and our operations are subject to certain health and safety regulations, including those issued under the Occupational Safety and Health Act. Our manufacturing facilities and products are subject to periodic inspection by federal, state and local authorities. We seek to comply at all times with all such laws and regulations and to obtain any necessary permits and licenses, and we are not aware of any instances of material non-compliance. We believe our facilities and practices are sufficient to maintain compliance with applicable governmental laws, regulations, permits and licenses. Nevertheless, there is no guarantee that we will be able to comply with any future laws and regulations or requirements for necessary permits and licenses. Our failure to comply with applicable laws and regulations or obtain any necessary permits and licenses could subject us to civil remedies including fines, injunctions, recalls or seizures as well as potential criminal sanctions.

     As a result of our agricultural, food processing and canning activities, we are subject to numerous environmental laws and regulations. These laws and regulations govern the treatment, handling, storage and disposal of materials and waste and the remediation of contaminated properties. Violations or non-compliance with these laws and regulations could result in the imposition of fines or civil liability against us by governmental entities or private parties. We seek to comply at all times with all of these laws and regulations and are not aware of any instances of material non-compliance. However, we cannot predict the extent to which the enforcement of any existing or future environmental law or regulation may affect our operations. Among the environmental matters currently affecting us are the following:

• We are conducting groundwater remediation at our Stockton, California property associated with petroleum hydrocarbon contamination that resulted from the operations of a prior owner of the property. We are in discussions with governmental authorities regarding remedial alternatives. At the present time, we are unable to predict the total cost for the remediation. Further, investigation and remediation of environmental conditions may be required in the future at other properties currently or formerly owned or operated by us. Nonetheless, based on current information, we do not expect that the costs associated with the Stockton, California remediation or any other potential future remediation will have a material adverse effect on our financial condition.

• Governmental authorities and private claimants have notified us that we may be liable for environmental investigation and remediation costs at certain contaminated sites, including certain third-party sites at which we disposed of wastes. We may be liable because of alleged leaks, spills, releases or disposal of certain wastes or other substances at these sites. With respect to a majority of these sites, we have settled our liability. Based upon the information currently available, we do not expect that our liability for the remaining sites will be material. We may receive additional claims that we are potentially liable for environmental investigation and remediation costs at other sites in the future.

     We spent approximately $6.9 million on environmental expenditures from fiscal 2000 through fiscal 2002, primarily related to wastewater treatment systems, settlement of environmental litigation and underground storage tank (“UST”) remediation activities. We project that we will spend an aggregate of approximately $2.5 million in fiscal 2003 and 2004 on capital projects and other expenditures in connection with environmental compliance, primarily for boiler upgrades, compliance costs related to the consolidation of our fruit and tomato processing operations and continued UST remediation activities. We believe that our environmental liabilities will not have a material adverse effect on our financial position or results of operations.

Working Capital

     We maintain a revolving line of credit to fund our seasonal working capital needs. Our quarterly operating results have varied in the past and are likely to vary in the future based upon a number of factors. (See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Seasonality”) Our working capital requirements are seasonally affected by the growing cycle of the vegetables, fruits and tomatoes we process. Our inventory position is seasonally affected by this growing cycle. Substantially all inventories are produced during the harvesting and packing months of June through October and depleted through the remaining seven months. Accordingly, working capital requirements fluctuate significantly throughout the year.

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Backlog

     We do not experience significant backlog.

History

     The predecessor of Del Monte was originally incorporated in 1916 and remained a publicly traded company until its acquisition in 1979 by the predecessor of RJR Nabisco, Inc. (“RJR Nabisco”). In December 1989, RJR Nabisco sold Del Monte’s fresh produce operations to Polly Peck International PLC. In January 1990, an investor group led by Merrill Lynch & Co. purchased Del Monte and certain of its subsidiaries from RJR Nabisco for $1.5 billion (“RJR Nabisco Sale”). Following this sale, Del Monte divested several of its non-core businesses and all of its foreign operations. In April 1997, Del Monte was recapitalized with an equity infusion from Texas Pacific Group, its affiliates and other investors. In February 1999, Del Monte again became a publicly traded company and is listed on the New York Stock Exchange and the Pacific Exchange under the symbol “DLM”.

     On December 19, 1997, we acquired assets comprising Nestle USA, Inc.’s U.S. business of manufacturing and marketing certain processed tomato products (“Contadina”) and the rights to Contadina processed tomato products.

     On August 28, 1998, we reacquired the rights to the Del Monte brand in South America from Nabisco, Inc. and purchased Nabisco’s processed vegetable and tomato business in Venezuela.

     On September 1, 2000, we acquired the rights to the SunFresh brand citrus and tropical fruits line of UniMark and entered into a five-year supply agreement under which a UniMark affiliate would produce certain chilled and processed fruit products at its facility in Mexico. We purchase products under this supply agreement at market prices.

     On March 13, 2001, we acquired the inventory and rights to the brand name of the S&W business from Tri Valley Growers, an agricultural cooperative association. S&W products are distributed nationally with a strong concentration in the western United States. These products include processed fruits, tomatoes, vegetables, beans and specialty sauces.

     On June 12, 2002, Del Monte and Heinz entered into the Merger Agreement under which Del Monte expects to merge with the Heinz Businesses. Subject to the approval of our stockholders, receipt by Heinz of a private revenue ruling from the Internal Revenue Service and satisfaction of other conditions to closing, we currently anticipate that the merger will be completed during the fourth calendar quarter of 2002 or the first calendar quarter of 2003.

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Item 2. Properties

     As of June 30, 2002, we operate twelve production facilities and seven distribution centers in the United States. See “Business — Sales, Marketing and Value-Added Services,” “— Supply” and “— Production and Distribution”. Our production facilities are owned properties, while our distribution centers are owned or leased. We have various warehousing and storage facilities, which are primarily leased facilities. Our leases are generally long-term. Virtually all of our properties, whether owned or leased, are subject to liens or security interests.

     The following table lists our production facilities and distribution centers located in the United States:

	Square Footage
Location	Owned	Leased	Primary Product Lines
Production Facilities:(*)
Hanford, CA	651,000	675,000	Tomato Products
Kingsburg, CA	229,000	270,000	Peaches and Zucchini
Modesto, CA	440,000	1,046,000	Apricots, Peaches, Fruit Cocktail, Fruit Cup, Chunky Fruit, Diced Pears, Plastic Cup and Orchard Select
Mendota, IL	246,000	304,000	Peas, Carrots, Corn, Lima Beans, Mixed Vegetables and Peas and Carrots
Plymouth, IN	156,000	140,000	Paste-Based Tomato Products and Pineapple Juice
Sleepy Eye, MN	230,000	128,000	Peas and Corn
Crystal City, TX	362,000	—	Green Beans, Spinach, Carrots, Beets, Potatoes and Tomato Sauce
Toppenish, WA	229,000	273,000	Asparagus, Corn, Lima Beans and Peas
Yakima, WA	211,000	123,000	Pears and Cherries
Cambria, WI	136,000	277,000	Green Beans, Italian Beans, Corn and Peas
Markesan, WI	299,000	129,000	Green Beans, Wax Beans and Italian Beans
Plover, WI	298,000	225,000	Green Beans, Carrots, Beets and Potatoes
Distribution Centers:
Birmingham, AL	—	293,000
Clearfield, UT	—	80,000
Dallas, TX	—	175,000
McAllen, TX	138,000	—
Rochelle, IL	559,000	144,000
Stockton, CA	—	512,000
Swedesboro, NJ	267,000	60,000

* Includes owned manufacturing and owned or leased warehouse and storage capacity.

     We have one food processing plant in Venezuela, which was purchased from Nabisco, Inc. as part of the reacquisition of the rights to the Del Monte brand in South America in August 1998. The plant in Venezuela is located in Turmero, approximately 70 miles from Caracas.

     Our principal administrative headquarters are located in leased office space in San Francisco, California. We own our primary research and development facility in Walnut Creek, California.

     We hold certain properties for sale and dispose of land and facilities no longer required for our operations. See Note 14 to the consolidated financial statements of Del Monte for the year ended June 30, 2002.

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     We consider our facilities to be suitable and adequate for our business and to have sufficient production capacity for the purposes for which they are currently intended.

Item 3. Legal Proceedings

     We are a defendant in an action brought by PPI Enterprises (U.S.), Inc. in the U.S. District Court for the Southern District of New York on May 25, 1999. The plaintiff has alleged that we breached certain purported contractual and fiduciary duties and made misrepresentations and failed to disclose material information to the plaintiff about the value of our company and our prospects for sale. The plaintiff also alleges that it relied on our alleged statements in selling its preferred and common stock interest in our company to a third party at a price lower than that which the plaintiff asserts it could have received absent our alleged conduct. The complaint seeks compensatory damages of at least $22.0 million, plus punitive damages. The discovery phase of the case has been completed and we have filed a motion for summary judgment of the plaintiff’s claims. We cannot at this time reasonably estimate a range of exposure, if any, of our potential liability. Nevertheless, we believe that our insurance coverage will be adequate to cover any material liability, fees and costs that we may incur with respect to this litigation. We are defending this proceeding vigorously.

     We are also involved from time to time in various legal proceedings incidental to our business, including claims with respect to product liability, worker’s compensation and other employee claims, tort and other general liability, for which we carry insurance, as well as trademark, copyright and related litigation. While it is not feasible to predict or determine the ultimate outcome of these matters, we believe that none of these legal proceedings will have a material adverse effect on our financial position. See “Business — Governmental Regulation; Environmental Compliance” for a description of certain environmental matters in which we are involved.

Item 4. Submission of Matters to a Vote of Security Holders

     None.

Executive Officers of Del Monte Foods Company

     The following table sets forth the name, age and position of individuals who hold positions as executive officers of our company. There are no family relationships between any director or executive officer and any other director or executive officer of our company. These individuals hold the same positions with DMC. Executive officers are elected by the Board of Directors and serve at the discretion of the Board.

Name	Age		Positions
Richard G. Wolford		58	Chairman, President, Director and Chief Executive Officer
Wesley J. Smith		55	Director and Chief Operating Officer
David L. Meyers Marvin A. Berg		56 56	Executive Vice President, Administration and Chief Financial Officer Senior Vice President, Eastern Region
Richard L. French Thomas E. Gibbons		45 54	Senior Vice President, Chief Accounting Officer and Controller Senior Vice President and Treasurer
Marc D. Haberman		39	Senior Vice President, Marketing
Irvin R. Holmes		50	Senior Vice President, Customer Marketing and Sales Development
Robert P. Magrann		58	Senior Vice President, Sales
James Potter		45	Senior Vice President, General Counsel and Secretary
William J. Spain David L. Withycombe		60 50	Senior Vice President and Chief Corporate Affairs Officer Senior Vice President, Western Region

     Richard G. Wolford, Chairman, President, Director and Chief Executive Officer. Mr. Wolford joined Del Monte as Chief Executive Officer and a Director in April 1997. He was elected President of Del Monte in February 1998 and was elected Chairman of

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the Board in May 2000. From 1967 to 1987, he held a variety of positions at Dole Foods, including President of Dole Packaged Foods from 1982 to 1987. From 1988 to 1996, he was Chief Executive Officer of HK Acquisition Corp. where he developed food industry investments with venture capital investors.

     Wesley J. Smith, Director and Chief Operating Officer. Mr. Smith joined Del Monte as Chief Operating Officer and a Director in April 1997. From 1972 to 1995, he was employed by Dole Foods in a variety of positions, including senior positions in finance, marketing, operations and general management in California, Hawaii and Honduras.

     David L. Meyers, Executive Vice President, Administration and Chief Financial Officer. Mr. Meyers joined Del Monte in 1989. He was elected Chief Financial Officer of Del Monte in December 1992 and served as a member of the Board of Directors of Del Monte from January 1994 until consummation of Del Monte’s recapitalization. Prior to joining Del Monte, Mr. Meyers held a variety of financial and accounting positions with RJR Nabisco (1987 to 1989), Nabisco Brands USA (1983 to 1987) and Standard Brands, Inc. (1973 to 1983).

     Marvin A. Berg, Senior Vice President, Eastern Region. Mr. Berg joined Del Monte in 1976 and was elected to his current position in October 2000. Mr. Berg was Vice President, Eastern Manufacturing from 1995 to October 2000 and has held a variety of manufacturing positions at Del Monte.

     Richard L. French, Senior Vice President, Chief Accounting Officer and Controller. Mr. French joined Del Monte in 1980 and was elected to his current position in May 1998. Mr. French was Vice President and Chief Accounting Officer of Del Monte from August 1993 through May 1998 and has held a variety of positions within Del Monte’s financial organization.

     Thomas E. Gibbons, Senior Vice President and Treasurer. Mr. Gibbons joined Del Monte in 1969 and was elected to his current position in February 1995. He was elected Vice President and Treasurer of Del Monte in January 1990. Mr. Gibbons’ prior experience also includes a variety of positions within Del Monte’s and RJR Nabisco’s tax and financial organizations.

     Marc D. Haberman, Senior Vice President, Marketing. Mr. Haberman joined Del Monte in January 1999 and was elected to his current position in August 2001. From February 2000 until July 2001, Mr. Haberman was Senior Vice President, Strategic Planning and Business Development. From January 1999 until February 2000 Mr. Haberman was Vice President, Strategic Planning and Business Development. Prior to that he was with Sunbeam Corporation from 1996 until 1998 where he was Category Leader for Sunbeam’s appliance business. From 1992 to 1996, Mr. Haberman was a consultant with McKinsey & Co.

     Irvin R. Holmes, Senior Vice President, Customer Marketing and Sales Development. Mr. Holmes joined Del Monte in November 1990 and was elected to his current position in August 2001. From November 1999 until July 2001, Mr. Holmes was Senior Vice President, Marketing. From May 1998 to November 1999 he was Senior Vice President, Marketing, Vegetables and Tomatoes. Since joining Del Monte in 1990, Mr. Holmes has held a variety of marketing positions.

     Robert P. Magrann, Senior Vice President, Sales. Mr. Magrann joined Del Monte in April 2001 as Senior Vice President, Sales. Prior to that he was with The Couponbasket, Inc. where he was President and Chief Executive Officer since July 2000. From March 2000 to July 2000, Mr. Magrann was Executive Vice President, Worldwide Sales for Kenosia Marketing Corporation. He was Senior Vice President, Sales and Marketing at Tetley USA from 1996 until March 2000.

     James Potter, Senior Vice President, General Counsel and Secretary. Mr. Potter joined Del Monte in October 2001. From December 1997 to December 2000, he was Executive Vice President, General Counsel and Secretary of Provident Mutual Life Insurance Company. From 1989 to November 1997, Mr. Potter was the Chief Legal Officer of The Prudential Bank and Trust Company and The Prudential Savings Bank, subsidiaries of The Prudential Insurance Company of America.

     William J. Spain, Senior Vice President and Chief Corporate Affairs Officer. Mr. Spain joined Del Monte in 1966 and was elected to his current position in January 1999. Previously, he was Del Monte’s Senior Vice President, Technology. Mr. Spain has also held various positions within Del Monte in corporate affairs, production management, quality assurance, environmental and energy management, and consumer services.

     David L. Withycombe, Senior Vice President, Western Region. Mr. Withycombe joined Del Monte in 1974 and was elected to his current position in October 2000. Mr. Withycombe was Vice President, Western Manufacturing from 1992 to October 2000 and has held a variety of manufacturing positions at Del Monte.

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PART II

Item 5. Market for Registrant’s Common Equity and Related Stockholder Matters

     Not applicable.

Item 6. Selected Financial Data

     The following table sets forth historical consolidated financial information of Del Monte. The statement of operations data for each of the fiscal years in the five-year period ended June 30, 2002 and the balance sheet data as of June 30, 2002, 2001, 2000, 1999 and 1998 have been derived from consolidated financial statements of Del Monte audited by KPMG LLP, independent auditors. The table should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” the consolidated financial statements of Del Monte and related notes and other financial information included elsewhere in this Annual Report on Form 10-K.

	Year Ended June 30,
	2002			2001			2000			1999		1998
	(In millions, except share and per share data)
Statement of Operations Data:
Net sales(a)(b)	$	1,322.4		$	1,291.4		$	1,214.8		$	1,267.8	$	1,115.4
Cost of products sold(b)(c)		1,033.2			1,009.9			920.5			998.3		898.2
Selling, administrative and general expense(a)(d)(e)(f)		161.9			140.4			136.9			139.5		125.4
Special charges related to plant consolidation(g)		1.3			14.6			10.9			17.2		9.6
Merger-related expenses(h)		7.3			—			—			—		—
Operating income		118.7			126.5			146.5			112.8		82.2
Interest expense(i)		57.5			74.6			67.1			77.6		77.5
Loss on financial instruments(j)		5.8			—			—			—		—
Other (income) expense(k)(l)(m)		(0.5	)		(4.8	)		—			2.0		(1.3	)
Income before income taxes and extraordinary item		55.9			56.7			79.4			33.2		6.0
Provision (benefit) for income taxes		16.1			16.7			(53.6	)		0.5		0.5
Income before extraordinary item		39.8			40.0			133.0			32.7		5.5
Extraordinary loss, net of tax benefit(n)		1.3			26.2			4.3			19.2		—
Net income	$	38.5		$	13.8		$	128.7		$	13.5	$	5.5
Net income attributable to common shares(o)	$	38.5		$	13.8		$	128.7		$	9.9	$	0.2
Diluted net income per common share(o)	$	0.73		$	0.26		$	2.42		$	0.23	$	0.01
Weighted average number of diluted shares outstanding		53,048,968			52,767,734			53,097,898			42,968,652		32,355,131

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	June 30,
	2002			2001			2000			1999			1998
	(In millions)
Balance Sheet Data:
Working capital	$	327.4		$	391.0		$	149.8		$	187.3		$	210.2
Total assets		1,070.0			1,124.1			1,040.7			872.0			845.1
Total debt		590.5			714.3			632.1			543.4			709.7
Redeemable preferred stock		—			—			—			—			32.5
Stockholders’ equity (deficit)		31.7			24.9			10.6			(118.4	)		(349.8	)
	Year Ended June 30,
	2002			2001			2000			1999			1998
	(In millions)
Cash Flow Data:
Cash flows provided by (used in) operating activities	$	169.4		$	89.6		$	(7.1	)	$	96.1		$	97.0
Cash flows used in investing activities		(41.3	)		(94.2	)		(65.9	)		(86.2	)		(222.0	)
Cash flows (used in) provided by financing activities		(123.6	)		11.9			71.2			(9.9	)		127.0
Capital expenditures		43.6			45.4			67.8			55.0			32.1
Other Data:(p)
EBIT(q)	$	113.4		$	131.3		$	146.5		$	110.8		$	83.5
Depreciation and amortization(r)		30.4			32.5			32.3			33.5			28.3
EBITDA(s)	$	143.8		$	163.8		$	178.8		$	144.3		$	111.8

(a)	As a result of the adoption of EITF 00-14 and EITF 00-25 on July 1, 2001 (codified by EITF 01-9), prior year balances have been reclassified to conform to current year presentation. EITF 00-14 and EITF 00-25 required certain costs related to coupon redemption and performance allowances previously recorded as selling, administrative and general expenses to be reclassified and presented as a reduction to sales. The combined effect of EITF 00-14 and EITF 00-25 was a reduction of $220.6 million, $247.3 million, $236.7 million and $197.9 million, in both net sales and selling, administrative and general expenses, for the previously reported years ended June 30, 2001, 2000, 1999 and 1998, respectively.
(b)	Contadina universal product codes (UPC) conversion. Fiscal 2002 net sales includes the effects of $1.3 million of trade promotion expenses to convert the universal product codes on Contadina products resulting from the acquisition of the business in December 1997. Fiscal 2001 cost of products sold includes $0.6 million of packaging obsolescence resulting from the conversion of universal product codes for Contadina products related to the acquisition.
(c)	Inventory write-up. In fiscal 2002, inventory step-up charges of $1.0 million were included in cost of products sold resulting from the purchase price allocation related to the S&W acquisition. In fiscal 2001, inventory step-up charges of $2.6 million were included in cost of products sold resulting from the purchase price allocations related to the S&W and SunFresh acquisitions. In fiscal 1999, inventory step-up charges of $2.8 million were included in cost of products sold due to the purchase price allocation related to the Contadina and South America acquisitions. In fiscal 1998, inventory step-up charges of $3.4 million were included in cost of products sold resulting from the purchase price allocation related to the Contadina acquisition.
(d)	Asset value (recapture). Fiscal 2000 selling, administrative and general expense includes the recapture of $2.3 million of a previously recorded impairment in value of a closed production facility. In the fourth quarter of fiscal 2000, Del Monte entered into a joint venture to develop the site of a former dried fruit plant location in San Jose, California. This propery

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	had previously been written-down in fiscal 1996 upon our adoption of SFAS No. 121, “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of”. The value assigned to this property, which was contributed in the joint venture, was higher than the carrying cost resulting in a recapture of the previous write-down.
(e)	Acquisition-related expenses. In fiscal 2001, acquisition-related expenses of $0.1 million were included in selling, administrative and general expense in relation to the SunFresh acquisition. In fiscal 1999, indirect acquisition-related expenses of $0.9 million and $0.5 million of start-up costs were included in selling, administrative and general expense in relation to the Contadina and South America acquisitions. In fiscal 1998, $6.9 million of indirect acquisition-related expenses were included in selling, administrative and general expense in connection with the Contadina acquisition.
(f)	Benefit costs. In fiscal 1998, non-cash charges of $2.9 million were included in selling, administrative and general expense relating to stock compensation and related benefit expense.
(g)	Special charges related to plant consolidation. Special charges related to plant consolidation includes ongoing fixed costs and other restructuring costs resulting from the consolidation of certain Del Monte facilities. Refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section for further information.
(h)	Merger-related expenses. In fiscal 2002, $7.3 million of merger-related expenses were recorded in relation to the proposed merger with some of Heinz’s businesses. See Note 2 to the consolidated financial statements for the year ended June 30, 2002.
(i)	Interest expense. In fiscal 2002, interest expense includes a credit to interest expense of $2.9 million reflecting a release to earnings from the $5.8 million swap liability attributed to the January 23, 2002 to June 30, 2002 period.
(j)	Loss on financial instruments. On January 23, 2002, the fair value of certain interest rate swaps was a liability of $5.8 million. Changes in fair value of the swaps, prior to January 23, 2002, are reflected in the income statement. On January 23, 2002 these swaps were designated as cash flow hedging instruments under SFAS No. 133 “Accounting for Derivative Instruments and Hedging Instruments” (as amended by SFAS 137 and 138). Changes in the fair value of the swaps subsequent to the January 23, 2002 designation date are recorded primarily in accumulated other comprehensive income/loss in Stockholders’ Equity.
(k)	Release of a contingent liability. Credits of $0.7 million and $4.8 million in fiscal 2002 and 2001, respectively, were included in other (income) expense and reflect the reversal of an accrual for a contingent liability no longer required.
(l)	Terminated transactions. In fiscal 1999, terminated transactions expense of $2.1 million were included in other (income) expense and relates to costs of a public equity offering that was withdrawn due to conditions in the equity securities market in July 1998.
(m)	Legal expenses. In fiscal 2002, legal expenses of $0.7 million were included in other (income) expense related to litigation associated with the 1997 recapitalization transaction.
(n)	Extraordinary loss, net of tax benefit. Del Monte made prepayments on its term loan that totaled $120.0 million during fiscal 2002. As a result, Del Monte incurred an extraordinary loss of $2.1 million ($1.3 million net of tax) related to the write-off of previously capitalized debt issuance costs. On May 15, 2001, Del Monte refinanced its debt outstanding, as described more fully in Note 6 of the consolidated financial statements as of and for the year ended June 30, 2002. In connection with this refinancing, an extraordinary loss of $42.3 million ($26.2 million net of tax) was recorded. This extraordinary loss consisted of $32.0 million of prepayment premiums and a $10.3 million write-off of previously capitalized deferred issuance costs and original issue discount. During February 2000, Del Monte repurchased $31.0 million of senior subordinated notes. In conjunction with this repurchase, an extraordinary loss of $5.2 million ($4.3 million net of tax) was recorded. This extraordinary loss consisted of $3.7 million ($3.1 million net of tax) of prepayment premiums and a $1.5 million ($1.2 million net of tax) write-off of previously capitalized deferred debt issuance costs and original issue discount. In fiscal 1999, Del Monte recorded a $19.2 million extraordinary loss. In conjunction with the February 1999 public equity offering, Del Monte redeemed all outstanding preferred stock, a portion of senior subordinated notes and a portion of senior discount notes, as well as an early retirement of senior debt. In connection with these payments, $5.5 million of previously capitalized debt issuance costs were written off and $13.7 million of redemption premiums were paid, both of which Del Monte recorded as extraordinary items.

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(o)	Net income per common share is computed as net income reduced by the cash and in-kind dividends for the period on redeemable preferred stock, divided by the weighted average number of diluted shares outstanding.
(p)	Other data includes non-GAAP measures that may not be comparable to similarly titled measures reported by other companies.
(q)	EBIT represents income before income taxes and extraordinary item plus interest expense.
(r)	Depreciation and amortization excludes amortization of $3.1 million, $3.3 million, $3.0 million, $3.4 million and $3.3 million of deferred debt issuance costs for fiscal 2002, 2001, 2000, 1999 and 1998, respectively, which are included in the caption “Interest expense.” In addition, in fiscal 2001, 2000, 1999 and 1998, depreciation and amortization excludes accelerated depreciation of $0.9 million, $4.3 million, $9.4 million and $3.0 million, respectively. Accelerated depreciation is included in the caption “Special charges related to plant consolidation”.
(s)	EBITDA is a measure of liquidity used by Del Monte and members of the financial community to assess the cash flow generating capabilities of our on-going operations and our ability to service debt.

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

     This discussion summarizes the significant factors affecting the consolidated operating results, financial condition and liquidity of our company during the three-year period ended June 30, 2002. This discussion should be read in conjunction with the consolidated financial statements of our company for the three-year period ended June 30, 2002 and related notes included elsewhere in this Annual Report on Form 10-K.

General

     We report our financial results on a July 1 to June 30 fiscal year basis to coincide with our inventory production cycle, which is highly seasonal. Raw product is harvested and processed primarily in the months of June through October, during which time inventories rise to their highest levels. At the same time, consumption of processed products declines, reflecting, in part, lower levels of promotional activity, the availability of fresh alternatives and other factors. This situation impacts operating results as sales volumes, revenues and profitability decline during this period. Results over the remainder of the fiscal year are affected by many factors including industry supply and our share of that supply. See “— Seasonality”.

     Our processed vegetables, fruits and tomato products are generally considered staple foods. We believe consumers purchase our products, like other basic food items, reasonably independent of economic cycles. However, retail consolidation and competitive pressures are causing many food retailers to concentrate on increasing operating efficiencies, generating cash flow and decreasing working capital requirements. Retailers are focused on decreasing their own inventory requirements by reducing the inventory carried, implementing more sophisticated shelf-management programs and consolidating their distribution centers and other infrastructures. Although consumer consumption of our products generally has remained stable, retailers have been selling more of our products from their inventory rather than purchasing from us. As a result, the volume of our products shipped to retailers has been less than the volume of our products purchased by consumers at retailers.

     During the fourth quarter of fiscal 2000, trade customers reduced the inventory levels they had built earlier in preparation of possible “Year 2000” shortages. This inventory reduction continued at a modest rate into fiscal 2001 and continued to a lesser extent throughout this year. This reduction of retail inventory decreased our shipments in the short-term and adversely affected our sales growth, operating margins, cash flows and working capital. In addition, it caused us to have excess inventory. The resulting lower sales volume also affected our ability to offset the increase in production costs experienced in fiscal 2001. Because we produce the majority of our products in the summer months, we decreased our summer 2001 production of vegetables to reduce our inventory levels, which lowered our working capital requirements. We reduced our summer 2001 production below our anticipated level of sales for fiscal 2002, generating significant cash flows that contributed to our $120.0 million prepayment of our term loan.

     Consistent with our strategy to generate growth through acquisitions, we consummated the acquisitions of Contadina in December 1997, SunFresh in September 2000 and S&W in March 2001. The Contadina acquisition solidified us as the branded market leader in the high margin processed solid tomato category and established a strong presence for us in the branded paste-based tomato products category, which includes tomato paste, tomato sauce and pizza sauce. In addition to further diversifying our revenue base, the Contadina acquisition expanded our processing scale, which has resulted in production cost efficiencies. We believe the SunFresh and S&W acquisitions will also provide further cost savings through manufacturing efficiencies and growth opportunities in new markets. We also reacquired the rights to the Del Monte brand in South America in August 1998, which opened a new geographic market for our company.

     In the third quarter of fiscal 1998, we developed a plan to consolidate processing operations over a three-year period. Among the facilities we acquired in connection with the Contadina acquisition was a state-of-the-art tomato processing facility at Hanford, California. We closed the Arlington vegetable processing facility in August 1998, the San Jose fruit processing facility in December 1999, the Stockton fruit processing facility in September 2000 and the Woodland bulk tomato-paste processing facility in January 2001. We recorded special charges related to plant consolidations of $1.3 million, $14.6 million and $10.9 million for the years ended June 30, 2002, 2001 and 2000, respectively. We expect to incur ongoing costs for security, insurance, taxes and other miscellaneous caretaker expenses until these properties are sold. See Note 14 to the consolidated financial statements for the year ended June 30, 2002.

     This plant consolidation plan is a major component of a capital investment program identified over five years ago. As of June 30, 2002, approximately $98.9 million has been capitalized for this program over the preceding five years. We achieved cumulative cost savings of approximately $165.0 million from this capital investment program. Cost savings were achieved through reduced

22

headcount from closing the facilities; reduced raw product costs and freight savings, improved raw product recovery as a result of sourcing produce closer to where it is processed and reduced facility fixed costs for depreciation, maintenance, taxes and insurance due to the closure of processing facilities.

Results of Operations

     The following table sets forth certain items from our consolidated statements of income, expressed as percentages of our total net sales, for the periods indicated:

		Year Ended June 30,
		2002			2001			2000
Net sales			100.0	%		100.0	%		100.0	%
Cost of products sold			78.1			78.2			75.8
Selling, administrative and general expense			12.2			10.9			11.2
Special charges related to plant consolidation			0.1			1.1			0.9
Merger-related expenses			0.6			—			—
	Operating income		9.0	%		9.8	%		12.1	%
Interest expense			4.3	%		5.8	%		5.5	%

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     The following table sets forth our total net sales, expressed in dollar amounts and as percentages of our total net sales, for the periods indicated:

		Year Ended June 30,
		2002			2001			2000
		(In millions)
Net Sales:(a)
Processed vegetables(b)		$	434.0		$	418.6		$	402.8
Processed fruit(b)			546.6			548.8			498.1
Tomato and Specialty products(b)			326.0			309.2			302.4
	Subtotal domestic		1,306.6			1,276.6			1,203.3
South America			16.1			15.2			12.0
Intercompany sales			(0.3	)		(0.4	)		(0.5	)
Total net sales		$	1,322.4		$	1,291.4		$	1,214.8
As a Percentage of Net Sales:
Processed vegetables(b)			32.8	%		32.4	%		33.1	%
Processed fruit(b)			41.3			42.5			41.0
Tomato and Specialty products(b)			24.7			23.9			24.9
	Subtotal domestic		98.8			98.8			99.0
South America			1.2			1.2			1.0
Intercompany sales			(0.0	)		(0.0	)		(0.0	)
Total			100.0	%		100.0	%		100.0	%

(a)

On July 1, 2001, Del Monte adopted EITF 00-14 and EITF 00-25 (codified by EITF 01-9), which required certain costs related to coupon redemption and performance allowances previously recorded as selling, administrative and general expense in our historical consolidated financial statements to be reclassified and presented as a reduction to sales. Financial statements for prior periods presented for comparative purposes are also required to be reclassified to comply with the statement of income display of EITF Issue No. 01-9. As a result, total costs of $220.6 million and $247.3 million, for the years ended June 30, 2001 and 2000, respectively, recorded as selling, general and administrative in the consolidated statements of income were reclassified and presented as a reduction to sales included in this table.

(b)

Includes sales of the entire product line across each channel of distribution, including sales to grocery chains, club stores, supercenters, mass merchandisers, and other grocery retailers, as well as our foodservice, food ingredients, export and private label businesses and military and government sales.

Seasonality

     Our quarterly operating results have varied in the past and are likely to vary in the future based upon a number of factors. Our historical net sales have exhibited seasonality, with the second and third fiscal quarters generally having the highest net sales. These two quarters reflect increased sales of our products during the holiday period in the United States extending from late November through December, as well as sales associated with the Easter holiday. Lower levels of promotional activity, the availability of fresh produce and other factors have historically affected net sales in the first fiscal quarter. Quarterly gross profit primarily reflects fluctuations in sales volumes and is also affected by the overall product mix. Our fruit operations have a greater percentage of annual sales and cost of products sold in the first fiscal quarter, as compared to our vegetable and tomato operations, due principally to increased sales of single-serve fruit products during the “back to school” period. Generally, we have a greater percentage of annual sales and cost of products sold in the second and third fiscal quarters, principally due to the year-end holiday season. Promotional expenses, which are presented as a reduction to net sales, tend to be greater in the first half of the fiscal year, primarily due to the “back to school” period and the year-end holiday season, while Easter is the only major holiday in the second half of the fiscal year.

     The annual production volume of vegetables, fruit and tomatoes is planned based on anticipated demand for the following year. Annual production is also influenced by raw product availability related to general seasonal fluctuations primarily due to weather and overall growing conditions.

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Fiscal 2002 vs. Fiscal 2001

     Net sales. Consolidated net sales for fiscal 2002 increased $31.0 million, or 2.4%, from fiscal 2001. The increase in net sales in fiscal 2002 is due primarily to the acquisition of the S&W business ($71.8 million) and the impact of a July 1 retail price increase, net of the impact of higher trade promotion expenses related to the price increase. Net sales also continue to reflect the shift in sales volume from the slower-growth grocery channel to the higher-growth club, supercenter and mass merchandiser channel. Fiscal 2002 net sales includes the effect of $1.3 million of trade promotion expenses to convert the universal product codes on Contadina products resulting from the acquisition of the business in December 1997. We were required to pay retailers reshelving costs resulting from the change to Del Monte universal product codes. Approximately 1.2% of consolidated net sales was generated by our South American businesses in both fiscal 2002 and 2001.

     The increase in retail sales prices contributed to a decline in the major vegetable and fruit categories in fiscal 2002 compared to fiscal 2001. We led the industry in raising our vegetable prices and were quickly followed by branded competitors and then private label. In fruit, our price spread versus private label widened during fiscal 2002 due to the price increase and although private label prices increased, they did not fully match our price increase. Consumption of processed fruit in the grocery channel declined in fiscal 2002 versus fiscal 2001, and the price spread versus private label contributed to consumption of our fruit products declining at a rate greater than the category. For tomato products, our price increase followed an increase initiated by another branded competitor and followed broadly across the category.

     We continued to respond to consumer trends in the single-serve fruit snacking business by introducing two new Fruit & Gel To-Go items in the first quarter of fiscal 2002. We also incurred trade promotion expenses to expand our distribution of our SunFresh processed citrus products acquired in fiscal 2001. The new product introductions and distribution expansion resulted in increases in trade promotion expenses of $3.5 million in fiscal 2002 compared to fiscal 2001.

     We continue to be impacted by competitive pressure in the single-serve fruit business, which has resulted, and may continue to result, in higher trade and consumer promotion expenses. We believe the single-serve fruit business is an important high-growth category and we expect to continue to invest in this category.

     In fiscal 2002, our market share for vegetable products, based on case volume, was 22.8% versus 22.1% in the previous year. Our market share for fruit products was 43.2% compared to 43.9% in the previous year, and our market share for solid tomato products was 21.3% in fiscal 2002 compared to 20.1% in fiscal 2001.

     Cost of products sold. Cost of products sold increased $23.3 million, or 2.3%, compared to fiscal 2001. The increase in cost of products sold was primarily due to higher manufacturing costs due to lower production volumes as a result of our initiative to reduce inventory levels, and an unfavorable sales mix. The increase in manufacturing costs was somewhat offset by continued cost savings from capital spending initiatives. Cost of products sold includes inventory step-up charges resulting from the sale of inventory on-hand at acquisition for the S&W and SunFresh businesses. Fiscal 2002 includes $1.0 million of inventory step-up charges related to the S&W acquisition, and fiscal 2001 includes $2.6 million of inventory step-up charges related to the acquisition of both the S&W and SunFresh businesses. Fiscal 2001 includes $0.6 million of packaging obsolescence resulting from the conversion of universal product codes for Contadina products related to the acquisition of the business.

     Selling, administrative and general expenses. Selling, administrative and general expenses increased by $21.5 million, or 15.3%, compared to fiscal 2001. This increase was due primarily to lower returns on pension assets, higher information technology expense, and higher rental expense due to the relocation of our corporate headquarters in December 2000. In addition, sales and marketing expenses to support the S&W business and new products contributed to the increases over fiscal 2001.

     Research and development costs of $7.5 million and $7.0 million in fiscal 2002 and 2001, respectively, were included in general and administrative expenses.

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     Special charges related to plant consolidation. As discussed in Note 14 to the consolidated financial statements for fiscal 2002, we incurred special charges of $1.3 million in fiscal 2002 compared to special charges of $14.6 million in fiscal 2001. Details of the special charges are as follows:

	Year Ended June 30,
	2002			2001
	(In millions)
Severance accrual	$	0.2		$	0.6
Severance accrual reversal		—			(1.1	)
Asset write-off		—			10.4
Asset write-down reversal		(0.2	)		—
Ongoing fixed costs and asset removal/ disposal costs of dormant facilities		1.3			3.8
Accelerated depreciation		—			0.9
Special charges related to plant consolidation	$	1.3		$	14.6

     Both the severance accrual and severance accrual reversal were related to the closure of the Woodland facility. Asset write-off was related to assets no longer used in operations at the Woodland and Stockton facilities. Asset write-down reversal was related to a reduction of an accrual for the closure of the Woodland facility, as the proceeds from the sale of the facility exceeded the original projections. On-going fixed costs and asset removal/disposal costs of dormant facilities included period costs primarily incurred at the San Jose, Stockton and Woodland facilities, as well as costs incurred for removal of fruit processing equipment to be disposed at the Stockton facility. We expect to incur ongoing costs for security, insurance, taxes and other miscellaneous caretaker expenses until these properties are sold. Special charges also included accelerated depreciation expense resulting from the effects of adjusting the assets’ remaining useful lives to accelerate the depreciation thereof.

     Merger-related expenses. In fiscal 2002, merger-related expenses included $7.3 million primarily related to the proposed merger of DMC and the Heinz Businesses. See “Recent Developments” and Note 2 to the consolidated financial statements for the year ended June 30, 2002 for a description of the proposed merger. In addition, part of the $7.3 million merger-related expenses related to a proposed alternative transaction with a third party.

     Interest expense. Interest expense decreased 22.9% in fiscal 2002 compared to fiscal 2001. This decrease was due primarily to lower interest rates and lower average debt balances. Interest expense includes $4.2 million of expense in excess of market rates due to the impact of interest rate swap agreements. On January 23, 2002, we designated our interest rate swaps as cash flow hedging instruments in accordance with SFAS No. 133, “Accounting for Derivative Instruments and Hedging Instruments” (“SFAS 133”), as amended by SFAS 137 and 138. We recorded a liability of $5.8 million representing the fair value of the swaps on January 23, 2002. Interest expense includes a credit of $2.9 million, reflecting a release to earnings from the $5.8 million liability attributed to the January 23, 2002 to June 30, 2002 period. See Note 7 to the consolidated financial statements for further information about the interest rate swaps.

     Interest expense includes amortization of deferred debt issuance costs of $3.1 million and $3.3 million in fiscal 2002 and 2001, respectively.

     Loss on financial instruments. Loss on financial instruments for fiscal 2002 was $5.8 million due to the change in the fair value of the interest rate swaps before they were designated as hedging instruments on January 23, 2002, as described in Note 7 of the consolidated financial statements.

     Other income. The $0.5 million other income for fiscal 2002 consists primarily of dividend income and the reversal of an accrual of $0.7 million for a contingent liability that is no longer required, offset by an accrual of $0.7 million for litigation expense related to our recapitalization transaction in 1997. The $4.8 million other income for fiscal 2001 was due to the reversal of an accrual for a contingent liability that is no longer required.

     Provision for income taxes. The provision for income taxes decreased $0.6 million to $16.1 million for fiscal 2002 from $16.7 million for fiscal 2001. The decrease in the fiscal 2002 provision was due primarily to the reversal of a larger amount of valuation allowances in fiscal 2002 compared to fiscal 2001. The effective tax rate for fiscal 2002 was lower than the statutory U.S. federal income tax

26

rate due to the utilization of state tax credits and net operating loss carryforwards. The amount of state tax credits utilized in fiscal 2002 was smaller than the amount utilized in fiscal 2001.

     Extraordinary item. The extraordinary item resulted from the write-off of $2.1 million ($1.3 million net of tax) of previously capitalized debt issuance costs related to the prepayment of $120.0 million of our term loan in fiscal 2002. In connection with the May 15, 2001 refinancing, an extraordinary loss of $42.3 million ($26.2 million net of tax) was recorded in fiscal 2001. This extraordinary loss consisted of $32.0 million of prepayment premiums and a $10.3 million write-off of previously capitalized deferred issuance costs and original issue discount.

Fiscal 2001 vs. Fiscal 2000

     Net sales. Consolidated net sales for fiscal 2001 increased $76.6 million, or 6.3%, from fiscal 2000. The increase in sales in fiscal 2001 primarily reflects the acquisition of the S&W and SunFresh businesses ($42.0 million), an increase in non-retail channel sales and lower promotional expense for new products. Sales for fiscal 2001 were impacted by a reduction in inventory levels by our customers, which resulted in a reduction of shipments of products. Although consumer consumption remained relatively stable, we believe retailers have sold more out of inventory on hand rather than purchasing product. As a result of this trend, our shipments decreased in the short-term affecting sales growth, operating margins, cash flow and working capital. The resulting lower sales volume also affected our ability to offset the increase in production costs for fiscal 2001. Approximately 1.2% and 1.0% of consolidated net sales were generated by our South American businesses in fiscal 2001 and 2000, respectively.

     Promotional expense was lower in fiscal 2001 due to fewer new product introductions than fiscal 2000. In fiscal 2001, new product introductions were limited to Fruit To-Go line extensions. In fiscal 2000, we introduced nationally the new Fruit To-Go line of fruit in single-serve plastic cups along with new flavors of diced tomatoes and new sizes of ketchup. In addition, lower spending in fiscal 2001 for tomato products resulted from a change in trade promotion strategy on selected tomato products to focus trade promotion spending on more efficient and less costly promotion types.

     In fiscal 2001, our market share for vegetables products, based on case volume, was 22.1% versus 23.1% in the previous year. Our market share for fruit products was 43.9% compared to 44.0% for the previous year, and our market share for solid tomato products was 20.1% in fiscal 2001 compared to 17.7% in the fiscal 2000.

     Cost of products sold. Cost of products sold increased by $89.4 million, or 9.7%, compared to fiscal 2000. The increase in cost of products sold in fiscal 2001 was primarily due to the acquisition of the S&W and SunFresh businesses. In addition, an unfavorable sales mix, together with increased manufacturing costs in 2001 due to lower production volumes and higher fruit production costs contributed to the increase in cost of products sold. These increases in manufacturing costs were somewhat offset by continued cost savings from capital spending initiatives. Cost of products sold includes $0.6 million of packaging obsolescence in fiscal 2001 resulting from the conversion of universal product codes for Contadina products related to the acquisition of the business in December 1997. In addition, fiscal 2001 includes $2.6 million of inventory step-up charges resulting from the sale of inventory acquired in the S&W and SunFresh acquisitions.

     Selling, administrative and general expense. Selling, administrative and general expense increased by $3.5 million, or 2.6%, compared to fiscal 2000, due primarily to additional sales and marketing expenses to support the S&W and SunFresh businesses. In addition, fiscal 2000 includes the recapture of $2.3 million of a previously recorded impairment in value of a closed production facility, resulting from contributing this facility to a joint venture real estate development.

     Research and development costs of $7.0 million and $6.6 million in fiscal 2001 and 2000, respectively, were included in general and administrative expenses.

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     Special charges related to plant consolidation. We incurred special charges of $14.6 million in fiscal 2001 compared to special charges of $10.9 million in fiscal 2000. Details of the special charges are as follows:

	Year Ended June 30,
	2001			2000
	(In millions)
Severance accrual	$	0.6		$	—
Severance accrual reversal		(1.1	)		(1.3	)
Asset write-off		10.4			—
Asset write-down reversal		—			(0.7	)
Ongoing fixed costs and asset removal/ disposal costs of dormant facilities		3.8			8.6
Accelerated depreciation		0.9			4.3
Special charges related to plant consolidation	$	14.6		$	10.9

     Both the severance accrual and severance accrual reversal were related to the closure of the Woodland and Arlington facilities. Asset write-off was related to assets no longer used in operations at the Woodland and Stockton facilities. Asset write-down reversal was related to a reduction of an accrual for the closure of the Arlington facility, as the proceeds from the sale of the facility exceeded the original projections. On-going fixed costs and asset removal/disposal costs of dormant facilities included period costs primarily incurred at the Modesto and Woodland facilities, as well as costs incurred for removal of fruit processing equipment to be disposed at the Stockton and San Jose facilities. Special charges also included accelerated depreciation expense resulting from the effects of adjusting the assets’ remaining useful lives to accelerate the depreciation thereof.

     Interest expense. Interest expense increased 11.2% in fiscal 2001 compared to fiscal 2000. This increase was due to the higher average outstanding debt balances.

     Interest expense includes amortization of deferred debt issuance costs of $3.3 million and $3.0 million in fiscal 2001 and 2000, respectively.

     Other income. The $4.8 million other income for fiscal 2001 was due to the reversal of an accrual for a contingent liability that was no longer required. There was no other (income) expense for fiscal 2000.

     Provision (Benefit) for income taxes. Provision (benefit) for income taxes changed from a benefit of $53.6 million in fiscal 2000 to a provision of $16.7 million in fiscal 2001. The change was mainly due to the $67.7 million release of the valuation allowance in fiscal 2000. The effective tax rate for fiscal 2001 was lower than the statutory U.S. federal income tax rate due to the utilization of state tax credits and net operating loss carryforwards.

     Extraordinary item. In connection with the May 15, 2001 refinancing, an extraordinary loss of $42.3 million ($26.2 million net of tax) was recorded in fiscal 2001. This extraordinary loss consisted of $32.0 million of prepayment premiums and a $10.3 million write-off of previously capitalized deferred issuance costs and original issue discount. In conjunction with the repayment of $31.0 million of senior subordinated notes, we recorded an extraordinary loss of $5.2 million ($4.3 million net of tax) in fiscal 2000. The extraordinary loss consisted of the write-off of $1.5 million ($1.2 million net of tax) of previously capitalized debt issuance costs related to the redeemed notes and original issuance discount and $3.7 million ($3.1 million net of tax) of redemption premiums.

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     The following table summarizes certain items included in the “Fiscal 2002 vs. Fiscal 2001” and “Fiscal 2001 vs. Fiscal 2000” discussions above.

	Year Ended June 30,
	2002			2001			2000
	(In millions)
Contadina universal product codes (UPC) conversion	$	1.3		$	0.6		$	—
Inventory write-up		1.0			2.6			—
Asset value (recapture)		—			—			(2.3	)
Acquisition-related expenses		—			0.1			—
Special charges related to plant consolidation		1.3			14.6			10.9
Merger-related expenses		7.3			—			—
Interest expense		(2.9	)		—			—
Loss on financial instruments		5.8			—			—
Release of a contingent liability		(0.7	)		(4.8	)		—
Legal expenses		0.7			—			—
Extraordinary loss, net of tax benefit		1.3			26.2			4.3

Critical Accounting Policies and Estimates

     Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. On an on-going basis, we re-evaluate all of our estimates, including those related to trade promotions, coupon redemption, retirement benefits, retained-insurance liabilities and intangibles and long-lived assets. 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 materially differ from these estimates under different assumptions or conditions and as additional information becomes available in future periods. Management has discussed the development and selection of critical accounting policies and estimates with the Audit Committee of the Board of Directors and the Audit Committee has reviewed our disclosure relating to critical accounting policies and estimates in this Form 10-K.

     We believe the following are the more significant judgments and estimates used in the preparation of our consolidated financial statements.

     Trade Promotions: Trade promotions are an important component of the sales and marketing of our products, and are critical to the support of our business. Trade promotion costs include amounts paid to encourage retailers to offer temporary price reductions for the sale of our products to consumers, amounts paid to obtain favorable display positions in retailers’ stores, and amounts paid to customers for shelf space in retail stores. Accruals for trade promotions are recorded primarily at the time of sale of product to the customer based on expected levels of performance. Settlement of these liabilities typically occurs in subsequent periods primarily through an authorized process for deductions taken by a customer from amounts otherwise due to us. As a result, the ultimate cost of a trade promotion program is dependent on the relative success of the events and the actions and level of deductions taken by our customers for amounts they consider due to them. Final determination of the permissible deductions may take extended periods of time.

     Coupon Redemption: We offer coupons to consumers in the normal course of business. Coupon redemption costs are accrued in the period in which the coupons are offered, based on estimates of redemption rates that are developed by independent coupon redemption clearing-houses based on historical information. Should actual redemption rates vary from amounts estimated, adjustments to accruals may be required.

     Retirement Benefits: We sponsor non-contributory defined benefit pension plans and unfunded defined benefit postretirement plans providing certain medical, dental and life insurance benefits to eligible retired, salaried, non-union hourly and union employees. Several statistical and other factors which attempt to anticipate future events are used in calculating the expense and liabilities related to these plans. These factors include assumptions about the discount rate, expected return on plan assets, the health care cost trend rate,

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withdrawal and mortality rates and the rate of increase in compensation levels. The actuarial assumptions used by us may differ materially from actual results due to changing market and economic conditions, higher or lower withdrawal rates or longer or shorter mortality of participants. These differences may impact the amount of retirement benefit expense recorded by us in future periods.

     Retained-insurance Liabilities: We retain liabilities up to $0.25 million ($0.5 million effective July 1, 2002) per claim under our loss sensitive worker’s compensation insurance policy. For our general and automobile insurance policy, we retain liabilities up to $0.25 million per claim. An independent, third-party actuary estimates the outstanding retained-insurance liabilities by projecting incurred losses to their ultimate liability and subtracting amounts paid to-date to obtain the remaining liabilities. Actuarial estimates of ultimate liability are based on actual incurred losses, estimates of incurred but not yet reported losses based on historical information from both our company and the industry, and the projected costs to resolve these losses. Retained-insurance liabilities may differ based on new events or circumstances that might materially impact the ultimate cost to settle these losses.

     Intangible and Long-lived Assets: Intangible assets consist of trademarks and distribution rights. As a result of the adoption of SFAS No. 142, “Goodwill and Other Intangible Assets” on July 1, 2001, intangible assets with indefinite useful lives are no longer amortized, but are instead tested for impairment at least annually, by comparing the carrying value with the estimated fair value of the intangible assets. Estimated fair value is determined using various valuation methods, including the relief from royalty method and the residual income method. In estimating discounted future cash flows, management uses historical financial information in addition to assumptions of sales trends and profitability, consistent with our performance and industry trends. Estimates of fair value may differ if projected cash flows, market interest rates and discount factors change as a result of new events or circumstances.

     We review long-lived assets held and used, intangible assets with finite useful lives and assets held for sale for impairment annually or whenever events or circumstances indicate that the carrying amount of an asset may not be recoverable. If an evaluation of recoverability is required, the estimated undiscounted future cash flows associated with the asset are compared to the asset’s carrying amount to determine if an impairment charge is required. All long-lived assets for which management has committed to a plan of disposal are reported at the lower of carrying amount or fair value. Changes in projected cash flows generated by an asset based on new events or circumstances may indicate a change in fair value and require a new evaluation of recoverability of the asset.

Liquidity and Capital Resources

     Del Monte’s primary cash requirements are to fund debt service, finance seasonal working capital needs and make capital expenditures. Internally generated funds and amounts available under its revolving credit facility which provides for a $325.0 million line of credit (the “Revolver”), described in “Financing Activities — 2001” below, are our primary sources of liquidity.

     Our ability to fund our cash requirements and to remain in compliance with all of the financial covenants under our debt agreements depends on our future operating performance and cash flow. These are in turn subject to prevailing economic conditions and to financial, business and other factors, some of which are beyond our control.

     We believe that cash flows from operations and availability under the Revolver will provide adequate funds for our working capital needs, planned capital expenditures and debt service obligations for at least the next 12 months. In addition, following the closing of the proposed merger and the financing described below under the heading “Proposed Financing”, we believe that cash flows from operations and availability under the new bank facility will provide adequate funds for our working capital needs, planned capital expenditures and debt service obligations for at least 12 months following the merger.

     On June 12, 2002, Del Monte and Heinz entered into the Merger Agreement under which we expect to acquire the Heinz Businesses by merging Del Monte Corporation with and into SKF Foods. See “Recent Developments” and Note 2 to the consolidated financial statements for the year ended June 30, 2002 for a description of the proposed merger. We believe merger-related costs will require a significant use of cash. As of June 30, 2002, we had incurred $7.3 million of merger-related expenses, including expenses related to a proposed alternative transaction with a third party. As of June 30, 2002, $0.4 million of the $7.3 million had been paid; the remainder is expected to be paid during fiscal 2003. If the amount of certain merger-related expenses we incur exceeds $26.5 million in aggregate, Heinz is entitled to receive an amount equal to three times the excess of our merger-related expenses over $26.5 million. Heinz may elect to have this amount paid by (1) having Del Monte pay directly or reimburse Heinz for certain Heinz’s merger-related expenses, (2) increasing the amount of debt to be incurred by SKF Foods prior to the spin-off of SKF Foods to the Heinz shareholders, the proceeds of which shall be subsequently distributed to Heinz or (3) by a combination of (1) and (2) above.

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Contractual and Other Cash Obligations

     The following table summarizes our contractual and other cash obligations at June 30, 2002:

		Payments Due by Period
				Less than						After 5
		Total		1 year		2-3 years		4-5 years		years
		(In millions)
Contractual and other cash obligations reflected on the balance sheet:
	Accounts payable and accrued expenses(1)	$	258.5	$	258.5	$	—	$	—	$	—
	Short-term borrowings(2)		0.2		0.2		—		—		—
	Long-term debt(2)		590.3		2.9		5.9		74.3		507.2
	Other non-current liabilities(1)		154.9		—		39.0		36.9		79.0
			1,003.9		261.6		44.9		111.2		586.2
Contractual and other cash obligations not reflected on the balance sheet:(3)
	Operating leases		190.6		27.9		77.1		28.5		57.1
	Grower commitments(4)		573.9		137.3		125.5		102.4		208.7
	Other(5)		17.6		11.6		6.0		—		—
			782.1		176.8		208.6		130.9		265.8
Total contractual and other cash obligations		$	1,786.0	$	438.4	$	253.5	$	242.1	$	852.0

(1)	See Notes 4 and 10 to the consolidated financial statements for the year ended June 30, 2002; other non-current liabilities on the balance sheet also include $34.4 million of deferred actuarial gains related to our post-employment health and welfare plans that are non-cash amounts.
(2)	See Note 6 to the consolidated financial statements for the year ended June 30, 2002.
(3)	See Note 12 to the consolidated financial statements for the year ended June 30, 2002.
(4)	Priced at June 30, 2002 estimated costs.
(5)	Noncancelable future minimum payments under the agreement with Electronic Data Systems Corporation to provide information services functions and support.

     On December 19, 2000, we entered into a ten-year operating lease to rent our principal administrative headquarters in San Francisco, California. Payments under the terms of the lease are based on scheduled monthly base rents and an escalation of rent based on an annual estimate of the increase of our share of property taxes and building operating expenses. The lease provides two consecutive five-year renewal options at the end of the lease term. A standby letter of credit of $6.8 million is in place as security deposit for the lease. Future minimum lease payments under this lease are included in the table above.

     In November 1998, we entered into a build-to-suit lease arrangement to finance the construction of four warehouse facilities (the “Facilities”) adjacent to our Hanford, Kingsburg and Modesto, California, and Plymouth, Indiana production plants. The construction of the Facilities was financed by a special purpose entity sponsored by certain lending institutions (the “Lenders”). The special purpose entity is not affiliated with us and is not consolidated in our consolidated financial statements. We have accounted for this arrangement as an operating lease in accordance with SFAS 13, “Accounting for Leases”, as amended.

     The initial lease term runs until November 2003. Monthly lease payments are based on LIBOR, plus a credit spread, applied to a $37.8 million lease balance. Future minimum lease payments, assuming exercise of the purchase option available to us under the lease, are included in the table above. The lease contains various affirmative and negative covenants, including covenants based upon our financial performance. A default under the lease, including violation of these covenants, could require an acceleration of our payment obligations. As of June 30, 2002, we believe we are in compliance with these covenants.

     Following the initial lease term, and with required prior notice, we must exercise one of the following end of term options, each with respect to all, but not less than all, of the Facilities: (i) renew the lease for up to five additional one-year terms, subject to the consent of the Lenders, (ii) purchase the Facilities for the purchase amount (i.e. the lease balance plus accrued and unpaid rent plus any other amounts due and payable) or (iii) sell the Facilities, on behalf of the special purpose entity, to an unrelated third party. In the event option (iii) is elected, we have provided a residual value guarantee of up to approximately $30.3 million for any deficiency if

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the proceeds from the sale of the Facilities are less than the lease balance. However, we are entitled to any sale proceeds from a sale of the Facilities in excess of the lease balance.

     On June 27, 1996, we entered into a twenty-year operating lease to rent warehouse space adjacent to production facilities located in Toppenish, Washington; Mendota, Illinois; Plover, Wisconsin and Yakima, Washington. Payments under the terms of the lease are based on scheduled monthly base rents adjusted for inflation every six years. The lease provides three to four consecutive ten-year renewal options for different warehouses at the end of the lease term. After the tenth anniversary of the lease, we have the option to purchase the warehouses at the greater of their market value or the sum of the landlord’s share of construction costs and any prepayment premium. A standby letter of credit of $2.1 million is in place as security deposit for the lease. Future minimum lease payments under this lease are included in the table above.

Commercial Commitments

     Lines of Credit. The working capital position of our company is seasonally affected by the growing cycle of the vegetables, fruit and tomatoes we process. Substantially all inventories are produced during the harvesting and packing months of June through October and depleted through the remaining seven months. Accordingly, working capital requirements fluctuate significantly. We use funds from the Revolver, which provides for a $325.0 million line of credit, to finance the seasonal working capital needs of our operations.

     The maximum availability of the Revolver is subject to an asset-based borrowing base. There was no outstanding balance on the Revolver at June 30, 2002. Net availability under the Revolver, adjusted for borrowing base limitations and outstanding letters of credit, at June 30, 2002 totaled $219.4 million. The Revolver expires on May 15, 2007.

     Standby Letters of Credit. We have standby letters of credit for certain operating leases, insurance-related requirements and our South America operations. The majority of the standby letters of credit are renewed automatically each year unless cancellation notice is given in advance by the issuer. At June 30, 2002, a balance of $33.0 million was outstanding on these letters of credit.

Operating Activities

     Cash provided by operating activities increased $79.8 million to $169.4 million from $89.6 million for the years ended June 30, 2002 and 2001, respectively. The increase in operating cash flows was due primarily to favorable working capital changes. One of our continuing objectives in fiscal 2002 was to reduce debt levels. We reduced our summer 2001 production below our anticipated level of sales for fiscal 2002,generating significant cash flows that contributed to our $120.0 million prepayment of our term loan. Our inventories, as of June 30, 2002, were $32.1 million lower than they were at the same time last year.

     Cash provided by operating activities for the year ended June 30, 2001 was $89.6 million. Cash used in operating activities for the year ended June 30, 2000 was $7.1 million. The change was primarily due to lower production of inventories during fiscal 2001, as well as the depletion of inventories that were built up in preparation for possible “Year 2000” shortages.

Investing Activities

     Cash used in investing activities decreased $52.9 million to $41.3 million from $94.2 million for the years ended June 30, 2002 and 2001, respectively. The decrease was due primarily to the impact of the SunFresh and S&W acquisitions in fiscal 2001 and lower capital expenditures of $1.8 million. See Note 3 to the consolidated financial statements for further information about these acquisitions.

     Cash used in investing activities increased $28.3 million to $94.2 million from $65.9 million for the years ended June 30, 2001 and 2000, respectively. The increase was due primarily to the acquisitions of the S&W and SunFresh businesses in fiscal 2001. The increase was offset by $11.0 million spent on the acquisition of the Cambria, Wisconsin plant and higher capital expenditures of $11.4 million in fiscal 2000.

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     Total capital expenditures incurred for the years ended June 30, 2002, 2001 and 2000 were $43.6 million, $45.4 million and $56.8 million, respectively. We plan an aggregate of approximately $50.0 million in capital expenditures for fiscal 2003. Details of the types of capital expenditures, which include purchases of land, new and used equipment/fixtures, information technology equipment, installation labor, and capitalized software development costs, are as follows:

	Year Ended June 30,
	2002		2001		2000
	(In millions)
Capability improvement program and information systems	$	17.9	$	10.7	$	6.5
Equipment replacement and other improvements		12.4		19.8		10.8
Economic return and cost savings		11.3		9.4		17.4
Environmental compliance		1.7		1.1		0.6
Plant consolidation		0.3		4.4		21.5
Total capital expenditures	$	43.6	$	45.4	$	56.8

     Capability improvement program and information systems. In June 2000, we began implementing a capability improvement program to upgrade information systems and business processes. The Enterprise Resource Planning system and Advanced Planning system are components of this seven-phase program which is expected to be substantially completed by the end of fiscal year 2004. In addition, purchases of information technology equipment, both related and unrelated to the capability improvement program, and other capitalized software are included under this type of capital expenditure.

     At June 30, 2002 and 2001, we had $15.4 million and $10.4 million of construction-in-progress related to the capability improvement program and other information system projects. We estimate we will incur approximately $12.8 million of capital expenditures of this type in fiscal 2003.

     Equipment replacement and other improvements. This type of capital expenditure includes normal replacement of equipment at the end of its economic life, and other improvements including purchases of land, furniture and fixtures.

     Economic return and cost savings. This type of capital expenditure includes projects that realize economic benefit or cost savings by installing equipment that allows facilities to operate more efficiently. Projects that require purchases of equipment to expand capacity for new products or product line extensions are also included in this category of expenditure.

     Environmental compliance. This type of capital expenditure includes projects that enable us to improve the impact of our operations on the environment, consistent with our standards and regulatory compliance.

     Plant consolidation. This type of expenditure is part of our California cannery consolidation, under which we expanded our operations in Hanford and Modesto to provide additional processing capacity to effect the closure of facilities located in San Jose, Stockton and Woodland.

     We had no significant construction-in-progress related to our plant consolidation program at June 30, 2002. At June 30, 2001, we had approximately $6.0 million of construction-in-progress related to our plant consolidation program.

     In addition to capital expenditures, we enter into operating leases to support our ongoing operations. The decision to lease, rather than purchase, an asset is the result of a number of considerations including the cost of funds, the useful life of the asset, its residual value and technological obsolescence. Additionally, some equipment is proprietary to the lessor and cannot be purchased. All material asset-financing decisions include an evaluation of the potential impact of the financing on our debt agreements, including applicable financial covenants. Rent expense, including contingent rent expense (calculated based on usage of equipment), was $36.8 million, $34.7 million and $30.1 million for the fiscal years ended June 30, 2002, 2001 and 2000, respectively.

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Financing Activities — 2002 Activity

     Cash used in financing activities for the year ended June 30, 2002 was $123.6 million. Cash provided by financing activities for the year ended June 30, 2001 was $11.9 million. The change was due primarily to the $120.0 million prepayment of the term loan as well as the absence of long-term borrowings in fiscal 2002. In addition, we had lower working capital financing requirements in fiscal 2002 than the prior year, as explained above. Net availability under the Revolver, adjusted for borrowing base limitations and outstanding letters of credit, at June 30, 2002 totaled $219.4 million. Unused lines of credit outside the United States at June 30, 2002 totaled $0.7 million.

     Subject to various terms and conditions, we currently anticipate that financing in an aggregate amount of up to $1.7 billion for the spin-off and the merger will be in the form of:

• a new bank facility consisting of a tranche A term loan in the amount of $250.0 million, a tranche B term loan in the amount of $800.0 million and a $350.0 million revolving credit facility; and

• debt securities with an aggregate principal amount currently expected to be $300.0 million.

     See “Proposed Financing” under “Management’s Discussion and Analysis of Results of Operations and Financial Condition — Liquidity” for a further description of the proposed financing of the spin-off and merger.

     On September 19, 2001, we launched an exchange offer under which our outstanding 9 1/4% Senior Subordinated Notes could be exchanged for Series B 9 1/4% Senior Subordinated Notes registered under the Securities Act of 1933. The exchange offer was completed and expired on October 18, 2001. All holders of the notes participated in the exchange and all of the 9 1/4% Senior Subordinated Notes were exchanged for Series B 9 1/4% Senior Subordinated Notes.

Financing Activities — 2001 Activity

     On May 15, 2001, we refinanced our outstanding debt. In connection with this refinancing, we repaid amounts outstanding under our existing revolving credit facility and term loans governed by the then existing Second Amended and Restated Credit Agreement (the “Agreement”) dated January 14, 2000. Concurrently, we amended and restated the terms and conditions of the Agreement to create a Third Amended and Restated Credit Agreement dated as of May 15, 2001 which established the Revolver (with a $325.0 million aggregate commitment amount) and a term loan (the “Term Loan”) in an initial funded amount of $415.0 million. The new credit agreement provides for additional borrowing capacity (up to $100.0 million) under either the Revolver or Term Loan. The refinancing also included the issuance of new 9 1/4% Senior Subordinated Notes due 2011 (the “New Notes”) in an amount of $300.0 million, which provided proceeds used by Del Monte to (a) redeem its then outstanding 12 1/4% Senior Subordinated Notes due 2007 and DMFC’s outstanding 12 1/2% Senior Discount Notes due 2007, (b) repay the Revolver and Term Loan balances then outstanding under the Agreement, and (c) pay fees and expenses of the May 15, 2001 refinancing. The refinancing also established new financial covenants reflecting changes in our debt structure and our financial performance. The Revolver expires on May 15, 2007, and the Term Loan matures on March 31, 2008.

     In connection with the repayment of debt at May 15, 2001, an extraordinary loss of $42.3 million ($26.2 million net of tax) was recorded. This extraordinary loss consisted of $32.0 million of prepayment premiums and a $10.3 million write-off of previously capitalized deferred debt issuance costs and original issue discount.

     In fiscal 2001, cash provided by financing activities decreased $59.3 million to $11.9 million from $71.2 million for the years ended June 30, 2001 and 2000, respectively. The decrease was primarily due to the incidental costs relating to the May 2001 refinancing. Net availability under the revolving credit agreement, adjusted for borrowing base limitations and outstanding letters of credit, at June 30, 2001 totaled $260.1 million. Unused lines of credit outside the United States at June 30, 2001 totaled $0.9 million.

Financing Activities — 2000 Activity

     On January 14, 2000, we amended our senior credit agreement with respect to our then effective revolver and term loan facility. The amendment provided for additional borrowing capacity (up to $100.0 million) under either the revolver or term loan facility. Under this provision, we increased our term loan borrowings by $100.0 million in August 2000. The proceeds of this borrowing were used to reduce the revolver balance. The amendment also adjusted certain financial covenants to reflect changes in our recent positive

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financial performance. The amendment did not change the revolver’s expiration date, the term loan maturity dates or the terms of the pricing schedule.

     The amendment allowed the prepayment of up to $35.0 million of senior subordinated notes. During February 2000, we repurchased $31.0 million of 12 1/4% Senior Subordinated notes through the use of funds that carry a lower interest rate. In conjunction with this early debt prepayment, an extraordinary loss of $5.2 million ($4.3 million net of tax) was recorded, consisting of prepayment premiums and a write-off of previously capitalized deferred debt issuance costs and original issue discount.

Restrictive Covenants

     The Term Loan, the Revolver and the New Notes contain restrictive covenants, which require us to meet certain financial tests, including minimum fixed charge coverage, minimum interest coverage and maximum leverage ratios. These requirements and ratios generally become more restrictive over time, subject to allowances for seasonal fluctuations. The credit agreements applicable to DMC generally limit through restricted payment covenants the ability of DMC to make cash payments to our parent company, limiting our ability to pay monetary dividends.

     In addition, the build-to-suit lease arrangement for warehouse facilities adjacent to four of our production plants contains restrictive covenants. The restrictive covenants include financial tests such as fixed charge ratio, senior debt ratio and total debt ratio.

     We believe that we were in compliance with all such financial covenants at all testing intervals, and as of June 30, 2002. The most restrictive of these covenants currently is the senior debt ratio related to the build-to-suit lease arrangement.

Pension Funding

     As described more fully in Note 10 to the consolidated financial statements for the year ended June 30, 2002, our defined benefit retirement plans were previously determined to be underfunded under ERISA guidelines. It has been our policy to fund our retirement plans in an amount consistent with the funding requirements of federal law and regulations and not to exceed an amount that would be deductible for federal income tax purposes. In connection with the recapitalization in April 1997, we entered into an agreement with the Pension Benefit Guaranty Corporation, dated April 7, 1997, under which we agreed to contribute a total of $55.0 million to our defined benefit pension plans through calendar 2001.

     As a result of the downturn of the financial markets, the investment returns from our pension plan assets declined $16.1 million and $11.4 million for the years ended of June 30, 2002 and 2001, respectively. This has caused our pension plans to become underfunded by $29.1 million as of June 30, 2002 from an overfunded status of $13.7 million as of June 30, 2001. We have recorded a minimum pension liability adjustment of $48.8 million ($29.8 million net of tax) as part of other comprehensive loss in our consolidated statements of stockholders’ equity as of June 30, 2002. See Note 10 to the consolidated financial statements for the year ended June 30, 2002.

Insurance

     We maintain insurance coverage to manage our risks related to workers compensation, property, automobile liability, general liability, directors and officers and other potential exposures. Insurance expense in fiscal 2002, 2001 and 2000 was $12.8 million, $15.0 million and $7.2 million, respectively. In fiscal 2000, we were insured under a premium based policy for workers compensation. This policy expired at the end of fiscal 2000. Beginning in fiscal 2001, we retain all liabilities up to $0.25 million (increased to $0.5 million effective July 1, 2002) per claim for workers compensation.

     The insurance industry has become more selective in offering certain types of insurance coverage, such as property, product liability, product recall and directors and officers liability. We were able to obtain these insurance coverages for fiscal 2003. Our fiscal 2003 insurance program is consistent with both our past level of coverage and our risk management policies. Fiscal 2003 insurance expense is estimated at $17.2 million, which includes estimated accruals of amounts for our loss sensitive insurance policies.

Environmental Matters

     We spent approximately $6.9 million on domestic environmental expenditures from fiscal 2000 through fiscal 2002, primarily related to wastewater treatment systems, settlement of environmental litigation and UST remediation activities. We project that we will spend an aggregate of approximately $2.5 million in fiscal 2003 and 2004 on capital projects and other expenditures in connection

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with environmental compliance. We believe that compliance with the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, and other environmental laws will not have a material adverse effect on its financial position or results of operations. See “Business - Governmental Regulation; Environmental Compliance”.

Inflation

     Our costs are affected by inflation and we may experience the effects of inflation in future periods. While we have historically mitigated the inflationary impact of increases in our costs by controlling our overall cost structure, we may not be able to mitigate inflationary impacts in the future.

Recently Issued Accounting Standards

     In June 2001, the Financial Accounting Standards Board (“FASB”) issued Statement No. 143, “Accounting for Asset Retirement Obligations” (“SFAS 143”). SFAS 143 addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. SFAS 143 applies to legal obligations associated with the retirement of long-lived assets that result from the acquisition, construction, development and normal use of the asset. SFAS 143 applies to all entities and amends FASB Statement No. 19, “Financial Accounting and Reporting by Oil and Gas Producing Companies”. SFAS 143 requires that the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. SFAS 143 is effective for fiscal years beginning after June 15, 2002. We believe that SFAS 143 will not have a material effect on our consolidated financial statements.

     In August 2001, the FASB issued Statement No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (“SFAS 144”). While SFAS 144 supersedes FASB Statement No. 121, “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of”, it retains many of the fundamental provisions of that Statement. SFAS 144 is effective for fiscal years beginning after December 15, 2001 and interim periods within those fiscal years. We believe that adoption of SFAS 144 in fiscal 2003 will not have a material effect on our consolidated financial statements.

     In April 2002, the FASB issued Statement No. 145, “Rescission of FASB Statement No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections” (“SFAS 145”). SFAS 145 rescinds FASB Statement No. 4, “Reporting Gains and Losses from Extinguishment of Debt” (“SFAS 4”) and amends other existing authoritative pronouncements. As a result of SFAS 145, gains and losses from extinguishment of debt should be classified as extraordinary items only if they meet the criteria in 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 Infrequently Occurring Events and Transactions” (“APB 30”). Applying the provisions of APB 30 will distinguish transactions that are part of an entity’s recurring operations from those that are unusual or infrequent or that meet the criteria for classification as an extraordinary item. SFAS 145 is effective for fiscal years beginning after May 15, 2002. Upon adoption of SFAS 145 on July 1, 2002, we will reclassify prior year items that do not meet the extraordinary item classification criteria in APB 30. We are currently analyzing SFAS 145; however based on management’s current understanding and interpretation, SFAS 145 is not expected to have a material impact on our financial position or results of operations, except that certain reclassifications will occur.

     In June 2002, the FASB issued Statement No. 146, “Accounting for Costs Associated with Exit or Disposal Activities” (“SFAS 146”. SFAS 146 replaces EITF 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 146 requires companies to recognize costs associated with exit or disposal activities when they are incurred rather than at the date of a commitment to an exit or disposal plan. SFAS 146 is to be applied prospectively to exit or disposal activities initiated after December 31, 2002. We believe that adoption of SFAS 146 will not have a material effect on our consolidated financial statements.

Related Party

     Transactions with Texas Pacific Group. We entered into a ten-year Management Advisory Agreement dated April 18, 1997 with TPG Partners, L.P. Under the Management Advisory Agreement, TPG Partners, L.P. is entitled to receive an annual fee from us for management advisory services equal to the greater of $0.5 million or 0.05% of the budgeted consolidated annual net sales of our company. TPG Partners, L.P. received fees of $0.7 million, $0.8 million and $0.8 million under this agreement for the years ended June 30, 2002, 2001 and 2000, respectively. This agreement makes available the resources of TPG Partners, L.P. concerning a variety of financial and operational matters, including advice and assistance in reviewing our business plans and our results of operations and in evaluating possible strategic acquisitions, as well as providing investment banking services in identifying and arranging sources of

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financing. The Management Advisory Agreement does not specify a minimum number of TPG Partners, L.P. personnel who must provide such services or the individuals who must provide them. It also does not require that a minimum amount of time be spent by such personnel on our matters. We cannot otherwise obtain the services that TPG Partners, L.P. will provide without the addition of personnel or the engagement of outside professional advisors. This agreement will terminate upon completion of the proposed merger of DMC and the Heinz Businesses.

     We also entered into a ten-year Transaction Advisory Agreement dated April 18, 1997 with TPG Partners, L.P. As compensation for financial advisory and other similar services rendered in connection with “add-on” transactions (such as an acquisition, merger or recapitalization), TPG Partners, L.P. is to be paid a fee of 1.5% of the total value of each add-on transaction. In fiscal 2002, 2001 and 2000, TPG Partners, L.P. did not receive any payments under the Transaction Advisory Agreement. This agreement will terminate upon completion of the proposed merger of DMC and the Heinz Businesses with a final payment of up to $9.0 million.

     Transactions with Management. During the second and third quarters of fiscal 1998, we sold shares of Del Monte common stock to certain key employees, including the executive officers of our company, under the Del Monte Employee Stock Purchase Plan. Messrs. Wolford and Smith each paid $0.18 million in cash and borrowed an additional equal amount from our company, under individual secured Promissory Notes (“Promissory Notes’’), to acquire the stock purchased by each of them pursuant to the plan. The Promissory Notes are secured by a pledge of the stock purchased with the proceeds of the loans. The terms of the Promissory Notes provide for accrual of interest, compounded semiannually, at the applicable federal short-term rate, adjusted each February 1 and August 1. As of August 1, 2002, this rate was 2.52%. The Promissory Notes permit prepayment at the borrower’s option and also require repayment upon the occurrence of specific events, including termination of employment and sale of the securities pledged to secure the Promissory Notes. We extended these loans in accordance with applicable law governing transactions by a corporation with its officers. We cannot predict whether the terms of these transactions, if made with a disinterested third party, would be more or less favorable to Messrs. Wolford and Smith. We have no reason to believe that such terms would be less favorable. Our bank financing arrangements limit our ability to make loans or advances to employees to a maximum amount outstanding at any time of $10.0 million. Other than these loans to Messrs. Wolford and Smith, we have not made any loans or advances to any of our directors or executive officers or members of their immediate families.

     In addition, Del Monte amended and entered into employment agreements with certain key employees during the third and fourth quarters of fiscal 2002. The agreements are filed as exhibits to this annual report on Form 10-K.

Proposed Financing

     On June 12, 2002, DMC, Heinz and certain banks entered into commitment letters, including related engagement and fee letters, with respect to an aggregate amount of up to $1.9 billion in financing in connection with the proposed spin-off and the merger involving the Heinz Businesses. The proposed financing is expected to consist of the following:

(a)

a senior secured bank facility (which we refer to as the “New Bank Facility”); and

(b)

either senior subordinated notes (or, at the option of DMC and Heinz, senior unsecured notes) to be sold in a SEC registered offering or an offering exempt from the registration requirements of the Securities Act of 1933 in an aggregate principal amount currently expected to be $300.0 million (which we refer to as the “Capital Market Notes”), senior secured notes in an aggregate principal amount currently expected to be $300.0 million to be sold to institutional investors in a private placement (which we refer to as the “Senior Secured Notes”, and, collectively with the Capital Market Notes, the “Notes”) or a combination of Capital Market Notes and Senior Secured Notes in an aggregate principal amount currently expected to be $300.0 million.

     The New Bank Facility is expected to consist of a $350.0 million revolving credit facility (including a letter of credit sublimit and a swingline loan sublimit), a term loan consisting of a $250.0 million tranche A loan and a $800.0 million tranche B loan. Upon completion of the spin-off and merger, the New Bank Facility would refinance the existing Revolver and Term Loan in their entirety. In addition, DMC’s $300.0 million existing notes due 2011 are expected to remain outstanding after the spin-off and the merger. The New Bank Facility will be entered into, and the Notes will be issued by, SKF Foods prior to the spin-off and the merger. Upon completion of the merger, the New Bank Facility and the Notes will be guaranteed by DMFC.

     Proceeds from the New Bank Facility and the Notes will be used (a) to satisfy the funding requirements of the spin-off and the merger (including the distribution to Heinz of $800.0 million in cash and $300 million in Notes), (b) to refinance the Revolver and the

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Term Loan, (c) to pay the transaction fees and expenses relating to the spin-off and the merger (including the fees relating to the proposed financing) and (d) for working capital and other general corporate purposes.

     The borrower’s obligations under the New Bank Facility and the Notes will be secured by a lien on substantially all of its assets and, upon completion of the proposed acquisition of the Heinz Businesses and the guaranty by DMFC, on all of the assets of DMFC and each of its material direct and indirect U.S. subsidiaries. The proposed financing is subject to certain conditions, including the satisfaction or waiver of all conditions to the completion of the spin-off and the merger and favorable market conditions, and, accordingly, we cannot assure you that the financing will be completed.

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Item 7A. Quantitative and Qualitative Disclosures about Market Risks

Financial Instruments and Risk Management Policies

     Our primary market risk exposure is that of interest rate risk. The average debt balance for our domestic short-term borrowings and long-term debt was $716.8 million and $749.9 million for the years ended June 30, 2002 and 2001, respectively. The weighted average interest rate for these obligations was 7.79% and 9.46% for the years ended June 30, 2002 and 2001, respectively. Our interest expense with regard to our revolving and term loan agreement is calculated using a reference interest rate plus a credit margin. Therefore, given a fixed debt level and a fixed credit margin, interest expense increases or decreases in relation to market interest rates. A 100 basis point change in the reference rate on our variable bank debt rate, after giving effect to the swap agreements noted below, would result in an approximate change of $1.2 million and $4.0 million in interest expense for the years ended June 30, 2002 and 2001, respectively. This assumes consistent debt levels for fiscal 2002 and 2001. Historically, to reduce our exposure to higher interest rates, we have entered into interest rate protection agreements to limit the impact of rate increases on future income. We use derivatives only for purposes of managing risk associated with the underlying exposures. We do not trade or use instruments with the objective of earning financial gains on interest rate fluctuations alone, nor do we use instruments where there are not underlying exposures. Complex instruments involving leverage or multipliers are not used. We believe that our use of interest rate protection agreements to manage risk is in Del Monte’s best interest and that any resulting market risk exposure would not materially effect operating results. (Market risk exposure has been defined as the change in fair value of a derivative financial instrument assuming a hypothetical 10% adverse change in market rates).

     The terms of our revolving and term loan agreement required us to enter into and maintain one or more permitted swap obligations (as defined in the loan agreement) for, among other things, a notional amount of at least $200.0 million and for a term of at least three years. To accomplish this, and to limit our exposure to interest rate increases, we entered into interest rate swaps on August 3, 2001. The aggregate notional amount of the swaps is $200.0 million and the swaps are in effect from September 28, 2001 through September 30, 2004. The swaps are with several banks and fix the three-month LIBOR at a weighted average rate of 4.91% per annum on the $200.0 million notional amount. This fixed interest rate is measured against three-month LIBOR for purposes of settlement. The fair value of each swap is determined independently by each bank, using its own valuation model, based on the projected three-month LIBOR yield curve. According to each bank, valuations based on other models may yield different results.

     The swaps were not initially designated as hedging instruments under SFAS 133 (as amended by SFAS 137 and 138) when they were entered into on August 3, 2001. Changes in fair value of the swaps from that date to their designation date as hedging instruments are reflected in the Consolidated Statements of Income for the year ended June 30, 2002. The fair value of the swaps at January 23, 2002 was a liability of $5.8 million. This liability will be credited to interest expense in the Consolidated Statements of Income over the remaining life of the swap agreements. This credit offsets interest expense in connection with the swap agreements. On January 23, 2002, we designated the swaps as cash flow hedging instruments of market interest rate risk under SFAS 133. The changes in the fair value of the swaps subsequent to the January 23, 2002 designation date are recorded in other comprehensive income in Stockholders’ Equity in an amount equal to the effective portion (deemed in accordance with SFAS 133) of the hedging instruments. The remaining amount, if any, equal to the ineffective portion (deemed in accordance with SFAS 133) of the hedging instruments is recorded as other income in the Consolidated Statements of Income.

     The fair value of the swaps at January 23, 2002 and June 30, 2002 was a liability of $5.8 million and $6.9 million, respectively. For the year ended June 30, 2002, the change in fair value of the swaps through January 23, 2002 resulted in a loss on financial instruments of $5.8 million. For the year ended June 30, 2002, the change in fair value of the swaps from January 23, 2002 to June 30, 2002 resulted in other comprehensive loss of $4.0 million ($2.4 million net of tax). Interest expense for the year ended June 30, 2002 was increased by $4.2 million due to the impact of the swaps. Interest expense for the year ended June 30, 2002 includes a credit to interest expense of $2.9 million, reflecting a release to earnings from the $5.8 million liability, attributed to the January 23, 2002 to June 30, 2002 period. A total of $3.4 million of additional credits to interest expense are expected for fiscal 2003. Settlements accrued for payment to the swap counterparties offset these releases to earnings from this liability.

     We had two interest rate cap agreements during fiscal 2001, for the term and revolver loans, both of which had terms of twelve months which ended June 30, 2001. The incremental effect of these interest rate contracts on interest expense for the year ended June 30, 2001 was $0.3 million.

     We do not believe we have any material commodity risk because we purchase most of our raw product requirements through arrangements under which pricing has not fluctuated significantly in recent years. See “Business — Supply” and Note 12 to the consolidated financial statements for the year ended June 30, 2002.

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Factors that May Affect Future Results

     Our future operating results may be materially affected by a number of factors, including, among others, those factors discussed below. Further, the future operating results of Del Monte following the completion of the proposed merger of DMC with and into SKF Foods may be materially affected by a number of additional factors that are discussed in the proxy statement/prospectus included as part of the registration statement we have filed with the SEC concerning the merger. We urge you to read the “Risk Factors” section of that proxy statement/prospectus for a description of the factors that could materially affect our business, financial condition and results of operation following the merger.

     This annual report also contains forward-looking statements, including those in the sections captioned “Business”, “Selected Financial Data”, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Financial Statements and Supplementary Data”. Statements that are not historical facts, including statements about our beliefs or expectations, are forward-looking statements. These statements are based on plans, estimates and projections at the time we make the statements, and readers should not place undue reliance on them. We do not undertake to update any of these statements in light of new information or future events.

     Forward-looking statements involve inherent risks and uncertainties. We caution you that a number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. These factors include, among others: general economic and business conditions; weather conditions; crop yields; competition, including pricing and promotional spending levels by competitors; ability to increase prices; raw material costs and availability; the loss of significant customers; market acceptance of new products; successful integration of acquired businesses; consolidation of processing plants; changes in business strategy or development plans; availability, terms and deployment of capital; changes in, or the failure or inability to comply with, governmental regulations, including, without limitation, environmental regulations; industry trends and capacity and other factors discussed below.

     Factors relating to future benefits of the proposed merger of DMC with and into SKF Foods Inc. that could cause actual results to differ materially from those described in this Annual Report include those factors previously mentioned, as well as: the inability to obtain stockholder or regulatory approvals, including without limitations a private letter ruling from the Internal Revenue Service; actions of the U.S., foreign and local governments; the inability to successfully integrate Del Monte and the Heinz Businesses; costs related to the merger; the inability to achieve synergies resulting from the merger; and other factors.

Failure to complete the proposed merger of DMC and the Heinz Businesses could adversely impact the market price of Del Monte common stock as well as our business and operating results.

     If the merger is not completed for any reason, the price of our common stock may decline to the extent that the current market price of our common stock reflects positive market assumptions that the spin-off and the merger will be completed and the related benefits will be realized. We may also be subject to additional risks if the merger is not completed, including:

• depending on the reasons for termination of the Merger Agreement, the requirement that we pay Heinz a termination fee of $20 million;

• substantial costs related to the merger, such as legal, accounting, filing, financial advisory and financial printing fees, must be paid regardless of whether the merger is completed; and

• potential disruption to our businesses and distraction of our workforce and management team.

Our high leverage could adversely affect our business.

     We are highly leveraged. We can incur additional indebtedness, even though our amended and restated credit facility imposes some limits on our ability to do so. Because our business is seasonal, our borrowings fluctuate significantly during the year, generally peaking in September and October. Our high degree of leverage can have important adverse consequences, such as:

• Limiting our ability to obtain additional financing;

• Limiting our ability to invest operating cash flow in our business;

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• Limiting our ability to compete with companies that are not as highly leveraged;

• Increasing our vulnerability to economic downturns and changing market conditions; and

• Increasing our vulnerability to fluctuations in market interest rates.

Our ability to pay our debt service depends partly on our performance.

     Our financial position could also prevent us from obtaining necessary financing at favorable rates, including at times when we must refinance maturing debt. If we cannot pay our debt service and meet our other liquidity needs from operating cash flow, we could have substantial liquidity problems. If we default on any of our debt, the relevant lenders could accelerate the maturity of the debt and take other actions that could adversely affect us. For example, in the event of a default under our bank financing, the lenders could foreclose on the security for the facility, which includes virtually all of the assets of our company.

We will require a significant amount of cash to service our indebtedness. Our ability to generate cash depends on many factors beyond our control.

     Our ability to make payments on and to refinance our debt, including the notes and the amended and restated credit facility, and to fund planned capital expenditures and possible expansions will depend on our ability to generate cash in the future. This is subject to general economic, financial, competitive, legislative, regulatory and other factors that may be beyond our control.

     We cannot assure you that our business will generate sufficient cash flow or that future borrowings will be available to us in an amount sufficient to enable us to pay our indebtedness, including the notes, or to fund our other liquidity needs. We may need to refinance all or a portion of our indebtedness, including the notes and our credit facility, on or before maturity. We cannot assure you that we will be able to refinance any of our indebtedness, including the notes and our credit facility, on commercially reasonable terms or at all.

Despite our significant indebtedness, we may still be able to incur substantially more debt through additional borrowings. This could further exacerbate the risks described above.

     The indenture under which the 9 1/4% Senior Subordinated Notes were issued permits us to borrow up to an additional $100.0 million under its amended and restated credit facility (from an initial capacity of $740.0 million) from additional commitments from new or existing lenders without any additional approval from the existing lenders. All of the borrowings under the amended and restated credit facility will be senior to the notes issued under the indenture. In addition to substantial amounts of money from other sources and amounts that may be borrowed under the amended and restated credit facility, the indenture also allows us to borrow money. If new debt is added to our current debt levels, the related risks that we now face could intensify.

Our business is highly competitive, and we cannot assure you that we will maintain our current market share.

     Many companies compete in the domestic processed vegetable, fruit and tomato product categories. However, only a few well-established companies operate on both a national and a regional basis with one or several branded product lines. We face strong competition from these and other companies in all our product lines. Important competitive considerations include the following:

• Some of our competitors have greater financial resources and operating flexibility than us. This may permit them to respond better to changes in the industry or to introduce new products and packaging more quickly and with greater marketing support.

• Several of our product lines are sensitive to competition from regional brands, and many of our product lines compete with imports, private label products and fresh alternatives. No single private label competitor has greater market share than us in our principal product categories. In fiscal 2002, private label products as a group had market shares of 45.1%, 40.2% and 31.5% in the processed vegetable, major fruit and solid tomato categories, respectively.

• We cannot predict the pricing or promotional activities of our competitors or whether they will have a negative effect on us and, when we raise our prices, we may lose market share to our competitors.

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• The processed food industry has in the past experienced processing over-capacity, which could create an imbalance in supply and demand that depresses sales volumes or prices.

Sales of our products depend upon a limited number of customers.

     A relatively limited number of customers account for a large percentage of our total sales. During the year ended June 30, 2002, our top 15 customers represented approximately 61% of our sales, with sales to Wal-Mart Stores, Inc. representing approximately 18% of sales. In recent years, there has been significant consolidation among our customers through acquisitions. Our business may be seriously harmed if we experience a loss of any of our significant customers or suffer a substantial reduction in orders from these customers.

Our business strategies pose risks associated with our ability to reach targeted customers and complete acquisitions successfully.

     The success of our business strategy depends in part on our ability to reduce costs. We plan to use improved processing technologies to maintain our position as a low cost and efficient producer. The success of our business strategy also depends on our ability to increase sales of our products such as single-serve fruit products, diced tomatoes, specialty vegetables and Orchard Select jarred fruit, and to increase product distribution through high volume club stores, such as Sam’s and Costco, supercenters and mass merchandisers, such as Wal-Mart Supercenters. We also plan to grow through acquisitions. All of these plans involve risks, including the following:

• We may not complete capital projects on time or within budget.

• Acquisitions may not be accretive and may negatively impact operating results.

• Our customers generally do not enter into long-term contracts and generally purchase products based on their inventory levels. They can stop purchasing our products at any time. Losing any significant customer would affect sales volumes and could also have a negative effect on our reputation.

• Acquisitions could require the consent of our bank lenders and could involve amendments to our principal credit facility to permit us to comply with our financial covenants. These lenders could also impose conditions on their consent that could adversely affect our operating flexibility.

• We may not be able to successfully integrate acquired businesses, including personnel, operating facilities and information systems, into our existing operations. The timing and number of acquisitions could make these risks more difficult to address. The process of integrating acquired businesses could distract management from other opportunities or problems in our business. The benefits of an acquisition often take time to develop, and there is no guarantee that any acquisition will in fact produce any benefits.

• In pursuing acquisitions, we could incur substantial additional debt and contingent liabilities, which could in turn restrict our ability to pursue other important elements of our business strategy or our ability to comply with our financial covenants.

The capability improvement program begun in June 2000 may not perform as expected, resulting in business disruptions.

     In June 2000, we began implementing a capability improvement program to upgrade business processes and information systems. The program will be implemented in phases and is scheduled to be substantially completed by the end of fiscal year 2004. Significant disruptions to our business may result if the program does not work as expected, if implementation is delayed or if our personnel are unable to effectively adapt to new programs and processes.

Our operating results are negatively impacted by the current trend of our customers reducing their levels of inventory.

     Our trade customers have been reducing their inventory levels significantly during the past several fiscal years. As a result, our sales to trade customers are less than the volume of purchases of our products by consumers. The effect of this trend was significant in the fourth quarter of fiscal 2000, as trade customers reduced the inventory levels they had built in preparation for possible “Year 2000” shortages. The inventory reduction continued at a modest rate into fiscal 2001 and continued to a lesser extent throughout this year. The reduction of retailer inventory decreased our shipments and adversely affected our growth, gross margin and working capital requirements. If the trend of reducing trade inventory levels continues, it could adversely affect our operating results.

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Severe weather conditions and natural disasters can affect crop supplies and reduce our operating results.

     Severe weather conditions and natural disasters, such as floods, droughts, frosts, earthquakes or pestilence, may affect the supply of our products. Irregular weather patterns may persist over a long period and further impact the supply of our products. These events can result in reduced supplies of raw materials, lower recoveries of usable raw materials, higher costs of cold storage if harvests are accelerated and processing capacity is unavailable or interruptions in our production schedules if harvests are delayed. Competing manufacturers can be affected differently depending on the location of their supplies. If our supplies of raw materials are reduced, we may not be able to find enough supplemental supply sources on favorable terms, which could adversely affect our business, operating results and financial condition.

Our operating results are highly seasonal. Interference with our production schedule during peak months could negatively impact our operating results.

     We do not manufacture the majority of our products continuously throughout the year, but instead have a seasonal production period that is limited to approximately three to four months primarily during the summer each year. Our working capital requirements are also seasonal and are most significant in the first and second fiscal quarters. An unexpected plant shutdown or any other material interference with our production schedule could adversely affect our operating results.

     Our sales tend to peak in the second and third quarters of each fiscal year, mainly as a result of the holiday period in November and December and the Easter holiday. By contrast, in the first fiscal quarter of each year, sales generally decline, mainly due to less promotional activity and the availability of fresh produce. We believe that the main trends in our operating results are relatively predictable and that we have adequate sources of liquidity to fund operations during periods of low sales. If these trends were to change or be disrupted, however, our operating results could be adversely affected, and we could require additional sources of liquidity to fund our working capital and other cash requirements.

Our business is subject to the risk of environmental liability, and we could be named as a responsible party.

     As a result of our agricultural and food processing activities, we are subject to various environmental laws and regulations. We have been named as a PRP and may be liable for environmental investigation and remediation costs at certain designated “Superfund Sites” under CERCLA, or under similar state laws. We are defending ourselves in these actions as appropriate. However, we cannot assure you that none of these matters will adversely impact our financial position or results of operations. We may in the future be named as a PRP at other currently or previously owned or operated sites, and additional remediation requirements could be imposed on us. Other properties could be identified for investigation or proposed for listing under CERCLA or similar state laws. Also, under the Federal Food, Drug and Cosmetic Act and the Food Quality Protection Act of 1996, the U.S. Environmental Protection Agency is involved in a series of regulatory actions relating to the evaluation and use of pesticides in the food industry. The effect of such actions and future actions on the availability and use of pesticides could adversely impact our financial position or results of operations.

Texas Pacific Group continues to control our company, which could lead to a conflict of interest.

     Texas Pacific Group currently owns 46.5% of the outstanding common stock of Del Monte. Texas Pacific Group will likely continue to use its significant ownership interest to influence our management and policies. We also have contractual relationships with Texas Pacific Group, under which Texas Pacific Group provides us with financial advisory and other services. These arrangements could give rise to conflicts of interest.

Our debt covenants can restrict our ability to pursue our business strategies. Our ability to comply with these restrictions depends on many factors beyond our control.

     We are subject to various financial and operating covenants under our amended and restated credit facility and the indenture, including limitations on asset sales, the amount of debt we can incur or repay and the amount and kind of distributions that we may make. We must also meet specified financial ratios and tests, including minimum interest coverage ratio, minimum fixed charge coverage and maximum leverage ratios. We have pledged substantially all of our assets to secure our bank debt.

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Our Del Monte brand name could be confused with names of other companies who, by their act or omission, could adversely affect the value of the Del Monte brand name.

     We have licensed the Del Monte brand name to various unaffiliated companies internationally and, for some products, in the United States. The common stock of one licensee, Fresh Del Monte Produce Inc., is publicly traded in the United States. Acts or omissions by these unaffiliated companies may adversely affect the value of the Del Monte brand name, the trading prices for Del Monte common stock and demand for our products. Third party announcements or rumors about these licensees could also have these negative effects.

Our reliance on a continuous power supply to conduct our operations and California’s recent energy situation could disrupt our operations and increase our expenses.

     California recently experienced an energy situation that could have disrupted our fruit and tomato processing operations and increased our expenses. In the event of an acute power shortage, that is, when power reserves for the State of California fall below 1.5%, California has on some occasions implemented, and may in the future continue to implement, rolling blackouts throughout the state. We currently do not have backup generators or alternate sources of power in the event of a blackout, and our current insurance may not provide coverage for damages that we or our customers may suffer as a result of any interruption in the power supply to us. If blackouts interrupt our power supply, we would be temporarily unable to continue operations at our facilities. Any such interruption in our ability to continue operations at our facilities could result in significant increases in production costs and lost revenue, which could substantially harm our business and results of operations. Del Monte’s energy costs have substantially increased since fiscal 2000. This increase and any future increase may have a negative impact on our results of operations.

We appointed a single national broker to represent us to the retail grocery trade.

     In June 2001, we appointed Advantage Sales and Marketing (“Advantage”) as our single national broker to represent our products to the retail grocery trade. Prior to the appointment of Advantage, we relied on multiple regional brokers to represent our products. We believe that a single broker will be able to more effectively represent our products to the increasingly consolidated retail grocery trade. However, our business would suffer substantial disruption if Advantage were to default in the performance of its obligations to perform brokerage services. Our business would be adversely affected if Advantage fails to effectively represent us to the retail grocery trade.

Our data network services are managed by EDS using the WorldCom, Inc. network.

     We obtain our data network services through EDS, which has sub-contracted the network services to WorldCom. WorldCom filed for bankruptcy under Chapter 11 in July 2001. Our business would be adversely affected if WorldCom fails to provide reliable services.

Our reliance upon co-packers to provide supply of certain products.

     We have a number of supply agreements with co-packers that require them to provide us with certain finished products. The failure of any such co-packer to fulfill their obligations under the applicable agreements could result in disruptions to our supply of finished goods.

Our ability to competitively serve our customers is a function of reliable and low cost transportation. Disruption of the supply of these services and/or significant increases in the cost of these services could impact our operating results.

     We use multiple forms of transportation to bring our products to market. They include ocean, truck, TOFC or intermodal, and railcar.

     Disruption to the timely supply of these services or dramatic increases in the cost of these services for any reason including availability of fuel for such services could have an adverse effect on our ability to serve our customers, and consumers and could have an adverse effect on our financial performance.

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Item 8. Financial Statements and Supplementary Data

INDEX TO FINANCIAL STATEMENTS

	Page
Report of Independent Auditors		46
Consolidated Balance Sheets — June 30, 2002 and 2001		47
Consolidated Statements of Income — Years ended June 30, 2002, 2001 and 2000		48
Consolidated Statements of Stockholders’ Equity (Deficit) and Comprehensive Income — Years ended June 30, 2002, 2001 and 2000		49
Consolidated Statements of Cash Flows — Years Ended June 30, 2002, 2001 and 2000		50
Notes to Consolidated Financial Statements		51

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REPORT OF INDEPENDENT AUDITORS

The Board of Directors and Stockholders
Del Monte Foods Company

     We have audited the accompanying consolidated balance sheets of Del Monte Foods Company and subsidiaries as of June 30, 2002 and 2001, and the related consolidated statements of income, stockholders’ equity (deficit) and comprehensive income and cash flows for each of the years in the three-year period ended June 30, 2002. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

     We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

     In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Del Monte Foods Company and subsidiaries as of June 30, 2002 and 2001, and the consolidated results of their operations and their cash flows for each of the years in the three-year period ended June 30, 2002, in conformity with accounting principles generally accepted in the United States of America.

KPMG LLP

July 26, 2002
San Francisco, California

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DEL MONTE FOODS COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In millions, except share and per share data)

				June 30,
				2002			2001
ASSETS
Current assets:
	Cash and cash equivalents			$	16.9		$	12.4
	Trade accounts receivable, net of allowance				116.9			135.8
	Inventories				405.4			437.5
	Deferred tax assets				19.2			9.9
	Prepaid expenses and other current assets				30.6			26.9
			TOTAL CURRENT ASSETS		589.0			622.5
Property, plant and equipment, net					336.6			326.4
Deferred tax assets					43.5			51.0
Intangible assets, net					56.5			56.7
Other assets, net					44.4			67.5
			TOTAL ASSETS	$	1,070.0		$	1,124.1
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
	Accounts payable and accrued expenses			$	258.5		$	227.0
	Short-term borrowings				0.2			0.3
	Current portion of long-term debt				2.9			4.2
			TOTAL CURRENT LIABILITIES		261.6			231.5
Long-term debt					587.4			709.8
Other non-current liabilities					189.3			157.9
			TOTAL LIABILITIES		1,038.3			1,099.2
Stockholders’ equity:
	Common stock ($0.01 par value per share, shares
		authorized: 500,000,000; issued and outstanding:
		52,299,967 in 2002 and 52,260,902 in 2001)			0.5			0.5
	Notes receivable from stockholders				(0.4	)		(0.4	)
	Additional paid-in capital				401.1			400.6
	Accumulated other comprehensive loss				(32.2	)		—
	Accumulated deficit				(337.3	)		(375.8	)
			TOTAL STOCKHOLDERS’ EQUITY		31.7			24.9
			TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	1,070.0		$	1,124.1

See Accompanying Notes to Consolidated Financial Statements.

47

DEL MONTE FOODS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per share data)

			Year Ended June 30,
			2002			2001			2000
Net sales			$	1,322.4		$	1,291.4		$	1,214.8
Cost of products sold				1,033.2			1,009.9			920.5
Selling, administrative and general expense				161.9			140.4			136.9
Special charges related to plant consolidation				1.3			14.6			10.9
Merger-related expenses				7.3			—			—
		OPERATING INCOME		118.7			126.5			146.5
Interest expense				57.5			74.6			67.1
Loss on financial instruments				5.8			—			—
Other income				(0.5	)		(4.8	)		—
		INCOME BEFORE INCOME TAXES AND EXTRAORDINARY ITEM		55.9			56.7			79.4
Provision for (benefit of) income taxes				16.1			16.7			(53.6	)
		INCOME BEFORE EXTRAORDINARY ITEM		39.8			40.0			133.0
Extraordinary loss from early debt prepayment/retirement, net of tax benefit				1.3			26.2			4.3
		NET INCOME	$	38.5		$	13.8		$	128.7
Basic net income per common share:
	Income before extraordinary item		$	0.76		$	0.77		$	2.55
	Extraordinary loss, net of tax benefit			(0.02	)		(0.51	)		(0.08	)
	Net income		$	0.74		$	0.26		$	2.47
Diluted net income per common share:
	Income before extraordinary item		$	0.75		$	0.76		$	2.50
	Extraordinary loss, net of tax benefit			(0.02	)		(0.50	)		(0.08	)
	Net income		$	0.73		$	0.26		$	2.42

See Accompanying Notes to Consolidated Financial Statements.

48

DEL MONTE FOODS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT) AND COMPREHENSIVE INCOME
(In millions, except share data)

						Notes					Accumulated						Total
		Common Stock				Receivable			Additional		Other						Stockholders'
						from			Paid-in		Comprehensive			Accumulated			Equity
		Shares		Amount		Stockholders			Capital		Loss			Deficit			(Deficit)
Balance at June 30, 1999			52,171,537	$	0.5	$	(0.4	)	$	399.8	$	—		$	(518.3	)	$	(118.4	)
Issuance of shares			48,255		—		—			0.3		—			—			0.3
Net income			—		—		—			—		—			128.7			128.7
Balance at June 30, 2000			52,219,792		0.5		(0.4	)		400.1		—			(389.6	)		10.6
Issuance of shares			41,110		—		—			0.5		—			—			0.5
Net income			—		—		—			—		—			13.8			13.8
Balance at June 30, 2001			52,260,902		0.5		(0.4	)		400.6		—			(375.8	)		24.9
Issuance of shares			39,065		—		—			0.2		—			—			0.2
Grants under the Annual Incentive Award Plan			—		—		—			0.3		—			—			0.3
Net income			—		—		—			—		—			38.5			38.5
Other comprehensive loss:
	Minimum pension liability adjustment (net of tax of $19.0)		—		—		—			—		(29.8	)		—			(29.8	)
	Loss on cash flow hedging instruments (net of tax of $1.6)		—		—		—			—		(2.4	)		—			(2.4	)
Comprehensive income																		6.3
Balance at June 30, 2002			52,299,967	$	0.5	$	(0.4	)	$	401.1	$	(32.2	)	$	(337.3	)	$	31.7

See Accompanying Notes to Consolidated Financial Statements.

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DEL MONTE FOODS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)

					Year Ended June 30,
					2002			2001			2000
OPERATING ACTIVITIES:
	Net income				$	38.5		$	13.8		$	128.7
	Adjustments to reconcile net income to net cash provided by (used in) operating activities:
		Extraordinary loss from early debt prepayment/retirement, net of tax benefit				1.3			26.2			4.3
		Net loss (gain) on disposal/revaluation of assets				2.8			11.8			(2.2	)
		Non-cash interest expense				—			12.4			12.6
		Depreciation and amortization				33.5			36.7			39.6
		Loss on financial instruments				5.8			—			—
		Deferred taxes				19.6			24.0			(74.2	)
		Changes in operating assets and liabilities net of effects of acquisitions:
			Accounts receivable			18.9			(26.6	)		29.8
			Inventories			32.1			18.8			(82.3	)
			Prepaid expenses and other current assets			(0.4	)		9.4			(13.3	)
			Other assets			(3.6	)		(23.1	)		(2.0	)
			Accounts payable and accrued expenses			31.5			(13.2	)		(35.5	)
			Other non-current liabilities			(10.6	)		(0.6	)		(12.6	)
				NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		169.4			89.6			(7.1	)
INVESTING ACTIVITIES:
	Capital expenditures					(43.6	)		(45.4	)		(56.8	)
	Net proceeds from sales of assets					2.3			0.3			1.9
	Acquisition of plant					—			—			(11.0	)
	Acquisitions of businesses					—			(49.1	)		—
				NET CASH USED IN INVESTING ACTIVITIES		(41.3	)		(94.2	)		(65.9	)
FINANCING ACTIVITIES:
	Proceeds from short-term borrowings					291.9			433.7			492.2
	Payments on short-term borrowings					(292.0	)		(586.9	)		(354.4	)
	Proceeds from long-term borrowings					—			815.0			—
	Principal payments on long-term borrowings					(123.7	)		(593.5	)		(62.4	)
	Deferred debt issuance costs					—			(24.9	)		(0.8	)
	Payments for prepayment penalty					—			(32.0	)		(3.7	)
	Proceeds from issuance of common stock					0.2			0.5			0.3
				NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES		(123.6	)		11.9			71.2
NET CHANGE IN CASH AND CASH EQUIVALENTS						4.6			7.3			(1.8	)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR						12.4			5.1			6.9
CASH AND CASH EQUIVALENTS AT END OF YEAR					$	16.9		$	12.4		$	5.1

See Accompanying Notes to Consolidated Financial Statements.

50

DEL MONTE FOODS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2002
(In millions, except share and per share data)

Note 1 — Business and Significant Accounting Policies

     Business and Segment Information: Del Monte Foods Company (“DMFC”) and its wholly-owned subsidiary, Del Monte Corporation (“DMC”), (DMFC together with DMC, “Del Monte” or the “Company”) operate in one business segment: the manufacturing and marketing of processed foods, primarily processed vegetables, fruit and tomato products. Del Monte primarily sells its products under the Del Monte brand to a variety of food retailers, supermarkets and mass merchandising stores. Del Monte holds the rights to the Del Monte and SunFresh brands for processed foods in the United States and in South America, and to the Contadina and S&W brands worldwide.

     Principles of Consolidation: The consolidated financial statements include the accounts of Del Monte and its majority owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. The Company accounts for its investments in joint ventures under the equity method of accounting, under which the investment in joint venture is adjusted for the Company’s share of the profit or loss of the joint venture.

     Critical Accounting Policies and Estimates: Del Monte’s consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires Del Monte to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. Del Monte bases its 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 the judgments made about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may materially differ from these estimates under different assumptions or conditions and as additional information becomes available in future periods. Del Monte believes the following are the more significant judgments and estimates used in the preparation of its consolidated financial statements.

• Trade Promotions: Trade promotions are an important component of the sales and marketing of Del Monte’s products, and are critical to the support of Del Monte’s business. Trade promotion costs include amounts paid to encourage retailers to offer temporary price reductions for the sale of Del Monte’s products to consumers, amounts paid to obtain favorable display positions in retailers’ stores, and amounts paid to customers for shelf space in retail stores. Accruals for trade promotions are recorded primarily at the time of sale of product to the customer based on expected levels of performance. Settlement of these liabilities typically occurs in subsequent periods primarily through an authorized process for deductions taken by a customer from amounts otherwise due to Del Monte. As a result, the ultimate cost of a trade promotion program is dependent on the relative success of the events and the actions and level of deductions taken by Del Monte’s customers for amounts they consider due to them. Final determination of the permissible deductions may take extended periods of time.

• Coupon Redemption: Del Monte offers coupons to consumers in the normal course of business. Coupon redemption costs are accrued in the period in which the coupons are offered, based on estimates of redemption rates that are developed by independent coupon redemption clearing-houses based on historical information. Should actual redemption rates vary from amounts estimated, adjustments to accruals may be required.

• Retirement Benefits: Del Monte sponsors non-contributory defined benefit pension plans and unfunded defined benefit postretirement plans providing certain medical, dental and life insurance benefits to eligible retired, salaried, non-union hourly and union employees. Several statistical and other factors which attempt to anticipate future events are used in calculating the expense and liabilities related to these plans. These factors include assumptions about the discount rate, expected return on plan assets, the health care cost trend rate, withdrawal and mortality rates and the rate of increase in compensation levels. The actuarial assumptions used by Del Monte may differ materially from actual results due to changing market and economic conditions, higher or lower withdrawal rates or longer or shorter mortality of participants. These differences may impact the amount of retirement benefit expense recorded by Del Monte in future periods.

• Retained-insurance Liabilities: Del Monte retains liabilities up to $0.25 ($0.5 effective July 1, 2002) per claim under its loss sensitive worker’s compensation insurance policy. For general and automobile insurance policy, Del Monte retains liabilities up to $0.25 per claim. An independent, third-party actuary estimates the outstanding retained-insurance liabilities by

51

	projecting incurred losses to their ultimate liability and subtracting amounts paid to-date to obtain the remaining liabilities. Actuarial estimates of ultimate liability are based on actual incurred losses, estimates of incurred but not yet reported losses based on historical information from both Del Monte and the industry, and the projected costs to resolve these losses. Retained-insurance liabilities may differ based on new events or circumstances that might materially impact the ultimate cost to settle these losses.
•	Intangible and Long-lived Assets: In July 2001, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 141, “Business Combinations” (“SFAS 141”). The provisions of SFAS 141 were adopted by Del Monte in July 2001. SFAS 141 requires that the purchase method of accounting be used for all business combinations initiated after June 30, 2001, as well as all purchase method business combinations completed after June 30, 2001. SFAS 141 also specifies certain criteria that must be met for intangible assets acquired in a purchase method business combination to be recognized and reported apart from goodwill.
	The FASB issued SFAS No. 142, “Goodwill and Other Intangible Assets” (“SFAS 142”) simultaneously with SFAS 141. SFAS 142 requires that goodwill and intangible assets with indefinite useful lives no longer be amortized, but instead be tested for impairment at least annually in accordance with the provisions of SFAS 142. SFAS 142 also requires that intangible assets with estimable useful lives be amortized over their respective estimated useful lives, and reviewed for impairment in accordance with SFAS Statement No. 121, “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of”.
	For intangible assets with indefinite useful lives, estimated fair value is determined using various valuation methods, including the relief from royalty method and the residual income method. In estimating discounted future cash flows, management uses historical financial information in addition to assumptions of sales trends and profitability, consistent with Del Monte’s performance and industry trends. Estimates of fair value may differ if projected cash flows, market interest rates and discount factors change as a result of new events or circumstances.
	For intangible with estimable useful lives, Del Monte reviews for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If an evaluation of recoverability was required, the estimated undiscounted future cash flows associated with the asset would be compared to the asset’s carrying amount to determine if a write-down was required. All long-lived assets, for which management has committed to a plan to dispose of are reported at the lower of carrying amount or fair value.
	Del Monte chose to early adopt the provisions of SFAS 142 during the first quarter of fiscal 2002. Upon the adoption of SFAS 142, as of July 1, 2001, Del Monte ceased amortization of its intangible assets with indefinite useful lives. Del Monte reassessed the useful lives and residual values of its intangible assets acquired during the second quarter of fiscal 2002, and concluded that the majority of its trademarks and distribution rights have indefinite lives. Del Monte has performed impairment tests on its intangible assets with indefinite useful lives in accordance with the provisions of SFAS 142 and identified no impairment losses relating to these intangible assets. Del Monte determined that certain intangible assets have an estimated useful life of three years and is amortizing these assets on a straight-line basis. Amortization expense was $0.2, $2.2 and $1.8 for the years ended June 30, 2002, 2001 and 2000, respectively.

     Cash Equivalents: Del Monte considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. The carrying amount reported in the balance sheet for cash and cash equivalents approximates its fair value.

     Inventories: Inventories are stated at the lower of cost or market. The cost of substantially all inventories is determined using the LIFO method. Del Monte has established various LIFO pools that have measurement dates coinciding with the natural business cycles of Del Monte’s major inventory items. Inflation has had a minimal impact on production costs since Del Monte adopted the LIFO method as of July 1, 1991. The LIFO reserve was a debit balance of $11.0 as of June 30, 2002 and 2001.

     Property, Plant and Equipment and Depreciation: Property, plant and equipment are stated at cost and are depreciated over their estimated useful lives, using the straight-line method. Maintenance and repairs are expensed as incurred. Significant expenditures that increase useful lives are capitalized. The principal estimated useful lives are: land improvements — 10 to 30 years; buildings and leasehold improvements — 10 to 30 years; machinery and equipment — 7 to 15 years; computer software (included in machinery and equipment in Note 3) — 2 to 10 years. Depreciation of plant and equipment and leasehold amortization was $30.2, $31.2 and $34.8 for the years ended June 30, 2002, 2001 and 2000.

52

     Del Monte capitalizes software development costs for internal use in accordance with Statement of Position 98-1, “Accounting for Costs of Computer Software Developed or Obtained for Internal Use” (“SOP 98-1”). Capitalization of software development costs begins in the application development stage and ends when the asset is placed into service. The Company amortizes such costs using the straight-line basis over estimated useful lives. Under SOP 98-1, the Company capitalized $16.5 and $9.7 of software development costs in 2002 and 2001, respectively, related to systems supporting the Company’s infrastructure.

     Deferred Charges: Del Monte capitalizes costs associated with the issuance of debt instruments. These costs are amortized on a straight-line basis over the term of the debt agreements. Amortization expenses for deferred charges were $3.1, $3.3 and $3.0 for the years ended June 30,2002, 2001 and 2000, respectively.

     Income Taxes: Del Monte accounts for income taxes under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and for tax losses and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized.

     Environmental Remediation: Del Monte accrues for losses associated with environmental remediation obligations when such losses are probable, and the amounts of such losses are reasonably estimable. Accruals for estimated losses from environmental remediation obligations generally are recognized no later than completion of the remedial feasibility study. Such accruals are adjusted as further information develops or circumstances change. Costs of future expenditures for environmental remediation obligations are not discounted to their present value.

     Revenue Recognition: Del Monte recognizes revenue once it is realizable and earned. Revenue from sales of products and related cost of products sold are recognized when persuasive evidence of an arrangement exists, delivery has occurred, the seller’s price is fixed or determinable and collectibility is reasonably assured. This generally occurs when the customer receives the product at which time title passes to the customer. Customers generally do not have the right to return product unless damaged or defective.

     Effective July 1, 2001, Del Monte adopted two new accounting requirements issued by the Emerging Issues Task Force (EITF). The two requirements are Issue No. 00-14, “Accounting for Certain Sales Incentives” (“EITF 00-14”) and Issue No. 00-25, “Vendor Income Statement Characterization of Consideration to a Purchaser of the Vendor’s Products or Services” (“EITF 00-25”). Both Issues were codified by Issue No. 01-9, “Accounting for Consideration Given by a Vendor to a Customer (Including a Reseller of the Vendor’s Products)” (“EITF 01-9”) in November, 2001.

     EITF 01-9 addresses the recognition, measurement, and income statement classification of sales incentives offered voluntarily by a vendor without charge to its customers (or consumers) that can be used in, or are exercisable by a consumer, as a result of a single exchange transaction. This EITF also addresses the recognition, measurement and income statement classification of consideration paid from a vendor to a retailer or wholesaler. As a result of the adoption of this EITF, consumer promotion costs relating to coupon redemption and customer promotion costs relating to performance allowances, which previously were included in selling, administrative and general expense, are now classified as a reduction of revenue. Prior year comparative amounts have been reclassified to comply with EITF 01-9. The effect of EITF 01-9 was a reduction of $220.6 and $247.3 in both net sales and selling, administrative and general expenses for the previously reported years ended June 30, 2001 and 2000, respectively.

     Upon adoption of the EITF requirements described above, net sales is comprised of gross sales reduced by consumer promotion costs relating to coupon redemption, customer promotion costs relating to performance allowances and routine returns and discounts.

     For the years ended June 30, 2002, 2001 and 2000, one customer accounted for approximately 18%, 15% and 14% of net sales, respectively. This customer accounted for 14% and 15% of trade accounts receivable as of June 30, 2002 and 2001, respectively.

     In June 2001, Del Monte appointed Advantage Sales and Marketing to act as a single national retail grocery broker representing Del Monte products. Advantage represents Del Monte to a broad range of grocery retailers and selected club stores. Advantage represented us on approximately 56.0% of our total net sales in fiscal 2002.

     Cost of Products Sold: Cost of products sold includes raw material, labor and overhead.

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     Advertising Expenses: Del Monte expenses all costs associated with advertising as incurred. Advertising expense was $9.9, $8.3 and $3.6 for the years ended June 30, 2002, 2001 and 2000, respectively.

     Research and Development: Research and development costs are included as a component of “Selling, administrative and general expense.” Research and development costs charged to operations were $7.5, $7.0 and $6.6 for the years ended June 30, 2002, 2001 and 2000, respectively.

     Financial Instruments: Del Monte has entered into interest rate swap agreements (“swaps”) to limit its exposure to interest rate increases and to fulfill the terms in its revolving and term loan agreement. Prior to the designation of the swaps as hedging instruments under SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities” (“SFAS 133”), as amended by SFAS 137 and 138, changes in fair value of the swaps were recognized as gain/loss on financial instruments in the Consolidated Statements of Income.

     To designate swaps as cash flow hedging instruments of market interest rate risk under SFAS 133, Del Monte formally documents all relationships between hedging instruments and hedged items, as well as its risk-management objectives and strategy for undertaking hedge transactions. Changes in the fair value of the swaps prior to designation as a hedge are reported in the Consolidated Statements of Income. Changes in the fair value of the swaps subsequent to the hedge designation date are recorded in other comprehensive income/loss in an amount equal to the effective portion of the hedging instruments. The remaining amount, if any, equal to the ineffective portion of the hedging instruments is recorded as other income/expense.

     Del Monte uses the hypothetical derivative method to measure ineffectiveness on a quarterly basis. Ineffectiveness is based on a comparison of the change in fair value of the actual swaps designated as the hedging instruments and the change in fair value of the hypothetical swaps. The hypothetical swaps have terms that identically match the critical terms of the floating-rate liabilities. As a result, they are expected to perfectly offset the hedged cash flows. The amount of ineffectiveness, if any, is equal to the excess of the cumulative change in the fair value of the actual swaps over the cumulative change in the fair value of the hypothetical swaps.

     Del Monte discontinues hedge accounting prospectively when the swaps expire or are sold, terminated, or management determines that designation of the swaps as hedging instruments is no longer appropriate. If a swap was terminated prior to its maturity, the gain or loss would be recognized over the remaining original life of the swap if the item hedged remains outstanding, or immediately, if the item hedged does not remain outstanding. If the swap was not terminated prior to maturity, but the underlying hedged item is no longer outstanding, the swap is marked to market and any unrealized gain or loss is recognized immediately.

     Foreign Currency Translation: For Del Monte’s operations in countries where the functional currency is other than the U.S. dollar, revenue and expense accounts are translated at the average rates during the period, and balance sheet items are translated at year-end rates. Effects of foreign currency translation were not significant for any periods presented.

     Fair Value of Financial Instruments: The carrying amount of certain of Del Monte’s financial instruments, including accounts receivable, accounts payable, and accrued expenses, approximates fair value due to the relatively short maturity of such instruments.

     The carrying amounts of Del Monte’s borrowings under its short-term revolving credit agreement and long-term debt instruments, excluding the senior subordinated notes, approximate their fair value. The fair value of the senior subordinated notes with a carrying amount of $300.0 was $310.5 and $304.5 at June 30, 2002 and 2001, respectively, as estimated based on quoted market prices from the trading desk of a nationally recognized investment bank.

     The fair value of the interest rate swap agreements is the estimated amount that Del Monte would pay/receive to terminate the agreements at the reporting date, taking into account current interest rates and the current credit worthiness of the counterparties. The fair value of the swaps at June 30, 2002 was a liability of $6.9. Del Monte had no interest rate swap agreements outstanding at June 30, 2001.

     Stock Option Plans: Del Monte accounts for its stock-based employee compensation plans using the intrinsic value method prescribed by Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (“APB 25”), and related interpretations, as allowed under SFAS No. 123, “Accounting for Stock-Based Compensation”. Accordingly, compensation cost is measured as the excess, if any, of the fair value of Del Monte’s stock at the date of the grant over the price the employee must pay to acquire the stock.

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     Net Income per Common Share: Net income per common share is computed by dividing net income attributable to common shares by the weighted average number of common shares and share equivalents outstanding during the period.

     Comprehensive Income: For the year ended June 30, 2002, comprehensive income includes net income, recognition of a minimum pension liability and fair value change in swaps. For the years ended June 30, 2001 and 2000, comprehensive income equaled net income.

     Recently Issued Accounting Standards: In April 2002, the FASB issued Statement No. 145, “Rescission of FASB Statement No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections” (“SFAS 145”). SFAS 145 rescinds FASB Statement No. 4, “Reporting Gains and Losses from Extinguishment of Debt” (“SFAS 4”) and amends other existing authoritative pronouncements. As a result of SFAS 145, gains and losses from extinguishment of debt should be classified as extraordinary items only if they meet the criteria in 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 Infrequently Occurring Events and Transactions” (“APB 30”). Applying the provisions of APB 30 will distinguish transactions that are part of an entity’s recurring operations from those that are unusual or infrequent or that meet the criteria for classification as an extraordinary item. SFAS 145 is effective for fiscal years beginning after May 15, 2002. Upon adoption of SFAS 145 on July 1, 2002, Del Monte will reclassify prior year items that do not meet the extraordinary item classification criteria in APB 30. Del Monte is currently analyzing SFAS 145; however based on management’s current understanding and interpretation, SFAS 145 is not expected to have a material impact on Del Monte’s financial position or results of operations, except that certain reclassifications will occur.

     Reclassifications: Certain prior year balances have been reclassified to conform with current year presentation.

Note 2 — Proposed Merger and Financing

     On June 12, 2002, Del Monte and the H. J. Heinz Company (“Heinz”) entered into an Agreement and Plan of Merger (which is referred to as the “Merger Agreement”) under which Del Monte will acquire:

• Heinz’s pet food and pet snacks business in the United States and Canada and certain of Heinz’s worldwide specialty pet food businesses;

• U.S. ambient tuna and other ambient seafood products businesses;

• U.S. retail private label soup and retail private label gravy businesses;

• U.S. “College Inn” broth business ; and

• U.S. infant feeding business, including certain pureed foods.

     We refer to these businesses collectively as the “Heinz Businesses”.

     Heinz will contribute the Heinz Businesses to SKF Foods Inc., a newly created, wholly-owned subsidiary of Heinz, which is referred to as “SKF Foods”, in exchange for all of the issued and outstanding shares of SKF Foods common stock, $800.0 in cash (subject to certain adjustments) and debt securities of SKF Foods in the principal amount of $300.0. In addition, SKF Foods will assume all of the liabilities relating to the Heinz Businesses, subject to certain exceptions. Heinz will then spin-off SKF Foods to its shareholders. Immediately after the spin-off, DMC will merge with and into SKF Foods, which will become a wholly-owned subsidiary of Del Monte. After the merger, Del Monte’s name shall continue to be Del Monte Foods Company and SKF Foods will change its name to Del Monte Corporation.

     Immediately after the merger, Heinz shareholders and current Del Monte stockholders will own 74.5% and 25.5%, respectively, of the Del Monte common stock on a fully diluted basis determined in accordance with the exchange ratio set forth in the Merger Agreement. Heinz shareholders will receive a fraction of a share of Del Monte common stock equal to the exchange ratio for each share of SKF Foods common stock issued to them in the spin-off. The transaction is expected to be tax-free to the stockholders of both companies.

     The merger will be accounted for under the purchase method of accounting and SKF Foods will be considered the acquirer of Del Monte Corporation for accounting purposes. Accordingly, the historical combined financial statements of the Heinz Businesses will become the historical financial statements of Del Monte after the merger. After the merger is completed, Del Monte’s fiscal year will end on the Sunday closest to April 30.

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     Richard G. Wolford, Del Monte’s current Chairman, President and Chief Executive Officer, will continue in these capacities after the completion of the merger. At the effective time of the merger, the board of directors of Del Monte will have nine members, including three directors designated by Del Monte (one of which shall be the current Chief Executive Officer of Del Monte) and six directors designated by Heinz, each subject to the other’s approval. None of Heinz’s director designees will be directors or officers of Heinz at the time they become directors of Del Monte.

     The completion of the merger requires the approval of the Del Monte stockholders of the issuance of Del Monte shares in connection with the merger. TPG Partners, L.P. and TPG Parallel I, L.P. (which are referred to collectively as “Texas Pacific Group”), together currently own approximately 46.5% of the outstanding Del Monte common stock and have agreed with Heinz to vote to approve the issuance of shares in connection with the merger. Completion of the merger is also subject to a number of other conditions, including the receipt by Heinz of a ruling from the Internal Revenue Service that the spin-off qualifies as a tax-free transaction under the Internal Revenue Code of 1986 (which is referred to as the “Code”) and the receipt of tax opinions stating that the merger will constitute a tax-free reorganization under the Code. Subject to the approval of the Del Monte stockholders and the satisfaction or waiver (where permissible) of the other conditions to the merger, Del Monte currently anticipates that the merger will be completed during the fourth calendar quarter of 2002 or the first calendar quarter of 2003.

     On June 12, 2002, Del Monte, Heinz and certain banks entered into commitment letters, including related engagement and fee letters, with respect to an aggregate amount of up to $1,900.0 in financing in connection with the spin-off and the merger. The proposed financing would consist of the following:

(a)

a senior secured bank facility (the “New Bank Facility”) and

(b)

either senior subordinated notes (or, at the option of DMC and Heinz, senior unsecured notes) to be sold in a SEC registered offering or an offering exempt from the registration requirements of the Securities Act of 1933 in an aggregate principal amount currently expected to be $300.0 (the “Capital Market Notes”); senior secured notes in an aggregate principal amount currently expected to be $300.0 to be sold to institutional investors in a private placement (the “Senior Secured Notes”, and, collectively with the Capital Market Notes, the “Notes”) or a combination of Capital Market Notes and Senior Secured Notes in an aggregate principal amount currently expected to be $300 million.

     The New Bank Facility is expected to consist of a $350.0 revolving credit facility (including a letter of credit sublimit and a swingline loan sublimit), a term loan consisting of a $250.0 Tranche A loan and a $800.0 Tranche B loan. Upon completion of the spin-off and merger, the New Bank Facility would refinance Del Monte’s existing bank facility in its entirety. In addition, Del Monte’s $300.0 existing notes due 2011 are expected to remain outstanding after the spin-off and the merger. The New Bank Facility will be entered into, and the Notes will be issued by, SKF Foods prior to the spin-off and the merger. Upon completion of the merger, the New Bank Facility and the Notes will be guaranteed by Del Monte.

     Proceeds from the New Bank Facility and the Notes will be used (a) to satisfy the funding requirements of the spin-off and the merger (including the distribution to Heinz of $800.0 in cash and $300.0 in Notes), (b) to refinance DMC’s existing bank facility, (c) to pay the transaction fees and expenses relating to the spin-off and the merger (including the fees relating to the proposed financing) and (d) for working capital and other general corporate purposes.

     Del Monte’s obligations under the New Bank Facility and the Senior Secured Notes if any, will be secured by a lien on substantially all of its assets and all of the assets of each of its material direct and indirect U.S. subsidiaries. The proposed financing is subject to certain conditions, including the satisfaction or waiver of all conditions to the completion of the spin-off and the merger and favorable market conditions, and, accordingly, Del Monte cannot assure you that the financing will be completed. In addition, if the merger is not completed, depending on the reasons for termination of the Merger Agreement, Del Monte may have to pay Heinz a termination fee of $20 million.

     In addition, Del Monte adopted a stockholders rights plan on June 12, 2002. The rights were distributed to stockholders as a dividend at the rate of one right for each share of common stock of Del Monte held by stockholders of record as of the close of business on June 12, 2002. The rights generally will be exercisable only if a person or group acquires beneficial ownership of 15% or more of Del Monte’s common stock. The transactions contemplated by the Merger Agreement have been excluded from triggering the rights plan.

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Note 3 — Acquisitions

     S&W Acquisition: On March 13, 2001, Del Monte acquired the S&W branded food business, including certain trademarks and existing inventory, from Tri Valley Growers (“Tri Valley”). S&W branded products include processed fruits, tomatoes, beans, specialty sauces and vegetables. The total cash purchase price was $35.4. Del Monte also incurred approximately $1.0 in transaction expenses for closing costs and accrued $1.3 of acquisition-related liabilities. The remaining balance of the acquisition-related liabilities at June 30, 2002 was $0.9, consisting of post audit claims for trade promotion. The transaction has been accounted for using the purchase method of accounting. The total purchase price has been allocated to the tangible and intangible assets acquired based on their respective fair values. The total purchase price was allocated $25.1 to inventory and $12.6 to trademark intangible assets.

     SunFresh Acquisition: On September 1, 2000, Del Monte acquired the rights to the SunFresh brand citrus and tropical fruits line of UniMark Group, Inc. (“UniMark”), as well as certain finished goods inventory and UniMark’s McAllen, Texas distribution center. Concurrently, Del Monte executed a five-year supply agreement under which a UniMark affiliate will produce certain chilled and processed fruit products at UniMark’s facility in Mexico. This product will be purchased by Del Monte at current market rates. The original purchase price was $14.5 of which $13.5 was paid solely in cash at closing for those assets. The purchase price was subject to adjustments based on the final calculation of inventory on-hand as of the closing date. Based on this calculation, the total purchase price was revised to $12.7. Because the cash paid exceeded the final purchase price by $0.8, UniMark reimbursed this amount to Del Monte by the end of fiscal 2001. The transaction has been accounted for using the purchase method of accounting. The total purchase price has been allocated to the tangible and intangible assets acquired based on their respective fair values. The total purchase price was allocated $5.9 to inventory, $2.7 to property, plant and equipment and $4.1 to trademark intangible assets.

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Note 4 — Supplemental Balance Sheet Information

			June 30,
			2002			2001
Trade accounts receivable:
	Trade		$	117.2		$	136.1
	Allowance for doubtful accounts			(0.3	)		(0.3	)
		TRADE ACCOUNTS RECEIVABLE, NET	$	116.9		$	135.8
Inventories:
	Finished product		$	257.5		$	301.1
	Raw materials and in-process inventories			14.5			16.1
	Other, principally packaging material			133.4			120.3
		TOTAL INVENTORIES	$	405.4		$	437.5
Prepaid expenses and other current assets:
	Prepaid expenses		$	14.6		$	15.4
	Income tax receivable			11.6			8.3
	Other current assets			4.4			3.2
		PREPAID EXPENSES AND OTHER CURRENT ASSETS	$	30.6		$	26.9
Property, plant and equipment:
	Land and land improvements		$	34.6		$	33.4
	Buildings and leasehold improvements			107.2			105.3
	Machinery and equipment			389.3			362.9
	Construction in progress			34.1			28.0
				565.2			529.6
	Accumulated depreciation			(228.6	)		(203.2	)
		PROPERTY, PLANT AND EQUIPMENT, NET	$	336.6		$	326.4
Other assets:
	Deferred debt issuance costs, net of accumulated amortization of $3.5 for 2002 and $0.4 for 2001		$	19.0		$	24.2
	Assets held for sale			11.0			20.3
	Investments in joint ventures			6.4			6.2
	Deferred pension asset			—			16.0
	Note receivable for sale of assets			7.0			—
	Other			1.0			0.8
		OTHER ASSETS, NET	$	44.4		$	67.5
Accounts payable and accrued expenses:
	Accounts payable — trade		$	122.3		$	100.0
	Marketing and advertising			57.7			56.3
	Payroll and employee benefits			26.4			21.1
	Income taxes payable			17.1			18.6
	Merger-related expenses			6.9			—
	Current portion of other non-current liabilities			9.5			9.9
	Other			18.6			21.1
		ACCOUNTS PAYABLE AND ACCRUED EXPENSES	$	258.5		$	227.0
Other non-current liabilities:
	Accrued postretirement benefits		$	127.0		$	130.7
	Pension liability			27.0			—
	Retained-insurance liabilities			15.0			11.6
	Other			20.3			15.6
		OTHER NON-CURRENT LIABILITIES	$	189.3		$	157.9

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Note 5 — Intangible Assets

     Del Monte does not have any recorded goodwill. A summary of intangible assets follows with 2001 reflecting all intangibles as being amortized in accordance with previous accounting standards:

		June 30,
		2002			2001
Non-amortizing intangible assets:
	Trademarks	$	31.7		$	—
	Distribution rights		24.4			—
	Total unamortized intangible assets	$	56.1		$	—
Amortized intangible assets:
	Trademarks	$	0.6		$	34.2
	Distribution rights		—			28.4
			0.6			62.6
	Accumulated amortization		(0.2	)		(5.9	)
	Total amortized intangible assets, net	$	0.4		$	56.7

     The estimated amortization expense for each of the two succeeding fiscal years is as follows:

2003	$	0.2
2004		0.2
	$	0.4

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     The following tables reconcile reported net income to pro forma net income, and earnings per share, as a result of the adoption of SFAS 142:

		Year Ended June 30,
		2002			2001			2000
Income before extraordinary item		$	39.8		$	40.0		$	133.0
Add back (net of tax):
	Trademark amortization		—			0.5			0.3
	Distribution rights amortization		—			1.0			1.2
Adjust (net of tax):
	Trademark amortization (change in useful life)		—			(0.1	)		—
Pro forma income before extraordinary item			39.8			41.4			134.5
Extraordinary loss, net of tax benefit			1.3			26.2			4.3
	Pro forma net income	$	38.5		$	15.2		$	130.2
Basic earnings per share:
Basic income per common share before extraordinary item		$	0.76		$	0.77		$	2.55
	Trademark amortization		—			0.01			0.01
	Distribution rights amortization		—			0.02			0.02
Pro forma basic income per common share before extraordinary item			0.76			0.80			2.58
Extraordinary loss per common share, net of tax benefit			(0.02	)		(0.51	)		(0.08	)
	Pro forma basic income per common share	$	0.74		$	0.29		$	2.50
Diluted earnings per share:
Diluted income per common share before extraordinary item		$	0.75		$	0.76		$	2.50
	Trademark amortization		—			0.01			0.01
	Distribution rights amortization		—			0.02			0.02
Pro forma diluted income per common share before extraordinary item			0.75			0.79			2.53
Extraordinary loss per common share, net of tax benefit			(0.02	)		(0.50	)		(0.08	)
	Pro forma diluted income per common share	$	0.73		$	0.29		$	2.45

Note 6 — Short-Term Borrowings and Long-Term Debt

     Short-term borrowings consisted of a note payable to banks outside the United States of $0.2 and $0.3 at June 30, 2002 and 2001, and a revolving credit agreement with zero outstanding balance at both June 30, 2002 and 2001. Net availability under the revolving credit agreement, adjusted for borrowing base limitations and outstanding letters of credit, at June 30, 2002 and 2001 totaled $219.4 and $260.1, respectively. Unused lines of credit outside the United States at June 30, 2002 and 2001 totaled $0.7 and $0.6, respectively. The weighted average interest rate on domestic short-term borrowings was 6.13% and 8.12% for the years ended June 30, 2002 and 2001, respectively.

     As permitted under Del Monte’s credit agreement, Del Monte prepaid $120.0 on its term loan during fiscal 2002. As a result, Del Monte incurred an extraordinary loss of $2.1 ($1.3 net of tax) related to the write-off of previously capitalized debt issuance costs. Del Monte did not incur any prepayment penalties as a result of these prepayments. The terms and conditions of the term loan agreement did not change as a result of these prepayments. However, the scheduled debt amortization in future periods has been adjusted to reflect these prepayments.

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     On May 15, 2001, the Company refinanced its outstanding debt. In connection with this refinancing, Del Monte repaid amounts outstanding under its existing revolving credit facility and term loans governed by the then existing Second Amended and Restated Credit Agreement (the “Agreement”) dated January 14, 2000. Concurrently, the Company amended and restated the terms and conditions of the Agreement to create a Third Amended and Restated Credit Agreement dated as of May 15, 2001, which established a $325.0 revolving credit facility (the “Revolver”) and a term loan (the “Term Loan”) in an initial funded amount of $415.0. The new credit agreement provides for additional borrowing capacity (up to $100.0) under either the Revolver or Term Loan. The refinancing also included the issuance of new 9¼% Senior Subordinated Notes due 2011 (the “New Notes”) by DMC in an amount of $300.0, which, together with the Revolver and Term Loan, provided proceeds used by the Company to (a) redeem DMC’s then outstanding 12¼% Senior Subordinated Notes due 2007 and DMFC’s outstanding 12½ % Senior Discount Notes due 2007 (the “Old Notes”) (b) repay the revolver and term loan balances then outstanding under the Agreement and (c) pay fees and expenses of the May 15, 2001 refinancing. The refinancing also established new financial covenants reflecting changes in the Company’s debt structure and its financial performance. The Revolver expires on May 15, 2007 and the Term Loan matures on March 31, 2008. The Term Loan amortizes quarterly at 1.0% per year for the next five years and, beginning June 30, 2007, is repaid in three quarterly installments of $69.1 with a fourth and final installment due on March 31, 2008 for the remaining balance.

     In connection with the repayment of debt at May 15, 2001, an extraordinary loss of $42.3 ($26.2 net of tax) was recorded. This extraordinary loss consisted of $32.0 of prepayment premiums and a $10.3 write-off of previously capitalized deferred debt issuance costs and original issue discount.

     The New Notes bear a fixed interest rate of 9¼%, paid semiannually on each May 15 and November 15, with the principal payable at maturity (May 15, 2011). The New Notes are redeemable in whole or in part at the option of the Company on or after May 15, 2006 at a price that is equal to 104.625% of their principal amount. In addition, on or before May 15, 2004, the Company may redeem up to 35% of the notes at a redemption price of 109.250% of their principal amount using net cash proceeds from one or more Equity Offerings (as defined in the Indenture under which the New Notes were issued). Initial credit margins applicable to the Revolver and Term Loan set under the May 15, 2001 refinancing were fixed through December 31, 2001. Subsequently, credit margins applicable to amounts outstanding under both the Revolver and Term Loan are determined by reference to a pricing grid, subject to quarterly adjustment based upon the calculated level of the Company’s senior leverage ratio. The applicable credit margins are additive, at the Company’s option, to either the base rate (the higher of 0.50% above the latest Federal Funds Rate or the bank’s reference rate) or the offshore rate, as defined. Currently, the applicable credit margins for the Revolver are 1.50% plus the base rate (all-in interest rates of 6.25% and 8.50% at June 30, 2002 and 2001, respectively) or 2.50% plus the offshore rate (all-in rates of approximately 4.36% and 6.60% at June 30, 2002 and 2001, respectively). Currently, the applicable credit margins for the Term Loan are 1.75% plus the base rate (an all-in interest rate of 6.50% and 8.75% at June 30, 2002 and 2001 respectively) or 2.75% plus the offshore rate (all-in rates of approximately 4.61% and 6.85% at June 30, 2002 and 2001). The Company is required to pay the lenders under the Revolver a commitment fee of 0.50% on the unused portion of such facility. The Company is also required to pay the lenders, under the Revolver, letter of credit fees of 2.00% per year for commercial letters of credit and 2.50% per year for all other letters of credit, as well as an additional fee of 0.25% per year to the bank issuing such letters of credit. At June 30, 2002 and 2001, a balance of $33.0 and $35.1, respectively, was outstanding on these letters of credit. With the exception of the issuing fee of 0.25%, which is fixed, letter of credit fees and the Revolver commitment fee were fixed through December 31, 2001 and are subsequently determined in conjunction with the pricing grid.

     During February 2000, Del Monte repurchased $31.0 of the then senior subordinated notes. In conjunction with this early debt prepayment, Del Monte recorded an extraordinary loss of $5.2 ($4.3 net of tax) in the year ended June 30, 2000. The extraordinary loss consisted of the write-off of $1.5 ($1.2 net of tax) of previously capitalized debt issuance costs related to the redeemed notes and original issuance discount and $3.7 ($3.1 net of tax) of redemption premiums.

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     Long-term debt consisted of the following:

	June 30,
	2002		2001
Term loan	$	290.3	$	414.0
9¼% Senior Subordinated Notes		300.0		300.0
		590.3		714.0
Less current portion		2.9		4.2
	$	587.4	$	709.8

     At June 30, 2002, scheduled maturities of long-term debt in each of the next five fiscal years and thereafter were as follows:

2003	$	2.9
2004		3.0
2005		2.9
2006		3.0
2007		71.3
Thereafter		507.2
	$	590.3

     The Revolver and Term Loan are collateralized by security interests in substantially all of Del Monte’s assets. The Revolver and Term Loan agreement and the New Notes contain restrictive covenants with which Del Monte must comply. These restrictive covenants, in some circumstances, limit the incurrence of additional indebtedness, payment of dividends, transactions with affiliates, asset sales, mergers, acquisitions, prepayment of other indebtedness, liens and encumbrances. In addition, Del Monte is required to meet certain financial covenants, including minimum fixed charge coverage, minimum interest coverage and maximum leverage ratios. Del Monte believes that it was in compliance with all such financial covenants at all testing intervals, and as of June 30, 2002. Del Monte made cash interest payments of $58.7, $57.0 and $52.7 for the years ended June 30, 2002, 2001 and 2000.

     See Note 2 for a discussion of the proposed financing relating to the proposed merger of DMC and the Heinz Businesses.

Note 7 — Financial Instruments

     Del Monte uses derivatives only for purposes of managing risk associated with the underlying exposures and does not trade or use instruments with the objective of earning financial gains on interest rate fluctuations alone, nor does it use instruments where there are not underlying exposures. Management believes that its use of derivative instruments to manage risk is in Del Monte’s best interest. In addition, the terms of Del Monte’s revolving and term loan agreement required Del Monte to enter into and maintain one or more permitted swap obligations (as defined in the loan agreement) for, among other things, a notional amount of at least $200.0 and for a term of at least three years. To accomplish this, and to limit its exposure to interest rate increases, Del Monte entered into interest rate swaps on August 3, 2001. The aggregate notional amount of the swaps is $200.0 and the swaps are in effect from September 28, 2001 through September 30, 2004. The swaps are with several banks and fix the three-month LIBOR at a weighted average rate of 4.91% per annum on the $200.0 notional amount. This fixed interest rate is measured against three-month LIBOR for purposes of settlement. The fair value of each swap is determined independently by each bank, using its own valuation model, based on the projected three-month LIBOR yield curve. According to each bank, valuations based on other models may yield different results.

     The swaps were not initially designated as hedging instruments under SFAS 133 (as amended by SFAS 137 and 138) when they were entered into on August 3, 2001. Changes in fair value of the swaps from that date to their designation date, January 23, 2002, as hedging instruments are reflected in the Consolidated Statements of Income. The fair value of the swaps at January 23, 2002 was a liability of $5.8. This liability will be credited to interest expense, in the Consolidated Statements of Income, over the remaining life of the swap agreements. This credit offsets interest expense on the related bank debt. On January 23, 2002, Del Monte designated the swaps as cash flow hedging instruments of market interest rate risk under SFAS 133. The changes in the fair value of the swaps subsequent to the January 23, 2002 designation date are recorded in other comprehensive income/loss in Stockholders’ Equity in an

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amount equal to the effective portion of the hedging instruments. The remaining amount, if any, equal to the ineffective portion of the hedging instruments is recorded as other income/expense in the Consolidated Statements of Income.

     The fair value of the swaps at January 23, 2002 and June 30, 2002 was a liability of $5.8 and $6.9, respectively. For the year ended June 30, 2002, the change in fair value of the swaps through January 23, 2002 resulted in a loss on financial instruments of $5.8. For the year ended June 30, 2002, the change in fair value of the swaps from January 23, 2002 to June 30, 2002 resulted in other comprehensive loss of $4.0 ($2.4 net of tax) which will be released into earnings over the term of the swaps. Interest expense for the year ended June 30, 2002 was increased by $4.2 due to the impact of the swaps. Interest expense for the year ended June 30, 2002 includes a credit to interest expense of $2.9, reflecting a release to earnings from the $5.8 liability, attributed to the January 23, 2002 to June 30, 2002 period. A total of $3.4 of additional credits to interest expense are expected for fiscal 2003. Settlements accrued for payment to the swap counterparties offset these releases to earnings from this liability.

     Del Monte had interest rate cap agreements during the year ended June 30, 2001, but had no interest rate protection arrangements as of June 30, 2001. The incremental effect of all interest rate contracts on interest expense for the year ended June 30, 2001 was $0.3.

Note 8 — Earnings Per Share

     The following tables set forth the computation of basic and diluted earnings per share:

		Year Ended June 30,
		2002			2001			2000
BASIC EARNINGS PER SHARE
Numerator:
Income attributable to common shares before extraordinary item		$	39.8		$	40.0		$	133.0
Extraordinary loss, net of tax benefit			(1.3	)		(26.2	)		(4.3	)
	Numerator for basic earnings per share — income attributable to common shares	$	38.5		$	13.8		$	128.7
Denominator:
	Denominator for basic earnings per share — weighted average shares		52,282,538			52,233,848			52,192,676
Basic income per common share before extraordinary item		$	0.76		$	0.77		$	2.55
Extraordinary loss per common share, net of tax benefit			(0.02	)		(0.51	)		(0.08	)
Basic income per common share		$	0.74		$	0.26		$	2.47
DILUTED EARNINGS PER SHARE
Numerator:
Income attributable to common shares before extraordinary item		$	39.8		$	40.0		$	133.0
Extraordinary loss, net of tax benefit			(1.3	)		(26.2	)		(4.3	)
	Numerator for diluted earnings per share — income attributable to common shares	$	38.5		$	13.8		$	128.7
Denominator:
	Weighted average shares		52,282,538			52,233,848			52,192,676
	Effect of dilutive securities — stock options		766,430			533,886			905,222
	Denominator for diluted earnings per share — weighted average shares and equivalents		53,048,968			52,767,734			53,097,898
Diluted income per common share before extraordinary item		$	0.75		$	0.76		$	2.50
Extraordinary loss per common share, net of tax benefit			(0.02	)		(0.50	)		(0.08	)
Diluted income per common share		$	0.73		$	0.26		$	2.42

     Options outstanding in the amounts of 1,464,469, 1,620,843 and 1,700,950 shares as of June 30, 2002, 2001 and 2000, respectively, were not included in the computation of diluted earnings per share because these options’ exercise prices were greater than the average market price of the common shares for those years.

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Note 9 — Employee Stock Plans

AIAP Deferred Compensation Plan

     On October 14, 1999, the Del Monte Corporation Annual Incentive Award Plan Deferred Compensation Plan was established under which certain employees are eligible to participate. Beginning in fiscal 2001, eligible employees may elect to defer from 5% to 100% of their annual incentive award. Del Monte provides a matching contribution of 25% of the employee’s deferral amount. The employee deferral and Del Monte’s match are converted to deferred stock units at the fair value of Del Monte common stock on the day the incentive awards are paid. The participant is 100% vested in the employee deferral portion of their account. Del Monte’s matching contribution vests in equal installments over three years subsequent to the award grant. At the time of distribution, the employee’s deferral amount and any vested Del Monte matching contribution will be distributed in whole shares of Del Monte common stock.

     As of June 30, 2002, Del Monte has accrued for awards earned in fiscal 2002 to be granted in fiscal 2003. Expense under this plan was $0.2 for both years ended June 30, 2002 and 2001. For awards earned in fiscal 2001, 27,285 units of deferred stock were granted on August 8, 2001 at $8.48 per unit. Del Monte provided 6,824 units of deferred stock as a matching contribution for the employee deferral amount.

Stock Option Incentive Plans

     On August 4, 1997, Del Monte adopted the 1997 Stock Incentive Plan (amended November 4, 1997 and October 14, 1999) which allowed Del Monte to grant options to certain key employees. The plan allowed the grant of options to purchase up to 1,821,181 shares of Del Monte’s common stock. Options could be granted as incentive stock options or as non-qualified options for purposes of the Internal Revenue Code. Options terminate ten years from the date of grant. Options to purchase 1,736,520 shares were granted under the plan. As of June 30, 2002, eligible employees held options to purchase 1,471,614 shares of common stock under the 1997 Plan. Options generally vest over four or five years. No additional options will be granted pursuant to this plan.

     Also on August 4, 1997, Del Monte adopted the Del Monte Foods Company Non-Employee Director and Independent Contractor 1997 Stock Incentive Plan (amended on November 4, 1997, October 14, 1999 and August 24, 2000). In connection with this plan, grants of non-qualified stock options representing 223,828 shares of common stock may be made to certain non-employee directors and independent contractors of Del Monte. Options terminate ten years from the date of grant. As of June 30,2002, eligible non-employees held options to purchase 178,828 shares of common stock under this plan and 45,000 shares were available to be issued in connection with future awards under this plan. Options generally vest over a four-year period.

     The Del Monte Foods Company 1998 Stock Incentive Plan (the “1998 Plan”) was adopted initially by the board of directors on April 24, 1998, modified by the board on September 23, 1998 and approved by the stockholders on October 28, 1998. Further amendments were made on October 14, 1999 and August 24, 2000 and approved by Del Monte stockholders on November 15, 2000. Under the 1998 Plan, grants of incentive and nonqualified stock options (“Options”), stock appreciation rights (“SARs”) and stock bonuses (together with Options and SARs, “Awards”) representing 6,208,887 shares of common stock may be made to certain employees of Del Monte. Initially 3,195,687 shares of common stock were reserved to be issued in connection with awards under the 1998 Plan, and amendments authorizing an additional 2,870,000 shares of common stock to be issued in connection with awards under the 1998 Plan were approved by stockholders on November 15, 2000, as well as any shares of common stock represented by awards granted under any prior plan which are forfeited, expired or canceled. The term of any Option or SAR may not be more than ten years from the date of its grant. Subject to certain limitations, the Nominating and Compensation Committee of the Board has authority to grant Awards under the 1998 Plan and to set the terms of any Awards. Options generally vest over four or five years. As of June 30, 2002, eligible employees held options to purchase 3,816,149 shares of common stock under the 1998 Plan, and 2,372,464 additional shares were available to be issued in connection with for future awards.

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     Stock option activity and related information during the periods indicated was as follows:

			Outstanding				Exercisable
			Weighted				Weighted
			Average				Average
	Options		Exercise		Options		Exercise
	Outstanding		Price		Exercisable		Price
Balance at June 30, 1999		3,676,737	$	9.13		868,453	$	5.22
Granted		69,375		13.33
Forfeited		318,844		9.96
Exercised		39,535		5.22
Balance at June 30, 2000		3,387,733		9.19		1,596,691		7.05
Granted		1,350,980		6.99
Forfeited		322,487		10.16
Exercised		26,241		5.22
Balance at June 30, 2001		4,389,985		8.46		2,256,758		7.65
Granted		1,310,100		8.88
Forfeited		208,240		10.12
Exercised		25,254		6.58
Balance at June 30, 2002		5,466,591	$	8.51		2,866,716	$	8.03

     At June 30, 2002, the range of exercise prices and weighted-average remaining contractual life of outstanding options was as follows:

		Options Outstanding						Options Exercisable
				Weighted
				Average		Weighted				Weighted
				Remaining		Average				Average
Range of Exercise		Number		Contractual		Exercise		Number		Exercise
Price Per Share		Outstanding		Life		Price		Exercisable		Price
$	5.22 -   8.42		2,764,047		6.20	$	5.96		1,900,016	$	5.48
	8.45 - 15.85		2,702,544		7.73		11.11		966,700		13.04
$	5.22 - 15.85		5,466,591		6.95	$	8.51		2,866,716	$	8.03

     Del Monte accounts for its stock option plans using the intrinsic value method prescribed by APB 25, and related Interpretations, under which no compensation cost for stock options is recognized for stock option awards granted at or above fair market value.

     Pro forma information regarding net income and earnings per share is required by FASB Statement No. 123, “Accounting for Stock Issued to Employees” (“SFAS 123”), and has been determined as if Del Monte had accounted for its employee stock options under the fair value method of that Statement. The fair value for these options was estimated at the date of grant using a Black-Scholes option-pricing model with the following weighted average assumptions for the years ended June 30, 2002, 2001 and 2000: dividend yield of 0% for all years; expected volatility of 0.36, 0.40 and 0.43, respectively; risk-free interest rates of 4.59%, 5.87% and 5.99%, respectively; and expected lives of 7 years for all years.

     The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options, which have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions including the expected stock price volatility. Changes in the subjective input assumptions can materially affect the fair value estimate, and in management’s opinion, the existing models do not necessarily provide a reliable single measure of the fair value of its

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employee stock options. The weighted average fair value per share of options granted during the year was $4.17, $3.65 and $6.72, for the years ended June 30, 2002, 2001 and 2000, respectively.

     For purposes of pro forma disclosures, the estimated fair value of the options is amortized to expense over the options’ vesting period. Del Monte’s pro forma information as calculated in accordance with SFAS 123 is as follows:

		Year Ended June 30,
		2002		2001		2000
Pro forma net income		$	35.9	$	11.5	$	126.2
Pro forma earnings per share:
	Basic	$	0.69	$	0.22	$	2.42
	Diluted	$	0.69	$	0.22	$	2.38

Stock Purchase Plan

     The Del Monte Foods Company Employee Stock Purchase Plan was approved on August 4, 1997 and amended on November 4, 1997. A total of 957,710 shares of common stock of Del Monte were reserved for issuance to eligible employees under this plan. At June 30, 2002, 381,360 shares of Del Monte’s common stock have been purchased by and issued under the plan. The Company does not anticipate issuing any additional shares pursuant to this plan.

     Total compensation expense recognized in connection with stock-based awards for the years ended June 30, 2002, 2001 and 2000 was $0.0, $0.3 and $0.2, respectively.

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Note 10 — Retirement Benefits

     Defined Benefit Plans. Del Monte sponsors two non-contributory defined benefit pension plans and several unfunded defined benefit postretirement plans providing certain medical, dental and life insurance benefits to eligible retired, salaried, non-union hourly and union employees.

			Pension Benefits						Other Benefits
			June 30,						June 30,
			2002			2001			2002			2001
Change in benefit obligation:
		Benefit obligation at beginning of year	$	283.2		$	269.0		$	86.1		$	77.4
		Service cost		4.0			3.4			1.2			1.0
		Interest cost		20.3			20.5			6.3			6.0
		Plan participants’ contributions		—			—			4.3			3.9
		Actuarial loss		6.4			17.7			11.6			7.7
		Benefits paid		(25.7	)		(27.4	)		(9.9	)		(9.9	)
		Benefit obligation at end of year	$	288.2		$	283.2		$	99.6		$	86.1
Change in plan assets:
		Fair value of plan assets at beginning of year	$	296.9		$	327.7		$	—		$	—
		Actual loss on plan assets		(16.1	)		(11.4	)		—			—
		Employer contributions		4.0			8.0			5.6			6.0
		Plan participants’ contributions		—			—			4.3			3.9
		Benefits paid		(25.7	)		(27.4	)		(9.9	)		(9.9	)
		Fair value of plan assets at end of year	$	259.1		$	296.9		$	—		$	—
		Funded status	$	(29.1	)	$	13.7		$	(99.6	)	$	(86.1	)
		Unrecognized net actuarial (gain) loss		51.1			2.8			(13.0	)		(26.9	)
		Unrecognized prior service cost		(0.2	)		(0.5	)		(21.4	)		(24.7	)
		Additional minimum liability		(48.8	)		—			—			—
		Net amount recognized	$	(27.0	)	$	16.0		$	(134.0	)	$	(137.7	)
WEIGHTED AVERAGE ASSUMPTIONS
	AS OF JUNE 30:
		Discount rate used in determining projected benefit obligation		7.25	%		7.50	%		7.25	%		7.50	%
		Rate of increase in compensation levels		5.00			5.00			—			—
		Long-term rate of return on assets		9.00			9.00			—			—

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     The components of net periodic pension cost for pension benefit plans and other benefit plans are as follows:

		Pension Benefits									Other Benefits
		June 30,									June 30,
		2002			2001			2000			2002			2001			2000
Components of net periodic benefit cost
	Service cost for benefits earned during period	$	4.0		$	3.4		$	3.5		$	1.2		$	1.0		$	1.0
	Interest cost on projected benefit obligation		20.3			20.5			19.9			6.3			6.0			5.4
	Expected return on plan assets		(25.8	)		(28.6	)		(26.0	)		—			—			—
	Amortization of prior service cost		(0.3	)		(0.3	)		(0.2	)		(3.2	)		(3.2	)		(3.2	)
	Recognized net actuarial gain		—			(2.2	)		(0.3	)		(2.3	)		(3.2	)		(3.6	)
Benefit cost (credit)		$	(1.8	)	$	(7.2	)	$	(3.1	)	$	2.0		$	0.6		$	(0.4	)

     It has been Del Monte’s policy to fund Del Monte’s retirement plans in an amount consistent with the funding requirements of federal law and regulations and not to exceed an amount that would be deductible for federal income tax purposes. Contributions are intended to provide not only for benefits attributed to service to date but also for those benefits expected to be earned in the future. Del Monte’s defined benefit retirement plans were previously determined to be underfunded under federal ERISA guidelines. Del Monte entered into an agreement with the Pension Benefit Guaranty Corporation, dated April 7, 1997, whereby Del Monte agreed to contribute a total of $55.0 to its defined benefit pension plans through calendar 2001.

     For measurement purposes, a 10.00% annual rate of increase in the per capita cost of covered health care benefits was assumed for the preferred provider organization (“PPO”) plan and associated indemnity plans for fiscal 2002. The rate of increase is assumed to decline gradually to 5.25% in the year 2007 and remains at that level thereafter. For health maintenance organization (“HMO”) plans, a 17.00% annual rate of increase in the per capita cost of covered health care benefits was assumed for fiscal 2002. The rate of increase is assumed to decline gradually to 9.0% in the year 2007 and then remain below that level. The health care cost trend rate assumption has a significant effect on the amounts reported. An increase in the assumed health care cost trend by 1% in each year would increase the postretirement benefit obligation as of June 30, 2002 by $10.4 and the aggregate of the service and interest cost components of net periodic postretirement benefit cost for the period then ended by $0.9. A decrease in the assumed health care cost trend by 1% in each year would decrease the postretirement benefit obligation as of June 30, 2002 by $9.8 and the aggregate of the service and interest cost components of net periodic postretirement benefit cost for the period then ended by $0.8.

     Defined Contribution Plans. Del Monte sponsors defined contribution plans covering substantially all of its employees. Company contributions to the plans are based on employee contributions or compensation. Contributions under such plans totaled $1.9, $1.7 and $1.7 for the years ended June 30, 2002, 2001 and 2000, respectively.

     Multi-employer Plans. In addition, Del Monte participates in several multi-employer pension plans, which provide defined benefits to certain union employees. The contributions to multi-employer plans for the years ended June 30, 2002, 2001 and 2000 were $7.2, $7.4 and $7.7, respectively.

     Nonqualified Retirement Plans. Effective January 1, 1990, Del Monte established the Del Monte Corporation Additional Benefits Plan and the Del Monte Corporation Supplemental Benefits Plan (the “Nonqualified Retirement Plans”). The Nonqualified Retirement Plans are “top hat” and “excess” benefit plans designed to provide benefits in excess of those otherwise permitted under the Del Monte Corporation Retirement Plan and the Del Monte Savings Plan (which is qualified under Section 401(k) of the Internal Revenue Code) by Sections 401(a)(17) and 415 of the Internal Revenue Code. The Nonqualified Retirement Plans also provide benefits in respect of certain amounts of severance not taken into account under the Del Monte Corporation Retirement Plan or the Del Monte Savings Plan. Employees who participate in the Del Monte Corporation Retirement Plan or the Del Monte Savings Plan are generally eligible to participate in the Nonqualified Retirement Plans. Benefits under the Nonqualified Retirement Plans are unfunded and paid from the general assets of Del Monte. Benefit costs incurred under such plans totaled $0.7, $0.7 and $0.8 for the years ended June 30, 2002, 2001 and 2000, respectively.

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Note 11 — Provision (Benefit) for Income Taxes

     The provision (benefit) for income taxes consists of the following:

			Year Ended June 30,
			2002			2001			2000
Income (loss) before taxes and extraordinary items:
		Domestic	$	56.2		$	56.7		$	79.9
		Foreign		(0.3	)		—			(0.5	)
			$	55.9		$	56.7		$	79.4
Income tax provision (benefit)
	Current:
		Federal	$	(3.7	)	$	(7.4	)	$	20.6
		State and foreign		0.2			0.1			—
	Total current			(3.5	)		(7.3	)		20.6
	Deferred:
		Federal		16.0			24.7			(66.6	)
		State and foreign		3.6			(0.7	)		(7.6	)
	Total deferred			19.6			24.0			(74.2	)
			$	16.1		$	16.7		$	(53.6	)

     Significant components of Del Monte’s deferred tax assets and liabilities are as follows:

			Year Ended June 30,
			2002			2001
Deferred tax assets:
	Post employment benefits		$	52.3		$	53.7
	Pension liability			12.2			1.6
	Reserves not currently deductible			13.8			15.0
	Workers’ compensation			6.6			5.3
	Net operating loss and tax credit carry forwards			28.3			41.4
	Other			19.3			17.0
		Gross deferred tax assets		132.5			134.0
		Valuation allowance		(0.1	)		(6.7	)
		Net deferred tax assets		132.4			127.3
Deferred tax liabilities:
	Depreciation			50.4			41.2
	Intangible assets			5.8			4.4
	LIFO reserve			13.5			14.6
	Other			—			6.2
		Gross deferred tax liabilities		69.7			66.4
		Net deferred tax asset	$	62.7		$	60.9

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     The change in deferred tax assets is attributable to the current year provision and is offset by the tax benefit of items included in other comprehensive income.

     At June 30, 2002, a valuation allowance of $0.1 was maintained for foreign net operating loss carryforwards, as the utilization of such foreign losses cannot be reasonably assured. The net change in valuation allowance for the years ended June 30, 2002, 2001 and 2000 was a decrease of $6.6, $3.0 and $81.6, respectively. The recognition of the net deferred tax asset is based upon the expected utilization of deferred tax assets that the Company believes will more likely than not be realized through future profitable taxable operations.

     The differences between the provision (benefit) for income taxes and income taxes computed at the statutory U.S. federal income tax rates are explained as follows:

	Year Ended June 30,
	2002			2001			2000
Income taxes computed at the statutory U.S. federal income tax rates	$	19.5		$	19.8		$	27.8
Taxes on foreign income at rates different than U.S. federal income tax rates		0.3			0.1			0.2
State taxes, net of federal benefit		2.4			(0.7	)		—
Reversal of valuation allowance, net of tax adjustments		(6.6	)		(2.2	)		(67.7	)
Realization of prior years’ net operating losses, tax credits and other adjustments		—			—			(12.2	)
Other		0.5			(0.3	)		(1.7	)
Provision (benefit) for income taxes	$	16.1		$	16.7		$	(53.6	)

     As of June 30, 2002, Del Monte had net operating loss carryforwards of $63.1 for U.S. tax purposes which will expire between 2012 and 2021, $86.7 for state purposes which will expire between 2006 and 2017, $0.6 for foreign tax purposes which will expire in 2003 and tax credits of $6.6 which will expire between 2007 and 2011.

     Del Monte made income tax payments of $1.5, $0.0 and $9.0 for the years ended June 30, 2002, 2001 and 2000, respectively.

Note 12 — Commitments and Contingencies

     Lease Commitments. Del Monte leases certain property and equipment and office and plant facilities. At June 30, 2002, the aggregate minimum rental payments required under operating leases were as follows:

2003	$	27.9
2004		59.1
2005		18.0
2006		15.2
2007		13.3
Thereafter		57.1
	$	190.6

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     Rent expense for all operating leases is as follows:

	Year Ended June 30,
	2002			2001			2000
Minimum rentals	$	29.7		$	28.1		$	24.0
Contingent rentals		7.3			7.3			7.1
Sublease rentals		(0.2	)		(0.7	)		(1.0	)
Rent expense for operating leases	$	36.8		$	34.7		$	30.1

     Contingent rentals relate to operating leases for certain equipment. Contingent rental expense is calculated based on the usage of the equipment.

     Lease Financing. In November 1998, Del Monte entered into a build-to-suit lease arrangement to finance the construction of four warehouse facilities (the “Facilities”) adjacent to Del Monte’s Hanford, Kingsburg and Modesto, California, and Plymouth, Indiana production plants. The construction of the Facilities was financed by a special purpose entity sponsored by certain lending institutions (the “Lenders”). The special purpose entity is not affiliated with Del Monte and is not consolidated in Del Monte’s consolidated financial statements. Del Monte has accounted for this arrangement as an operating lease in accordance with SFAS 13, “Accounting for Leases”, as amended.

     The initial lease term runs until November 2003. Monthly lease payments are based on LIBOR, plus a credit spread, applied to a $37.8 lease balance. Future minimum lease payments, assuming exercise of the purchase option available to Del Monte under the lease, are included in the table above. The lease contains various affirmative and negative covenants, including covenants based upon Del Monte’s financial performance. A default under the lease, including violation of these covenants, could require an acceleration of Del Monte’s payment obligations. As of June 30, 2002, Del Monte believes it is in compliance with these covenants.

     Following the initial lease term, and with required prior notice, Del Monte must exercise one of the following end of term options, each with respect to all, but not less than all, of the Facilities: (i) renew the lease for up to five additional one-year terms, subject to the consent of the Lenders, (ii) purchase the Facilities for the purchase amount (i.e. the lease balance plus accrued and unpaid rent plus any other amounts due and payable) or (iii) sell the Facilities, on behalf of the special purpose entity, to an unrelated third party. In the event option (iii) is elected, Del Monte has provided a residual value guarantee of up to approximately $30.3 for any deficiency if the proceeds from the sale of the Facilities are less than the lease balance. However, Del Monte is entitled to any sale proceeds from a sale of the Facilities in excess of the lease balance.

     Grower Commitments. Del Monte has entered into noncancelable agreements with growers, with terms ranging from less than one year to ten years, to purchase certain quantities of raw products. Total purchases under these agreements were $125.4, $142.2 and $161.8 for the years ended June 30, 2002, 2001 and 2000, respectively.

     At June 30, 2002, aggregate future payments under such purchase commitments (priced at June 30, 2002 estimated costs) are estimated as follows:

2003	$	137.3
2004		69.5
2005		56.0
2006		52.8
2007		49.6
Thereafter		208.7
	$	573.9

     Supply Agreement. In connection with the sale of Del Monte’s 50.1% interest in Del Monte Philippines, a joint venture operating primarily in the Philippines, on March 29, 1996, Del Monte signed an eight-year supply agreement under which Del Monte sources

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the majority of its pineapple requirements from Del Monte Philippines over the agreement term. Del Monte expects to purchase $32.7 of product in fiscal 2003 under this supply agreement for pineapple products. During the years ended June 30, 2002, 2001 and 2000, Del Monte purchased $28.9, $35.4 and $40.8, respectively, of product under the supply agreement.

     On September 1, 2000, in conjunction with the acquisition of the rights to the SunFresh brand citrus and tropical fruits line of UniMark Group Inc, Del Monte executed a five-year supply agreement under which a UniMark affiliate will produce certain chilled and processed fruit products at UniMark’s facility in Mexico that Del Monte will purchase at current market rates. Del Monte expects to purchase $19.1 of product in fiscal 2003 under this supply agreement. During the year ended June 30, 2002 and 2001, Del Monte purchased $17.9 and $12.8, respectively, of product under the supply agreement.

     Effective December 21, 1993, Del Monte sold substantially all of the assets and certain related liabilities of its can manufacturing operations in the United States to Silgan Containers Corporation (“Silgan”). In connection with the sale to Silgan, Del Monte entered into a ten-year supply agreement under which Silgan, effective immediately after the sale, began supplying substantially all of Del Monte’s metal container requirements for foods and beverages in the United States. However, Del Monte is entitled to consider competitive bids for up to 50% of its requirements. Silgan has the right to match any competitive offer. In addition, if Silgan is unable to supply all of such requirements for any reason, Del Monte is entitled to purchase the excess from another supplier.

     Price levels were originally set based on Del Monte’s costs of self-manufactured containers. Price changes under the contract reflect changes in Silgan’s costs or as otherwise negotiated. The agreement may be terminated by either party, without penalty, on notice given 12 months prior to the end of the term of the agreement. The base term of the supply agreement has since been extended to December 21, 2006. Purchases under the agreement during the year ended June 30, 2002, 2001 and 2000, amounted to $205.9, $198.0 and $172.9, respectively. Del Monte believes the supply agreement provides it with a long-term supply of cans at competitive prices that adjust over time for normal manufacturing cost increases or decreases.

     Information Systems Agreement. On November 1, 1992, Del Monte entered into a ten-year agreement with Electronic Data Systems Corporation (“EDS”) to provide services and administration to Del Monte in support of its information services functions for all domestic operations. Payments under the terms of the agreement are based on scheduled monthly base charges subject to various adjustments such as system usage and inflation. Total payments for the years ended June 30, 2002, 2001 and 2000 were $19.6, $17.8, and $17.0 respectively.

     On June 30, 2002, Del Monte entered into a ten-year agreement with EDS to provide similar services beginning November 2002. Monthly payments will be based on scheduled costs for services, a portion of which will be subject to an inflation adjustment. Del Monte may terminate the contract at any time after the first year of service. A termination fee is applicable to early termination of the contract. Noncancelable future minimum payments under the existing and new agreements are as follows:

2003	$	11.6
2004		6.0
	$	17.6

     Union Contracts. Approximately 80% of Del Monte’s hourly and seasonal work force are employees working under union collective bargaining agreements. Of these employees, approximately 58% are under agreements that will expire in calendar 2003.

     Legal Proceedings. Del Monte is a defendant in an action brought by PPI Enterprises (U.S.), Inc. in the U.S. District Court for the Southern District of New York on May 25, 1999. The plaintiff has alleged that Del Monte breached certain purported contractual and fiduciary duties and made misrepresentations and failed to disclose material information to the plaintiff about the value of Del Monte and its prospects for sale. The plaintiff also alleges that it relied on Del Monte’s alleged statements in selling its preferred and common stock interest in Del Monte to a third party at a price lower than that which the plaintiff asserts it could have received absent Del Monte’s alleged conduct. The complaint seeks compensatory damages of at least $22.0, plus punitive damages. The discovery phase of the case has been completed and Del Monte has filed a motion for summary judgment of the plaintiff’s claims. Del Monte cannot at this time reasonably estimate a range of exposure, if any, of its potential liability. Nevertheless, Del Monte believes that adequate insurance coverage is in place to cover any material liability, fees and cost that Del Monte may incur with respect to this litigation. Del Monte is defending this proceeding vigorously.

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     Del Monte is also defending various other claims and legal actions that arise from its normal course of business, including certain environmental actions. Governmental authorities and private claimants have notified Del Monte that it is a potentially responsible party (“PRP”) or may otherwise be potentially responsible for environmental investigation and remediation costs at certain contaminated sites under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended (“CERCLA”) or under similar state laws. These claims contain allegations that Del Monte sent certain wastes from its operations to these sites for disposal or recycling. With respect to a majority of the sites at which Del Monte has been identified as a PRP, Del Monte has settled its liability. While it is not feasible to predict or determine the ultimate outcome of these matters, in the opinion of management none of these claims and actions, individually or in the aggregate, will have a material effect on Del Monte’s financial position.

Note 13 — Related Party Transactions

     DMC is directly-owned and wholly-owned by Del Monte. For the year ended June 30, 2002, DMC and DMC’s subsidiaries accounted for 100% of the consolidated revenues and net earnings of Del Monte, except for expenses relating to compensation for the members of the Board of Directors Del Monte. As of June 30, 2002, DMFC’s sole asset was the stock of DMC. Del Monte had no subsidiaries other than DMC and DMC’s subsidiaries, and had no direct liabilities other than accruals relating to the compensation for the directors of the Board of Del Monte. Del Monte is separately liable under various guarantees of indebtedness of DMC, which guarantees of indebtedness are full and unconditional.

     Transactions with Texas Pacific Group. Del Monte entered into a ten-year Management Advisory Agreement dated April 18, 1997 with TPG Partners, L.P. Under the Management Advisory Agreement, TPG Partners, L.P. is entitled to receive an annual fee from Del Monte for management advisory services equal to the greater of $0.5 or 0.05% of the budgeted consolidated annual net sales of Del Monte. TPG Partners, L.P. received fees of $0.7, $0.8 and $0.8 under this agreement for the years ended June 30, 2002, 2001 and 2000, respectively. This agreement makes available the resources of TPG Partners, L.P. concerning a variety of financial and operational matters, including advice and assistance in reviewing Del Monte’s business plans and its results of operations and in evaluating possible strategic acquisitions, as well as providing investment banking services in identifying and arranging sources of financing. The Management Advisory Agreement does not specify a minimum number of TPG Partners, L.P. personnel who must provide such services or the individuals who must provide them. It also does not require that a minimum amount of time be spent by such personnel on Del Monte’s matters. We cannot otherwise obtain the services that TPG Partners, L.P. will provide without the addition of personnel or the engagement of outside professional advisors. This agreement will terminate upon completion of the proposed merger of DMC and the Heinz Businesses.

     Del Monte also entered into a ten-year Transaction Advisory Agreement dated April 18, 1997 with TPG Partners, L.P. As compensation for financial advisory and other similar services rendered in connection with “add-on” transactions (such as an acquisition, merger or recapitalization), TPG Partners, L.P. is to be paid a fee of 1.5% of the total value for each add-on transaction. In fiscal 2002, 2001 and 2000, TPG Partners, L.P. did not receive any payments under the Transaction Advisory Agreement. This agreement will terminate upon completion of the proposed merger of DMC and the Heinz Businesses with a final payment of up to $9.0.

     Transactions with Management. During the second and third quarters of fiscal 1998, Del Monte sold shares of Del Monte common stock to certain key employees, including the executive officers of Del Monte, under Del Monte’s Employee Stock Purchase Plan. Messrs. Wolford and Smith each paid $0.18 in cash and borrowed an additional equal amount from Del Monte, under individual secured Promissory Notes (“Promissory Notes’’), to acquire the stock purchased by each of them pursuant to the plan. The Promissory Notes are secured by a pledge of the stock purchased with the proceeds of the loans. The terms of the Promissory Notes provide for accrual of interest, compounded semiannually, at the applicable federal short-term rate, adjusted each February 1 and August 1. As of August 1, 2002, this rate was 2.52%. The Promissory Notes permit prepayment at the borrower’s option and also require repayment upon the occurrence of specific events, including termination of employment and sale of the securities pledged to secure the Promissory Notes. Del Monte extended these loans in accordance with applicable law governing transactions by a corporation with its officers. Del Monte cannot predict whether the terms of these transactions, if made with a disinterested third party, would be more or less favorable to Messrs. Wolford and Smith. Del Monte has no reason to believe that such terms would be less favorable. Del Monte’s bank financing arrangements limit the ability of Del Monte to make loans or advances to employees to a maximum amount outstanding at any time of $10.0. Other than these loans to Messrs. Wolford and Smith, Del Monte has not made any loans or advances to any of its directors or executive officers or members of their immediate families.

     In addition, Del Monte amended and entered into employment agreements with certain key employees during the third and fourth quarters of fiscal 2002. The agreements are filed as exhibits to the annual report on Form 10-K for the year ended June 30, 2002.

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Note 14 — Plant Consolidation

     In the third quarter of fiscal 1998, management implemented a plan to consolidate processing operations over a three-year period. Operations were suspended at the Modesto facility during fiscal 1999 while that facility underwent reconfiguration to accommodate fruit processing, which had previously taken place at the San Jose facility and at the Stockton facility. Del Monte closed the Arlington facility in August 1998, the San Jose facility in December 1999 and the Stockton facility in September 2000. The tomato processing formerly performed at the Modesto facility has been moved to the Hanford facility. In January 2001, Del Monte closed its tomato processing plant located in Woodland, California. This closure was part of management’s plan to consolidate its California manufacturing operations in order to enhance the efficiency of processing operations; to reduce the production of lower-margin commodity products, such as bulk tomato paste; and to allow Del Monte to better meet the competitive challenges of the market. Del Monte’s Hanford, California facility is now the sole internal source of bulk tomato paste, a component of several of Del Monte’s tomato products. Special charges related to plant consolidation are as follows:

	Year Ended June 30,
	2002			2001			2000
Severance accrual	$	0.2		$	0.6		$	—
Severance accrual reversal		—			(1.1	)		(1.3	)
Asset write-off		—			10.4			—
Asset write-down reversal		(0.2	)		—			(0.7	)
Ongoing fixed costs and asset removal/disposal costs of dormant facilities		1.3			3.8			8.6
Accelerated depreciation		—			0.9			4.3
Special charges related to plant consolidation	$	1.3		$	14.6		$	10.9

     In connection with the 1998 consolidation plan, Del Monte established an accrual of $6.6 in fiscal 1998 relating to severance and benefit costs for 433 employees to be terminated. A severance accrual of $0.2 relating to seven employees remained at June 30, 2002. Cash expenditures of $0.5, $1.1 and $2.3 were recorded against this accrual for the years ended June 30, 2002, 2001 and 2000. During fiscal 2001 and in the fourth quarter of fiscal 2000, this accrual was reduced by $1.1 and $1.3 due primarily to changes in severance and related benefit estimates.

     In connection with the Stockton closure, a $0.2 severance related charge was recorded during the first quarter of fiscal 2002. In the fourth quarter of fiscal 2001, a $2.4 charge was recorded for the write-off of assets at the Stockton facility for assets no longer used in operations. These assets where originally intended to be put into operation; however, management has decided to dispose of these assets which were deemed to no longer be useful. In relation to the San Jose facility and the Stockton facility, Del Monte continues to actively pursue potential buyers for the facilities.

     In connection with the Woodland facility, Del Monte entered into a purchase agreement with a buyer for the plant in the fourth quarter of fiscal 2001 for a sales price of $9.0. The transaction was closed in the first quarter of fiscal 2002 and Del Monte incurred closing costs of $0.1. In fiscal 2001, Del Monte recorded a charge of $8.0 ($10.5 recorded in the second quarter, less a $2.5 adjustment in the fourth quarter), representing the write-off of assets no longer used in operations; $0.2 of the write-off was reversed in the first quarter of fiscal 2002 upon the completion of the transaction. As part of the transaction, the buyer provided Del Monte with $2.0 in cash and a $7.0 interest-bearing promissory note. Interest on this promissory note is charged at three-month LIBOR plus a premium and is payable on a quarterly basis. The principal of the loan is due in two equal installments in 2005 and 2006. Del Monte has a first-priority lien and encumbrance on the plant.

     In August 1998, management announced its intention to close Del Monte’s vegetable processing plant located in Arlington, Wisconsin after the summer 1998 pack. For the year ended June 30, 2000, non-cash charges of $1.8 and $0.1 of cash expenditures were charged against this accrual. In addition, upon the sale of this plant in fiscal 2000, the sale proceeds exceeded original estimates resulting in a reduction of the accrual of $0.7. No balance remained in this accrual at June 30, 2000.

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     Accelerated depreciation results from the effects of adjusting the tomato and fruit processing assets’ remaining useful lives to match the period of use prior to the closures of these plants. Assets that are subject to accelerated depreciation consist primarily of buildings and of machinery and equipment, which will no longer be needed due to the consolidation of the operations of the two fruit processing plants and the consolidation of the operations of three tomato processing plants. The remaining useful lives of the buildings at the San Jose facility were decreased by approximately 20 years due to this acceleration. Ongoing fixed costs and asset removal/disposal costs represent costs to remove and dispose of assets, and costs to be incurred until the sale of the closed facilities has taken place.

Note 15 — Segment Reporting

     Del Monte operates in one reportable segment, the manufacturing and marketing of processed foods, for which Del Monte receives revenues from its customers. Del Monte’s chief operating decision maker reviews financial information presented on a consolidated basis accompanied by disaggregated information on revenues by product line for purposes of making decisions and assessing financial performance. The following table sets forth net sales by product category:

		Year Ended June 30,
		2002			2001			2000
Net Sales:
Processed vegetables		$	434.0		$	418.6		$	402.8
Processed fruit			546.6			548.8			498.1
Tomato and Specialty products			326.0			309.2			302.4
	Subtotal domestic		1,306.6			1,276.6			1,203.3
South America			16.1			15.2			12.0
Intercompany sales			(0.3	)		(0.4	)		(0.5	)
Total net sales		$	1,322.4		$	1,291.4		$	1,214.8

     Sales to export markets were $59.2, $55.9 and $50.8 for the years ended June 30, 2002, 2001 and 2000, respectively.

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Note 16 — Quarterly Results of Operations (unaudited)

		First			Second		Third		Fourth
2002(1)(2)
Net sales		$	272.3		$	391.3	$	343.9	$	314.9
Operating income			14.9			40.7		30.8		32.3
Income before extraordinary item			(5.3	)		18.9		11.4		14.8
Net income (loss)			(5.3	)		18.9		10.7		14.2	(4)
Per share data:(3)
	Basic income per share before extraordinary item	$	(0.10	)	$	0.36	$	0.22	$	0.28
	Diluted income per share before extraordinary item	$	(0.10	)	$	0.36	$	0.21	$	0.28
2001(1)(2)
Net sales		$	263.0		$	358.2	$	328.7	$	389.6
Operating income			24.3			31.2		34.9		36.1
Income before extraordinary item			6.4			8.5		10.7		14.4
Net income (loss)			6.4			8.5		10.7		(11.8	)(4)
Per share data:(3)
	Basic income per share before extraordinary item	$	0.12		$	0.16	$	0.21	$	0.27
	Diluted income per share before extraordinary item	$	0.12		$	0.16	$	0.20	$	0.27

(1)	The first quarter of fiscal 2002 includes $1.0 of inventory step-up charges related to the S&W acquisition. The first, second, third, and fourth quarters of fiscal 2001 includes $0.2, $0.7, $0.2 and $1.5, respectively, of inventory step-up charges related to the SunFresh and S&W acquisitions.
(2)	Quarterly plant consolidation charges for the first, second, third and fourth quarters of fiscal 2002 were $0.7, $0.4, $0.1 and $0.1, respectively. Quarterly plant consolidation charges for the first, second, third and fourth quarters of fiscal 2001 were $0.7, $11.8, $1.5 and $0.6, respectively.
(3)	Earnings per share were computed independently for each of the periods presented; therefore, the sum of the earnings per share amounts for the quarters may not equal the total for the year.
(4)	The third and fourth quarters of fiscal 2002 include extraordinary losses of $0.7 and $0.6, respectively, net of tax benefit, consisting of the write-off of previously capitalized debt issuance costs as a result of debt prepayments. The fourth quarter of fiscal 2001 includes an extraordinary loss of $26.2, net of tax benefit, consisting of prepayment premiums and the related write-off of previously capitalized debt issuance costs as a result of the May 2001 refinancing.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures

     Not applicable.

76

PART III

Item 10. Directors and Executive Officers of the Registrant

     The information required by Item 10 of Form 10-K with respect to identification of directors will be contained in our definitive proxy materials to be included by amendment to our Registration Statement on Form S-4, No. 333-98827, filed with the SEC on August 28, 2002, and is incorporated in this Annual Report on Form 10-K by this reference. For information with respect to the executive officers of Del Monte, see “Executive Officers of Del Monte Foods Company” at the end of Part I of this report.

     The information required by Item 10 of Form 10-K with respect to compliance with Section 16(a) of the Securities Exchange Act, as amended, will be contained in our definitive proxy materials to be filed with the SEC and is incorporated in this Annual Report on Form 10-K by this reference.

Item 11. Executive Compensation

     The information required by Item 11 of Form 10-K will be contained in our definitive proxy materials to be filed with the SEC and is incorporated in this Annual Report on Form 10-K by this reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management

     The information required by Item 12 of Form 10-K will be contained in our definitive proxy materials to be filed with the SEC and is incorporated in this Annual Report on Form 10-K by this reference.

Item 13. Certain Relationships and Related Transactions

     The information required by Item 13 of Form 10-K will be contained in our definitive proxy materials to be filed with the SEC and is incorporated in this Annual Report on Form 10-K by this reference.

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PART IV

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K

(a)	1.	Financial Statements
		(i)	The following financial statements of Del Monte Foods Company and subsidiaries are included in Item 8:
			Report of KPMG LLP, Independent Auditors
			Consolidated Balance Sheets — June 30, 2002 and 2001 Consolidated Statements of Income — Years ended June 30, 2002, 2001 and 2000
			Consolidated Statements of Stockholders’ Equity (Deficit) and Comprehensive Income — Years ended June 30, 2002, 2001 and 2000
			Consolidated Statements of Cash Flows — Years ended June 30, 2002, 2001 and 2000
			Notes to consolidated financial statements
	2.	Financial Statements Schedules
		Schedules have been omitted because they are inapplicable, not required, or the information is included elsewhere in the financial statements or notes thereto.
	3.	Exhibits
		The exhibits listed on the accompanying Exhibit Index are incorporated in this Annual Report on Form 10-K by this reference and filed as part of this report.
(b)	Reports on Form 8-K
	Registrant filed the following reports on Form 8-K during the quarter ended June 30, 2002:
		(1)	Current Report on Form 8-K filed on June 17, 2002 — Item 5: Announcement of the Agreement and Plan of Merger, dated as of June 12, 2002, by and among the H. J. Heinz Company, SKF Foods Inc., Del Monte Foods Company and Del Monte Corporation.
		(2)	Current Report on Form 8-K filed on June 17, 2002 — Item 5: Announcement of the adoption of a stockholder rights plan by the Del Monte Board of Directors on June 12, 2002.
(c)	See Item 14(a)3 above.
(d)	See Item 14(a)1 and 14(a)2 above.

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SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Del Monte Foods Company

By: /s/ RICHARD G. WOLFORD
Richard G. Wolford
President and Chief Executive Officer,
Director and Chairman of the Board

Dated: September 30, 2002

POWER OF ATTORNEY

     KNOWN ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints David L. Meyers and James Potter, each of whom may act without joinder of the other, as their true and lawful attorneys-in-fact and agents, each with full power of substitution and resubstitution, for such person and in his or her name, place and stead, in any and all capacities, to sign any and all amendments to the Annual Report on Form 10-K, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or their substitutes, may lawfully do or cause to be done by virtue hereof.

     Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/ RICHARD G. WOLFORD Richard G. Wolford	President and Chief Executive Officer; Director and Chairman of the Board	September 30, 2002
/s/ DAVID L. MEYERS David L. Meyers	Executive Vice President, Administration and Chief Financial Officer	September 30, 2002
/s/ RICHARD L. FRENCH Richard L. French	Senior Vice President, Chief Accounting Officer and Controller	September 30, 2002
/s/ RICHARD W. BOYCE Richard W. Boyce	Director	September 30, 2002
/s/ TIMOTHY G. BRUER Timothy G. Bruer	Director	September 30, 2002
/s/ AL CAREY Al Carey	Director	September 30, 2002
/s/ PATRICK FOLEY Patrick Foley	Director	September 30, 2002
/s/ BRIAN E. HAYCOX Brian E. Haycox	Director	September 30, 2002

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Signature	Title	Date
/s/ DENISE O’LEARY Denise O’Leary	Director	September 30, 2002
/s/ WILLIAM S. PRICE, III William S. Price, III	Director	September 30, 2002
/s/ JEFFREY A. SHAW Jeffrey A. Shaw	Director	September 30, 2002
/s/ WESLEY J. SMITH Wesley J. Smith	Director	September 30, 2002

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CERTIFICATIONS

     Each of the undersigned, in his capacity as the Chief Executive Officer and Chief Financial Officer, respectively, of Del Monte Foods Company, provides the following certifications required by 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, and 17 C.F.R. §240.13a-14.

Certification of Chief Executive Officer:

I, Richard G. Wolford, President and Chief Executive Officer, Director and Chairman of the Board of Del Monte Foods Company, certify that:

1.	I have reviewed this annual report on Form 10-K of Del Monte Foods Company;
2.	Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report; and
3.	Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report.

Date: September 30, 2002

/s/ RICHARD G. WOLFORD
Richard G. Wolford
President and Chief Executive Officer,
Director and Chairman of the Board

Certification of Chief Financial Officer:

I, David L. Meyers, Executive Vice President, Administration and Chief Financial Officer of Del Monte Foods Company, certify that:

1.	I have reviewed this annual report on Form 10-K of Del Monte Foods Company;
2.	Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report; and
3.	Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report.

Date: September 30, 2002

/s/ DAVID L. MEYERS David L. Meyers
Executive Vice President, Administration and
Chief Financial Officer

81

EXHIBIT INDEX

Exhibit
Number		Description
	2.1	Agreement and Plan of Merger, dated as of June 12, 2002, by and among H. J. Heinz Company, SKF Foods Inc., Del Monte Foods Company and Del Monte Corporation (incorporated by reference to Exhibit 2.1 to the Registration Statement on Form S-4 No. 333-98827, filed August 28, 2002 (“2002 Form S-4”)
	3.1	Certificate of Incorporation of Del Monte Foods Company (incorporated by reference to Exhibit 3.1 to Amendment No. 1 to the Registration Statement on Form S-1 No. 333-48235, filed May 18, 1998 (“Amendment No. 1 to the Registration Statement on Form S-l”))
	3.2	Amended and Restated Bylaws of Del Monte Foods Company, adopted on April 22, 1999 (incorporated by reference to Exhibit (3)(ii) to the Quarterly Report on Form 10-Q for the quarterly period ended March 31, 1999)
	4.1	Specimen Certificate for Del Monte Foods Company Common Stock (incorporated herein by reference to Exhibit 4.1 to Amendment No. 1 to the Registration Statement on Form S-1)
	4.2	Indenture dated as of May 15, 2001 among Del Monte Corporation, as issuer of 9¼% Senior Subordinated Notes due 2011, Del Monte Foods Company, as guarantor, and Bankers Trust Company, as Trustee (incorporated by reference to Exhibit 4.1 to Registration Statement on Form S-4 No. 333-64802 filed July 10, 2001 (the “2001 Form S-4”))
	4.3	Specimen form of Series B Global Note (incorporated by reference to Exhibit 4.2 to the 2001 Form S-4)
	4.4	Specimen form of Series B Regulation S Note (incorporated by reference to Exhibit 4.3 to the 2001 Form S-4)
	4.5	Registration Rights Agreement dated May 15, 2001 by and among Del Monte Corporation, Del Monte Foods Company, Morgan Stanley & Co. Incorporated, Banc of America Securities LLC, Deutsche Banc Alex Brown, Inc., Chase Securities, Inc., ABN AMRO Incorporated, BMO Nesbitt Burns Corp. (incorporated by reference to Exhibit 4.4 to the 2001 Form S-4)
	4.6	Registration Rights Agreement by and between TPG Partners, L.P., TPG Parallel I, L.P. and Del Monte Foods Company (incorporated by reference to Exhibit 4.6 to Amendment No. 3 to the Registration Statement on Form S-1 No. 333-48235, filed June 30, 1998)
	4.7	Rights Agreement, dated as of June 12, 2002, by and between Del Monte Foods Company and the Bank of New York, as Rights Agent (incorporated by reference to Exhibit 1 to the Form 8-A filed on June 13, 2002)
	4.8	Stockholder Rights Agreement, dated as of June 12, 2002, by and between TPG Partners, L.P., TPG Parallel I, L.P. and Del Monte Foods Company (incorporated by reference to Exhibit 4.7 to the 2002 Form S-4)
	10.1	Third Amended and Restated Credit Agreement dated as of May 15, 2001, by and among Del Monte Corporation, Del Monte Foods Company, the Lenders named therein, Bank of America, N.A., as administrative agent, the Chase Manhattan Bank, as syndication agent, and Bankers Trust Company, as documentation agent (incorporated by reference to Exhibit 10.1 to the 2001 Form S-4)
	10.2	Second Amended and Restated Credit Agreement, dated as of January 14, 2000, among Del Monte Corporation, Bank of America, N.A., as Administrative Agent, and the other financial institutions parties thereto (incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q for the period ended December 31, 1999 (the “December 1999 10-Q”))
	10.3	Amended and Restated Parent Guaranty, dated December 17, 1997, executed by Del Monte Foods Company, with respect to the obligations under the Amended Credit Agreement (incorporated by reference to Exhibit 4.5 to the Registration Statement on Form S-4, No. 333-47289, filed March 4, 1998)
	10.4	Security Agreement, dated April 18, 1997, between Del Monte Corporation and Del Monte Foods Company and Bank of America National Trust and Savings Association (incorporated by reference to Exhibit 4.6 to the Registration Statement on Form S-4, No. 333-29079, filed June 12, 1997 (“DMC Registration Statement”)
	10.5	Pledge Agreement, dated April 18, 1997, between Del Monte Corporation and Bank of America National Trust and Savings Association (incorporated by reference to Exhibit 4.7 to DMC Registration Statement)
	10.6	Parent Pledge Agreement, dated April 18, 1997, between Del Monte Foods Company and Bank of America National Trust and Savings Association (incorporated by reference to Exhibit 4.8 to the DMC Registration Statement)
	10.7	Placement Agreement, dated May 3, 2001, by and among Del Monte Corporation, Del Monte Foods Company,

82

Exhibit
Number		Description
		Morgan Stanley & Co. Incorporated, Banc of American Securities LLC, Deutsche Banc Alex Brown, Inc., Chase Securities, Inc., ABN AMRO Incorporated, BMO Nesbitt Burns Corp. (incorporated by reference to Exhibit 1.1 to the 2001 Form S-4)
	10.8	Transaction Advisory Agreement, dated as of April 18, 1997, between Del Monte Corporation and TPG Partners, L.P. (incorporated by reference to Exhibit 10.1 to the DMC Registration Statement)
	10.9	First Amendment to Transaction Advisory Agreement, dated as of June 13, 2002 (incorporated by reference to Exhibit 10.9 to the 2002 Form S-4)
	10.10	Management Advisory Agreement, dated as of April 18, 1997, between Del Monte Corporation and TPG Partners, L.P. (incorporated by reference to Exhibit 10.2 to the DMC Registration Statement)
	10.11	Asset Purchase Agreement, dated as of November 12, 1997, among Nestle USA, Inc., Contadina Services, Inc., Del Monte Corporation and Del Monte Foods Company (incorporated by reference to Exhibit 10.1 to Report on Form 8-K No. 33-36374-01 filed January 5, 1998)
	*10.12	Adjacent Warehouse Space Lease Agreement, dated October 31, 1995, between DELMO (PA) QRS 11-36 and DELMO (PA) QRS 12-10 (collectively, as Landlord) and Del Monte Corporation (Tenant)
	*10.13	First Amendment to the Adjacent Warehouse Space Lease Agreement, dated June 28, 1996, among DELMO (PA) QRS 11-36 and DELMO (PA) QRS 12-10 (collectively, as Landlord) and Del Monte Corporation (Tenant)
	*10.14	Second Amendment to the Adjacent Warehouse Space Lease Agreement, dated October 31, 1996, among DELMO (PA) QRS 11-36 and DELMO (PA) QRS 12-10 (collectively, as Landlord) and Del Monte Corporation (Tenant)
	*10.15	Third Amendment to the Adjacent Warehouse Space Lease Agreement, dated June 24, 1997, among DELMO (PA) QRS 11-36 and DELMO (PA) QRS 12-10 (collectively, as Landlord) and Del Monte Corporation (Tenant)
	*10.16	Fourth Amendment to the Adjacent Warehouse Space Lease Agreement, dated October 2001, among DELMO (PA) QRS 11-36 and DELMO (PA) QRS 12-10 (collectively, as Landlord) and Del Monte Corporation (Tenant)
	*10.17	Yakima Adjacent Warehouse Space Lease Agreement, dated October 24, 2001, between DELMO (PA) QRS 11-36 and DELMO (PA) QRS 12-10 (collectively as Landlord) and Del Monte Corporation (Tenant)
	*10.18	Amended and Restated Master Lease with respect to the Build-To-Suit Arrangement, dated April 5, 1999, among State Street Bank and Trust Company of California, N.A. (Certificate Trustee and Lessor) and Del Monte Corporation (Lessee)
	10.19	Office Lease, dated October 7, 1999 between TMG/One Market, L.P. and Crossmarket, LLC (Landlord) and Del Monte Corporation (Tenant) (confidential treatment has been requested as to portions of the Exhibit) (incorporated by reference to Exhibit 10.5 to the December 1999 10-Q)
	*10.20	First Amendment to Office Lease, dated April 30, 2000, between TMG/One Market, L.P. (Landlord) and Del Monte Corporation (Tenant)
	*10.21	Second Amendment to Office Lease, dated March 23, 2001, between TMG/One Market, L.P. and Crossmarket, LLC (collectively as Landlord) and Del Monte Corporation (Tenant)
	10.22	Agreement for Information Technology Services, dated November 1, 1992, between Del Monte Corporation and Electronic Data Systems Corporation, as amended (incorporated by reference to Exhibit 10.11 to the DMC Registration Statement)
	*10.23	Agreement for Information Technology Services, dated June 30, 2002, between Del Monte Corporation and Electronic Data Systems Corporation and EDS Information Services LLC (confidential treatment has been requested as to portions of the Exhibit)
	*10.24	Consulting Service Agreement, dated June 5, 2000, between Andersen Consulting LLP and Del Monte Corporation
	10.25	Supply Agreement, dated as of September 3, 1993, between Del Monte Corporation and Silgan Containers Corporation, as amended (incorporated by reference to Exhibit 10.12 to the DMC Registration Statement)
	*10.26	First Amendment to Supply Agreement, dated as of December 21, 1993, between Del Monte Corporation and Silgan Containers Corporation
	*10.27	Second Amendment to Supply Agreement, dated as of May 12, 1994, between Del Monte Corporation and Silgan Containers Corporation
	*10.28	Third Amendment to Supply Agreement, dated as of May 28, 1995, between Del Monte Corporation and Silgan Containers Corporation

83

Exhibit
Number		Description
	*10.29	Fourth Amendment to Supply Agreement, dated as of November 5, 1998, between Del Monte Corporation and Silgan Containers Corporation (confidential treatment has been requested as to portions of the Exhibit)
	*10.30	Fifth Amendment to Supply Agreement, dated as of November 5, 1998, between Del Monte Corporation and Silgan Containers Corporation (confidential treatment has been requested as to portions of the Exhibit)
	*10.31	Sixth Amendment to Supply Agreement, dated as of June 7, 2002, between Del Monte Corporation and Silgan Containers Corporation (confidential treatment has been requested as to portions of the Exhibit)
	*10.32	Retail Brokerage Agreement, dated July 1, 2001, between Del Monte Corporation and Advantage Sales and Marketing
	10.33	Del Monte Foods Company 1998 Stock Incentive Plan (as amended through November 15, 2000) (incorporated by reference to Exhibit 4.2 to the Registration Statement on Form S-8 filed on December 20, 2000, File No. 333-52226))**
	10.34	Del Monte Foods Company Non-Employee Directors and Independent Contractors 1997 Stock Incentive Plan (as amended through November 15, 2000) (incorporated by reference to Exhibit 4.1 to the Registration Statement on Form S-8, filed December 20, 2000, File No. 333-52226)
	10.35	Retention Plan (adopted October 24, 2000) (incorporated by reference to Exhibit 10.3 to the Quarterly Report on Form 10-Q for the period ended December 31, 2000)**
	10.36	Del Monte Foods Annual Incentive Award Plan as amended (incorporated by reference to Exhibit 10.8 to the DMC Registration Statement)**
	10.37	Additional Benefits Plan of Del Monte Corporation, effective January 1, 1996, as amended and restated (incorporated by reference to Exhibit 10.9 to the DMC Registration Statement)
	10.38	Supplemental Benefits Plan of Del Monte Corporation, effective as of January 1, 1990, as amended as of January 1, 1992 and May 30, 1996 (incorporated by reference to Exhibit 10.10 to the DMC Registration Statement)
	10.39	Del Monte Foods Company Employee Stock Purchase Plan (incorporated by reference to Exhibit 4.1 to the Registration Statement on Form S-8, filed November 24, 1997, File No. 333-40867)
	10.40	Del Monte Foods Company 1997 Stock Incentive Plan, as amended (incorporated by reference to Exhibit 10.2 to the December 1999 10-Q)**
	10.41	Del Monte Corporation AIAP Deferred Compensation Plan, dated October 14, 1999, effective July 1, 2000 (incorporated by reference to Exhibit 10.30 to the Annual Report on Form 10-K for the year ended June 30, 2000, File No. 001-14335 (the “2000 Form 10-K”))**
	10.42	Retention Agreement between Del Monte Corporation and David L. Meyers, dated November 1, 1991 (incorporated by reference to Exhibit 10.3 to the DMC Registration Statement)**
	*10.43	First Amendment to Retention Agreement of David L. Meyers, dated March 28, 2002**
	10.44	Employment Agreement and Promissory Note of Richard G. Wolford (incorporated by reference to Exhibit 10.25 to the Annual Report on Form 10-K for the year ended June 30, 1998, filed September 22, 1998, File No. 001-14335 (the “1998 Form 10-K”))**
	*10.45	First Amendment to Employment Agreement of Richard G. Wolford, dated July 1, 1999**
	*10.46	Second Amendment to Employment Agreement of Richard G. Wolford, dated March 26, 2002**
	10.47	Employment Agreement and Promissory Note of Wesley J. Smith (incorporated by reference to Exhibit 10.26 to the 1998 Form 10-K)**
	*10.48	First Amendment to Employment Agreement of Wesley J. Smith, dated July 1, 1999**
	*10.49	Second Amendment to Employment Agreement of Wesley J. Smith, dated March 26, 2002**
	*10.50	Employment Agreement, dated April 2, 2002, between Del Monte Foods Company and Robert P. Magrann**
	*10.51	Employment Agreement, dated March 28, 2002, between Del Monte Foods Company and Marc D. Haberman**
	*12	Statement re Computation of Ratio of Earnings to Fixed Charges
	21	Subsidiaries of Del Monte Foods Company (incorporated by reference to Exhibit 21.1 to the 2001 Form S-4)
	*23	Consent of KPMG LLP, Independent Accountants

84

Exhibit
Number		Description
	24	Power of Attorney (see signature page to this Annual Report on Form 10-K)
	*99	Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*	filed herewith
**	indicates a management contract or compensatory plan or arrangement

85 EX-10.12 3 f84647exv10w12.txt EXHIBIT 10.12 EXHIBIT 10.12 LEASE AGREEMENT by and between DELMO (PA) QRS 11-36 and DELMO (PA) QRS 12-10 each a Pennsylvania business trust collectively, as LANDLORD and DEL MONTE CORPORATION, a New York corporation, as TENANT Premises: Mendota, Illinois Toppenish, Washington Yakima, Washington Plover, Wisconsin Dated as of: October 31, 1995 TABLE OF CONTENTS

Page ---- 1. Demise of Premises ......................................... 1 2. Certain Definitions ........................................ 1 3. Title and Condition ........................................ 12 4. Use of Leased Premises; Quiet Enjoyment .................... 14 5. Term ....................................................... 14 6. Basic Rent ................................................. 15 7. Additional Rent ............................................ 16 8. Net Lease; Non-Terminability ............................... 17 9. Payment of Impositions ..................................... 18 10. Compliance with Laws and Easement Agreements; Environmental Matters ...................................... 20 11. Liens; Recording ........................................... 22 12. Maintenance and Repair ..................................... 22 13. Alterations and Improvements ............................... 23 14. Permitted Contests ......................................... 24 15. Indemnification ............................................ 25 16. Insurance .................................................. 26 17. Casualty and Condemnation .................................. 30 18. Termination Events ......................................... 31 19. Restoration; Reduction of Rent ............................. 33 20. Procedures Upon Purchase ................................... 35 21. Assignment and Subletting .................................. 36 22. Events of Default .......................................... 40 23. Remedies and Damages Upon Default .......................... 43 24. Notices .................................................... 47 25. Estoppel Certificate ....................................... 48 26. Surrender .................................................. 48 27. No Merger of Title ......................................... 48 28. Books and Records .......................................... 49 29. Determination of Value ..................................... 51 30. Non-Recourse as to Landlord ................................ 54 31. Financing .................................................. 54 32. Subordination .............................................. 54 33. Tax Treatment; Reporting ................................... 55 34. Financing Major Alterations ................................ 55 35. Security Deposit ........................................... 57 36. Economic Abandonment ....................................... 59 37. Option to Purchase ......................................... 61 38. Right of First Refusal ..................................... 62 39. Miscellaneous .............................................. 64

EXHIBITS - -------- Exhibit "A" - Premises Exhibit "B" - Machinery and Equipment Exhibit "C" - Schedule of Permitted Encumbrances Exhibit "D" - Rent Schedule Exhibit "E" - Landlord's Share of Project Costs Exhibit "F" - Percentage Allocation of Basic Rent -i- LEASE AGREEMENT, made as of this 31st day of October, 1995, between BARCLAY G. JONES III, TRUSTEE OF DELMO (PA) QRS 11-36 under a certain Trust Agreement dated as of October 11, 1995, and BARCLAY G. JONES III, TRUSTEE OF DELMO (PA) QRS 12-10 under a certain Trust Agreement dated as of October 11, 1995, each a Pennsylvania business trust (collectively, "Landlord"), with its principal place of business c/o W.P. Carey & Co., Inc., 50 Rockefeller Plaza, 2nd Floor, New York, New York 10020, and DEL MONTE CORPORATION, a New York corporation ("Tenant"), with an address at Market Place, Steuart Tower, San Francisco, California 94105. In consideration of the rents and provisions herein stipulated to be paid and performed, Landlord and Tenant hereby covenant and agree as follows: 1. Demise of Premises. The Leased Premises shall be comprised of four (4) parcels of Land, Improvements to be constructed thereon by Landlord and Equipment to be installed therein by Landlord, all as set forth in this Lease and the Construction Agency Agreement. Landlord hereby demises and lets to Tenant, and Tenant hereby takes and leases from Landlord, for the term and upon the provisions hereinafter specified, the following described property (hereinafter referred to collectively as the "Leased Premises" and individually as the "Mendota Premises" "Toppenish Premises" "Yakima Premises" and "Plover Premises" each of which premises is more particularly described in the applicable description in Exhibit "A" attached hereto and made a part hereof and shall include the portions of items (a), (b) and (c) of this Paragraph 1 located thereon or therein and appertaining thereto): (a) the premises described in Exhibit "A" hereto, together with the Appurtenances (collectively, the "Land"); (b) the buildings, structures and other improvements constructed or to be constructed on the Land by Landlord (collectively, the "Improvements"); and (c) the fixtures, machinery, equipment, including conveyor equipment, and other property to be installed in the Improvements by Landlord described in Exhibit "B" hereto (collectively, the "Equipment"). 2. Certain Definitions. "Abandonment Date" shall mean the Abandonment Date as defined in Paragraph 36. "Abandonment Notice" shall mean Abandonment Notice as defined in Paragraph 36. "Abandonment Offer Amount" shall mean the Abandonment Offer Amount as defined in Paragraph 36. "Abandonment Premises" shall mean one of the Related Premises so designated by Tenant. "Acquisition Fee" shall mean $990,000 and shall be payable by Landlord to W.P. Carey & Co., Inc. and/or Carey Institutional Properties Incorporated and/or Corporate Property Associates 12 Incorporated. -1- "Additional Rent" shall mean Additional Rent as defined in Paragraph 7. "Adjoining Property" shall mean all sidewalks, driveways, curbs, gores and vault spaces adjoining each Related Premises and which Tenant has the legal obligation to maintain. "Affected Premises" shall mean the Affected Premises as defined in Paragraph 18. "Affiliate" shall mean, as to any Person, any other Person which, directly or indirectly, is in control of, is controlled by, or is under common control with, such Person. For purposes of this definition and otherwise in this Lease, a Person shall be deemed to control another Person if the controlling Person possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of the other Person only through the ownership of voting securities (but not by contract or otherwise). "Alterations" shall mean all changes, additions, improvements or repairs to, all alterations, reconstructions, renewals, replacements or removals of and all substitutions or replacements for any of the Improvements or Equipment, both interior and exterior, structural and non-structural, and ordinary and extraordinary and shall include any Major Alterations. "Appurtenances" shall mean all tenements, hereditaments, easements, rights-of-way, rights, privileges in and to the Land, including (a) easements over other lands granted by any Easement Agreement and (b) any streets, ways, alleys, vaults, gores or strips of land adjoining the Land. "Assignment" shall mean any assignment of rents and leases from Landlord to a Lender which (a) encumbers any of the Leased Premises and (b) secures Landlord's obligation to repay a Loan, as the same may be amended, supplemented or modified from time to time. "Assumable Loan" shall mean Assumable Loan as defined in Paragraph 38. "Basic Rent" shall mean Basic Rent as defined in Paragraph 6. "Basic Rent Payment Dates" shall mean the Basic Rent Payment Dates as defined in Paragraph 6. "Cash Security" shall mean Cash Security as defined in Paragraph 35. "Casualty" shall mean any injury to or death of any person or any loss of or damage to any property (including the -2- Leased Premises) included within or related to the Leased Premises or arising from the Adjoining Property. "Commencement Date" shall mean Commencement Date as defined in Paragraph 5. "Condemnation" shall mean a Taking and/or a Requisition. "Condemnation Notice" shall mean written notice or knowledge of the institution of or intention to institute any proceeding for Condemnation. "Construction Agency Agreement" shall mean that certain Construction Agency Agreement of even date between Landlord, as owner, and Tenant, as agent for Landlord in connection with the construction of the Improvements. "Construction Contingency" shall mean the Construction Contingency as defined in the Construction Agency Agreement. "Costs" of a Person or associated with a specified transaction shall mean all reasonable costs and expenses incurred by such Person or associated with such transaction, including without limitation, attorneys' fees and expenses, court costs, brokerage fees, escrow fees, title insurance premiums, mortgage commitment fees, mortgage points, recording fees and transfer taxes, as the circumstances require. "CPI" shall mean CPI as defined in Exhibit "D" hereto. "Default Rate" shall mean the Default Rate as defined in Paragraph 7(a)(iv). "Default Termination Amount" shall mean the Default Termination Amount as defined in Paragraph 23(a)(iii). "Direct Costs" shall mean Direct Costs as defined in Section 1.01 of the Construction Agency Agreement. "Easement Agreement" shall mean any conditions, covenants, restrictions, easements, declarations, licenses and other agreements listed as Permitted Encumbrances or as may hereafter affect any Leased Premises. "Environmental Law" shall mean (i) whenever enacted or promulgated, any applicable federal, state, foreign or local law, statute, ordinance, rule, regulation, license, permit, authorization, approval, consent, court order, judgment, decree, injunction, code, requirement or agreement with any governmental entity, (x) relating to pollution (or the cleanup thereof), or the protection of air, water vapor, surface water, groundwater, -3- drinking water supply, land (including land surface or subsurface), plant, aquatic and animal life from injury or damage caused by a Hazardous Substance or (y) concerning exposure to, or the use, containment, storage, recycling, reclamation, reuse, treatment, generation, discharge, transportation, processing, handling, labeling, production, disposal or remediation of Hazardous Substances, Hazardous Condition or Hazardous Activity, in each case as amended and as now or hereafter in effect, and (ii) any common law or equitable doctrine (including, without limitation, injunctive relief and tort doctrines such as negligence, nuisance, trespass and strict liability) that may impose liability or obligations for injuries or damages due to or threatened as a result of the presence of, exposure to, or ingestion of, any Hazardous Substance. The term Environmental Law includes, without limitation, the federal Comprehensive Environmental Response Compensation and Liability Act of 1980, the Superfund Amendments and Reauthorization Act, the federal Water Pollution Control Act, the federal Clean Air Act, the federal Clean Water Act, the federal Resources Conservation and Recovery Act of 1976 (including the Hazardous and Solid Waste Amendments to RCRA), the federal Solid Waste Disposal Act, the federal Toxic Substance Control Act, the federal Insecticide, Fungicide and Rodenticide Act, the federal Occupational Safety and Health Act of 1970, the federal National Environmental Policy Act and the federal Hazardous Materials Transportation Act, each as amended and as now or hereafter in effect and any similar state or local Law. "Environmental Violation" shall mean (a) any direct or indirect discharge, disposal, spillage, emission, escape, pumping, pouring, injection, leaching, release, seepage, filtration or transporting of any Hazardous Substance at, upon, under, onto or within the Leased Premises, or from the Leased Premises to the environment, in violation of any Environmental Law or in excess of any reportable quantity established under any Environmental Law or which results, or could reasonably be expected to result, in any material liability to Landlord, Tenant or Lender, any Federal, state or local government or any other Person for the costs of any removal or remedial action or natural resources damage or for bodily injury or property damage, (b) any deposit, storage, dumping, placement or use of any Hazardous Substance at, upon, under or within the Leased Premises or which extends to any Adjoining Property in violation of any Environmental Law or in excess of any reportable quantity established under any Environmental Law or which results, or could reasonably be expected to result, in any material liability to any Federal, state or local government or to any other Person for the costs of any removal or remedial action or natural resources damage or for bodily injury or property damage, (c) the abandonment or discarding on or from the Leased Premises of any barrels, drums, containers or other receptacles containing any Hazardous Substances in violation of any Environmental Laws, (d) any activity, occurrence or condition under any Environmental Law which results, or could reasonably be expected to result, in any -4- material liability, cost or expense to Landlord or Lender or any other owner or occupier of the Leased Premises, or which results, or could result, in a creation of a lien on any Related Premises under any Environmental Law or (e) any violation of or noncompliance with any Environmental Law. "Equipment" shall mean the Equipment as defined in Paragraph 1. "Event of Default" shall mean an Event of Default as defined in Paragraph 22(a). "Expiration Date" shall mean Expiration Date as defined in Paragraph 5. "Fair Market Value" shall be as defined in Paragraph 29. "Fair Market Value Date" shall mean the date when the Fair Market Value is determined in accordance with Paragraph 29. "Federal Funds" shall mean federal or other immediately available funds which at the time of payment are legal tender for the payment of public and private debts in the United States of America. "Final Completion Date" shall mean Final Completion Date as defined in Section 1.01 of the Construction Agency Agreement. "Guarantor" shall mean Del Monte Foods Company, a Maryland corporation. "Guaranty" shall mean the Guaranty and Suretyship Agreement dated as of the date hereof from Guarantor to Landlord guaranteeing the payment and performance by Tenant of all of Tenant's obligations under the Lease. "Hazardous Activity" means any activity, process, procedure or undertaking which directly or indirectly (i) procures, generates or creates any Hazardous Substance in violation of any Environmental Law; (ii) causes or results in (or threatens to cause or result in) the release, seepage, spill, leak, flow, discharge or emission of any Hazardous Substance into the environment (including the air, ground water, watercourses or water systems) in violation of any Environmental Law or in excess of any reportable quantity; (iii) involves the containment or storage of any Hazardous Substance; or (iv) would cause any of the Leased Premises or any portion thereof to become a hazardous waste treatment, recycling, reclamation, processing, storage or disposal facility within the meaning of any Environmental Law. -5- "Hazardous Condition" means any condition which could reasonably be expected to give rise to any claim or liability under any Environmental Law, including the presence of underground storage tanks. "Hazardous Substance" means (i) any substance, material, product, petroleum, petroleum product, derivative, compound or mixture, mineral (including asbestos), chemical, gas, medical waste, or other pollutant, in each case whether naturally occurring, man-made or the by-product of any process, that is toxic, harmful or hazardous or acutely hazardous to the environment or public health or safety or (ii) any substance subject to regulations under any Environmental Law, whether or not defined as hazardous as such under any Environmental Law. Hazardous Substances include, without limitation, any toxic or hazardous waste, pollutant, contaminant, industrial waste, petroleum or petroleum-derived substances or waste, radon, radioactive materials, asbestos, asbestos containing materials, urea formaldehyde foam insulation, lead, polychlorinated biphenyls. "Impositions" shall mean the Impositions as defined in Paragraph 9(a). "Improvements" shall mean the Improvements as defined in Paragraph 1 and shall include any Major Alterations. "Indemnitee" shall mean an Indemnitee as defined in Paragraph 15. "Indirect Costs" shall mean Indirect Costs as defined in Section 1.01 of the Construction Agency Agreement. "Initial Lender" shall mean Creditanstalt Corporate Finance, Inc. or any other Lender who makes the Initial Loan. "Initial Loan" shall mean the initial permanent Loan following completion of construction of the Improvements. "Initial Loan Commitment" shall mean the commitment of Creditanstalt Corporate Finance, Inc., to make the Initial Loan pursuant to that certain Application and Commitment dated November 7, 1995 by and between Creditanstalt Corporate Finance, Inc., and Landlord. "Initial Term" shall mean Initial Term as defined in Paragraph 5. "Initial Term Commencement Date" shall mean Initial Term Commencement Date as defined in Paragraph 5. "Insurance Requirements" shall mean the requirements of all insurance policies maintained in accordance with this Lease. -6- "Land" shall mean the Land as defined in Paragraph 1. "Landlord Encumbrances" shall mean any defects in title or matters affecting title to the Leased Premises created by Landlord, except for the Mortgage and Assignment and defects or matters created at the request of, with the concurrence of or as a result of any act of Tenant. "Landlord's Share of Project Costs" shall mean with respect to each Related Premises the sum of (i) actual Direct Costs expended by Landlord with respect to such Related Premises, including amounts charged against the Construction Contingency for such Related Premises, plus (ii) Indirect Costs (exclusive of the Construction Contingency) expended by Landlord, allocated to such Related Premises based on the percentages set forth in Exhibit F hereto. Landlord's Share of Project Costs for the Leased Premises shall refer to the total of Landlord's Share of Project Costs for all of the Related Premises, which shall in no event exceed $21,990,000. "Law" shall mean any constitution, statute, rule of law, code, ordinance, order, judgment, decree, injunction, rule, regulation, policy, requirement or administrative or judicial determination, even if unforeseen or extraordinary, of every duly constituted governmental authority, court or agency, now or hereafter enacted or in effect. "Lease" shall mean this Lease Agreement. "Lease Year" shall mean, with respect to the first Lease Year, the period commencing on the Commencement Date and ending at midnight on the last day of the twelfth (12th) consecutive calendar month following the month in which the Commencement Date occurred, and each succeeding twelve (12) month period during the Term. "Leased Premises" shall mean the Leased Premises as defined in Paragraph 1. "Legal Requirements" shall mean the requirements of all present and future Laws (including but not limited to Environmental Laws) and all covenants, restrictions and conditions now or hereafter of record which may be applicable to any of the Leased Premises, or to the use, manner of use, occupancy, possession, operation, maintenance, alteration, repair or restoration of any of the Leased Premises, even if compliance therewith necessitates structural changes or improvements or results in interference with the use or enjoyment of any of the Leased Premises. "Lender" shall mean (a) Initial Lender, its successors and assigns, and (b) any person or entity (and their -7- respective successors and assigns) which may, after the date hereof, make a Loan to Landlord or is the holder of any Note. "Letter of Credit" shall mean the Letter of Credit as defined in Paragraph 35. "Loan" shall mean any loan made by one or more Lenders to Landlord, which loan is secured by a Mortgage and an Assignment and evidenced by a Note. "Major Alterations" shall mean Major Alterations as defined in Paragraph 34. "Monetary Obligations" shall mean Rent and all other sums payable by Tenant under this Lease to Landlord, to any third party on behalf of Landlord or to any Indemnitee. "Mortgage" shall mean, singly or collectively, any one or more mortgages or deeds of trust from Landlord to a Lender or a trustee for the benefit of a Lender which (a) encumbers any of the Leased Premises and (b) secures Landlord's obligation to repay a Loan, as the same may be amended, supplemented or modified. "Net Award" shall mean (a) the entire award payable to Landlord or Lender by reason of a Condemnation whether pursuant to a judgment or by agreement or otherwise, or (b) the entire proceeds of any insurance required under clauses (i), (ii) (to the extent payable to Landlord or Lender), (iv), (v) or (vi) of Paragraph 16(a), as the case may be, less any reasonable expenses incurred by Landlord and Lender in collecting such award or proceeds. "Non-Preapproved Assignment" shall have the meaning set forth in Paragraph 21. "Note" shall mean any promissory note evidencing Landlord's obligation to repay a Loan, as the same may be amended, supplemented or modified. "Occupancy Date" shall mean with respect to each Related Premises the date on which all of the following events have occurred: (i) the Improvements have been substantially completed in accordance with the Plans, as certified to by the General Contractor and Construction Manager (as such terms are defined in the Construction Agency Agreement), and (ii) a temporary or permanent permit required for the occupancy of the Improvements has been obtained, but in no event shall the Occupancy Date occur later than 60 days following the Completion Date (as defined in the Construction Agency Agreement) for such Related Premises. "Offer Amount" shall mean the greater of (a) Fair Market Value or (b) the sum of the Landlord's Share of Project -8- Costs for the Leased Premises and any Prepayment Premium which Landlord will be required to pay in prepaying the Loan with proceeds of the Offer Amount. "Outside Date" shall mean July 1, 1996. "Partial Casualty" shall mean any Casualty which does not constitute a Termination Event. "Partial Condemnation" shall mean any Condemnation which does not constitute a Termination Event. "Permitted Encumbrances" shall mean those covenants, restrictions, reservations, liens, conditions and easements and other encumbrances, other than any Mortgage or Assignment, listed on Exhibit "C" hereto (but such listing shall not be deemed to revive any such encumbrances that have expired or terminated or are otherwise invalid or unenforceable). "Person" shall mean an individual, partnership, association, corporation or other entity. "Plans" shall mean Plans as defined in the Construction Agency Agreement. "Prepayment Premium" shall mean any payment (other than a payment of principal and/or interest which Landlord is required to make under a Note or a Mortgage) by reason of any prepayment by Landlord of any principal due under a Note or Mortgage, and which may be (in lieu of such prepayment premium or prepayment penalty) a "make whole" clause requiring a prepayment premium in an amount sufficient to compensate the Lender for the loss of the benefit of the Loan due to prepayment; provided, however, that Tenant shall not be required to pay the Prepayment Premium on any amount in excess of $13,000,000. "Present Value" of any amount shall mean such amount discounted by a rate per annum which is the lower of (a) the Prime Rate at the time such present value is determined or (b) eight percent (8%) per annum. "Primary Term" shall mean Primary Term as defined in Paragraph 5(a). "Primary Term Commencement Date" shall mean the date of this Lease. "Prime Rate" shall mean the interest rate per annum as published, from time to time, in the Wall Street Journal as the "Prime Rate" in its column entitled "Money Rate". The Prime Rate may not be the lowest rate of interest charged by any "large U.S. money center commercial banks" and Landlord makes no representations or warranties to that effect. In the event the Wall Street Journal ceases publication or ceases to publish the -9- "Prime Rate" as described above, the Prime Rate shall be the average per annum discount rate (the "Discount Rate") on ninety-one (91) day bills ("Treasury Bills") issued from time to time by the United States Treasury at its most recent auction, plus three hundred (300) basis points. If no such 91-day Treasury Bills are then being issued, the Discount Rate shall be the discount rate on Treasury Bills then being issued for the period of time closest to ninety-one (91) days. "Related Premises" shall mean any one of the Mendota Premises, Toppenish Premises, Yakima Premises and Plover Premises. "Relevant Amount" shall mean the Abandonment 0ffer Amount, the Offer Amount, the Termination Amount or the Default Termination Amount, as the case may be. "Relevant Date" shall mean (a) the date immediately prior to the date on which the applicable Condemnation Notice is received, in the event of a Termination Notice under Paragraph 18 which is occasioned by a Taking, (b) the date immediately prior to the date on which the applicable Casualty occurs, in the event of a Termination Notice under Paragraph 18 which is occasioned by a Casualty, (c) the date when Fair Market Value is redetermined, in the event of a redetermination of Fair Market Value pursuant to Paragraph 20(c), (d) the date immediately prior to the Event of Default giving rise to the need to determine Fair Market Value in the event Landlord provides Tenant with notice of its intention to require Tenant to make a Termination Offer under Paragraph 23(a)(iii), (e) the Fair Market Value Date in the event Tenant exercises its option to purchase the Leased Premises pursuant to Paragraph 37, or (f) with respect to a Non-Preapproved Assignment, the earlier of the date on which Landlord issues notice of the Non-Preapproved Assignment to Tenant or the date that is immediately prior to the date on which the Non-Preapproved Assignment occurs. "Remaining Premises" shall mean the Related Premises which are not Abandonment Premises or Affected Premises under Paragraph 18. "Remaining Sum" shall mean Remaining Sum as defined in Paragraph 19(c). "Rent" shall mean, collectively, Basic Rent and Additional Rent. "Requisition" shall mean any temporary requisition or confiscation of the use or occupancy of any of the Leased Premises by any governmental authority, civil or military, whether pursuant to an agreement with such governmental authority in settlement of or under threat of any such requisition or confiscation, or otherwise. -10- "Retention Date" shall mean the later of the date on which the amount of the Remaining Sum is finally determined or the date on which Landlord's right to the Remaining Sum is finally determined. "Security Deposit" shall mean Security Deposit as defined in Paragraph 35. "Silgan" shall mean Silgan Containers Corporation. "Silgan Subleases" shall mean the sublease agreements for 30,000 square feet of space in the Plover Premises and 35,000 square feet in space in the Toppenish Premises between Tenant, as landlord, and Silgan (or a subsidiary of Silgan, so long as Silgan guarantees the obligations of such subsidiary under such sublease), as tenant, which shall be satisfactory in form and substance to Landlord and Initial Lender and which shall require, among other things, that Silgan shall execute such documents as Landlord or Lender shall reasonably request in connection with the disbursement of the Loan from Initial Lender to Landlord, including an estoppel certificate and a consent to assignment of leases, rents and any applicable guaranties. "Site Assessment" shall mean a Site Assessment as defined in Paragraph 10(c). "State" shall mean the States of Illinois, Washington and Wisconsin. .. "Surviving Obligations" shall mean any obligations of Tenant under this Lease, actual or contingent, which arise on or prior to the expiration or prior termination of this Lease or which survive such expiration or termination by their own terms. "Taking" shall mean (a) any taking or damaging of all or a portion of any of the Leased Premises (i) in or by condemnation or other eminent domain proceedings pursuant to any Law, general or special, or (ii) by reason of any agreement with any condemnor in settlement of or under threat of any such condemnation or other eminent domain proceeding, or (iii) by any other means, or (b) any de facto condemnation. The Taking shall be considered to have taken place as of the later of the date actual physical possession is taken by the condemnor, or the date on which the right to compensation and damages accrues under the law applicable to the Related Premises. "Term" shall mean the Primary Term and Initial Term and any extensions thereof. "Termination Amount" shall mean the greater of (a) Fair Market Value or (b) the sum of the Landlord's Share of Project Costs for the applicable Related Premises or the Leased Premises, as the case may be, and any Prepayment Premium which -11- Landlord will be required to pay in prepaying any Loan with proceeds of the Termination Amount. "Termination Date" shall mean the Termination Date as defined in Paragraph 18. "Termination Event" shall mean a Termination Event as defined in Paragraph 18. "Termination Notice" shall mean Termination Notice as defined in Paragraph 18(a). "Third Party Purchaser" shall mean the Third Party Purchaser as defined in Paragraph 21(h). "Yakima Funding Deadline" shall mean August 31, 1996. 3. Title and Condition. (a) The Leased Premises are demised and let subject to (i) the rights of any Persons in possession of the Leased Premises, (ii) the existing state of title of any of the Leased Premises, including any Permitted Encumbrances, (iii) any state of facts which an accurate survey or physical inspection of the Leased Premises might show, (iv) all Legal Requirements, including any existing violation of any thereof, and (v) the condition of the Leased Premises as of the commencement of the Term, without representation or warranty by Landlord except as to Landlord Encumbrances. (b) LANDLORD LEASES AND WILL LEASE AND TENANT TAKES AND WILL TAKE THE LEASED PREMISES AS IS. TENANT ACKNOWLEDGES THAT LANDLORD (WHETHER ACTING AS LANDLORD HEREUNDER OR IN ANY OTHER CAPACITY) HAS NOT MADE AND WILL NOT MAKE, NOR SHALL LANDLORD BE DEEMED TO HAVE MADE, ANY WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, WITH RESPECT TO ANY OF THE LEASED PREMISES, INCLUDING ANY WARRANTY OR REPRESENTATION AS TO (i) ITS FITNESS, DESIGN OR CONDITION FOR ANY PARTICULAR USE OR PURPOSE, (ii) THE QUALITY OF THE MATERIAL OR WORKMANSHIP THEREIN, (iii) THE EXISTENCE OF ANY DEFECT, LATENT OR PATENT, (iv) LANDLORD'S TITLE THERETO (EXCEPT THAT LANDLORD REPRESENTS AND WARRANTS THAT THERE ARE NO LANDLORD ENCUMBRANCES), (v) VALUE, (vi) COMPLIANCE WITH SPECIFICATIONS, (vii) LOCATION, (viii) USE, (ix) CONDITION, (x) MERCHANTABILITY, (xi) QUALITY, (xii) DESCRIPTION, (xiii) DURABILITY (xiv) OPERATION OR (xv) THE EXISTENCE OF ANY HAZARDOUS SUBSTANCE; AND ALL RISKS INCIDENT THERETO ARE TO BE BORNE BY TENANT. TENANT ACKNOWLEDGES THAT THE LEASED PREMISES ARE OF ITS SELECTION AND TO ITS SPECIFICATIONS AND THAT LANDLORD HAS NO OBLIGATION WITH RESPECT TO CONSTRUCTION OF THE IMPROVEMENTS. IN THE EVENT OF ANY DEFECT OR DEFICIENCY IN ANY OF THE LEASED PREMISES OF ANY NATURE, WHETHER LATENT OR PATENT, LANDLORD AND LENDER SHALL NOT HAVE ANY RESPONSIBILITY OR LIABILITY WITH RESPECT THERETO OR FOR ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES (INCLUDING STRICT LIABILITY IN -12- TORT). THE PROVISIONS OF THIS PARAGRAPH 3(b) HAVE BEEN NEGOTIATED, AND ARE INTENDED TO BE A COMPLETE EXCLUSION AND NEGATION OF ANY WARRANTIES BY LANDLORD OR LENDER, EXPRESS OR IMPLIED, WITH RESPECT TO ANY OF THE LEASED PREMISES, ARISING PURSUANT TO THE UNIFORM COMMERCIAL CODE OR ANY OTHER LAW NOW OR HEREAFTER IN EFFECT OR ARISING OTHERWISE. TENANT DOES NOT WAIVE ANY CLAIM AGAINST ANY PARTY EXCEPT LANDLORD AND LENDER UNDER THE FOREGOING LANGUAGE. (c) Tenant represents to Landlord that Tenant has examined the title to the Leased Premises prior to the execution and delivery of this Lease and has found the same to be satisfactory for the purposes contemplated hereby. Tenant acknowledges that (i) fee simple title (both legal and equitable) to the Leased Premises is in Landlord and that Tenant has only the leasehold right of possession and use of the Leased Premises as provided herein, (ii) on the Occupancy Date for each Related Premises the Improvements shall conform to all material Legal Requirements and all Insurance Requirements, (iii) all easements necessary for Tenant's use or operation of each Related Premises have been or by the relevant Occupancy Date shall have been obtained, (iv) subject to Tenant's rights under Paragraph 14 no later than the Final Completion Date for each Related Premises all contractors and subcontractors who have performed work on or supplied materials to such Related Premises shall have been fully paid, and all materials and supplies have been fully paid for, and (v) no later than the Final Completion Date for each Related Premises all Equipment necessary or appropriate for Tenant's use or operation of the Leased Premises shall have been installed and shall be operational. (d) Landlord hereby assigns to Tenant, without recourse or warranty whatsoever, all warranties, guaranties, indemnities and similar rights which Landlord may have against any manufacturer, seller, engineer, contractor or builder in respect of any of the Leased Premises. Such assignment shall remain in effect until an Event of Default occurs or until the expiration or earlier termination of this Lease, whereupon such assignment shall cease and all of said warranties, guaranties, indemnities and other rights shall automatically revert to Landlord. (e) Pursuant to the Construction Agency Agreement, Tenant will cause the Improvements to be constructed and the Equipment to be acquired and installed with funds more particularly described in the Construction Agency Agreement. The Improvements and Equipment will be owned by Landlord and are included within the Leased Premises. Tenant acknowledges that the Improvements have not yet been constructed and the Equipment has not yet been acquired and installed and that, pursuant to the Construction Agency Agreement entered into by Landlord and Tenant, Tenant has the responsibility for causing the Improvements and Equipment to be completed in accordance with the terms of the Construction Agency Agreement. Landlord will not make any representations or warranties with respect to the Improvements and -13- Equipment. Tenant further acknowledges that, upon occurrence of an Event of Default, Landlord may terminate the Construction Agency Agreement, and in addition to all other remedies of Landlord under this Lease, Landlord shall have the right but not the obligation to complete construction of the Improvements and installation of the Equipment in accordance with the Plans. If Landlord so completes construction of the Improvements and installation of the Equipment, Tenant will not be excused from paying all Rent due pursuant to the terms of this Lease as long as this Lease is not terminated, and Landlord shall have the right to exercise any or all of its remedies hereunder following an Event of Default. All acknowledgments of Tenant regarding each Related Premises contained in Paragraph 3(b) shall be deemed to have been made again as of the Final Completion Date for such Related Premises. 4. Use of Leased Premises; Quiet Enjoyment. (a) Tenant may occupy and use the Leased Premises for commercial or industrial uses and for no other purpose without the prior written consent of Landlord. Tenant shall not use or occupy or permit any of the Leased Premises to be used or occupied, nor do or permit anything to be done in or on any of the Leased Premises, in a manner which would or be reasonably likely to (i) violate any Law or Legal Requirement, (ii) make void or voidable or cause any insurer to cancel any insurance required by this Lease, or make it difficult or impossible to obtain any such insurance at commercially reasonable rates, (iii) cause structural injury to any of the Improvements or (iv) constitute a public or private nuisance or waste. (b) Subject to the provisions hereof, so long as no Event of Default has occurred and is continuing, Tenant shall quietly hold, occupy and enjoy the Leased Premises throughout the Term, without any hindrance, ejection or molestation by Landlord with respect to matters that arise after the date hereof, provided that Landlord or its agents may enter upon and examine any of the Leased Premises at such reasonable times as Landlord may select and upon reasonable notice to Tenant (except in the case of any emergency, in which event no notice shall be required) for the purpose of inspecting the Leased Premises, verifying compliance or non-compliance by Tenant with its obligations hereunder and the existence or non-existence of an Event of Default or event which with the passage of time and/or notice would constitute an Event of Default, showing the Leased Premises to prospective Lenders and purchasers and taking such other action with respect to the Leased Premises as is permitted by any provision hereof. 5. Term. (a) Subject to the provisions hereof, Tenant shall have and hold the Leased Premises for a primary term ("Primary Term") commencing on November __, 1995 ("Commencement Date") and -14- terminating at midnight on the last day of the calendar month in which the Final Completion Date for the final Related Premises occurs which shall not, in any event, occur later than October 1, 1996 ("Primary Term Expiration Date") and for an initial term (such initial term as extended or renewed in accordance with the provisions hereof being called herein the "Initial Term") commencing on the day ("Initial Term Commencement Date") immediately following the Primary Term Expiration Date. The Initial Term shall expire on the last day of the two hundred fortieth (240th) calendar month following the Initial Term Commencement Date ("Expiration Date"). Immediately following the Primary Term Expiration Date, Landlord and Tenant shall execute an addendum to this Lease and an amendment to each memorandum of lease setting forth the Initial Term Commencement Date and the Expiration Date. (b) Provided that if, on or prior to the Expiration Date or any other Renewal Date (as hereinafter defined), this Lease shall not have been terminated pursuant to any provision hereof, then Tenant shall have the right on the Expiration Date and on the tenth (10th), twentieth (20th) and thirtieth (30th) anniversaries of the Expiration Date (the Expiration Date and each such anniversary being a "Renewal Date"), to extend the Term for an additional period of ten (10) years (each such period being referred to herein as "Renewal Term"), upon written notice to Landlord in recordable form at least one (1) year prior to the next Renewal Date (each such notice, a "Renewal Notice") that Tenant is extending this Lease as of the next Renewal Date for the next Renewal Term. If Tenant fails to provide any Renewal Notice, Landlord shall provide to Tenant a reminder notice that Tenant has failed to provide the required Renewal Notice, and Tenant shall have thirty (30) days after receipt of such reminder notice to give the required Renewal Notice, time being of the essence. Any such extension of the Term shall be subject to all of the provisions of this Lease, as the same may be amended, supplemented or modified. (c) If Tenant does not exercise its option pursuant to Paragraph 5(b) to extend the Term, or if an Event of Default occurs, then Landlord shall have the right during the remainder of the Term then in effect and, in any event, Landlord shall have the right during the last year of the Term, to (i) advertise the availability of any of the Leased Premises for sale or reletting and to erect upon any of the Leased Premises signs indicating such availability and (ii) upon reasonable prior notice to Tenant show any of the Leased Premises to prospective purchasers or tenants or their agents at such reasonable times during business hours as Landlord may select. 6. Basic Rent. Tenant shall pay to Landlord, as annual rent for the Leased Premises during the Term, the amounts determined in accordance with Exhibit "D" hereto ("Basic Rent") and on the dates described in Paragraphs 1 and 2 of Exhibit "D" (each such date being a "Basic Rent Payment Date"). Basic Rent -15- shall be paid to Landlord at its address set forth above and/or to such one other Person, at such addresses and in such proportions as Landlord may direct by fifteen (15) days' prior written notice to Tenant (in which event Tenant shall give Landlord notice of each such payment concurrent with the making thereof) in funds available to Landlord or such other Person on each Basic Rent Payment Date. 7. Additional Rent. (a) Tenant shall pay and discharge, as additional rent (collectively, "Additional Rent"): (i) except as otherwise specifically provided herein, all costs and expenses of Tenant, and all reasonable costs and expenses of Landlord and any other Persons specifically referenced herein which are incurred in connection or associated with (A) the ownership, use, non-use, occupancy, possession, operation, condition, design, construction, maintenance, alteration, repair or restoration of any of the Leased Premises, (B) the performance of any of Tenant's obligations under this Lease, (C) any sale or other transfer of any of the Leased Premises to Tenant under this Lease, (D) any Condemnation proceedings, (E) the adjustment, settlement or compromise of any insurance claims (including any contest or prosecution in connection therewith) under insurance covering any of the Leased Premises, (F) the prosecution or defense of any litigation related to the Leased Premises, this Lease, or the sale of the Leased Premises to Landlord and arising from an act or omission of Tenant provided, however, that in the event of legal action between Landlord and Tenant where Tenant is the prevailing party, Landlord shall pay Tenant's reasonable costs and attorneys' fees, (G) the exercise or enforcement by Landlord, its successors and assigns, of any of its rights under this Lease, (H) any amendment to or modification or termination of this Lease made at the request of Tenant, (I) Costs of Landlord's counsel and reasonable internal Costs of Landlord incurred in connection with the preparation, negotiation and execution of this Lease, or incurred in connection with any act undertaken by Landlord (or its counsel) at the written request of Tenant, or incurred in connection with any act of Landlord performed on behalf of Tenant if Tenant is obligated to take such action under this Lease and has refused to do so within the period required herein or if no such period is specified, within a reasonable time following notice from Landlord, (J) the commitment for and the financing of the Initial Loan pursuant to the Initial Loan Commitment, including commitment fees, net interest cost to Landlord from July 1, 1996 to the closing of the Initial Loan (if the Initial Loan does not close on or before July 1, 1996), a "funding failure" fee equal to $62,540 if the Initial Loan fails to close, title premiums, inspection costs, and mortgage and recording taxes and costs (provided, however, that Tenant shall not be obligated to pay any such costs and expenses which result from the failure of the Initial Loan to close by July 1, 1996, or the failure of the Initial Loan to close -16- at all, if Tenant has performed its obligations under Article VI of the Construction Agency Agreement, and Tenant and Guarantor are otherwise prepared to satisfy the conditions of the Initial Loan Application that pertain to them, and the Initial Loan Application has not been terminated by reason of any act by or circumstance relating to Tenant or Guarantor), and (K) any other items specifically required to be paid by Tenant under this Lease; (ii) after the date all or any portion of any installment of Basic Rent is due and not paid, an amount ("Late Charge") equal to five percent (5%) of the amount of such unpaid installment or portion thereof, provided, however, that with respect to the first late payment in any Lease Year the Late Charge shall not be due and payable unless two (2) days have elapsed elapsed following telephonic notice followed by facsimile notice that such payment has not been received; (iii) a sum equal to any additional sums (including any late charge, default penalties, interest and fees of Lender's counsel) which are payable by Landlord to any Lender under any Note by reason of Tenant's late payment or nonpayment of Basic Rent or by reason of an Event of Default; and (iv) interest at the rate (the "Default Rate") of three percent (3%) over the Prime Rate per annum on the following sums until paid in full: (A) all overdue installments of Basic Rent from the respective due dates thereof, (B) all overdue amounts of Additional Rent relating to obligations which Landlord shall have paid on behalf of Tenant, from the date of payment thereof by Landlord, and (C) all other overdue amounts of Additional Rent, from the date when Tenant has received notice that any such amount has become overdue. (b) Tenant shall pay and discharge (i) any Additional Rent referred to in Paragraph 7(a)(i) when the same shall become due, provided that amounts which are billed to Landlord or any third party, but not to Tenant, shall be paid within thirty (30) days after Landlord's demand for payment thereof, and (ii) any other Additional Rent, within thirty (30) days after Landlord's demand for payment thereof. (c) In no event shall amounts payable under Paragraph 7(a)(ii), (iii) and (iv) exceed the maximum amount permitted by applicable Law. 8. Net Lease; Non-Terminality. (a) This is a net lease and all Monetary Obligations shall be paid without notice or demand and without set-off, counterclaim, recoupment, abatement, suspension, deferment, diminution, deduction, reduction or defense (collectively, a "Set-Off"). -17- (b) Except as otherwise expressly provided herein, this Lease and the rights of Landlord and the obligations of Tenant hereunder shall not be affected by any event or for any reason, including the following: (i) any damage to or theft, loss or destruction of any of the Leased Premises, (ii) any Condemnation, (iii) Tenant's acquisition of ownership of any of the Leased Premises other than pursuant to an express provision of this Lease, (iv) any default on the part of Landlord hereunder or under any Note, Mortgage, Assignment or any other agreement, including the Construction Agency Agreement, (v) any latent or other defect in any of the Leased Premises, (vi) the breach of any warranty of any seller or manufacturer of any of the Equipment, (vii) any violation of Paragraph 4(b) or any other provision of reorganization, composition, readjustment, liquidation, dissolution or winding-up of, or other proceeding affecting Landlord, (ix) the exercise of any remedy, including foreclosure, under any Mortgage or Assignment, (x) any action with respect to this Lease (including the disaffirmance hereof) which may be taken by Landlord, any trustee, receiver or liquidator of Landlord or any court under the Federal Bankruptcy Code or otherwise, (xi) any interference with Tenant's use of the Leased Premises, (xii) market or economic changes or (xiii) any other cause, whether similar or dissimilar to the foregoing, any present or future Law to the contrary notwithstanding. (c) The obligations of Tenant hereunder shall be separate and independent covenants and agreements, all Monetary Obligations shall continue to be payable in all events (or, in lieu thereof, Tenant shall pay amounts equal thereto), and the obligations of Tenant hereunder shall continue unaffected unless the requirement to pay or perform the same shall have been terminated pursuant to an express provision of this Lease. All Rent payable by Tenant hereunder shall constitute "rent" for all purposes (including Section 502(b)(6) of the Bankruptcy Code). (d) Except as otherwise expressly provided herein, Tenant shall have no right and hereby waives all rights which it may have under any Law (i) to quit, terminate or surrender this Lease or any of the Leased Premises, or (ii) to any Set-Off of any Monetary Obligations. 9. Payment of Impositions. (a) Tenant shall, before interest or penalties are due thereon, pay and discharge all taxes (including real and personal property, franchise, sales and rent taxes), all charges for any easement or agreement maintained for the benefit of any of the Leased Premises, all assessments and levies, all permit, inspection and license fees, all rents and charges for water, sewer, utility and communication services relating to the any of Leased Premises, all ground rents and all other public charges whether of a like or different nature, even if unforeseen, or extraordinary, imposed upon or assessed against (i) Tenant's -18- possessory interest in the Leased Premises, (ii) any of the Leased Premises, (iii) Landlord as a result of or arising in respect of the acquisition, ownership, occupancy, leasing, use, possession or sale of any of the Leased Premises, any activity conducted on any of the Leased Premises, or the Rent, or (iv) any Lender by reason of any Note, Mortgage, Assignment or other document evidencing or securing a Loan and which (as to this clause (iv)) Landlord has agreed to pay and that is normal and customary for similar financings (collectively, the "Impositions"); provided, that nothing herein shall obligate Tenant to pay (A) income, excess profits or other taxes of Landlord (or Lender) which are determined on the basis of Landlord's (or Lender's) net income or net worth (unless such taxes are in lieu of or a substitute for respect to the Leased Premises which, if it were in effect, would be payable by Tenant under the provisions hereof or by the terms of such tax, assessment or other charge), (B) any estate, inheritance, succession, gift or similar tax imposed on Landlord or Lender or (C) any capital gains or other tax imposed on Landlord in connection with the sale of the Leased Premises to any Person, except for any transfer or recording tax payable in connection with a sale to Tenant or its designee. If any Imposition may be paid in installments without interest or penalty, Tenant shall have the option to pay such Imposition in installments; in such event, Tenant shall be liable only for those installments which accrue or become due and payable during the Term. Tenant shall prepare and file all tax reports required by governmental authorities which relate to the Impositions. Tenant shall deliver to Landlord, (1) receipts for payment of all taxes required to be paid by Tenant hereunder within thirty (30) days after the due date thereof and (2) within thirty (30) days following Landlord's request, (A) copies of all settlements and notices pertaining to the Impositions which may be issued by any governmental authority and (B) receipts for payment of all other Impositions. (b) Landlord shall have the right during the existence of an Event of Default to require Tenant to pay to Landlord or Lender, if required by the terms of any Mortgage, an additional monthly sum (each an "Escrow Payment") sufficient to pay the Escrow Charges (as hereinafter defined) as they become due. As used herein, "Escrow Charges" shall mean real estate taxes on the Leased Premises or payments in lieu thereof and premiums on any insurance required by this Lease. Landlord shall determine the amount of the Escrow Charges and of each Escrow Payment. As long as the Escrow Payments are being held by Landlord and not Lender, the Escrow Payments shall not be commingled with other funds of Landlord or other Persons and interest shall accrue thereon for the benefit of Tenant and which shall serve as additional security for the obligations of Tenant hereunder from the date such monies are received by or on behalf of Landlord to the date such monies are disbursed to pay Escrow Charges in such order or priority as Landlord shall determine or as required by law. If at any time the Escrow Payments theretofore paid to Landlord shall be insufficient for the -19- payment of the Escrow Charges, Tenant, within ten (10) days after Landlord's demand therefor, shall pay the amount of the deficiency to Landlord or Lender, as the case may be. 10. Compliance with Laws and Easement Agreements; Environmental Matters. (a) Tenant shall, at its expense, be in material compliance with and conform to, and cause the Leased Premises and any other Person occupying any part of the Leased Premises to be in material compliance with and conform to, all Insurance Requirements and Legal Requirements (except that Tenant and the Leased Premises shall be in absolute compliance with all applicable Environmental Laws pertaining to the Leased Premises). Tenant shall not at any time (i) cause, permit or suffer to occur any Environmental Violation or (ii) permit any sublessee, assignee or other Person occupying the Leased Premises under or through Tenant to cause, permit or suffer to occur any Environmental Violation. (b) Tenant, at its sole cost and expense, will at all times promptly and faithfully abide by, discharge and perform all of the covenants, conditions and agreements contained in any Easement Agreement on the part of Landlord or the occupier to be kept and performed thereunder. Tenant will not alter, modify, amend or terminate any Easement Agreement, give any consent or approval thereunder, or enter into any new Easement Agreement without, in each case, prior written consent of Landlord, which consent shall not be unreasonably conditioned. If Landlord fails to respond to any request for consent to any such alteration, modification, amendment or termination of an existing Easement Agreement, or for consent to any new Easement agreement, in any case within ten (10) days after receipt of Tenant's request therefor, Landlord shall be deemed to have given such consent. Any such Easement Agreement, as altered, modified or amended, or any such new Easement Agreement, shall automatically be a Permitted Encumbrance. (c) Not more frequently than once every three (3) years and at any other time required by a Lender or if in the opinion of Landlord or Lender, a reasonable basis exists to believe that an Environmental Violation exists, upon prior written notice from Landlord, Tenant shall permit such professional environmental consultants as Landlord may designate ("Site Reviewers") to visit the Leased Premises at reasonable times and upon reasonable prior notice to Tenant and perform environmental site investigations and assessments ("Site Assessments") on the Leased Premises for the purpose of determining whether there exists on the Leased Premises any Environmental Violation or any condition which could reasonably be expected to result in any Environmental Violation. Such Site Assessments may include both above and, if a reasonable basis exists to believe that an Environmental Violation exists or if reasonably recommended by a Site Reviewer, below the ground testing for Environmental -20- Violations and such other tests (other than below the ground or groundwater testing except as permitted above) as may be necessary, in the opinion of the Site Reviewers, to conduct the Site Assessments. Tenant shall supply to the Site Reviewers such historical and operational information regarding the Leased Premises as may be reasonably requested by the Site Reviewers to facilitate the Site Assessments, and shall make available for meetings with the Site Reviewers appropriate personnel having knowledge of such matters. Not more frequently than once every three (3) years during the Term Tenant shall pay up to $7,000 of the Cost of a Phase I Site Assessment for each Related Premises except that, if an Environmental Violation is found to exist, Tenant shall pay all of the costs of performing and reporting any Site Assessments required by Landlord or Lender with respect to such Environmental Violation. (d) If an Environmental Violation occurs or is found to exist and, in Landlord's reasonable judgment, the cost of remediation of the same is likely to exceed $500,000, Tenant shall provide to Landlord, within ten (10) days after Landlord's request therefor, reasonable financial assurances that Tenant will effect such remediation in accordance with applicable Environmental Laws. (e) Notwithstanding any other provision of this Lease, if an Environmental Violation occurs or is found to exist with respect to any Related Premises that in the reasonable opinion of Landlord causes the fair market rental value of such Related Premises to be less than would otherwise be the case and the Term would otherwise terminate or expire, then, at the option of Landlord, the Term shall be automatically extended beyond the date of termination or expiration and this Lease shall remain in full force and effect with respect to such Related Premises but at a monthly rent equal to the fair market rental value of such Related Premises absent such Environmental Violation beyond such date until the earlier to occur of (i) the completion of all remedial action in accordance with applicable Environmental Laws or (ii) the date specified in a written notice from Landlord to Tenant terminating this Lease. (f) If, in Landlord's reasonable discretion, Tenant fails to promptly commence to comply and diligently pursue compliance with any requirement of any Environmental Law in connection with any Environmental Violation which occurs or is found to exist, Landlord shall have the right, at Tenant's expense (but no obligation), to take any and all actions as Landlord shall deem reasonably necessary or advisable in order to cure such Environmental Violation. (g) Tenant shall notify Landlord immediately after becoming aware of any violation of any Environmental Law or other material Environmental Violation (or alleged violation of any Environmental Law or other material Environmental Violation) and upon the request of Landlord shall forward to Landlord immediately upon receipt thereof copies of all orders, reports, notices, -21- permits, applications or other communications relating to any such violation. (h) All future leases, subleases or concession agreements relating to the Leased Premises entered into by Tenant shall contain covenants of the other party; thereto which are comparable to the covenants contained in this Paragraph 10(b), (c), (f) and (g). 11. Liens; Recording. (a) Tenant shall not, directly or indirectly, create or permit to be created or to remain and shall promptly discharge or remove any lien, levy or encumbrance on and of the Leased Premises or on any Rent or any other sums payable by Tenant under this Lease, other than any Mortgage or Assignment, the Permitted Encumbrances and any mortgage, lien, encumbrance or other charge created by or resulting solely from any act or omission of Landlord. NOTICE IS HEREBY GIVEN THAT LANDLORD SHALL NOT BE LIABLE FOR ANY LABOR, SERVICES OR MATERIALS FURNISHED OR TO BE FURNISHED TO TENANT OR TO ANYONE HOLDING OR OCCUPYING ANY OF THE LEASED PREMISES THROUGH OR UNDER TENANT, AND THAT NO MECHANICS' OR OTHER LIENS FOR ANY SUCH LABOR, SERVICES OR MATERIALS SHALL ATTACH TO OR AFFECT THE INTEREST OF LANDLORD IN AND TO ANY OF THE LEASED PREMISES. LANDLORD MAY AT ANY TIME POST ANY NOTICES ON THE LEASED PREMISES REGARDING SUCH NON-LIABILITY OF LANDLORD. (b) Tenant shall execute, deliver and record, file or register (collectively, "record") all such instruments as may be required or permitted by any present or future Law in order to evidence the respective interests of Landlord and Tenant in any of the Leased Premises, and shall cause a memorandum of this Lease (or, if such a memorandum cannot be recorded, this Lease), and any supplement hereto or thereto, to be recorded in such manner and in such places as may be required or permitted by any present or future Law in order to protect the validity and priority of this Lease. 12. Maintenance and Repair. (a) Tenant shall at all times maintain each Related Premises and the Adjoining Property in as good repair and appearance as each is in on the Final Completion Date and fit to be used for their intended use in accordance with recognized industry standards and, in the case of the Equipment, in good mechanical condition, in all cases except for ordinary wear and tear. Tenant shall take every other reasonable action necessary or appropriate for the preservation and safety of each Related Premises. Tenant shall promptly make all Alterations of every kind and nature, whether foreseen or unforeseen, which may be required to comply with the foregoing requirements of this Paragraph 12(a). Landlord shall not be required to make any Alteration, whether foreseen or unforeseen, or to maintain any of -22- the Related Premises or Adjoining Property in any way, and Tenant hereby expressly waives any right which may be provided for in any Law now or hereafter in effect to make Alterations at the expense of Landlord or to require Landlord to make Alterations. Any Alteration made by Tenant pursuant to this Paragraph 12 shall be made in conformity with the provisions of Paragraph 13. (b) If any Improvement, now or hereafter constructed, shall (i) encroach upon any setback or any property, street or right-of-way adjoining any of the Leased Premises, (ii) violate the provisions of any restrictive covenant affecting any of the Leased Premises, (iii) hinder or obstruct any easement or right-of-way to which any of the Leased Premises is subject or (iv) impair the rights of others in, to or under any of the foregoing, Tenant shall, promptly after receiving a demand to remove or correct such condition from a Person entitled to make such demand, either (A) obtain from all necessary parties waivers or settlements of all claims, liabilities and damages resulting from each such encroachment, violation, hindrance, obstruction or impairment, whether the same shall affect Landlord, Tenant or both, or (B) take such action as shall be necessary to remove all such encroachments, hindrances or obstructions and to end all such violations or impairments, including, if necessary, making Alterations. 13. Alterations and Improvements. (a) Tenant shall have the right, without having obtained the prior written consent of Landlord and Lender, to make Alterations or a series of related Alterations that, as to any such Alterations or series of related Alterations, do not cost in excess of $1,000,000 with respect to any Related Premises and to install Equipment in the Improvements or accessions to the Equipment that, as to such Equipment or accessions, do not cost in excess of $1,000,000, so long as at the time of construction or installation of any such Equipment or Alterations no Event of Default exists and the value and utility of the Leased Premises is not diminished thereby. If the cost of any Alterations, series of related Alterations or Equipment or accessions thereto is in excess of the amounts specified above, the prior written approval of Landlord and Lender shall be required, such approval not to be unreasonably withheld, delayed or conditioned. Tenant shall not construct upon the Land any additional buildings costing in excess of $1,000,000 without having first obtained the prior written consent of Landlord and Lender, such consent not to be unreasonably withheld, conditioned or delayed. If Landlord or Lender fails to respond to any written request for consent within thirty (30) days after receipt of such consent, such consent shall be deemed given. (b) If Tenant makes any Alterations pursuant to this Paragraph 13 or Paragraph 34 or as required by Paragraph 12 or 17 (such Alterations and actions being hereinafter collectively referred to as "Work"), then (i) as to Work other than Work done -23- pursuant to a Legal Requirement, the market value of the Leased Premises shall not be lessened by any such Work or its usefulness impaired, (ii) all such Work shall be performed by Tenant in a good and workmanlike manner, (iii) all such Work shall be expeditiously completed in compliance with all Legal Requirements, (iv) all such Work shall comply with the requirements of all insurance policies required to be maintained by Tenant hereunder, (v) if any such Work involves the replacement of Equipment or parts thereto, all replacement Equipment or parts shall function in a manner that is the better of (A) the functioning of the Equipment or parts being replaced or (B) the functioning of similar Equipment or parts in other warehouses owned or used by Tenant, (vi) subject to Tenant's rights under Paragraph 14, Tenant shall promptly discharge or remove all liens filed against any of the Leased Premises arising out of such Work, (vii) Tenant shall procure and pay for all permits and licenses required in connection with any such Work, (viii) all such Work (except for additions that are paid for by Tenant and can be readily removed without substantial damage to the Improvements and are not a replacement for any of the Improvements or Equipment) shall be the property of Landlord and shall be subject to this Lease, and Tenant shall execute and deliver to Landlord any document requested by Landlord evidencing the assignment to Landlord of all estate, right, title and interest (other than the leasehold estate created hereby) of Tenant or any other Person thereto or therein, and (ix) Tenant shall comply, to the extent reasonably requested by Landlord or required by this Lease, with the provisions of Paragraph 19(a), whether or not such Work involves restoration of the Leased Premises. 14. Permitted Contests. Notwithstanding any other provision of this Lease, Tenant shall not be required to (a) pay any Imposition, (b) discharge or remove any lien referred to in Paragraph 11 or 13, (c) take any action with respect to any encroachment, violation, hindrance, obstruction or impairment referred to in Paragraph 12(b) or (d) comply with any Legal Requirements (such non-compliance with the terms hereof being hereinafter referred to collectively as "Permitted Violations"), so long as at the time of such non-compliance no Event of Default exists and so long as Tenant shall contest, in good faith, the existence, amount, validity or interpretation thereof, the amount of the damages caused thereby, or the extent of its or Landlord's liability therefore by appropriate proceedings which shall operate during the pendency thereof to prevent or stay (i) the collection of, or other realization upon, the Permitted Violation so contested, (ii) the sale, forfeiture or loss of any of the Leased Premises or any Rent to satisfy or to pay any damages caused by any Permitted Violation, (iii) any material interference with the use or occupancy of any of the Leased Premises, (iv) any interference with the payment of any Rent, (v) the cancellation or increase in the rate of any insurance policy or a statement by the carrier that coverage will be denied or (vi) the enforcement or execution of any injunction, order or Legal Requirement with respect to the Permitted Violation. If the amount being contested -24- is reasonably estimated by Landlord to be in excess of Two Hundred Fifty Thousand Dollars ($250,000) or if otherwise required by the terms of the Mortgage, Tenant shall provide Landlord security which is satisfactory in Landlord's reasonable judgment, to assure that such Permitted Violation is corrected if Tenant's contest is unsuccessful, including all Costs, interest and penalties that may reasonably be expected to be incurred or become due in connection therewith. While any proceedings which comply with the requirements of this Paragraph 14 are pending and the required security is held by Landlord, Landlord shall not have the right to correct any Permitted Violation thereby being contested unless a Landlord is required by law to correct such Permitted Violation and Tenant's contest does not prevent or stay such requirement as to Landlord. Each such contest shall be promptly and diligently prosecuted by Tenant to a final conclusion, except that Tenant, so long as the conditions of this Paragraph 14 are at all times complied with, has the right to attempt to settle or compromise such contest through negotiations. Tenant shall pay any and all losses, judgments, decrees and Costs in connection with any such contest and shall, promptly after the final determination of such contest, fully pay and discharge the amounts which shall be levied, assessed, charged or imposed or be determined to be payable therein or in connection therewith, together with all penalties, fines, interest and Costs thereof or in connection therewith, and perform all acts the performance of which shall be ordered or decreed as a result thereof. No such contest shall subject Landlord to the risk of any civil or criminal liability. 15. Indemnification. (a) Tenant shall pay, protect, indemnify, defend, save and hold harmless Landlord, Lender and all other Persons described in Paragraph 30 (each an "Indemnitee") for, from and against any and all liabilities, losses, damages (including punitive damages), penalties, Costs (including attorneys' fees and costs), causes of action, suits, claims, demands or judgments of any nature whatsoever, howsoever caused, without regard to the form of action and whether based on strict liability, gross negligence, negligence or any other theory of recovery at law or in equity (other than those based on the gross negligence or willful misconduct of such Indemnitee or based on activities by such Indemnitee in connection with the sale or reletting of the Leased Premises to any Person except a sale to Tenant or its designee and except for activities that are based on representations by or obligations and liabilities of Tenant or Guarantor), arising from (i) any matter pertaining to the acquisition (or the negotiations leading thereto), ownership, leasing, use, non-use, occupancy, operation, management, condition, design, construction, maintenance, repair or restoration of any of the Leased Premises or Adjoining Property, (ii) any casualty in any manner arising from any of the Leased Premises or Adjoining Property, whether or not Indemnitee has or should have knowledge or notice of any defect or condition causing or contributing to said casualty, (iii) any violation by Tenant of -25- any provision of this Lease, any contract or agreement to which Tenant is a party and which relates to the Leased Premises, any Legal Requirement or any Permitted Encumbrance or (iv) any alleged, threatened or actual Environmental Violation, including (A) liability for response costs and for costs of removal and remedial action incurred by the United States Government, any state or local governmental unit or any other Person, or damages from injury to or destruction or loss of natural resources, including the reasonable costs of assessing such injury, destruction or loss, incurred pursuant to Section 107 of CERCLA, or any successor section or act or provision of any similar state or local Law, (B) liability for costs and expenses of abatement, correction or clean-up, fines, damages, response costs or penalties which arise from the provisions of any of the other Environmental Laws and (C) liability for personal injury or property damage arising under any statutory or common-law tort theory, including damages assessed for the maintenance of a public or private nuisance or for carrying on of a dangerous activity. (b) In case any action or proceeding is brought against any Indemnitee by reason of any such claim, (i) Tenant may, except in the event of a conflict of interest or a dispute between Tenant and any such Indemnitee or during the continuance of an Event of Default, retain its own counsel at its expense and defend such action (it being understood that Landlord may employ counsel of its choice to monitor the defense of any such action) and (ii) such Indemnitee shall notify Tenant to resist or defend such action or proceeding by retaining counsel reasonably satisfactory to such Indemnitee, and such Indemnitee will cooperate and assist in the defense of such action or proceeding if reasonably requested to do so by Tenant. (c) The obligations of Tenant under this Paragraph 15 shall survive any termination, expiration or rejection in bankruptcy of this Lease. (d) For the sole purpose of effecting the indemnification obligations under this Lease and not for the benefit of any employees of Tenant or Guarantor or any third parties unrelated to the parties indemnified under this Lease Tenant specifically and expressly waives any immunity that may be granted it under the Washington State Industrial Insurance Act, Title 51 RCW. (Tenant's Initials: WRS). Further the indemnification obligations under this Lease shall not be limited in any way by any limitation on the amount or type of damages, compensation or benefits payable to or for any third party under Worker Compensation Acts, Disability Benefit Acts or other employee benefit acts. 16. Insurance. (a) Tenant shall maintain the following insurance on or in connection with the Leased Premises: -26- (i) Insurance against physical loss or damage to the Improvements and Equipment as provided under a standard "All Risk" property policy including but not limited to flood (to the extent that a Related Premises is in a flood zone) and earthquake coverage (to the extent any Related Premises is in a critical earthquake zone) in amounts not less than the actual replacement cost of the Improvements and Equipment, subject to a deductible or self-insurance retention not to exceed $500,000 except that with respect to earthquake coverage, the deductible or self-insurance retention shall not exceed 5% of replacement cost as long as such insurance is available. Such policies shall contain Replacement Cost and Agreed Amount Endorsements. (ii) Commercial general liability and automobile liability insurance against claims for personal and bodily injury, death or property damage occurring on, in or as a result of the use of the Leased Premises, in an amount not less than $15,000,000 per occurrence/annual aggregate, subject to a deductible or self-insurance retention not to exceed $500,000 including but not limited to garagekeepers liability, non-owned and hired automobile liability and all other coverage extensions that are usual and customary for properties of this size and type provided, however, that the Landlord shall have the right to require such higher limits, up to a maximum of $50 million, as may be reasonable and customary for properties of this size and type. (iii) Worker's compensation insurance covering all persons employed by Tenant in connection with any work done on or about any of the Leased Premises for which claims for death, disease or bodily injury may be asserted against Landlord, Tenant or any of the Leased Premises or, in lieu of such Worker's Compensation Insurance, a program of self-insurance complying with the rules, regulations and requirements of the appropriate agency of the State or States in which the Leased Premises are located. (iv) Comprehensive boiler and machinery insurance on any of the Equipment or any other equipment on or in the Leased Premises including but not limited to service interruption, expediting expenses, ammonia contamination, hazardous clean-up and comprehensive object definition, in an amount not less than $15,000,000, subject to a deductible or self-insurance retention not to exceed $500,000 for damage to property resulting from such covered perils as found in a standard comprehensive boiler & machinery policy. (v) Business income/interruption insurance to include loss of rents at limits sufficient to cover 100% of the annual rental income on an actual loss sustained basis with a period of indemnity not less than one year from the time of loss, subject to deductible or self-insurance retention not to exceed $500,000. (vi) During any period in which substantial Alterations at any Related Premises are being undertaken, -27- builder's risk insurance covering the total completed value including any "soft costs" with respect to the Improvements being altered or repaired (on a completed value, non-reporting basis), replacement cost of work performed and equipment, supplies and materials furnished in connection with such construction or repair of Improvements or Equipment, together with such "soft cost" endorsements and such other endorsements as Landlord may reasonably require. (vii) Such other insurance which at the time is usual and commonly obtained in connection with properties similar in type of building size, use and location to the Leased Premises. (b) The insurance required by Paragraph 16(a) shall be written by companies which have a Best's rating of A:VIII or above (provided that any carrier providing such insurance which is not rated by Best shall also be deemed acceptable unless Landlord objects to such carrier within ten (10) days of receipt of notice by Landlord that such carrier is providing coverage). The insurance policies shall be in amounts sufficient at all times to satisfy any coinsurance requirements thereof, unless such coinsurance requirements are waived in writing by the insurer. The insurance referred to in Paragraphs 16(a)(i), 16(a)(iv) and 16(a)(vi) shall name Landlord, Lender and Tenant as loss payees and as their interests may appear. If said insurance or any part thereof shall expire, be withdrawn, become void, voidable, unreliable or unsafe for any reason, including a breach of any condition thereof by Tenant or the failure or impairment of the capital of any insurer, Tenant shall immediately obtain new or additional insurance in compliance with Paragraph 16(a). (c) Each insurance policy referred to in clauses (i), (iv), (v) and (vi) of Paragraph 16(a) shall contain standard non-contributory mortgagee clauses in favor of and acceptable to Lender. Each policy required by any provision of Paragraph 16(a), except clause (iii) thereof, shall provide that it may not be cancelled except after thirty (30) days' prior written notice to Landlord and Lender. Each such policy shall also provide that any loss otherwise payable thereunder with respect to the Leased Premises shall be payable notwithstanding (i) any act or omission of Landlord or Tenant which might, absent such provision, result in a forfeiture of all or a part of such insurance payment, (ii) the occupation or use of any of the Leased Premises for purposes more hazardous than those permitted by the provisions of such policy, (iii) any foreclosure or other action or proceeding taken by Lender pursuant to any provision of the Mortgage, Note, Assignment or other document evidencing or securing the Loan upon the happening of an event of default therein or (iv) any change in title to or ownership of Landlord's fee simple interest in any of the Leased Premises. (d) Tenant shall pay as they become due all premiums for the insurance required by Paragraph 16(a), shall renew or replace each policy and deliver to Landlord evidence -28- thereof prior to the expiration date of such policy, and shall promptly deliver to Landlord copies of all such insurance certified by a senior officer of Tenant to be true and correct. (e) Anything in this Paragraph 16 to the contrary notwithstanding, any insurance which Tenant is required to obtain pursuant to Paragraph 16(a) may be carried under a "blanket" or umbrella policy or policies covering other properties or liabilities of Tenant, provided that such "blanket" or umbrella policy or policies otherwise comply with the provisions of this Paragraph 16. A copy of each such "blanket" or umbrella policy certified by a senior officer of Tenant to be true and correct shall promptly be delivered to Landlord. (f) Replacement costs of Improvements and Equipment may be redetermined not more frequently than once every twelve (12) months at the Landlord's request and shall be determined based on insurance carrier trends for corporations of established reputation engaged in the same or similar business of the Tenant. (g) Tenant shall promptly comply with and conform to (i) all provisions of each insurance policy required by this Paragraph 16 and (ii) all reasonable requirements of the insurers thereunder applicable to Landlord, Tenant (in connection with the Leased Premises) or any of the Leased Premises or to the use, manner of use, occupancy, possession, operation, maintenance, alteration or repair of any of the Leased Premises, even if such compliance necessitates Alterations or results in interference with the use or enjoyment of any of the Leased Premises. (h) Tenant shall not carry separate insurance concurrent in form or contributing in the event of a Casualty with that required in this Paragraph 16 unless (i) Landlord and Lender are included therein as named insureds, with loss payable as provided herein, and (ii) such separate insurance complies with the other provisions of this Paragraph 16. Tenant shall immediately notify Landlord of such separate insurance and shall deliver to Landlord copies thereof certified by a senior officer of Tenant. (i) All policies shall contain effective waivers by the carrier against all claims for insurance premiums against Landlord and shall contain full waivers of subrogation against the Landlord. (j) All proceeds of any insurance required under Paragraph 16(a) shall be payable as follows: (i) The insurance referred to in Paragraphs 16(a)(i), 16(a)(iv) and 16(a)(vi) shall name Landlord, Lender and Tenant as loss payees, as their interests may appear. The insurance referred to in Paragraph 16(a)(ii) shall name Landlord and Lender as additional insureds, and the insurance referred to in Paragraph 16(a)(v) shall name Tenant as insured and Lender and -29- Landlord as loss payees to the extent of amounts payable by Tenant under the Lease. (ii) Each insurer is hereby authorized and directed to make payment of insurance proceeds in excess of $500,000, or if an Event of Default exists, in any amount directly to Landlord or, if required by the Mortgage or requested by Lender pursuant to the Mortgage, to Lender instead of to Landlord and Tenant jointly, and Tenant hereby appoints each of Landlord and Lender as Tenant's attorneys-in-fact to endorse any draft therefor. If no Event of Default exists, proceeds up to and including $500,000 shall be paid directly to Tenant. 17. Casualty and Condemnation (a) If any Casualty occurs the insurance proceeds for which is reasonably estimated by Tenant to be equal to or in excess of One Hundred Thousand Dollars ($100,000), Tenant shall give Landlord and Lender immediate notice thereof. So long as no Event of Default exists Tenant is hereby authorized to adjust, collect and compromise all claims under any of the insurance policies required by Paragraph 16(a) and to execute and deliver on behalf of Landlord all necessary proofs of loss, receipts, vouchers and releases required by the insurers, and Landlord shall have the right to join with Tenant if the amount of any such claim is in excess of Five Hundred Thousand Dollars ($500,000). Any adjustment, settlement or compromise of any such claim in excess of $500,000 shall be subject to the prior written approval of Landlord, which shall not be unreasonably withheld, conditioned or delayed. Landlord shall have the right to prosecute or contest any such claim, adjustment, settlement or compromise and, in connection therewith, Tenant hereby irrevocably assigns to Landlord any and all interest it has or may have in such claim. If an Event of Default exists, Tenant shall not be entitled to adjust, collect or compromise any such claim or to participate with Landlord in any adjustment, collection or compromise of the Net Award payable in connection with a Casualty. Tenant agrees to sign, upon the request of Landlord, all such proofs of loss, receipts, vouchers and releases. Each insurer is hereby authorized and directed to make payment under said policies in excess of $500,000 directly to Landlord or, if required by the Mortgage or requested by Landlord or Lender pursuant to the Mortgage, to Lender instead of to Landlord and Tenant jointly, and Tenant hereby appoints each of Landlord and Lender as Tenant's attorneys-in-fact to endorse any draft therefor. The rights of Landlord under this Paragraph 17(a) shall be extended to Lender if and to the extent that any Mortgage so provides. (b) Tenant, immediately upon receiving a Condemnation Notice, shall notify Landlord and Lender thereof. Landlord and Lender are authorized to collect, settle and compromise, in their discretion (and, if no Event of Default exists, upon notice to Tenant), the amount of any Net Award. Provided that no Event of Default has occurred and is continuing, -30- Tenant shall be entitled to participate with Landlord and Lender in any Condemnation proceeding or negotiations under threat thereof and to contest the Condemnation or the amount of the Net Award therefor. No agreement with any condemnor in settlement or under threat of any Condemnation shall be made by Tenant without the written consent of Landlord and Lender, which shall not be unreasonably withheld, conditioned or delayed. Subject to the provisions of this Paragraph 17(b), Tenant hereby irrevocably assigns to Landlord any award or payment to which Tenant is or may be entitled by reason of any Condemnation, whether the same shall be paid or payable for Tenant's leasehold interest hereunder or otherwise; but nothing in this Lease shall impair Tenant's right to any award or payment on account of Tenant's trade fixtures, equipment or other tangible property which is not part of the Equipment, moving expenses or loss of business, if available, to the extent that and so long as (i) Tenant shall have the right to make, and does make, a separate claim therefor against the condemnor and (ii) such claim does not in any way reduce either the amount of the award otherwise payable to Landlord for the Condemnation of Landlord's fee interest in the Leased Premises or the amount of the award (if any) otherwise payable for the Condemnation of Tenant's leasehold interest hereunder. (c) If any Partial Casualty (whether or not insured against) or Partial Condemnation shall occur to any Related Premises, this Lease shall continue, notwithstanding such event, and there shall be no abatement or reduction of any Monetary Obligations, except as provided in Paragraph 19(c). Promptly after such Partial Casualty or Partial Condemnation, Tenant, as required in Paragraph 12(a), shall commence and diligently continue to restore the Leased Premises as nearly as practicable to their value, condition and character immediately prior to such event (assuming the Leased Premises to have been in the condition required by this Lease). Upon the receipt by Landlord of the entire Net Award of such Partial Casualty or Partial Condemnation, Landlord shall make such Net Award Available to Tenant for restoration in accordance with and subject to the provisions of Paragraph 19(a). If any Casualty or Condemnation which is not a Partial Casualty or Partial Condemnation shall occur, Tenant shall comply with the terms and conditions of Paragraph 18. 18. Termination Events. (a) If (i) all of any Related Premises shall be taken by a Taking or (ii) any substantial portion of any Related Premises shall be taken by a Taking or all or any substantial portion of any Related Premises shall be totally damaged or destroyed by a Casualty and, in any such case, Tenant certifies and covenants to Landlord that it will forever abandon operations at the Related Premises, (any one or all of the Related Premises described in the above clauses (i) and (ii) above being hereinafter referred to as the "Affected Premises" and each of the events described in the above clauses (i) and (ii) shall hereinafter be referred to as a "Termination Event"), then (x) in -31- the case of (i) above, Tenant shall be obligated, within thirty (30) days after Tenant receives a Condemnation Notice and (y) in the case of (ii) above, Tenant shall have the option, within thirty (30) days after Tenant receives a Condemnation Notice or thirty (30) days after the Casualty, as the case may be, to give to Landlord written notice (a "Termination Notice") of the Tenant's option to terminate this Lease as to the Affected Premises in the form described in Paragraph 18(b). (b) A Termination Notice shall contain (i) notice of Tenant's intention to terminate this Lease as to the Affected Premises on the first Basic Rent Payment Date which occurs at least ninety (90) days after the Fair Market Value Date (the "Termination Date"), (ii) a binding and irrevocable offer of Tenant to purchase the Leased Premises for a price equal to the Termination Amount and (iii) if the Termination Event is an event described in Paragraph 18(a)(ii), the certification and covenant described therein and a certified resolution of the Board of Directors of Tenant authorizing the same. Promptly upon the delivery to Landlord of a Termination Notice, Landlord and Tenant shall commence to determine Fair Market Value. (c) If Landlord shall reject such offer to terminate this Lease as to the Affected Premises by written notice to Tenant (a "Rejection"), which Rejection shall contain the written consent of Lender, not later than thirty (30) days following the Fair Market Value Date, then this Lease shall terminate as to the Affected Premises on the Termination Date; provided that, if Tenant has not satisfied all Monetary Obligations and all other obligations and liabilities under this Lease which have arisen as to the Affected Property (collectively, "Remaining Obligations") on or prior to the Termination Date, then Landlord may, at its option, extend the date on which this Lease may terminate as to the Affected Premises to a date which is no later than the first Basic Rent Payment Date after the Termination Date on which Tenant has satisfied all Remaining Obligations. Upon such termination (i) all obligations of Tenant hereunder as to the Affected Premises shall terminate except for any Surviving Obligations, (ii) Tenant shall promptly vacate and shall have no further right, title or interest in or to any of the Affected Premises and (iii) the Net Award shall be retained by Landlord. Notwithstanding anything to the contrary hereinabove contained, if Tenant shall have received a Rejection and, on the date when this Lease would otherwise terminate as provided above, Landlord shall not have received the full amount of the Net Award payable by reason of the applicable Termination Event, then on the Termination Date Tenant shall assign to Landlord all of its right, title and interest, if any, in and to the Net Award. (d) Unless Tenant shall have received a Rejection not later than the thirtieth (30th) day following the Fair Market Value Date, Landlord shall be conclusively presumed to have accepted such offer. If such offer is accepted by Landlord then, on the Termination Date, Tenant shall pay to Landlord or Lender, -32- if the Mortgage requires or permits Lender to so require, the Termination Amount and all Remaining obligations and, if requested by Tenant, Landlord shall convey to Tenant or its designee the Affected Premises or the remaining portion thereof, if any, all in accordance with Paragraph 20. (e) In the event of the termination of this Lease as to the Affected Premises as hereinabove provided, this Lease shall remain in full force and effect as to the Remaining Premises; provided, that the Basic Rent for the Remaining Premises to be paid after such termination shall be the Basic Rent otherwise payable hereunder with respect to the Leased Premises multiplied by a percentage equal to the sum of the percentages set forth on Exhibit "F" for the Remaining Premises. 19. Restoration; Reduction of Rent. (a) If (on the basis of a cost breakdown provided by Tenant) the cost of restoration in the event of a Casualty is reasonably estimated by Landlord and Lender to be Five Hundred Thousand ($500,000) or less, then, so long as an Event of Default has not occurred and is continuing, such amount shall be paid to and retained by Tenant, and Tenant shall promptly restore the Related Premises in accordance with and subject to Paragraph 12 and Paragraph 13 hereof. As long as an Event of Default has not occurred and is continuing, any Net Award in excess of Five Hundred Thousand ($500,000) that is paid to Landlord or Lender shall be made available to Tenant for restoration of the Leased Premises and Landlord (or Lender if required by any Mortgage) shall hold such Net Award in a separate trust fund not commingled with any other funds (the "Restoration Fund") and disburse amounts from the Restoration Fund only in accordance with the following conditions: (i) prior to commencement of restoration, (A) the architects, contracts, contractors, plans and specifications for the restoration shall have been approved by Landlord, which approval shall not be unreasonably withheld, delayed or conditioned, (B) Landlord and Lender shall be provided with mechanics' lien insurance or an acceptable payment bond which insures satisfactory payment for the restoration, is in an amount and form and have a surety reasonably acceptable to Landlord, and name Landlord and Lender as additional dual obligees; (ii) at the time of any disbursement, no Event of Default shall exist and no mechanics' or materialmen's liens shall have been filed against any of the Leased Premises and remain undischarged; (iii) disbursements shall be made from time to time in an amount not exceeding the cost of the work completed since the last disbursement, upon receipt of (A) satisfactory evidence, including architects' certificates, of the stage of completion, the estimated total cost of completion and performance -33- of the work to date in a good and workmanlike manner in accordance with the contracts, plans and specifications, (B) conditional waivers of liens, (C) a satisfactory bringdown of title insurance and (D) other evidence of cost and payment so that Landlord and Lender can verify that the amounts disbursed from time to time are represented by work that is completed, in place and free and clear of mechanics' and materialmen's lien claims; (iv) each request for disbursement shall be accompanied by a certificate of Tenant, signed by the president or a vice president or the Director of Property Management of Tenant, describing the work for which payment is requested, stating the cost incurred in connection therewith, stating that Tenant has not previously received payment for such work and, upon completion of the work, also stating that the work has been fully completed and complies with the applicable requirements of this Lease; (v) Landlord may retain ten percent (10$) of the restoration fund until 50% of the restoration is fully completed; (vi) the Restoration Fund shall not be commingled with Landlord's other funds and shall bear interest at a commercially available rate; and (vii) such other reasonable conditions consistent with customary construction loan disbursement practices as Landlord or Lender may impose. (b) Prior to commencement of restoration and at any time during restoration, if the estimated cost of completing the restoration work free and clear of all liens, as reasonably determined by Landlord or Lender, exceeds the amount of the Net Award available for such restoration, the amount of such excess shall, upon demand by Landlord, be paid by Tenant to Landlord or Lender, if so required or permitted by the terms of the Mortgage, to be added to the Restoration Fund. Any sum so added by Tenant which remains in the Restoration Fund upon completion of restoration shall be refunded to Tenant. For purposes of determining the source of funds with respect to the disposition of funds remaining after the completion of restoration, the Net Award shall be deemed to be disbursed prior to any amount added by Tenant. (c) If any sum remains in the Restoration Fund after completion of the restoration and any refund to Tenant pursuant to Paragraph 19(b), such sum (the "Remaining Sum") shall be retained by Landlord or Lender, each installment of Basic Rent payable on or after the date on which the Net Award is paid to Landlord shall be reduced by a fraction, the denominator of which shall be the total amount of all Basic Rent due from such date to and including the last day of the Term and the numerator of which shall be the amount of such Net Award retained by Landlord and/or Lender. -34- 20. Procedures Upon Purchase. (a) If the Leased Premises or any of the Related Premises are purchased by Tenant pursuant to any provision of this Lease, Landlord need not convey any better title thereto than that which was conveyed to Landlord, and Tenant or its designee shall accept such title, subject, however, to the Permitted Encumbrances and to all other liens, exceptions and restrictions on, against or relating to any of the Leased Premises or the applicable Related Premises and to all applicable Laws, but free of the lien of and security interest created by any Mortgage or Assignment and liens, exceptions and restrictions on, against or relating to the Leased Premises or the applicable Related Premises which have been created by or resulted solely from acts of Landlord after the date of this Lease, unless the same are Permitted Encumbrances or customary utility easements benefiting the Leased Premises or were created with the concurrence of Tenant or as a result of a default by Tenant under this Lease. (b) Upon the date fixed for any such purchase of the Leased Premises or any of the Related Premises pursuant to any provision of this Lease (any such date the "Purchase Date"), Tenant shall pay to Landlord, or to any Person to whom Landlord directs payment, the Relevant Amount therefor specified herein, in Federal Funds, less any credit of the Net Award received and retained by Landlord or a Lender and allowed against the Relevant Amount, and Landlord shall deliver to Tenant (i) a special warranty deed which describes the premises being conveyed and conveys the title thereto as provided in Paragraph 20(a), (ii) such other instruments as shall be necessary to transfer to Tenant or its designee any other property (or rights to any Net Award not yet received by Landlord or a Lender) then required to be sold by Landlord to Tenant pursuant to this Lease and (iii) any Net Award received by Landlord, not credited to Tenant against the Relevant Amount and required to be delivered by Landlord to Tenant pursuant to this Lease; provided, that if any Monetary Obligations remain outstanding on such date, then Landlord may deduct from the Net Award the amount of such Monetary Obligations; and further provided, that if any event has occurred which, in Landlord's reasonable judgment, is likely to subject any Indemnitee to any liability which Tenant is required to indemnify against pursuant to Paragraph 15, then an amount shall be deducted from the Net Award which, in Landlord's reasonable judgment, is sufficient to satisfy such liability, which amount shall be deposited in an escrow account with a financial institution reasonably satisfactory to Landlord and Tenant on terms and conditions reasonably satisfactory to Landlord and Tenant, pending resolution of such matter. If on the Purchase Date any Monetary Obligations remain outstanding and no Net Award is payable to Tenant by Landlord or the amount of such Net Award is less than the amount of the Monetary Obligations, then Tenant shall pay to Landlord on the Purchase Date the amount of such Monetary Obligations. Upon the completion of such purchase, this Lease and all obligations and liabilities of Tenant hereunder with respect to the applicable -35- Related Premises (but not with respect to the Remaining Premises) shall terminate, except any Surviving Obligations. (c) If the completion of such purchase shall be delayed after (i) the Termination Date, in the event of a purchase pursuant to Paragraph 18 or, (ii) the date scheduled for such purchase, in the event of a purchase under any other provision of this Lease then, except as specifically provided in the following sentence, (x) Rent shall continue to be due and payable until completion of such purchase and (y) at Landlord's sole option, Fair Market value shall be redetermined and the Relevant Amount payable by Tenant pursuant to the applicable provision of this Lease shall be adjusted to reflect such redetermination. If, however, the delay for completion of such purchase is caused solely by an act of or failure to act by Landlord, Tenant's obligation to pay Rent until completion of the purchase shall be limited to that portion of Basic Rent equal to the payments of principal and interest payable on the Loan, and such payments shall be payable directly to the Lender and shall be credited against the purchase price payable by Tenant to Landlord. (d) Any prepaid Monetary Obligations paid to Landlord shall be prorated as of the Purchase Date, and the prorated unapplied balance shall be deducted from the Relevant Amount due to Landlord. 21. Assignment and Subletting. (a) (i) Tenant shall have the right, upon thirty (30) days prior written notice to Landlord and Lender, with no consent of Landlord or Lender being required or necessary ("Preapproved Assignment") to assign this Lease by operation of law or otherwise to any Person ("Preapproved Assignee") (A) that is an Affiliate of Tenant or (B) which immediately following such assignment has, or is a direct or indirect subsidiary of a parent corporation that has executed (or will, as a condition to such assignment, execute) a guaranty of the obligations of Tenant hereunder substantially in the form of the Guaranty and has, a publicly traded unsecured senior debt rating that is the higher of (1) the then publicly traded unsecured senior debt rating of Guarantor or (2) a rating of "A" or better from Moody's Investors Services, Inc. or a rating of "A" or better from Standard & Poor's Corporation (or in the event both of such rating agencies cease to furnish such ratings, then a comparable rating by any rating agency reasonably acceptable to Landlord and Lender). (ii) If Tenant desires to assign this Lease to a Person ("Non-Preapproved Assignee") who would not be a Preapproved Assignee ("Non-Preapproved Assignment") then Tenant shall, not less than forty-five (45) days prior to the date on which it desires to make a Non-Preapproved Assignment submit to Landlord and Lender information regarding the following with respect to the Non-Preapproved Assignee: (A) credit, (B) capital structure, (C) management, (D) operating history, (E) proposed use -36- of the Leased Premises and (F) risk factors associated with the proposed use of the Leased Premises by the Non-Preapproved Assignee, taking into account factors such as environmental concerns, product liability and the like. Landlord and Lender shall review such information and shall approve or disapprove the Non-Preapproved Assignee no later than the twentieth (20th) day following receipt of all such information, and Landlord and Lender shall be deemed to have acted reasonably in granting or withholding consent if such grant or disapproval is based on a review of the above-described criteria applying such review standards as are customary in private placement transactions. (iii) If Landlord or Lender withhold consent to the Non-Preapproved Assignment and Tenant desires to complete the Non-Preapproved Assignment, Tenant shall make a rejectable offer (the "Intended Assignment Offer") to purchase the Leased Premises for a purchase price equal to the Offer Amount and to consummate the purchase on the first Basic Rent Payment Date occurring thirty (30) days after the determination of Fair Market Value (the "Intended Assignment Purchase Date"). Notwithstanding the foregoing, if the Intended Assignment Offer is accepted by Landlord and Lender and the Non-Preapproved Assignment occurs on a date (the "Assignment Date") that is prior to the Intended Assignment Purchase Date, then, no later than the Assignment Date, Tenant shall deposit in escrow with Lender an amount (the "Deposit Amount") equal to one hundred percent (100%) of the sum of the Project Cost and any Prepayment Premium. The Deposit Amount shall be held by and invested by Landlord and the Deposit Amount, together with any interest earned thereon, shall be applied on the Intended Assignment Purchase Date to payment of the Offer Amount. (iv) If Landlord shall reject the Intended Assignment Offer by notice to Tenant, such notice to contain the written consent of Lender to such rejection, no later than the thirtieth (30th) day following receipt of the Intended Assignment Offer by Landlord, then this Lease shall remain in full force and effect and Landlord and Lender shall be deemed to have consented to the Non-Preapproved Assignment. Nothing provided herein-shall constitute a waiver by Landlord of the obligation of Tenant to comply with the requirements of this Paragraph 21(a)(iv) if a subsequent Non-Preapproved Assignment arises. No rejection of the Intended Assignment Offer shall be effective for any purpose unless consented to in writing by Lender. (v) Unless Landlord shall have rejected the Intended Assignment Offer by the foregoing notice to Tenant not later than the thirtieth (30th) day following receipt of information described in the foregoing Paragraph 21(a)(iv), Landlord shall be conclusively presumed to have accepted the Intended Assignment Offer. If the Intended Assignment Offer is accepted by Landlord, Tenant shall pay to Landlord the Offer Amount (less the Deposit Amount and interest thereon paid to Landlord) on the Intended Assignment Purchase Date and, provided -37- that no Rent or any other charge is due and unpaid under this Lease as of the Intended Assignment Purchase Date and Tenant is otherwise in compliance with the terms of this Lease, Landlord shall convey to Tenant the Leased Premises in accordance with the provisions of Paragraph 20 of this Lease. (b) (i) In addition to the Silgan Subleases Tenant shall have the right, upon thirty (30) days prior written notice to Landlord and Lender, to enter into one or more subleases that demise, in the aggregate, up to but not in excess at any time of thirty-three and one-third percent (33 1/3%) of the gross space in the Improvements for a term of up to ten (10) years (but not extending beyond the Expiration Date) with no consent or approval of Landlord being required or necessary ("Preapproved Sublet"). Other than pursuant to a Preapproved Sublet, no portion of the Leased Premises shall be subleased during the Term to any other Person without the prior written consent of Landlord and Lender, which consent shall not be unreasonably withheld or delayed, and which consent shall be granted or withheld based on a review of the following criteria as they relate to the proposed sublessee: (1) credit, (2) capital structure, (3) management, (4) operating history and (5) the proposed use of the sublet portion of the Improvements, taking in account factors related to the proposed subtenant's use of the Leased Premises such as environmental concerns. Landlord and Lender shall be deemed to have acted reasonably in granting or withholding consent if such grant or disapproval is based on their reasonable review of the above-described criteria. (c) If Tenant assigns all its rights and interest under this Lease, the assignee under such assignment shall expressly assume all the obligations of Tenant hereunder, actual or contingent, including obligations of Tenant which may have arisen on or prior to the date of such assignment, by a written instrument delivered to Landlord at the time of such assignment. Each sublease of any of the Leased Premises shall be subject and subordinate to the provisions of this Lease. Following any assignment (i) to a Person that satisfies the test for a Preapproved Assignee under clause (B) of Paragraph 21(a)(i) or (ii) to a Non-Preapproved Assignee that is approved by Lender and that immediately following the Non-Preapproved Assignment has a publicly traded unsecured senior debt rating of not less than "Baal" from Moody's Investors Services, Inc. or a rating of not less than "BBB" from Standard & Poor's Corporation (or in the event both of such rating agencies cease to furnish such ratings, then a comparable rating by a rating agency reasonably acceptable to Landlord and Lender), Tenant and Guarantor shall be deemed released from their respective obligations and liabilities under this Lease and the Guaranty that arise after the date of such Preapproved Assignment or Non-Preapproved Assignment described in clause (ii) above, as the case may be, and do not relate to any act or failure to act by Guarantor or Tenant that occurred prior to the date of such assignment. Except as specifically provided in the foregoing sentence, no assignment or sublease made as -38- permitted by this Paragraph 21 shall affect or reduce any of the obligations of Tenant hereunder or of Guarantor under the Guaranty, and all such obligations shall continue in full force and effect as obligations of a principal and not as obligations of a guarantor, as if no assignment or sublease had been made. No assignment or sublease shall impose any additional obligations on Landlord under this Lease. (d) With respect to any Preapproved Assignment or Preapproved Sublet, Tenant shall provide to Landlord information reasonably required by Landlord to establish that any proposed Preapproved Assignment or Preapproved Sublet satisfies the criteria set forth above. (e) Tenant shall, within ten (10) days after the execution and delivery of any assignment or sublease, deliver a duplicate original copy thereof to Landlord which, in the event of an assignment, shall be in recordable form. (f) As security for performance of its obligations under this Lease, Tenant hereby grants, conveys and assigns to Landlord all right, title and interest of Tenant in and to all subleases, including the Silgan Subleases and any guaranty executed in connection therewith, now in existence or hereafter entered into for any or all of the Leased Premises, any and all extensions, modifications and renewals thereof and all rents, issues and profits therefrom. Landlord hereby grants to Tenant a license to collect and enjoy all rents and other sums of money payable under any sublease of any the Leased Premises, provided, however, that Landlord shall have the absolute right at any time during the existence of an Event of Default, upon notice to Tenant and any subtenants, to revoke said license and to collect such rents and sums of money and to retain the same as a credit against Rent. Tenant shall not (i) consent to, cause or allow any material modification or alteration of any of the terms, conditions or covenants of the subleases or any guaranty thereof or the termination or surrender of any sublease or guaranty thereof, (ii) anticipate Rents prior to the accrual thereof, or (iii) waive or release any tenant or guarantor thereunder from any material obligation or performance, without the prior written approval of Landlord, which consent shall not be unreasonably withheld (provided, however, that Landlord in its sole and absolute discretion may give or withhold its consent to any proposed modification to the term or rent provisions of either of the Silgan Subleases), nor shall Tenant do or permit anything to be done, the doing of which, nor omit or refrain from doing anything, the omission of which, will or could be a breach of or default in the terms of the Silgan Subleases or a material breach of or material default in the terms of any of the other subleases. Tenant shall, with respect to each sublease, observe and perform each and every condition to be performed by Tenant thereunder, give prompt notice to Landlord and Lender of any notice given or received under any sublease or guaranty thereof, enforce, short of termination, each sublease and guaranty thereof and appear in and -39- defend any action growing out of or in any manner connected with any sublease or guaranty thereof, provided, that, if Tenant shall fail or refuse to so enforce or defend Landlord or Lender shall have such right which shall be exercisable at the sole cost and expense of Tenant. (g) Tenant shall have the right to grant a first lien leasehold mortgage on, or to pledge its leasehold interest in, the Leased Premises to its senior lender, and a second and a third lien leasehold mortgage on the Leased Premises to its other lenders but shall not have the power to otherwise mortgage, pledge or otherwise encumber its interest under this Lease or any sublease of the Leased Premises, and any other such mortgage, pledge or encumbrance made in violation of this Paragraph 21 shall be void. Landlord and Lender shall execute such documents as may be reasonably requested by Tenant's lender who holds a first lien leasehold mortgage and are customarily acceptable to Landlord and Lender in order to afford to such leasehold mortgagee rights of notice and an opportunity to cure an Event of Default and the benefits of any non-disturbance and attornment agreement in favor of Tenant, provided, however, that any entity that becomes a successor tenant under this Paragraph 21(g) shall be required to be in compliance with all of the terms of this Lease. (h) No later than April 1, 1996 Tenant shall, and shall cause Silgan to execute the Silgan Subleases and a non-disturbance and attornment agreement in form and substance reasonably satisfactory to Landlord. (i) Subject to Tenant's rights under Paragraphs 38 and 39, Landlord may sell or transfer the Leased Premises (but not any Related Premises separately) at any time without Tenant's consent to any third party (a "Third Party Purchaser"). In the event of any such transfer, Tenant shall attorn to any Third Party Purchaser as Landlord so long as such Third Party Purchaser and Landlord notify Tenant in writing of such transfer and such Third Party Purchaser assumes in writing the obligations of Landlord under this Lease. At the request of Landlord, Tenant, at no cost or expense to Tenant, will execute such documents confirming the agreement referred to above and such other agreements as Landlord may reasonably request, provided that such agreements do not increase the liabilities and obligations of Tenant hereunder. In no event shall Tenant have any obligation to attorn to, or recognize more than one Person at one time as, Landlord. 22. Events of Default. (a) The occurrence of any one or more of the following (after expiration of any applicable cure period as provided in Paragraph 22(b)) shall, at the sole option of Landlord, constitute an "Event of Default" under this Lease: -40- (i) a failure by Tenant to make any payment of any Monetary Obligation, regardless of the reason for such failure; (ii) a failure by Tenant duly to perform and observe, or a violation or breach of, any other provision hereof not otherwise specifically mentioned in this Paragraph 22(a); (iii) any representation or warranty made by Tenant herein or by Guarantor under the Guaranty or by Tenant or Guarantor in any certificate, demand or request made pursuant hereto proves to be incorrect in any material respect when made; (iv) a default beyond any applicable cure period or at maturity by Tenant or Guarantor in any payment of principal or interest on any obligations for borrowed money having an outstanding principal balance of $10,000,000 or more in the aggregate, or in the performance of any other provision contained in any instrument under which any such obligation is created or secured (including the breach of any covenant thereunder); (v) a final, non-appealable judgment or judgments for the payment of money in excess of $15,000,000 in the aggregate shall be rendered against Tenant or Guarantor and the same shall remain undischarged for a period of sixty (60) consecutive days; (vi) Tenant or Guarantor shall (A) voluntarily be adjudicated a bankrupt or insolvent, (B) seek or consent to the appointment of a receiver or trustee for itself or for any of the Related Premises, (C) file a petition seeking relief under the bankruptcy or other similar laws of the United States, any state or any jurisdiction, (D) make a general assignment for the benefit of creditors, or (E) be unable to pay its debts as they mature; (vii) a court shall enter an order, judgment or decree appointing, without the consent of Tenant and Guarantor, a receiver or trustee for it or for any of the Related Premises or approving a petition filed against Tenant or Guarantor, as the case may be, which seeks relief under the bankruptcy or other similar laws of the United States, any state or any jurisdiction, and such order, judgment or decree shall remain undischarged or unstayed ninety (90) days after it is entered; (viii) any of the Related Premises shall have been vacated or abandoned except as specifically permitted by the terms of Paragraph 36; (ix) Tenant or Guarantor shall be liquidated or dissolved or shall begin proceedings towards its liquidation or dissolution; (x) the estate or interest of Tenant in any of the Related Premises shall be levied upon or attached in any -41- proceeding and such estate or interest is about to be sold or transferred or such process shall not be vacated or discharged within ninety (94) days after it is made; (xi) a failure by Tenant to perform or observe, or a violation or breach of, or a misrepresentation by Tenant under, any provision of any Assignment or any other document executed by Tenant and Lender with respect to this Lease or the Loan, if such failure, violation, breach or misrepresentation gives rise to a default beyond any applicable cure period with respect to any Loan, giving the Lender the right to accelerate the Loan and such default has not been cured; (xii) a failure by Tenant to maintain in effect any license or permit necessary for the use, occupancy or operation of any of the Related Premises; (xiii) A Non-Preapproved Assignment shall occur and Tenant shall have failed to comply with the provisions of Paragraph 21(a)(iii) through (v); (xiv) an Event of Default (as defined in the Construction Agency Agreement) beyond any applicable cure period shall occur under the Construction Agency Agreement; (xv) Tenant shall fail to commence to occupy and operate any Related Premises by the forty-fifth (45th) day following the occupancy Date with respect to such Related Premises; (xvi) A default shall occur under Paragraph 35; (xvii) Guarantor shall have failed to comply with or a breach shall occur with respect to any of the representations, warranties or covenants set forth in the Guaranty; (xviii) Fully executed Silgan Subleases and a non-disturbance and attornment reasonably satisfactory to Landlord shall not have been delivered to Landlord by April 1, 1996; or (xix) Tenant shall sell or transfer or enter into an agreement to sell or transfer all or substantially all of its assets unless such sale shall include an assignment of this Lease in compliance with Paragraph 21. (b) No notice or cure period shall be required in any one or more of the following events: (A) the occurrence of an Event of Default under clause (iv), (v), (vi), (vii), (viii), (ix), (x), (xi), (xii), (xiii), (xiv), (xv), (xvi), or (xix) of Paragraph 22(a); (B) the default consists of a failure to provide insurance with the types of coverage and in the amounts referred to in clauses (i), (ii), (iv), (v) and (vi) of Paragraph 16(a) (but excluding a default consisting of a failure to provide -42- insurance which meets any of the other specific requirements in clauses (i), (ii), (iv), (v) and (vi) of Paragraph 16(a)) or an assignment or sublease entered into in violation of Paragraph 21; or (C) the default is such that any delay in the exercise of a remedy by Landlord could reasonably be expected to cause irreparable harm to Landlord. If the default consists of the failure to pay any Monetary Obligation under clause (i) of Paragraph 22(a), the applicable cure period shall be five (5) days from the date on which notice is given, but Landlord shall not be obligated to give notice of, or allow any cure period for, any such default more than one (1) time within any Lease Year. If the default consists of a default under clause (ii) of Paragraph 22(a), other than the events specified in clauses (B) and (C) of the first sentence of this Paragraph 22(b) the applicable cure period shall be twenty (20) days from the date on which notice is given or, if the default cannot with reasonable diligence be cured within such twenty (20) day period and delay in the exercise of a remedy would not (in Landlord's reasonable judgment) cause any material adverse harm to Landlord or any of the Leased Premises, the cure period shall be extended for the period required to cure the default (but such cure period, including any extension, shall not in the aggregate exceed ninety (90) days), provided that Tenant shall commence to cure the default within the said twenty-day period and shall actively, diligently and in good faith proceed with and continue the curing of the default until it shall be fully cured. If the default consists of a default under clause (ii) with respect to the failure to provide insurance which meets all of the requirements in clauses (i), (ii), (iv), (v) and (vi) of Paragraph 16(a), or clauses (iii), (xvii) or (xviii) of Paragraph 22(a), the applicable cure period shall be twenty (20) days from the date on which notice is given provided that the default or the granting of a cure period does not directly or indirectly cause the Lender to declare Landlord in default of the Loan. 23. Remedies and Damages Upon Default. If an Event of Default shall have occurred and is continuing: (a) Landlord shall have the right, at its sole option, then or at any time thereafter, to exercise its remedies and to collect damages from Tenant in accordance with this Paragraph 23, subject in all events to applicable Law, without demand upon or notice to Tenant except as otherwise provided in Paragraph 22(b) and this Paragraph 23. (i) Landlord may give Tenant notice of Landlord's intention to terminate this Lease on a date specified in such notice. Upon such date, this Lease, the estate hereby granted and all rights of Tenant hereunder shall expire and terminate. Upon such termination, Tenant shall immediately surrender and deliver possession of the Leased Premises to Landlord in accordance with Paragraph 26. If Tenant does not so surrender and deliver possession of all of the Leased Premises, Landlord may re-enter and repossess any of the Leased Premises -43- not surrendered, with or without legal process, by peaceably entering any of the Leased Premises and changing locks or by summary proceedings, ejectment or any other lawful means or procedure. Upon or at any time after taking possession of any of the Leased Premises and whether or not the Lease has been terminated, Landlord may, by peaceable means or legal process, remove any Persons or property therefrom. Landlord shall be under no liability for or by reason of any such entry, repossession or removal. Notwithstanding such entry or repossession, Landlord may (A) exercise the remedy set forth in and collect the damages permitted by Paragraph 23(a)(iii) or (B) collect the damages set forth in Paragraph 23(b)(i) or 23(b)(ii). (ii) After repossession of any of the Leased Premises pursuant to clause (i) above, Landlord shall have the right with or without terminating this Lease and as agent of Tenant, if appropriate, to relet any of the Leased Premises to such tenant or tenants, for such term or terms, for such rent, on such conditions and for such uses as Landlord in its sole discretion may determine, and collect and receive any rents payable by reason of such reletting. Landlord may make such Alterations in connection with such reletting as it may deem advisable in its sole discretion. Notwithstanding any such reletting, Landlord may collect the damages set forth in Paragraph 23(b)(ii). (iii) Landlord may, upon notice to Tenant, require Tenant to make an irrevocable offer to terminate this Lease in its entirety for an amount (the "Default Termination Amount") specified in the next sentence. The "Default Termination Amount" shall be the greater of (A) the Fair Market Value of the Leased Premises or (B) the sum of the Project Cost and Prepayment Premium which Landlord will be required to pay in prepaying any Loan with proceeds of the Default Termination Amount. Upon such notice to Tenant, Tenant shall be deemed to have made such offer and shall, if requested by Landlord, within ten (10) days following such request, deposit with Landlord as payment against the Default Termination Amount the amount described in (B) above, Landlord and Tenant shall promptly commence to determine Fair Market Value. Within thirty (30) days after the Fair Market Value Date, Landlord shall accept or reject such offer. If Landlord accepts such offer then, on the tenth (10th) business day after such acceptance, Tenant shall pay to Landlord the Default Termination Amount and, at the request of Tenant, Landlord will convey the Leased Premises to Tenant or its designee "as is," with all faults and without warranty in accordance with Paragraph 20. Any rejection by Landlord of such offer shall have no effect on any other remedy Landlord may have under this Lease. (iv) Landlord may declare by notice to Tenant the entire Basic Rent (in the amount of Basic Rent then in effect) for the remainder of the then current Term to be -44- immediately due and payable. Tenant shall immediately pay to Landlord all such Basic Rent discounted to its Present Value, all accrued Rent then due and unpaid, all other Monetary Obligations which are then due and unpaid and all Monetary Obligations which arise or become due by reason of such Event of Default (including any Costs of Landlord). Upon receipt by Landlord of all such accelerated Basic Rent and Monetary obligations, this Lease shall remain in full force and effect and Tenant shall have the right to possession of the Leased Premises from the date of such receipt by Landlord to the end of the Term, and subject to all the provisions of this Lease, including the obligation to pay all increases in Basic Rent and all Monetary Obligations that subsequently become due, except that (A) no Basic Rent which has been prepaid hereunder shall be due thereafter during the said Term and (B) Tenant shall have no option to extend or renew the Term. (b) The following constitute damages to which Landlord shall be entitled if Landlord exercises its remedies under Paragraph 23(a)(i) or 23(a)(ii): (i) If Landlord exercises its remedy under Paragraph 23(a)(i) but not its remedy under Paragraph 23(a)(ii) (or attempts to exercise such remedy and is unsuccessful in reletting the Leased Premises) then, upon written demand from Landlord, Tenant shall pay to Landlord, as liquidated and agreed final damages for Tenant's default and in lieu of all current damages beyond the date of such demand (it being agreed that it would be impracticable or extremely difficult to fix the actual damages), an amount equal to the Present Value of the excess, if any, of (A) all Basic Rent from the date of such demand to the date on which the Term is scheduled to expire hereunder in the absence of any earlier termination, re-entry or repossession over (B) the then fair market rental value of the Leased Premises for the same period. Tenant shall also pay to Landlord all of Landlord's Costs in connection with the repossession of the Leased Premises and any attempted reletting thereof, including all brokerage commissions, legal expenses attorneys' fees, employees' expenses, costs of Alterations and expenses and preparation for reletting. (ii) If Landlord exercises its remedy under Paragraph 23(a)(i) or its remedies under Paragraph 23(a)(i) and 23(a)(ii), then Tenant shall, until the end of what would have been the Term in the absence of the termination of the Lease, and whether or not any of the Leased Premises shall have been relet, be liable to Landlord for, and shall pay to Landlord, as liquidated and agreed current damages on the date on which the same are due and payable under the terms of this Lease all Monetary Obligations which would be payable under this Lease by Tenant in the absence of such termination less the net proceeds, if any, of any reletting pursuant to Paragraph 23(a)(ii), after deducting from such proceeds all of Landlord's Costs (including the items listed in the last sentence of Paragraph 23(b)(i) -45- hereof) incurred in connection with such repossessing and reletting; provided, that if Landlord has not relet the Leased Premises, such Costs of Landlord shall be considered to be Monetary Obligations payable by Tenant. Tenant shall be and remain liable for all sums aforesaid, and Landlord may recover such damages from Tenant and institute and maintain successive actions or legal proceedings against Tenant for the recovery of such damages. Nothing herein contained shall be deemed to require Landlord to wait to begin such action or other legal proceedings until the date when the Term would have expired by its own terms had there been no such Event of Default. (c) Landlord shall be entitled to apply the Security Deposit to any amounts due under Paragraph 23(a) if this Lease shall be terminated, or, if this Lease shall remain in full force and effect, to any amounts due under Paragraph 23(b) or in the following order (i) to past due Basic Rent, (ii) to cure any other monetary Event of Default and (iii) to installments of Basic Rent in inverse order of maturity commencing with the last installment of the Term. (d) Notwithstanding anything to the contrary herein contained, in lieu of or in addition to any of the foregoing remedies and damages, Landlord may exercise any remedies and collect any damages available to it at law or in equity. If Landlord is unable to obtain full satisfaction pursuant to the exercise of any remedy, it may pursue any other remedy which it has hereunder or at law or in equity. (e) Notwithstanding anything to the contrary herein contained, if the Event of Default is solely an Event of Default under Paragraph 22(a)(iv) hereof, and such Event of Default ceases to exist prior to the date that Landlord commences a judicial action to exercise a remedy hereunder, then Landlord shall discontinue the exercise of remedies under this Paragraph 23(b) with respect to such Event of Default but not with respect to any other Event of Default. (f) Landlord shall not be required to mitigate any of its damages hereunder unless required to by applicable Law. If any Law shall validly limit the amount of any damages provided for herein to an amount which is less than the amount agreed to herein, Landlord shall be entitled to the maximum amount available under such Law. (g) No termination of this Lease, repossession or reletting of any of the Leased Premises, exercise of any remedy or collection of any damages pursuant to this Paragraph 23 shall relieve Tenant of any Surviving Obligations. (h) WITH RESPECT TO ANY REMEDY OR PROCEEDING HEREUNDER, LANDLORD AND TENANT WAIVE ANY RIGHT TO A TRIAL BY JURY. -46- (i) During the existence of any Event of Default, Landlord shall have the right (but no obligation) to perform any act required of Tenant hereunder and, if performance of such act requires that Landlord enter the Leased Premises, Landlord may enter the Leased Premises for such purpose. (j) No failure of Landlord (i) to insist at any time upon the strict performance of any provision of this Lease or (ii) to exercise any option, right, power or remedy contained in this Lease shall be construed as a waiver, modification or relinquishment thereof. A receipt by Landlord of any sum in satisfaction of any Monetary Obligation with knowledge of the breach of any provision hereof shall not be deemed a waiver of such breach, and no waiver by Landlord of any provision hereof shall be deemed to have been made unless expressed in a writing signed by Landlord. (k) Tenant hereby waives and surrenders, for itself and all those claiming under it, including creditors of all kinds, (i) any right and privilege which it or any of them may have under any present or future Law to redeem any of the Leased Premises or to have a continuance of this Lease after termination of this Lease or of Tenant's right of occupancy or possession pursuant to any court order or any provision hereof, and (ii) the benefits of any present or future Law which exempts property from liability for debt or for distress for rent. (1) Except as otherwise provided herein, all remedies are cumulative and concurrent and no remedy is exclusive of any other remedy. Each remedy may be exercised at any time an Event of Default has occurred and is continuing and may be exercised from time to time. No remedy shall be exhausted by any exercise thereof. 24. Notices. All notices, demands, requests, consents, approvals, offers, statements and other instruments or communications required or permitted to be given pursuant to the provisions of this Lease shall be in writing and shall be deemed to have been given for all purposes when delivered in person or by Federal Express or other reliable 24-hour delivery service or facsimile followed by Federal Express or other reliable delivery service or by five (5) business days after being deposited in the United States mail, by registered or certified mail, return receipt requested, postage prepaid, addressed to the other party at its address stated above. A copy of any notice given by Tenant to Landlord shall simultaneously be given by Tenant to Reed Smith Shaw & McClay, 2500 One Liberty Place, Philadelphia, PA 19103, Attention: Chairman, Real Estate Department. For the purposes of this Paragraph, any party may substitute another address stated above (or substituted by a previous notice) for its address by giving fifteen (15) days' notice of the new address to the other party, in the manner provided above. -47- 25. Estoppel Certificate. At any time upon not less than ten (10) days' prior written request by Landlord Lender, or Tenant (the "Requesting Party") to Landlord or Tenant (the "Responding Party"), the Responding Party shall deliver to the Requesting Party or its designee a statement in writing, executed by an authorized officer of the Responding Party, certifying (a) that, except as otherwise specified, this Lease is unmodified and in full force and effect, (b) the dates to which Basic Rent, Additional Rent and all other Monetary Obligations have been paid, (c) that, to the knowledge of the signer of such certificate and except as otherwise specified, no default by either Landlord or Tenant exists hereunder, (d) such other matters as the Requesting Party may reasonably request, and (e) if Tenant is the Responding Party that, except as otherwise specified, there are no proceedings pending or, to the knowledge of the signer, threatened, against Tenant before or by an court or administrative agency which, if adversely decided, would materially and adversely affect the financial condition and operations of Tenant. Any such statements by the Responding Party may be relied upon by the Requesting Party, any Person whom the Requesting Party notifies the Responding Party in its request for the Certificate is an intended recipient or beneficiary of the Certificate, any Lender or their assignees and by any prospective purchase or mortgagee of any of the Leased Premises. Any certificate required under this Paragraph 25 and delivered by Tenant shall state that, in the opinion of each person signing the same, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to the subject matter of such certificate, and shall briefly state the nature of such examination or investigation. 26. Surrender. Upon the expiration or earlier termination of this Lease, Tenant shall peaceably leave and surrender the Leased Premises to Landlord in the same condition in which the Leased Premises was at the commencement of this Lease, except as repaired, rebuilt, restored, altered, replaced or added to as permitted or required by any provision of this Lease, and except for ordinary wear and tear. Upon such surrender, Tenant shall (a) remove from the Leased Premises all property which is owned by Tenant or third parties other than Landlord and (b) repair any damage caused by such removal. Property not so removed shall become the property of Landlord, and Landlord may thereafter cause such property to be removed from the Leased Premises. The cost of removing and disposing of such property and repairing any damage to any of the Leased Premises caused by such removal shall be paid by Tenant to Landlord upon demand. Landlord shall not in any manner or to any extent be obligated to reimburse Tenant for any such property which becomes the property of Landlord pursuant to this Paragraph 26. 27. No Merger of Title. There shall be no merger of the leasehold estate created by this Lease with the fee estate -48- in any of the Leased Premises by reason of the fact that the same Person may acquire or hold or own, directly or indirectly, (a) the leasehold estate created hereby or any part thereof or interest therein and (b) the fee estate in any of the Leased Premises or any part thereof or interest therein, unless and until all Persons having any interest in the interests described in (a) and (b) above which are sought to be merged shall join in a written instrument effecting such merger and shall duly record the same. 28. Books and Records. (a) Tenant shall keep or shall cause Guarantor to keep adequate records with respect to the Leased Premises and books of account with respect to the finances and business of Tenant generally and in accordance with generally accepted accounting principles ("GAAP") consistently applied, and shall permit Landlord and Lender by their respective agents, accountants and attorneys, upon reasonable notice to Tenant, to visit and inspect the Leased Premises and examine (and make copies of) the records and books of account and to discuss the finances and business with the officers of Tenant, at such reasonable times as may be requested by Landlord. Upon the request of Lender or Landlord (either telephonically or in writing), Tenant shall provide and shall cause Guarantor to provide the requesting party with copies of any information to which such party would be entitled in the course of a personal visit. (b) Tenant shall deliver to Landlord and to Lender within ninety-five (95) days of the close of each fiscal year, annual audited financial statements of Tenant or Guarantor prepared by nationally recognized independent certified public accountants. Tenant shall also furnish to Landlord (i) within fifty (50) days after the end of each of the three remaining quarters unaudited financial statements, certified by Tenant's chief financial officer or a financial vice president together with a copy of any compliance certificate furnished by Tenant to its senior lender or lenders, (ii) as and when provided to Tenant's senior lender or lenders (A) Tenant's annual operating plan and (B) until the funding of the Initial Loan, Tenant's monthly management reporting package and (iii) all filings, if any, of Form 10-K, Form 10-Q and other required filings with the Securities and Exchange Commission pursuant to the provisions of the Securities Exchange Act of 1934, as amended, or any other Law. All financial statements of Tenant shall be prepared in accordance with GAAP consistently applied, except that quarterly statements shall be subject to year-end adjustments and to the absence of footnotes. All annual financial statements shall be accompanied by an opinion of said accountants stating that (C) there are no qualifications as to the scope of the audit and (D) the audit was performed in accordance with GAAP, and the certificate of the chief financial officer or a financial vice president of Tenant, dated within five (5) days of the delivery -49- of such statement, stating that (E) such Person knows of no Event of Default, or event which, upon notice or the passage of time or both, would become an Event of Default which has occurred and is continuing hereunder or, if any such event has occurred and is continuing, specifying the nature and period of existence thereof and what action Tenant has taken or proposes to take with respect thereto and (F) except as otherwise specified in such affidavit, that such Person has no knowledge if any respect in which Tenant has not fulfilled all of its obligations under this Lease which are required to be fulfilled on or prior to the date of such affidavit. (c) Landlord and its agents, accountants and attorneys, shall consider and treat on a strictly confidential basis (i) any information contained in the books and records of Tenant, (ii) any copies of any books and records of Tenant, and any financial statements of Tenant pursuant to Paragraph 28(b) which are delivered to or received by them. Neither Landlord nor its agents, accountants and attorneys, shall disclose any information contained in Tenant's books and records nor distribute copies of any of such books and records nor Tenant's financial statements to any other Persons without the prior written consent of the chief operating officer or the financial vice president of Tenant. The restrictions contained in this Paragraph 28(c) shall not prevent disclosure by Landlord any information that is generally available to the public or in any of the following circumstances: (i) Upon the order of any court or administrative agency to the extent required by such order and not effectively stayed or by appeal or otherwise; (ii) Upon the request, demand or requirement of the Securities and Exchange Commission (the "SEC") or otherwise upon the request, demand or requirement of any other regulatory agent or authority having jurisdiction over such party, but subject to the consent of Tenant, which shall not be unreasonably withheld and shall be deemed given if required by law; (iii) That has been publicly disclosed by Tenant in a press release or other public announcement of general circulation; (iv) To counsel or accountants for Landlord who has agreed to abide by the provisions of this Paragraph 28(c); (v) While an Event of Default exists, in connection with the exercise of any right or remedy under this Lease or any other related document; -50- (vi) Independently developed by Landlord to the extent that confidential information provided by Tenant is not used to develop such information; (vii) With respect to financial information and information that Landlord, the SEC or its attorneys deem to be material, in any reporting to the shareholders of Landlord or the shareholders or prospective shareholders (whether through a registered public offering or otherwise) of Landlord's parent company; (viii) In connection with any sale, financing or refinancing of the Leased Premises, provided that any recipient of such information shall agree to be bound by the terms of this Paragraph 28(c); (ix) From Landlord to Lender; or (x) As otherwise required by Law. 29. Determination of Value. (a) Whenever a determination of Fair Market Value is required pursuant to any provision of this Lease, such Fair Market Value shall be determined in accordance with the following procedure: (i) Landlord and Tenant shall endeavor to agree upon such Fair Market Value within thirty (30) days after the date (the "Applicable Initial Date") on which (A) Tenant provides Landlord with notice of its intention to terminate this Lease and purchase the Affected Premises pursuant to Paragraph 18, (B) Landlord provides Tenant with notice of its intention to redetermine Fair Market Value pursuant to Paragraph 20(c), (C) Tenant provides Landlord with an Intended Assignment Notice pursuant to Paragraph 21(a)(iii), (D) Landlord provides Tenant with notice of Landlord's intention to require Tenant to make an offer to purchase the Leased Premises pursuant to Paragraph 23(a)(iii), or (E) Tenant provides Landlord with notice pursuant to Paragraph 38(a) of its intention to exercise its option to purchase the Leased Premises. Upon reaching such agreement, the parties shall execute an agreement setting forth the amount of such Fair Market Value. (ii) If the parties shall not have signed such agreement within thirty (30) days after the Applicable Initial Date, Tenant shall within fifty (50) days after the Applicable Initial Date select an appraiser and notify Landlord in writing of the name, address and qualifications of such appraiser. Within twenty (20) days following Landlord's receipt of Tenant's notice of the appraiser selected by Tenant, Landlord shall select an appraiser and notify Tenant of the name, address and qualifications of such appraiser. Such two appraisers shall endeavor to agree upon Fair Market Value based on a written -51- appraisal made by each of them as of the Relevant Date (and given to Landlord by Tenant). If such two appraisers shall agree upon a Fair Market Value, the amount of such Fair Market Value as so agreed shall be binding and conclusive. (iii) If such two appraisers shall be unable to agree upon a Fair Market Value within twenty (20) days after the selection of an appraiser by Landlord, then such appraisers shall advise Landlord and Tenant of their respective determination of Fair Market Value and shall select a third appraiser to make the determination of Fair Market Value. The selection of the third appraiser shall be binding and conclusive upon Landlord and Tenant. (iv) If such two appraisers shall be unable to agree upon the designation of a third appraiser within ten (10) days after the expiration of the twenty (20) day period referred to in clause (iii) above, or if such third appraiser does not make a determination of Fair Market Value within twenty (20) days after his selection, then such third appraiser or a substituted third appraiser, as applicable, shall, at the request of either party hereto (with respect to the other party), be appointed by the President or Chairman of the American Arbitration Association in New York, New York. The determination of Fair Market Value made by the third appraiser appointed pursuant hereto shall be made within twenty (20) days after such appointment. (v) If a third appraiser is selected, Fair Market Value shall be the average of the determination of Fair Market Value made by the third appraiser and the determination of Fair Market Value made by the appraiser (selected pursuant to Paragraph 29(a)(ii) hereof) whose determination of Fair Market Value is nearest to that of the third appraiser. Such average shall be binding and conclusive upon Landlord and Tenant. (vi) All appraisers selected or appointed pursuant to this Paragraph 29(a) shall (A) be independent qualified MAI appraisers (B) have no right, power or authority to alter or modify the provisions of this Lease, (C) utilize the definition of Fair Market Value hereinabove set forth above, and (D) be registered in the State if the State provides for or requires such registration. (vii) The Cost of the procedure described in this Paragraph 29(a) above shall be borne entirely by Tenant. (b) If, by virtue of any delay, Fair Market Value is not determined by the expiration or termination of the then current Term, then the date on which the Term would otherwise expire or terminate shall be extended with respect to the Leased Premises or the Affected Premises, as applicable, to the date specified for termination in the particular provision of this -52- Lease pursuant to which the determination of Fair Market Value is being made. (c) "Fair Market Value" of the Leased Premises or any Related Premises, as the case may be, and the context may require, shall mean (i) for all purposes except for the determination of the Default Termination Amount, the fair market value of the Leased Premises or Related Premises, as the case may be as of the Relevant Date as affected and encumbered by this Lease, without any assumption that the Term will or will not be extended for any of the extension periods provided for herein, or (ii) for the purpose of a determination of the Default Termination Amount, the fair market value of the Leased Premises as of the Relevant Date as affected and encumbered by this Lease and assuming that the Term has been extended for all extension periods provided for herein. For purposes of determining Fair Market Value under clause (i) of the foregoing sentence, the appraisers shall: (I) determine the Basic Rent payable hereunder during the remainder of the Initial Term or then effective Renewal Term, assuming that CPI increases during the remainder of the Initial Term will occur at the same average rate of increase as during the portion of the Term already then past; and then (II) discount such Basic Rent so as to represent a present value, using a discount rate intended to represent the market capitalization rate applicable to long-term lease obligations of the Tenant (based on the credit standing of the Tenant), as affected by the location (or locations) of the Related Premises; and then (III) determine the assumed future replacement cost of the Improvements at the end of the Initial Term, using Landlord's Share of Project Costs and assuming increases therein using the Means Construction Cost Index (the "Means Index") for the portion of the Term already past and increases in the Means Index which occur at the same average rate of increase thereafter until the end of the Term; and then (IV) subtract from such assumed future replacement cost physical depreciation and functional obsolescence (but not external obsolescence) applicable to the Improvements as of the end of the Term; and then (V) discount the result obtained under the foregoing clause (IV) so as to represent a present value, using a discount rate based on the market capitalization rate for properties similar to the Related Premises in the location or respective locations of the Related Premises; and then -53- (VI) add together the present values determined under the foregoing clause (II) and (V). 30. Non-Recourse as to Landlord. Anything contained herein to the contrary notwithstanding, any claim based on or in respect of any liability of Landlord under this Lease shall be enforced only against the Leased Premises and not against any other assets, properties or funds of (a) Landlord, (b) any director, officer, general partner, limited partner, employee or agent of Landlord, or any general partner of Landlord, any of its general partners or shareholders (or any legal representative, heir, estate, successor or assign of any thereof), (c) any predecessor or successor partnership or corporation (or other entity) of Landlord, or any of its general partners, either directly or through Landlord or its general partners or any predecessor or successor partnership or corporation or their shareholders, officers, directors, employees or agents (or other entity), or (d) any other Person (including Carey Property Advisors, Carey Fiduciary Advisors, Inc., W.P. Carey & Co., Inc., W.P. Carey Incorporated and any Person affiliated with any of the foregoing, or any director, officer, employee or agent of any thereof). 31. Financing. If Landlord desires to obtain or refinance any Loan, Tenant, except as otherwise provided in Paragraph 7(a)(i), shall, at no cost to Tenant, negotiate in good faith with Landlord concerning any request made by any Lender or proposed Lender for changes or modifications in this Lease. In particular, Tenant agrees, upon request of Landlord, to supply any such Lender with such notices and information as Tenant is required to give to Landlord hereunder and to extend the rights of Landlord hereunder to any such Lender and to consent to such financing if such consent is requested by such Lender. Tenant shall provide any other consent or statement and shall execute any and all other documents that such Lender reasonably requires in connection with such financing, including a Certificate of No Default with respect to its then existing credit agreements, any environmental indemnity agreement which shall contain substantially similar provisions to the applicable provisions in this Lease and any subordination, non-disturbance and attornment agreement, so long as in any such case the same do not materially adversely affect any right, benefit or privilege of Tenant under this Lease or materially increase Tenant's obligations under this Lease. Such subordination, nondisturbance and attornment agreement may require Tenant to confirm that (a) Lender and its assigns will not be liable for any misrepresentation, act or omission of Landlord and (b) Lender and its assigns will not be subject to any counterclaim, demand or offsets which Tenant may have against Landlord. 32. Subordination. This Lease and Tenant's interest hereunder shall be subordinate to any Mortgage or other security instrument hereafter placed upon the Leased Premises by Landlord, and to any and all advances made or to be made -54- thereunder, to the interest thereon, and all renewals, replacements and extensions thereof, provided that any such Mortgage or other security instrument (or a separate instrument in recordable form duly executed by the holder of any such Mortgage or other security instrument and delivered to Tenant) shall provide, in form and substance reasonably satisfactory to Tenant, for the recognition of this Lease and all Tenant's rights hereunder by any purchaser at foreclosure or acceptance of a deed in lieu thereof unless and until an Event of Default exists, that the Lender recognizes and agrees to be bound by the provisions of Paragraphs 16, 17 and 19 of this Lease, and, with respect to any Loan after the Initial Loan, that the Lender agrees to release the Mortgage insofar as it encumbers Abandonment Premises under Paragraph 36 hereof upon such terms and conditions as may be agreed to between Lender and Landlord, but which shall not require a payment to Lender in excess of the Abandonment Offer Amount or otherwise impose conditions upon such release not within the control of Landlord. 33. Tax Treatment; Reporting. Landlord and Tenant each acknowledge that each shall treat this transaction as a true lease for state law purposes and shall report this transaction as a Lease for Federal income tax purposes. For Federal income tax purposes each shall report this Lease as a true lease with Landlord as the owner of the Leased Premises and Equipment and Tenant as the lessee of such Leased Premises and Equipment including: (1) treating Landlord as the owner of the property eligible to claim depreciation deductions under Section 167 or 168 of the Internal Revenue Code of 1986 (the "Code") with respect to the Leased Premises and Equipment, (2) Tenant reporting its Rent payments as business expense under Section 162 of the Code, and (3) Landlord reporting the Rent payments as rental income. 34. Financing Major Alterations. (a) Should Tenant, during the Term of this Lease, desire to make Alterations to any of the Leased Premises which are not readily removable without causing material damage to the Leased Premises and which will cost in excess of $500,000 as to any one of the Related Premises or $500,000 in the aggregate as to the Leased Premises ("Major Alterations"), Tenant shall, prior to the commencement of construction of such Major Alterations, offer by written notice to Landlord (a "Payment Offer") to accept payment from Landlord for the costs (the "Alteration Cost") thereof, to wit: cost of labor and materials, financing fees, legal fees, survey, title insurance and other normal and customary loan or construction costs. (b) Should Landlord accept Tenant's offer, which acceptance shall be made in writing within sixty (60) days after receipt by Landlord of such offer, Landlord and Tenant shall enter into good faith negotiations regarding the execution and -55- delivery of a written agreement of modification of this Lease, which agreement shall provide for the following: (i) payment by Landlord to Tenant of the Alteration Cost within one hundred twenty (120) days of the date of Landlord's acceptance of such Payment Offer, or in installment payments as agreed, or on the date of completion of the Major Alterations, whichever shall be the later; (ii) an increase in the annual Basic Rent payable during the Amortization Period (as hereinafter defined) to an amount sufficient to amortize the Alteration Cost ("Total Financing") over a period (the "Amortization Period") which shall be the remainder of the then current Term and, if Tenant so elects, any additional extension periods provided for herein (so long as Tenant shall confirm any such extension periods included in the Amortization Period by a written waiver of its right to give notice of its intention not to renew this Lease prior to the expiration of such extension periods), at such rate of interest and upon such other terms as shall be agreed upon between Landlord and Tenant, but which shall be no less favorable than the prevailing interest rate and terms for unsecured loans in a principal amount equal to the Total Financing for borrowers with credit ratings equivalent to that of Tenant's at that time; (iii) provide a rate of return to Landlord on Landlord's equity investment in the Leased Premises equal to that enjoyed by Landlord hereunder immediately prior to such proposed increase in Basic Rent; and (iv) such other changes and amendments to this Lease as may be necessary and appropriate in view of such payment of the Alteration Cost by Landlord to Tenant. Tenant shall pay all Costs incurred by Landlord in connection with any such modification to this Lease and such financing, including closing costs, brokerage fees, taxes, recording charges and legal fees and expenses. (c) To the extent that the terms of the Mortgage or any other document encumbering any of the Leased Premises shall require the consent of Lender and/or the holder or holders of any encumbrance on any of the Leased Premises (the "Encumbrancers") to the addition or construction of any Major Alterations or to the financing thereof by Landlord, the rights and obligations of Landlord and Tenant under Paragraph 12 and this Paragraph 35 are expressly conditioned upon Tenant's obtaining, prior to the commencement of any construction, the Encumbrancers' written consent to such construction and to Landlords obtaining, in the event Landlord has accepted Tenant's offer to accept payment for the Major Alterations, the Encumbrancers' written consent to such financing. -56- (d) Should Tenant's offer to accept payment for the Major Alterations not be accepted by Landlord within said sixty (60) day period, or should Landlord and Tenant be unable in good faith to agree upon the terms of the modification of this Lease, Tenant shall, subject to the provisions of Paragraph 13 of this Lease, have the right to construct the Major Alterations at Tenant's sole cost and expense. In any event, the construction of the Major Alterations shall be performed in accordance with the provisions of Paragraph 12 hereof and the Major Alterations shall be the property of Landlord and part of the Leased Premises subject to this Lease. (e) Nothing contained in this Paragraph 34 shall be construed to modify Paragraph 13 hereof, and the provisions of Paragraph 12 and Paragraph 13 shall apply to all Major Alterations made or constructed hereunder provided, however, that Landlord's consent shall be required for all Major Alterations. 35. Security Deposit. (a) Concurrently with the execution of this Lease, Tenant shall deliver to Landlord an irrevocable Letter of Credit (the "Letter of Credit") in the original face amount of one Million Three Hundred Thousand and No/100 Dollars ($1,300,000) (as increased pursuant to the following sentence, the "Security Deposit") issued by Bank of America or another bank selected y Tenant and reasonably acceptable to Landlord and in form and substance satisfactory to Landlord. The Security Deposit shall be increased to $2,600,000 on January 1, 1996, to $3,900,000 on April 1, 1996, and on the later of July 1, 1996 or the Yakima Funding Deadline the Security Deposit shall be in the amount of and shall be maintained at an amount equal to two times the annual Basic Rent for the first year of the Initial Term, and on the earlier of the closing of the Initial Loan or the date the Tenant has performed or is prepared to perform its obligations under Article VI of the Construction Agency Agreement in order to close the Initial Loan and provided that at such time the Initial Loan Application has not been terminated by reason of any act by or circumstance relating to Tenant or Guarantor, the amount of the Security Deposit shall be reduced so as to be equal to the annual Basic Rent for the first year of the Initial Term, and in each such instance the Letter of Credit shall be reissued or amended accordingly. The Letter of Credit shall remain in full force and effect until satisfaction of one of the conditions set forth in the following subparagraph (b) provided, however, that all or any portion of the Security Deposit may be in cash (U.S. dollars) ("Cash Security"), in which event the required amount of the Letter of Credit shall be reduced by the amount of the Cash Security. The Cash Security shall not be commingled with other funds of Landlord or other Persons and interest shall accrue thereon for the benefit of Tenant from the date the Cash Security is withdrawn and applied or released in accordance with the terms -57- of this Lease. The Security Deposit shall be security for the payment by Tenant of the Rent and all other charges or payments to be paid hereunder and the performance of the covenants and obligations contained herein and during the existence of an Event of Default may be applied as provided in Paragraph 23(c) hereof. The Letter of Credit shall be renewed at least thirty (30) days prior to any expiration thereof, unless Cash Security is substituted therefor. If Tenant fails to renew the Letter of Credit by such date, time being of the essence, Landlord shall have the right at any time after the thirtieth (30th) day before such expiration date to draw on the Letter of Credit and to deposit the Security Deposit in any account for the benefit of Landlord or to declare an Event of Default. If at any time Rent is not paid as and when due, Landlord shall have the right to draw on the Letter of Credit or withdraw Cash Security to make such payment, and within twenty-four (24) hours of such draw or withdrawal Tenant shall replenish the Security Deposit. (b) On the earliest to occur of any of the following conditions and provided that an Event of Default does not then exist, the Letter of Credit or Cash Security and interest earned thereon, as the case may be, shall be released to Tenant and thereafter no Security Deposit shall be required: (i) If Tenant or Guarantor has received with respect to its senior unsecured debt a credit rating of Baa from Moody's Investors Services, Inc. or a credit rating of BBB from Standard and Poor's Corporation; or (ii) If at any time after the first day of the fifth year of the Initial Term (but in no event earlier than November 30, 2000) the Consolidated Fixed Charge Coverage Ratio of Guarantor and its Consolidated Subsidiaries is not less than 2:1 and the Indebtedness to EBITDA Ratio of Guarantor and its Consolidated Subsidiaries is not greater than 4:1 as of the last day of the most recently completed four (4) fiscal quarters of Guarantor; or (iii) The Initial Term shall have expired on the Expiration Date. (c) For the purpose of this Paragraph 35, the following terms shall have the following meanings: "Consolidated Fixed Charge Coverage Ratio" shall mean the ratio of EBITDA to Consolidated Interest Expense. "Consolidated Interest Expense" shall mean the total interest expense of Guarantor and its Consolidated Subsidiaries, determined in accordance with GAAP. "Consolidated Net Income" means the aggregate of the net income (or loss) of Guarantor and its Consolidated Subsidiaries, determined in accordance with GAAP. -58- "Consolidated Subsidiaries" means, at any particular time, Tenant and those other subsidiaries of Guarantor whose accounts either (i) are consolidated with those of Guarantor or (ii) should be consolidated with those of Guarantor in accordance with GAAP. "EBITDA" means (i) Consolidated Net Income (excluding items considered extraordinary items under GAAP), plus (ii) all Consolidated Interest Expense, income tax expense, depreciation and amortization (including amortization of any goodwill or other intangibles), minus (iii) gains (plus losses) attributable to any asset sales otherwise included in clause (j) above and plus (iv) any other non-cash charges which have been subtracted in calculating Consolidated Net Income. "Fiscal quarter of Guarantor" means each of the four quarter periods within the fiscal year of Guarantor and its Consolidated Subsidiaries which commences on July 1st. "GAAP" means generally accepted accounting principles in effect from time to time. "Indebtedness" means at any date, without duplication, (a) any liability to the extent it would appear as a liability upon obligor's balance sheet prepared on a consolidated basis in accordance with GAAP, (i) for borrowed money evidenced by a bond, note, debenture or similar instrument (other than a letter of credit or a trade payable or a current liability arising in the ordinary course of business) and (ii) for the monetary obligation regarding a lease of property that, in accordance with GAAP, should be reflected as a capital lease on obligor's balance sheet and (b) any liability of others that obligor has guaranteed or that is otherwise its legal liability, except guaranties by endorsement of negotiable instruments for deposit or collection or similar transactions in the normal course of business and except guaranties of obligations of any subsidiary of Guarantor. (d) Landlord shall have the right to designate Lender or any other holder of a Mortgage as the beneficiary of the Letter of Credit (or as the holder of the Cash Security Account) during the term of the applicable Loan and, upon such designation, such designated Lender shall have all of the rights and obligations of Landlord under this Paragraph 35. Tenant covenants and agrees to execute such agreements, consents and acknowledgments as may be requested by Landlord from time to time to change the beneficiary of the Letter of Credit (or the holder of Cash Security Account) as hereinabove provided. 36. Economic Abandonment. Provided that an Event of Default does not exist, Tenant shall have the right at any time after the fifth (5th) year of the Initial Term (but, in no event earlier than November 30, 2000) to terminate this Lease with respect to one of the Related Premises (such Related Premises, -59- an "Abandonment Premises") that Tenant shall have determined that the Abandonment Premises shall not be used for at least seven (7) years in its business operations. In the event Tenant elects to exercise such right, Tenant shall give notice (the "Abandonment Notice") to Landlord (with a copy to Lender) of its intention so to terminate this Lease as to the Abandonment Premises, no later than nine (9) months prior to the date (the "Abandonment Date") of such intended termination, which notice shall specify the Abandonment Date and shall contain (a) an irrevocable offer of Tenant to terminate this Lease as to the Abandonment Premises on the Abandonment Date for the Abandonment Offer Amount and (b) a certificate of Tenant (i) stating that the Abandonment Premises are no longer economic for Tenant's continued use and occupancy in its business operations, (ii) specifying in reasonable detail the reasons therefor and (iii) certifying that Tenant then intends forever to abandon its operations at the Abandonment Premises, which certificate shall be conclusively binding upon Landlord and Tenant, and (c) a resolution of the Board of Directors of Tenant authorizing such notice. Tenant may exercise its rights under this Paragraph 36 only one time and only with respect to one of the Related Premises. The Abandonment Offer Amount shall be the sum of (A) (i) 110% of (ii) Landlord's Share of Project Costs with respect to the Abandonment Premises, reduced by the portion of the Acquisition Fee allocated to the Abandonment Premises according to the percentages specified in Exhibit "F" attached hereto and made a part hereof, and (B) any Prepayment Premium which Landlord will be required to pay in prepayment of any Loan with proceeds of the Abandonment Offer Amount. Promptly upon the delivery of such notice from Tenant to Landlord, Landlord and Tenant shall commence to determine such Fair Market Value in accordance with the procedure specified in Paragraph 29. Landlord shall accept or reject such offer by notice to Tenant given not later than ninety (90) days prior to the Abandonment Date. If Landlord shall reject such offer, which rejection shall not be valid unless accompanied by the written consent of Lender thereto, then upon (i) payment of all Rent and any other sums due and unpaid hereunder as of the Abandonment Date and (ii) compliance by Tenant with all other obligations and liabilities under this Lease which have arisen on or prior to the Abandonment Date, this Lease shall terminate as to the Abandonment Premises on the Abandonment Date and Tenant shall immediately vacate and have no further right, title or interest in or to any of the Abandonment Premises. After the Abandonment Date, whether or not Landlord shall have accepted or rejected Tenant's offer, the terms of this Lease will remain in full force and effect with respect to the remaining Related Premises except that the Basic Rent will be that percentage of the then Basic Rent which is allocated to the remaining Related Premises as set forth on Exhibit "F" attached hereto and made a part hereof. -60- Unless Landlord shall have rejected such offer by the foregoing notice to Tenant not later than the ninetieth (90th) day prior to the Abandonment Date, Landlord shall be conclusively presumed to have accepted such offer. If such offer is accepted by Landlord, Tenant shall pay to Landlord the Abandonment Offer Amount on the Abandonment Date and, provided an Event of Default does not then exist hereunder, at the request of Tenant, Landlord shall convey to Tenant the Abandonment Premises in accordance with the provisions of Paragraph 20. Landlord shall have the right, at Landlord's sole option, to treat any vacating or abandonment of the Abandonment Premises which is prohibited pursuant to Paragraph 22(a) hereof as constituting an election by Tenant of its rights under this Paragraph 36 and as an irrevocable offer of Tenant to purchase the Abandonment Premises at the price and upon the terms hereinabove more specifically provided. 37. Option to Purchase. (a) Landlord does hereby give and grant to Tenant the option to purchase the entire Leased Premises (i) for a Purchase Price (the "Purchase Price") equal to the Offer Amount and (ii) on any date (the "Option Purchase Date") during the one year period that commences on the tenth (10th) anniversary of the Initial Term Commencement Date (the "Option Period") which is mutually agreeable to Landlord and Tenant, but in any event not sooner than thirty (30) days after the Fair Market Value Date. If Tenant intends to exercise such option, Tenant shall give written notice to Landlord to such effect not later than six (6) months prior to the tenth (10th) Lease Year. Promptly upon receipt of such notice by Landlord, the parties shall commence to determine Fair Market Value. (b) If Tenant shall exercise the foregoing option to purchase the Leased Premises, on the later to occur of (i) the Option Purchase Date or (ii) the date when Tenant has paid the Offer Amount and has satisfied all other Monetary Obligations, Landlord shall convey the Leased Premises to Tenant in accordance with Paragraph 20 hereof; provided, that if an Event of Default has occurred and is continuing on the Option Purchase Date, Landlord, at its sole option, may terminate Tenant's option to purchase hereunder. If this Lease shall terminate for any reason prior to the date originally fixed herein for the expiration of the Term, or if Tenant shall fail to give the aforesaid notice of intention to purchase, time being of the essence, the option provided in this Paragraph 38 and any exercise thereof by Tenant shall cease and terminate and shall be null and void. (c) Landlord shall use all reasonable efforts to obtain the agreement of the Lender that the Loan that shall encumber the Leased Premises during the Option Period (the -61- "Assumable Loan") may be assumed by the Tenant as partial payment of the Offer Amount; provided that (i) Landlord shall have no obligation to make or to be obligated to make any payment to Lender as a condition to requesting or obtaining such consent and (ii) Tenant shall agree (A) to be personally liable and, if requested by Lender, that Guarantor will be personally liable for repayment and performance of the Assumable Loan and (B) that the Lease and Guaranty shall remain in full force and effect during the term of the Assumable Loan. 38. Right of First Refusal. (a) Except as otherwise provided in Paragraph 38(e), and provided an Event of Default does not then exist, if Landlord shall enter into a contract (the "Sale Contract") for the sale of the Leased Premises with a Third Party Purchaser, which Sale Contract shall be conditioned upon Tenant's failure to exercise its right under this Paragraph 38(a), then promptly following the execution thereof, Landlord shall give written notice to Tenant, together with a copy of the executed Sale Contract. For a period of fifteen (15) days following receipt of such notice, Tenant shall have the right and option, exercisable by written notice to Landlord given within said fifteen (15) day period, to elect to purchase the Leased Premises at the purchase price and upon all the terms and conditions set forth in the Sale Contract except that no contingencies contained in such Sale Contract as to environmental assessments, engineering studies, inspection of the Leased Premises, sale of other property, state of the title to or encumbrances on the Leased Premises, or any other condition or contingency to the Third Party Purchaser's obligation to purchase the Leased Premises which pertains to the condition of the Leased Premises, shall apply to Tenant's obligation to purchase the Leased Premises under this Paragraph 38, and Tenant shall be obligated to purchase the Leased Premises without any such condition or contingency. If at the expiration of the aforesaid fifteen (15) day period Tenant shall have failed to exercise the aforesaid option, Landlord may sell the Leased Premises to such Third Party Purchaser upon the terms set forth in such contract. (b) Except as otherwise specifically provided herein, the closing date for any purchase of the Leased Premises by Tenant pursuant to this Paragraph 38 shall be the earlier to occur of (i) ninety (90) days after the date of Tenant's notice to Landlord of its intention to purchase the Leased Premises upon the terms of the Sale Contract or (ii) the closing date provided in such Sale Contract. At such closing Landlord shall convey the Leased Premises to Tenant in accordance with, and Tenant shall pay to Landlord the purchase price and other consideration set forth in, the applicable Sale Contract. -62- (c) Tenant shall have the right to exercise the foregoing right of first refusal upon (i) each proposed sale of the Leased Premises prior to the tenth (10th) anniversary of the Initial Term Commencement Date and (ii) notwithstanding the lack of exercise by Tenant in (i) above, one (1) time after the tenth (10th) anniversary of the Initial Term Commencement Date; provided, that if, following compliance with the procedure described in Paragraph 38(a), a Third Party Purchaser does not purchase the Leased Premises, such event shall not count as an exercise of Tenant's right of first refusal. Notwithstanding anything to the contrary, if Tenant fails to exercise the right of first refusal granted pursuant to this Paragraph (c), subsection (ii), after the first day of the tenth (10th) anniversary of the Initial Term Commencement Date and the sale to the Third Party Purchaser is consummated, or if the Term of this Lease shall terminate or expire, such rights of first refusal granted pursuant to this Paragraph 38 shall terminate and be null and void and of no further force and effect. (d) If Tenant does not exercise its right of first refusal to purchase the Leased Premises and the Leased Premises are transferred to a Third Party Purchaser, Tenant will attorn to any Third Party Purchaser as Landlord so long as such Third Party Purchaser and Landlord notify Tenant in writing of such transfer. At the request of Landlord and at not cost or expense to Tenant, Tenant will execute such documents confirming the agreement referred to above and such other agreements as Landlord may reasonably request, provided that such agreements do not increase the liabilities and obligations of Tenant hereunder. (e) The provisions of Paragraph 38 shall not apply to or prohibit (i) any mortgaging, subjection to deed of trust or other hypothecation of Landlord's interest in the Leased Premises, (ii) any sale of the Leased Premises pursuant to a private power of sale under or judicial foreclosure of any Mortgage or other security instrument or device to which Landlord's interest in the Leased Premises is now or hereafter subject, (iii) any transfer of Landlord's interest in the Leased Premises to a Lender, beneficiary under deed of trust or other holder of a security interest therein by deed in lieu of foreclosure, (iv) any transfer of the Leased Premises to any governmental or quasi-governmental agency with power of condemnation, (v) any transfer of the Leased Premises to any affiliate of Landlord or to any entity sponsored by W.P. Carey & Co., Inc., W.P. Carey Incorporated or either of their successors, (vi) any transfer of the interest of one of the Persons that comprise Landlord to the other Person that comprises Landlord, (vii) any sale to any Person to whom either of the parents of the Landlord sells all or substantially all of its assets, or (viii) any transfer of the Leased Premises to any of the successors or assigns of any of the Persons referred to in the foregoing clauses (ii) and (iii). -63- 39. Miscellaneous. (a) The paragraph headings in this Lease are used only for convenience in finding the subject matters and are not part of this Lease or to be used in determining the intent of the parties or otherwise interpreting this Lease. (b) As used in this Lease, the singular shall include the plural and any gender shall include all genders as the context requires and the following words and phrases shall have the following meanings: (i) "including" shall mean "including without limitation"; (ii) "provisions" shall mean "provisions, terms, agreements, covenants and/or conditions"; (iii) "lien" shall mean "lien, charge, encumbrance, title retention agreement, pledge, security interest, mortgage and/or deed of trust"; (iv) "obligation" shall mean "obligation, duty, agreement, liability, covenant and/or condition"; (v) "any of the Leased Premises" shall mean "the Leased Premises or any part thereof or interest therein"; (vi) "any of the Land" shall mean "the Land or any part thereof or interest therein"; (vii) "any of the Improvements" shall mean "the Improvements or any part thereof or interest therein"; (viii) "any of the Equipment" shall mean "the Equipment or any part thereof or interest therein"; and (ix) "any of the Adjoining Property" shall mean "the Adjoining Property or any part thereof or interest therein". (c) Any act which Landlord is permitted to perform under this Lease may be performed at any time and from time to time by Landlord or any person or entity designated by Landlord. Each appointment of Landlord as attorney-in-fact for Tenant hereunder is irrevocable and coupled with an interest. Except as otherwise specifically provided herein, Landlord shall have the right, at its sole option, to withhold or delay its consent whenever such consent is required under this Lease for any reason or no reason. Time is of the essence with respect to the performance by Tenant of its obligations under this Lease. (d) Landlord shall in no event be construed for any purpose to be a partner, joint venturer or associate of Tenant or of any subtenant, operator, concessionaire or licensee of Tenant with respect to any of the Leased Premises or otherwise in the conduct of their respective businesses. (e) This Lease and any documents which may be executed by Tenant on or about the effective date hereof at Landlord's request constitute the entire agreement between the parties and supersede all prior understandings and agreements, whether written or oral, between the parties hereto relating to the Leased Premises and the transactions provided for herein. Landlord and Tenant are business entities having substantial experience with the subject matter of this Lease and have each fully participated in the negotiation and drafting of this Lease. Accordingly, this Lease shall be construed without -64- regard to the rule and ambiguities in a document are to be construed against the drafter. (f) This Lease may be modified, amended, discharged or waived only by an agreement in writing signed by the party against whom enforcement of any such modification, amendment, discharge or waiver is sought. (g) The covenants of this Lease shall run with the land and bind Tenant, its successors and assigns and all present and subsequent encumbrances and subtenants of any of the Leased Premises, and shall inure to the benefit of Landlord, its successors and assigns. If there is more than one Tenant, the obligations of each shall be joint and several. (h) Notwithstanding any provision in this Lease to the contrary, all Surviving Obligations of Tenant shall survive the expiration or termination of this Lease with respect to any Related Premises. (i) If any one or more of the provisions contained in this Lease shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision of this Lease, but this Lease shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein. (j) All exhibits attached hereto are incorporated herein as if fully set forth. (k) This Lease shall be governed by and construed and enforced in accordance with the Laws of the State. IN WITNESS WHEREOF, Landlord and Tenant have caused this Lease to be duly executed under seal as of the day and year first above written. LANDLORD: DELMO (PA) QRS 11-36 By: /s/ BARCLAY G. JONES III ------------------------------------- Barclay G. Jones III A Trustee under a certain Trust Agreement dated as of October 11, 1995 -65- DELMO (PA) QRS 12-10 By: /s/ BARCLAY G. JONES III ------------------------------------- Title: ---------------------------------- Barclay G. Jones III A Trustee under a certain Trust Agreement dated as of October 11, 1995 TENANT: DEL MONTE CORPORATION, a New York corporation By: /s/ THOMAS E. GIBBONS ------------------------------------- Thomas E. Gibbons Senior Vice President and Treasurer -66- EX-10.13 4 f84647exv10w13.txt EXHIBIT 10.13 EXHIBIT 10.13 FIRST AMENDMENT TO LEASE AGREEMENT THIS FIRST AMENDMENT TO LEASE AGREEMENT, made as of this 28th day of June, 1996, by and between BARCLAY G. JONES III, AS TRUSTEE of DELMO (PA) QRS 11-36 and BARCLAY G. JONES III, AS TRUSTEE OF DELMO (PA) QRS 12-10, a Pennsylvania business trust (collectively, "Landlord") and DEL MONTE CORPORATION, a New York corporation ("Tenant"). WITNESSETH: WHEREAS, Landlord and Tenant entered into a Lease Agreement dated as of October 31, 1995 (the "Lease Agreement") for premises located in Mendota, Illinois, Toppenish, Washington, Yakima, Washington and Plover, Wisconsin; and WHEREAS, Landlord and Tenant desire to amend the Lease as hereinafter set forth. NOW, THEREFORE, and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Landlord leases and demises to Tenant and Tenant leases from Landlord the premises described on Exhibit A-1 and Exhibit A-2 attached hereto and Landlord and Tenant further covenant and agree as follows: 1. EXHIBIT A, LEGAL DESCRIPTION: YAKIMA, WASHINGTON is hereby deleted in its entirety and EXHIBIT A, LEGAL DESCRIPTION: YAKIMA, WASHINGTON attached hereto as Exhibit A-1 is hereby inserted in lieu thereof. 2. EXHIBIT A, LEGAL DESCRIPTION: TOPPENISH, WASHINGTON - Parking attached hereto as Exhibit A-2 is hereby incorporated into the Lease as part of Exhibit A to the Lease. 3. EXHIBIT C, PERMITTED EXCEPTIONS (YAKIMA, YAKIMA COUNTY, WASHINGTON) is hereby deleted in its entirety and EXHIBIT C, PERMITTED EXCEPTIONS (YAKIMA, YAKIMA COUNTY, WASHINGTON) attached hereto as Exhibit C-1 is hereby inserted in lieu thereof. 4. EXHIBIT C, PERMITTED EXCEPTIONS (TOPPENISH PARKING, YAKIMA COUNTY, WASHINGTON) attached hereto as Exhibit C-2 is hereby incorporated into the Lease as part of Exhibit C. 5. Paragraph 2 of EXHIBIT D, BASIC RENT PAYMENTS is hereby deleted in its entirety and the following Paragraph 2 is inserted in lieu thereof: "2. Basic Rent From and After June 28, 1996. Commencing on July 1, 1996 annual Basic Rent shall be $2,572,500 payable on the first day of July, 1996 and on the first day of each October, January, April and July thereafter until the expiration of the Term in quarterly installments of $643,125.00. Basic Rent shall be subject to the adjustments provided for in subparagraphs A, B and C of Paragraph 5 below." 1. 6. EXHIBIT E, LANDLORD'S SHARE OF PROJECT COSTS is hereby deleted in its entirety and EXHIBIT E, LANDLORD'S SHARE OF PROJECT COSTS attached hereto as Exhibit E is hereby inserted in lieu thereof. 7. EXHIBIT F, PERCENTAGE ALLOCATION OF BASIC RENT is hereby deleted in its entirety and EXHIBIT F, PERCENTAGE ALLOCATION OF BASIC RENT attached hereto as Exhibit F is hereby inserted in lieu thereof. 8. Paragraph 1. Demise of Premises. is hereby amended by adding the phrase "Toppenish Parking" after "Toppenish Premises". 9. Paragraph 2. Certain Definitions. is hereby amended as follows: "Construction Agency Agreement" shall mean that certain Construction Agency Agreement dated as of October 31, 1995, between Landlord, as owner, and Tenant, as agent for Landlord in connection with the construction of the Improvements, as amended by a First Amendment to Construction Agency Agreement. "Ground Lease" shall mean that certain Term Lease, lease no. 524,425, dated as of May 1, 1996 between Ground Lessor and Tenant and assigned by Tenant to Landlord by Assignment of Term Lease dated as of June 28, 1996 (such assignment having been consented to by Ground Lessor). "Ground Lessor" shall mean Burlington Northern Railroad Company, a Delaware corporation and Washington Central Railroad Company, a Washington corporation. "Related Premises" shall mean any one of the Mendota Premises, Toppenish Premises, Toppenish Parking, Yakima Premises and Plover Premises. "Surviving Obligations" shall mean any obligations of Tenant under this Lease and any obligations of the tenant under the Ground Lease, actual or contingent, which arise on or prior to the expiration or prior termination of this Lease or the Ground Lease, as the case may be, or which survive such expiration or termination by their own terms. The definition of "Yakima Funding Deadline" is hereby deleted. 10. Subparagraph (a) of Paragraph 5. Term. is hereby restated in its entirety as follows: "(a) Subject to the provisions hereof, Tenant shall have and hold the Leased Premises for a primary term ("Primary Term") commencing on November 1, 1995 ("Commencement Date") and terminating at midnight on June 27,1996 ("Primary Term Expiration Date") and for an initial term (such initial term as extended or renewed in accordance with the provisions hereof being called herein the Initial Term") 2. commencing on June 28, 1996 ("Initial Term Commencement Date"). The Initial Term shall expire on June 30, 2016 "Expiration Date"). 11. Paragraph 10. Compliance with Laws and Easement Agreements; Environmental Matters. is hereby renamed Compliance with Laws, Easement Agreements and Ground Lease Environmental Matters. and is hereby modified by adding thereto the following subparagraph (i): "(i) Tenant, at its sole cost and expense, will at all times and faithfully abide by, discharge and perform all of the covenants, conditions and agreements contained in the Ground Lease and will not alter, modify, amend or terminate or attempt to alter, modify, amend or terminate the Ground Lease, give any consent or approval thereunder without in each case prior written consent of Landlord and Lender." 12. Subparagraphs (a) through (c) of Paragraph 18. Termination Events. are hereby restated in their entirety as follows: "(a) If (i) all of any Related Premises shall be taken by a Taking or (ii) any substantial portion of any Related Premises shall be taken by a Taking or all or any substantial portion of any Related Premises shall be totally damaged or destroyed by a Casualty and, in any such case, Tenant certifies and covenants to Landlord that it will forever abandon operations at the Related Premises or (iii) Landlord receives notice from Ground Lessor that Ground Lessor is exercising its right under Section 11(b) of the Ground Lease to terminate the Ground Lease or (iv) the holder of any mortgage encumbering the interest of Ground Lessor in the Yakima Premises commences to foreclose or otherwise acquire the interest of Ground Lessor in the Yakima Premises, (any one or all of the Related Premises described in the above clauses (i) and (ii) above and the Yakima Premises with respect to (iii) and (iv) above being hereinafter referred to as the "Affected Premises" and each of the events described in the above clauses (i), (ii), (iii) and (iv) shall hereinafter be referred to as a "Termination Event"), then (x) in the case of (i) and (iii) above, Tenant shall be obligated, within thirty (30) days after Tenant receives a Condemnation Notice or within thirty days after Tenant receives a termination notice from Ground Lessor, as the case may be, and (x) in the case of (iv) above within ten (10) days after Tenant receives notice that any such holder has commenced to foreclose or otherwise acquire Ground Lessor's interest in the Yakima Premises, and (y) in the case of (ii) above, Tenant shall have the option, within thirty (30) days after Tenant receives a Condemnation Notice or thirty (30) days after the Casualty, as the case may be, to give to Landlord written notice (a "Termination Notice" of the Tenant's option to terminate this Lease as to the Affected Premises in the form described in Paragraph 18(b). (b) A Termination Notice shall contain (i) notice of Tenant's intention to terminate this Lease as to the Affected Premises on the first Basic Rent Payment Date which occurs at least thirty (30) days after the Fair Market Value Date (the "Termination Date"), (ii) a binding and irrevocable offer of Tenant to purchase the Affected Premises 3. for a price equal to the Termination Amount and (iii) if the Termination Event is an event described in Paragraph 18(a)(ii), the certification and covenant described therein and a certified resolution of the Board of Directors of Tenant authorizing the same. Promptly upon the delivery to Landlord of a Termination Notice, Landlord and Tenant shall commence to determine Fair Market Value. (c) If Landlord shall reject such offer to terminate this Lease as to the Affected Premises by written notice to Tenant (a "Rejection"), which Rejection shall contain the written consent of Lender, not later than thirty (30) days following the Fair Market Value Date, then this Lease shall terminate as to the Affected Premises on the Termination Date; provided that, if Tenant has not satisfied all Monetary Obligations and all other obligations and liabilities under this Lease which have arisen as to the Affected Property (collectively, "Remaining Obligations") on or prior to the Termination Date, then Landlord may, at its option, extend the date on which this Lease may terminate as to the Affected Premises to a date which is no later than the first Basic Rent Payment Date after the Termination Date on which Tenant has satisfied all Remaining Obligations. Upon such termination (i) all obligations of Tenant hereunder as to the Affected Premises shall terminate except for any Surviving Obligations, (ii) Tenant shall promptly vacate and shall have no further right, title or interest in or to any of the Affected Premises and (iii) the Net Award or payment by Ground Lessor, as the case may be, shall be retained by Landlord. Notwithstanding anything to the contrary hereinabove contained, if Tenant shall have received a Rejection and, on the date when this Lease would otherwise terminate as provided above, Landlord shall not have received the full amount of the Net Award payable by reason of the applicable Termination Event, then on the Termination Date Tenant shall assign to Landlord all of its right, title and interest, if any, in and to the Net Award." 13. Paragraph 20. Procedures Upon Purchase. is hereby amended by deleting clause (i) of subparagraph (b) and inserting in lieu thereof the following: "(i) a Special Warranty Deed (or with respect to the Yakima Premises a Special Warranty Assignment of Ground Lease) which describes the premises being conveyed and conveys the title thereto as provided in Paragraph 20(a), . . ." 14. Paragraph 22. Events of Default. is hereby amended in the following respects: (a) Subparagraph (a) is hereby amended by changing the date in clause (xviii) from "April 1, 1996" to "June 28, 1996" and by adding thereto the following clause (xx) and (xxi): "(xx) a default shall occur under the Ground Lease, or (xxi) Tenant shall fail to comply with the terms of Section 6.07 of the Construction Agency Agreement with respect to the Yakima Premises, or 4. (xxii) Tenant shall fail to make a rejectable offer under Paragraph 12(a)(iii) or (iv) within the time periods provided therein." (b) Subparagraph (b) is hereby amended by deleting the word "or" in the fourth line thereof and adding the phrase "(xx), (xxi) or (xxii)" after "(xix)". 15. Paragraph 35. Security Deposit. is hereby amended by deleting the second full sentence in subparagraph (a) and inserting in lieu thereof the following: "The Security Deposit shall be increased to $2,600,000 on January 1, 1996, to $3,900,000 on April 1, 1996, to June 1, 1996 and commencing on June 28, 1996 and continuing until completion of the Yakima Premises in accordance with the terms of Article VI of the Construction Agency Agreement shall be maintained at an amount equal to $5,395,000. Upon completion of the Yakima Premises in accordance with the terms of Article VI of the Construction Agency Agreement, the amount of the Security Deposit shall be reduced to $3,072,500. In each instance the Letter of Credit shall be reissued or amended accordingly." 16. Except as specifically amended hereby, the terms and conditions of the Lease Agreement shall be binding on Landlord and Tenant and their respective successors and assigns, and from and after the date hereof the term "Lease" shall mean the Lease as amended by this First Amendment to Lease Agreement. IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to Lease Agreement to be duly executed under seal as of the day and year first above written. BALANCE OF PAGE INTENTIONALLY BLANK 5. SIGNATURE PAGE FOR FIRST AMENDMENT TO LEASE AGREEMENT DELMO (PA) QRS 11-36, a Pennsylvania Business Trust By: /s/ BARCLAY G. JONES ----------------------------------------- Barclay G. Jones, Trustee DELMO (PA) QRS 12-10, a Pennsylvania Business Trust By: /s/ BARCLAY G. JONES ----------------------------------------- Barclay G. Jones, Trustee ATTEST: DEL MONTE CORPORATION A New York corporation By: /s/ RAYMOND S. VOLAN By: /s/ JON W. GRAVES ---------------------------- ------------------------------------------ Title: Real Estate Mgr. Title: Assistant Treasurer [Corporate Seal] EX-10.14 5 f84647exv10w14.txt EXHIBIT 10.14 EXHIBIT 10.14 SECOND AMENDMENT TO LEASE AGREEMENT This SECOND AMENDMENT TO LEASE AGREEMENT, made as of this 31st day of this 31st day of October, 1996 by and between Barclay G. Jones III as Trustee of DELMO (PA) QRS 11-36 and Barclay G. Jones III as Trustee of DELMO (PA) QRS 12-10, each a Pennsylvania Business Trust (collectively, "Landlord") and DEL MONTE CORPORATION, a New York corporation ("Tenant"). W I T N E S S E T H WHEREAS, Landlord and Tenant entered into a Lease Agreement, dated as of October 31, 1995, as amended by a First Amendment to Lease Agreement, dated as of June 28, 1996 (said Lease Agreement, as amended, the "Lease Agreement") for premises located in Mendota, Illinois, Toppenish, Washington, Yakima, Washington and Plover, Wisconsin; and WHEREAS, Landlord and Tenant desire to amend the Lease Agreement as hereinafter set forth. NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Landlord and Tenant hereby agree to amend the Lease Agreement in the following respects: 1. Paragraph 2. of Exhibit D Basic Rent Payments is hereby deleted in its entirety and the following Paragraph 2 is inserted in lieu thereof: 2. Basic Rent from and after January 1, 1997. On January 1, 1997, a quarterly installment of Basic Rent shall be due in the amount of $613,396.80. Commencing on April 1, 1997, annual Basic Rent shall be $2,501,152.30 payable in quarterly installments of $625,288.08 on the first day of April, 1997 and on the first day of each July, October, January and April thereafter until the expiration of the term. Basic Rent shall be subject to the adjustments provided for in subparagraphs (a), (b) and (c) of Paragraph 5 below. 2 . Exhibit E Landlord's Share of Project Costs is hereby deleted in its entirety and Exhibit E Landlord's Share of Project Costs attached hereto as Exhibit E is hereby inserted in lieu thereof. 3. Paragraph 35. Security Deposit is hereby amended by deleting the first two sentences of subparagraph (a) and inserting the following in lieu thereof: Concurrently with the execution hereof, Tenant shall deliver to Landlord an irrevocable letter of credit (the "Letter of Credit") in the face amount of $2,751,152.30 issued by Bank of America or another bank selected by Tenant and reasonably acceptable to Landlord and in form and substance satisfactory to Landlord. 4. Except as specifically amended hereby, the terms and conditions of the Lease Agreement shall be binding on Landlord and Tenant and their respective successors and assigns and from and after the date hereof the term "Lease" shall mean the Lease Agreement as amended by this Second Amendment to Lease Agreement. IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment to Lease Agreement to be duly executed under seal as of the day and year first above written. ATTEST: DELMO (PA) QRS 11-36, a Pennsylvania Business Trust By: By: /s/ BARCLAY G. JONES ------------------------ ------------------------ Title: ASSISTANT SECRETARY Title: TRUSTEE --------------------- --------------------- [Corporate Seal] ATTEST: DELMO (PA) QRS 12-10, a Pennsylvania Business Trust By: By: /s/ BARCLAY G. JONES ------------------------ ------------------------ Title: ASSISTANT SECRETARY Title: TRUSTEE --------------------- --------------------- [Corporate Seal] ATTEST: DEL MONTE CORPORATION By: By: /s/ JON W. GRAVES ------------------------ ------------------------ Title: Title: ASSISTANT TREASURER --------------------- --------------------- [Corporate Seal] -2- CONSENT Del Monte Foods Company, guarantor of the obligations of Tenant under the Lease hereby joins in and consents to the within Second Amendment to Lease Agreement and agrees to be bound by the terms thereof. DEL MONTE FOODS COMPANY By: /s/ JON W. GRAVES ----------------------- Title: ASSISTANT TREASURER -------------------- Date: October 31, 1996 -3- EX-10.15 6 f84647exv10w15.txt EXHIBIT 10.15 EXHIBIT 10.15 THIRD AMENDMENT TO LEASE AGREEMENT This THIRD AMENDMENT TO LEASE AGREEMENT, made as of this 24th day of June, 1997, by and between Barclay G. Jones III, as Trustee of DELMO (PA) QRS 11-36 and Barclay G. Jones III, as Trustee of DELMO (PA) QRS 12-10, each a Pennsylvania business trust (collectively, "Landlord") and DEL MONTE CORPORATION, a New York corporation ("Tenant"). W I T N E S S E T H WHEREAS, Landlord and Tenant entered into a Lease Agreement, dated as of October 31, 1995, for premises located in Mendota, Illinois, Toppenish, Washington, Yakima, Washington and Plover, Wisconsin; WHEREAS, the Lease Agreement was amended pursuant to a First Amendment to Lease Agreement, dated as of June 28, 1996, and pursuant to a Second Amendment to Lease Agreement, dated as of October 31, 1996 (the Lease Agreement, as amended, being hereinafter referred to as the "Lease Agreement"); WHEREAS, Landlord has agreed to fund to Tenant an additional $582,430.20 to be used by Tenant in the following manner (1) $288,203.91 to pay past due Basic Rent due Landlord, (2) $282,856 to construct certain improvements to the Leased Premises (as defined in the Lease Agreement) and (3) $11,370.29 to pay certain unpaid Landlord's Share of Project Costs, which amount shall be disbursed pursuant to the terms and conditions set forth in that certain Construction Agency Agreement, dated as of October 31, 1995, between Tenant and Landlord, as amended by that certain First Amendment to Construction Agency Agreement, dated as of June 28, 1996, and by that certain Second Amendment to Construction Agency Agreement of even date herewith; and WHEREAS, Landlord and Tenant desire to amend the Lease as hereinafter set forth. NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Landlord and Tenant covenant and agree as follows: 1. Paragraph 2 of Exhibit D, Basic Rent Payments is hereby deleted in its entirety and the following Paragraph 2 is inserted in lieu thereof: "2. Basic Rent From and After July 1, 1997. Commencing on July 1, 1997 annual Basic Rent shall be $2,572,500 payable on the first day of July, 1997 and on the first day of each October, January, April and July thereafter until the expiration of the Term in quarterly installments of $643,125.00. Basic Rent shall be subject to the adjustments provided for in subparagraphs A, B and C of Paragraph 5 below." 2. Paragraph 35 of the Lease Agreement is hereby amended by deleting the first sentence thereof in its entirety and inserting the following sentence in lieu thereof: "Concurrently with the execution hereof, Tenant shall deliver to Landlord an irrevocable letter of credit (the "Letter of Credit") in the face amount of Two Million Eight Hundred Twenty-Two Thousand Five Hundred Dollars ($2,822,500) issued by Bank of America or another bank selected by Tenant and reasonably acceptable to Landlord and in form and substance satisfactory to Landlord." 3. Except as specifically amended hereby, the terms and conditions of the Lease Agreement shall be binding on Landlord and Tenant and their respective successors and assigns, and from and after the date hereof the term "Lease" shall mean the Lease as amended by this Third Amendment to Lease Agreement. -2- IN WITNESS WHEREOF, the parties hereto have caused this Third Amendment to Lease Agreement to be duly executed under seal as of the day and year first above written. DELMO (PA) QRS 11-36, a Pennsylvania Business Trust By: /s/ BARCLAY G. JONES ---------------------------------- Barclay G. Jones, Trustee DELMO (PA) QRS 12-10, a Pennsylvania Business Trust By: /s/ BARCLAY G. JONES ---------------------------------- Barclay G. Jones, Trustee DEL MONTE CORPORATION, ATTEST: a New York corporation By: By: ------------------------------------ ----------------------------------- Title: Title: --------------------------------- -------------------------------- [Corporate Seal] [Signatures to Third Amendment to Lease Agreement] -3- IN WITNESS WHEREOF, the parties hereto have caused this Third Amendment to Lease Agreement to be duly executed under seal as of the day and year first above written. DELMO (PA) QRS 11-36, a Pennsylvania Business Trust By: ---------------------------------- Barclay G. Jones, Trustee DELMO (PA) QRS 12-10, a Pennsylvania Business Trust By: ---------------------------------- Barclay G. Jones, Trustee DEL MONTE CORPORATION, ATTEST: a New York corporation By: /s/ RAYMOND S. VOLAN By: /s/ JON W. GRAVES ------------------------------------ ----------------------------------- Title: Real Estate Mgr. Title: Assistant Treasurer --------------------------------- -------------------------------- [Corporate Seal] [Signatures to Third Amendment to Lease Agreement] -3- CONSENT OF MORTGAGEE AND ASSIGNEE CREDITANSTALT CORPORATE FINANCE, INC. ("Lender"), the Mortgagee under that certain Mortgage, Assignment of Rents and Security Agreement, dated as of June 28, 1996, from Landlord to Lender and the Assignee under that certain Absolute Assignment of Leases and Rentals from Landlord to Lender, dated as of June 28, 1996, hereby consents to the foregoing Third Amendment to Lease Agreement. CREDITANSTALT CORPORATE FINANCE, INC. By: --------------------------------------------------- Title: Senior Vice President Vice President ------------------------------------------------ Dated: 6/25/97 ------------------------------------------------- EX-10.16 7 f84647exv10w16.txt EXHIBIT 10.16 EXHIBIT 10.16 FOURTH AMENDMENT TO LEASE AGREEMENT THIS FOURTH AMENDMENT to LEASE AGREEMENT (this "Amendment") is made and entered into as of this day of October, 2001, by and among DELMO (PA) QRS 11-36, a Pennsylvania business trust ("QRS 11-36"), DELMO (PA) QRS 12-10, a Pennsylvania business trust ("QRS 12-10"; collectively, QRS 11-26 and QRS 12-10 are referred to here in as the "Landlord") having an address at c/o W.P. Carey & Co. LLC, 50 Rockefeller Plaza, 2nd Floor, New York, NY 10020, and DEL MONTE CORPORATION, a New York corporation ("Tenant"), having an address at Market Place, Steuart Tower, San Francisco, California, 94105. WITNESSETH: WHEREAS, Landlord and Tenant entered into a certain lease agreement for the property situate in Mendota, Illinois, Toppenish, Washington, Yakima, Washington and Plover, Wisconsin (the "Property") dated as of October 31,1995, as amended by that certain First Amendment to Lease Agreement made as of June 28, 1996, that certain Second Amendment to Lease Agreement made as of October 31,1996 and that certain Third Amendment to Lease Agreement made as of June 24,1997 (collectively the "Lease"). WHEREAS, Landlord and Tenant now desire to amend the terms of the Lease pursuant to the terms of this Amendment. NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Landlord and Tenant covenant and agree as follows: 1. The Cover Page of the Lease is hereby amended by deleting the reference "Yakima, Washington". 2. Paragraph 1 of the Lease is hereby amended by deleting the phrase "four (4)" parcels" contained in the first sentence and inserting in lieu thereof the phrase "three (3) parcels". 3. Paragraph 1 of the Lease is hereby further amended by deleting the defined term "Yakima Premises" contained in the second sentence. 4. Paragraph 2 of the Lease is hereby amended by deleting the term "Paragraph "38" contained in the definition of "Assumable Loan" and inserting in lieu thereof the term "Paragraph 37". 5. Paragraph 2 of the Lease is hereby further amended by deleting the definitions "Ground Lease" and "Ground Lessor". 6. Paragraph 2 of the Lease is hereby further amended by inserting the phrase "as may be amended or modified from time to time" at the end of the definition of "Guaranty". 7. Paragraph 2 of the Lease is hereby further amended by deleting the definition "Lender" in its entirety and inserting in lieu thereof the following definition: " "Lender" shall mean any person or entity (and their respective successors and assigns) which may make a Loan to Landlord or is the holder of any Note." 8. Paragraph 2 of the Lease is hereby further amended by adding the following definition: " "MSDW Loan" shall mean the Loan to be made by Morgan Stanley Dean Witter Mortgage Capital Inc., or an accommodation party on behalf thereof, to Landlord and secured by a Mortgage and that closes in calendar year 2001." 9. Paragraph 2 of the Lease is hereby further amended by deleting the definition of "Prepayment Premium" and inserting the following in lieu thereof: " "Prepayment Premium" shall mean any and all amounts (other than (1) principal and interest payable by Landlord to Lender in connection with the prepayment of a Loan or (ii) scheduled payments of principal and interest which would be payable but for the defeasance of a Loan) payable by Landlord to Lender in connection with the prepayment or defeasance of a Loan pursuant to and in accordance with the terms and provisions of the related Note, Mortgage and other Loan documents, including, without limitation, prepayment premiums payable in connection therewith; provided, however, that Tenant shall not be required to pay the portion of the Prepayment Premium applicable to that portion of the then outstanding principal balance of a Loan that is in excess of $12,500,000." 10. Paragraph 2 of the Lease is hereby further amended by deleting the phrase "Yakima Premises" from the definition "Related Premises". 11. Paragraph 2 of the Lease is hereby further amended by deleting the definition "Surviving Obligations" and inserting in lieu thereof the following definition: " "Surviving Obligations" shall mean the obligations of Tenant under this Lease, actual or contingent, which arise on or prior to the expiration or prior termination of this Lease or which survive such expiration or termination by their own terms." 12. Paragraph 10 of the Lease is hereby amended by renaming the paragraph as "Paragraph 10. Compliance with Laws and Easement Agreements; Environmental Matters". 13. Paragraph 10 of the Lease is hereby further amended by deleting subparagraph (1) in its entirety. 14. Paragraph 18 of the Lease is hereby amended by restating subparagraphs (a) through (c) in their entirety as follows: "(a) If (1) all of any Related Premises shall be taken by a Taking or (ii), any substantial portion of any Related Premises shall be taken by a Taking or all or any substantial portion of any Related Premises shall be totally damaged or destroyed by a Casualty and, in any such case, Tenant certifies and covenants to Landlord that it will forever abandon operations at such Related Premises (any one or all of the Related Premises at the Related Premises, described in the above clauses (1) and (ii) above being hereinafter referred to as the "Affected Premises" and each of the events described ire the above clauses (1) and (ii) shall hereinafter be referred to as a "Termination Event"), then (x) in the case of (1) above, Tenant shall be obligated, within thirty (30) days after Tenant receives a Condemnation Notice to give to Landlord written notice (a "Termination Notice") of the termination of this Lease as to the Affected Premises in the form described in Paragraph 18(b) and (y) in the case of (ii) above, Tenant shall have the option, within thirty (30) days after Tenant receives a Condemnation Notice or thirty (30) days after the Casualty, as the case may be, to give to Landlord Termination Notice exercising such option of Tenant to terminate this Lease as to the Affected Premises under this Paragraph. (b) A Termination Notice shall contain (1) notice of Tenant's intention to terminate this Lease as to the Affected Premises on the first Basic Rent Payment Date which occurs at least thirty (30) days after the Fair Market Value Date (the "Termination Date"), (II) a binding and irrevocable offer of Tenant to purchase the Leased Premises for a price equal to the Termination Amount and (iii) if the Termination Event is an event described in Paragraph 18(a)(ii), the certification and covenant described therein and a certified resolution of the Board of Directors of Tenant authorizing the same. Promptly upon the delivery to Landlord of a Termination Notice, Landlord and Tenant shall commence to determine Fair Market Value. (c) If Landlord shall reject such offer to terminate this Lease as to the Affected Premises by written notice to Tenant (a "Rejection"), which Rejection shall contain the written consent of Lender, not later than thirty (30) days following the Fair Market Value Date, then this Lease shall terminate as to the Affected Premises on the Termination Date; provided that, if Tenant has not satisfied all Monetary Obligations and all other obligations and liabilities under this Lease which have arisen as to the Affected Property (collectively, "Remaining Obligations") on or prior to the Termination Date, then Landlord may, at its option, extend the date on which this Lease may terminate as to the Affected Premises to a date which is no later than the first Basic Rent Payment Date after the Termination Date on which Tenant has satisfied all Remaining Obligations. Upon such termination (i) all obligations of Tenant hereunder as to the Affected Premises shall terminate except for any Surviving Obligations, (ii) Tenant shall promptly vacate and shall have no further right, title or interest in or to any of the Affected Premises and (iii) the Net Award shall be retained by Landlord. Notwithstanding anything to the contrary hereinabove contained, if Tenant shall have received a Rejection and, on the date when this Lease would otherwise terminate as provided above, Landlord shall not have received the full amount of the Net Award payable by reason of the applicable Termination Event, then on the Termination Date Tenant shall assign to Landlord all of its right, title and interest, if any, in and to the Net Award." 15. Paragraph 20 of the Lease is hereby amended by deleting the phrase "(or with respect to the Yakima Premises a Special Warranty Assignment of Ground Lease)" contained in subparagraph (b)(1). 16. Paragraph 21 of the Lease is hereby amended by inserting at the end of subparagraph 21(a)(iii) the following: "Notwithstanding anything to the contrary set forth in this subparagraph 21(a), Tenant shall not have the right to make the Intended Assignment Offer until aver the date which is the earlier of four years after the funding of the MSDW Loan or two years after the MSDW Loan is securitized." 17. Paragraph 21 of the Lease is hereby amended by deleting the phrase "Paragraphs 38 and 39" contained in the first sentence of subparagraph (1) and inserting in lieu thereof the phrase "Paragraphs 38 and 39." 18. Paragraph 22 of the Lease is hereby amended by deleting subparagraphs (xx), (xxi) and (xxii) in their entirety from subparagraph (a). 19. Paragraph 22 of the Lease is further hereby amended by inserting the word "or" in clause (A) of the first sentence of subparagraph (b) after "(xvi)" and deleting the phrase "(xx), (xxi) or (xxii)" after "(xix)". 20. Paragraph 23 of the Lease is hereby amended by deleting the phrase "Project Cost" contained in the sixth (6th) line of subparagraph 23(a)(iii) and inserting in lieu thereof the phrase "Landlord's Share of Project Costs". 21. Paragraph 35 of the Lease is hereby amended by deleting the first and second sentences of subparagraph 35(a) and inserting in lieu thereof the following: "Tenant has delivered to Landlord an irrevocable letter of credit (the "Letter of Credit") in the original face amount of Two Million One Hundred Sixteen Thousand Eight Hundred Seventy-Five Dollars ($2,116,875) (the "Security Deposit") issued a bank selected by Tenant." 22. Paragraph 36 of the Lease is hereby amended by deleting the phrase "fifth (5th) year of the Initial Term (but in no event earlier than November 30, 2000)" contained in the first (1st) sentence of Paragraph 36 and inserting in lieu thereof the phrase "earlier of four years after the funding of the MSDW Loan or two years after the MSDW Loan is securitized". 23. Exhibit "A" of the Lease is hereby amended by deleting in its entirety the legal description for Yakima, Yakima County, Washington. 24. Exhibit "C" of the Lease is hereby amended by deleting in its entirety the Permitted Exceptions applicable to Yakima, Yakima County, Washington. 25. Exhibit "D" to the Lease is hereby amended by deleting Paragraphs 1 and 2 in their entirety and inserting in lieu thereof the following: "l. Basic Rent. (a) Basic Rent has been paid in full through December 31, 2001. (b) Commencing on January 1, 2002 and continuing on the first day of each April, July, October and January thereafter until the expiration of the Term, Basic Rent shall be payable in equal quarterly installments of $595,212.19. Basic Rent shall be subject to the adjustments provided for in subparagraphs (a), (b) and (c) of Paragraph 4 below." 26. Exhibit "D" to the Lease is hereby further amended by renumbering Paragraphs 3, 4, and 5 to Paragraphs 2, 3, and 4, respectively. 27. Exhibit "D" to the Lease is hereby further amended by deleting Paragraph 3 in its entirety and inserting in lieu thereof the following: "3. Effective Dates of CPI Adjustments. As of July 1 of 2002, 2008, and 2014 and if the term is extended, July 1 of 2020, 2026, 2032, 2038, 2044, 2050 and 2056, Basic Rent shall be adjusted to reflect increases in the CPI during the most recent six year period immediately preceding each of the foregoing dates (each such date being hereinafter referred to as the "Basic Rent Adjustment Date")." 28. Exhibit "E" to the Lease is hereby amended by deleting Exhibit "E" in its entirety and replacing in lieu thereof with Exhibit "E" attached hereto and made a part hereof. 29. Exhibit "F" to the Lease is hereby amended by deleting Exhibit "F" in its entirety and replacing in lieu thereof with Exhibit "F" attached hereto and made a part hereof. 30. Landlord and Tenant each hereby release the other from all obligations under the Lease relating to the period or accruing after October __, 2001 with respect to the property situated in Yakima, Washington, which property constituted a portion of the Leased Premises prior to such date. 31. Except as expressly set forth herein, nothing herein is intended to or shall be deemed to modify or amend any of the other terns or provisions of the Lease. 32. All undefined capitalized terms used herein shall have the same meanings as set forth in the Lease. 33. This Amendment may be executed in any number of and by different parties hereto on separate counterparts, all of which, when so executed, shall be deemed an original, but all such counterparts shall constitute one and the same agreement. 34. This Amendment and the Lease together contain the entire understanding between the parties hereto and supersedes all prior agreements and understandings, if any, relating to the subject matter hereof or thereof. Any promises, representations, warranties or guarantees not herein or therein contained and hereinafter made shall have no force and effect unless in writing, and executed by the party or parties making such representations, warranties or guarantees. Neither this Amendment nor the Lease nor any portion or provisions hereof or thereof may be changed, modified, amended, waived, supplemented, discharged, cancelled or terminated orally or by any course of dealing, or in any manner other than by an agreement in writing, signed by the party to be charged. THE REMAINDER OF THIS PAGE IS INTENTIONALLY BLANK IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed under seal as of the day and year first above written. LANDLORD: DELMO (PA) QRS 11-36, a Pennsylvania business trust By: /s/ GORDON J. WHITING ---------------------------------------- Name: Gordon J. Whiting Title: Trustee DELMO (PA) QRS 12-10, a Pennsylvania business trust By: /s/ GORDON J. WHITING ---------------------------------------- Name: Gordon J. Whiting Title: Trustee TENANT: DEL MONTE CORPORATION, a New York corporation By: ---------------------------------------- Name: Title: IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed under seal as of the day and year first above written. LANDLORD: DELMO (PA) QRS 11-36, a Pennsylvania business trust By: ---------------------------------------- Name: Gordon J. Whiting Title: Trustee DELMO (PA) QRS 12-10, a Pennsylvania business trust By: ---------------------------------------- Name: Gordon J. Whiting Title: Trustee TENANT: DEL MONTE CORPORATION, a New York corporation By: /s/ THOMAS E. GIBBONS ---------------------------------------- Name: THOMAS E. GIBBONS Title: SENIOR VICE PRESIDENT & TREASURER EX-10.17 8 f84647exv10w17.txt EXHIBIT 10.17 EXHIBIT 10.17 LEASE AGREEMENT by and between DELMO (PA) QRS 11-36 and DELMO (PA) QRS 12-10 each a Pennsylvania business trust collectively, as LANDLORD and DEL MONTE CORPORATION, a New York corporation, as TENANT Premises: Yakima, Washington Dated as of: October 24, 2001 Table of Contents

Page 1. Demise of Premises ................................................ 1 2. Certain Definitions................................................ 1 3. Title and Condition ............................................... 8 4. Use of Leased Premises; Quiet Enjoyment ........................... 9 5. Term .............................................................. 9 6. Basic Rent ........................................................ 10 7. Additional Rent ................................................... 10 8. Net Lease; Non-Terminability....................................... 11 9. Payment of Impositions ............................................ 12 10. Compliance with Laws, Easement Agreements and Railroad Ground Lease; Environmental Matters ...................................... 13 11. Liens; Recording .................................................. 15 12. Maintenance and Repair ............................................ 15 13. Alterations and Improvements ...................................... 15 14. Permitted Contests ................................................ 16 15. Indemnification ................................................... 17 16. Insurance ......................................................... 18 17. Casualty and Condemnation ......................................... 20 18. Termination Events ................................................ 22 19. Restoration; Reduction of Rent .................................... 23 20. Procedures Upon Purchase .......................................... 24 21. Assignment and Subletting ......................................... 25 22. Events of Default ................................................. 28 23. Remedies and Damages Upon Default ................................. 30 24. Notices ........................................................... 33 25. Estoppel Certificate .............................................. 33 26. Surrender.......................................................... 33 27. No Merger of Title ................................................ 34 28. Books and Records ................................................. 34 29. Determination of Value ............................................ 35 30. Non-Recourse as to Landlord ....................................... 37 31. Financing.......................................................... 37 32. Subordination ..................................................... 38 33. Tax Treatment; Reporting .......................................... 38

-i- Table of Contents (continued)

Page 34. Financing Major Alterations ...................................... 38 35. INTENTIONALLY DELETED ............................................ 39 36. Economic Abandonment ............................................. 39 37. Option to Purchase ............................................... 39 38. Right of First Refusal ........................................... 40 39. Miscellaneous .................................................... 41

-ii-

EXHIBITS Exhibit "A" ......................................................- Premises Exhibit "B" .......................................- Machinery and Equipment Exhibit "C" ............................- Schedule of Permitted Encumbrances Exhibit "D" ................................................ - Rent Schedule

-iii- LEASE AGREEMENT, made as of this ______day of October, 2001, between DELMO (PA) QRS 11-36 and DELMO (PA) QRS 12-10, each a Pennsylvania business trust (collectively, "Landlord"), with its principal place of business c/o W.P. Carey & Co LLC, 50 Rockefeller Plaza, 2nd Floor, New York, New York 10020, and DEL MONTE CORPORATION, a New York corporation ("Tenant"), with an address at Market Place, Steuart Tower, San Francisco, California 94105. WHEREAS, Landlord and Tenant entered into that certain Lease Agreement dated as of October 31,1995 for property situate in Mendota, Illinois, Toppenish, Washington, Plover, Wisconsin, and Yakima, Washington, as amended by that certain First Amendment to Lease Agreement made as of June 28, 1996, that certain Second Amendment to Lease made as of October 31, 1996, that certain Third Amendment to Lease Agreement made as of June 24, 1997 and that certain Fourth Amendment to Lease Agreement dated as of the date hereof (the "Original Lease"); and WHEREAS, Landlord and Tenant now desire to amend the Original Lease in order to remove the demised premises in Yakima, Washington, and to enter into this Lease for the demised premises in Yakima, Washington, such that the Original Lease would now apply to the property situate in Mendota, Illinois, Toppenish, Washington, and Plover, Wisconsin and this Lease would apply to the property situate in Yakima, Washington. In consideration of the rents and provisions herein stipulated to be paid and performed, Landlord and Tenant hereby covenant and agree as follows: 1. Demise of Premises. The Leased Premises shall be comprised of one (1) parcel of Land, Improvements constructed thereon by Landlord and Equipment installed therein by Landlord, all as set forth in this Lease. Landlord hereby demises and lets to Tenant, and Tenant hereby takes and leases from Landlord, for the term and upon the provisions hereinafter specified, the following described property (hereinafter referred to as the "Leased Premises" which premises is more particularly described in Exhibit "A" attached hereto and made a part hereof and shall include the portions of items (a), (b) and (c) of this Paragraph 1 located thereon or therein and appertaining thereto): (a) the premises described in Exhibit "A" hereto, together with the Appurtenances (collectively, the "Land"); (b) the buildings, structures and other improvements constructed or to be constructed on the Land by Landlord (collectively, the "Improvements"); and (c) the fixtures, machinery, equipment, including conveyor equipment, and other property to be installed in the Improvements by Landlord described in Exhibit "B" hereto (collectively, the "Equipment"). 2. Certain Definitions. "Abandonment Date" shall mean the Abandonment Date as defined in Paragraph 36. "Abandonment Notice" shall mean Abandonment Notice as defined in Paragraph 36. "Abandonment Offer Amount" shall mean the Abandonment Offer Amount as defined in Paragraph 36. "Abandonment Premises" shall mean the Abandonment Premises as defined in Paragraph 36. -1- "Additional Rent" shall mean Additional Rent as defined in Paragraph 7. "Adjoining Property" shall mean all sidewalks, driveways, curbs, gores and vault spaces adjoining the Leased Premises and which Tenant has the legal obligation to maintain. "Affiliate" shall mean, as to any Person, any other Person which, directly or indirectly, is in control of, is controlled by, or is under common control with, such Person. For purposes of this definition and otherwise in this Lease, a Person shall be deemed to control another Person if the controlling Person possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of the other Person only through the ownership of voting securities (but not by contract or otherwise). "Alterations" shall mean all changes, additions, improvements or repairs to, all alterations, reconstructions, renewals, replacements or removals of and all substitutions or replacements for any of the Improvements or Equipment, both interior and exterior, structural and non-structural, and ordinary and extraordinary and shall include any Major Alterations. "Appurtenances" shall mean all tenements, hereditaments, easements, rights-of-way, rights, privileges in and to the Land, including (a) easements over other lands granted by any Easement Agreement and (b) any streets, ways, alleys, vaults, gores or strips of land adjoining the Land. "Assignment" shall mean any assignment of rents and leases from Landlord to a Lender which (a) encumbers any of the Leased Premises and (b) secures Landlord's obligation to repay a Loan, as the same may be amended, supplemented or modified from time to time. "Assumable Loan" shall mean Assumable Loan as defined in Paragraph 38. "Basic Rent" shall mean Basic Rent as defined in Paragraph 6. "Basic Rent Payment Dates" shall mean the Basic Rent Payment Dates as defined in Paragraph 6. "Casualty" shall mean any injury to or death of any person or any loss of or damage to any property (including, the Leased Premises) included within or related to the Leased Premises or arising from the Adjoining Property. "Condemnation" shall mean a Taking and/or a Requisition. "Condemnation Notice" shall mean written notice or knowledge of the institution of or intention to institute any proceeding for Condemnation. "Costs" of a Person or associated with a specified transaction shall mean all reasonable costs and expenses incurred by such Person or associated with such transaction, including without limitation, attorneys' fees and expenses, court costs, brokerage fees, escrow fees, title insurance premiums, mortgage commitment fees, mortgage points, recording fees and transfer taxes, as the circumstances require. "CPI" shall mean CPI as defined in Exhibit "D" hereto. -2- "Default Rate" shall mean the Default Rate as defined in Paragraph 7(a)(iv). "Default Termination Amount" shall mean the Default Termination Amount as defined in Paragraph 23(a)(iii). "Easement Agreement" shall mean any conditions, covenants, restrictions, easements, declarations, licenses and other agreements listed as Permitted Encumbrances or as may hereafter affect the Leased Premises. "Environmental Law" shall mean (i) whenever enacted or promulgated, any applicable federal, state, foreign or local law, statute, ordinance, rule, regulation, license, permit, authorization, approval, consent, court order, judgment, decree, injunction, code, requirement or agreement with any governmental entity, (x) relating to pollution (or the cleanup thereof), or the protection of air, water vapor, surface water, groundwater, drinking water supply, land (including land surface or subsurface), plant, aquatic and animal life from injury or damage caused by a Hazardous Substance or (y) concerning exposure to, or the use, containment, storage, recycling, reclamation, reuse, treatment, generation, discharge, transportation, processing, handling, labeling, production, disposal or remediation of Hazardous Substances, Hazardous Condition or Hazardous Activity, in each case as amended and as now or hereafter in effect, and (ii) any common law or equitable doctrine (including, without limitation, injunctive relief and tort doctrines such as negligence, nuisance, trespass and strict liability) that may impose liability or obligations for injuries or damages due to or threatened as a result of the presence of, exposure to, or ingestion of, any Hazardous Substance. The term Environmental Law includes, without limitation, the federal Comprehensive Environmental Response Compensation and Liability Act of 1980, the Superfund Amendments and Reauthorization Act, the federal water Pollution Control Act, the federal Clean Air Act, the federal Clean Water Act, the federal Resources Conservation and Recovery Act of 1976 (including the Hazardous and Solid Waste Amendments to RCRA), the federal Solid Waste Disposal Act, the federal Toxic Substance Control Act, the federal Insecticide, Fungicide and Rodenticide Act, the federal occupational Safety and Health Act of 1970, the federal National Environmental Policy Act and the federal Hazardous Materials Transportation Act, each as amended and as now or hereafter in effect and any similar state or local Law. "Environmental ,Violation" shall mean (a) any direct or indirect discharge, disposal, spillage, emission, escape, pumping, pouring, injection, leaching, release, seepage, filtration or transporting of any Hazardous Substance at, upon, under, onto or within the Leased Premises, or from the Leased Premises to the environment, in violation of any Environmental Law or in excess of any reportable quantity established under any Environmental Law or which results, or could reasonably be expected to result, in any material liability to Landlord, Tenant or Lender, any Federal, state or local government or any other Person for the costs of any removal or remedial action or natural resources damage or for bodily injury or property damage, (b) any deposit, storage, dumping, placement or use of any Hazardous Substance at, upon, under or within the Leased Premises or which extends to any Adjoining Property in-violation of any Environmental Law or in excess of any reportable quantity established under any Environmental Law or which results, or could reasonably be expected to result, in any material liability to any Federal, state or local government or to any other Person for the costs of any removal or remedial action or natural resources damage or for bodily injury or property damage, (c) the abandonment or discarding on or from the Leased Premises of any barrels, drums, containers or other receptacles containing any Hazardous Substances in violation of any Environmental Laws, (d) any activity, occurrence or condition under any Environmental Law which results, or could reasonably be expected to result, in any material liability, cost or expense to Landlord or Lender or any other owner or occupier of the Leased Premises, or which results, or could result, in a -3- creation of a lien on the Leased Premises under any Environmental Law or (e) any violation of or noncompliance with any Environmental Law. "Equipment" shall mean the Equipment as defined in Paragraph 1. "Event of Default" shall mean an Event of Default as defined in Paragraph 22(a). "Expiration Date" shall mean Expiration Date as defined in Paragraph 5. "Fair Market Value" shall be as defined in Paragraph 29. "Fair Market Value Date" shall mean the date when the Fair Market Value is determined in accordance with Paragraph 29. "Federal Funds" shall mean federal or other immediately available funds which at the time of payment are legal tender for the payment of public and private debts in the United States of America. "Ground Lessor" shall mean the Burlington Northern Railroad Company, a Delaware corporation and Washington Central Railroad Company, a Washington corporation. "Guarantor" shall mean Del Monte Foods Company, a Maryland corporation. "Guaranty" shall mean the Guaranty and Suretyship Agreement dated as of the date hereof from Guarantor to Landlord guaranteeing the payment and performance by Tenant of all of Tenant's obligations under the Lease. "Hazardous Activity" means any activity, process, procedure or undertaking which directly or indirectly (i) procures, generates or creates any Hazardous Substance in violation of any Environmental Law; (ii) causes or results in (or threatens to cause or result in) the release, seepage, spill, leak, flow, discharge or emission of any Hazardous Substance, into the environment (including the air, ground water, watercourses or water systems) in violation of any Environmental Law or in excess of any reportable quantity; (iii) involves the containment or storage of any Hazardous Substance; or (iv) would cause any of the Leased Premises or any portion thereof to become a hazardous waste treatment, recycling, reclamation, processing, storage or disposal facility within the meaning of any Environmental Law. "Hazardous Condition" means any condition which could reasonably be expected to give rise to any claim or liability under any Environmental Law, including the presence of underground storage tanks. "Hazardous Substance" means (i) any substance, material, product, petroleum, petroleum product, derivative, compound or mixture, mineral (including asbestos), chemical, gas, medical waste, or other pollutant, in each case whether naturally occurring, man-made or the by-product of any process, that is toxic, harmful or hazardous or acutely hazardous to the environment or public health or safety or (ii) any substance subject to regulations under any Environmental Law, whether or not defined as hazardous as such under any Environmental Law. Hazardous Substances include, without limitation, any toxic or hazardous waste, pollutant, contaminant, industrial waste, petroleum or petroleum-derived substances or waste, radon, radioactive materials, asbestos, asbestos containing materials, urea formaldehyde foam insulation, lead, polychlorinated biphenyls. -4- "Impositions" shall mean the Impositions as defined in Paragraph 9(a). "Improvements" shall mean the Improvements as defined in Paragraph 1 and shall include any Major Alterations. "Indemnitee" shall mean an Indemnitee as defined in Paragraph 15. "Initial Term" shall mean Initial Term as defined in Paragraph 5. "Initial Term Commencement Date" shall mean Initial Term Commencement Date as defined in Paragraph 5. "Insurance Requirements" shall mean the requirements of all insurance policies maintained in accordance with this Lease. "Land" shall mean the Land as defined in Paragraph 1. "Landlord Encumbrances" shall mean any defects in title or matters affecting title to the Leased Premises created by Landlord, except for the Mortgage and Assignment and defects or matters created at the request of, with the concurrence of or as a result of any act of Tenant. "Landlord's Share of Project Costs" shall mean $1,737,754.79. "Law" shall mean any constitution, statute, rule of law, code, ordinance, order, judgment, decree, injunction, rule, regulation, policy, requirement or administrative or judicial determination, even if unforeseen or extraordinary, of every duly constituted governmental authority, court or agency, now or hereafter enacted or in effect. "Lease" shall mean this Lease Agreement. "Lease Year" shall mean, with respect to the first Lease Year, the period commencing on the Initial Term Commencement Date and ending at midnight on the last day of the twelfth (12th) consecutive calendar month following the month in which the Initial Term Commencement Date occurred, and each succeeding twelve (12) month period during the Term. "Leased Premises" shall mean the Leased Premises as defined in Paragraph 1. "Legal Requirements" shall mean the requirements of all present and future Laws (including but not limited to Environmental Laws) and all covenants, restrictions and conditions now or hereafter of record which may be applicable to any of the Leased Premises, or to the use, manner of use, occupancy, possession, operation, maintenance, alteration, repair or restoration of any of the Leased Premises, even if compliance therewith necessitates structural changes or improvements or results in interference with the use or enjoyment of any of the Leased Premises. "Lender" shall mean any person or entity (and their respective successors and assigns) which may make a Loan to Landlord or is the holder of any Note. "Loan" shall mean any loan made by one or more Lenders to Landlord, which loan is secured by a Mortgage and an Assignment and evidenced by a Note. -5- "Major Alterations" shall mean Major Alterations as defined in Paragraph 34. "Monetary Obligations" shall mean Rent and all other sums payable by Tenant under this Lease to Landlord, to any third party on behalf of Landlord or to any Indemnitee. "Mortgage" shall mean, singly or collectively, any one or more mortgages or deeds of trust from Landlord to a Lender or a trustee for the benefit of a Lender which (a) encumbers any of the Leased Premises and (b) secures Landlord's obligation to repay a Loan, as the same may be amended, supplemented or modified. "Net Award" shall mean (a) the entire award payable to Landlord or Lender by reason of a Condemnation whether pursuant to a judgment or by agreement or otherwise, or (b) the entire proceeds of any insurance required under clauses (1), (ii) (to the extent payable to Landlord or Lender), (iv), (v) or (vi) of Paragraph 16(a), as the case may be, less any reasonable-expenses incurred by Landlord and Lender in collecting such award or proceeds. "Non-Preapproved Assignment" shall have the meaning set forth in Paragraph 21. "Note" shall mean any promissory note evidencing Landlord's obligation to repay a Loan, as the same may be amended, supplemented or modified. "Offer Amount" shall mean the greater of (a) Fair Market Value or (b) the sum of the Landlord's Share of Project Costs for the Leased Premises and any Prepayment Premium which Landlord will be required to pay in prepaying the Loan with proceeds of the Offer Amount. "Original Lease" shall mean Original Lease as defined in the Recitals. "Partial Casualty" shall mean any Casualty which does not constitute a Termination Event. "Partial Condemnation" shall mean any Condemnation which does not constitute a Termination Event. "Permitted Encumbrances" shall mean those covenants, restrictions, reservations, liens, conditions and easements and other encumbrances, other than any Mortgage or Assignment, listed on Exhibit "C" hereto (but such listing shall not be deemed to revive any such encumbrances that have expired or terminated or are otherwise invalid or unenforceable). "Person" shall mean an individual, partnership, association, corporation or other entity. "Prepayment Premium" shall mean any payment (other than a payment of principal and/or interest which Landlord is required to make under a Note or a Mortgage) by reason of any prepayment by Landlord of any principal due under a Note or Mortgage, and which may be (in lieu of such prepayment premium or prepayment penalty) a "make whole" clause requiring a prepayment premium in an amount sufficient to compensate the Lender for the loss of the benefit of the Loan due to prepayment; provided, however, that Tenant shall not be required to pay the Prepayment Premium on any amount in excess of $500,000. -6- "Present Value" of any amount shall mean such amount discounted by a rate per annum which is the lower of (a) the Prime Rate at the time such present value is determined or (b) eight percent (8%) per annum. "Prime Rate" shall mean the interest rate per annum as published, from time to time, in the Wall Street Journal as the "Prime Rate" in its column entitled "Money Rate". The Prime Rate may not be the lowest rate of interest charged by any "large U.S. money center commercial banks" and Landlord makes no representations or warranties to that effect. In the event the Wall Street Journal ceases publication or ceases to publish the "Prime Rate" as described above, the Prime Rate shall be the average per annum discount rate (the "Discount Rate") on ninety-one (91) day bills ("Treasury Bills") issued from time to time by the United States Treasury at its most recent auction, plus three hundred (300) basis points. If no such 91-day Treasury Bills are then being issued, the Discount Rate shall be the discount rate on Treasury Bills then being issued for the period of time closest to ninety-one (91) days. "Railroad Ground Lease" shall mean that certain Term Lease (Lease No. 524,245) made May 1, 1996 between Burlington Northern Railroad Company and Washington Central Railroad Company, as lessor, and Tenant, as lessee, for a portion of the Leased Premises, as assigned to Landlord by that certain Assignment of Lease dated June 27, 1996 by Burlington Northern Railroad Company and Washington Central Railroad Company. "Relevant Amount" shall mean the Offer Amount, the Termination Amount or the Default Termination Amount, as the case may be. "Relevant Date" shall mean (a) the date immediately prior to the date on which the applicable Condemnation Notice is received, in the event of a Termination Notice under Paragraph 18 which is occasioned by a Taking, (b) the date immediately prior to the date on which the applicable Casualty occurs, in the event of a Termination Notice under Paragraph 18 which is occasioned by a Casualty, (c) the date when Fair Market Value is redetermined, in the event of a redetermination of Fair Market Value pursuant to Paragraph 20(c), (d) the date immediately prior to the Event of Default giving rise to the need to determine Fair Market Value in the event Landlord provides Tenant with notice of its intention to require Tenant to make a Termination Offer under Paragraph 23(a)(iii), (e) the Fair Market Value Date in the event Tenant exercises its option to purchase the Leased Premises pursuant to Paragraph 37, or (f) with respect to a Non-Preapproved Assignment, the earlier of the date on which Landlord issues notice of the Non-Preapproved Assignment to Tenant or the date that is immediately prior to the date on which the Non-Preapproved Assignment occurs. "Remaining Sum" shall mean Remaining Sum as defined in Paragraph 19(c). "Rent" shall mean, collectively, Basic Rent and Additional Rent. "Requisition" shall mean any temporary requisition or confiscation of the use or occupancy of any of the Leased Premises by any governmental authority, civil or military, whether pursuant to an agreement with such governmental authority in settlement of or under threat of any such requisition or confiscation, or otherwise. "Retention Date" shall mean the later of the date on which the amount of the Remaining Sum is finally determined or the date on which Landlord's right to the Remaining Sum is finally determined. "Site Assessment" shall mean a Site Assessment as defined in Paragraph 10(c). -7- "State" shall mean the State of Washington. "Surviving Obligations" shall mean any obligations of Tenant under this Lease, actual or contingent, which arise on or prior to the expiration or prior termination of this Lease, or which survive such expiration or termination by their own terms. "Taking" shall mean (a) any taking or damaging of all or a portion of any of the Leased Premises (1) in or by condemnation or other eminent domain proceedings pursuant to any Law, general or special, or (ii) by reason of any agreement with any condemnor in settlement of or under threat of any such condemnation or other eminent domain proceeding, or (iii) by any other means, or (b) any de facto condemnation. The Taking shall be considered to have taken place as of the later of the date actual physical possession is taken by the condemnor, or the date on which the right to compensation and damages accrues under the law applicable to the Leased Premises. "Term" shall mean the Initial Term and any extensions thereof. "Termination Amount" shall mean the greater of (a) Fair Market Value or (b) the sum of the Landlord's Share of Project Costs for the Leased Premises, and any Prepayment Premium which Landlord will be required to pay in prepaying any Loan with proceeds of the Termination Amount. "Termination Date" shall mean the Termination Date as defined in Paragraph 18. "Termination Event" shall mean a Termination Event as defined in Paragraph 18. "Termination Notice" shall mean Termination Notice as defined in Paragraph 18(a). "Third Party Purchaser" shall mean the Third Party Purchaser as defined in Paragraph 21(h). 3. Title and Condition. (a) The Leased Premises are demised and let subject to (1) the rights of any Persons in possession of the Leased Premises, (ii) the existing state of title of any of the Leased Premises, including any Permitted Encumbrances, (iii) any state of facts which an accurate survey or physical inspection of the Leased Premises might show, (iv) all Legal Requirements, including any existing violation of any thereof, and (v) the condition of the Leased Premises as of the commencement of the Term, without representation or warranty by Landlord except as to Landlord Encumbrances. (b) LANDLORD LEASES AND WILL LEASE AND TENANT TAKES AND WILL TAKE THE LEASED PREMISES AS IS. TENANT ACKNOWLEDGES THAT LANDLORD (WHETHER ACTING AS LANDLORD HEREUNDER OR IN ANY OTHER CAPACITY) HAS NOT MADE AND WILL NOT MAKE, NOR SHALL LANDLORD BE DEEMED TO HAVE MADE, ANY WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, WITH RESPECT TO ANY OF THE LEASED PREMISES, INCLUDING ANY WARRANTY OR REPRESENTATION AS TO (i) ITS FITNESS, DESIGN OR CONDITION FOR ANY PARTICULAR USE OR PURPOSE, (ii) THE QUALITY OF THE MATERIAL OR WORKMANSHIP THEREIN, (iii) THE EXISTENCE OF ANY DEFECT, LATENT OR PATENT, (iv) LANDLORD'S TITLE THERETO (EXCEPT -8- THAT LANDLORD REPRESENTS AND WARRANTS THAT THERE ARE NO LANDLORD ENCUMBRANCES), (v) VALUE, (vi) COMPLIANCE WITH SPECIFICATIONS, (vii) LOCATION, (viii) USE, (ix) CONDITION, (x) MERCHANTABILITY, (xi) QUALITY, (xii) DESCRIPTION, (xiii) DURABILITY (xiv) OPERATION OR (xv) THE EXISTENCE OF ANY HAZARDOUS SUBSTANCE; AND ALL RISKS INCIDENT THERETO ARE TO BE BORNE BY TENANT. TENANT ACKNOWLEDGES THAT THE LEASED PREMISES ARE OF ITS SELECTION AND TO ITS SPECIFICATIONS AND THAT LANDLORD HAS NO OBLIGATION WITH RESPECT TO CONSTRUCTION OF THE IMPROVEMENTS. IN THE EVENT OF ANY DEFECT OR DEFICIENCY IN ANY OF THE LEASED PREMISES OF ANY NATURE, WHETHER LATENT OR PATENT, LANDLORD AND LENDER SHALL NOT HAVE ANY RESPONSIBILITY OR LIABILITY WITH RESPECT THERETO OR FOR ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES (INCLUDING STRICT LIABILITY IN TORT). THE PROVISIONS OF THIS PARAGRAPH 3(b) HAVE BEEN NEGOTIATED, AND ARE INTENDED TO BE A COMPLETE EXCLUSION AND NEGATION OF ANY WARRANTIES BY LANDLORD OR LENDER, EXPRESS OR IMPLIED, WITH RESPECT TO ANY OF THE LEASED PREMISES, ARISING PURSUANT TO THE UNIFORM COMMERCIAL CODE OR ANY OTHER LAW NOW OR HEREAFTER IN EFFECT OR ARISING OTHERWISE. TENANT DOES NOT WAIVE ANY CLAIM AGAINST ANY PARTY EXCEPT LANDLORD AND LENDER UNDER THE FOREGOING LANGUAGE. (c) Tenant represents to Landlord that Tenant has examined the title to the Leased Premises prior to the execution and delivery of this Lease and has found the same to be satisfactory for the purposes contemplated hereby. Tenant acknowledges that (i) fee simple title (both legal and equitable) to the Leased Premises is in Landlord and that Tenant has only the leasehold right of possession and use of the Leased Premises as provided herein, (ii) the Improvements conform to all material Legal Requirements and all Insurance Requirements, (iii) all easements necessary for Tenant's use or operation of each Leased Premises have been obtained, (iv) subject to Tenant's rights under Paragraph 14 all contractors and subcontractors who have performed work on or supplied materials to the Leased Premises shall have been fully paid, and all materials and supplies have been fully paid for, and (v) all Equipment necessary or appropriate for Tenant's use or operation of the Leased Premises shall have been installed and shall be operational. (d) Landlord hereby assigns to Tenant, without recourse or warranty whatsoever, all warranties, guaranties, indemnities and similar rights which Landlord may have against any manufacturer, seller, engineer, contractor or builder in respect of any of the Leased Premises. Such assignment shall remain in effect until an Event of Default occurs or until the expiration or earlier termination of this Lease, whereupon such assignment shall cease and all of said warranties, guaranties, indemnities and other rights shall automatically revert to Landlord. 4. Use of Leased Premises; Quiet Enjoyment. (a) Tenant may occupy and use the Leased Premises for commercial or industrial uses and for no other purpose without the prior written consent of Landlord. Tenant shall not use or occupy or permit any of the Leased Premises to be used or occupied, nor do or permit anything to be done in or on any of the Leased Premises, in a manner which would or be reasonably likely to (i) violate any Law or Legal Requirement, (ii) make void or voidable or cause any insurer to cancel any insurance required by this Lease, or make it difficult or impossible to obtain any such insurance at commercially reasonable rates, (iii) cause structural injury to any of the Improvements or (iv) constitute a public or private nuisance or waste. (b) Subject to the provisions hereof, so long as no Event of Default has occurred and is continuing, Tenant shall quietly hold, occupy and enjoy the Leased Premises -9- throughout the Term, without any hindrance, ejection or molestation by Landlord with respect to matters that arise after the date hereof, provided that Landlord or its agents may enter upon and examine any of the Leased Premises at such reasonable times as Landlord may select and upon reasonable notice to Tenant (except in the case of any emergency, in which event no notice shall be required) for the purpose of inspecting the Leased Premises, verifying compliance or noncompliance by Tenant with its obligations hereunder and the existence or non-existence of an Event of Default or event which with the passage of time and/or notice would constitute an Event of Default, showing the Leased Premises to prospective Lenders and purchasers and taking such other action with respect to the Leased Premises as is permitted by any provision hereof. 5. Term. (a) Subject to the provision hereof, Tenant shall have and hold the Leased Premises for an initial term (such initial term as extended or renewed in accordance with the provisions hereof being called herein the "Initial Term") commenced on October ____, 2001 ("Initial Term Commencement Date"). Subject to the provisions hereof, the Initial Term shall expire on June 30, 2016 ("Expiration Date"). (b) Provided that if, on or prior to the Expiration Date or any other Renewal Date (as hereinafter defined), this Lease shall not have been terminated pursuant to any provision hereof, then Tenant shall have the right on the Expiration Date and on the tenth (10th), twentieth (20th) and thirtieth (30th) anniversaries of the Expiration Date (the Expiration Date and each such anniversary being a "Renewal Date"), to extend the Term for an additional period of ten (10) years (each such period being referred to herein as "Renewal Term"), upon written notice to Landlord in recordable form at least one (1) year prior to the next Renewal Date (each such notice, a "Renewal Notice") that Tenant is extending this Lease as of the next Renewal Date for the next Renewal Term. If Tenant fails to provide any Renewal Notice, Landlord shall provide to Tenant a reminder notice that Tenant has failed to provide the required Renewal Notice, and Tenant shall have thirty (30) days after receipt of such reminder notice to give the required Renewal Notice, time being of the essence. Any such extension of the Term shall be subject to all of the provisions of this Lease, as the same may be amended, supplemented or modified. (c) If Tenant does not exercise its option pursuant to Paragraph 5(b) to extend the Term, or if an Event of Default occurs, then Landlord shall have the right during the remainder of the Term then in effect and, in any event, Landlord shall have the right during the last year of the Term, to (i) advertise the availability of any of the Leased Premises for sale or reletting and to erect upon any of the Leased Premises signs indicating such availability and (ii) upon reasonable prior notice to Tenant show any of the Leased Premises to prospective purchasers or tenants or their agents at such reasonable times during business hours as Landlord may select. 6. Basic Rent. Tenant shall pay to Landlord, as annual rent for the Leased Premises during the Term, the amounts determined in accordance with Exhibit "D" hereto ("Basic Rent") and on the dates described in Paragraph 1 of Exhibit "D" (each such date being a "Basic Rent Payment Date"). Basic Rent shall be paid to Landlord at its address set forth above and/or to such one other Person, at such addresses and in such proportions as Landlord may direct by fifteen (15) days, prior written notice to Tenant (in which event Tenant shall give Landlord notice of each such payment concurrent with the making thereof) in funds available to Landlord or such other Person on each Basic Rent Payment Date. 7. Additional Rent. -10- (a) Tenant shall pay and discharge, as additional rent (collectively, "Additional Rent"): (i) except as otherwise specifically provided herein, all costs and expenses of Tenant, and all reasonable costs and expenses of Landlord and any other Persons specifically referenced herein which are incurred in connection or associated with (A) the ownership, use, non-use, occupancy, possession, operation, condition, design, construction, maintenance, alteration, repair or restoration of any of the Leased Premises, (B) the performance of any of Tenant's obligations under this Lease, (C) any sale or other transfer of any of the Leased Premises to Tenant under this Lease, (D) any Condemnation proceedings, (E) the adjustment, settlement or compromise of any insurance claims (including any contest or prosecution in connection therewith) under insurance covering any of the Leased Premises, (F) the prosecution or defense of any litigation related to the Leased Premises, this Lease, or the sale of the Leased Premises to Landlord and arising from an act or omission of Tenant provided, however, that in the event of legal action between Landlord and Tenant where Tenant is the prevailing party, Landlord shall pay Tenant's reasonable costs and attorneys' fees, (G) the exercise or enforcement by Landlord, its successors and assigns, of any of its rights under this Lease, (H) any amendment to or modification or termination of this Lease made at the request of Tenant, (I) Costs of Landlord's counsel and reasonable internal Costs of Landlord incurred in connection with the preparation, negotiation and execution of this Lease, or incurred in connection with any act undertaken by Landlord (or its counsel) at the written request of Tenant, or incurred in connection with any act of Landlord performed on behalf of Tenant if Tenant is obligated to take such action under this Lease and has refused to do so within the period required herein or if no such period is specified, within a reasonable time following notice from Landlord, and (J) any other items specifically required to be paid by Tenant under this Lease; (ii) after the date all or any portion of any installment of Basic Rent is due and not paid, an amount ("Late Charge") equal to five percent (5%) of the amount of such unpaid installment or portion thereof, provided, however, that with respect to the first late payment in any Lease Year the Late Charge shall not be due and payable unless two (2) days have elapsed following telephonic notice followed by facsimile notice that such payment has not been received; (iii) a sum equal to any additional sums (including any late charge, default penalties, interest and fees of Lender's counsel) which are payable by Landlord to any Lender under any Note by reason of Tenant's late payment or non-payment of Basic Rent or by reason of an Event of Default; and (iv) interest at the rate (the "Default Rate") of three percent (3%) over the Prime Rate per annum on the following sums until paid in full: (A) all overdue installments of Basic Rent from the respective due dates thereof, (B) all overdue amounts of Additional Rent relating to obligations which Landlord shall have paid on behalf of Tenant, from the date of payment thereof by Landlord, and (C) all other overdue amounts of Additional Rent, from the date when Tenant has received notice that any such amount has become overdue. (b) Tenant shall pay and discharge (i) any Additional Rent referred to in Paragraph 7(a)(i) when the same shall become due, provided that amounts which are billed to Landlord or any third party, but not to Tenant, shall be paid within thirty (30) days after Landlord's demand for payment thereof, and (ii) any other Additional Rent, within thirty (30) days after Landlord's demand for payment thereof. (c) In no event shall amounts payable under Paragraph 7(a)(ii), (iii) and (iv) exceed the maximum amount permitted by applicable Law. -11- 8. Net Lease; Non-Terminability. (a) This is a net lease and all Monetary Obligations shall be paid without notice or demand and without set-off, counterclaim, recoupment, abatement, suspension, deferment, diminution, deduction, reduction or defense (collectively, a "Set-Off"). (b) Except as otherwise expressly provided herein, this Lease and the rights of Landlord and the obligations of Tenant hereunder shall not be affected by any event or for any reason, including the following: (i) any damage to or theft, loss or destruction of any of the Leased Premises, (ii) any Condemnation, (iii) Tenant's acquisition of ownership of any of the Leased Premises other than pursuant to an express provision of this Lease, (iv) any default on the part of Landlord hereunder or under any Note, Mortgage, Assignment or any other agreement, (v) any latent or other defect in any of the Leased Premises, (vi) the breach of any warranty of any seller or manufacturer of any of the Equipment, (vii) any violation of Paragraph 4(b) or any other provision of this Lease by Landlord, (viii) the bankruptcy, insolvency, reorganization, composition, readjustment, liquidation, dissolution or winding-up of, or other proceeding affecting Landlord, (ix) the exercise of any remedy, including foreclosure, under any Mortgage or Assignment, (x) any action with respect to this Lease (including the disaffirmance hereof) which may be taken by Landlord, any trustee, receiver or liquidator of Landlord or any court under the Federal Bankruptcy Code or otherwise, (xi) any interference with Tenant's use of the Leased Premises, (xii) market or economic changes or (xiii) any other cause, whether similar or dissimilar to the foregoing, any present or future Law to the contrary notwithstanding. (c) The obligations of Tenant hereunder shall be separate and independent covenants and agreements, all Monetary obligations shall continue to be payable in all events (or, in lieu thereof, Tenant shall pay amounts equal thereto), and the obligations of Tenant hereunder shall continue unaffected unless the requirement to pay or perform the same shall have been terminated pursuant to an express provision of this Lease. All Rent payable by Tenant hereunder shall constitute "rent" for all purposes (including Section 502(b)(6) of the Bankruptcy Code). (d) Except as otherwise expressly provided herein, Tenant shall have no right and hereby waives all rights which it may have under any Law (i) to quit, terminate or surrender this Lease or any of the Leased Premises, or (ii) to any Set-Off of any Monetary Obligations. 9. Payment of Impositions. (a) Tenant shall, before interest or penalties are due thereon, pay and discharge all taxes (including real and personal property, franchise, sales and rent taxes), all charges for any easement or agreement maintained for the benefit of any of the Leased Premises, all assessments and levies, all permit, inspection and license fees, all rents and charges for water, sewer, utility and communication services relating to the any of Leased Premises, all ground rents and all other public charges whether of a like or different nature, even if unforeseen or extraordinary, imposed upon or assessed against (i) Tenant's possessory interest in the Leased Premises, (ii) any of the Leased Premises, (iii) Landlord as a result of or arising in respect of the acquisition, ownership, occupancy, leasing, use, possession or sale of any of the Leased Premises, any activity conducted on any of the Leased Premises, or the Rent, or (iv) any Lender by reason of any Note, Mortgage, Assignment or other document evidencing or securing a Loan and which (as to this clause (iv)) Landlord has agreed to pay and that is normal and customary for similar financings (collectively, the "Impositions"); provided, that nothing herein shall obligate Tenant to pay (A) income, excess profits or other taxes of Landlord (or Lender) which are determined on the basis of Landlord's (or Lender's) net income or net worth (unless such taxes are in lieu of or a substitute for any other tax, assessment or other charge upon or with respect to -12- the Leased Premises which, if it were in effect, would be payable by Tenant under the provisions hereof or by the terms of such tax, assessment or other charge), (B) any estate, inheritance, succession, gift or similar tax imposed on Landlord or Lender or (C) any capital gains or other tax imposed on Landlord in connection with the sale of the Leased Premises to any Person, except for any transfer or recording tax payable in connection with a sale to Tenant or its designee. If any Imposition may be paid in installments without interest or penalty, Tenant shall have the option to pay such Imposition in installments; in such event, Tenant shall be liable only for those installments which accrue or become due and payable during the Term. Tenant shall prepare and file all tax reports required by governmental authorities which relate to the Impositions. Tenant shall deliver to Landlord, (1) receipts for payment of all taxes required to be paid by Tenant hereunder within thirty (30) days after the due date thereof and (2) within thirty (30) days following Landlord's request, (A) copies of all settlements and notices pertaining to the Impositions which may be issued by any governmental authority and (B) receipts for payment of all other Impositions. (b) Landlord shall have the right during the existence of an Event of Default to require Tenant to pay to Landlord or Lender, if required by the terms of any Mortgage, an additional monthly sum (each an "Escrow Payment") sufficient to pay the Escrow Charges (as herein defined) as they become due. As used herein, "Escrow Charges" shall mean real estate taxes on the Leased Premises or payments in lieu thereof and premiums on any insurance required by this Lease. Landlord shall determine the amount of the Escrow Charges and of each Escrow Payment. As long as the Escrow Payments are being held by Landlord and not Lender, the Escrow Payments shall not be commingled with other funds of Landlord or other Persons and interest shall accrue thereon for the benefit of Tenant and which shall serve as additional security for the obligations of Tenant hereunder from the date such monies are received by or on behalf of Landlord to the date such monies are disbursed to pay Escrow Charges in such order or priority as Landlord shall determine or as required by law. If at any time the Escrow Payments theretofore paid to Landlord shall be insufficient for the payment of the Escrow Charges, Tenant, within ten (10) days after Landlord's demand therefor, shall pay the amount of the deficiency to Landlord or Lender, as the case may be. 10. Compliance with Laws, Easement Agreements and Railroad Ground Lease; Environmental Matters. (a) Tenant shall, at its expense, be in material compliance with and conform to, and cause the Leased Premises and any other Person occupying any part of the Leased Premises to be in material compliance with and conform to, all Insurance Requirements and Legal Requirements (except that Tenant and the Leased Premises shall be in absolute compliance with all applicable Environmental Laws pertaining to the Leased Premises). Tenant shall not at any time (i) cause, permit or suffer to occur any Environmental Violation or (ii) permit any sublessee, assignee or other Person occupying the Leased Premises under or through Tenant to cause, permit or suffer to occur any Environmental Violation. (b) Tenant, at its sole cost and expense, will at all times promptly and faithfully abide by, discharge and perform all of the covenants, conditions and agreements contained in the Railroad Ground Lease and in any Easement Agreement on the part of Landlord or the occupier to be kept and performed thereunder. Tenant will not alter, modify, amend or terminate any Easement Agreement, give any consent or approval thereunder, or enter into any new Easement Agreement without, in each case, prior written consent of Landlord, which consent shall not be unreasonably conditioned. If Landlord fails to respond to any request for consent to any such alteration, modification, amendment or termination of an existing Easement Agreement, or for consent to any new Easement Agreement, in any case within ten (10) days after receipt of Tenant's request therefor, Landlord shall be deemed to have given such consent. -13- Any such Easement Agreement, as altered, modified or amended, or any such new Easement Agreement, shall automatically be a Permitted Encumbrance. (c) Not more frequently than once every three (3) years and at any other time required by a Lender or if in the opinion of Landlord or Lender, a reasonable basis exists to believe that an Environmental Violation exists, upon prior written notice from Landlord, Tenant shall permit such professional environmental consultants as Landlord may designate ("Site Reviewers") to visit the Leased Premises at reasonable times and upon reasonable prior notice to Tenant and perform environmental site investigations and assessments ("Site Assessments") on the Leased Premises for the purpose of determining whether there exists on the Leased Premises any Environmental Violation or any condition which could reasonably be expected to result in any Environmental Violation. Such Site Assessments may include both above and, if a reasonable basis exists to believe that an Environmental Violation exists or if reasonably recommended by a Site Reviewer, below the ground testing for Environmental Violations and such other tests (other than below the ground or groundwater testing except as permitted above) as may be necessary, in the opinion of the Site Reviewers, to conduct the Site Assessments. Tenant shall supply to the Site Reviewers such historical and operational information regarding the Leased Premises as may be reasonably requested by the Site Reviewers to facilitate the Site Assessments, and shall make available for meetings with the Site Reviewers appropriate personnel having knowledge of such matters. Not more frequently than once every three (3) years during the Term Tenant shall pay up to $7,000 of the Cost of a Phase I Site Assessment for the Leased Premises except that, if an Environmental Violation is found to exist, Tenant shall pay all of the costs of performing and reporting any Site Assessments required by Landlord or Lender with respect to such Environmental Violation. (d) If an Environmental Violation occurs or is found to exist and, in Landlord's reasonable judgment, the cost of remediation of the same is likely to exceed $500,000, Tenant shall provide to Landlord, within ten (10) days after Landlord's request therefor, reasonable financial assurances that Tenant will effect such remediation in accordance with applicable Environmental Laws. (e) Notwithstanding any other provision of this Lease, if an Environmental Violation occurs or is found to exist with respect to the Leased Premises that in the reasonable opinion of Landlord causes the fair market rental value of the Leased Premises to be less than would otherwise be the case and the Term would otherwise terminate or expire, then, at the option of Landlord, the Term shall be automatically extended beyond the date of termination or expiration and this Lease shall remain in full force and effect but at a monthly rent equal to the fair market rental value of the Leased Premises absent such Environmental Violation beyond such date until the earlier to occur of (i) the completion of all remedial action in accordance with applicable Environmental Laws or (ii) the date specified in a written notice from Landlord to Tenant terminating this Lease. (f) If, in Landlord's reasonable discretion, Tenant fails to promptly commence to comply and diligently pursue compliance with any requirement of any Environmental Law in connection with any Environmental Violation which occurs or is found to exist, Landlord shall have the right, at Tenant's expense (but no obligation), to take any and all actions as Landlord shall deem reasonably necessary or advisable in order to cure such Environmental Violation. (g) Tenant shall notify Landlord immediately after becoming aware of any violation of any Environmental Law or other material Environmental Violation (or alleged violation of any Environmental Law or other material Environmental Violation) and upon the request of Landlord shall forward to Landlord immediately upon receipt thereof copies of all -14- orders, reports, notices, permits, applications or other communications relating to any such violation. (h) All future leases, subleases or concession agreements relating to the Leased Premises entered into by Tenant shall contain covenants of the other party thereto which are comparable to the covenants contained in this Paragraph 10(b), (c), (f) and (g). (i) Tenant, at its sole cost and expense, will at all times and faithfully abide by, discharge and perform all of the covenants, conditions, and agreements contained in the Railroad Ground Lease and will not alter, modify, amend or terminate or attempt to alter, modify, amend or terminate the Railroad Ground Lease, or give any consent or approval thereunder without in each case prior written consent of Landlord. 11. Liens; Recording. (a) Tenant shall not, directly or indirectly, create or permit to be created or to remain and shall promptly discharge or remove any lien, levy or encumbrance on any of the Leased Premises or on any Rent or any other sums payable by Tenant under this Lease, other than any Mortgage or Assignment, the Permitted Encumbrances and any mortgage, lien, encumbrance or other charge created by or resulting solely from any act or omission of Landlord. NOTICE IS HEREBY GIVEN THAT LANDLORD SHALL NOT BE LIABLE FOR ANY LABOR, SERVICES OR MATERIALS FURNISHED OR TO BE FURNISHED TO TENANT OR TO ANYONE HOLDING OR OCCUPYING ANY OF THE LEASED PREMISES THROUGH OR UNDER TENANT, AND THAT NO MECHANICS' OR OTHER LIENS FOR ANY SUCH LABOR, SERVICES OR MATERIALS SHALL ATTACH TO OR AFFECT THE INTEREST OF LANDLORD IN AND TO ANY OF THE LEASED PREMISES. LANDLORD MAY AT ANY TIME POST ANY NOTICES ON THE LEASED PREMISES REGARDING SUCH NON-LIABILITY OF LANDLORD. (b) Tenant shall execute, deliver and record, file or register (collectively, "record") all such instruments as may be required or permitted by any present or future Law in order to evidence the respective interests of Landlord and Tenant in any of the Leased Premises, and shall cause a memorandum of this Lease (or, if such a memorandum cannot be recorded, this Lease), and any supplement hereto or thereto, to be recorded in such manner and in such places as may be required or permitted by any present or future Law in order to protect the validity and priority of this Lease. 12. Maintenance and Repair. (a) Tenant shall at all times maintain the Leased Premises and the Adjoining Property in as good repair and appearance as each is in on the Initial Term Commencement Date and fit to be used for their intended use in accordance with recognized industry standards and, in the case of the Equipment, in good mechanical condition, in all cases except for ordinary wear and tear. Tenant shall take every other reasonable action necessary or appropriate for the preservation and safety of the Leased Premises. Tenant shall promptly make all Alterations of every kind and nature, whether foreseen or unforeseen, which may be required to comply with the foregoing requirements of this Paragraph 12(a). Landlord shall not be required to make any Alteration, whether foreseen or unforeseen, or to maintain the Leased Premises or Adjoining Property in any way, and Tenant hereby expressly waives any right which may be provided for in any Law now or hereafter in effect to make Alterations at the expense of Landlord or to require Landlord to make Alterations. Any Alteration made by Tenant pursuant to this Paragraph 12 shall be made in conformity with the provisions of Paragraph 13. -15- (b) If any Improvement, now or hereafter constructed, shall (i) encroach upon any setback or any property, street or right-of-way adjoining any of the Leased Premises, (ii) violate the provisions of any restrictive covenant affecting any of the Leased Premises, (iii) hinder or obstruct any easement or right-of-way to which any of the Leased Premises is subject or (iv) impair the rights of others in, to or under any of the foregoing, Tenant shall, promptly after receiving a demand to remove or correct such condition from a Person entitled to make such demand, either (A) obtain from all necessary parties waivers or settlements of all claims, liabilities and damages resulting from each such encroachment, violation, hindrance, obstruction or impairment, whether the same shall affect Landlord, Tenant or both, or (B) take such action as shall be necessary to remove all such encroachments, hindrances or obstructions and to end all such violations or impairments, including, if necessary, making Alterations. 13. Alterations and Improvements. (a) Tenant shall have the right, without having obtained the prior written consent of Landlord and Lender, to make Alterations or a series of related Alterations that, as to any such Alterations or series of related Alterations, do not cost in excess of $1,000,000 with respect to the Leased Premises and to install Equipment in the Improvements or accessions to the Equipment that, as to such Equipment or accessions, do not cost in excess of $1,000,000, so long as at the time of construction or installation of any such Equipment or Alterations no Event of Default exists and the value and utility of the Leased Premises is not diminished thereby. If the cost of any Alterations, series of related Alterations or Equipment or accessions thereto is in excess of the amounts specified above, the prior written approval of Landlord and Lender shall be required, such approval not to be unreasonably withheld, delayed or conditioned. Tenant shall not construct upon the Land any additional buildings costing in excess of $1,000,000 without having first obtained the prior written consent of Landlord and Lender, such consent not to be unreasonably withheld, conditioned or delayed. If Landlord or Lender fails to respond to any written request for consent within thirty (30) days after receipt of such consent, such consent shall be deemed given. (b) If Tenant makes any Alterations pursuant to this Paragraph 13 or Paragraph 34 or as required by Paragraph 12 or 17 (such Alterations and actions being hereinafter collectively referred to as "Work"), then (1) as to Work other than Work done pursuant to a Legal Requirement, the market value of the Leased Premises shall not be lessened by any such Work or its usefulness impaired, (ii) all such work shall be performed by Tenant in a good and workmanlike manner, (iii) all such Work shall be expeditiously completed in compliance with all Legal Requirements, (iv) all such Work shall comply with the requirements of all insurance policies required to be maintained by Tenant hereunder, (v) if any such work involves the replacement of Equipment or parts thereto, all replacement Equipment or parts shall function in a manner that is the better of (A) the functioning of the Equipment or parts being replaced or, (B) the functioning of similar Equipment or parts in other warehouses owned or used by Tenant, (vi) subject to Tenant's rights under Paragraph 14, Tenant shall promptly discharge or remove all liens filed against any of the Leased Premises arising out of such Work, (vii) Tenant shall procure and pay for all permits and licenses required in connection with any such Work, (viii) all such Work (except for additions that are paid for by Tenant and can be readily removed without substantial damage to the Improvements and are not a replacement for any of the Improvements or Equipment) shall be the property of Landlord and shall be subject to this Lease, and Tenant shall execute and deliver to Landlord any document. requested by Landlord evidencing the assignment to Landlord of all estate, right, title and interest (other than the leasehold estate created hereby) of Tenant or any other Person thereto or therein, and (ix) Tenant shall comply, to the extent reasonably requested by Landlord or required by this Lease, with the provisions of Paragraph 19(a), whether or not such Work involves restoration of the Leased Premises. -16- 14. Permitted Contests. Notwithstanding any other provision of this Lease, Tenant shall not be required to (a) pay any Imposition, (b) discharge or remove any lien referred to in Paragraph 11 or 13, (c) take any action with respect to any encroachment, violation, hindrance, obstruction or impairment referred to in Paragraph 12(b) or (d) comply with any Legal Requirements (such non-compliance with the terms hereof being hereinafter referred to collectively as "Permitted Violations"), so long as at the time of such non-compliance no Event of Default exists and so long as Tenant shall contest, in good faith, the existence, amount, validity or interpretation thereof, the amount of the damages caused thereby, or the extent of its or Landlord's liability therefor by appropriate proceedings which shall operate during the pendency thereof to prevent or stay (1) the collection of, or other realization upon, the Permitted Violation so contested, (ii) the sale, forfeiture or loss of any of the Leased Premises or any Rent to satisfy or to pay any damages caused by any Permitted Violation, (iii) any material interference with the use or occupancy of any of the Leased Premises, (iv) any interference with the payment of any Rent, (v) the cancellation or increase in the rate of any insurance policy or a statement by the carrier that coverage will be denied or (vi) the enforcement or execution of any injunction, order or Legal Requirement with respect to the Permitted Violation. If the amount being contested is reasonably estimated by Landlord to be in excess of Two Hundred Fifty Thousand Dollars ($250,000) or if otherwise required by the terms of the Mortgage, Tenant shall provide Landlord security which is satisfactory in Landlord's reasonable judgment, to assure that such Permitted Violation is corrected if Tenant's contest is unsuccessful, including all Costs, interest and penalties that may reasonably be expected to be incurred or become due in connection therewith. While any proceedings which comply with the requirements of this Paragraph 14 are pending and the required security is held by Landlord, Landlord shall not have the right to correct any Permitted Violation thereby being contested unless Landlord is required by law to correct such Permitted Violation and Tenant's contest does not prevent or stay such requirement as to Landlord. Each such contest shall be promptly and diligently prosecuted by Tenant to a final conclusion, except that Tenant, so long as the conditions of this Paragraph 14 are at all times complied with, has the right to attempt to settle or compromise such contest through negotiations. Tenant shall pay any and all losses, judgments, decrees and Costs in connection with any such contest and shall, promptly after the final determination of such contest, fully pay and discharge the amounts which shall be levied, assessed, charged or imposed or be determined to be payable therein or in connection therewith, together with all penalties, fines, interest and Costs thereof or in connection therewith, and perform all acts the performance of which shall be ordered or decreed as a result thereof. No such contest shall subject Landlord to the risk of any civil or criminal liability. 15. Indemnification. (a) Tenant shall pay, protect, indemnify, defend, save and hold harmless Landlord, Lender and all other Persons described in Paragraph 30 (each an "Indemnitee") for, from and against any and all liabilities, losses, damages. (including punitive damages), penalties, Costs (including attorneys, fees and costs), causes of action, suits, claims, demands or judgments of any nature whatsoever, howsoever caused, without regard to the form of action and whether based on strict liability, gross negligence, negligence or any other theory of recovery at law or in equity (other than those based on the gross negligence or willful misconduct of such Indemnitee or based on activities by such Indemnitee in connection with the sale or reletting of the Leased Premises to any Person except a sale to Tenant or its designee and except for activities that are based on representations by or obligations and liabilities of Tenant or Guarantor), arising from (i) any matter pertaining to the acquisition (or the negotiations leading thereto), ownership, leasing, use, non-use, occupancy, operation, management, condition, design, construction, maintenance, repair or restoration of any of the Leased Premises or Adjoining Property, (ii) any casualty in any manner arising from any of the Leased Premises or Adjoining Property, whether or not Indemnitee has or should have knowledge or notice of any defect or condition causing or contributing to said casualty, (iii) any violation by Tenant of any -17- provision of this Lease, any contract or agreement to which Tenant is a party and which relates to the Leased Premises, any Legal Requirement or any Permitted Encumbrance or (iv) any alleged, threatened or actual Environmental Violation, including (A) liability for response costs and for costs of removal and remedial action incurred by the United States Government, any state or local governmental unit or any other Person, or damages from injury to or destruction or loss of natural resources, including the reasonable costs of assessing such injury, destruction or loss, incurred pursuant to Section 107 of CERCLA, or any successor section or act or provision of any similar state or local Law, (13) liability for costs and expenses of abatement, correction or cleanup, fines, damages, response costs or penalties which arise from the provisions of any of the other Environmental Laws and (C) liability for personal injury or property damage arising under any statutory or common-law tort theory, including damages assessed for the maintenance of a public or private nuisance or for carrying on of a dangerous activity. (b) In case any action or proceeding is brought against any Indemnitee by reason of any such claim, (i) Tenant may, except in the event of a conflict of interest or a dispute between Tenant and any such Indemnitee or during the continuance of an Event of Default, retain its own counsel at its expense and defend such action (it being understood that Landlord may employ counsel of its choice to monitor the defense of any such action) and (ii) such Indemnitee shall notify Tenant to resist or defend such action or proceeding by retaining counsel reasonably satisfactory to such Indemnitee, and such Indemnitee will cooperate and assist in the defense of such action or proceeding if reasonably requested to do so by Tenant. (c) The obligations of Tenant under this Paragraph 15 shall survive any termination, expiration or rejection in bankruptcy of this Lease. (d) For the sole purpose of effecting the indemnification obligations under this Lease and not for the benefit of any employees of Tenant or Guarantor or any third parties unrelated to the parties indemnified under this Lease Tenant specifically and expressly waives any immunity that may be granted it under the Washington State Industrial Insurance Act, Title 51 RCW. (Tenant's Initials:____). Further the indemnification obligations under this Lease shall not be limited in any way by any limitation on the amount or type of damages, compensation or benefits payable to or for any third party under Worker Compensation Acts, Disability Benefit Acts or other employee benefit acts. 16. Insurance. (a) Tenant shall maintain the following insurance on or in connection with the Leased Premises: (i) Insurance against physical loss or damage to the Improvements and Equipment as provided under a standard "All Risk" property policy including but not limited to flood (to the extent that the Leased Premises are in a flood zone) and earthquake coverage (to the extent the Leased Premises are in a critical earthquake zone) in amounts not less than the actual replacement cost of the Improvements and Equipment, subject to a deductible or self-insurance retention not to exceed $500,000 except that with respect to earthquake coverage, the deductible or self-insurance retention shall not exceed 5% of replacement cost as long as such insurance is available. Such policies shall contain Replacement Cost and Agreed Amount Endorsements. (ii) Commercial general liability and automobile liability insurance against claims for personal and bodily injury, death or property damage occurring on, in or as a result of the use of the Leased Premises, in an amount not less than $15,000,000 per occurrence/annual aggregate, subject to a deductible or self-insurance retention not to exceed $500,000 including but not limited to garagekeepers liability, non-owned and hired automobile -18- liability and all other coverage extensions that are usual and customary for properties of this size and type provided, however, that the Landlord shall have the right to require such higher limits, up to a maximum of $50 million, as may be reasonable and customary for properties of this size and type. (iii) Worker's compensation insurance covering all persons employed by Tenant in connection with any work done on or about any of the Leased Premises for which claims for death, disease or bodily injury may be asserted against Landlord, Tenant or any of the Leased Premises or, in lieu of such worker's Compensation Insurance, a program of self-insurance complying with the rules, regulations and requirements of the appropriate agency of the State or States in which the Leased Premises are located. (iv) Comprehensive boiler and machinery insurance on any of the Equipment or any other equipment on or in the Leased Premises including but not limited to service interruption, expediting expenses, ammonia contamination, hazardous clean-up and comprehensive object definition, in an amount not less than $15,000,000, subject to a deductible or self-insurance retention not to exceed $500,000 for damage to property resulting from such covered perils as found in a standard comprehensive boiler & machinery policy. (v) Business income/interruption insurance to include loss of rents at limits sufficient to cover 100% of the annual rental income on an actual loss sustained basis with a period of indemnity not less than one year from the time of loss, subject to deductible or self-insurance retention not to exceed $500,000. (vi) During any period in which substantial Alterations at the Leased Premises are being undertaken, builder's risk insurance covering the total completed value including any "soft costs" with respect to the Improvements being altered or repaired (on a completed value, non-reporting basis), replacement cost of work performed and equipment, supplies and materials furnished in connection with such construction or repair of Improvements or Equipment, together with such "soft cost" endorsements and such other endorsements as Landlord may reasonably require. (vii) Such other insurance which at the time is usual and commonly obtained in connection with properties similar in type of building size, use and location to the Leased Premises. (b) The insurance required by Paragraph 16(a) shall be written by companies which have a Best's rating of A:VIII or above (provided that any carrier providing such insurance which is not rated by Best shall also be deemed acceptable unless Landlord objects to such carrier within ten (10) days of receipt of notice by Landlord that such carrier is providing coverage). The insurance policies shall be in amounts sufficient at all times to satisfy any coinsurance requirements thereof, unless such coinsurance requirements are waived in writing by the insurer. The insurance referred to in Paragraphs 16(a)(i), 16(a)(iv) and 16(a)(vi) shall name Landlord, Lender and Tenant as loss payees and as their interests may appear. If said insurance or any part thereof shall expire, be withdrawn, become void, voidable, unreliable or unsafe for any reason, including a breach of any condition thereof by Tenant or the failure or impairment of the capital of any insurer, Tenant shall immediately obtain new or additional insurance in compliance with Paragraph 16(a). (c) Each insurance policy referred to in clauses (i), (iv), (v) and (vi) of Paragraph 16(a) shall contain standard non-contributory mortgagee clauses in favor of and acceptable to Lender. Each policy required by any provision of Paragraph 16(a), except clause (iii) thereof, shall provide that it may not be cancelled except after thirty (30) days, prior written notice to Landlord and Lender. Each such policy shall also provide that any loss otherwise -19- payable thereunder with respect to the Leased Premises shall be payable notwithstanding (i) any act or omission of Landlord or Tenant which might, absent such provision, result in a forfeiture of all or a part of such insurance payment, (ii) the occupation or use of any of the Leased Premises for purposes more hazardous than those permitted by the provisions of such policy, (iii) any foreclosure or other action or proceeding taken by Lender pursuant to any provision of the Mortgage, Note, Assignment or other document evidencing or securing the Loan upon the happening of an event of default therein or (iv) any change in title to or ownership of Landlord's fee simple interest in any of the Leased Premises. (d) Tenant shall pay as they become due all premiums for the insurance required by Paragraph 16(a), shall renew or replace each policy and deliver to Landlord evidence thereof prior to the expiration date of such policy, and shall promptly deliver to Landlord copies of all such insurance certified by a senior officer of Tenant to be true and correct. (e) Anything in this Paragraph 16 to the contrary notwithstanding, any insurance which Tenant is required to obtain pursuant to Paragraph 16(a) may be carried under a "blanket" or umbrella policy or policies covering other properties or liabilities of Tenant, provided that such "blanket" or umbrella policy or policies otherwise comply with the provisions of this Paragraph 16. A copy of each such "blanket" or umbrella policy certified by a senior officer of Tenant to be true and correct shall promptly be delivered to Landlord. (f) Replacement costs of Improvements and Equipment may be redetermined not more frequently than once every twelve (12) months at the Landlord's request and shall be determined based on insurance carrier trends for corporations of established reputation engaged in the same or similar business of the Tenant. (g) Tenant shall promptly comply with and conform to (i) all provisions of each insurance policy required by this Paragraph 16 and (ii) all reasonable requirements of the insurers thereunder applicable to Landlord, Tenant (in connection with the Leased Premises) or any of the Leased Premises or to the use, manner of use, occupancy, possession, operation, maintenance, alteration or repair of any of the Leased Premises, even if such compliance necessitates Alterations or results in interference with the use or enjoyment of any of the Leased Premises. (h) Tenant shall not carry separate insurance concurrent in form or contributing in the event of a Casualty with that required in this Paragraph 16 unless (i) Landlord and Lender are included therein as named insureds, with loss payable as provided herein, and (ii) such separate insurance complies with the other provisions of this Paragraph 16. Tenant shall immediately notify Landlord of such separate insurance and shall deliver to Landlord copies thereof certified by a senior officer of Tenant. (i) All policies shall contain effective waivers by the carrier against all claims for insurance premiums against Landlord and shall contain full waivers of subrogation against the Landlord. (j) All proceeds of any insurance required under Paragraph 16(a) shall be payable as follows: (i) The insurance referred to in Paragraphs 16(a)(i), 16(a)(iv) and 16(a)(vi) shall name Landlord, Lender and Tenant as loss payees, as their interests may appear. The insurance referred to in Paragraph 16(a)(ii) shall name Landlord and Lender as additional insureds, and the insurance referred to in Paragraph 16(a)(v) shall name Tenant as insured and Lender and Landlord as loss payees to the extent of amounts payable by Tenant under the Lease. -20- (ii) Each insurer is hereby authorized and directed to make payment of insurance proceeds in excess of $500,000, or if an Event of Default exists, in any amount directly to Landlord or, if required by the Mortgage or requested by Lender pursuant to the Mortgage, to Lender instead of to Landlord and Tenant jointly, and Tenant hereby appoints each of Landlord and Lender as Tenant's attorneys-in-fact to endorse any draft therefor. If no Event of Default exists, proceeds up to and including $500,000 shall be paid directly to Tenant. 17. Casualty and Condemnation. (a) If any Casualty occurs the insurance proceeds for which is reasonably estimated by Tenant to be equal to or in excess of One Hundred Thousand Dollars ($100,000), Tenant shall give Landlord and Lender immediate nonce thereof: So long as no Event of Default exists Tenant is hereby authorized to adjust, collect and compromise all claims under any of the insurance policies required by Paragraph 16(a) and to execute and deliver on behalf of Landlord all necessary proofs of loss, receipts, vouchers and releases required by the insurers, and Landlord shall have the right to join with Tenant if the amount of any such claim is in excess of Five Hundred Thousand Dollars ($500,000). Any adjustment, settlement or compromise of any such claim in excess of $500,000 shall be subject to the prior written approval of Landlord, which shall not be unreasonably withheld, conditioned or delayed. Landlord shall have the right to prosecute or contest any such claim, adjustment, settlement or compromise and, in connection therewith, Tenant hereby irrevocably assigns to Landlord any and all interest it has or may have in such claim. If an Event of Default exists, Tenant shall not be entitled to adjust, collect or compromise any such claim or to participate with Landlord in any adjustment, collection or compromise of the Net Award payable in connection with a Casualty. Tenant agrees to sign, upon the request of Landlord, all such proofs of loss, receipts, vouchers and releases. Each insurer is hereby authorized and directed to make payment under said policies in excess of $500,000 directly to Landlord or, if required by the Mortgage or requested by Landlord or Lender pursuant to the Mortgage, to Lender instead of to Landlord and Tenant jointly, and Tenant hereby appoints each of Landlord and Lender as Tenant's attorneys-in-fact to endorse any draft therefor. The rights of Landlord under this Paragraph 17(a) shall be extended to Lender if and to the extent that any Mortgage so provides. (b) Tenant, immediately upon receiving a Condemnation Notice, shall notify Landlord and Lender thereof. Landlord and Lender are authorized to collect, settle and compromise, in their discretion (and, if no Event of Default exists, upon notice to Tenant), the amount of any Net Award. Provided that no Event of Default has occurred and is continuing, Tenant shall be entitled to participate with Landlord and Lender in any Condemnation proceeding or negotiations under threat thereof and to contest the Condemnation or the amount of the Net Award therefor. No agreement with any condemnor in settlement or under threat of any Condemnation shall be made by Tenant without the written consent, of Landlord and Lender, which shall not be unreasonably withheld, conditioned or delayed. Subject to the provisions of this Paragraph 17(b), Tenant hereby irrevocably assigns to Landlord any award or payment to which Tenant is or may be entitled by reason of any Condemnation, whether the same shall be paid or payable for Tenant's leasehold interest hereunder or otherwise; but nothing in this Lease shall impair Tenant's right to any award or payment on account of Tenant's trade fixtures, equipment or other tangible property which is not part of the Equipment, moving expenses or loss of business, if available, to the extent that and so long as (i) Tenant shall have the right to make, and does make, a separate claim therefor against the condemnor and (ii) such claim does not in any way reduce either the amount of the award otherwise payable to Landlord for the Condemnation of Landlord's fee interest in the Leased Premises or the amount of the award (if any) otherwise payable for the Condemnation of Tenant's leasehold interest hereunder. (c) If any Partial Casualty (whether or not insured against) or Partial Condemnation shall occur, this Lease shall continue, notwithstanding such event, and there shall -21- be no abatement or reduction of any Monetary obligations, except as provided in Paragraph 19(c). Promptly after such Partial Casualty or Partial Condemnation, Tenant, as required in Paragraph 12(a), shall commence and diligently continue to restore the Leased Premises as nearly as practicable to their value, condition and character immediately prior to such event (assuming the Leased Premises to have been in the condition required by this Lease). Upon the receipt by Landlord of the entire Net Award of such Partial Casualty or Partial Condemnation, Landlord shall make such Net Award available to Tenant for restoration in accordance with and subject to the provisions of Paragraph 19(a). If any Casualty or Condemnation which is not a Partial Casualty or Partial Condemnation shall occur, Tenant shall comply with the terms and conditions of Paragraph 18. 18. Termination Events. (a) If (i) all of the Leased Premises shall be taken by a Taking or (ii) any substantial portion of any Leased Premises shall be taken by a Taking or all or any substantial portion of the Leased Premises shall be totally damaged or destroyed by a Casualty and, in any such case, Tenant certifies and covenants to Landlord that it will forever abandon operations at the Lease Premises or (iii) Landlord receives notice from Ground Lessor that Ground Lessor is exercising its right under Section 11(b) of the Railroad Ground Lease to terminate the Ground Lease or (iv) the holder of any mortgage encumbering the interest of Ground Lessor commences to foreclose or otherwise acquire the interest of Ground Lessor in the Leased Premises (each of the events described in the above clauses (i), (ii), (iii) and (iv) shall hereinafter be referred to as a "Termination Event"), then (x) in the case of (i) and (iii) above, Tenant shall be obligated, within thirty (30) days after Tenant receives a Condemnation Notice or within thirty (30) days after Tenant receives a termination notice from Ground Lessor, as the case may be, and (y) in the case of (iv) above within ten (10) days after Tenant receives notice that any such holder has commenced to foreclose or otherwise acquire Ground lessor's interest in the Leased Premises, and (z) in the case of (ii) above, Tenant shall have the option, within thirty (30) days after Tenant receives a Condemnation Notice or thirty (30) days after the Casualty, as the case may be, to give to Landlord written notice (a "Termination Notice") of the Tenant's option to terminate this Lease in the form described in Paragraph 18(b). (b) A Termination Notice shall contain (i) notice of Tenant's intention to terminate this Lease on the first Basic Rent Payment Date which occurs at least thirty (30) days after the Fair Market Value Date (the "Termination Date"), (ii) a binding and irrevocable offer of Tenant to purchase the Leased Premises for a price equal to the Termination Amount and (iii) if the Termination Event is an event described in Paragraph 18(a)(ii), the certification and covenant described therein and a certified resolution of the Board of Directors of Tenant authorizing the same. Promptly upon the delivery to Landlord of a Termination Notice, Landlord and Tenant shall commence to determine Fair Market Value. (c) If Landlord shall reject such offer to terminate this Lease by written notice to Tenant (a "Rejection"), which Rejection shall contain the written consent of Lender, not later than thirty (30) days following the Fair Market Value Date, then this Lease shall terminate on the Termination Date; provided that, if Tenant has not satisfied all Monetary Obligations and all other obligations and liabilities under this Lease which have arisen (collectively, "Remaining Obligations") on or prior to the Termination Date, then Landlord may, at its option, extend the date on which this Lease may terminate to a date which is no later than the first Basic Rent Payment Date after the Termination Date on which Tenant has satisfied all Remaining Obligations. Upon such termination (i) all obligations of Tenant hereunder shall terminate except for any Surviving Obligations, (ii) Tenant shall promptly vacate and shall have no further right, title or interest in or to the Leased Premises and (iii) the Net Award or payment by Ground Lessor, as the case may be, shall be retained by Landlord. Notwithstanding anything to the contrary hereinabove contained, if Tenant shall have received a Rejection and, on the date -22- when this Lease would otherwise terminate as provided above, Landlord shall not have received the full amount of the Net Award payable by reason of the applicable Termination Event, then on the Termination Date Tenant shall assign to Landlord all of its right, title and interest, if any, in and to the Net Award. (d) Unless Tenant shall have received a Rejection not later than the thirtieth (30th) day following the Fair Market Value Date, Landlord shall be conclusively presumed to have accepted such offer. If such offer is accepted by Landlord then, on the Termination Date, Tenant shall pay to Landlord or Lender, if the Mortgage requires or permits Lender to so require, the Termination Amount and all Remaining Obligations and, if requested by Tenant, Landlord shall convey to Tenant or its designee the Leased Premises or the remaining portion thereof, if any, all in accordance with Paragraph 20. 19. Restoration; Reduction of Rent. (a) If (on the basis of a cost breakdown provided by Tenant) the cost of restoration in the event of a Casualty is reasonably estimated by Landlord and Lender to be Five Hundred Thousand ($500,000) or less, then, so long as an Event of Default has not occurred and is continuing, such amount shall be paid to and retained by Tenant, and Tenant shall promptly restore the Leased Premises in accordance with and subject to Paragraph 12 and Paragraph 13 hereof. As long as an Event of Default has not occurred and is continuing, any Net Award in excess of Five Hundred Thousand ($500,000) that is paid to Landlord or Lender shall be made available to Tenant for restoration of the Leased Premises and Landlord (or Lender if required by any Mortgage) shall hold such Net Award in a separate trust fund not commingled with any other funds (the "Restoration Fund") and disburse amounts from the Restoration Fund only in accordance with the following conditions: (i) prior to commencement of restoration, (A) the architects, contracts, contractors, plans and specifications for the restoration shall have been approved by Landlord, which approval shall not be unreasonably withheld, delayed or conditioned, (B) Landlord and Lender shall be provided with mechanics, lien insurance or an acceptable payment bond which insures satisfactory payment for the restoration, is in an amount and form and have a surety reasonably acceptable to Landlord, and name Landlord and Lender as additional dual obligees; (ii) at the time of any disbursement, no Event of Default shall exist and no mechanics' or materialmen's liens shall have been filed against any of the Leased Premises and remain undischarged; (iii) disbursements shall be made from time to time in an amount not exceeding the cost of the work completed since the last disbursement, upon receipt of (A) satisfactory evidence, including architects' certificates, of the stage of completion, the estimated total cost of completion and performance of the work to date in a good and workmanlike manner in accordance with the contracts, plans and specifications, (B) conditional waivers of liens, (C) a satisfactory bringdown of title insurance and (D) other evidence of cost and payment so that Landlord and Lender can verify that the amounts disbursed from time to time are represented by work that is completed, in place and free and clear of mechanics, and materialmen's lien claims; (iv) each request for disbursement shall be accompanied by a certificate of Tenant, signed by the president or a vice president or the Director of Property Management of Tenant, describing the work for which payment is requested, stating the cost incurred in connection therewith, stating that Tenant has not previously received payment for such work and, upon completion of the work, also stating that the work has been fully completed and complies with the applicable requirements of this Lease; -23- (v) Landlord may retain ten percent (10%) of the restoration fund until 50% of the restoration is fully completed; (vi) the Restoration Fund shall not be commingled with Landlord's other funds and shall bear interest at a commercially available rate; and (vii) such other reasonable conditions consistent with customary construction loan disbursement practices as Landlord or Lender may impose. (b) Prior to commencement of restoration and at any time during restoration, if the estimated cost of completing the restoration work free and clear of all liens, as reasonably determined by Landlord or Lender, exceeds the amount of the Net Award available for such restoration, the amount of such excess shall, upon demand by Landlord, be paid by Tenant to Landlord or Lender, if so required or permitted by the terms of the Mortgage, to be added to the Restoration Fund. Any sum so added by Tenant which remains in the Restoration Fund upon completion of restoration shall be refunded to Tenant. For purposes of determining the source of finds with respect to the disposition of funds remaining after the completion of restoration, the Net Award shall be deemed to be disbursed prior to any amount added by Tenant. (c) If any sum remains in the Restoration Fund after completion of the restoration and any refund to Tenant pursuant to Paragraph 19(b), such sum (the "Remaining Sum") shall be retained by Landlord or Lender, each Installment of Basic Rent payable on or after the date on which the Net Award is paid to Landlord shall be reduced by a fraction, the denominator of which shall be the total amount of all Basic Rent due from such date to and including the last day of the Term and the numerator of which shall be the amount of such Net Award retained by Landlord and/or Lender. 20. Procedures Upon Purchase. (a) If the Leased Premises are purchased by Tenant pursuant to any provision of this Lease, Landlord need not convey any better title thereto than that which was conveyed to Landlord, and Tenant or its designee shall accept such title, subject, however, to the Permitted Encumbrances and to all other liens, exceptions and restrictions on, against or relating to any of the Leased Premises and to all applicable Laws, but free of the lien of and security interest created by any Mortgage or Assignment and liens, exceptions and restrictions on, against or relating to the Leased Premises which have been created by or resulted solely from acts of Landlord after the date of this Lease, unless the same are Permitted Encumbrances or customary utility easements benefiting the Leased Premises or were created with the concurrence of Tenant or as a result of a default by Tenant under this Lease. (b) Upon the date fixed for any such purchase of the Leased Premises pursuant to any provision of this Lease (any such date the "Purchase Date"), Tenant shall pay to Landlord, or to any Person to whom Landlord directs payment, the Relevant Amount therefor specified herein, in Federal Funds, less any credit of the Net Award received and retained by Landlord or a Lender and allowed against the Relevant Amount, and Landlord shall deliver to Tenant (i) a special warranty deed (or with respect to the leasehold portion of the Leased Premises, a special warranty assignment of ground lease) which describes the premises being conveyed and conveys the title thereto as provided in Paragraph 20(a), (ii) such other instruments as shall be necessary to transfer to Tenant or its designee any other property (or rights to any Net Award not yet received by Landlord or a Lender) then required to be sold by Landlord to Tenant pursuant to this Lease and (iii) any Net Award received by Landlord, not credited to Tenant against the Relevant Amount and required. to be delivered by Landlord to Tenant pursuant to this Lease; provided, that if any Monetary Obligations remain outstanding on such date, then Landlord may deduct from the Net Award the amount of such Monetary Obligations; and further -24- provided, that if any event has occurred which, in Landlord's reasonable judgment, is likely to subject any Indemnitee to any liability which Tenant is required to indemnify against pursuant to Paragraph 15, then an amount shall be deducted from the Net Award which, in Landlord's reasonable judgment, is sufficient to satisfy such liability, which amount shall be deposited in an escrow account with a financial institution reasonably satisfactory to Landlord and Tenant on terms and conditions reasonably satisfactory to Landlord and Tenant, pending resolution of such matter. If on the Purchase Date any Monetary Obligations remain outstanding and no Net Award is payable to Tenant by Landlord or the amount of such Net Award is less than the amount of the Monetary Obligations, then Tenant shall pay to Landlord on the Purchase Date the amount of such Monetary Obligations. Upon the completion of such purchase, this Lease and all obligations and liabilities of Tenant hereunder with respect to the Leased Premises shall terminate, except any Surviving Obligations. (c) If the completion of such purchase shall be delayed after (i) the Termination Date, in the event of a purchase pursuant to Paragraph 18 or, (ii) the date scheduled for such purchase, in the event of a purchase under any other provision of this Lease then, except as specifically provided in the following sentence, (x) Rent shall continue to be due and payable until completion of such purchase and (y) at Landlord's sole option, Fair Market Value shall be redetermined and the Relevant Amount payable by Tenant pursuant to the applicable provision of this Lease shall be adjusted to reflect such redetermination. If, however, the delay for completion of such purchase is caused solely by an act of or failure to act by Landlord, Tenant's obligation to pay Rent until completion of the purchase shall be limited to that portion of Basic Rent equal to the payments of principal and interest payable on the Loan, and such payments shall be payable directly to the Lender and shall be credited against the purchase price payable by Tenant to Landlord. (d) Any prepaid Monetary Obligations paid to Landlord shall be prorated, as of the Purchase Date, and the prorated unapplied balance shall be deducted from the Relevant Amount due to Landlord. 21. Assignment and Subletting. (a)(i) Tenant shall have the right, upon thirty (30) days prior written notice to Landlord and Lender, with no consent of Landlord or Lender being required or necessary ("Preapproved Assignment") to assign this Lease by operation of law or otherwise to any Person ("Preapproved Assignee") (A) that is an Affiliate of Tenant or (B) which immediately following such assignment has, or is a direct or indirect subsidiary of a parent corporation that has executed (or will, as a condition to such assignment, execute) a guaranty of the obligations of Tenant hereunder substantially in the form of the Guaranty and has, a publicly traded unsecured senior debt rating that is the higher of (1) the then publicly traded unsecured senior debt rating of Guarantor or (2) a rating of "A" or better from Moody's Investors Services, Inc. or a rating of "A" or better from Standard & Poor's Corporation (or in the event both of such rating agencies cease to furnish such ratings, then a comparable rating by any rating agency reasonably acceptable to Landlord and Lender). (ii) If Tenant desires to assign this Lease to a Person ("Non-Preapproved Assignee") who would not be a Preapproved Assignee ("Non-Preapproved Assignment") then Tenant shall, not less than forty-five (45) days prior to the date on which it desires to make a Non-Preapproved Assignment submit to Landlord and Lender information regarding the following with respect to the Non-Preapproved Assignee: (A) credit, (B) capital structure, (C) management, (D) operating history, (E) proposed use of the Leased Premises and (F) risk factors associated with the proposed use of the Leased Premises by the Non-Preapproved Assignee, taking into account factors such as environmental concerns, product liability and the like. Landlord and Lender shall review such information and shall approve or disapprove the -25- Non-Preapproved Assignee no later than the twentieth (20th) day following receipt of all such information, and Landlord and Lender shall be deemed to have acted reasonably in granting or withholding consent if such grant or disapproval is based on a review of the above-described criteria applying such review standards as are customary in private placement transactions. (iii) If Landlord or Lender withhold consent to the Non-Preapproved Assignment and Tenant desires to complete the Non-Preapproved Assignment, Tenant shall make a rejectable offer (the "Intended Assignment Offer") to purchase the Leased Premises for a purchase price equal to the Offer Amount and to consummate the purchase on the first Basic Rent Payment Date occurring thirty (30) days after the determination of Fair Market Value (the "Intended Assignment Purchase Date"). Notwithstanding the foregoing, if the Intended Assignment offer is accepted by Landlord and Lender and the Non-Preapproved Assignment occurs on a date (the "Assignment Date") that is prior to the Intended Assignment Purchase Date, then, no later than the Assignment Date, Tenant shall deposit in escrow with Lender an amount (the "Deposit Amount") equal to one hundred percent (100%) of the sum of the Project Cost and any Prepayment Premium. The Deposit Amount shall be held by and invested by Landlord and the Deposit Amount, together with any interest earned thereon, shall be applied on the Intended Assignment Purchase Date to payment of the Offer Amount. (iv) If Landlord shall reject the Intended Assignment Offer by notice to Tenant, such notice to contain the written consent of Lender to such rejection, no later than the thirtieth (30th) day following receipt of the Intended Assignment Offer by Landlord, then this Lease shall remain in full force and effect and Landlord and Lender shall be deemed to have consented to the Non-Preapproved Assignment. Nothing provided herein shall constitute a waiver by Landlord of the obligation of Tenant to comply with the requirements of this Paragraph 21(a)(iv) if a subsequent Non-Preapproved Assignment arises. No rejection of the Intended Assignment Offer shall be effective for any purpose unless consented to in writing by Lender. (v) Unless Landlord shall have rejected the Intended Assignment Offer by the foregoing notice to Tenant not later than the thirtieth (30th) day following receipt of information described in the foregoing Paragraph 21(a)(iv), Landlord shall be conclusively presumed to have accepted the Intended Assignment Offer. If the Intended Assignment Offer is accepted by Landlord, Tenant shall pay to Landlord the Offer Amount (less the Deposit Amount and interest thereon paid to Landlord) on the Intended Assignment Purchase Date and, provided that no Rent or any other charge is due and unpaid under this Lease as of the Intended Assignment Purchase Date and Tenant is otherwise in compliance with the terms of this Lease, Landlord shall convey to Tenant the Leased Premises in accordance with the provisions of Paragraph 20 of this Lease. (b) (i) Upon thirty (30) days prior written notice to Landlord and Lender, to enter into one or more subleases that demise, in the aggregate, up to but not in excess at any time of thirty-three and one-third percent (33 1/3%) of the gross space in the Improvements for a term of up to ten (10) years (but not extending beyond the Expiration Date) with no consent or approval of Landlord being required or necessary ("Preapproved Sublet"). Other than pursuant to a Preapproved Sublet, no portion of the Leased Premises shall be subleased during the Term to any other Person without the prior written consent of Landlord and Lender, which consent shall not be unreasonably withheld or delayed, and which consent shall be granted or withheld based on a review of the following criteria as they relate to the proposed sublessee: (1) credit, (2) capital structure, (3) management, (4) operating history and (5) the proposed use of the sublet portion of the Improvements, taking in account factors related to the proposed subtenant's use of the Leased Premises such as environmental concerns. Landlord and Lender shall be deemed to have acted reasonably in granting or withholding consent if such grant or disapproval is based on their reasonable review of the above-described criteria. -26- (c) If Tenant assigns all its rights and interest under this Lease, the assignee under such assignment shall expressly assume all of the obligations of Tenant hereunder, actual or contingent, including obligations of Tenant which may have arisen on or prior to the date of such assignment, by a written instrument delivered to Landlord at the time of such assignment. Each sublease of any of the Leased Premises shall be subject and subordinate to the provisions of this Lease. Following any assignment (i) to a Person that satisfies the test for a Preapproved Assignee under clause (B) of Paragraph 21 (a)(i) or (ii) to a Non-Preapproved Assignee that is approved by Lender and that immediately following the Non-Preapproved Assignment has a publicly traded unsecured senior debt rating of not less than "Baa" from Moody's Investors Services, Inc. or a rating of not less than "BBB" from Standard & Poor's Corporation (or in the event both of such rating agencies cease to furnish such ratings, then a comparable rating by a rating agency reasonably acceptable to Landlord and Lender), Tenant and Guarantor shall be deemed released from their respective obligations and liabilities under this Lease and the Guaranty that arise after the date of such Preapproved Assignment or Non-Preapproved Assignment described in clause (ii) above, as the case may be, and do not relate to any act or failure to act by Guarantor or Tenant that occurred prior to the date of such assignment. Except as specifically provided in the foregoing sentence, no assignment or sublease made as permitted by this Paragraph 21 shall affect or reduce any of the obligations of Tenant hereunder or of Guarantor under the Guaranty, and all such obligations shall continue in full force and effect as obligations of a principal and not as obligations of a guarantor, as if no assignment or sublease had been made. No assignment or sublease shall impose any additional obligations on Landlord under this Lease. (d) With respect to any Preapproved Assignment or Preapproved Sublet, Tenant shall provide to Landlord information reasonably required by Landlord to establish that any proposed Preapproved Assignment or Preapproved Sublet satisfies the criteria set forth above. (e) Tenant shall, within ten (10) days after the execution and delivery of any assignment or sublease, deliver a duplicate original copy thereof to Landlord which, in the event of an assignment, shall be in recordable form. (f) As security for performance of its obligations under this Lease, Tenant hereby grants, conveys and assigns to Landlord all right, title and interest of Tenant in and to all subleases and any guaranty executed in connection therewith, now in existence or hereafter entered into for any or all of the Leased Premises, any and all extensions, modifications and renewals thereof and all rents, issues and profits therefrom. Landlord hereby grants to Tenant a license to collect and enjoy all rents and other sums of money payable under any sublease of any Leased Premises, provided, however, that Landlord shall have the absolute right at any time during the existence of an Event of Default, upon notice to Tenant and any subtenants, to revoke said license and to collect such rents and sums of money and to retain the same as a credit against Rent. Tenant shall not (i) consent to, cause or allow any material modification or alteration of any of the terms, conditions or covenants of the subleases or any guaranty thereof or the termination or surrender of any sublease or guaranty thereof, (ii) anticipate Rents prior to the accrual thereof, or (iii) waive or release any tenant or guarantor thereunder from any material obligation or performance, without the prior written approval of Landlord, which consent shall not be unreasonably withheld, nor shall Tenant do or permit anything to be done, the doing of which, nor omit or refrain from doing anything, the omission of which, will or could be a material breach of or material default in the terms of any subleases. Tenant shall, with respect to each sublease, observe and perform each and every condition to be performed by Tenant thereunder, give prompt notice to Landlord and Lender of any notice given or received under any sublease or guaranty thereof, enforce, short of termination, each sublease and guaranty thereof and appear in and defend any action growing out of or in any manner connected with any sublease or guaranty thereof, provided, that, if Tenant shall fail or refuse to -27- so enforce or defend Landlord or Lender shall have such right which shall be exercisable at the sole cost and expense of Tenant. (g) Tenant shall have the right to grant a first lien leasehold mortgage on, or to pledge its leasehold interest in, the Leased Premises to its senior lender, and a second and a third lien leasehold mortgage on the Leased Premises to its other lenders but shall not have the power to otherwise mortgage, pledge or otherwise encumber its interest under this Lease or any sublease of the Leased Premises, and any other such mortgage, pledge or encumbrance made in violation of this Paragraph 21 shall be void. Landlord and Lender shall execute such documents as may be reasonably requested by Tenant's lender who holds a first lien leasehold mortgage and are customarily acceptable to Landlord and Lender in order to afford to such leasehold mortgagee rights of notice and an opportunity to cure an Event of Default and the benefits of any non-disturbance and attornment agreement in favor of Tenant, provided, however, that any entity that becomes a successor tenant under this Paragraph 21(g) shall be required to be in compliance with all of the terms of this Lease. (h) Subject to Tenant's rights under Paragraphs 37 and 38, Landlord may sell or transfer the Leased Premises at any time without Tenant's consent to any third party (a "Third Party Purchaser"). In the event of any such transfer, Tenant shall attorn to any Third Party Purchaser as Landlord so long as such Third Party Purchaser and Landlord notify Tenant in writing of such transfer and such Third Party Purchaser assumes in writing the obligations of Landlord under this Lease. At the request of Landlord, Tenant, at no cost or expense to Tenant, will execute such documents confirming the agreement referred to above and such other agreements as Landlord may reasonably request, provided that such agreements do not increase the liabilities and obligations of Tenant hereunder. no event shall Tenant have any obligation to attorn to, or recognize more than one Person at one time as, Landlord. 22. Events of Default. (a) The occurrence of any one or more of the following (after expiration of any applicable cure period as provided in Paragraph 22(b)) shall, at the sole option of Landlord, constitute an "Event of Default" under this Lease: (i) a failure by Tenant to make any payment of any Monetary Obligation, regardless of the reason for such failure; (ii) a failure by Tenant duly to perform and observe, or a violation or breach of, any other provision hereof not otherwise specifically mentioned in this Paragraph 22(a); (iii) any representation or warranty made by Tenant herein or by Guarantor under the Guaranty or by Tenant or Guarantor in any certificate, demand or request made pursuant hereto proves to be incorrect in any material respect when made; (iv) a default beyond any applicable cure period or at maturity by Tenant or Guarantor in any payment of principal or interest on any obligations for borrowed money having an outstanding principal balance of $10,000,000 or more in the aggregate, or in the performance of any other provision contained in any instrument under which any such obligation is created or secured (including the breach of any covenant thereunder); (v) a final, non-appealable judgment or judgments for the payment of money in excess of $15,000,000 in the aggregate shall be rendered against Tenant or Guarantor and the same shall remain undischarged for a period of sixty (60) consecutive days; -28- (vi) Tenant or Guarantor shall (A) voluntarily be adjudicated a bankrupt or insolvent, (B) seek or consent to the appointment of a receiver or trustee for itself or the Leased Premises, (C) file a petition seeking relief under the bankruptcy or other similar laws of the United States, any state or any jurisdiction, (D) make a general assignment for the benefit of creditors, or (E) be unable to pay its debts as they mature; (vii) a court shall enter an order, judgment or decree appointing, without the consent of Tenant and Guarantor, a receiver or trustee for it or for the Leased Premises or approving a petition filed against Tenant or Guarantor, as the case may be, which seeks relief under the bankruptcy or other similar laws of the United States, any state or any jurisdiction, and such order, judgment or decree shall remain undischarged or unstayed ninety (90) days after it is entered; (viii) the Leased Premises shall have been vacated or abandoned; (ix) Tenant or Guarantor shall be liquidated or dissolved or shall begin proceedings towards its liquidation or dissolution; (x) the estate or interest of Tenant in the Leased Premises shall be levied upon or attached in any proceeding and such estate or interest is about to be sold or transferred or such process shall not be vacated or discharged within ninety (90) days after it is made; (xi) a failure by Tenant to perform or observe, or a violation or breach of, or a misrepresentation by Tenant under, any provision of any Assignment or any other document executed by Tenant and Lender with respect to this Lease or the Loan, if such failure, violation, breach or misrepresentation gives rise to a default beyond any applicable cure period with respect to any Loan, giving the Lender the right to accelerate the Loan and such default has not been cured; (xii) a failure by Tenant to maintain in effect any license or permit necessary for the use, occupancy or operation of the Leased Premises; (xiii) a Non-Preapproved Assignment shall occur and Tenant shall have failed to comply with the provisions, of Paragraph 21(a)(iii) through (v); (xiv) Guarantor shall have failed to comply with or a breach shall occur with respect to any of the representations, warranties or covenants set forth in the Guaranty; (xv) Tenant shall sell or transfer or enter into an agreement to sell or transfer all or substantially all of its assets unless such sale shall include an assignment of this Lease in compliance with Paragraph 21; (xvi) an Event of Default shall exist under the Original Lease; (xvii) a default shall exist under the Railroad Ground Lease which would give the ground lessor under the Railroad Ground Lease the right to terminate; or (xviii) Tenant shall fail to make a rejectable offer under Paragraph 18(a)(iii) or (iv) within the time periods provided therein. (b) No notice or cure period shall be required in any one or more of the following events: (A) the occurrence of an Event of Default under clause (iv), (v), (vi), (vii), -29- (viii), (ix), (x), (xi), (xii), (xiii), (xiv), (xv), (xvi), (xvii) or (xviii) of Paragraph 22(a); (B) the default consists of a failure to provide insurance with the types of coverage and in the amounts referred to in clauses (i), (ii), (iv), (v) and (vi) of Paragraph 16(a) (but excluding a default consisting of a failure to provide insurance which meets any of the other specific requirements in clauses (i), (ii), (iv), (v) and (vi) of Paragraph 16(a)) or an assignment or sublease entered into in violation of Paragraph 21; or (C) the default is such that any delay in the exercise of a remedy by Landlord could reasonably be expected to cause irreparable harm to Landlord. If the default consists of the failure to pay any Monetary Obligation under clause (i) of Paragraph 22(a), the applicable cure period shall be five (5) days from the date on which notice is given, but Landlord shall not be obligated to give notice of, or allow any cure period for, any such default more than one (1) time within any Lease Year. If the default consists of a default under clause (ii) of Paragraph 22(a), other than the events specified in clauses (B) and (C) of the first sentence of this Paragraph 22(b), the applicable cure period shall be twenty (20) days from the date on which notice is given or, if the default cannot with reasonable diligence be cured within such twenty (20) day period and delay in the exercise of a remedy would not (in Landlord's reasonable judgment) cause any material adverse harm to Landlord or any of the Leased Premises, the cure period shall be extended for the period required to cure the default (but such cure period, including any extension, shall not in the aggregate exceed ninety (90) days), provided that Tenant shall commence to cure the default within the said twenty-day period and shall actively, diligently and in good faith proceed with and continue the curing of the default until it shall be fully cured. If the default consists of a default under clause (ii) with respect to the failure to provide insurance which meets all of the requirements in clauses (i), (ii), (iv), (v) and (vi) of Paragraph 16(a), or clauses (iii) or (xiv) of Paragraph 22(a), the applicable cure period shall be twenty (20) days from the date on which notice is given provided that the default or the granting of a cure period does not directly or indirectly cause the Lender to declare Landlord in default of the Loan. 23. Remedies and Damages Upon Default. If an Event of Default shall have occurred and is continuing. (a) Landlord shall have the right, at its sole option, then or at any time thereafter, to exercise its remedies and to collect damages from Tenant in accordance with this Paragraph 23, subject in all events to applicable Law, without demand upon or notice to Tenant except as otherwise provided in Paragraph 22(b) and this Paragraph 23. (i) Landlord may give Tenant notice of Landlord's intention to terminate this Lease on a date specified in such notice. Upon such date, this Lease, the estate hereby granted and all rights of Tenant hereunder shall expire and terminate. Upon such termination, Tenant shall immediately surrender and deliver possession of the Leased Premises to Landlord in accordance with Paragraph 26. If Tenant does not so surrender and deliver possession of all of the Leased Premises, Landlord may re-enter and repossess any of the Leased Premises not surrendered, with or without legal process, by peaceably entering any of the Leased Premises and changing locks or by summary proceedings, ejectment or any other lawful means or procedure. Upon or at any time after taking possession of any of the Leased Premises and whether or not the Lease has been terminated, Landlord may, by peaceable means or legal process, remove any Persons or property therefrom. Landlord shall be under no liability for or by reason of any such entry, repossession or removal. Notwithstanding such entry or repossession, Landlord may (A) exercise the remedy set forth in and collect the damages permitted by Paragraph 23(a)(iii) or (B) collect the damages set forth in Paragraph 23(b)(i) or 23(b)(ii). (ii) After repossession of any of the Leased Premises pursuant to clause (i) above, Landlord shall have the right with or without terminating this Lease and as agent of Tenant, if appropriate, to relet any of the Leased Premises to such tenant or tenants, for -30- such term or terms, for such rent, on such conditions and for such uses as Landlord in its sole discretion may determine, and collect and receive any rents payable by reason of such reletting. Landlord may make such Alterations in connection with such reletting as it may deem advisable in its sole discretion. Notwithstanding any such reletting, Landlord may collect the damages set forth in Paragraph 23(b)(ii). (iii) Landlord may, upon notice to Tenant, require Tenant to make an irrevocable offer to terminate this Lease in its entirety for an amount (the "Default Termination Amount") specified in the next sentence. The "Default Termination Amount" shall be the greater of (A) the Fair Market Value of the Leased Premises or (B) the sum of the Project Cost and Prepayment Premium which Landlord will be required to pay in prepaying any Loan with proceeds of the Default Termination Amount. Upon such notice to Tenant, Tenant shall be deemed to have made such offer and shall, if requested by Landlord, within ten (10) days following such request, deposit with Landlord as payment against the Default Termination Amount the amount described in (B) above, Landlord and Tenant shall promptly commence to determine Fair Market Value. Within thirty (30) days after the Fair Market Value Date, Landlord shall accept or reject such offer. If Landlord accepts such offer then, on the tenth (10th) business day after such acceptance, Tenant shall pay to Landlord the Default Termination Amount and, at the request of Tenant, Landlord will convey the Leased Premises to Tenant or its designee "as is," with all faults and without warranty in accordance with Paragraph 20. Any rejection by Landlord of such offer shall have no effect on any other remedy Landlord may have under this Lease. (iv) Landlord may declare by notice to Tenant the entire Basic Rent (in the amount of Basic Rent then in effect) for the remainder of the then current Term to be immediately due and payable. Tenant shall immediately pay to Landlord all such Basic Rent discounted to its Present Value, all accrued Rent then due and unpaid, all other Monetary obligations which are then due and unpaid and all Monetary obligations which arise or become due by reason of such Event of Default (including any Costs of Landlord). Upon receipt by Landlord of all such accelerated Basic Rent and Monetary Obligations, this Lease shall remain in full force and effect and Tenant shall have the right to possession of the Leased Premises from the date of such receipt by Landlord to the end of the Term, and subject to all the provisions of this Lease, including the obligation to pay all increases in Basic Rent and all Monetary Obligations that subsequently become due, except that (A) no Basic Rent which has been prepaid hereunder shall be due thereafter during the said Term and (B) Tenant shall have no option to extend or renew the Term. (b) The following constitute damages to which Landlord shall be entitled if Landlord exercises its remedies under Paragraph 23(a)(i) or 23(a)(ii): (i) If Landlord exercises its remedy under Paragraph 23(a)(i) but not its remedy under Paragraph 23(a)(ii) (or attempts to exercise such remedy and is unsuccessful in reletting the Leased Premises) then, upon written demand from Landlord, Tenant shall pay to Landlord, as liquidated and agreed final damages for Tenant's default and in lieu of all current damages beyond the date of such demand (it being agreed that it would be impracticable or extremely difficult to fix the actual damages), an amount equal to the Present Value of the excess, if any, of (A) all Basic Rent from the date of such demand to the date on which the Term is scheduled to expire hereunder in the absence of any earlier termination, re-entry or repossession over (B) the then fair market rental value of the Leased Premises for the same period. Tenant shall also pay to Landlord all of Landlord's Costs in connection with the repossession of the Leased Premises and any attempted reletting thereof, including all brokerage commissions, legal expenses attorneys, fees, employees, expenses, costs of Alterations and expenses and preparation for reletting. -31- (ii) If Landlord exercises its remedy under Paragraph 23(a)(i) or its remedies under Paragraph 23(a)(i) and 23(a)(ii), then Tenant shall, until the end of what would have been the Term in the absence of the termination of the Lease, and whether or not any of the Leased Premises shall have been relet, be liable to Landlord for, and shall pay to Landlord, as liquidated and agreed current damages on the date on which the same are due and payable under the terms of this Lease all Monetary Obligations which would be payable under this Lease by Tenant in the absence of such termination less the net proceeds, if any, of any reletting pursuant to Paragraph 23(a)(ii), after deducting from such proceeds all of Landlord's Costs (including the items listed in the last sentence of Paragraph 23(b)(i) hereof) incurred in connection with such repossessing and reletting; provided, that if Landlord has not relet the Leased Premises, such Costs of Landlord shall be considered to be Monetary Obligations payable by Tenant. Tenant shall be and remain liable for all sums aforesaid, and Landlord may recover such damages from Tenant and institute and maintain successive actions or legal proceedings against Tenant for the recovery of such damages. Nothing herein contained shall be deemed to require Landlord to wait to begin such action or other legal proceedings until the date when the Term would have expired by its own terms had there been no such Event of Default. (c) Notwithstanding anything to the contrary herein contained, in lieu of or in addition to any of the foregoing remedies and damages, Landlord may exercise any remedies and collect any damages available to it at law or in equity. If Landlord is unable to obtain full satisfaction pursuant to the exercise of any remedy, it may pursue any other remedy which it has hereunder or at law or in equity. (d) Notwithstanding anything to the contrary herein contained, if the Event of Default is solely an Event of Default under Paragraph 22(a)(iv) hereof, and such Event of Default ceases to exist prior to the date that Landlord commences a judicial action to exercise a remedy hereunder, then Landlord shall discontinue the exercise of remedies under this Paragraph 23(b) with respect to such Event of Default but not with respect to any other Event of Default. (e) Landlord shall not be required to mitigate any of its damages hereunder unless required to by applicable Law. If any Law shall validly limit the amount of any damages provided for herein to an amount which is less than the amount agreed to herein, Landlord shall be entitled to the maximum amount available under such Law. (f) No termination of this Lease, repossession or reletting of any of the Leased Premises, exercise of any remedy or collection of any damages pursuant to this Paragraph 23 shall relieve Tenant of any Surviving Obligations. (g) WITH RESPECT TO ANY REMEDY OR PROCEEDING HEREUNDER, LANDLORD AND TENANT WAIVE ANY RIGHT TO A TRIAL BY JURY. (h) During the existence of any Event of Default, Landlord shall have the right (but no obligation) to perform any act required of Tenant hereunder and, if performance of such act requires that Landlord enter the Leased Premises, Landlord may enter the Leased Premises for such purpose. (i) No failure of Landlord (i) to insist at any time upon the strict performance of any provision of this Lease or (ii) to exercise any option, right, power or remedy contained in this Lease shall be construed as a waiver, modification or relinquishment thereof. A receipt by Landlord of any sum in satisfaction of any Monetary obligation with knowledge of the breach of any provision hereof shall not be deemed a waiver of such breach, and no waiver by Landlord of any provision hereof shall be deemed to have been made unless expressed in a writing signed by Landlord. -32- (j) Tenant hereby waives and surrenders, for itself and all those claiming under it, including creditors of all kinds, (i) any right and privilege which it or any of them may have under any present or future Law to redeem any of the Leased Premises or to have a continuance of this Lease after termination of this Lease or of Tenant's right of occupancy or possession pursuant to any court order or any provision hereof, and (ii) the benefits of any present or future Law which exempts property from liability for debt or for distress for rent. (k) Except as otherwise provided herein, all remedies are cumulative and concurrent and no remedy is exclusive of any other remedy. Each remedy may be exercised at any time an Event of Default has occurred and is continuing and may be exercised from time to time. No remedy shall be exhausted by any exercise thereof. 24. Notices. All notices, demands, requests, consents, approvals, offers, statements and other instruments or communications required or permitted to be given pursuant to the provisions of this Lease shall be in writing and shall be deemed to have been given for all purposes when delivered in person or by Federal Express or other reliable 24-hour delivery service or facsimile followed by Federal Express or other reliable delivery service or by five (5) business days after being deposited in the United States mail, by registered or certified mall, return receipt requested, postage prepaid, addressed to the other party at its address stated above. A copy of any notice given by Tenant to Landlord shall simultaneously be given by Tenant to Reed Smith LLP, 2500 One Liberty Place, Philadelphia, PA 19103, Attention: Chairman, Real Estate Department. For the purposes of this Paragraph, any party may substitute another address stated above (or substituted by a previous notice) for its address by giving fifteen (15) days' notice of the new address to the other party, in the manner provided above. 25. Estoppel Certificate. At any time upon not less than ten (10) days, prior written request by Landlord Lender, or Tenant (the "Requesting Party") to Landlord or Tenant (the "Responding Party"), the Responding Party shall deliver to the Requesting Party or its designee a statement in writing, executed by an authorized officer of the Responding Party, certifying (a) that, except as otherwise specified, this Lease is unmodified and in full force and effect, (b) the dates to which Basic Rent, Additional Rent and all other Monetary Obligations have been paid, (c) that, to the knowledge of the signer of such certificate and except as otherwise specified, no default by either Landlord or Tenant exists hereunder, (d) such other matters as the Requesting Party may reasonably request, and (e) if Tenant is the Responding Party that, except as otherwise specified, there are no proceedings pending or, to the knowledge of the signer, threatened, against Tenant before or by a court or administrative agency which, if adversely decided, would materially and adversely affect the financial condition and operations of Tenant. Any such statements by the Responding Party may be relied upon by the Requesting Party, any Person whom the Requesting Party notifies the Responding Party in its request for the Certificate is an intended recipient or beneficiary of the Certificate, any Lender or their assignees and by any prospective purchase or mortgagee of any of the Leased Premises. Any certificate required under this Paragraph 25 and delivered by Tenant shall state that, in the opinion of each person signing the same, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to the subject matter of such certificate, and shall briefly state the nature of such examination or investigation. 26. Surrender. Upon the expiration or earlier termination of this Lease, Tenant shall peaceably leave and surrender the Leased Premises to Landlord in the same condition in which the Leased Premises was at the commencement of this Lease, except as repaired, rebuilt, restored, altered, replaced or added to as permitted or required by any provision of this Lease, and except for ordinary wear and tear. Upon such surrender, Tenant shall (a) remove from the Leased Premises all property which is owned by Tenant or third parties other than Landlord and (b) repair any damage caused by such removal. Property not so removed shall become the property of Landlord, and Landlord may thereafter cause such property to be -33- removed from the Leased Premises. The cost of removing and disposing of such property and repairing any damage to any of the Leased Premises caused by such removal shall be paid by Tenant to Landlord upon demand. Landlord shall not in any manner or to any extent be obligated to reimburse Tenant for any such property which becomes the property of Landlord pursuant to this Paragraph 26. 27. No Merger of Title. There shall be no merger of the leasehold estate created by this Lease with the fee estate in any of the Leased Premises by reason of the fact that the same Person may acquire or hold or own, directly or indirectly, (a) the leasehold estate created hereby or any part thereof or interest therein and (b) the fee estate in any of the Leased a Premises or any part thereof or interest therein, unless and until all Persons having any interest in the interests described in (a) and (b) above which are sought to be merged shall join in a written instrument effecting such merger and shall duly record the same. 28. Books and Records. (a) Tenant shall keep or shall cause Guarantor to keep adequate records with respect to the Leased Premises and books of account with respect to the finances and business of Tenant generally and in accordance with generally accepted accounting principles ("GAAP") consistently applied, and shall permit Landlord and Lender by their respective agents, accountants and attorneys, upon reasonable notice to Tenant, to visit and inspect the Leased Premises and examine (and make copies of) the records and books of account and to discuss the finances and business with the officers of Tenant, at such reasonable times as may be requested by Landlord. Upon the request of Lender or Landlord (either telephonically or in writing), Tenant shall provide and shall cause Guarantor to provide the requesting party with copies of any information to which such party would be entitled in the course of a personal visit. (b) Tenant shall deliver to Landlord and to Lender within ninety-five (95) days of the close of each fiscal year, annual audited financial statements of Tenant or Guarantor prepared by nationally recognized independent certified public accountants. Tenant shall also furnish to Landlord (i) within fifty (50) days after the end of each of the three remaining quarters unaudited financial statements, certified by Tenant's chief financial officer or a financial vice president together with a copy of any compliance certificate furnished by Tenant to its senior lender or lenders, (ii) as and when provided to Tenant's senior lender or lenders Tenant's annual operating plan and (iii) all filings, if any, of Form 10-K, Form 10-Q and other required flings with the Securities and Exchange Commission pursuant to the provisions of the Securities Exchange Act of 1934, as amended, or any other Law. All financial statements of Tenant shall be prepared in accordance with GAAP consistently applied, except that quarterly statements shall be subject to year-end adjustments and to the absence of footnotes. All annual financial statements shall be accompanied by an opinion of said accountants stating that (C) there are no qualifications as to the scope of the audit and (D) the audit was performed in accordance with GAAP, and the certificate of the chief financial officer or a financial vice president of Tenant, dated within five (5) days of the delivery of such statement, stating that (E) such Person knows of no Event of Default, or event which, upon notice or the passage of time or both, would, become an Event of Default which has occurred and is continuing hereunder or, if any such event has occurred and is continuing, specifying the nature and period of existence thereof and what action Tenant has taken or proposes to take with respect thereto and (F) except as otherwise specified in such affidavit, that such Person has no knowledge if any respect in which Tenant has not fulfilled all of its obligations under this Lease which are required to be fulfilled on or prior to the date of such affidavit. (c) Landlord and its agents, accountants and attorneys, shall consider and treat on a strictly confidential basis (i) any information contained in the books and records of Tenant, (ii) any copies of any books and records of Tenant, and any financial statements of -34- Tenant pursuant to Paragraph 28(b) which are delivered to or received by them. Neither Landlord nor its agents, accountants and attorneys, shall disclose any information contained in Tenant's books and records nor distribute copies of any of such books and records nor Tenant's financial statements to any other Persons without the prior written consent of the chief operating officer or the financial vice president of Tenant. The restrictions contained in this Paragraph 28(c) shall not prevent disclosure by Landlord any information that is generally available to the public or in any of the following circumstances: (i) Upon the order of any court or administrative agency to the extent required by such order and not effectively stayed or by appeal or otherwise; (ii) Upon the request, demand or requirement of the Securities and Exchange Commission (the "SEC") or otherwise upon the request, demand or requirement of any other regulatory agent or authority having Jurisdiction over such party, but subject to the consent of Tenant, which shall not be unreasonably withheld and shall be deemed given if required by law; (iii) That has been publicly disclosed by Tenant in a press release or other public announcement of general circulation; (iv) To counsel or accountants for Landlord who has agreed to abide by the provisions of this Paragraph 28(c); (v) While an Event of Default exists, in connection with the exercise of any right or remedy under this Lease or any other related document; (vi) Independently developed by Landlord to the extent that confidential information provided by Tenant is not used to develop such information; (vii) with respect to financial information and information that Landlord, the SEC or its attorneys deem to be material, in any reporting to the shareholders of Landlord or the shareholders or prospective shareholders (whether through a registered public offering or otherwise) of Landlord's parent company; (viii) In connection with any sale, financing or refinancing of the Leased Premises, provided that any recipient of such information shall agree to be bound by the terms of this Paragraph 28(c); (ix) From Landlord to Lender; or (x) As otherwise required by Law. 29. Determination of Value. (a) Whenever a determination of Fair Market Value is required pursuant to any provision of this Lease, such Fair Market Value shall be determined in accordance with the following procedure: (i) Landlord and Tenant shall endeavor to agree upon such Fair Market Value within thirty (30) days after the date (the "Fair Market Value Date") on which (A) Tenant provides Landlord with notice of its intention to terminate this Lease and purchase the Leased Premises pursuant to Paragraph 18, (B) Landlord provides Tenant with notice of its -35- intention to redetermine Fair Market Value pursuant to Paragraph 20(c), (C) Tenant provides Landlord with an Intended Assignment Notice pursuant to Paragraph 21(a)(iii), (D) Landlord provides Tenant with notice of Landlord's intention to require Tenant to make an offer to purchase the Leased Premises pursuant to Paragraph 23(a)(iii), or (E) Tenant provides Landlord with notice pursuant to Paragraph 38(a) of its intention to exercise its option to purchase the Leased Premises. Upon reaching such agreement, the parties shall execute an agreement setting forth the amount of such Fair Market Value. (ii) If the parties shall not have signed such agreement within thirty (30) days after the Fair Market Value Date, Tenant shall within fifty (50) days after the Fair Market Value Date select an appraiser and notify Landlord in writing of the name, address and qualifications of such appraiser. Within twenty (20) days following Landlord's receipt of Tenant's notice of the appraiser selected by Tenant, Landlord shall select an appraiser and notify Tenant of the name, address and qualifications of such appraiser. Such two appraisers shall endeavor to agree upon Fair Market Value based on a written appraisal made by each of them as of the Relevant Date (and given to Landlord by Tenant). If such two appraisers shall agree upon a Fair Market Value, the amount of such Fair Market Value as so agreed shall be binding and conclusive. (iii) If such two appraisers shall be unable to agree upon a Fair Market Value within twenty (20) days after the selection of an appraiser by Landlord, then such appraisers shall advise Landlord and Tenant of their respective determination of Fair Market value and shall select a third appraiser to make the determination of Fair Market Value. The selection of the third appraiser shall be binding and conclusive upon Landlord and Tenant. (iv) If such two appraisers shall be unable to agree upon the designation of a third appraiser within ten (10) days after the expiration of the twenty (20) day period referred to in clause (iii) above, or if such third appraiser does not make a determination of Fair Market Value within twenty (20) days after his selection, then such third appraiser or a substituted third appraiser, as applicable, shall, at the request of either party hereto (with respect to the other party), be appointed by the President or Chairman of the American Arbitration Association in New York, New York. The determination of Fair Market Value made by the third appraiser appointed pursuant hereto shall be made within twenty (20) days after such appointment. (v) If a third appraiser is selected, Fair Market Value shall be the average of the determination of Fair Market Value made by the third appraiser and the determination of Fair Market Value made by the appraiser (selected pursuant to Paragraph 29(a)(ii) hereof) whose determination of Fair Market Value is nearest to that of the third appraiser. Such average shall be binding and conclusive upon Landlord and Tenant. (vi) All appraisers selected or appointed pursuant to this Paragraph 29(a) shall (A) be independent qualified MAI appraisers (B) have no right, power or authority to alter or modify the provisions of this Lease, (C) utilize the definition of Fair Market Value hereinabove set forth above, and (D) be registered in the State if the State provides for or requires such registration. (vii) The Cost Of the procedure described in this Paragraph 29(a) above shall be borne entirely by Tenant. (b) If, by virtue of any delay, Fair Market Value is not determined by the expiration or termination of the then current Term, then the date on which the Term would otherwise expire or terminate shall be extended with respect to the Leased Premises to the date -36- specified for termination in the particular provision of this Lease pursuant to which the determination of Fair Market Value is being made. (c) "Fair Market Value" of the Leased Premises shall mean (i) for all purposes except for the determination of the Default Termination Amount, the fair market value of the Leased Premises as of the Relevant Date as affected and encumbered by this Lease, without any assumption that the Term will or will not be extended for any of the extension periods provided for herein, or (ii) for the purpose of a determination of the Default Termination Amount, the fair market value of the Leased Premises as of the Relevant Date as affected and encumbered by this Lease and assuming that the Term has been extended for all extension periods provided for herein. For purposes of determining Fair Market Value under clause (i) of the foregoing sentence, the appraisers shall: (I) determine the Basic Rent payable hereunder during the remainder of the Initial Term or then effective Renewal Term, assuming that CPI increases during the remainder of the Initial Term will occur at the same average rate of increase as during the portion of the Term already then past; and then (II) discount such Basic Rent so as to represent a present value, using a discount rate intended to represent the market capitalization rate applicable to long-term lease obligations of the Tenant (based on the credit standing of the Tenant), as affected by the location of the Leased Premises; and then (III) determine the assumed future replacement cost of the Improvements at the end of the Initial Term, using Landlord's Share of Project Costs and assuming increases therein using the Means Construction Cost Index (the "Means Index") for the portion of the Term already past and increases in the Means Index which occur at the same average rate of increase thereafter until the end of the Term; and then (IV) subtract from such assumed future replacement cost physical depreciation and functional obsolescence (but not external obsolescence) applicable to the Improvements as of the end of the Term; and then (V) discount the result obtained under the foregoing clause (IV) so as to represent a present value, using a discount rate based on the market capitalization rate for properties similar to the Leased Premises in the location of the Leased Premises; and then (VI) add together the present values determined under the foregoing clause (II) and (V). 30. Non-Recourse as to Landlord. Anything contained herein to the contrary notwithstanding, any claim based on or in respect of any liability of Landlord under this Lease shall be enforced only against the Leased Premises and not against any other assets, properties or funds of (a) Landlord, (b) any director, officer, general partner, limited partner, employee or agent of Landlord, or any general partner of Landlord, any of its general partners or shareholders,(or any legal representative, heir, estate, successor or assign of any thereof), (c) any predecessor or successor partnership or corporation (or other entity) of Landlord, or any of its general partners, either directly or through Landlord or its general partners or any predecessor or successor partnership or corporation or their shareholders, officers, directors, employees or agents (or other entity), or (d) any other Person (including Carey Property Advisors, Carey Fiduciary Advisors, Inc., W.P. Carey & Co. LLC, W.P. Carey Incorporated and any Person affiliated with any of the foregoing, or any director, officer, employee or agent of any thereof). -37- 31. Financing. If Landlord desires to obtain or refinance any Loan, Tenant, except as otherwise provided in Paragraph 7(a)(i), shall, at no cost to Tenant, negotiate in good faith with Landlord concerning any request made by any Lender or proposed Lender for changes or modifications in this Lease. In particular, Tenant agrees, upon request of Landlord, to supply any such Lender with such notices and information as Tenant is required to give to Landlord hereunder and to extend the rights of Landlord hereunder to any such Lender and to consent to such financing if such consent is requested by such Lender. Tenant shall provide any other consent or statement and shall execute any and all other documents that such Lender reasonably requires in connection with such financing, including a Certificate of No Default with respect to its then existing credit agreements, any environmental indemnity agreement which shall contain substantially similar provisions to the applicable provisions in this Lease and any subordination, non-disturbance and attornment agreement, so long as in any such case the same do not materially adversely affect any right, benefit or privilege of Tenant under this Lease or materially increase Tenant's obligations under this Lease. Such subordination, non-disturbance and attornment agreement may require Tenant to confirm that (a) Lender and its assigns will not be liable for any misrepresentation, act or omission of Landlord and (b) Lender and its assigns will not be subject to any counterclaim, demand or offsets which Tenant may have against Landlord. 32. Subordination. This Lease and Tenant's interest hereunder shall be subordinate to any Mortgage or other security instrument hereafter placed upon the Leased Premises by Landlord, and to any and all advances made or to be made thereunder, to the interest thereon, and all renewals, replacements and extensions thereof, provided that any such Mortgage or other security instrument (or a separate instrument in recordable form duly executed by the holder of any such Mortgage or other security instrument and delivered to Tenant) shall provide, in form and substance reasonably satisfactory to Tenant, for the recognition of this Lease and all Tenant's rights hereunder by any purchaser at foreclosure or acceptance of a deed in lieu thereof unless and until an Event of Default exists, and that the Lender recognizes and agrees to be bound by the provisions of Paragraphs 16, 17 and 19 of this Lease, and, with respect to any Loan, that the Lender agrees to release the Mortgage insofar as it encumbers Abandonment Premises under Paragraph 36 hereof upon such terms and conditions as may be agreed to between Lender and Landlord, but which shall not require a payment to Lender in excess of the Abandonment Offer Amount or otherwise impose conditions upon such release not within the control of Landlord. 33. Tax Treatment; Reporting. Landlord and Tenant each acknowledge that each shall treat this transaction as a true lease for state law purposes and shall report this transaction as a Lease for Federal income tax purposes. For Federal income tax purposes each shall report this Lease as a true lease with Landlord as the owner of the Leased Premises and Equipment and Tenant as the lessee of such Leased Premises and Equipment including: (1) treating Landlord as, the owner of the property eligible to claim depreciation deductions under Section 167 or 168 of the Internal Revenue Code of 1986 (the "Code") with respect to the Leased Premises and Equipment, (2) Tenant reporting its Rent payments as business expense under Section 162 of the Code, and (3) Landlord reporting the Rent payments as rental income. 34. Financing Major Alterations. (a) Should Tenant, during the Term of this Lease, desire to make Alterations to the Leased Premises which are not readily removable without causing material damage to the Leased Premises and which will cost in excess of $500,000 ("Major Alterations"), Tenant shall, prior to the commencement of construction of such Major Alterations, offer by written notice to Landlord (a "Payment Offer") to accept payment from Landlord for the costs (the "Alteration Cost") thereof, to wit: cost of labor and materials, financing fees, legal fees, survey, title insurance and other normal and customary loan or construction costs. -38- (b) Should Landlord accept Tenant's offer, which acceptance shall be made in writing within sixty (60) days after receipt by Landlord of such offer, Landlord and Tenant shall enter into good faith negotiations regarding the execution and delivery of a written agreement of modification of this Lease, which agreement shall provide for the following: (i) payment by Landlord to Tenant of the Alteration Cost within one hundred twenty (120) days of the date of Landlord's acceptance of such Payment Offer, or in installment payments as agreed, or on the date of completion of the Major Alterations, whichever shall be the later; (ii) an increase in the annual Basic Rent payable during the Amortization Period (as hereinafter defined) to an amount sufficient to amortize the Alteration Costs ("Total Financing") over a period (the "Amortization Period") which shall be the remainder of the then current Term and, if Tenant so elects, any additional extension periods provided for herein (so long as Tenant shall confirm any such extension periods included in the Amortization Period by a written waiver of its right to give notice of its intention not to renew this Lease prior to the expiration of such extension periods), at such rate of interest and upon such other terms as shall be agreed upon between Landlord and Tenant, but which shall be no less favorable than the prevailing interest rate and terms for unsecured loans in a principal amount equal to the Total Financing for borrowers with credit ratings equivalent to that of Tenant's at that time; (iii) provide a rate of return to Landlord on Landlord's equity investment in the Leased Premises equal to that enjoyed by Landlord hereunder immediately prior to such proposed increase in Basic Rent; and (iv) such other changes and amendments to this Lease as may be necessary and appropriate in view of such payment of the Alteration Cost by Landlord to Tenant. Tenant shall pay all Costs incurred by Landlord in connection with any such modification to this Lease and such financing, including closing costs, brokerage fees, taxes, recording charges and legal fees and expenses. (c) To the extent that the terms of the Mortgage or any other document encumbering any of the Leased Premises shall require the consent of Lender and/or the holder or holders of any encumbrance on any of the Leased Premises (the "Encumbrancers") to the addition or construction of any Major Alterations or to the financing thereof by Landlord, the rights and obligations of Landlord and Tenant under Paragraph 12 and this Paragraph 34 are expressly conditioned upon Tenant's obtaining, prior to the commencement of any construction, the Encumbrances' written consent to such construction and to Landlords obtaining, in the event Landlord has accepted Tenant's offer to accept payment for the Major Alterations, the Encumbrancers' written consent to such financing. (d) Should Tenant's offer to accept payment for the Major Alterations not be accepted by Landlord within said sixty (60) day period, or should Landlord and Tenant be unable in good faith to agree upon the terms of the modification of this Lease, Tenant shall, subject to the provisions of Paragraph 13 of this Lease, have the right to construct the Major Alterations at Tenant's sole cost and expense. In any event, the construction of the Major Alterations shall be performed in accordance with the provisions of Paragraph 12 hereof and the Major Alterations shall be the property of Landlord and part of the Leased Premises subject to this Lease. (e) Nothing contained in this Paragraph 34 shall be construed to modify Paragraph 13 hereof, and the provisions of Paragraph 12 and Paragraph 13 shall apply to -39- all Major Alterations made or constructed hereunder provided, however, that Landlord's consent shall be required for all Major Alterations. 35. INTENTIONALLY DELETED. 36. Economic Abandonment. Provided that an Event of Default does not exist, Tenant shall have the right at any time during the Term hereof to terminate this Lease with respect to the Leased Premises (the "Abandonment Premises") that Tenant shall have determined that the Abandonment Premises shall not be used for at least seven (7) years in its business operations. In the event Tenant elects to exercise such right, Tenant shall give notice (the "Abandonment Notice") to Landlord (with a copy to Lender) of its intention so to terminate this Lease as to the Abandonment Premises, no later than nine (9) months prior to the date (the "Abandonment Date") of such intended termination, which notice shall specify the Abandonment Date and shall contain (a) an irrevocable offer of Tenant to terminate this Lease as to the Abandonment Premises on the Abandonment Date for the Abandonment Offer Amount and (b) a certificate of Tenant (i) stating that the Abandonment Premises are no longer economic for Tenant's continued use and occupancy in its business operations, (ii) specifying in reasonable detail the reasons there for and (iii) certifying that Tenant then intends forever to abandon its operations at the Abandonment Premises, which certificate shall be conclusively binding upon Landlord and Tenant, and (c) a resolution of the Board of Directors of Tenant authorizing such notice. Tenant may exercise its rights under this Paragraph 36 only one time. The Abandonment Offer Amount shall be the sum of (A)(i) 110% of (ii) Landlord's Share of Project Costs with respect to the Abandonment Premises, reduced by the Acquisition Fee, and (B) any Prepayment Premium which Landlord will be required to pay in prepayment of any Loan with proceeds of the Abandonment Offer Amount. Promptly upon the delivery of such notice from Tenant to Landlord, Landlord and Tenant shall commence to determine such Fair Market Value in accordance with the procedure specified in Paragraph 29. Landlord shall accept or reject such offer by notice to Tenant given not later than ninety (90) days prior to the Abandonment Date. If Landlord shall reject such offer, which rejection shall not be valid unless accompanied by the written consent of Lender thereto, then upon (i) payment of all Rent and any other sums due and unpaid hereunder as of the Abandonment Date and (ii) compliance by Tenant with all other obligations and liabilities under this Lease which have arisen on or prior to the Abandonment Date, this Lease shall terminate as to the Abandonment Premises on the Abandonment Date and Tenant shall immediately vacate and have no further right, title or interest in or to any of the Abandonment Premises. Unless Landlord shall have rejected such offer by the foregoing notice to Tenant not later than the ninetieth (90th) day prior to the Abandonment Date, Landlord shall be conclusively presumed to have accepted such offer. If such offer is accepted by Landlord, Tenant shall pay to Landlord the Abandonment Offer Amount on the Abandonment Date and, provided an Event of Default does not then exist hereunder, at the request of Tenant, Landlord shall convey to Tenant the Abandonment Premises in accordance with the provisions of Paragraph 20. Landlord shall have the right, at Landlord's sole option, to treat any vacating or abandonment of the Abandonment Premises which is prohibited pursuant to Paragraph 22(a) hereof as constituting an election by Tenant of its rights under this Paragraph 36 and as an irrevocable offer of Tenant to purchase the Abandonment Premises at the price and upon the terms hereinabove more specifically provided. 37. Option to Purchase. -40- (a) Subject to the consent of the ground lessor under the Railroad Ground Lease, Landlord does hereby give and grant to Tenant the option to purchase the entire Leased Premises (i) for a Purchase Price (the "Purchase Price") equal to the Offer Amount and (ii) on any date (the "Option Purchase Date") during the one year period that commences on June 28, 2006 (the "Option Period") which is mutually agreeable to Landlord and Tenant, but in any event not sooner than thirty (30) days after the Fair Market Value Date. If Tenant intends to exercise such option, Tenant shall give written notice to Landlord to such effect not later than December 28, 2005. Promptly upon receipt of such notice, by Landlord, the parties shall commence to determine Fair Market Value. (b) If Tenant shall exercise the foregoing option to purchase the Leased Premises, on the later to occur of (i) the Option Purchase Date or (ii) the date when Tenant has paid the Offer Amount and has satisfied all other Monetary Obligations, Landlord shall convey the Leased Premises to Tenant in accordance with Paragraph 20 hereof; provided, that if an Event of Default has occurred and is continuing on the Option Purchase Date, Landlord, at its sole option, may terminate Tenant's option to purchase hereunder. If this Lease shall terminate for any reason prior to the date originally fixed herein for the expiration of the Term, or if Tenant shall fail to give the aforesaid notice of intention to purchase, time being of the essence, the option provided in this Paragraph 38 and any exercise thereof by Tenant shall cease and terminate and shall be null and void. (c) Landlord shall use all reasonable efforts to obtain the agreement of the Lender that the Loan that shall encumber the Leased Premises during the Option Period (the "Assumable Loan") may be assumed by the Tenant as partial payment of the Offer Amount; provided that (i) Landlord shall have no obligation to make or to be obligated to make any payment to Lender as a condition to requesting or obtaining such consent and (ii) Tenant shall agree (A) to be personally liable and, if requested by Lender, that Guarantor will be personally liable for repayment and performance of the Assumable Loan and (B) that the Lease and Guaranty shall remain in full force and effect during the term of the Assumable Loan. 38. Right of First Refusal. (a) Except as otherwise provided in Paragraph 38(e), and provided an Event of Default does not then exist, if Landlord shall enter into a contract (the "Sale Contract") for the sale of the Leased Premises with a third Party Purchaser, which Sale Contract shall be conditioned upon Tenant's failure to exercise its right under this Paragraph 38(a), then promptly following the execution thereof, Landlord shall give written notice to Tenant, together with a copy of the executed Sale Contract. For a period of fifteen (15) days following receipt of such notice, Tenant shall have the right and option, exercisable by written notice to Landlord given within said fifteen (15) day period, to elect to purchase the Leased Premises at the purchase price and upon all the terms and conditions set forth in the Sale Contract except that no contingencies contained in such Sale Contract as to environmental assessments, engineering studies, inspection of the Leased Premises, sale of other property, state of the title to or encumbrances on the Leased Premises, or any other condition or contingency to the Third Party Purchaser's obligation to purchase the Leased Premises which pertains to the condition of the Leased Premises, shall apply to Tenant's obligation to purchase the Leased Premises under this Paragraph 38, and Tenant shall be obligated to purchase the Leased Premises without any such condition or contingency. If at the expiration of the aforesaid fifteen (15) day period Tenant shall have failed to exercise the aforesaid option, Landlord may sell the Leased Premises to such Third Party Purchaser upon the terms set forth in such contract. -41- (b) Except as otherwise specifically provided herein, the closing date for any purchase of the Leased Premises by Tenant pursuant to this Paragraph 38 shall be the earlier to occur of (i) ninety (90) days after the date of Tenant's notice to Landlord of its intention to purchase the Leased Premises upon the terms of the Sale Contract or (ii) the closing date provided in such Sale Contract. At such closing Landlord shall convey the Leased Premises to Tenant in accordance with, and Tenant shall pay to Landlord the purchase price and other consideration set forth in, the applicable Sale Contract. (c) Tenant shall have the right to exercise the foregoing right of first refusal upon (i) each proposed sale of the Leased Premises prior to June 28, 2006 and (ii) notwithstanding the lack of exercise by Tenant in (i) above, one (1) time on or after June 28, 2006; provided, that if, following compliance with the procedure described in Paragraph 38(a), a Third Party Purchaser does not purchase the Leased Premises, such event shall not count as an exercise of Tenant's right of first refusal. Notwithstanding anything to the contrary, if Tenant falls to exercise the right of first refusal granted pursuant to this Paragraph (c), subsection (ii), on or after June 28, 2006 and the sale to the Third Party Purchaser is consummated, or if the Term of this Lease shall terminate or expire, such rights of first refusal granted pursuant to this Paragraph 38 shall terminate and be null and void and of no further force and effect. (d) If Tenant does not exercise its right of first refusal to purchase the Leased Premises and the Leased Premises are transferred to a Third Party Purchaser, Tenant will attorn to any Third Party Purchaser as Landlord so long as such Third Party Purchaser and Landlord notify Tenant in writing of such transfer. At the request of Landlord and at not cost or expense to Tenant, Tenant will execute such documents confirming the agreement referred to above and such other agreements as Landlord may reasonably request, provided that such agreements do not increase the liabilities and obligations of Tenant hereunder. (e) The provisions of Paragraph 38 shall not apply to or prohibit (i) any mortgaging, subjection to deed of trust or other hypothecation of Landlord's interest in the Leased Premises, (ii) any sale of the Leased Premises pursuant to a private power of sale under or judicial foreclosure of any Mortgage or other security instrument or device to which Landlord's interest in the Leased Premises is now or hereafter subject, (iii) any transfer of Landlord's interest in the Leased Premises to a Lender, beneficiary under deed of trust or other holder of a security interest therein by deed in lieu of foreclosure, (iv) any transfer of the Leased Premises to any governmental or quasi-governmental agency with power of condemnation, (v) any transfer of the Leased Premises to any affiliate of Landlord or to any entity sponsored by W.P. Carey & Co., LLC, W.P. Carey Incorporated or either of their successors, (vi) any transfer of the interest of one of the Persons that comprise Landlord to the other Person that comprises Landlord, (vii) any sale to any Person to whom either of the parents of the Landlord sells all or substantially all of its assets, or (viii) any transfer of the Leased Premises to any of the successors or assigns of any of the Persons referred to in the foregoing clauses (ii) and (iii). 39. Miscellaneous. (a) The paragraph headings in this Lease are used only for convenience in finding the subject matters and are not part of this Lease or to be used in determining the intent of the parties or otherwise interpreting this Lease. (b) As used in this Lease, the singular shall include the plural and any gender shall include all genders as the context requires and the following words and phrases shall have the following meanings: (i) "including" shall mean "including without limitation"; (ii) "provisions" shall mean "provisions, terms, agreements, covenants and/or conditions"; (iii) "lien" shall mean "lien, charge, encumbrance, title retention agreement, pledge, security interest, mortgage and/or deed of trust"; (iv) "obligation" shall mean "obligation, duty, agreement, -42- liability, covenant and/or condition"; (v) "any of the Leased Premises" shall mean "the Leased Premises or any part thereof or interest therein"; (vi) "any of the Land" shall mean "the Land or any part thereof or interest therein"; (vii) "any of the Improvements" shall mean "the Improvements or any part thereof or interest therein"; (viii) "any of the Equipment" shall mean "the Equipment or any part thereof or interest therein"; and (ix) "any of the Adjoining Property" shall mean "the Adjoining Property or any part thereof or interest therein". (c) Any act which Landlord is permitted to perform under this Lease may be performed at any time and from time to time by Landlord or any person or entity designated by Landlord. Each appointment of Landlord as attorney-in-fact for Tenant hereunder is irrevocable and coupled with an interest. Except as otherwise specifically provided herein, Landlord shall have the right, at its sole option, to withhold or delay its consent whenever such consent is required under this Lease for any reason or no reason. Time is of the essence with respect to the performance by Tenant of its obligations under this Lease. (d) Landlord shall in no event be construed for any purpose to be a partner, joint venturer or associate of Tenant or of any subtenant, operator, concessionaire or licensee of Tenant with respect to any of the Leased Premises or otherwise in the conduct of their respective businesses. (e) This Lease and any documents which may be executed by Tenant on or about the effective date hereof at Landlord's request constitute the entire agreement between the parties and supersede all prior understandings and agreements, whether written or oral, between the parties hereto relating to the Leased Premises and the transactions provided for herein. Landlord and Tenant are business entities having substantial experience with the subject matter of this Lease and have each fully participated in the negotiation and drafting of this Lease. Accordingly, this Lease shall be construed without regard to the rule and ambiguities in a document are to be construed against the drafter. (f) This Lease may be modified, amended, discharged or waived only by an agreement in writing signed by the party against whom enforcement of any such modification, amendment, discharge or waiver is sought. (g) The covenants of this Lease shall run with the land and bind Tenant, its successors and assigns and all present and subsequent encumbrancers and subtenants of any of the Leased Premises, and shall inure to the benefit of Landlord, its successors and assigns. If there is more than one Tenant, the obligations of each shall be joint and several. (h) Notwithstanding any provision in this Lease to the contrary, all Surviving Obligations of Tenant shall survive the expiration or termination of this Lease with respect to the Leased Premises. (i) If any one or more of the provisions contained in this Lease shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision of this Lease, but this Lease shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein. (j) All exhibits attached hereto are incorporated herein as if fully set forth. (k) This Lease shall be governed by and construed and enforced in accordance with the Laws of the State. -43- IN WITNESS THEREOF, Landlord and Tenant have caused this Lease to be duly executed under seal as of the day and year first above written. LANDLORD: DELMO (PA) QRS 11-36, a Pennsylvania business trust By: /s/ GORDON J. WHITING ---------------------------------- Title: Trustee ------------------------------- DELMO (PA) QRS 12-10, a Pennsylvania business trust By: /s/ GORDON J. WHITING ---------------------------------- Title: Trustee ------------------------------- TENANT: DEL MONTE CORPORATION, a New York corporation By: ---------------------------------- Title: ------------------------------- -1- IN WITNESS THEREOF, Landlord and Tenant have caused this Lease to be duly executed under seal as of the day and year first above written. LANDLORD DELMO (PA) QRS 11-36, a Pennsylvania business trust By: ---------------------------------- Title: ------------------------------- DELMO (PA) QRS 12-10, a Pennsylvania business trust By: ---------------------------------- Title: ------------------------------- TENANT: DEL MONTE CORPORATION, a New York corporation By: /s/ THOMAS E. GIBBONS ---------------------------------- Title: SENIOR VICE PRESIDENT & TREASURER ------------------------------- -1- EX-10.18 9 f84647exv10w18.txt EXHIBIT 10.18 EXHIBIT 10.18 ================================================================================ AMENDED AND RESTATED MASTER LEASE (Del Monte Corporation Trust No. 1998-A) Dated as of April 5, 1999 between STATE STREET BANK AND TRUST COMPANY OF CALIFORNIA, N.A., not in its individual capacity, but solely as Certificate trustee, as Lessor, and DEL MONTE CORPORATION, as Lessee ================================================================================ THIS MASTER LEASE HAS BEEN EXECUTED IN _____ MANUALLY EXECUTED SERIALLY NUMBERED COUNTERPARTS OF WHICH THIS IS COUNTERPART NUMBER ___. TO THE EXTENT, IF ANY, THAT THIS MASTER LEASE CONSTITUTES CHATTEL PAPER (AS SUCH TERM IS DEFINED IN THE UNIFORM COMMERCIAL CODE AS IN EFFECT IN ANY APPLICABLE JURISDICTION), NO SECURITY INTEREST IN THIS MASTER LEASE MAY BE CREATED THROUGH THE TRANSFER OR POSSESSION OF ANY COUNTERPART HEREOF OTHER THAN COUNTERPART "NUMBER 1", WHICH SHALL BE IDENTIFIED AS THE COUNTERPART CONTAINING THE RECEIPT THEREFOR EXECUTED BY CERTIFICATE TRUSTEE ON OR FOLLOWING THE SIGNATURE PAGE THEREOF. SEE SECTION 23.20 FOR THE NATURE OF THIS TRANSACTION AND INTENTION OF THE PARTIES. TABLE OF CONTENTS (Lease)

Page ARTICLE I - DEFINITIONS; LESSEE LIABILITY ARTICLE II - LEASE OF PREMISES; LEASE TERM SECTION 2.1. Acceptance and Lease of Sites.......................... 2 SECTION 2.2. Acceptance Procedure................................... 2 SECTION 2.3. Term................................................... 3 ARTICLE III - OTHER PROPERTY ARTICLE IV - RENT SECTION 4.1. Basic Rent............................................. 3 SECTION 4.2. Supplemental Rent...................................... 4 SECTION 4.3. Method and Amount of Payment........................... 4 SECTION 4.4. Late Payment........................................... 4 ARTICLE V - NET LEASE ARTICLE VI - UTILITY CHARGES ARTICLE VII - CONDITION AND USE OF PREMISES SECTION 7.1. Waivers................................................ ARTICLE VIII - NO LESSOR CONSENT OR LIABILITY ARTICLE IX - MAINTENANCE AND REPAIR; ALTERATIONS AND ADDITIONS SECTION 9.1. Maintenance and Repair; Compliance With Law......................................... 9 SECTION 9.2. Improvements and Alterations........................... 9 SECTION 9.3. Title to Alterations................................... 11 SECTION 9.4. Maintenance and Repair Reports......................... 12 SECTION 9.5. Permitted Contests..................................... 12 SECTION 9.6. Liens.................................................. 13 ARTICLE X - USE ARTICLE XI - INSURANCE SECTION 11.1. Required Coverages..................................... 14 SECTION 11.2. Delivery of Insurance Certificates..................... 16 ARTICLE XII ASSIGNMENT AND SUBLEASING

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ARTICLE XIII - LOSS, DESTRUCTION, CONDEMNATION OR DAMAGE SECTION 13.1. Event of Loss; Condemnation or Casualty............... 17 SECTION 13.2. Application of Payments Relating to an Event of Loss.................................................... 18 SECTION 13.3. Application of Certain Payments Relating to a Condemnation............................................... 18 SECTION 13.4. Casualty.............................................. 18 SECTION 13.5. Negotiations.......................................... 19 SECTION 13.6. No Rent Abatement..................................... 19 SECTION 13.7. Notice of Environmental Matters....................... 19 ARTICLE XIV - NON-INTERFERENCE SECTION 14.1. Non-Interference...................................... 20 SECTION 14.2. Certain Duties and Responsibilities of Lessor.................................................. 20 ARTICLE XV - INSPECTION AND REPORTS SECTION 15.1. Inspection............................................ 21 SECTION 15.2. Reports............................................... 21 ARTICLE XVI - OWNERSHIP, GRANT OF LIEN AND FURTHER ASSURANCES SECTION 16.1. Grant of Security Interest............................ 21 SECTION 16.2. Attorney-in-Fact...................................... 22 ARTICLE XVII - LEASE EVENTS OF DEFAULT ARTICLE XVIII - ENFORCEMENT SECTION 18.1. Remedies.............................................. 25 SECTION 18.2. Proceeds of Sale; Deficiency.......................... 30 SECTION 18.3. Mortgage and Lease Supplement Remedies................ 30 SECTION 18.4. Remedies Cumulative; No Waiver; Consents.............. 30 SECTION 18.5. Limitation of Recourse Liability...................... 31 ARTICLE XIX - RIGHT TO PERFORM FOR LESSEE SECTION 19.1. Right to Cure......................................... 31 SECTION 19.2. Grants and Releases of Easements...................... 31 SECTION 19.3. Power of Attorney..................................... 32 ARTICLE XX - EARLY TERMINATION OPTION AND OBLIGATION TO PURCHASE SECTION 20.1. Early Termination Option.............................. 33 SECTION 20.2. Required Purchase..................................... 34 ARTICLE XXI - END OF TERM OPTIONS SECTION 21.1. End of Term Options................................... 34 SECTION 21.2. Election of Options................................... 35 SECTION 21.3. Renewal Options; Extension Options.................... 35

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ARTICLE XXII - SALE OPTION SECTION 22.1. Sale Option Procedures.............................. 36 SECTION 22.2. Sale................................................ 37 SECTION 22.3. Application of Sale Proceeds and Recourse Payments.. 38 SECTION 22.4. Appraisal........................................... 39 ARTICLE XXIII - MISCELLANEOUS SECTION 23.1. Binding Effect; Successors and Assigns; Survival.... 39 SECTION 23.2. Severability........................................ 39 SECTION 23.3. Notices............................................. 40 SECTION 23.4. Amendment; Complete Agreements...................... 40 SECTION 23.5. Headings............................................ 40 SECTION 23.6. Original Lease...................................... 40 SECTION 23.7. GOVERNING LAW....................................... 41 SECTION 23.8. RESERVED............................................ 41 SECTION 23.9. Liability of Lessor Limited......................... 41 SECTION 23.10. Estoppel Certificates............................... 42 SECTION 23.11. No Joint Venture.................................... 42 SECTION 23.12. No Accord and Satisfaction.......................... 42 SECTION 23.13. No Merger........................................... 43 SECTION 23.14. Successor Lessor.................................... 43 SECTION 23.15. Survival............................................ 43 SECTION 23.16. Transfer of Premises................................ 43 SECTION 23.17. Enforcement of Certain Warranties................... 44 SECTION 23.18. Security Interest in Funds.......................... 44 SECTION 23.19. Recording of Lease Supplements...................... 45 SECTION 23.20. Nature of Transaction............................... 45 EXHIBIT A-1 - Form of Lease Supplement (California) EXHIBIT A-2 - Form of Lease Supplement (Indiana)

THIS AMENDED AND RESTATED MASTER LEASE, dated as of April 5, 1999 (as amended, supplemented, or otherwise modified from time to time, this "Lease"), is between STATE STREET BANK AND TRUST COMPANY OF CALIFORNIA, N.A., a national banking association, not in its individual capacity, except as expressly stated herein, but solely as Certificate Trustee under the Trust Agreement, as Lessor ("Lessor"), and DEL MONTE CORPORATION, as Lessee ("Lessee"). W I T N E S S E T H: A. Lessee desired to enter into the Overall Transaction for the purpose of financing the acquisition of a fee interest in certain of the Sites and the construction on the Sites of the Financed Improvements. B. Subject to the terms and conditions set forth in the Operative Documents, (i) Lessor has purchased the Hanford and Kingsburg Sites and has entered into the Ground Lease pursuant to which Lessee has leased the Modesto Site to Lessor, using Advances funded by the Participants; (ii) Lessor will purchase on the Site Acquisition Date the Plymouth Site from one or more third parties designated by Lessee on the Site Acquisition Date, using Advances funded by the Participants; (iii) during the Construction Period, Construction Agent, using Advances funded by the Participants, will construct on the Sites the Financed Improvements on behalf of Lessor, and (iv) pursuant to this Lease, Lessor will lease the Sites (or in the case of the Modesto Site, sublease such Site) and the Financed Improvements to Lessee, and Lessee will lease such Sites (or in the case of the Modesto Site, sublease such Site) and Financed Improvements from Lessor. C. This Lease is intended to amend and completely restate and supersede the Master Lease dated as of November 19, 1998, by and between Lessor and Lessee, as amended to the date hereof (the "ORIGINAL MASTER LEASE"). NOW, THEREFORE, in consideration of the mutual agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto, intending to be legally bound hereby, hereby agree as follows: ARTICLE I DEFINITIONS; LESSEE LIABILITY For all purposes hereof, the capitalized terms used herein and not otherwise defined shall have the meanings assigned thereto in Appendix 1 to that certain Amended and Restated Participation Agreement dated as of even date herewith, among Lessee, Guarantor, Lessor, Agent, and the Participants identified therein (the "Participation Agreement"). Except as specially provided for at Section 18.5 hereof, all obligations imposed on the "Lessee" in this Lease shall be the full recourse liability of Lessee. Upon the effective date of the Participation Agreement, this Lease will amend and completely restate and supersede the Original Master Lease. ARTICLE II LEASE OF PREMISES; LEASE TERM SECTION 2.1. Acceptance and Lease of Sites. Lessor, subject to the satisfaction or waiver of the conditions set forth in Article III of the Participation Agreement, hereby agrees to accept delivery on each Site Acquisition Date of fee title to each Site (or in the case of the Modesto Site, a leasehold interest) to be delivered on such Site Acquisition Date and of the Financed Improvements to be constructed thereon pursuant to the terms of the Construction Agency Agreement and to lease all of Lessor's interest in such Site and Financed Improvements to Lessee hereunder, and Lessee hereby agrees, expressly for the direct benefit of Lessor, to lease from Lessor for the Site Term applicable to such Site, Lessor's interest in such Site and such Financed Improvements. SECTION 2.2. Acceptance Procedure. Lessor hereby authorizes one or more employees of Lessee, to be designated by Lessee, as the authorized representative or representatives of Lessor to accept delivery of each Site identified on the applicable Advance Request and the Financed Improvements to be constructed thereon. Lessee hereby agrees that acceptance of delivery by such authorized representative or representatives and the execution and delivery by Lessee on each Site Acquisition Date of a Lease Supplement (in the form of Exhibit A-1 or Exhibit A-2 attached hereto, as applicable, appropriately completed) with respect to such Site and the Improvements now on such site and all Improvements, including without limitation all Financed Improvements, to be constructed during the applicable Site Term shall, without further act, constitute the irrevocable acceptance by Lessee of such Site and all such Improvements for all purposes of this Lease and the other Operative Documents on the terms set forth therein and herein and -2- that such Site and such Improvements shall be deemed to be included in the Premises and shall be subject to the terms and conditions of this Lease during the applicable Site Term. SECTION 2.3. Term. (a) Site Term. Unless earlier terminated, the term of the Lease Supplement with respect to each Site shall consist of (a) an interim period (the "Interim Term") commencing on and including the Site Acquisition Date for such Site and ending on but not including the earlier of (i) the Completion Date for such Site or (ii) such Site becoming subject to this Lease pursuant to Section 5.1 of the Construction Agency Agreement, (b) a base term (the "Base Term") commencing on and including the last day of the Interim Term for such Site (such day, the "Base Term Commencement Date") and ending on but not including the fifth anniversary of the First Document Closing Date, and (c) if exercised and approved pursuant to each of the terms and conditions of Section 2.14 of the Participation Agreement, each Lease Renewal Term (the Interim Term, the Base Term and the Lease Renewal Terms, if any, with respect to a Site collectively the "Site Term"). (b) Lease Term. The term of this Lease (the "Lease Term") shall begin on the first occurring Site Acquisition Date and shall end on the last occurring Site Expiration Date. ARTICLE III OTHER PROPERTY Lessee may from time to time own or hold under lease from Persons other than Lessor, furniture, trade fixtures, equipment and other tangible personal property located on or about any Site that is not subject to this Lease and does not constitute a portion of the Financed Improvements. ARTICLE IV RENT SECTION 4.1. Basic Rent. During the Base Term with respect to a Site and any Lease Renewal Term, Lessee shall pay to Lessor Basic Rent (i) on each Quarterly Payment Date, (ii) on the date required under Section 22.3 hereof in connection with Lessee's exercise of the Sale Option and (iii) on any date on which this Lease terminates or upon demand following a Lease Event of Default pursuant to Section 17.1 hereof. Basic Rent payable on each Quarterly Payment Date shall be allocated to each Lease Supplement. -3- in the same proportion that the Advances with respect to, or allocated to, the Site subject to such Lease Supplement bears to the aggregate amount of all Advances made by the Participants. SECTION 4.2. Supplemental Rent. Lessee shall pay to Lessor, or to whomever shall be entitled thereto as expressly provided herein or in any other Operative Document (and Lessor hereby directs Lessee, on behalf of Lessor, to so pay any such other Person), any and all Supplemental Rent promptly as the same shall become due and payable and, in the event of any failure on the part of Lessee to pay any Supplemental Rent, Lessor shall have all rights, powers and remedies provided for herein or by law or in equity or otherwise in the case of nonpayment of Basic Rent. Lessee hereby reaffirms that is obligation to pay Supplement Rent shall include the payment of any and all Additional Costs. The expiration or other termination of Lessee's obligations to pay Basic Rent hereunder shall not limit or modify the obligations of Lessee with respect to Supplemental Rent. SECTION 4.3. Method and Amount of Payment. Basic Rent and Supplemental Rent shall be paid by wire transfer to Lessor (or, in the case of Supplemental Rent, to such Person as may be entitled thereto) at such place as Lessor (or such other Person) shall specify in writing to Lessee pursuant to Schedule II to the Participation Agreement or Section 9.3 of the Participation Agreement; provided, however, that, so long as the Notes remain outstanding, Lessor directs Lessee to pay Basic Rent directly to the Agent. Each payment of Rent shall be made by Lessee prior to 12:00 noon New York time (and payments made after such time shall be deemed to have been made on the next day) at the place of payment in funds consisting of lawful currency of the United States of America which (in the case of any amount payable to Lessor, Agent or any Participant or any other Indemnitee) shall be immediately available on the scheduled date when such payment shall be due unless with respect to Supplemental Rent, the scheduled date shall not be a Business Day, in which case such payment shall be due and made on the next succeeding Business Day. The provisions of the foregoing sentence of this Section 4.3 shall be applicable only to Basic Rent and to Supplement Rent payable to, or on behalf of or for the account of, Lessor, Agent, any Participant and any other Indemnitee. SECTION 4.4. Late Payment. If any Basic Rent shall not be paid when due, Lessee shall pay to Lessor, or if any Supplemental Rent payable to or on behalf or for the account of Lessor, Agent, any Participant, or other Indemnitee is not paid when due, Lessee shall pay to whomever shall be entitled thereto, in each case as Supplemental Rent, interest at the Overdue Rate (to the maximum -4- extent permitted by law) on such overdue amount from and including the due date thereof (without regard to any applicable grace period) to but excluding the Business Day of payment thereof. ARTICLE V NET LEASE This Lease shall constitute a net lease and, notwithstanding any other provision of this Lease, it is intended that Basic Rent, Supplemental Rent, the Lease Balance and all other amounts due and payable under the Operative Documents shall be paid without counterclaim, setoff, deduction or defense of any kind and without abatement, suspension, deferment, diminution or reduction of any kind, and Lessee's obligation to pay all such amounts throughout the Lease Term is absolute and unconditional. The obligations and liabilities of Lessee hereunder shall in no way be released, discharged or otherwise affected for any reason, including, to the maximum extent permitted by law: (a) any defect in the condition, merchantability, design, construction, quality or fitness for use of any portion of any Leased Property, or any failure of any Leased Property to comply with all Applicable Laws and Regulations, including any inability to occupy or use any Leased Property by reason of such non-compliance; (b) any damage to, abandonment, loss, contamination of or Release from or destruction of or any requisition or taking of any Leased Property or any part thereof, including eviction; (c) any restriction, prevention or curtailment of or interference with any use of any Leased Property or any part thereof, including eviction; (d) any defect in title to or rights to any Leased Property or any Lien on such title or rights or on any Leased Property; (e) any change, waiver, extension, indulgence or other action or omission or breach in respect of any obligation or liability of or by Lessor, Agent or any Participant; (f) any bankruptcy, insolvency, reorganization, composition, adjustment, dissolution, liquidation or other like proceedings relating to Lessee, Lessor, Agent, any Participant or any other Person, or any action taken with respect to this Lease by any trustee or receiver of Lessee, Lessor, Agent, any Participant or any other Person, or by any court, in any such proceeding; (g) any claim that Lessee has or might have against any Person, including, without limitation, Lessor, Agent, or any Participant; (h) any failure on the part of Lessor to perform or comply with any of the terms of this Lease, any other Operative Document or of any other agreement whether or not related to the Overall Transaction; (i) any invalidity or unenforceability or disaffirmance against or by Lessee of this Lease or any provision hereof or any of the other Operative Documents or any provision of any thereof; (j) the impossibility of performance by Lessee, Lessor or both; (k) any action by any court, -5- administrative agency or other Authority; (1) any restriction, prevention or curtailment of or any use of any Leased Property or any part thereof or the construction of any Alterations; (m) the failure of Lessee or Guarantor to achieve any accounting or tax benefits or the characterization of the transaction intended by Section 23.20 hereinbelow and Section 2.7 of the Participation Agreement; or (n) any other occurrence whatsoever, whether similar or dissimilar to the foregoing, whether or not Lessee shall have notice or knowledge of any of the foregoing. Except as specifically set forth in Article XIII or Section 20.1 of this Lease, this Lease shall be noncancellable by Lessee for any reason whatsoever, and Lessee, to the extent permitted by Applicable Laws and Regulations, waives all rights now or hereafter conferred by statute or otherwise to quit, terminate or surrender this Lease, or to any diminution, abatement or reduction of Rent payable by Lessee hereunder. If for any reason whatsoever this Lease shall be terminated in whole or in part by operation of law or otherwise, except as expressly provided in Article XIII or Section 20.1 of this Lease, Lessee shall, unless prohibited by Applicable Laws and Regulations, nonetheless pay to Lessor (or, in the case of Supplemental Rent, to whomever shall be entitled thereto) an amount equal to each Rent payment (including the Lease Balance or any other amount due and payable under any Operative Documents) at the time and in the manner that such payment would have become due and payable under the terms of this Lease if it had not been terminated in whole or in part. Each payment of Rent and any payment of the Lease Balance made by Lessee hereunder shall be final and, absent manifest error in the computation of the amount thereof, Lessee shall not seek or have any right to recover all or any part of such payment from Lessor, Agent, any Participant or any party to any agreements related thereto for any reason whatsoever. Lessee assumes the sole responsibility for the condition, use, operation, maintenance, and management of the Premises and Lessor shall have no responsibility in respect thereof and shall have no liability for damage to the property of Lessee or any subtenant of Lessee on any account or for any reason whatsoever other than by reason of Lessor's willful misconduct or gross negligence or negligence in the handling of funds; provided, however, any liability of Lessor with respect to any such willful misconduct or gross negligence or negligence in the handling of funds shall not limit or affect Lessee's absolute obligations as set forth in this Article V. Without affecting Lessee's obligation to pay Basic Rent, Supplemental Rent, the Lease Balance and all other amounts due and payable under the Operative Documents or to perform its obligations under the Operative Documents, Lessee may seek damages or any other remedy at law or equity against Lessor for a breach by Lessor of its obligations under this Lease or the Participation Agreement, subject to the limitations set forth at Section 23.9 hereof. -6- ARTICLE VI UTILITY CHARGES During the Lease Term Lessee shall pay or cause to be paid all charges for electricity, power, gas, oil, water, telephone, sanitary sewer service and all other rents and utilities used in or on each Leased Property during the Lease Term. Lessee shall be entitled to receive any credit or refund with respect to any utility charge paid by Lessee and the amount of any credit or refund received by Lessor on account of any utility charges paid by Lessee, net of the costs and expenses reasonably incurred by Lessor in obtaining such credit or refund, shall be promptly paid over to Lessee. All charges for utilities imposed with respect to a Leased Property for a billing period during which this Lease expires or terminates (except pursuant to Article XX or Section 21.1(b) hereof, in which case Lessee shall be solely responsible for all such charges) shall be adjusted and prorated on a daily basis between Lessee and any purchaser or such Leased Property, and each party shall pay or reimburse the other for each party's pro rata share thereof; provided, that in no event shall Lessor have any liability therefor. ARTICLE VII CONDITION AND USE OF PREMISES SECTION 7.1. Waivers. LESSEE ACKNOWLEDGES AND AGREES THAT, ALTHOUGH LESSOR WILL OWN AND HOLD RECORD TITLE TO THE PREMISES, LESSEE SELECTED THE SITES AND IS SOLELY RESPONSIBLE FOR THE DESIGN, DEVELOPMENT, BUDGETING AND THE SUPERVISION OF CONSTRUCTION OF THE FINANCED IMPROVEMENTS AND ANY ALTERATIONS. The Premises are let by Lessor "AS IS" in its present condition, subject to (a) any rights of any parties in possession thereof, (b) the state of the title thereto existing at the time Lessor acquired its interest in the Premises, (c) any state of facts which an accurate survey or physical inspection might show (including any survey delivered on the First Document Closing Date, the Second Document Closing Date, and Advance Date or any Completion Date), (d) all Applicable Laws and Regulations, and (e) any violations of Applicable Laws and Regulations which may exist at the commencement of the Lease Term. Lessee has examined the Premises and (insofar as Lessor is concerned) has found the same to be satisfactory. WITHOUT LIMITING THE SPECIFIC REPRESENTATIONS AND WARRANTIES IN SECTIONS 4.2, 4.3 AND 4.4 OF THE PARTICIPATION AGREEMENT, NONE OF LESSOR, AGENT NOR ANY PARTICIPANT HAS MADE OR SHALL BE DEEMED TO HAVE MADE ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, OR SHALL BE DEEMED TO HAVE ANY LIABILITY WHATSOEVER AS TO THE TITLE TO THE PREMISES OR -7- TO THE VALUE, MERCHANTABILITY, HABITABILITY, CONDITION, OR FITNESS FOR USE OF THE PREMISES, OR ANY PART THEREOF, OR ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO THE PREMISES, OR ANY PART THEREOF, AND NONE OF LESSOR, AGENT NOR ANY PARTICIPANT SHALL BE LIABLE FOR ANY LATENT, HIDDEN, OR PATENT DEFECT THEREIN OR THE FAILURE OF THE PREMISES, OR ANY PART THEREOF, TO COMPLY WITH ANY APPLICABLE LAWS AND REGULATIONS, except that Lessor hereby represents and warrants that as of the date of this Lease, the Premises are free of Certificate Trustee Liens (such Certificate Trustee representations and warranty being made by (x) Bank with respect to any Certificate Trustee Liens attributable to Bank, and (y) Certificate Trustee with respect to any Certificate Trustee Liens attributable to Certificate Trustee). Lessee has been afforded full opportunity to inspect the Premises, is satisfied with the results of its inspections and is entering into this Lease solely on the basis of the results of its own inspections, and all risks incident to the matters discussed in the preceding sentence, as between Lessor, Agent and the Participants, on the one hand, and Lessee, on the other, are to be borne by Lessee. The provisions of this Article VII have been negotiated, and, except to the extent otherwise expressly stated, the foregoing provisions are intended to be a complete exclusion and negation of any representations or warranties by any of Lessor, Agent or the Participants, express or implied, with respect to the Premises (or any interest therein), that may arise pursuant to any law now or hereinafter in effect or otherwise. ARTICLE VIII NO LESSOR CONSENT OR LIABILITY Nothing contained in this Lease shall be construed as constituting the consent or request of Lessor, expressed or implied, to or for the performance by any contractor, mechanic, laborer, materialman, supplier or vendor of any labor or services or for the furnishing of any materials for any construction, alteration, addition, repair or demolition of or to the Premises or any part thereof. NOTICE IS HEREBY GIVEN THAT NONE OF LESSOR, AGENT OR ANY PARTICIPANT IS OR SHALL BE LIABLE FOR ANY LABOR, SERVICES OR MATERIALS FURNISHED OR TO BE FURNISHED TO LESSEE, OR TO ANYONE HOLDING THE PREMISES OR ANY PART THEREOF THROUGH OR UNDER LESSEE, AND THAT NO MECHANIC'S OR OTHER LIENS FOR ANY SUCH LABOR, SERVICES OR MATERIALS SHALL ATTACH TO OR AFFECT THE INTEREST OF LESSOR OR AGENT IN AND TO THE PREMISES. -8- ARTICLE IX MAINTENANCE AND REPAIR; ALTERATIONS AND ADDITIONS SECTION 9.1. Maintenance and Repair; compliance With Law. At all times during each Site Term with respect to each Site on and after the Base Term Commencement Date for each Site with respect to the Financed Improvements to be constructed thereon, Lessee, at its own expense, shall at all times (a) maintain such Leased Property in good operating condition, subject to ordinary wear and tear, and in any event at least as good as the condition of similar buildings owned or leased by Guarantor or its Subsidiaries and in good repair and condition; (b) maintain such Leased Property in accordance with all Applicable Laws and Regulations in all material respects, whether or not such maintenance requires structural modifications; (c) comply in all material respects with the Insurance Requirements which are in effect any time with respect to such Leased Property or any part thereof; (d) use such Leased Property only in accordance with Article X below and cause such Leased Property to have at all times the capacity and functional ability to be used, on a continuing basis and in commercial operation, in accordance with such Article X; (e) make all necessary or appropriate repairs, replacements and renewals of such Leased Property or any part thereof which may be required to keep such Leased Property in the condition required by the preceding clauses (a) through (d), whether interior or exterior, structural or nonstructural, ordinary or extraordinary, foreseen or unforeseen, and including, without limitation, repairs, replacements and renewals that would constitute capital expenditures under GAAP if incurred by an owner of property; and (f) procure, maintain and comply in all material respects with all material licenses, permits, orders, approvals, consent and other authorizations required for the construction, use, maintenance and operation of such Leased Property. Lessee waives any right that it may now have or hereafter acquire to (x) require Lessor to maintain, repair, replace, alter, remove or rebuild all or any part of such Leased Property or (y) make repairs at the expense of Lessor pursuant to any Applicable Laws and Regulations or other agreements. SECTION 9.2. Improvements and Alterations. (a) In addition to Lessee's obligations as Construction Agent to build the Financed Improvements on each Site under the Construction Agency Agreement, on and after the Base Term Commencement Date with respect to a Site (i) Lessee, at lessee's own cost and expense, shall make alterations, renovations, improvements and additions to such Leased Property or any part thereof and substitutions and replacements therefor (collectively, "Alterations") which are (A) necessary to repair or maintain such -9- Leased Property in the condition required by Section 9.1 above; (B) necessary in order for such Leased Property to be in compliance in all material respects with Applicable Laws and Regulations; or (C) necessary or advisable to restore such Leased Property to its condition existing prior to a Casualty or Condemnation to the extent required pursuant to Article XIII hereof; and (ii) so long as no Lease Event of Default has occurred and is continuing, Lessee, at Lessee's own cost and expense, may undertake Alterations on such Leased Property so long as such Alterations comply in all material respects with Applicable Laws and Regulations except to the extent such non-compliance would not have a Material Adverse Effect with Section 9.1 above and subsection (b) of this Section 9.2. (b) The making of any Alterations must be in compliance with the following requirements: (1) No such Alterations with a cost exceeding $1,000,000 shall be made or undertaken except upon not less than thirty days' prior written notice to Lessor. (2) Lessee shall not make any Alterations in violation of the terms of any restriction, easement, condition, covenant or other similar matter affecting title to or binding on such Leased Property. (3) No Alterations shall be undertaken until Lessee shall have procured and paid for, so far as the same may be required from time to time, all permits and authorizations relating to such Alterations of all municipal and other Authorities having jurisdiction over such Leased Property. Lessor, at Lessee's expense, shall join in the application for any such permit or authorization and execute and deliver any document in connection therewith, whenever such joinder is necessary or advisable. (4) The Alterations shall be completed in a good and workmanlike manner and in compliance in all material respects with all Applicable Laws and Regulations then in effect and with the standards imposed by any insurance policies required to be maintained hereunder. (5) All Alterations shall, when completed, be of such a character as to not materially adversely affect the Fair Market Value, utility, remaining economic useful life or residual value of such Leased Property from its Fair Market Value, utility, remaining economic useful life or residual value immediately prior to the making thereof or, in the case -10- of Alterations being made by virtue of a Casualty or Condemnation, immediately prior to the occurrence of such Casualty or Condemnation. If such alterations have a cost exceeding $1,000,000 and if requested by Required Participants, Lessor may engage an appraiser of nationally recognized standing, at Lessee's sole cost and expense, to determine (by appraisal methods satisfactory to the Required Participants) the projected Fair Market Value of such Leased Property following completion of the Alterations relating thereto. (6) Lessee shall have made adequate arrangements for payment of the cost of all Alterations when due so that the Leased Property shall at all times be free of Liens for Labor and materials supplied or claimed to have been supplied to the Premises, other than Permitted Liens; provided, that Lessee shall have the right to engage in Permitted Contests in accordance with Section 9.5 below. (7) The Alterations must be located solely on such Site. SECTION 9.3. Title to Alterations. Title to the following described Alterations shall without further act vest in Lessor and shall be deemed to constitute a part of a Leased Property and be subject to this Lease: (a) each of the Financed Improvements; (b) Alterations that are in replacement of or in substitution for a portion of any Improvements existing on the date of this Lease with respect to a Site or any Financed Improvements with respect to a Site; (c) Alterations that are required to be made pursuant to the terms of Section 9.1 or 9.2(a)(i) hereof; or (d) Alterations that are Nonseverable. Lessee, at Lessor's request, shall execute and deliver any deeds, bills of sale, assignments or other documents of conveyance reasonably necessary to evidence the vesting of title in and to such Alterations to Lessor. If such Alterations are not within any of the categories set forth in clauses (a) through (d) of this Section 9.3, then title to such Alterations shall vest in Lessee and such Alterations shall not be deemed to be Alterations which are part of the Premises. -11- All alterations to which Lessee shall have title may, so long as removal thereof shall not result in the violation of any Applicable Laws and Regulations and no Lease Event of Default is continuing, be removed at any time by Lessee. Lessee agrees to notify Lessor in writing at least 30 days before it removes any such Alterations which individually or in aggregate had an original cost exceeding $1,000,000, and Lessee shall at its expense prior to the Lease Term Expiration Date repair any damage to the Premises caused by the removal of such Alterations. Lessor (or the purchaser of the applicable Leased Property if Lessee elects the Sale Option or in connection with a Sale pursuant to Section 18.1 below) may purchase from Lessee any such Alterations (if not already owned by Lessor) that Lessee intends to remove from a Leased Property prior to the Lease Term Expiration Date, which purchase shall be at the Fair Market Value of such Alterations as determined by the Appraiser at the time of such purchase. Title to any such Alterations shall vest in Lessor (or the purchaser of the applicable Leased Property) if not removed from the Leased Property by Lessee prior to the return of such Leased Property to Lessor or sale of such Leased Property if Lessee elects the Sale Option or in connection with a Sale pursuant to Section 18.1 below. SECTION 9.4. Maintenance and Repair Reports. During the Lease Term Lessee shall keep maintenance and repair reports in sufficient detail, on the same basis as records are kept for similar properties owned or leased by Guarantor or its Subsidiaries, to indicate the nature and date of major work done. Such reports shall be kept on file by Lessee at its offices during the Lease Term, and shall be made available at Lessee's office to Lessor upon reasonable request. Lessee shall give notice to Lessor of any Condemnation of Casualty the cost to repair which is reasonably expected by Lessee to exceed $500,000, promptly after Lessee has knowledge thereof. SECTION 9.5. Permitted Contests. If, to the extent and for so long as (a) a contest of the legality, validity or applicability to any Leased Property or any interest therein of, or the operation, use or maintenance thereof by, Lessee of (i) any Applicable Laws and Regulations, (ii) any term or condition of, or any revocation or amendment of, or other proceeding relating to, any Governmental Action, or (iii) any Lien or Tax shall be made in good faith, by appropriate proceedings initiated timely and diligently prosecuted, by Lessee, or (b) compliance with such Applicable Laws and Regulations, Governmental Action, Lien or Tax shall have been excused or exempted by a valid nonconforming use permit, waiver, extension or forbearance, Lessee shall not be required to comply with such Applicable Laws and Regulations, Governmental Action, Lien or Tax but only if and so long as any -12- such contest or noncompliance shall in the reasonable opinion of Lessor, acting at the direction of the Required Participants, constitute a Permitted Contest. Lessor will not be required to join in any Permitted Contest pursuant to this Section 9.5 unless a provision of any Applicable Laws and Regulations requires, or, in the good faith opinion of Lessee, it is helpful to Lessee, that such proceedings be brought by or in the name of Lessor; and in that event, Lessor will join in the proceedings or permit them or any part thereof to be brought in its name if and so long as no Lease Event of Default is continuing and Lessee pays all related expenses, and Lessee shall be deemed to have acknowledged and agreed that Lessor is indemnified therefor pursuant to Article VII of the Participation Agreement. SECTION 9.6. Liens. During the Lease Term Lessee will not directly or indirectly create, incur, assume or suffer to exist any Lien (other than Permitted Liens) on or with respect to any portion of any Leased Property, Lessor's title thereto, or any interest therein. Lessee, at its own expense, will promptly pay, satisfy and otherwise take such actions as may be necessary to keep the Premises free and clear of, and duly to discharge, eliminate or bond in a manner reasonably satisfactory to Lessor, Agent and the Required Participants, any such Lien (other than Permitted Liens) not accepted above if the same shall arise at any time. ARTICLE X USE Each Leased Property shall be used only for the production (including labeling), storage and distribution of processed and fresh fruits and vegetables and fruit and vegetable products. Lessee shall not use any Site or any part thereof for any purpose or in any manner that would materially adversely affect the Fair Market Value, utility, remaining useful life or residual value of such Leased Property. Lessee shall use each Leased Property in compliance in all material respects with (a) any Applicable Laws and Regulations, except to the extent permitted by Section 9.5 above, (b) any insurance policies required by Article XI below, and (c) all of the Operative Documents. Lessee shall pay, or cause to be paid, all charges and costs required in connection with the use of each Leased Property in accordance with this Lease and the Participation Agreement. Lessee shall not commit or permit any waste of any Leased Property or any part thereof. -13- ARTICLE XI INSURANCE SECTION 11.1. Required Coverages. During the Site Term for each Leased Property Lessee will provide or cause to be provided insurance with respect to each such Leased Property of a character usually insured by Persons engaged in the same or similar business similarly situated against loss or damage of the kinds and in the amounts customarily insured against by such Persons, and carry such other insurance as is usually carried by such Persons; provided, that in any event Lessee will maintain: (a) Commercial General Liability Insurance. Combined single limit insurance against claims for third-party bodily injury, including death and third-party property damage occurring on, in or about each Leased Property (including adjoining streets and sidewalks) in an amount at least equal to $19,000,000 per occurrence. Following the Base Term Commencement Date for each Leased Property, such coverage may be subject to deductibles or self-insured retentions up to an amount that is customarily carried by a company of similar size and engaged in business similar to Lessee; provided however, that during the Construction Period with respect to a Leased Property there shall be no such deductibles and self insurance amounts. (This coverage may be provided in a combination of umbrella and excess liability policies.) (b) Property Insurance. Insurance against loss or damage covering each Leased Property or any portion thereof by reason of any Peril (as defined below) in an amount (following the Base Term Commencement Date) for each Leased Property, subject to such deductibles and/or self-insurance in such minimum amounts as is carried by corporations owning and/or operating similar properties; provided, however, that during the Construction Period with respect to a Leased Property there shall be no such deductibles and self insurance amounts; provided, however, that at no time shall the amount of such coverage be less than the replacement cost of the Improvements with respect to a Leased Property, including any costs that may be required to cause such Leased Property to be reconstructed to then current Applicable Laws and Regulations. The term "Peril" shall mean (i) collectively, fire, lightning, flood, windstorm, hail, explosion, riot and civil commotion, vandalism and malicious mischief, damage from aircraft, vehicles and smoke and all other perils covered by the "all risk endorsement" then in use in the State in which such Leased Property is located and (ii) earthquake. Alternatively, at Lessee's election, such insurance shall be on a coverage form reasonably available in the commercial insurance market at the time of the -14- most recent policy reviewed, provided that all Perils are covered by such alternate coverage form or forms. (c) Workers' Compensation Insurance. Lessee shall, in the construction of the Financed Improvements or other Alterations and the operation of each Leased Property, comply with the applicable Workers' Compensation laws and protect Lessor, Agent and the Participants against any liability under such laws. (d) Builder's Risk Insurance. During the construction of any Alteration costing in excess of $1,000,000, Lessee shall also maintain, for the benefit of Lessor, all-risk Builders' Risk Insurance in an amount equal to the greater of the replacement value of such Alterations and the aggregate cost for the construction of same. (e) Other Insurance. Such other insurance, including earthquake, worker's compensation and business interruption insurance, in each case as is generally carried by owners of similar properties in such amounts and against such risks as are then customary for properties similar in use and to the extent required by any Participant, and flood insurance to the extent required by Applicable Law and Regulations applicable to such Participant. Such insurance shall be written by reputable insurance companies that are financially sound and solvent and otherwise reasonably appropriate considering the amount and type of insurance being provided by such companies. Any insurance company selected by Lessee shall be rated in A.M. Best's Insurance Guide or any successor thereto (of if there be none, an organization having a similar national reputation) and shall have a general policyholder rating of "A" (or comparable rating for a rating by an organization other than A.M. Best) and a financial rating of at least "X" (or comparable rating for a rating by an organization other than A.M. Best) or be otherwise acceptable to the Required Participants. In the case of liability insurance maintained by Lessee, it shall name Lessor (both in its individual capacity and as trustee), Agent and each of the Participants as additional insureds and, in the case of property insurance maintained by Lessee, it shall name Agent as mortgagee and loss payee as its interests may appear. Each policy referred to in this Section 11.1 shall provide that: (i) it will not be canceled, materially modified or its limits reduced, or allowed to lapse without renewal, except after not less than 30 days' prior written notice to Lessor; (ii) the interests of Lessor, Agent and any Participant shall not be invalidated by any act or negligence of or breach of warranty or representation by Lessee or any Person having an interest in the Premises or the -15- Improvements; (iii) such insurance is primary with respect to any other insurance carried by or available to Lessor, Agent or any Participant; (iv) the insurer shall waive and right of subrogation, setoff, counterclaim, or other deduction, whether by attachment or otherwise, against Lessor; and (v) such policy shall contain a cross-liability clause providing for coverage of Lessor, Agent and each Participant, as if separate policies had been issued to each of them. Lessee will notify Lessor promptly of any policy cancellation, reduction in policy limits, modification or amendment. SECTION 11.2. Delivery of Insurance Certificates. With respect to the Site or Sites to be acquired on each Site Acquisition Date, Lessee shall deliver to Lessor certificates of insurance satisfactory to Lessor evidencing the existence of all insurance required to be maintained hereunder and setting forth the respective coverages, limits of liability, carrier, policy number and period of coverage. Thereafter, throughout the Lese Term, at the time each of Lessee's insurance policies is renewed (but in no event less frequently than once each year on or before December 31) or upon written request by any Lessor following a Lease Event of Default, Lessee shall deliver to Lessor certificates of insurance evidencing that all insurance required by Section 11.1 to be maintained by Lessee with respect to the Premises is in effect. ARTICLE XII ASSIGNMENT AND SUBLEASING Lessee during the Lease Term may not assign, mortgage or pledge to any Person, including an Affiliate of Lessee, at any time, in whole or in part, any of its right, title or interest in, to or under this Lease or any portion of any Leased Property, and any such assignment, mortgage or pledge shall be void. Except for the leasehold interest in the Modesto Site granted to Lessor pursuant to the Ground Lease and as expressly permitted in this Article XII, Lessee may not sublease, in whole or in part, any of its right, title or interest in, to or under this Lease or any portion of any Leased Property to any Person, except that, following the final Completion Date, Lessee may enter into subleases with (i) a direct or indirect wholly-owned Subsidiary of Guarantor and (ii) a Person which is not a direct or indirect wholly-owned Subsidiary of Lessee ("Third Party Sublease"); provided, however, that in no event shall the aggregate subleased space (together with the nonexclusive use of any related or necessary portion of any Site as necessary to access and parking) subject to all Third Party Subleases exceed 30% of the aggregate net rentable square feet of any Site. Lessee shall not sublease -16- any portion of any Leased Property to, or permit the sublease of any portion of any Leased Property by, any Person who shall then be engaged in any proceedings for relief under any bankruptcy or insolvency law or laws relating to the relief of debtors. No sublease hereunder will discharge or diminish any of Lessee's obligations to Lessor hereunder, and Lessee shall remain directly and primarily liable under the Lease with respect to the entire Premises. Each sublease permitted hereby shall be made and shall expressly provide in writing that it is subject and subordinate to this Lease and the rights of Lessor hereunder, shall expressly provide for the surrender of the space subleased by the applicable sublessee at the election of Lessor after a Lease Event of Default, and that such provisions may be directly enforced by Lessor or Agent. All such subleases under this Article XII shall expressly provide in writing for termination on or prior to the Lease Expiration Date unless Lessee shall purchase all of the Premises pursuant to Section 21.1(b) of this Lease. Lessee shall, within fifteen (15) days after the execution of any Third Party Sublease, deliver to Agent a fully executed copy of such sublease. ARTICLE XIII LOSS, DESTRUCTION, CONDEMNATION OR DAMAGE SECTION 13.1. Event of Loss; Condemnation or Casualty. (a) If an Event of Loss shall occur during the Lease Term, Lessee shall give Lessor prompt written notice of such occurrence and the date thereof and Lessee shall purchase the Leased Property(ies) affected thereby from Lessor on the next succeeding Quarterly Payment Date after the date such Event of Loss shall have occurred or, if such Event of Loss shall have occurred within ten (10) Business Days preceding a Quarterly Payment Date, then on the next succeeding Quarterly Payment Date after such Event of Loss shall have occurred, at a purchase price equal to the Purchase Amount of such Leased Property. In the case of an Event of Taking which is deemed to have occurred because of a requisition which is not scheduled to last beyond the earlier of the Lease Expiration Date and Lessee's election of the Sale Option but which in fact is continuing on the earlier of such dates, the foregoing purchase price shall be paid on such earlier date. (b) Upon payment in full of all amounts payable pursuant to Section 13.1(a), (i) the Site Term shall end with respect to the affected Leased Property(ies), (ii) the obligations of Lessee -17- hereunder with respect to the affected Leased Property(ies) (other than any obligations expressed herein or any other Operative Document as surviving termination of this Lease) shall terminate as of the date of such payment. Lessor shall thereupon transfer its right, title and interest in the affected Leased Property(ies) to Lessee in accordance with Section 23.16(a) and (iii) the Lease Supplement for the affected Leased Property(ies) shall be canceled. SECTION 13.2. Application of Payments Relating to an Event of Loss. All net Condemnation Proceeds and property insurance proceeds received at any time by Lessee during the Lease Term from any Authority or other Person with respect to any Event of Loss shall be promptly remitted to Lessor (up to, but not exceeding, the amounts owed under Section 13.1(a) above) and, upon the purchase of the affected Leased Property(ies) by Lessee pursuant to such Section 13.1(a) and the payment by Lessee of the purchase price and all other amounts payable by Lessee pursuant to such Section 13.1(a), any such Net Condemnation Proceeds and property insurance proceeds remaining thereafter shall be paid over to, or retained by, Lessee, or as Lessee may direct. SECTION 13.3. Application of Certain Payments Relating to a Condemnation. In case of a requisition for temporary use of all or a portion of any Leased Property which is not an Event of Taking, this Lease shall remain in full force and effect, without any abatement or reduction of Rent, and the proceeds received from any Authority relating to a Condemnation for the affected portion of the Leased Property shall, so long as no Lease Event of Default exists and subject to Section 16.2 hereof, be paid to Lessee and, to the extent applicable, shall be used by Lessee to repair and restore the affected Premises to the condition required by Section 9.1 hereof. Notwithstanding anything herein to the contrary, any portion of such proceeds that is awarded with respect to the time period after the expiration or termination of the Lease Term (unless Lessee shall have exercised an option to purchase all of the Premises and consummated such purchase) shall be paid to Lessor; provided, that if Lessee has paid the Lease Balance to Lessor, such proceeds (or the portion of such proceeds in excess of portion thereof applied to the Lease Balance) shall be paid over to Lessee. SECTION 13.4. Casualty. Upon any Casualty during the Lease Term with respect to any portion of any Leased Property the cost of repair of which would exceed $500,000 Lessee shall give to Lessor written notice thereof. As soon as practicable after a Casualty, Lessee shall repair and rebuild the affected portions of the Leased Property suffering such Casualty (or cause such affected portions to be repaired and rebuilt) to the condition required to be -18- maintained by Section 9.1 hereof; provided, that the value and functional capability of such item as restored is at least equivalent to the value and functional capability of such item as in effect immediately prior to the occurrence of such Casualty. So long as no Lease Event of Default or Material Default is continuing, any insurance proceeds received with respect to any Casualty shall be paid over to or retained by Lessee up to $500,000. Insurance proceeds received with respect to any Casualty in excess of $500,000 shall be held by Agent and made available to Lessee to pay costs actually incurred by Lessee to restore the Premises as required herein. SECTION 13.5. Negotiations. In the event any part of any Leased Property becomes subject to condemnation or requisition proceedings during the Lease Term, Lessee shall give notice thereof to Lessor promptly after Lessee has knowledge thereof and, to the extent permitted by any Applicable Laws and Regulations, Lessee shall control the negotiations with the relevant Authority unless a Lease Event of Default exists, in which case Lessor shall be entitled to control such negotiations; provided, that in any event Lessor may participate at Lessor's expense (or if a Lease Event of Default exists, at Lessee's expense) in such negotiations; and provided in all cases, that no settlement will be made without Lessor's prior written consent acting at the direction of the Required Participants, not to be unreasonably withheld. Lessee shall give to Lessor such information, and copies of such documents, which relate to such proceedings, or which relate to the settlement of amounts due under insurance policies required by Section 11.1 above, and are in the possession of Lessee, as are reasonably requested by Lessor. If the proceedings relate to an Event of Taking, Lessee shall act diligently in connection therewith. Nothing contained in this Section 13.5 shall diminish Lessor's rights with respect to Condemnation Proceeds and property insurance proceeds under Section 13.2 above. SECTION 13.6. No Rent Abatement. Rent shall not abate hereunder by reason of any Casualty, any Event of Loss, any Event of Taking or any Condemnation of any portion of any Leased Property, and Lessee shall continue to perform and fulfill all of Lessee's obligations, covenants and agreement hereunder notwithstanding such Casualty, Event of Loss, Event of Taking or Condemnation until the Lease Expiration Date. SECTION 13.7. Notice of Environmental Matters. Promptly, but in an event within thirty (30) days from the date a Responsible Officer of Lessee has actual knowledge thereof, Lessee shall provide to Lessor written notice of any pending or, to Lessee's knowledge, threatened claim, action or proceeding involving any -19- Environmental Law or any Release on or in connection with any Leased Property, which claim, action or proceeding would require in excess of $250,000 in remediation costs in respect of such Leased Property (such claim, action or proceeding, a "Material Environmental Claim"). All such notices shall describe in reasonable detail the nature of the claim, action or proceeding and Lessee's proposed response thereto. In addition, Lessee shall provide to Lessor, within thirty (30) days of receipt, copies of all Material Environmental Claim. Lessee shall also promptly provide such detailed reports of any such Material Environmental Claims as may reasonably be requested by Lessor or Agent. ARTICLE XIV NON-INTERFERENCE SECTION 14.1. Non-Interference. Subject to Lessor's cure rights, as provided for in Article XIX below, Lessor covenants that it will not interfere in Lessee's use or possession of the Premises during the Lease Term, so long as no Lease Event of Default has occurred and is continuing; it being agreed that Lessee's remedies for breach of the foregoing covenant shall be limited to a claim for damages or the commencement of proceedings to enjoin such breach. Such right is independent of and shall not affect Lessee's obligations hereunder and under the other Operative Documents or Lessor's rights otherwise to initiate legal action to enforce the obligations of Lessee under this Lease. The foregoing covenant shall not require Lessor to take any action contrary to, or which would permit Lessee to use the Premises for a use not permitted under the provisions of, this Lease. SECTION 14.2. Certain Duties and Responsibilities of Lessor. Lessor undertakes to perform such duties and only such duties as are specifically set forth herein and in the other Operative Documents, and no implied covenants or obligations shall be read into this Lease against Lessor, and Lessor agrees that it shall not, nor shall it have a duty to, manage, control, use, sell, maintain, insure, register, lease, operate, modify, dispose of or otherwise deal with the Premises or any other part of the Trust Estate in any manner whatsoever, except as required by the terms of the Operative Documents and as otherwise provided herein. -20- ARTICLE XV INSPECTION AND REPORTS SECTION 15.1. Inspection. Upon five (5) Business Days prior notice to Lessee, Lessor or its authorized representatives (the "Inspecting Parties") at any time during the Lease Term may inspect (a) the Premises and (b) the books and records of Lessee relating to the Premises and make copies and abstracts therefrom. All such inspections shall be during Lessee's normal business hours (unless a Lease Event of Default has occurred and is existing) and shall be at the expense and risk of the Inspecting Parties, except that one such inspection in each calendar year shall be at Lessee's expense at a cost not to exceed $1,000 per Site inspected and except that if a Lease Event of Default or Lease Default has occurred and is continuing, Lessee shall reimburse the Inspecting Parties for the reasonable costs of such inspections and, except for the Inspecting Party's gross negligence or willful misconduct, such inspection shall be at Lessee's risk. No inspection shall unreasonably interfere with Lessee's operations. None of the Inspecting Parties shall have any duty to make any such inspection or inquiry. None of the Inspecting Parties shall incur any liability or obligation by reason of making any such inspection or inquiry unless and to the extent such Inspecting Party causes damage to the Premises or any property of Lessee or any other Person during the course of such inspection. SECTION 15.2. Reports. To the extent permissible under Applicable Laws and Regulations, during the Lease Term Lessee shall prepare and file in timely fashion, or, where Lessor shall be required to file, Lessee shall prepare and make available to Lessor within a reasonable time prior to the date for filing and Lessor shall file, any reports with respect to the condition or operation of the Premises that shall be required to be filed with any Authority. ARTICLE XVI OWNERSHIP, GRANT OF LIEN AND FURTHER ASSURANCES SECTION 16.1. Grant of Security Interest. Title to the Premises are held by Lessor, as security for the obligations of Lessee hereunder and under each of the other Operative Documents to which it is a party until such time as Lessee shall have fulfilled all of its obligations hereunder and under such other Operative Documents. Lessee hereby assigns, grants, warrants and pledges to Lessor for the benefit of the Participants a Lien against all of the Lessee's right, title and interest, whether now or hereafter existing or acquired, in the Premises and the other Del Monte -21- Collateral to secure the payment and performance of all obligations of Lessee now or hereafter existing under this Lease or any other Operative Document. Lessee shall, at its expense, promptly and duly execute, acknowledge and deliver to Lessor and file, register and record such documents and assurances including the Mortgages and any financing statements and fixture filings and take such further actions as Lessor, Agent or any Participant may from time to time reasonably request in order to carry out more effectively the intent and purpose of this Lease and the other Operative Documents, to establish and protect the rights and remedies created or intended to be created in favor of Lessor hereunder and thereunder, and to establish, perfect and maintain the right, title and interest of Lessor in and to the Premises and the other Del Monte Collateral, subject to no Lien other than Permitted Liens, and Lessee agrees to execute and deliver promptly such of the foregoing Mortgages, financing statements and fixture filings or other documents as may require execution by Lessee. To the extent permitted by Applicable Laws and Regulations, Lessee hereby authorizes any such Mortgages, financing statements and fixture filings to be filed without the necessity of the signature of Lessee. Upon Lessee's request, Lessor shall at such time as all of the obligations of Lessee under this Lease or any other Operative Documents have been indefeasibly paid or performed in full (other than Lessee's contingent obligations, if any, under Article VII of the Participation Agreement and under Article VI of the Construction Agency Agreement) execute and deliver termination statements and other appropriate documentation reasonably requested by Lessee, all at Lessee's expense, to evidence Lessor's release of its Lien against the Del Monte Collateral. SECTION 16.2. Attorney-in-Fact. Lessee hereby irrevocably appoints Lessor as Lessee's attorney-in-fact, with full authority in the place and stead of Lessee and in the name of Lessee or otherwise, from time to time in Lessor's discretion, to execute any instrument which Lessor may deem necessary or advisable to accomplish the purposes of this Lease (subject to any limitations set forth in the Operative Documents), and to take any action (including any action that Lessee is entitled to take), including, without limitation: (a) to ask, demand, collect, sue for, recover, compromise, receive and give acquittance and receipts for money due and to become due under or in connection with all or any portion of the Premises and the other Del Monte Collateral; (b) to receive, endorse and collect any drafts or other instruments, documents and chattel paper in connection with the foregoing clause (a); -22- (c) to file any claim or take any action or institute any proceedings which Lessor may deem to be necessary or advisable for the collection thereof or to enforce compliance with the terms and conditions of this Lease; and (d) to perform any affirmative obligations of Lessee hereunder, including the execution of mortgages, financing statements and other documents. Lessee hereby acknowledges, consents and agrees that the power of attorney granted pursuant to this Section 16.2 is irrevocable and coupled with an interest. Notwithstanding anything contained herein to the contrary, the rights and powers presently granted Lessor by this Section 16.2 may be exercised by Lessor only upon the occurrence and during the continuance of a Lease Event of Default. ARTICLE XVII LEASE EVENTS OF DEFAULT The occurrence of any one or more of the following events, whether any such event shall be voluntary or involuntary or come about or be effected by operation of law or pursuant to or in compliance with any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body, shall constitute a "Lease Event of Default": (a) Lessee shall fail to make any payment of (i) Basic Rent and such failure shall continue for a period of three days or (ii) amounts payable pursuant to Section 13.1(a), Article XX, or Sections 21.1(b), 22.3 or 22.4 hereof when due; (b) Lessee or Guarantor shall fail to make payment of any other amount payable hereunder or under any of the other Operative Documents and such failure shall continue for a period of five (5) days after the earlier of notice to Lessee or Guarantor, as the case may be, of such failure or a Responsible Officer of Lessee or Guarantor knew or reasonably should have known of such failure; (c) Lessee shall fail to maintain insurance as required by Section 11.1 above; (d) Lessee shall fail to purchase the Premises in accordance with Section 20.2 below or Lessee shall fail to sell all of the Premises on the Lease Expiration Date in accordance with and satisfaction of each of the terms, covenants, conditions and -23- agreements set forth at Articles XXI and XXII hereof in connection with and following its exercise of the Sale Option, including each of Lessee's obligations at Sections 21.1 and 21.2 hereof; (e) Lessee or Guarantor shall fail timely to perform or observe any covenant, condition or agreement (not included in any other clause of this Article XVII) to be performed or observed by it hereunder or under any other Operative Document and such failure shall continue for a period of 30 days (but in no event later than the Lease Expiration Date) after the earlier to occur of (i) written notice thereof to Lessee from any Lessor, Agent or any Participant or (ii) the date upon which a Responsible Officer of Lessee knew or reasonably should have known thereof; (f) the occurrence of a Del Monte Event of Default; (g) Any Operative Document or the security interest and lien granted under this Lease (except in accordance with its terms), in whole or in part, terminates, ceases to be effective or ceases to be the legal, valid and binding enforceable obligation of Lessee, Guarantor, or any of their Affiliates, as the case may be, on account of, or as a result of, directly or indirectly, any act or omission of Lessee, Guarantor or any of their Affiliates, or Lessee, Guarantor or any of their Affiliates, directly or indirectly, contests in any manner in any court the effectiveness, validity, binding nature or enforceability thereof; or the security interest and lien securing Lessee's or Guarantor's obligations under the Operative Documents, in whole or in part, ceases to be a perfected first priority security interest and lien on account of, or as a result of, directly or indirectly, any action or omission of Lessee, Guarantor of any of their Affiliates; (h) A Construction Agency Agreement Event of Default shall have occurred and be continuing; (i) An Event of Default shall occur under any Material Credit Agreement; (j) Lessee fails to provide and maintain the Letter of Credit as described in Section 5.2(k) of the Participation Agreement; or (k) Lessee fails to replace any Non-Funding Participant within the ninety (90) day period permitted to such replacement in Section 2.17 of the Participation Agreement. -24- ARTICLE XVIII ENFORCEMENT SECTION 18.1. Remedies. During the existence of a Lease Event of Default, at Lessor's option and without limiting Lessor in the exercise of any other right or remedy Lessor may have on account of such default (including, without limitation, the obligation of Lessee to purchase the Premises as set forth below), and without any further demand or notice, Lessor may cause the following to occur: (i) By notice to Lessee, Lessor may terminate Lessee's right to possession of the Premises. A notice given in connection with unlawful detainer proceedings specifying a time within which to cure a default shall terminate Lessee's right to possession if Lessee fails to cure the default within the time specified in the notice. (ii) Upon termination of Lessee's right to possession and without further demand or notice, Lessee shall surrender possession and vacate the Premises and deliver possession thereof, and Lessor may re-enter the Premises and remove any Persons in possession thereof. (iii) Lessor may terminate this Lease with respect to all or any of the Leased Properties and/or on and after the Base Term Commencement Date with respect to a Leased Property declare the aggregate outstanding Site Balance for such Leased Property to be immediately due and payable, and Lessor shall be entitled to (x) recover from Lessee the following amounts and (y) take the following actions: (A) Lessee shall pay all accrued and unpaid Rent hereunder (including, without limitation, Basic Rent and Supplemental Rent) with respect to such Leased Property for the period commencing on the Base Term Commencement Date with respect to such Leased Property through the Final Rent Payment Date with respect to such Leased Property; (B) Lessor may elect either of the following with respect to any or all of the Leased Properties: (1) Lessor may demand, by written notice to the Lessee specifying a payment date (the "Final Rent Payment Date") not earlier than ten (10) days after the date of such notice, that Lessee purchase such Leased Property, and Lessee shall pay to Lessor, on the Final Rent Payment Date (in lieu of Basic Rent with respect to -25- such Leased Property due after the Final Rent Payment Date with respect to such Leased Property), an amount equal to the sum of (A) the Site Balance for such Leased Property computed for the period commencing on the Base Term Commencement Date with respect to such Leased Property to and including the Final Rent Payment Date with respect to such Leased Property, plus (B) all accrued and unpaid Rent with respect to such Leased Property due and unpaid for the period commencing on the Base Term Commencement Date with respect to such Leased Property to and including the Final Rent Payment Date with respect to such Leased Property, and upon payment of such amount, and the amount of all other sums due and payable by Lessee under this Lease and the other Operative Documents (and interest at the Overdue Rate on the amounts payable under this clause (B)(1) from the Final Rent Payment Date to the date of actual payment) with respect to such Leased Property, Lessor shall transfer to Lessee all of Lessor's right, title and interest in and to such Leased Property pursuant to Section 23.16 below; or (2) Lessor may sell its interest in such leased Property and the other applicable Del Monte Collateral in which event Lessee shall pay to Lessor an amount equal to the excess, if any, of (x) all amounts due Lessor under clause (B)(1) above over (y) the net Sale Proceeds received by Lessor from the foregoing sale (provided, that in calculating such net Sale Proceeds, all expenses and Taxes incurred by Lessor or any of the Participants in connection with such sale, including, without limitation, legal fees, shall be deducted from such Sale Proceeds); (C) Any other amount necessary to compensate Lessor for all the damages proximately caused by Lessee's failure to perform Lessee's obligation under this Lease or which in the ordinary course of things would be likely to result therefrom, including, but not limited to, the costs and expenses (including, without limitation, reasonable attorneys' fees, advertising costs and brokers' commissions) of recovering possession of the Premises, removing Persons or property therefrom, placing the Premises in good order, condition and repair, preparing and altering the Premises for reletting, and all other costs and expenses of reletting; and -26- (D) Such other amounts in addition to or in lieu of the foregoing as may be permitted from time to time by Applicable Laws and Regulations. (iv) Lessor may enforce the Lien given hereunder pursuant to Section 16.1 hereof, Section 5 of the Lease Supplements, the Mortgages, the Uniform Commercial Code or any other Applicable Laws and Regulations to recover all damages caused by a Lease Event of Default, including any damages arising from Lessee's failure to purchase the Premises pursuant to Section 20.2 hereof. (v) If Lessee has breached this Lease, this Lease shall continue in effect for so long as Lessor does not terminate this Lease, and Lessor may enforce all of Lessor's rights and remedies under this Lease, including the right to recover the Rent hereunder (including, without limitation, Basic Rent (when applicable) and Supplemental Rent) as it becomes due under this Lease. Lessee's right to possession shall not be deemed to have been terminated by Lessor except pursuant to clause (iii) above. The following do not constitute a termination of this Lease: (A) Acts of maintenance or preservation or efforts to relet the Premises; (B) The appointment of a receiver upon the initiative of Lessor to protect Lessor's interest under this Lease; or (C) Withholding of consent to an assignment or subletting, or terminating a subletting or assignment by Lessee. (vi) In the event that Lessor elects to continue this Lease in full force and effect following the termination of Lessee's right of possession, Lessor, to the maximum extent permitted by Applicable Laws and Regulations, may enforce all its rights and remedies under this Lease, including, but not limited to, the right to recover Rent hereunder as it becomes due. During the continuance of a Lease Event of Default or following the termination of Lessee's right to possession, Lessor may enter the Premises in accordance with Applicable Laws and Regulations without terminating this Lease and sublet all or any part of the Premises for Lessee's account to any Person, for such term (which may be a period beyond the remaining Lease Term), at such rents and on such other terms and conditions as are commercially reasonable. In the event -27- of any such subletting, rents received by Lessor from such subletting shall be applied (a) first, to the payment of the reasonable costs incurred by Lessor in maintaining, preserving, altering and preparing the Premises for subletting and other reasonable costs of subletting, including, but not limited to, brokers' commissions and attorneys' fees; (b) second, to the payment of Rent hereunder then due and payable; (c) third, to the payment of future Rent hereunder as the same may become due and payable hereunder; (d) fourth, to the payment of all other obligations of Lessee hereunder and under the other Operative Documents (including, without limitation, the Lease Balance), and (e) fifth, the balance, if any, shall be paid to Lessee upon (but not before) expiration of the Lease Term. If the rents received by Lessor from such subletting, after application as provided above, are insufficient in any period to pay the Rent due and payable hereunder for such period, Lessee shall pay such deficiency to Lessor upon demand. Notwithstanding any such subletting for Lessee's account without termination, Lessor may at any time thereafter, by written notice to Lessee, elect to terminate this Lease. (vii) Lessor may exercise any other right or remedy that may be available to it under Applicable Laws and Regulations or in equity, or proceed by appropriate court action (legal or equitable) to enforce the terms or to recover damages for the breach hereof, including those arising from a breach by Lessee of its obligations under Section 20.2 hereof. Separate suits may be brought to collect any such damages for any Rent installment period(s), and such suits shall not in any manner prejudice Lessor's right to collect any such damages for any subsequent Rent installment period(s), or Lessor may defer any such suit until after the expiration of the Basic Term or any Renewal Term, in which event such suit shall be deemed not to have accrued until the expiration of the Lease Term. (viii) Lessor may retain and apply against Lessor's damages all sums which Lessor would, absent such Lease Event of Default, be required to pay to, or turn over to, Lessee pursuant to the terms of this Lease. (ix) As a matter of right and without notice to Lessee or anyone claiming under Lessee, and without regard to the then value of the Del Monte Collateral or the interest of Lessee therein, Lessor shall have the right to apply to any court having jurisdiction to appoint a receiver or receivers of the Del Monte Collateral at Lessee's sole cost and expense, and Lessee hereby irrevocably consents to such appointment and -28- waives notice of any application therefor. Any such receiver or receivers shall have all the usual powers and duties of receivers in like or similar cases and all the powers and duties of Lessor in case of entry as provided in this Lease and shall continue as such and exercise all such powers until the latest to occur of (i) the date of confirmation of sale of the Del Monte Collateral; (ii) the disbursement of all proceeds of the Del Monte Collateral collected by such receiver and the payment of all expenses incurred in connection therewith; or (iii) the termination of such receivership with the consent of Lessor or pursuant to an order by a court of competent jurisdiction. (x) Lessor may exercise the remedies described in Section 5 of the Lease Supplements. (xi) Lessee hereby grants to Chicago Title Company, as trustee (together with all successor trustees, the "Trustee"), IN TRUST for the benefit of Lessor as security for the obligations hereunder A SECURITY INTEREST AND LIEN against the Premises WITH POWER OF SALE, and that, upon the occurrence of any Lease Event of Default, Lessor shall have the power and authority, to the extent provided by Applicable Laws, after proper notice and lapse of such time as may be required by Applicable Laws, to cause the Trustee to sell the Premises, or any portion thereof, at the time and place of sale fixed by Lessor in said notice of sale, either as a whole, or in separate lots or parcels or items and in such order as Lessor may elect, at auction to the highest bidder for cash in lawful money of the United States payable at the time of sale; accordingly, it is acknowledged that A POWER OF SALE HAS BEEN GRANTED IN THIS INSTRUMENT; A POWER OF SALE MAY ALLOW LESSOR TO TAKE THE APPLICABLE PREMISES AND SELL IT WITHOUT GOING TO COURT IN A FORECLOSURE ACTION UPON DEFAULT BY LESSEE UNDER THIS INSTRUMENT, and (ii) upon the occurrence of Lease Event of Default, Lessor, in lieu of or in addition to exercising any power of sale hereinabove given, may proceed by a suit or suits in equity or at law, whether for a foreclosure, or for the sale of the premises, or against Lessee on a recourse basis for the Lease Balance and all accrued and unpaid interest on the Loans, all accrued and unpaid Yield on the Certificate Amounts, and all other amounts owing by Lessee under the Operative Documents with respect to such Premises, or for the specific performance of any covenant or agreement herein contained or in aid of the execution of any power herein granted, or for the appointment of a receiver pending any foreclosure hereunder or the sale of the Premises, or for -29- the enforcement of any other appropriate legal or equitable remedy. (xii) The Agent may draw under the Letter of Credit and apply the proceeds thereof, all as described in the Loan Agreement. Lessor acknowledges and agrees that upon the declaration of a Lease Event of Default the amount due and owing by it to Lessor hereunder shall be the Lease Balance and that to the maximum extent permitted by Applicable Laws, Lessee waives any right to contest the Lease Balance as the liquidated sum due upon acceleration of this Lease. SECTION 18.2. Proceeds of Sale; Deficiency. All payments received and amounts held or realized by Lessor at any time when a Lease Event of Default shall be continuing and after the Lease Balance shall have been accelerated pursuant to this Article XVIII as well as all payments or amounts then held or thereafter received by Lessor (except for rents received by Lessor from subletting pursuant to Section 18.1(vi) above, which shall be distributed as set forth therein) and the proceeds of sale pursuant to Section 18.1(iii)(B)(2) above or pursuant to the Mortgages shall be distributed forthwith upon receipt by Lessor in accordance with Article III of the Loan Agreement. SECTION 18.3. Mortgage and Lease Supplement Remedies. Without limiting any other remedies set forth in this Lease, Lessor and Lessee agree that upon the occurrence of a Lease Event of Default, the Lessor and Agent shall have all the rights and may pursue any of the remedies provided to it in the Mortgages and Lease Supplements, the terms and provisions of which Mortgages and Lease Supplements, the terms and provisions of which Mortgages and the Lease Supplements are incorporated herein by this reference. SECTION 18.4. Remedies Cumulative; No Waiver; Consents. To the extent permitted by, and subject to the mandatory requirements of, Applicable Laws and Regulations, each and ever right, power and remedy herein specifically given to Lessor or otherwise in this Lease shall be cumulative and shall be in addition to every other right, power and remedy herein specifically given or now or hereafter existing at law, in equity or by statute, and each and ever right, power and remedy whether specifically herein given or otherwise existing may be exercised from time to time and as often and in such order as may be deemed expedient by Lessor, and the exercise or the beginning of the exercise of any power or remedy shall not be construed to be a waiver of the right to exercise at the same time or thereafter any other right, power or remedy. No delay or omission by Lessor in the exercise of any right, power or -30- remedy or in the pursuit of any remedy shall impair any such right, power or remedy or be construed to be a waiver of any default on the part of Lessee or be acquiescence therein. Lessor's consent to any request made by Lessee shall not be deemed to constitute or preclude the necessity for obtaining Lessor's consent, in the future, to all similar requests. No express or implied waiver by Lessor of any Lease Event of Default shall in any way be, or be construed to be, a waiver of any future or subsequent Lease Default or Lease Event of Default. To the extent permitted by Applicable Laws and Regulations and subject to the provisions of Section 18.1 above, Lessee hereby waives any rights now or hereafter conferred by statute or otherwise that may require Lessor to sell, lease or otherwise use the Premises, the other Del Monte Collateral or any part thereof in mitigation of Lessor's damages upon the occurrence of a Lease Event of Default or that may otherwise limit or modify any of Lessor's rights or remedies under this Article XVIII. Section 18.5. Limitation of Recourse Liability. Notwithstanding anything set forth herein to the contrary, prior to the commencement of the Base Term with respect to a Lease Supplement for a Site, the aggregate amount payable by Lessee on a recourse basis under this Article XVIII shall be subject to the limitations on recourse liability set forth in Section 7.9 of the Participation Agreement to the extent such amounts arose solely as a result of an Nonrelated Construction Event relating directly to such Leased Property. ARTICLE XIX RIGHT TO PERFORM FOR LESSEE SECTION 19.1. Right to Cure. If any Lease Default or Lease Event of Default shall be continuing and in Lessor's reasonably exercised judgment Lessee is not acting diligently and appropriately to cure such Lease Default or Lease Event of Default, Lessor may, but shall not be obligated to, on five (5) Business Day's prior notice to Lessee (except in the event of an emergency, in which case only one Business Day's prior notice shall be required), cure such Lease Default or Lease Event of Default, and Lessor shall not thereby be deemed to have waived any default caused by such failure to cure, and the amount of such payment and the amount of the expenses of Lessor (including reasonable attorneys' fees and expenses) incurred in connection with such cure, together with interest thereon at the Overdue Rate, shall be deemed Supplemental Rent, payable by Lessee to Lessor upon demand. SECTION 19.2. Grants and Releases of Easements. Provided that no Default or Lease Event of Default shall have occurred and -31- be continuing, Lessor hereby consents in each instance to the following actions by Lessee, in the name and stead of Lessor and as Lessor's attorney-in-fact, but at Lessee's sole cost and expense: (i) the granting of easements, licenses, rights-of-way and other rights and privileges in the nature of easements reasonably necessary or desirable for the use, repair or maintenance of any Leased Property in accordance with this Lease; (ii) the release of existing easements or other rights in the nature of easements which are for the benefit of any Leased Property; (iii) the dedication or transfer of unimproved portions of any Leased Property for road, highway or other public purposes; (iv) the execution of petitions to have any Leased Property annexed to any municipal corporation or utility district; (v) the execution of any covenants and restrictions affecting any Leased Property or amendments or modifications thereto; and (vi) the execution or release of any similar agreements; provided, however, that in each case Lessee, prior to taking any such action, shall have delivered to Lessor an Officer's Certificate stating that (x) such grant, release, dedication, transfer, annexation, or amendment or similar agreement does not materially impair the Fair Market Value, residual value, utility, operation or remaining useful life of the applicable Leased Property, (y) such grant, release, dedication, transfer, annexation or amendment will not cause the applicable Leased Property or any portion thereof to fail to comply in any respect with the provisions of this Lease of any other Operative Document or in any material respect with all Applicable Laws and Regulations (including, without limitation, all applicable zoning, planning, building and subdivision ordinances, all applicable restrictive covenants and all applicable architectural approval requirements), and (z) Lessee shall timely pay and perform any obligations of Lessor under such grant, release, dedication, transfer, annexation or amendment during the Lease Term. Without limiting the effectiveness of the foregoing or the power of attorney granted to Lessee pursuant to Section 19.3 below, provided that no Material Default or Lease Event of Default shall have occurred and be continuing, Lessor shall, upon the request of Lessee, and at Lessee's sole cost and expense, execute and deliver any instruments necessary or appropriate to confirm any such grant, release, dedication, transfer, annexation or amendment to any Person permitted under Sections 19.2 and 19.3 hereof. SECTION 19.3. Power of Attorney. Unless and until a Default or Lease Event of Default has occurred and is continuing, the Lessor does, solely for the purposes stated in Section 19.2 above, hereby irrevocably make, constitute and appoint Lessee and any of its officers or designees its true and lawful attorney-in-fact, with full power and authority to do any and all acts necessary or proper to carry out the intent of Sections 19.2 and 19.3 hereof, -32- including, without limitation, the right, power and authority (i) to take such actions described in Section 19.2 above, and (ii) to execute such documents and agreements as Lessee may reasonably determine are necessary for the purposes of carrying out the intent of such Sections 19.2 and 19.3, and Lessor hereby ratifies and confirms all that Lessee as such attorney-in-fact or its substitute undertakes by virtue of this power of attorney, which power is coupled with an interest and is irrevocable. Lessor hereby agrees to execute, at Lessee's sole cost and expense, such additional powers of attorney in recordable form as may be necessary for Lessee to carry out the intent of such Sections 19.2 and 19.3. ARTICLE XX EARLY TERMINATION OPTION AND OBLIGATION TO PURCHASE SECTION 20.1 Early Termination Option. Without limitation of Lessee's purchase obligation pursuant to Section 20.2, on (1) any scheduled Quarterly Payment Date following the expiration of the Construction Period for all of the Sites, or (2) on an Business Day following the occurrence of a Lease Event of Default of the types described in clause (ii) of the next sentence, Lessee may, at its options, purchase all, but not less than all, of the Premises (the "Early Termination Option") at a price equal to the Purchase Amount. Lessee's right to purchase all of the Premises pursuant to this Section 20.1 shall terminate automatically and without notice (i) upon the occurrence of a Lease Event of Default arising as a result of an Insolvency Event and (ii) upon the occurrence of any other Lease Event of Default, unless in the case of a Lease Event of Default described in this clause (ii) Lessee delivers a written notice of its election to exercise this option to purchase not less than three (3) days prior to the date of the purchase and consummates the purchase within ten (10) Business Days following the occurrence of such Lease Event of Default. In order to exercise its option to purchase the Premises pursuant to this Section 20.1 and except as provided for in clause (ii) of the foregoing sentence, Lessee shall give to Lessor not less than ten (10) days' prior written notice of such election to exercise, which election shall become irrevocable if not revoked or extended by written notice to Lessor not later than five (5) days prior to the end of such ten (10) day period. Upon receipt of the Purchase Amount, Lessor shall transfer the Premises to Lessee, or its assigns, pursuant to Section 23.16 below, on the date set forth in the written notice delivered by Lessee pursuant to this Section 20.1. If a Lease Event of Default of the type described in clause (ii) above (other than a Lease Event of Default of the type described in clause (a) or (b) of Article XVII hereof) relates only to a specific Leased Property but not all Leased Properties, the -33- exercise of the Early Termination Option and the purchase of such Leased Properties for the applicable Purchase Amount in accordance with the requirements hereof shall be deemed to cure such Lease Event of Default; provided that Lessee may, if all of the Participants consent, cure such Lease Event of Default for a specific Leased Property by exercising the Early Termination Option and paying the Purchase Amount for such Leased Property; provided, further, if any Participant fails to consent, Lessee may nonetheless exercise the Early Termination Option and pay the Purchase Amount for all of the Leased Properties. SECTION 20.2. Required Purchase. Provided that Lessor has not exercised any other remedy inconsistent therewith, Lessee shall be obligated to purchase Lessor's interest in the Premises for the Purchase Amount (a) automatically and without notice upon the occurrence of any Lease Event of Default arising as a result of an Insolvency Event, (b) immediately upon the written demand of Lessor upon the occurrence of any other Lease Event of Default. ARTICLE XXI END OF TERM OPTIONS SECTION 21.1. End of Term Options. At least 270 days before the scheduled expiration date of the Lease Term, Lessee shall, by delivery of written notice to Lessor and the Agent, exercise one of the following options: (a) Renew this Lease (together with each Lease Supplement) with respect to all, but not less than all, of the Premises for five (5) additional one-year Lease Renewal Terms (the "Renewal Option") on the terms and conditions set forth set forth herein and in the other Operative Documents; provided, however, such Renewal Option shall be available at the end of the Base Term only if the conditions to the Extension Option set forth in Section 2.14 of the Participation Agreement are satisfied; and provided further, that the Renewal Option shall not be available during the fifth Renewal Term; or (b) Purchase for cash for the Purchase Amount all, but not less than all, of the Premises then subject to this Lease on the last day of the Lease Term (the "Purchase Option"); and if Lessee shall have elected the Purchase Option, Lessor shall, upon the payment to Lessor of the Purchase Amount, transfer all of Lessor's right, title and interest in and to the Premises pursuant to Section 23.16 below; or -34- (c) Sell on behalf of Lessor for cash to a single purchaser not in any way affiliated with Lessee or any of its Affiliates all, but not less than all, of the Premises then subject to this Lease on the last day of the Lease Term (the "Sale Option"). Lessee's right to sell the Premises pursuant to the Sale Option shall be conditioned upon the subject to (i) the full performance by Lessee of its obligations pursuant to Section 2 of each of the Utility Easements before such election of the Sale Option is made, (ii) the fulfillment by Lessee of each of the terms and conditions set forth in Article XXII below, and (iii) there not being at the time of such election any existing Third Party Subleases. Lessee shall not enter into any additional subleases or renew any subleases with respect to the Premises following Lessee's election of the Sale Option. Following Lessee's election of the Sale Option, Lessee shall not remove any Alterations. SECTION 21.2. Election of Options. To the extent that the Renewal Option is available, unless Lessee shall have affirmatively elected in accordance herewith the Purchase Option or the Sale Option, Lessee shall be deemed to have elected the Renewal Option. To the extent that the Renewal Option is not available for any reason (including because of the Participants' refusal to consent to an Extension Option Request), unless Lessee shall have (a) affirmatively elected the Sale Option within the time period provided for in Section 21.1. and (b) satisfied each of the requirements in Article XXII hereof, Lessee shall be deemed to have elected the Purchase Option. In addition, the Sale Option shall automatically be revoked if there exists a Lease Default, Lease Event of Default or Event of Loss at any time after the Sale Option is properly elected or Lessee fails to comply with each of the terms and conditions set forth at such Article XXII and Lessor shall be entitled to exercise all rights and remedies provided in Article XVIII hereof. Lessee may not elect the Sale Option if there exists on the date the election is made a Lease Default, a Lease Event of Default, an Event of Loss, or an outstanding Extension Option Request. SECTION 21.3. Renewal Options; Extension Options. The exercise of any Renewal Option by Lessee shall be subject to satisfaction of the following conditions: (i) on the Lease Expiration Date then in effect and on the date Lessee gives notice of its exercise of the Renewal Option, no Lease Event of Default or Lease Default shall have occurred and be continuing; and (ii) Lessee shall not have exercised the Sale Option or the Purchase Option. -35- Lessee's exercise of a Renewal Option shall be deemed to be a representation by Lessee that on both the Lease Expiration Date then in effect and the date Lessee gives notice of its exercise of the Renewal Option, no Lease Event of Default or Lease Default shall have occurred and be continuing. Following the Extension Effective Date, each Renewal Option (other than the first) shall be at the sole option of Lessee, not subject to the consent of the Participants. ARTICLE XXII SALE OPTION SECTION 22.1. Sale Option Procedures. If Lessee elects the Sale Option, Lessee shall use its best commercial efforts as nonexclusive agent for Lessor to obtain the highest all cash purchase price for the purchase of the Premises, and in the event Lessee receives any bid, Lessee shall within five (5) Business Days after receipt thereof, and at least twenty (20) Business Days prior to the Lease Expiration Date, certify to Lessor in writing the amount and terms of such bid, the name and address of the party (who shall not be Lessee, Guarantor or any Affiliate of Lessee or Guarantor or any Person with whom Lessee or Guarantor has an understanding or arrangement regarding their future use, possession or ownership of the Premises), but who may be Lessor or a Participant, any Affiliates thereof, or any Person contacted by any Participant (other than any Person referred to in the foregoing parenthetical) submitting such bid. Unless pursuant to the terms of the bid submitted, the Sale Proceeds shall exceed the aggregate outstanding Lease Balance as of the Lease Expiration Date any Participant may submit a bid to Lessee not later than five (5) Business Days prior to the Lease Expiration Date. Lessee shall bear its own expense and pay the expenses of Lessor and each Participant in connection with any such bidding and sale process pursuant to this Section 22.1 as well as all costs and expenses incurred by any party (including a buyer or potential buyer) to place the Premises in the condition required by Section 9.1 above and costs of repair and alterations for improvements desired by such buyer. None of the foregoing costs or expenses shall be deducted from the Sale Proceeds or serve to reduce the purchase price to be paid for the Premises. After Lessee shall have certified to Lessor all bids received, if all such bids received on an all cash basis are for less than the aggregate outstanding Lease Balance as of the Lease Expiration Date, any Participant, any Affiliate thereof, or any Person contacted by any Participant may submit a further bid or bids to Lessee not later than five (5) Business Days prior to the Lease Expiration Date. On or before the Lease Expiration Date, so long as no Lease Event of Default or -36- Lease Default shall have occurred and be continuing: (i) Lessee shall transfer all of Lessee's right, title and interest in the Premises, or cause the Premises to be transferred, to the bidder, if any, which shall have submitted the highest bid therefor at least twenty (20) (or in the case of a Participant, any Affiliate thereof or Person contacted by a Participant, five (5)) Business Days) prior to such Lease Expiration Date, in the same manner and in the same condition and otherwise in accordance with all of the terms of this Lese; (ii) subject to the prior or current payment by Lessee of all amounts due under clause (iii) of this sentence, Lessor shall comply with any conditions to transfer set forth in Section 22.2 hereof and the transfer provisions of Section 23.16 hereof in order to transfer Lessor's right, title and interest in and to the Premises for cash to such bidder; and (iii) Lessee shall simultaneously pay to Lessor all of the amounts required pursuant to Section 22.3 below. All costs related to a sale and delivery pursuant to this Section 22.1 including the cost of sales agents retained by Lessee, Lessor or the Participants, improvements desired by the potential buyer, delivery of documents, filing and documentary transfer fees, Taxes relating to or arising as a result of such transfer, title insurance, certification and testing of the Premises, environmental audits, legal costs, costs of notices, any advertisement or other similar costs shall be borne entirely by Lessee, without regard to whether such costs were incurred by Lessor, Lessee or any potentially qualified buyer, and shall in no event be paid by the purchaser of the Premises or from any of the Sale Proceeds or as a reduction to the purchase price. Neither Lessor nor any Participant shall have any responsibility for procuring any purchaser; provided, however, that Lessor and its designees may, at the direction of the Required Participants, engage in activities to market and sell the Premises. Any such activities undertaken by Lessor pursuant to this Section 22.1 shall not reduce Lessee's obligations under this Section 22.1 to use its best commercial efforts to sell the Premises in accordance with the requirements of this Article XXII. SECTION 22.2. Sale. Lessee shall, on the Lease Expiration Date at Lessee's own expense, transfer each Leased Property to the purchaser thereof free and clear of all Liens other than Permitted Exceptions, in as good condition as it was on the applicable Site Acquisition Date and on the applicable Completion Date, ordinary wear and tear excepted, and in compliance with all Applicable Laws and Regulations (and in any event without (x) any asbestos installed or maintained in any part of the Premises, (y) any polychlorinated biphenyls (PCBs) in, on or used, stored or located at the Premises, and (z) any other Hazardous Materials). As a condition to Lessees' rights hereunder, Lessee shall obtain all necessary governmental consents and approvals and make all -37- governmental filings required by Lessee or Lessor in connection with any third party sale. Lessee shall cooperate with the purchaser of the Premises in order to facilitate the ownership and operation of each Leased Property by such purchaser after the date of the sale or transfer, including providing all books, reports and records regarding the maintenance, repair and ownership of the Premises and granting or assigning all licenses necessary for the operation of each Leased Property and cooperating in seeking and obtaining all necessary Governmental Action. As a further condition to Lessee's rights hereunder, Lessee shall pay the total cost for the completion of the Financed Improvements and of all Alterations commenced prior to the Lease Expiration Date and for the repair and rebuilding of the affected portions of each Leased Property suffering a Casualty. All Financed Improvements and Alterations and all such repairs and rebuilding shall be completed prior to the date of Lessee's election of the Sale Option. Prior to the Lease Expiration Date, Lessee shall furnish to the Certificate Trustee, the Agent, and the Participants and the independent purchaser hereunder a reasonably current Environmental Audit for each Leased Property dated not earlier than 45 days prior to the Lease Expiration Date and addressed to each such party in form and substance satisfactory in the sole discretion of such purchaser, the Certificate Trustee, the Agent and the Required Participants. The obligations of Lessee under this Section 22.2 shall survive the expiration or termination of this Lease. Unless Lessee shall have exercised or been deemed to have exercised its Purchase Option, Lessor shall at Lessee's expense be entitled to perform such investigation, including obtaining reports of engineers and other experts as to the condition and state of repair and maintenance of the Premises required by this Section 22.2 and as to the compliance of the Premises with Applicable Laws and Regulations including Environmental Laws, as it deems appropriate. Lessee, at its sole cost and expense, shall cause the repair or other remediation of any discrepancies between the actual condition of the Premises and the condition required under this Lease, such repair or remediation to be completed not later than the Lease Expiration Date. SECTION 22.3. Application of Sale Proceeds and Recourse Payments. (a) On the Lease Expiration Date in connection with an exercise of the Sale Option, Lessee shall pay to Lessor all Rent then due together with all other amounts due and payable by Lessee to Lessor, Agent, any Participant or any Indemnitee. Lessee also shall pay to Lessor, as Supplemental Rent, from the aggregate Sale Proceeds the aggregate outstanding Lease Balance as of the Lease Expiration Date (as determined after the payment of all Rent due on -38- such date). If the Sale Proceeds exceed the Lease Balance as of the Lease Expiration Date, Lessee shall retain the portion of the Sale Proceeds in excess thereof. If the Sale Proceeds are less than the aggregate outstanding Lease Balance, Lessee shall pay or shall cause to be paid to Lessor, as Supplemental Rent, on the Lease Expiration Date, in addition to the Sale Proceeds an additional amount equal to the lesser of (x) the Sales Recourse Amount and (y) the amount that the Lease Balance exceeds the Sale Proceeds. (b) The obligation of Lessee to pay the amounts determined pursuant to Sections 22.3(a) and 22.4 hereof shall be recourse obligations of Lessee, and such payments by Lessee shall not limit any other obligation of Lessee under the Operative Documents, including pursuant to Article VII of the Participation Agreement. SECTION 22.4. Appraisal. If any Participant expects that the Sale Proceeds will be less than the outstanding Lease Balance as of the Lease Expiration Date, Lessor (upon direction from such Participant) shall engage an appraiser reasonably satisfactory to Lessee, at Lessee's expense, to determine (by appraisal methods reasonably satisfactory to the Required Participants) the Fair Market Value of the Premises then subject to this Lease as of the Lease Expiration Date. If the Appraiser concludes that the Fair Market Value of such Premises as of the Lease Expiration Date is in excess of the Sale Proceeds to be obtained from the sale of the Premises, Lessee shall promptly pay to Lessor on the date of such sale together with the Sale Proceeds, as Supplemental Rent, such excess which, together with such Sale Proceeds and the Sale Recourse Amount so paid to Lessor, shall not exceed the Lease Balance determined immediately before the application of the foregoing amounts. ARTICLE XXIII MISCELLANEOUS SECTION 23.1. Binding Effect; Successors and Assigns; Survival. The terms and provisions of this Lease, and the respective rights and obligations hereunder of Lessor, Lessee, Agent and the Participants shall be binding upon them and their respective successors, legal representatives and assigns (including, in the case of Lessor, any Person to whom Lessor may transfer the Premises or any interest therein in accordance with the provisions of the Operative Documents), and inure to their benefit and the benefit of their respective permitted successors, legal representatives and assigns. -39- SECTION 23.2. Severability. Any provision of this Lease that shall be prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction, and Lessee shall remain liable to perform its obligations hereunder except to the extent of such unenforceability. To the extent permitted by Applicable Laws and Regulations, Lessee hereby waives any provision of law that renders any provision hereof prohibited or unenforceable in any respect. SECTION 23.3. Notices. Unless otherwise specified herein, all notices, requests, demands or other communications to or upon the respective parties hereto shall be in writing and shall be delivered and shall be deemed to have been given in accordance with Section 9.3 of the Participation Agreement. SECTION 23.4. Amendment; Complete Agreements. Neither this Lease nor any of the terms hereof may be terminated, amended, supplemented, waived or modified orally, but only by an instrument in writing signed by the party against which the enforcement of the termination, amendment, supplement, waiver or modification shall be sought. This Lease, together with the other Operative Documents, is intended by the parties as a final expression of their agreement and as a complete and exclusive statement of the terms thereof, all negotiations, considerations and representations between the parties having been incorporated herein and therein. No course of prior dealings between the parties or their officers, employees, agents or Affiliates shall be relevant or admissible to supplement, explain, or vary any of the terms of this Lease or any other Operative Document. Acceptance of, or acquiescence in, a course of performance rendered under this or any prior agreement between the parties or their Affiliates shall not be relevant or admissible to determine the meaning of any of the terms of this Lease or any other Operative Document. No representations, undertakings, or agreements have been made or relied upon in the making of this Lease other than those specifically set forth in the Operative Documents. SECTION 23.5. Headings. The Table of Contents and headings of the various Articles and Sections of this Lease are for convenience of reference only and shall not modify, define or limit any of the terms or provisions hereof. SECTION 23.6. Original Lease. The single executed original of this Lease containing the receipt of Lessor therefor on or following the signature page thereof shall be the "original -40- executed counterpart" of this Lease. To the extent that this Lease constitutes chattel paper, as such term is defined in the UCC as in effect in any applicable jurisdiction, no security interest in this Lease may be created through the transfer or possession of any counterpart other than the "original executed counterpart." SECTION 23.7. GOVERNING LAW. THIS LEASE HAS BEEN DELIVERED IN, AND SHALL IN ALL RESPECTS BE GOVERNED BY AN CONSTRUED IN ACCORDANCE WITH THE LAWS OF, THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES (EXCEPT SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW), EXCEPT AS TO MATTERS RELATING TO THE GRANTING, CONVEYANCING, OR LEASING OF, AND CREATION OF LIENS AND THE EXERCISE OF REMEDIES WITH RESPECT TO, THE PREMISES CONSTITUTING REAL PROPERTY, WHICH, TO THE EXTENT REQUIRED BY APPLICABLE LAWS AND REGULATIONS, SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE IN WHICH THE APPLICABLE LEASED PROPERTY IS LOCATED. SECTION 23.8. RESERVED. SECTION 23.9. Liability of Lessor Limited. The parties hereto agree that State Street Bank and Trust Company of California, N.A., in its individual capacity (the "State Street CA"), shall have no personal liability whatsoever to Lessee or its respective successors and assigns for any Claim based on or in respect of this Lease or any of the other Operative Documents or arising in any way from the transactions contemplated hereby or thereby; provided, however, that State Street CA shall be liable in its individual capacity (a) for its own willful misconduct or gross negligence (or negligence in the handling of funds), (b) for liabilities that may result from the incorrectness of any representation or warranty expressly made by it in its individual capacity in Section 4.3 of the Participation Agreement or from the failure of State Street CA to perform its covenants and agreements set forth in Section 6.2(a) of the Participation Agreement, or (c) for any Tax based on or measured by any fees, commission or compensation received by it for acting as Lessor as contemplated by the Operative Documents. It is understood and agreed that, except as provided in the preceding proviso: (i) State Street CA shall have no personal liability under any of the Operative Documents as a result of acting pursuant to and consistent with any of the Operative Documents; (ii) all obligations of the Certificate Trustee to Lessee are solely nonrecourse obligations except to the extent that it has received payment from others; (iii) all such personal liability of State Street CA is expressly waived and released as a condition of, and as consideration for, the execution and delivery of the Operative Documents by State Street CA; and (iv) this Lease is executed and delivered by State Street CA solely -41- as Certificate Trustee in the exercise of the powers expressly conferred upon it as Lessor under the Trust Agreement. SECTION 23.10. Estoppel Certificates. Each party hereto agrees that at any time and from time to time during the Lease Term, it will promptly, but in no event later than thirty (30) days after request by the other party hereto, execute, acknowledge and deliver to such other party or to any prospective purchaser (if such prospective purchase has signed a commitment letter or letter of intent to purchase the Premises or any part thereof or to purchase any Certificate), assignee or mortgagee or third party designated by such other party, a certificate stating (a) that this Lease is unmodified and in force and effect (or if there have been modifications, that this Lease is in force and effect as modified, and identifying the modification agreements); (b) the date to which Basic Rent has been paid; (c) in the case of an estoppel certificate to be given by Lessee, whether or not there is any existing default by Lessee in the payment of Basic Rent or any other sum of money hereunder, and whether or not there is any other existing Lease Default or Lease Event of Default with respect to which a notice of default has been served, and, if there is any such default, specifying the nature and extent thereof; (d) in the case of an estoppel certificate to be given by Lessee, whether or not, to the knowledge of Lessee after due inquiry and investigation, there are any purported setoffs, defenses or counterclaims against enforcement of the obligations to be performed hereunder existing in favor Lessee; and (e) other items that may be reasonably requested; provided, that no such certificate may be requested unless the requesting party has a good faith reason for such request. In addition, Lessee, promptly, but in no event later than ten (10) Business Days after request by any other party hereto, shall use commercially reasonable efforts to obtain and deliver to such other party or to any prospective purchaser (if such prospective purchaser has signed a commitment letter or letter of intent to purchase the Premises or any part thereof or to purchase any Certificate), assignee, mortgagee or third party designated by such other party, an estoppel certificate from each subtenant under each sublease containing such items as reasonably requested by the party requesting the same; provided, that no such certificate may be requested unless the requesting party has a good faith reason for such request. SECTION 23.11 No Joint Venture. Any intention to create a joint venture or partnership relation hereunder or pursuant to any other Operative Document between Lessor and lessee is hereby expressly disclaimed. -42- SECTION 23.12. No Accord and Satisfaction. The acceptance by Lessor of any sums from Lessee (whether as Basic Rent or otherwise) in amounts which are less than the amounts due and payable by Lessee hereunder is not intended, nor shall be construed, to constitute an accord and satisfaction of any dispute between Lessor and Lessee regarding sums due and payable by Lessee hereunder, unless the Required Participants specifically deem it as such in writing. SECTION 23.13. No Merger. In no event shall the leasehold estate of Lessee hereunder merge with any interests, estates or rights of Lessor in or to the Premises, it being understood that such leasehold estate of Lessee hereunder shall be deemed to be separate and distinct from Lessor's interests, estates and rights in or to the Premises, notwithstanding that any such interests, estates or rights shall at any time or times be held by or vested in the same Person. SECTION 23.14. Successor Lessor. Lessee agrees that, in the case of the appointment of any successor certificate trustee pursuant to the Trustee Agreement and the other Operative Documents, such successor certificate trustee shall, upon written notice by such successor certificate trustee to Lessee, succeed to all the rights, powers and title of Lessor hereunder and shall be deemed to be Lessor for all purposes hereof and without in any way altering the terms of this Lease or Lessee's obligations hereunder. SECTION 23.15. Survival. The termination of this Lease pursuant to Section 18.1 hereof shall in no event relieve Lessee of its liabilities and obligations hereunder which accrued prior to such termination, all of which shall survive any such termination. The extension of any applicable statute of limitations by Lessor, Lessee, any Participant or any other Indemnitee shall not affect such survival. SECTION 23.16. Transfer of Premises. (a) Whenever pursuant to any provision of this Lease, Lessor is required to transfer all or any portion of the Premises or to any Leased Property to Lessee or to an independent third party, such transfer shall be made at Lessee's expense by the transfer by a deed and assignment of all of Lessor's interest in and to the applicable Premises on an "as is, where is, with all faults" basis free and clear of all Certificate Trustee Liens, without covenants or warranties of title, except for matters arising by, through or under Lessor, and otherwise without recourse, representation or warranty of any kind, and together with the due assumption by Lessee (or such third party) of, and due release of Lessor from, all obligations relating to the applicable Premises and the applicable Del Monte Collateral. In connection -43- with any transfer to an independent third party, Lessee shall execute and deliver such documents, certificates and estoppels as may be required to facilitate the transfer of the applicable Premises. Any provision in this Lease or other Operative Document to the contrary notwithstanding, Lessor shall not be obligated to make any such transfer until Lessor and the Participants have received all Rent and other amounts then due and owing by Lessee hereunder and under the other Operative Documents. At or subsequent to the transfer or return of all or any of the Premises, Lessee will provide Lessor with such lien and title searches as Lessor may reasonably request to demonstrate to Lessor's satisfaction that the applicable Premises are subject to no liens for which Lessor would be liable under any warranties of title. (b) Lessee may assign to another Person its right, upon a purchase by Lessee, to take title to the Premises or to any Leased Property pursuant to Article XX or Section 21.1(b) hereof; provided, that (i) Lessee shall exercise any such option, (ii) such assignee shall be bound by the provisions of such Article XX or Section 21.1(b), as applicable, with respect to the Premises or the Leased Property to be purchased by it, (iii) Lessee shall have delivered to Lessor proof that all necessary governmental approvals, consents and filings with respect to such transfer, including the purchase of the Premises or any Leased Property by any other Person as contemplated herein, have been obtained or made, as applicable, and (iv) no such assignment shall release Lessee from its obligations under any such Section, and Lessee shall remain personally liable to Lessor for the payment of all amounts due under any such section and this Section 23.16. SECTION 23.17. Enforcement of Certain Warranties. Unless a Lease Event of Default shall have occurred and be continuing, Lessor authorizes lessee (directly or through agents), at Lessee's expense, to assert, during the Lease Term, all of Lessor's rights (if any) under any applicable warranty and any other claim that Lessee or Lessor may have under the warranties provided to Lessor in connection with the Financed Improvements and Lessor agrees to cooperate, at Lessee's expense, with Lessee and its agents in asserting such rights. Any amount recovered by Lessee under any such warranties shall be retained by or paid over to Lessee, subject to Section 23.18 below. SECTION 23.18. Security Interest in Funds. As long as a Lease Event of Default, or a Lease Default that upon notice or lapse of time, or both, would become an Insolvency Event, shall have occurred and be continuing, any amount that would otherwise be payable to Lessee under the Operative Documents shall be paid to or retained by Lessor (including amounts to be paid to Lessee pursuant -44- to Article XIII or Section 23.17 hereof) as security for the performance by Lessee in full of its obligations under this Lease and the other Operative Documents, and it may be applied to the obligations of Lessee hereunder and under the other Operative Documents and distributed pursuant to Section 18.2 hereof. At such time as no Lease Event of Default, or no Lease Event of Default that upon notice or lapse of time, or both, would become an Insolvency Event, or failure to perform shall be continuing, such amounts, net of any amounts previously applied to Lessee's obligations hereunder or under any other Operative Documents, shall be paid to Lessee. Any such amounts which are held pending paying to Lessee or application hereunder shall be invested by Lessor as directed from time to time in writing by Lessee, and at the expense and risk of Lessee, in Permitted Investments. Any gain (including interest received) realized as the result of any such investment (net of any fees, commissions and other expenses, if any, incurred in connection with such investment) shall be applied from time to time in the same manner as the principal invested. Lessor shall not be liable for any losses on such investments or for any failure to make any investment. Lessee will promptly pay to Lessor, on demand, the amount of any loss realized as the result of any such investment (together with any fees, commissions and other expenses, if any, incurred in connection with such investment), such amount to be held, paid and applied in the same manner as other amounts subject to this Section 23.18. SECTION 23.19. Recording of Lease Supplements. Concurrently with the execution and delivery of this Lease and concurrently with the execution and delivery of each Lease Supplement, Lessor and Lessee shall execute, acknowledge and cause to be recorded each such Lease Supplement or a memorandum thereof in the official records of the Counties where each Site that is the subject of this Lease or such Lease Supplement is located and in such other places as Lessor deems necessary to perfect the Lien granted pursuant to this Lease or such Lease Supplement. Notwithstanding the execution, delivery and recording of any such Lease Supplement or memorandum thereof, the terms, covenants and conditions of this Lease shall control. SECTION 23.20. Nature of Transaction. It is the intention of the parties that: (a) the Overall Transaction constitutes an operating lease from Lessor to Lessee for purposes of Lessee's and Guarantor's financial reporting; (b) for federal and state income tax, property tax, bankruptcy (including the substantive law upon which bankruptcy -45- proceedings are based) and real estate and Uniform Commercial Code purposes: (i) the Overall Transaction constitutes a financing by the Participants to Lessee, and on each Site Acquisition Date beneficial ownership in the Premises shall be deemed to pass directly to and that the Overall Transaction preserves beneficial ownership in the Premises in Lessee, and the obligations of Lessee to pay Basic Rent shall be treated as payments of interest to the Participants, and the payment by Lessee of any amounts in respect of the Lease Balance shall be treated as payments of principal to the Participants; (ii) Lessor holds title in the Premises as security for Lessee's and Guarantor's obligations under the Operative Documents, and the Lease grants a security interest or a lien, as the case may be, in the Premises and the other Del Monte Collateral in favor of the Certificate Trustee, and for the benefit of the Participants; and (iii) the Mortgages create liens and security interests in the Mortgaged Property defined therein for the benefit of all the Participants. Nevertheless, Lessee acknowledges and agrees that none of Certificate Trustee, Agent, Arranger, or any Participant has made any representations or warranties concerning the tax, accounting or legal characteristics of the Operative Documents or any aspect of the Overall Transaction and that Lessee and Guarantor have obtained and relied upon such tax, accounting and legal advice concerning the Operative Documents and the Overall Transaction as each deems appropriate. [SIGNATURE PAGES FOLLOW] -46- Amended and Restated Master Lease IN WITNESS WHEREOF, the undersigned have each caused this Amended and Restated Master Lease to be duly executed and delivered by their respective officers thereunto duly authorized as of the day and year first above written. STATE STREET BANK AND TRUST COMPANY OF CALIFORNIA, N.A., not in its individual capacity, but solely as Certificate Trustee By: /s/ MARK HENSON ---------------------------------- Name : Mark Henson Title: Assistant Vice President DEL MONTE CORPORATION, as Lessee By: ---------------------------------- Name : William R. Sawyers Title: Vice President, General Counsel, Secretary S-1 Amended and Restated Master Lease IN WITNESS WHEREOF, the undersigned have each caused this Amended and Restated Master Lease to be duly executed and delivered by their respective officers thereunto duly authorized as of the day and year first above written. STATE STREET BANK AND TRUST COMPANY OF CALIFORNIA, N.A., not in its individual capacity, but solely as Certificate Trustee By: ---------------------------------- Name : Mark Henson Title: Assistant Vice President DEL MONTE CORPORATION, as Lessee By: /s/ WILLIAM R. SAWYERS ---------------------------------- Name : William R. Sawyers Title: Vice President, General Counsel, Secretary S-1 EX-10.20 10 f84647exv10w20.txt EXHIBIT 10.20 EXHIBIT 10.20 FIRST AMENDMENT TO LEASE THIS FIRST AMENDMENT TO LEASE ("Amendment") is entered into this 30 day of April, 2000, by and between TMG/ONE MARKET, L.P., A Delaware limited partnership and CROSSMARKET, LLC, a Nevada limited liability company (collectively, "Landlord") and DEL MONTE CORPORATION, a New York corporation ("Tenant"), in the following factual context. RECITALS This Amendment is based upon the following facts, understandings and intentions of the parties. A. Tenant and Landlord entered into that certain Lease dated as of October 7, 1999 (the "Lease") of certain premises located in the building commonly known as The Landmark @ One Market, California, more particularly described in the Lease. B. Del Monte Foods Company, a New York corporation ("Guarantor") executed that certain Lease Guaranty, dated as of October 7, 1999 (the "Guaranty") guaranteeing the obligations of Tenant under the Lease. C. Concurrent with the execution of this Amendment, Tenant and Landlord are entering into that certain Annex Sublease (the "Annex Sublease") for the sublease by Tenant of certain space in a building located adjacent to the Building. D. Landlord and Tenant now desire to amend the Lease. NOW, therefore, in consideration of the mutual covenants and promises set forth in this Amendment and other valuable consideration, receipt of which is hereby acknowledged, the parties do hereby agree as follows: 1. Definitions. Terms defined in the Lease shall have the same meanings when used in this Amendment. 2. Premises. The definition of the "Premises" set forth in the Basic Lease Information of the Lease is hereby deleted in its entirety and the following is hereby substituted in its place: 92,487 square feet of Rentable Area located on the 3rd, 9th, 10th and 11th Floor(s) of the Building (of which 8,189 square feet are located on the 3rd floor, 36,310 square feet are located on the 9th Floor, 36,310 square feet are located on the 10th Floor, and 11,678 square feet are located on the 1lth Floor), as shown on the Floor Plan(s) attached to this Lease as Exhibit A. The Premises shall also include the storage area outlined on the Floor Plan(s) and 3,500 square feet located in the basement of the Building (the "Storage Space"). The entire Building contains 362,109 square feet of Rentable Area. -1- 3. Rent. The description of Base Rent set forth in the Basic Lease Information of the Lease is hereby deleted in its entirety and the following is hereby substituted in its place:

PERIOD OF TERM AMOUNT - -------------- ------- Commencement Date to Fourth anniversary of Commencement Date $4,787,867.16/year (the "Initial Base Rent") Fourth anniversary of Commencement Date to Eighth Anniversary of Commencement Date $4,876,865.16/year (the "Middle Base Rent") Eighth anniversary of Commencement Date to End of Initial Term $5,038,483.16/year (the "Final Base Rent") Extended Terms: The fair market rent for the Premises as of the first day of each Extended Term, as determined in accordance with Section 3.2 of the Lease.

4. Percentage Share. The definition of "Tenant's Percentage Share" set forth in the Basic Lease Information of the Lease is hereby amended to be 25.54%. 5. Construction Allowance. The first sentence of Section 1.2 of the Work Letter is hereby deleted in its entirety and the following is hereby substituted in its place: In the manner provided in this Section 1.2, Landlord shall pay to Tenant a "Construction Allowance" equal to Forty Dollars ($40.00) multiplied by the Rentable Area of the portion of the Premises located on the 9th, lOth and 11th Floors of the Building plus Thirty-Two and 50/100s Dollars ($32.50) multiplied by the Rentable Area of the portion of the Premises located on the 3rd Floor of the Building. 6. Cross Default. The Lease is hereby amended to add the following as Section 20.1(f) of the Lease: (f) the occurrence of a default by Tenant under the Annex Lease. 7. Options to Extend. Section 3.2 of the Lease is hereby amended to add the following at the end of Section 3.2.1: "Notwithstanding any provision in this Lease to the contrary, Tenant shall have no right to exercise either Extension Option unless Tenant simultaneously properly exercises the applicable extension option under the Annex Lease." 8. Deletion of 3rd Floor. The Lease is hereby amended to add the following as Section 2.3 of the Lease: 2.3. Deletion of 3rd Floor. If at any time during the Term the Annex Lease terminates, then Tenant shall have the option (the "Deletion Option") to elect, as of the date of termination of the Annex Lease (the "Deletion Date"), to delete from the Premises the portion of the Premises located on the 3rd Floor of the Building (the "Third Floor Portion"). If Tenant properly exercises the Deletion Option in accordance with the terms of this Section 2.3, then as of the Deletion Date: (i) the Third Floor Portion shall automatically be deemed deleted from the Premises, (ii) Tenant shall surrender the Third Floor Portion to Landlord in the condition required under this Lease, and (iii) Landlord shall concurrently deliver to Tenant an amendment to this Lease memorializing the deletion of the Third Floor Portion from the Premises (the "Deletion Amendment"). The Deletion Amendment shall provide the following: (i) the definition of the Premises shall be modified to exclude the Third Floor Portion; (ii) Tenant's Percentage Share shall be decreased to reflect the deletion of the Third Floor Portion from the Premises, (iii) the Initial Base Rent shall be decreased by an amount equal to the Initial Multiple multiplied by any decrease in the Rentable Area of the Premises, (iv) the Middle Base Rent shall be decreased by an amount equal to the Middle Multiple multiplied by any decrease in the Rentable Area of the Premises, and (v) the Final Base Rent shall be decreased by an amount equal to the Final Multiple multiplied by any decrease in the Rentable Area of the Premises. If Tenant fails to execute the Deletion Amendment within thirty (30) days after receipt of the Deletion Amendment from Landlord, or if Tenant fails to vacate the Third Floor Portion of the Premises on or before the effective date of the Deletion Amendment, then Tenant shall be in default under this Lease and Landlord shall have the right to exercise all of its rights and remedies under this Lease. Tenant shall have the right to exercise the Deletion Option by delivering written notice of exercise to Landlord at any time during a thirty (30) day period following Tenant's receipt of written notice from Landlord that the Annex Lease is terminating. If Tenant fails to exercise the Deletion Option in accordance with this Section 2.3, then the Third Floor Portion shall remain a part of the Premises. 9. Representations and Warranties of Tenant. As a material inducement to Landlord to enter into this Amendment, Tenant represents and warrants to Landlord that, as of the date of this Amendment: 9.1. No Defaults. The Lease is in full force and effect. There are no defaults by Landlord or Tenant under the Lease, and no circumstance has occurred which, but for the expiration of an applicable grace period, would constitute an event of default by Landlord or Tenant under the Lease. Tenant has no defenses or rights of offset under the Lease. 9.2. Authority. Tenant has full right, power and authority to enter into this Amendment, and has obtained all necessary consents and resolutions from its members required under the documents governing its affairs in order to consummate this transaction, and the persons executing this Amendment have been duly authorized to do so. The Amendment and the Lease are binding obligations of Tenant, enforceable in accordance with their terms. 9.3 No Assignments. Tenant is the sole lawful tenant under the Lease, and Tenant has not sublet, assigned or otherwise transferred any of the right, title or interest of Tenant under the Lease or arising from its use or occupancy of the Premises, and no other person, partnership, corporation or other entity has any right, title or interest in the Lease or the Premises, or the right to occupy or use all or any part of the Premises. -3- 10. Amendment to Lease. This Amendment is and shall constitute an amendment to the Lease and shall be effective as of the date of this Amendment. Except as modified hereby, all of the terms and conditions of the Lease shall remain in full force and effect. IN WITNESS WHEREOF, the parties hereto have executed this Amendment the day and year first above written. LANDLORD: TMG/ONE MARKET, L.P., A Delaware limited partnership By: Martin/One Market LLC, A California limited liability company Its General Partner By: The Martin Group of Companies, Inc., A California corporation Its Managing Member By: ------------------------- Its: ------------------------ CROSSMARKET, LLC A Nevada limited liability company By: Martin/Crossman, LLC A California limited liability company Its: managing member By: /s/ MICHAEL A. COVARRUBIAS ---------------------------- Michael A. Covarrubias Managing Member TENANT: DEL MONTE CORPORATION, A New York corporation By: DAVID L. MEYERS ------------------------- Its: ------------------------ By: WILLIAM R. SAWYERS ------------------------- Its: ------------------------ GUARANTOR'S CONSENT The undersigned is the Guarantor under the Guaranty. Guarantor hereby approves the foregoing Amendment and consents to Tenant's execution of the Amendment. Guarantor agrees that the Amendment, and Tenant's execution of the Amendment, shall in no way limit, void, or vitiate the Guaranty or any of the provisions of the Guaranty, and the Amendment, and Tenant's execution of the Amendment, shall in no way alter, limit or otherwise affect the Guaranty or the liability of Guarantor under the Guaranty. IN WITNESS WHEREOF, Guarantor has executed this Amendment and Guarantor's Consent the day and year first above written. DEL MONTE FOODS COMPANY, A New York corporation By: DAVID L. MEYERS ------------------------- Its: ------------------------ By: WILLIAM R. SAWYERS ------------------------- Its: ------------------------ -5- EX-10.21 11 f84647exv10w21.txt EXHIBIT 10.21 EXHIBIT 10.21 SECOND AMENDMENT TO LEASE THIS SECOND AMENDMENT TO LEASE ("Amendment") is entered into this 23rd day of March, 2001, by and between TMG/ONE MARKET, L.P., A Delaware limited partnership ("Landlord") and DEL MONTE CORPORATION, a New York corporation ("Tenant"), in the following factual context. RECITALS This Amendment is based upon the following facts, understandings and intentions of the parties. A. Tenant and Landlord entered into that certain Lease dated as of October 7, 1999 as amended by that certain First Amendment to Lease dated April 30, 2000 (collectively, the "Lease") of certain premises located in the building commonly known as The Landmark @ One Market, California, more particularly described in the Lease. B. Del Monte Foods Company, a New York corporation ("Guarantor") executed that certain Lease Guaranty, dated as of October 7, 1999 (the "Guaranty") guaranteeing the obligations of Tenant under the Lease. C. Landlord and Tenant now desire to amend the Lease. NOW, therefore, in consideration of the mutual covenants and promises set forth in this Amendment and other valuable consideration, receipt of which is hereby acknowledged, the parties do hereby agree as follows: l . Definitions. Terms defined in the Lease shall have the same meanings when used in this Amendment. 2. Premises. The term "Premises" set forth in the Basic Lease Information of the Lease is hereby amended to delete from the Premises the portion of the third floor of the Building outlined on Exhibit A attached to this Amendment. Accordingly, the definition of the "Premises" set forth in the Basic Lease Information of the Lease is hereby deleted in its entirety and the following is hereby substituted in its place: 92,417 square feet of Rentable Area located on the 3rd, 9th, 10th and 11th Floor(s) of the Building (of which 8,119 square feet are located on the 3rd floor, 36,310 square feet are located on the 9th Floor, 36,310 square feet are located on the 10th Floor, and 11,678 square feet are located on the 11th Floor), as shown on the Floor Plan(s) attached to this Lease as Exhibit A. The Premises shall also include the storage area outlined on the Floor Plan(s) and 3,500 square feet located in the basement of the Building (the "Storage Space"). The entire Building contains 362,109 square feet of Rentable Area. 3. Percentage Share. The definition of "Tenant's Percentage Share" set forth in the Basic Lease Information of the Lease is hereby amended to be 25.52%. 4. Rent. In consideration for this Amendment, the Base Rent payable by Tenant as set forth in the Basis Lease Information shall be reduced in the following amounts during the following periods: (i) during the period from the Commencement Date until the fourth anniversary of the Commencement Date, $398.80/month, (ii) during the period from the fourth anniversary of the -1- Commencement Date until the eighth anniversary of the Commencement Date, $416.92/month, and (iii) during the remainder of the Initial Term, $435.05/month. 5. Amendment to Lease. This Amendment is and shall constitute an amendment to the Lease and shall be effective as of the date of this Amendment. Except as modified hereby, all of the terms and conditions of the Lease shall remain in full force and effect. IN WITNESS WHEREOF, the parties hereto have executed this Amendment the day and year first above written. LANDLORD: TMG/ONE MARKET, L.P., A Delaware limited partnership By: Martin/One Market LLC, A California limited liability company Its General Partner By: The Martin Group of Companies, Inc., A California corporation Its Managing Member By: ----------------------------- Its: SVP ----------------------------- TENANT: DEL MONTE CORPORATION, A New York corporation By: /s/ STEVEN P. RONZONE ---------------------------------- Its: DIR/RE & Facilities ---------------------------------- By: /s/ WILLIAM R. SAWYERS ---------------------------------- Its: V.P. & General Counsel ---------------------------------- GUARANTOR'S CONSENT The undersigned is the Guarantor under the Guaranty. Guarantor hereby approves the foregoing Amendment and consents to Tenant's execution of the Amendment. Guarantor agrees that the Amendment, and Tenant's execution of the Amendment, shall in no way limit, void, or vitiate the Guaranty or any of the provisions of the Guaranty, and the Amendment, and Tenant's execution of the Amendment, shall in no way alter, limit or otherwise affect the Guaranty or the liability of Guarantor under the Guaranty. IN WITNESS WHEREOF, Guarantor has executed this Amendment and Guarantor's Consent the day and year first above written. DEL MONTE FOODS COMPANY, A New York corporation By: /s/ STEVEN P. RONZONE --------------------------------- Its: DIR/RE & Facilities --------------------------------- By: /s/ WILLIAM R. SAWYERS --------------------------------- Its: V.P. & General Counsel --------------------------------- -3- CONFIRMATION OF LEASE TERM LANDLORD: TMG/ONE MARKET, L.P., A California limited partnership TENANT: DEL MONTE CORPORATION, A New York corporation LEASE DATE: October 7,1999 PREMISES: all or portions of the 3rd, 9th, 10th and 11th Floor(s) of the Landmark@One Market Pursuant to Section 3 of the above referenced Lease, the Commencement Date as defined in Section 3 shall be December 19, 2000. LANDLORD: TMG/ONE MARKET, L.P., A Delaware limited partnership By: Martin/One Market LLC, A California limited liability company Its General Partner By: The Martin Group of Companies, Inc., A California corporation Its Managing Member By: ----------------------------- Its: SVP ----------------------------- TENANT: DEL MONTE CORPORATION, A New York corporation By: /s/ STEVEN P. RONZONE ---------------------------------- Its: DIR/R.E. & Fac. ---------------------------------- By: /s/ RAYMOND S. VOLAN ---------------------------------- Its: Real Estate Mgr. ---------------------------------- EX-10.23 12 f84647exv10w23.txt EXHIBIT 10.23 EXHIBIT 10.23 AGREEMENT FOR INFORMATION TECHNOLOGY SERVICES BETWEEN DEL MONTE CORPORATION AND ELECTRONIC DATA SYSTEMS CORPORATION AND EDS INFORMATION SERVICES LLC JUNE 30, 2002 Page 1 of 49 TABLE OF CONTENTS ARTICLE I. RELATIONSHIP MANAGEMENT....................................................6 1.01 EDS Account Executive.........................................................6 1.02 Del Monte Representative......................................................6 1.03 Procedures Manual.............................................................7 ARTICLE II. PERSONNEL.................................................................8 2.01 Use and Replacement of Personnel..............................................8 2.02 Qualifications and Retention of EDS Personnel.................................8 2.03 Use of Subcontractors.........................................................9 2.04 Hiring of Employees...........................................................9 ARTICLE III. TERM....................................................................10 3.01 Initial Term.................................................................10 3.02 Renewal Term; Extension Period...............................................10 ARTICLE IV. EDS SERVICES.............................................................11 4.01 Services.....................................................................11 4.02 Scope and Volume of Services.................................................11 4.03 Services, Additional Details.................................................11 4.04 Services not Specifically Noted..............................................14 4.05 Services from Third Parties..................................................14 4.06 Reliance on Instructions.....................................................14 4.07 Savings Clause...............................................................15 ARTICLE V. SERVICE LEVELS............................................................15 5.01 Service Levels...............................................................15 5.02 Measurement and Monitoring Tools.............................................15 5.03 Continuous Improvement and Best Practices....................................15 5.04 Adjustment of Service Levels.................................................15 5.05 Root Cause Analysis..........................................................15 5.06 Service Level Failures.......................................................16 ARTICLE VI. SERVICE LOCATIONS........................................................16 Page 2 of 49 6.01 Facilities...................................................................16 6.02 Safety and Security Procedures...............................................17 6.03 Data Security................................................................17 6.04 Security Relating to Competitors and other Interested Parties................17 6.05 Use of Del Monte Service Locations...........................................17 ARTICLE VII. DEL MONTE'S ROLE........................................................18 7.01 Del Monte Responsibilities...................................................18 7.02 Access to Del Monte Facilities and Infrastructure............................19 7.03 Access to Del Monte Equipment................................................19 7.04 Use of Del Monte Software and Del Monte-Vendor Software......................19 7.05 Additional Items of Property.................................................19 7.06 Consents; Further Assurances.................................................19 ARTICLE VIII. MAINTENANCE CONTRACTS..................................................20 8.01 EDS Management of Del Monte-Vendor Software and other Information Technology related maintenance contracts.....................................20 8.02 Notification.................................................................20 ARTICLE IX. REPRESENTATIONS, WARRANTIES AND COVENANTS................................20 9.01 Warranties...................................................................20 9.02 Covenants....................................................................22 ARTICLE X. PROPRIETARY RIGHTS........................................................23 10.01 Definitions..................................................................23 10.02 EDS Software.................................................................24 10.03 EDS-Vendor Software..........................................................25 10.04 Del Monte Software...........................................................25 10.05 Del Monte-Vendor Software....................................................25 10.06 Developed Software and Other Deliverables....................................26 10.07 EDS Development Tools; Residual Technology...................................26 10.08 Further Assurances...........................................................26 ARTICLE XI. DATA, CONFIDENTIALITY AND AUDIT RIGHTS...................................27 11.01 Data of Del Monte............................................................27 11.02 Privacy Laws.................................................................28 11.03 Confidentiality..............................................................28 Page 3 of 49 11.04 Audit Rights.................................................................29 ARTICLE XII. PAYMENTS................................................................30 12.01 Charges for EDS Services.....................................................30 12.02 Out-of-Pocket Expenses.......................................................30 12.03 Time of Payment..............................................................30 12.04 Disputed Amounts.............................................................31 12.05 Taxes........................................................................31 12.06 Cost and Quality Benchmarking................................................32 ARTICLE XIII. DISPUTE ESCALATION, MEDIATION AND ARBITRATION..........................32 13.01 Dispute Escalation...........................................................32 13.02 Exclusive Remedy.............................................................34 ARTICLE XIV. TERMINATION.............................................................35 14.01 Material Default.............................................................35 14.02 Termination for Nonpayment...................................................35 14.03 Termination for Bankruptcy and Related Events................................35 14.04 Termination upon Material Change in Del Monte Business.......................35 14.05 Termination for Convenience..................................................36 14.06 Effect of Expiration or Termination..........................................36 ARTICLE XV. INDEMNITIES AND LIABILITY................................................38 15.01 Indemnities..................................................................38 15.02 Liability....................................................................41 ARTICLE XVI. MISCELLANEOUS...........................................................42 16.01 Accounting Terms.............................................................42 16.02 Amendments; Waiver...........................................................42 16.03 Approvals and Similar Actions................................................43 16.04 Binding Nature; Assignment...................................................43 16.05 Construction Rules...........................................................43 16.06 Entire Agreement; Survival...................................................44 16.07 Excused Performance..........................................................44 16.08 Export Regulations...........................................................44 16.09 Governing Law................................................................45 16.10 Independent Contractors......................................................45 Page 4 of 49 16.11 Notices......................................................................45 16.12 Public Relations and Marketing References....................................45 16.13 Right to Engage in Other Activities..........................................46 Page 5 of 49 AGREEMENT FOR INFORMATION TECHNOLOGY SERVICES This AGREEMENT FOR INFORMATION TECHNOLOGY SERVICES (referred to, together with the exhibits and schedules attached hereto, as the "AGREEMENT"), effective as of November 1st, 2002 (the "EFFECTIVE DATE"), is between Del Monte Corporation, a New York corporation ("DEL MONTE"), Electronic Data Systems Corporation, a Delaware corporation ("EDS CORPORATION") and EDS Information Services L.L.C. a Delaware limited liability company ("EIS"). The obligations of EDS Corporation set forth in this Agreement will be performed by EDS Corporation, itself and through its direct and indirect wholly-owned subsidiaries, including EIS (collectively "EDS"). EDS Corporation will remain responsible for the obligations performed by EIS and such other subsidiaries to the same extent as if such obligations were performed by EDS Corporation. By executing this Agreement, EIS also agrees to be bound by, and subject to, the terms and conditions of this Agreement to the same extent as EDS Corporation. By way of background, Del Monte desires that certain of its technology and information systems operations and functions, which are currently being performed by EDS under an agreement that will expire at 23:59:59 on October 31, 2002, continue to be performed and managed by a third party experienced in performing and managing such operations and functions. Del Monte has selected EDS as its vendor of choice to continue to provide the technology and information systems services during the term of this Agreement. This Agreement documents the terms and conditions under which Del Monte agrees to purchase, and EDS agrees to provide, such services. EDS and Del Monte may be referred to in this Agreement individually as a "PARTY" and together as the "PARTIES." For convenience of reference, the Schedule of Definitions attached hereto sets forth the capitalized terms that are used in this Agreement and identifies the sections hereof in which the definitions for such terms appear. ARTICLE I. RELATIONSHIP MANAGEMENT 1.01 EDS Account Executive. At all times during the term of this Agreement, EDS will provide an individual who will be dedicated, on a full-time basis, to Del Monte's account and who will maintain an office at Del Monte's headquarters or at such other location as Del Monte shall specify in accordance with Section 6.01 (the "EDS ACCOUNT EXECUTIVE"). The EDS Account Executive will (a) be acceptable to Del Monte, (b) be the primary contact for Del Monte in dealing with EDS under this Agreement, (c) have overall responsibility for managing and coordinating the delivery of the EDS Services, (d) meet regularly with the Del Monte Representative and (e) have the power and authority to make decisions with respect to actions to be taken by EDS in the ordinary course of day-to-day management of Del Monte's account in accordance with this Agreement. Unless otherwise requested by Del Monte, EDS will assign the EDS Account Executive for a minimum of three (3) year periods and will not reassign such individual during such period (e.g., EDS will not reassign the current EDS Account Executive until at least three (3) years at the Del Monte account). 1.02 Del Monte Representative. Page 6 of 49 At all times during the term of this Agreement, Del Monte will designate a senior level individual who will be authorized to act as Del Monte's primary contact for EDS in dealing with Del Monte under this Agreement and who will have the power and authority to make decisions with respect to actions to be taken by Del Monte under this Agreement (the "DEL MONTE REPRESENTATIVE"). The Del Monte Representative will be Del Monte's Chief Information Officer. The Del Monte Representative may designate in writing a reasonable number of additional Del Monte employees to be points of contact for EDS with respect to particular matters of expertise relating to this Agreement. 1.03 Procedures Manual. (a) Procedures Manual. The EDS Representative and the Del Monte Representative will agree on the content and structure of the Procedures Manual within sixty (60) days of the Effective Date. The procedures manual (the "PROCEDURES MANUAL"), sets forth but is not limited to: (i) Periodic Reports. Periodic reports and detailed requirements for the periodic reports that shall be provided to Del Monte by EDS regarding EDS 's provision of the Services; (ii) Goals. Additional goals, specifications and documentation (e.g., operations manuals, user guides, specifications, version control management, and management reporting) consistent with the provisions of this Agreement; (iii) Program Management. EDS' proprietary Service Excellence Dashboard, Systems Life Cycle Methodology, Project Management Methodology, and other management tools and techniques that EDS shall use to perform the services; (iv) Disaster Recovery Procedures. Disaster recovery procedures, together with problem escalation policies and procedures and such other matters as Del Monte and EDS may agree; and (v) Change Control Procedures. A description of the change control procedures and implementation techniques to be used therefore, including policies and procedures relating to hardware, software, facility changes, system problem management and emergency changes. (vi) Security Procedures, A description of the security procedures and processes to be used. (vii) Service levels. A description of the Service Levels as noted in Article V of this Agreement. (b) Updates to Procedures Manual. EDS shall periodically update the Procedures Manual (but in no event less frequently than once during any six (6) month period during the term) to reflect changes in the operations, policies and procedures described therein. EDS will submit all updates to the Procedures Manual to Del Monte for Del Monte's review and prior written approval, which approval will not be unreasonably Page 7 of 49 withheld. EDS shall, at Del Monte's reasonable request, expand the Procedures Manual to include additional information. (c) Services. It is the Parties' intention that EDS's respective obligations under this Agreement will be consistently performed in accordance with the Procedures Manual. ARTICLE II. PERSONNEL 2.01 Use and Replacement of Personnel. (a) Account Team. If Del Monte is dissatisfied for any significant reason with any EDS personnel providing the Services (the EDS Account Executive together with any EDS personnel providing Service hereinafter referred to as the "ACCOUNT TEAM"), Del Monte will give written notice to EDS of such dissatisfaction and the specific reasons for such dissatisfaction. EDS will have thirty (30) days from the receipt of such notice in which to remedy such problem to the reasonable satisfaction of Del Monte. If Del Monte remains dissatisfied (in Del Monte's reasonable discretion) with the EDS Account Team personnel in question after such 30-day period, then EDS will promptly replace that EDS person. If for any reason, Del Monte requests the replacement of the EDS Account Executive, EDS will promptly replace that individual. (b) Key Personnel. EDS agrees that each of the EDS personnel listed in Schedule A (the "KEY POSITIONS") will devote his or her full time and effort to the performance of the Services. Before assigning a replacement individual to any of the Key Positions, EDS will notify Del Monte of the proposed assignment, will provide Del Monte with a resume and any other job-related information about the individual reasonably requested by Del Monte and will introduce (either by telephone or, if requested by Del Monte, in person) the individual for an interview by the appropriate Del Monte representatives. If Del Monte in good faith objects to the proposed assignment, the Parties shall attempt to resolve Del Monte's concerns on a mutually agreeable basis. If the Parties have not been able to resolve Del Monte's concerns within five (5) business days, EDS shall not assign the individual to that position and shall propose to Del Monte the assignment of another individual of similar and suitable ability and qualifications. Personnel filling Key Positions may not be transferred or re-assigned until Del Monte has approved a suitable replacement, which approval shall not be unreasonably withheld. Unless otherwise requested by Del Monte, EDS will assign EDS Level 6 personnel for a minimum of two (2) years and Level 5 personnel for a minimum of eighteen (18) months and will not reassign such individual during such period. EDS agrees to use reasonable efforts to provide Del Monte with at least thirty (30) days advance written notice prior to transferring or reassigning any personnel filling EDS Key Positions. 2.02 Qualifications and Retention of EDS Personnel. (a) Qualifications. EDS shall assign personnel to perform the Services in a professional and workmanlike manner. The Account Team shall be: (i) of good name and character and without, to the extent permitted by applicable law, a history of misconduct or dishonesty; (ii) appropriately competent and experienced in performing the tasks, works, functions or obligations to be performed by such personnel; and (iii) if Page 8 of 49 required to perform the applicable task, work, function or obligation, qualified with appropriate U.S. qualifications or qualifications that are recognized in, or equivalent to qualifications recognized in, the United States. (b) Turnover Rate. Del Monte and EDS both agree that it is in their best interests to keep the turnover rate of the Account Team to a reasonably low level. Accordingly, if Del Monte believes that EDS's turnover rate may be excessive and so notifies EDS, EDS shall provide data concerning its turnover rate, meet with Del Monte to discuss the reasons for, and impact of, the turnover rate and otherwise use reasonable efforts to keep such turnover rate to a reasonably low level. If appropriate, EDS shall submit to Del Monte its proposals for reducing the turnover rate, and the Parties shall mutually agree on a program to bring the turnover rate down to an acceptable level. In any event, notwithstanding transfer or turnover of personnel, EDS shall at all times during the Term remain obligated to perform the Services without degradation and in accordance with this Agreement. (c) Training. EDS shall implement and maintain a policy of ongoing training for the Account Team members to provide that all Account Team members have the requisite skills and knowledge required to perform the tasks, works, functions and obligations assigned to them by EDS. 2.03 Use of Subcontractors. The Services will be performed by EDS, itself and its wholly owned affiliates or through an approved subcontractor in accordance with this Section 2.03. Prior to subcontracting the Services or any material portion thereof defined as $10,000 per month or more, EDS will: (a) notify Del Monte of the proposed subcontract; (b) provide the name of the proposed subcontractor, a description of the work to be subcontracted and descriptive information about each subcontractor's ability to perform the work; and (c) obtain Del Monte's written consent of such subcontract, which shall not be unreasonably withheld. Del Monte will not be bound by the provisions of any agreements entered into between EDS and its subcontractors. Prior to materially amending, modifying or otherwise supplementing any subcontract relating to the Services, EDS will notify Del Monte of the proposed amendment, modification or supplement and will obtain Del Monte's written consent thereof. EDS will not disclose any confidential information of Del Monte to any such subcontractor unless and until the subcontractor has agreed in writing to protect the confidentiality of such confidential information in the manner required by Section 11.03 hereof and then only to the extent necessary for the subcontractor to perform those Services subcontracted to it. No subcontracting will release EDS from its responsibility for its obligations under this Agreement. EDS will be responsible for the work and activities of each of its subcontractors, including compliance with the terms of this Agreement, to the same extent as if EDS performed such obligations. Any third party chosen by EDS to develop products or deliver services will be required to adhere to Del Monte's standards, policies and procedures in effect at the time. EDS will be responsible for all payments to its subcontractors. EDS will promptly pay for all services, materials, equipment and labor used in providing the Services and EDS will keep Del Monte's premises free of all liens. 2.04 Hiring of Employees. Page 9 of 49 During the term of this Agreement and for a period of twelve (12) months thereafter, EDS will not solicit, directly or indirectly, for employment any employee of Del Monte who is or was actively involved in the consumption of the Services without the prior written consent of Del Monte. Notwithstanding the foregoing, the Parties acknowledge and agree that this Agreement will not prohibit (a) any executive search or similar business controlled by EDS from engaging in its business in the ordinary course in a manner consistent with past practices on behalf of clients other than EDS or (b) solicitations through advertising or other publications of general circulation. Subject to Section 14.06, during the term of the Agreement, Del Monte will have the right to extend offers of employment to a reasonable number of EDS personnel who have been or are assigned to or have or are performing any Services or other work on behalf of EDS with respect to Del Monte. Del Monte will provide EDS prior notification and EDS will provide reasonable access to such personnel after providing written approval which approval shall not be withheld unless such person is reasonably deemed essential to the on-going business of EDS. ARTICLE III. TERM 3.01 Initial Term. The initial term of this Agreement (the "INITIAL TERM") will commence on the Effective Date and continue until 23:59:59 (Pacific Standard Time) on October 31st, 2012 (the "INITIAL TERM EXPIRATION DATE"), or such earlier date upon which this Agreement may be terminated in accordance with the provisions hereof. 3.02 Renewal Term; Extension Period. (a) Renewal Term. Unless this Agreement is terminated in accordance with the provisions hereof, Del Monte will notify EDS at least one hundred twenty (120) days prior to the Initial Term Expiration Date as to whether or not Del Monte desires to renew this Agreement. If Del Monte provides EDS with notice that it desires to renew this Agreement for a specified period (the "RENEWAL TERM") and the Parties agree on the terms and conditions applicable to the Renewal Term, then this Agreement will continue in effect beyond the Initial Term Expiration Date in accordance with the terms and conditions agreed upon by the Parties for the Renewal Term. If Del Monte does not provide EDS with notice that it desires to renew this Agreement, this Agreement will expire on the Initial Term Expiration Date, subject to EDS' obligation to provide Termination Assistance Services as set forth in this Agreement. (b) Extension Period. If Del Monte provides EDS with notice that it desires to renew this Agreement and the Parties have not agreed on the terms and conditions applicable to a Renewal Term prior to the Initial Term Expiration Date, then the term of this Agreement will extend for a period determined by Del Monte of up to twelve (12) months beyond the Initial Term Expiration Date (the "EXTENSION PERIOD"), at the charges, terms and conditions in effect as of the Initial Term Expiration Date. If, during the Extension Period, the Parties are able to reach agreement on the terms and conditions applicable to a Renewal Term, then this Agreement will continue in effect beyond the end of the Extension Period in accordance with the terms and conditions agreed upon by the Page 10 of 49 Parties for the Renewal Term. If, during the Extension Period, the Parties are unable to reach agreement on the terms and conditions applicable to a Renewal Term, this Agreement will expire at the end of the Extension Period, subject to EDS' obligation to provide Termination Assistance Services as set forth in this Agreement. ARTICLE IV. EDS SERVICES 4.01 Services. Commencing on the Effective Date and continuing throughout the Initial Term and any Renewal Term or Extension Period, if applicable (collectively, "TERM"), EDS will be responsible for providing to Del Monte the Services (as defined in this Article IV) (hereinafter referred to as "SERVICES"). Except as otherwise expressly provided in this Agreement, EDS shall provide the facilities, personnel, and other resources necessary to provide the Services. EDS shall perform the Services in a manner (including, the degree of accuracy, quality, completeness, timeliness, responsiveness and efficiency) that meets or exceeds the specifications and the service levels referred to in or established in this Agreement ("SERVICE LEVELS") which specifications and Service Levels shall be consistent with methods and standards satisfied by well-managed operations performing services similar to the Services. 4.02 Scope and Volume of Services. (a) Del Monte reserves the right to add or remove EDS Services subject to Sections 4.02 (b) and 4.04 or increase or decrease EDS Services, subject to Schedule E, Attachment P, during the term of this Agreement. Del Monte will share such information with EDS as may be necessary for EDS to determine which resources will be required to meet Del Monte's needs relative to such increases or decreases in Services. Del Monte will not be obligated to obtain Services from EDS with respect to any additional entity or business unit acquired by Del Monte (whether pursuant to acquisition or merger). (b) Del Monte may not completely eliminate EDS Services for either Applications, Desktop, Help Desk or Servers and still receive the pricing noted in this Agreement, unless for cause. For purposes of this Section, cause will be Del Monte's reasonable dissatisfaction with the Service and the processes established in the Agreement to handle these matters have been executed and the dissatisfaction reasonably remains. 4.03 Services, Additional Details. (a) Definition. For purposes of this Agreement, "SERVICES" means: (i) the services, functions and responsibilities described in this Agreement (including the services, functions, and responsibilities described in the Schedule B Statement of Work); and (ii) any services, functions or responsibilities that are not specifically described in this Agreement, but that are required for the proper performance and delivery of the Services, including without limitation meeting Service Levels (as such term is defined in Schedule C hereto); and (iii) any other services, functions or responsibilities that will be provided under the terms of this Agreement and amendments or revision thereto. Page 11 of 49 (b) Technological Advancements. Throughout the Term, at no additional cost to Del Monte, EDS will jointly, with Del Monte, identify the least cost/highest benefit methods to implement technology changes and improved methodologies and processes. Upon Del Monte's written request and in accordance with Section 12.01 (charges for EDS services), EDS will implement technology changes and improved methodologies and processes to maintain a level of technology used to provide the Services that (A) allows Del Monte to take advantage of technological advances in order to remain competitive in the markets that Del Monte serves, (B) is at least current with the level of technology that EDS uses in providing services to its other comparable customers and (C) is at least current with the level of technology generally adopted from time to time in Del Monte's industries. In addition, EDS shall meet with Del Monte, upon Del Monte's reasonable request, to inform Del Monte of any new information processing technology EDS is developing or information technology trends and directions that could reasonably be expected to have an impact on Del Monte's business. (c) Technical Architecture and Product Standards. EDS will comply with Del Monte's information management technical architecture and product standards, as may be modified by Del Monte from time to time during the Term and the Termination Assistance Period. In the event that Del Monte makes an enterprise wide change in technical architecture and product standards that is not related to the normal evolution of information technology and that materially impacts EDS's cost to deliver Services, EDS and Del Monte will meet to discuss a mutually acceptable go-forward strategy. (d) Efficiencies. EDS will, without charge or expense to Del Monte, and at least once annually, perform a review of the systems, technology and EDS service delivery methods and methodologies used at the Del Monte account. This review will be performed by appropriately skilled and experienced individuals not on the Del Monte Account Team. The results of this review will be provided to the Del Monte Representative and the Account Executive. The objective of the review is to identify material opportunities to improve the quality of or delivery of information technology and how to reduce the cost of information technology to Del Monte. (e) Reports. EDS will provide to Del Monte, in a format and containing information mutually agreed by the Parties, a set of reports, including performance, utilization, billing and status reports, as frequently as Del Monte reasonably requires. (f) Knowledge Sharing. EDS will provide knowledge sharing assistance to Del Monte, including explaining how the information technology systems work and should be operated and how the Services are provided. (g) Governmental Consents. EDS will, at its own expense, obtain and maintain all licenses, approvals, permits, consents and authorizations of any governmental authority, or any notice to any governmental authority, the granting of which to EDS is required by law, including regulatory requirements, for the consummation of the transactions contemplated by this Agreement ("GOVERNMENTAL CONSENTS"). (h) Compliance with Laws. Page 12 of 49 (i) At all times during the Term, EDS will monitor, and promptly identify and notify Del Monte of, all laws (including regulatory requirements) and any changes thereto that might relate to Del Monte's use of the Services or EDS' delivery of the Services. Del Monte shall notify EDS of any laws and changes in laws applicable to the principal business of Del Monte (excluding laws applicable to the provision of systems integration, data processing, and information technology products and services) that it reasonably believes may impact EDS' delivery of Services and shall cooperate with EDS to identify the impact of such laws and changes in laws on EDS's performance and Del Monte's receipt of such Services. EDS and Del Monte will work together to identify how Del Monte uses, and EDS delivers, the Services in light of such laws and changes thereto. EDS will be responsible for implementing all changes necessary to comply with regulatory requirements on a timely basis. EDS will be responsible for any fines and penalties arising from any noncompliance with any law relating to the delivery or use of the Services, except that Del Monte will be responsible for any fines and penalties arising from any noncompliance by Del Monte with any law relating to Del Monte's use of the Services to the extent that (A) EDS notifies Del Monte in writing and in a timely manner of changes in such law in accordance with this subsection (and sufficiently in advance of the applicability of such law to provide Del Monte a reasonable opportunity to comply with such law) and (B) such noncompliance was not caused by EDS. (ii) EDS will perform the Services regardless of changes in law, including regulatory requirements. If such changes prevent EDS from performing its obligations under this Agreement, EDS will develop and, upon Del Monte's written consent, implement a suitable workaround until such time as EDS can perform its obligations under this Agreement without such workaround; provided, however, that if such workaround results in a material increase in the charges to Del Monte under this Agreement, then Del Monte will have the right to terminate the affected portion of the Services. (i) Procurement. EDS may have the ability to acquire hardware, software or services for Del Monte at a cost more favorable then Del Monte could acquire by itself. EDS agrees to cooperate fully to accommodate Del Monte's procurement requests, and EDS agrees to invoice Del Monte for purchases on the monthly EDS invoice at the cost noted in Schedule E. Del Monte will pay to EDS, the supplier, third party lessor or third party licensor, as applicable, the purchase, lease or license fees, as applicable. Except as otherwise agreed in writing by the Parties, all rights in and title to any purchases, leases or licenses by EDS on behalf of Del Monte and paid for by Del Monte will belong to Del Monte. All third party warranties, maintenance or support agreements will run to and be for the express benefit of Del Monte. (j) Customer Surveys. At least once, but no more than twice during any twelve (12) month period during the term of this Agreement, EDS and Del Monte will jointly conduct surveys of at least three (3) Del Monte personnel selected by Del Monte's Representative to determine the level of Del Monte's satisfaction with the Services and the EDS relationship. The Parties will review the survey results and work together to mutually agree on any appropriate adjustments to EDS's practices and procedures as they relate to the provision of the Services and the Parties' relationship. Page 13 of 49 4.04 Services not Specifically Noted. In addition to the Services described on Schedule B (including those services, functions or responsibilities not specifically described but that are required for the proper performance and delivery of the Services), EDS will provide to Del Monte such other services as Del Monte may reasonably request in writing from time to time during the term of this Agreement. EDS shall provide Del Monte with a written estimate according to the Fees noted in Schedule E of the cost of such services, which estimate Del Monte shall accept or reject. EDS will invoice Del Monte on the monthly EDS invoice for these additional services. 4.05 Services from Third Parties. (a) Rights to Use Third Parties. Nothing in this Agreement will be deemed to limit Del Monte's right to solicit or use providers other than EDS (including any Del Monte in-house capabilities) to render information technology services. (b) EDS Responsibilities to Other Service Providers. To the extent Del Monte performs any information technology services itself, or retains a third party provider to do so, EDS shall cooperate fully with Del Monte or any such third party provider, all at Del Monte's reasonable direction. (c) Del Monte Conditions to Using Third Party Services. Del Monte agrees that if it uses a third party to perform services related to its information technology needs, Del Monte will use commercially reasonable efforts to provide for such services will not affect the ability of, or cost to, EDS to perform its obligations under this Agreement, and EDS agrees to reasonably cooperate with any such third party. As a condition to any such cooperation, the third party must agree in writing to the security and confidentiality obligations and procedures reasonably required by EDS. Del Monte will keep EDS apprised of any material changes to Del Monte's information technology environment that are made by Del Monte or any third party. EDS will not be responsible or penalized for any adverse impact on Del Monte, the Services or the Service Levels resulting from the acts or omissions of Del Monte or a third party, but will use commercially reasonable efforts to mitigate it. EDS shall immediately notify Del Monte if an act or omission of EDS or a third party may cause a problem or delay in providing the Services and shall diligently work with Del Monte or the third party to prevent or circumvent the problem or delay. 4.06 Reliance on Instructions. Unless specifically provided otherwise in this Agreement, in performing its obligations under this Agreement, EDS will be entitled to rely upon any routine instructions, authorizations, approvals or other information provided to EDS by the Del Monte Representative or, as to areas of competency specifically identified in writing by the Del Monte Representative, by any other Del Monte personnel identified by the Del Monte Representative in writing, from time to time, as having authority to provide the same on behalf of Del Monte in such person's area of competency. Unless EDS knew or reasonably should have known of any error, incorrectness or inaccuracy in such instructions, authorizations, approvals or other information, EDS will incur no liability or Page 14 of 49 responsibility of any kind in relying on or complying with any such instructions or information. 4.07 Savings Clause. EDS' failure to perform its responsibilities under this Agreement or to meet the Service Levels shall be excused if and to the extent (i) such EDS non-performance results from a material act or omission by Del Monte, a material breach by Del Monte of a covenant, representation or warranty under this Agreement; or a material failure by Del Monte to perform Del Monte's responsibilities under this Agreement; and (ii) EDS uses commercially reasonable efforts to perform notwithstanding such act or omission, breach or failure to perform by Del Monte. ARTICLE V. SERVICE LEVELS. 5.01 Service Levels. During the Term and the Termination Assistance Period, EDS will perform all Services in accordance with the terms of this Agreement, and as improved from time to time as noted in Section 5.03 (Continuous Improvement and Best Practices). 5.02 Measurement and Monitoring Tools. As of the Effective Date, EDS will implement the measurement and monitoring tools and procedures required to measure and report EDS's performance of the Services against applicable Service Levels. Such measurement and monitoring and procedures will (a) permit reporting at a level of detail sufficient to verify compliance with the Service Levels and (b) be subject to audit by Del Monte or its designee. EDS will provide Del Monte and its designees with information concerning access to such measurement and monitoring tools and procedures upon request for inspection and verification purposes. 5.03 Continuous Improvement and Best Practices. EDS will, on a continuous basis, (a) identify ways to improve the Service Levels and (b) identify and apply proven techniques and tools from other installations within its operations that would benefit Del Monte either operationally or financially. EDS will, from time to time, include updates with respect to such improvements, techniques and tools in the reports provided to Del Monte. 5.04 Adjustment of Service Levels. At least annually, the Del Monte Representative and EDS Account Executive (a) will review the Service Levels for the preceding twelve (12) months, (b) with respect to any Service Levels that are no longer appropriate, will adjust the Service Levels. In addition, either Party may, at any time upon notice to the other Party, initiate negotiations to review and, upon agreement by the Del Monte Representative and EDS Account Executive, adjust any Service Level that such Party in good faith believes is inappropriate at the time, or establish new Service levels. 5.05 Root Cause Analysis. Page 15 of 49 If EDS fails to attain one or more Service Levels or a material Service disruption or Service issue occurs, EDS shall (i) Investigate. Promptly investigate the root cause of the failure; (ii) Describe. Provide a description of the failure, the root cause of the failure and a plan for the corrective action to be taken by EDS in connection therewith; (iii) Correct the Error. Upon Del Monte's written consent of the plan for corrective action, implement such plan to correct the problem giving rise to such failure and begin attaining the Service Level as soon as practicable; (iv) Provide Assurance. Provide Del Monte with assurance satisfactory to Del Monte that such failure will not recur following the completion of the implementation of the procedures; and (v) Report. Keep the Del Monte Representative apprised of the status and efficacy of the remedial efforts being undertaken by EDS to correct such problem. (b) Meeting. If, after pursuing avenues to address Del Monte's concerns about the standard of service being provided by EDS remains, then the Del Monte Representative may request a meeting with senior executives of EDS to discuss such concerns. The meeting shall be held at Del Monte's headquarters at a mutually convenient time on a day that is not more than ten (10) business days following the day on which the request for the meeting is made by Del Monte. Notwithstanding the foregoing, if EDS's performance fails to meet the applicable Services Levels, then at any time during the Term, Del Monte may seek all remedies available to it in under the terms of this Agreement 5.06 Service Level Failures. In the event of a repeated failure to provide the Services in accordance with the applicable Service Levels, Del Monte will request a meeting with senior executives of EDS. The meeting shall be held at Del Monte's headquarters at a mutually convenient time on a day that is not more than ten (10) business days following the day on which the request for the meeting is made by Del Monte. EDS will thereafter have thirty (30) days to resolve the Service issue. If the Service failure thereafter still exists, EDS and Del Monte will negotiate in good faith to provide Del Monte with an appropriate financial or other adjustment for not delivering the Service acceptably in addition to such other remedies available to it under the terms of this Agreement. ARTICLE VI. SERVICE LOCATIONS 6.01 Facilities. The Services will be provided to Del Monte from (a) the Del Monte locations as agreed to from time to time (the "DEL MONTE SERVICE LOCATIONS"), (b) the EDS locations as listed on Schedule D, and such additional locations as agreed to from time to time or as operational necessities dictate (the "EDS SERVICE LOCATIONS") and (c) any other Page 16 of 49 location for which EDS has received Del Monte's written consent (together with the Del Monte Service Locations and EDS Service Locations, the "SERVICE LOCATIONS" listed on Schedule D). Any incremental expenses incurred as a result of a relocation to, or use of, any location other than the locations set forth on Schedule D will, be paid by the party requesting the change unless otherwise agreed. EDS may not provide or market any services to a third party from a Del Monte Service Location without Del Monte's written consent, to be given in Del Monte's sole discretion. 6.02 Safety and Security Procedures. EDS will maintain and enforce at the EDS Service Locations safety and security procedures that are at least equal to the most stringent of the following: (a) best practices for locations similar to the EDS Service Locations; (b) SAS 70 standards; (c)those procedures applicable to the Del Monte Service Locations, as amended by Del Monte from time to time during the Term; and (d) any higher standard otherwise agreed upon by the Parties. EDS will comply with the safety and security procedures that are applicable to the Del Monte Service Locations. EDS will, at EDS's expense, provide the results of an annual SAS 70 security audit to Del Monte. 6.03 Data Security. EDS will (a) establish and maintain environmental, security, and other safeguards against the destruction, loss or alteration of Del Monte Data in the possession of EDS and during the electronic transmission, storage and shipping thereof (the "DATA SAFEGUARDS") that will comply with industry standard practices or as may be required by laws and (b) provide dedicated shared storage devices for Del Monte data secured against any shared access with the data of any EDS's data or data of EDS's other customers. EDS will revise and maintain the Data Safeguards at Del Monte's request. In the event EDS intends to implement a change to the Data Safeguards (including pursuant to Del Monte's request), EDS will notify Del Monte and, upon Del Monte's consent, implement such change. In the event EDS discovers or is notified of a breach or potential breach of security relating to Del Monte data, EDS will immediately notify the Del Monte Representative of such breach or potential breach and, if the applicable Del Monte data was in the possession of EDS at the time of such breach or potential breach, EDS will investigate and remediate the effects of the breach or potential breach and provide Del Monte with assurance satisfactory to Del Monte that such breach or potential breach will not recur. 6.04 Security Relating to Competitors and other Interested Parties. EDS shall use commercially reasonable efforts to protect all Del Monte proprietary information in its possession from being accessed by or made available to a competitor or other interested party. EDS shall comply with applicable privacy laws, privacy guidelines and the Del Monte Privacy Policy with respect to information (including consumer and customer information) in its possession as a result of providing the Services. 6.05 Use of Del Monte Service Locations. (a) Except as expressly provided in this Agreement, EDS will use the Del Monte Service Locations for the sole and exclusive purpose of providing the Services. Page 17 of 49 Use of such facilities by EDS does not constitute a leasehold interest in favor of EDS or any of EDS's customers. (b) EDS will use the Del Monte Service Locations in an efficient manner. To the extent that EDS operates the space in a manner that unnecessarily increases facility costs incurred by Del Monte, Del Monte reserves the right to set-off the excess utility costs of such practices. Prior to setting-off such excess costs, Del Monte will notify EDS of its awareness of the inefficient use as soon as it reasonably can and provide EDS an opportunity to cure the situation. (c) EDS will keep the Del Monte Service Locations in good order, not commit or permit waste or damage to such facilities, not use such facilities for any unlawful purpose or act and comply with all of Del Monte's standard and site-specific policies and procedures as in effect from time to time, including procedures for the physical security of the Del Monte Service Locations. (d) EDS will permit Del Monte personnel and agents to enter into those portions of the Del Monte Service Locations occupied by EDS's staff at any time to perform facilities-related services. (e) EDS will not make any improvements or changes involving structural, mechanical or electrical alterations to the Del Monte Service Locations without Del Monte's prior written consent. Any additions, improvements or changes made by EDS will be deemed the property of Del Monte without further consideration. (f) In the event that Del Monte sells, divests or experiences another change regarding a Del Monte Service Location, Del Monte will provide reasonable assistance to EDS in transitioning to alternate facilities, if needed, provided that Del Monte will have the option to provide an alternate Del Monte Service Location. g) When the Del Monte Service Locations are no longer required for performance of the Services, EDS will return such locations to Del Monte in substantially the same condition as when EDS began using such locations, ordinary wear and tear excepted. (h) In the event that a Lessor to Del Monte of Del Monte Service Locations requires acceptance of additional use conditions, EDS agrees to cooperate with Del Monte in good faith to accommodate such use conditions. ARTICLE VII. DEL MONTE'S ROLE 7.01 Del Monte Responsibilities. During the term of this Agreement and in connection with EDS' performance of its obligations hereunder, Del Monte will, at its own cost and expense, have the obligations, and retain the responsibilities, set forth in this Agreement. Del Monte acknowledges and agrees that EDS' ability to perform the Services in accordance with this Agreement might be affected by Del Monte's timely performance of those obligations assigned to Del Monte hereunder. Page 18 of 49 7.02 Access to Del Monte Facilities and Infrastructure. Del Monte shall, throughout the Term, provide to EDS personnel assigned to perform Services at Del Monte Service Locations, adequate access to facilities, use of Del Monte's voice system and basic office infrastructure and services. 7.03 Access to Del Monte Equipment. During the term of this Agreement, Del Monte will allow, or will obtain the right to allow, EDS (and any subcontractors of EDS engaged in accordance with this Agreement) to Access (as defined below) at no charge any equipment owned or leased by Del Monte that is reasonably necessary for EDS to perform Services hereunder (the "DEL MONTE EQUIPMENT"). For purposes of this Agreement, the term "ACCESS" means the enjoyment of physical and legal use and operation of a specified item of property in order for EDS to perform the Services. EDS agrees that it will use the Del Monte Equipment leased by Del Monte in a manner consistent with the terms and conditions of such lease. 7.04 Use of Del Monte Software and Del Monte-Vendor Software. During the term of this Agreement, Del Monte will allow, or will obtain the right to allow, EDS (and any subcontractors of EDS engaged in accordance with this Agreement) to Access at no charge to EDS (a) the Del Monte Software and (b) subject to Del Monte having obtained any required consents, the Del Monte-Vendor Software. Del Monte will pay all costs and expenses with respect to the Del Monte Software and the Del Monte-Vendor Software. Del Monte represents and warrants to EDS that (a) it is not (and, to its knowledge, the licensor is not) in default in any material respect under any of the licenses applicable to the Del Monte-Vendor Software and (b) Del Monte has delivered, or will deliver, to EDS complete copies of those license terms and conditions relating to the use and operation of the Del Monte-Vendor Software (including all amendments thereto) as in effect on the Effective Date. EDS covenants that it will use the Del Monte-Vendor Software in a manner consistent with such terms and conditions. 7.05 Additional Items of Property. If any additional items of property, whether in the form of equipment, software and upgrades thereto or otherwise, are required by EDS to perform the Services or otherwise to meet its obligations hereunder, and such items of property are not the responsibility of EDS to provide under this Agreement, EDS will inform Del Monte and Del Monte will obtain such additional items (if in Del Monte's reasonable view the acquisition is warranted) and will provide them at Del Monte's expense or on such other terms and conditions as the Parties mutually agree and if Del Monte acquires any additional items of property for use in Del Monte's information technology environment, whether in addition to or in replacement of any then existing property, and EDS reasonably contemplates an adverse impact on Service Levels due to Del Monte's not approving an acquisition proposed by EDS, or Del Monte's acquisition of additional items of property, EDS will use commercially reasonable efforts to mitigate such adverse impact on the Service Levels and the Parties will discuss in good faith appropriate adjustments to Service Levels, if any. 7.06 Consents; Further Assurances. EDS will work with and assist Del Monte in Del Monte's efforts to obtain such consents as are required for the transactions contemplated by this Article VII, with Del Page 19 of 49 Monte paying such transfer, upgrade or other fees as are necessary to obtain a required consent. Del Monte will provide EDS with written evidence of such consents upon Del Monte's receipt thereof, if EDS has not otherwise received satisfactory evidence thereof. If a required consent is not obtained, (a) unless and until such required consent is obtained, EDS will determine and adopt, subject to Del Monte's prior written consent, such alternative approaches as are necessary and sufficient to perform the Services without such required consent and (b) the Parties will mutually agree in writing on any appropriate adjustments to this Agreement, whether with respect to the scope of the Services, the Service Levels, EDS' charges or otherwise. In addition, EDS and Del Monte agree to execute and deliver such other instruments and documents as either Party reasonably requests to evidence or effect the transactions contemplated by this Article VII. ARTICLE VIII. MAINTENANCE CONTRACTS 8.01 EDS Management of Del Monte-Vendor Software and other Information Technology related maintenance contracts. Subject to Del Monte having obtained any required consents, Del Monte will designate EDS as Del Monte's representative for purposes of obtaining maintenance support pursuant to the terms of Del Monte-Vendor Software and other information technology related maintenance contracts ("MAINTENANCE CONTRACTS"). 8.02 Notification. EDS shall promptly notify Del Monte of any breach of, or misuse or fraud in connection with, any maintenance contracts of which EDS becomes aware and shall cooperate with Del Monte to prevent or stay any such breach, misuse or fraud. EDS shall not be liable for failures by third parties to perform in accordance with the applicable Maintenance Contract requirements except to the extent such failure is attributable to EDS's failure to properly perform management services hereunder. ARTICLE IX. REPRESENTATIONS, WARRANTIES AND COVENANTS 9.01 Warranties. (a) By EDS. EDS warrants that: (i) EDS Corporation is a corporation duly incorporated, validly existing and in good standing under the Laws of the State of Delaware and EIS is a limited liability company duly formed, validly existing and in good standing under the Laws of the State of Delaware; (ii) EDS is duly licensed, authorized or qualified to do business and is in good standing in every jurisdiction in which a license, authorization or qualification is required for the ownership or leasing of its assets or the transaction of business of the character transacted by it, except where the failure to be so licensed, authorized or qualified would not have a material adverse effect on EDS's ability to fulfill its obligations under this Agreement; Page 20 of 49 (iii) EDS is in compliance as of the Effective Date with all Laws applicable to EDS's obligations under this Agreement and has obtained all applicable permits and licenses required of EDS in connection with its obligations under this Agreement, provided that nothing in this paragraph shall be deemed to make any warranty with respect to intellectual property laws, permits, or licenses; (iv) there is no outstanding litigation or arbitrated matter to which EDS is a party that, if decided unfavorably to EDS, would reasonably be expected to have a material adverse effect on EDS's ability to fulfill its obligations under this Agreement; and (v) for a period of 180 days following acceptance of any Developed Software (as defined in Article X) in accordance with the approval procedures adopted by the Parties each item of Developed Software will conform in all material respects to the written technical specifications agreed to by the Parties in accordance with the software development methodologies adopted by the Parties. As soon as reasonably practicable after discovery by Del Monte or EDS of a failure of the Developed Software to so conform (a "NONCONFORMANCE"), Del Monte or EDS, as applicable, will deliver to the other a statement and supporting documentation describing in reasonable detail the alleged Nonconformance. If EDS confirms that there is a Nonconformance, then EDS will use commercially reasonable efforts to correct such Nonconformance as requested by Del Monte. The methods and techniques for correcting Nonconformances will be at the sole discretion of EDS. The foregoing warranty will not extend to any Nonconformances caused (A) by any change or modification to software without EDS' prior written consent or (B) by Del Monte operating software otherwise than (1) in accordance with the applicable documentation, (2) for the purpose for which it was designed or (3) on hardware not recommended, supplied or approved in writing by EDS. Furthermore, if, after undertaking commercially reasonable efforts to remedy a breach by EDS of the foregoing warranty, EDS, in the exercise of its reasonable business judgment, determines that any repair, adjustment, modification or replacement is not feasible, or if the Developed Software subsequent to all repairs, adjustments, modifications and replacements continues to fail to meet the foregoing warranty, then Del Monte will return the Developed Software to EDS and EDS will credit to Del Monte, in a manner and on a schedule agreed to by the Parties and as Del Monte's sole and exclusive remedy for such failure, an amount equal to the charges actually paid by Del Monte to EDS for the Developed Software that has failed to meet the foregoing warranty. Notwithstanding the other provisions of this Section 9.01, upon the written request of Del Monte, EDS will use commercially reasonable efforts to correct an alleged Nonconformance for which EDS is not otherwise responsible hereunder because it is caused or contributed to by one of the factors listed above. (b) By Del Monte. Del Monte warrants: (i) Del Monte is a corporation duly incorporated, validly existing and in good standing under the Laws of the State of New York; (ii) Del Monte is duly licensed, authorized or qualified to do business and is in good standing in every jurisdiction in which a license, authorization or qualification is required for the ownership or leasing of its assets or the transaction of Page 21 of 49 business of the character transacted by it, except where the failure to be so licensed, authorized or qualified would not have a material adverse effect on Del Monte's ability to fulfill its obligations under this Agreement; (iii) Del Monte has obtained all applicable permits and licenses required of Del Monte in connection with its obligations under this Agreement; and (c) Disclaimer of Warranties. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN SECTION 9.01, NEITHER PARTY MAKES ANY REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION THOSE REGARDING THE MERCHANTABILITY, SUITABILITY, ORIGINALITY OR FITNESS FOR A PARTICULAR USE OR PURPOSE OR RESULTS TO BE DERIVED FROM THE USE OF ANY INFORMATION TECHNOLOGY SERVICES, SOFTWARE, HARDWARE, OR OTHER MATERIALS PROVIDED UNDER THIS AGREEMENT, OR THAT THE OPERATION OF ANY SUCH SERVICES, SOFTWARE, HARDWARE OR OTHER MATERIALS WILL BE UNINTERRUPTED OR ERROR FREE. 9.02 Covenants. (a) By EDS. Without limitation of any of EDS's other representations, warranties and covenants, EDS covenants and agrees with Del Monte that during the Term and the Termination Assistance Period: (i) in addition to meeting or exceeding all Service Levels, EDS will at all times render the Services promptly and diligently and perform in a professional and workmanlike manner consistent with high standards in the industry; (ii) all Services will be performed consistent with the specifications and conditions set forth in this Agreement or any attachment thereto; (iii) EDS will at all times use qualified individuals with suitable training, education, competence and skill to perform the Services; (iv) EDS will comply with all laws applicable to EDS and will obtain all applicable permits and licenses required of EDS in connection with its obligations under this Agreement, provided that nothing in this paragraph shall be applicable to intellectual property or intellectual property laws, permits, or licenses (subject to EDS' obligations set forth in Section 15.01); (v) EDS will use commercially reasonable efforts to prevent any viruses or similar items from being coded or introduced into the Systems and, in the event a virus or similar item is found to have been introduced into the Systems, EDS will use commercially reasonable efforts to assist Del Monte in reducing the effects of the virus or similar item and, if the virus or similar item causes a loss of operational efficiency or loss of data, to assist Del Monte Entities to the same extent to mitigate and restore such losses; and (vi) without the consent of Del Monte, EDS will not knowingly and intentionally insert into the Software used to provide the Services any code that would Page 22 of 49 have the effect of disabling or otherwise shutting down all or any portion of the Services. EDS further covenants that, with respect to any disabling code that may be part of the Software used to provide the Services, EDS will not knowingly and intentionally invoke such disabling code at any time, including upon expiration or termination of this Agreement, without Del Monte's consent. (vii) EDS will pass through to Del Monte any rights it obtains under warranties and indemnities given by its third party subcontractors or suppliers in connection with any services, software, equipment or other products provided by EDS pursuant to this Agreement to the extent permitted by the applicable subcontractors or suppliers. If pass-through warranties and indemnities reasonably acceptable to Del Monte are not available from a particular subcontractor or supplier, EDS will discuss the matter with Del Monte prior to engaging the particular subcontractor or supplier, and the Parties will mutually determine to either accept the terms available from such subcontractor or supplier, in which case EDS will enforce the applicable warranty or indemnity on behalf of Del Monte as provided below, or deal with another vendor of comparable services, software, equipment or other products that will provide warranties and indemnities reasonably acceptable to Del Monte. In the event of a third party software or equipment nonconformance, EDS will coordinate with, and be the point of contact for resolution of the problem through, the applicable vendor and, upon becoming aware of a problem, will notify such vendor and will use commercially reasonable efforts to cause such vendor to promptly repair or replace the nonconforming item in accordance with such vendor's warranty. If any warranties or indemnities may not be passed through, EDS agrees that it will, upon the request of Del Monte, take reasonable action to enforce any applicable warranty or indemnity that is enforceable by EDS in its own name. However, EDS will have no obligation to resort to litigation or other formal dispute resolution procedures to enforce any such warranty or indemnity unless EDS chooses to do so and Del Monte agrees to reimburse EDS for all costs and expenses incurred in connection therewith, including reasonable attorneys' fees and expenses. (b) By Del Monte. Del Monte covenants and agrees with EDS that during the Term and the Termination Assistance Period: (i) Del Monte will comply with all laws applicable to Del Monte's receipt of the Services and, except as otherwise provided in this Agreement, will obtain all applicable permits and licenses required of Del Monte in connection with its obligations under this Agreement. ARTICLE X. PROPRIETARY RIGHTS 10.01 Definitions. For purposes of this Agreement: (a) "EDS SOFTWARE" means any Software that is owned or developed by or on behalf of EDS before the Effective Date and any Software that is acquired or developed by or on behalf of EDS after the Effective Date without reference to or use of the intellectual property of Del Monte (but excluding Developed Software). Page 23 of 49 (b) "EDS-VENDOR SOFTWARE" means any Software that is proprietary to any party other than EDS or Del Monte and is licensed to EDS. (c) "DEL MONTE SOFTWARE" means any Software that is owned or developed by or on behalf of Del Monte before the Effective Date and any Software that is acquired or developed by or on behalf of Del Monte after the Effective Date without reference to or use of the intellectual property of EDS. (d) "DEL MONTE-VENDOR SOFTWARE" means any Software that is proprietary to any party other than Del Monte or EDS and is licensed to Del Monte. (e) "DEVELOPED SOFTWARE" means any Software that is developed and delivered by EDS under this Agreement, and paid for by Del Monte, including any Software Changes made by EDS to Del Monte Software or Del Monte-Vendor Software as part of the Services, but excluding (i) any Software Changes made by EDS to EDS Software or EDS-Vendor Software, (ii) any EDS Software or EDS Development Tools that are used in developing, modifying or enhancing any Developed Software hereunder and (iii) any Residual Technology. (f) "OTHER DELIVERABLES" means those tangible, viewable items other than Software that are developed and delivered by EDS under this Agreement, and paid for by Del Monte. (g) "EDS DEVELOPMENT TOOLS" means all know-how, intellectual property, methodologies, processes, technologies, algorithms, software tools or development tools used in performing the Services that (i) are based on trade secrets or proprietary information of EDS, (ii) are developed or created by or on behalf of EDS without reference to or use of the intellectual property of Del Monte or (iii) are otherwise owned or licensed by EDS. (h) "RESIDUAL TECHNOLOGY" means the ideas, concepts, methodologies, processes and know-how that are developed or created by EDS in the course of performing the Services and may be retained by EDS' employees in intangible form. (i) "SOFTWARE," as used in the terms that are defined in this Section 10.01, means computer programs, together with input and output formats, source and object codes, program listings, data models, flow charts, outlines, narrative descriptions, operating instructions and supporting documentation, and includes the tangible media upon which such programs and documentation are recorded, including all authorized reproductions of such programs. Except as otherwise expressly provided in this Agreement, Software includes any corrections, enhancements, translations, modifications, updates, new releases, new versions and other changes thereof or thereto (collectively, "SOFTWARE CHANGES"). 10.02 EDS Software. All rights, title and interest in and to the EDS Software (including all Software Changes made thereto) will be and remain EDS' property, and Del Monte will have no rights or interest therein. EDS will, where possible, grant to Del Monte a perpetual, irrevocable (subject to compliance with the applicable license), nontransferable, Page 24 of 49 nonexclusive license to use, after the expiration or termination of this Agreement, the object code form of any application software programs, including existing documentation, of the EDS Software (if any) then being used by EDS in performing the Services, including those items of EDS Software being used at one or more EDS data centers as part of the Services, as may be reasonably necessary for Del Monte's continued use of Del Monte Software, Del Monte Vendor Software and any other Software to which Del Monte has continuing rights, solely for the purpose of Del Monte (or the third party provider assuming the obligations of EDS hereunder) performing the information and technology systems services previously performed by EDS hereunder (the "LICENSED PROGRAMS), subject to EDS and Del Monte entering into an agreement containing terms and conditions including pricing that may be appropriate. Notwithstanding anything to the contrary in this Agreement, such license will not include the right to use any Software Changes with respect to the EDS Software other than those in use at the time the license is granted. 10.03 EDS-Vendor Software. All rights, title and interest in and to the EDS-Vendor Software, will be and remain the property of the applicable third party vendor(s) and, as between EDS and Del Monte, all Software Changes made by EDS thereto will be owned by EDS. EDS will obtain all consents necessary to permit EDS (and any subcontractors of EDS engaged in accordance with this Agreement) to Access the EDS-Vendor Software in connection with the performance of the Services and will pay all costs and expenses associated therewith. During the term of this Agreement, EDS will pay all required license, installation, maintenance and upgrade fees with respect to the EDS-Vendor Software. 10.04 Del Monte Software. All rights, title and interest in and to the Del Monte Software (excluding any Software Changes made by EDS thereto as part of the Services), will be and remain Del Monte's property. With respect to Software Changes to Del Monte Software made by EDS as part of the Services, EDS agrees to assign, conditioned upon payment by Del Monte of the Fee for the underlying Service, its entire right, title, and interest in and to the copyright in and to all Software Changes to Del Monte. Other intellectual property rights of EDS with respect to such Software Changes shall be licensed to Del Monte at no additional cost as set forth below. Del Monte will make available the Del Monte Software to EDS in such form and on such media as EDS may reasonably request, together with appropriate documentation and Del Monte hereby grants to EDS (and its subcontractors, affiliates, and agents) a limited, world-wide, royalty-free, nonexclusive license, during the Term, to use such Del Monte Software and any other items provided by Del Monte hereunder for the sole benefit of Del Monte. 10.05 Del Monte-Vendor Software. All rights, title and interest in and to the Del Monte-Vendor Software (excluding any Software Changes made by EDS thereto as part of the Services), will be and remain the property of the applicable third party vendor(s). With respect to Software Changes to Del Monte-Vendor Software made by EDS as part of the Services, EDS agrees to assign, conditioned upon payment by Del Monte of the Fee for the underlying Service, its entire right, title, and interest in and to the copyright in and to all Software Changes to Del Monte-Vendor Software. Other intellectual property rights of EDS with respect to such Software Page 25 of 49 Changes shall be licensed to Del Monte at no additional cost as set forth below. Del Monte will make available the Del Monte-Vendor Software to EDS in such form and on such media as EDS may reasonably request and Del Monte hereby grants to EDS (and its subcontractors, affiliates, and agents) a limited, worldwide, royalty free, non-exclusive license, during the Term, to use such Del Monte-Vendor Software for the sole benefit of Del Monte, according to the terms of the Vendor. 10.06 Developed Software and Other Deliverables. Del Monte will own the copyright in and to all Developed Software and Other Deliverables. Conditioned upon payment by Del Monte of the Fee for the underlying Service, EDS will assign to Del Monte its entire right, title, and interest in and to the copyright in and to all Developed Software. Del Monte hereby grants to EDS (and any subcontractors, affiliates, or agents of EDS) a worldwide, paid-up, royalty-free, nontransferable except as permitted under this Agreement, nonexclusive license during the term of this Agreement to use, copy, maintain, modify, enhance, create derivative works of, or otherwise exploit the Developed Software solely to perform the Services for Del Monte. If any EDS Software, EDS-Vendor Software, EDS Development Tools, and/or pre-existing EDS copyrighted materials are embedded in such Developed Software, Software Changes to Del Monte-Vendor Software, Software Changes to Del Monte Software, or Other Deliverables, EDS hereby grants to Del Monte a perpetual, irrevocable, worldwide, paid-up, royalty-free, nontransferable (except as expressly permitted under this Agreement), nonexclusive license, to use, reproduce, modify, create derivative works of, display, and perform, by all means now known or later developed, such embedded EDS Software, EDS-Vendor Software (to the extent provided in the applicable license of such Software to EDS on a royalty free basis), EDS Development Tools, and/or pre-existing EDS copyrighted materials solely in connection with Del Monte's internal use and internal exploitation of such Developed Software, Software Changes to Del Monte-Vendor Software, Software Changes to Del Monte Software, or Other Deliverables, and only so long as such EDS Software, EDS-Vendor Software, EDS Development Tools, and/or pre-existing EDS copyrighted materials remain embedded in such Developed Software and are not separated therefrom. 10.07 EDS Development Tools; Residual Technology. Notwithstanding anything to the contrary in this Agreement, EDS will retain all right, title and interest in and to, and will be free to use, (a) the EDS Development Tools and (b) subject to the confidentiality obligations set forth in Section 11.03, the Residual Technology. The Parties acknowledge and agree that EDS' right, title and interest in and to the Residual Technology constitute substantial rights in the technology developed as a result of the Services performed under this Agreement. No licenses will be deemed to have been granted by either Party to any of its patents, trade secrets, trademarks or copyrights, except as otherwise expressly provided in this Agreement. Nothing in this Agreement will require EDS or Del Monte to violate the proprietary rights of any third party in any software or otherwise. 10.08 Further Assurances. EDS and Del Monte agree to execute and deliver such other instruments and documents as either Party reasonably requests to evidence or effect the transactions contemplated by this Article X. The provisions of this Article X will survive the expiration or termination of this Agreement for any reason. Page 26 of 49 ARTICLE XI. DATA, CONFIDENTIALITY AND AUDIT RIGHTS 11.01 Data of Del Monte. (a) Certain Obligations. "DEL MONTE DATA" means information relating to Del Monte or its customers. Del Monte Data is confidential, will be subject to Section 11.03 and will be and remain the property of Del Monte. EDS (and any subcontractors of EDS engaged in accordance with this Agreement) is hereby authorized to have access to and to make use of the Del Monte Data for the Term of this Agreement as is appropriate for the performance by EDS of its obligations hereunder. Upon expiration or termination of this Agreement for any reason, subject to any record retention requirements of EDS, EDS will, at EDS' expense, return to Del Monte all of the Del Monte Data in EDS' possession and in EDS' then existing machine-readable format and media. EDS will not use the Del Monte Data for any purpose other than providing the Services. At no time shall any of the computer or other files or other materials or information containing Del Monte Data be stored or held in a form or manner not reasonably accessible to Del Monte through the Del Monte Representative. Subject to restrictions contained in any relevant contracts, EDS shall provide the Del Monte Representative or such other person or persons as may be designated in writing by Del Monte all such files and other materials promptly upon the reasonable request of Del Monte, including hardware and software keys and such information as to format encryption (if any) and any other specification or information necessary for Del Monte to retrieve, read, revise and/or maintain such files and information. (b) Safeguards. EDS will maintain safeguards against the destruction, loss or alteration of the Del Monte Data in the possession of EDS. EDS will maintain safeguards that are no less rigorous than those maintained by EDS for its own information of a similar nature. Del Monte will have the right to establish backup security for the Del Monte Data and to keep backup data and data files in its possession if it so chooses, provided, however, that EDS will have access to such backup data and data files as is reasonably required by EDS. (c) Restricted Access. EDS Personnel shall not attempt to access, or allow access to, any data, files or programs to which they are not entitled under this Agreement. If such Access is attained, EDS shall immediately report the incident to the Del Monte Representative, describe in detail any accessed materials and the method of access and, upon request, provide to the Del Monte Representative copies of any accessed materials. (d) Security System. EDS shall institute reasonable system security measures to guard against the unauthorized access, alteration or destruction of software and Del Monte Data. Such measures shall include, when possible, the installation of software that (i) requires all users to enter a user identification code and password prior to gaining access to the system, (ii) controls and tracks the addition and deletion of users, and (iii) controls user access to areas and features of the system. (e) Loss of Data. If any Del Monte Data is lost or damaged due to EDS' failure to perform Services as required under this Agreement, EDS shall use commercially Page 27 of 49 reasonable efforts to replace or regenerate such lost or damaged Del Monte Data without charge or expense to Del Monte and shall not require Del Monte to pay for any resource usage from the replacement or regeneration of such lost or damaged data. 11.02 Privacy Laws. The Parties acknowledge and agree that Del Monte will be and remain the controller of the Del Monte Data for purposes of all applicable laws relating to data privacy, trans-border data flow and data protection (collectively, the "PRIVACY LAWS"), and nothing in this Agreement will restrict or limit in any way Del Monte's rights or obligations as owner and/or controller of the Del Monte Data for such purposes. The Parties also acknowledge and agree that EDS may have certain responsibilities prescribed by applicable Privacy Laws as a processor of the Del Monte Data, and EDS hereby acknowledges such responsibilities to the extent required thereby for processors of data and agrees that such responsibilities will be considered as a part of the Services to be provided by EDS under this Agreement, provided, however, that if the Privacy Laws to which the activities contemplated by this Agreement are subject are modified, then EDS will continue to comply with such Privacy Laws, as so modified, but to the extent that such modifications expand the scope of the activities previously undertaken by EDS pursuant to this Section 11.02, EDS will, at Del Monte's reasonable request, provide such additional activities in accordance with Section 4.04. 11.03 Confidentiality. (a) Scope of Obligation. Except as otherwise expressly provided in this Agreement, EDS and Del Monte each agrees that (i) all information communicated to it by the other and identified as confidential, whether before or after the Effective Date, (ii) all information identified as confidential to which it has access in connection with the Services, whether before or after the Effective Date, and (iii) this Agreement and the Parties' rights and obligations hereunder, will be and will be deemed to have been received in confidence and will be used only for purposes of this Agreement, and each of EDS and Del Monte agrees to use the same means as it uses to protect its own confidential information, but in no event less than reasonable means, to prevent the disclosure and to protect the confidentiality thereof. No such information will be disclosed by the recipient Party without the prior written consent of the other Party, provided, however, that each Party may disclose this Agreement and the other Party's confidential information to those of the recipient Party's attorneys, auditors, insurers (if applicable), subcontractors and full time employees to the extent they have a need to have access to such information in connection with their employment (or engagement, if applicable) by the recipient Party, so long as the recipient Party requires, in the case of its attorneys, auditors, insurers and subcontractors that each of them execute a confidentiality agreement containing terms and conditions no less restrictive than those set forth in this Section 11.03 and advises, in the case of its employees, each such employee of the confidentiality obligations set forth in this Section 11.03. In any event, compliance by each of the persons referenced in the preceding sentence with the confidentiality obligations set forth in this Section 11.03 will remain the responsibility of the Party employing or engaging such persons. Page 28 of 49 (b) Exceptions. The foregoing will not prevent either Party from disclosing information that belongs to such Party or (i) is already known by the recipient Party without an obligation of confidentiality other than under this Agreement, (ii) is publicly known or becomes publicly known through no unauthorized act of the recipient Party, (iii) is rightfully received from a third party or (iv) is independently developed without use of the other Party's confidential information. If confidential information is required to be disclosed pursuant to a requirement of a governmental authority, such confidential information may be disclosed pursuant to such requirement so long as the Party required to disclose the confidential information, to the extent possible, provides the other Party with timely prior notice of such requirement and coordinates with such other Party in an effort to limit the nature and scope of such required disclosure, provided, however, that in the event of a tax audit, (A) notice of a disclosure requirement in connection therewith will not be given and (B) the Parties will use commercially reasonable efforts to ensure that any confidential information that is subject to a valid request for delivery of a copy of such information (including a copy of this Agreement) to the taxing authority is not subject to further disclosure by it (such as by marking such information as a trade secret). If confidential information is required to be disclosed in connection with the conduct of any mediation or arbitration proceeding carried out pursuant to Article XIII, such confidential information may be disclosed pursuant to and in accordance with the approval and at the direction of the mediator or arbitrator, as the case may be, conducting such proceeding. Upon written request of the disclosing Party at the expiration or termination of this Agreement for any reason, all such documented confidential information (and all copies thereof) of the disclosing Party will be returned to the disclosing Party or will be destroyed, with written certification thereof being given to the disclosing Party. The provisions of this Section 11.03 will survive the expiration or termination of this Agreement for any reason. 11.04 Audit Rights. (a) General. Employees of Del Monte and its auditors who are from time to time designated by Del Monte and who agree in writing to the security and confidentiality obligations and procedures reasonably required by EDS will be provided with reasonable access to any facility at which the Services are being performed to enable them to conduct audits of EDS' performance of the Services and other matters relevant to this Agreement, including (i) verifying the accuracy of EDS' charges to Del Monte and (ii) verifying that the Services are being provided in accordance with this Agreement, including any Service Levels. Any audit of EDS' pricing methodology will be conducted by an independent audit firm acceptable to EDS. EDS will retain documentation supporting the pricing methodology used to develop the pricing noted in this Agreement and any subsequent revisions thereof. (b) Procedures. Such audits will be conducted during reasonable business hours, and with the frequency deemed reasonably necessary or appropriate by Del Monte. Del Monte will provide EDS with prior written notice of an audit. EDS will cooperate in the audit, will make the information reasonably required to conduct the audit available on a timely basis and will assist the designated employees of Del Monte or its auditors as reasonably necessary. If Del Monte requests resources beyond those resources then assigned to the Account Team who are able to provide reasonable assistance of a Page 29 of 49 routine nature in connection with such audit, such resources will be provided at Del Monte's expense. EDS will retain records that support EDS' performance of the Services and other matters relevant to this Agreement in accordance with EDS' retention guidelines. Notwithstanding anything to the contrary in this Agreement, EDS will not be required to provide access to the proprietary data of EDS or other EDS customers. All information learned or exchanged in connection with the conduct of an audit, as well as the results of any audit, is confidential and will be subject to Section 11.03. (c) Results. Following an audit, Del Monte will conduct an exit conference with EDS to discuss issues identified in the audit that pertain to EDS, and Del Monte will give EDS a copy of any portion of the audit report pertaining to EDS. The Parties will review each EDS audit issue and will determine (i) what, if any, actions will be taken in response to such audit issues, when and by whom and (ii) which Party will be responsible for the cost of taking the actions necessary to resolve such issues. Any such determination will be based on the following criteria: (A) the Party that owns the original deficiency; and (B) the Party that has contractual responsibility for the improvement of internal controls. EDS will not be responsible for the cost of an audit, except to the extent the audit expenses are incurred in connection with a material deficiency in EDS's delivery of Services, or otherwise agreed to in writing by the Parties. ARTICLE XII. PAYMENTS 12.01 Charges for EDS Services. In consideration for the performance of the Services, Del Monte will pay to EDS the charges set forth in Schedule E (the "SERVICES FEES") plus Del Monte responsible taxes. EDS will invoice Del Monte for such Services Fees on a monthly basis on the 15th day of each month, with each invoice setting forth the charges related to that month. To the extent actual information is not available, EDS shall utilize a reasonable estimate and adjust the estimate to actual on the next monthly invoice. 12.02 Out-of-Pocket Expenses. Del Monte will pay, or reimburse EDS for, the reasonable, out-of-pocket expenses, including travel and travel-related expenses incurred by EDS in connection with EDS' activities requested by Del Monte and not within the general scope of the Services, plus Del Monte responsible taxes, provided that Del Monte approved such out-of-pocket expenses in writing. EDS will invoice for all such out-of-pocket expenses, on the EDS monthly invoice with appropriate details. 12.03 Time of Payment. Except as otherwise expressly provided in this Agreement, any amount due to EDS under this Agreement and not disputed in good faith by Del Monte (as provided below) will be due and payable on the 30th day following date of the invoice from EDS therefor. All amounts will be payable to EDS in accordance with payment instructions provided by EDS from time to time, so as in each case to constitute immediately available funds by 12 noon, Plano, Texas time, on the payment date no matter what the method of payment. Any amount not paid when due will bear interest until paid at a rate of interest equal to the lesser of (a) the prime rate established from time to time by Citibank of New Page 30 of 49 York plus one and one-half percent or (b) the maximum rate of interest allowed by applicable law. 12.04 Disputed Amounts. If any portion of an amount due to EDS under this Agreement is subject to a bona fide dispute between the Parties, Del Monte will pay to EDS on the date such amount is due all amounts not disputed in good faith by Del Monte. Within thirty (30) days of Del Monte's receipt of the invoice on which a disputed amount appears, Del Monte will notify EDS in writing of the specific items in dispute, will describe in detail Del Monte's reason for disputing each such item and will deposit such disputed amount into a mutually agreed escrow account. Within ten (10) days of EDS' receipt of such notice, the Parties will negotiate in good faith pursuant to the provisions of Article XIII to reach settlement on any items that are the subject of such dispute. 12.05 Taxes. (a) Each Party will be responsible for any personal property taxes on property it owns or leases, for franchise and privilege taxes on its business, and for taxes based on its net income or non-transaction based gross receipts. (b) The Services Fees, all out-of-pocket expenses, and all termination fees, (collectively, "FEES") paid to EDS are inclusive of, and EDS will be responsible for, any applicable sales, use, gross receipts, excise, value-added, services, consumption, withholding or other taxes attributable to periods on or after the Effective Date based upon or measured by EDS's cost in acquiring equipment, materials, supplies or services used by EDS in performing the Services, including all personal property and sales or use taxes, if any, due on the EDS machines. In the event that a sales, use, excise, gross receipts or services tax is imposed, levied, or assessed on the provision of the Services by EDS to Del Monte or on EDS' charges to Del Monte under this Agreement, however levied or assessed, EDS shall add all such taxes to EDS's Fees and Del Monte shall pay or reimburse EDS. To the extent that any sales, use, gross receipts, excise, value-added or services tax is required by Law to be separately identified in EDS's billings to Del Monte, EDS will separately identify the tax. (c) Any taxes assessed, as determined by Del Monte, including a gross-up thereon, on the provision of the Services for a particular site resulting from EDS's relocating or rerouting the delivery of Services for EDS's convenience to, from or through a location other than the Service Location used to provide the Services as of the Effective Date will be EDS' responsibility; provided that, Del Monte may pay such taxes and Del Monte will receive a credit with respect to the Fees invoiced under this Agreement equal to such payments made pursuant to this subsection, provided, however, that such credit shall be net of other benefits received by Del Monte as reasonably agreed to by the Parties. (d) Del Monte and EDS will cooperate to segregate the Fees into the following separate payment streams: (i) those for taxable Services; (ii) those for non-taxable Services; and (iii) those for which EDS functions merely as a paying agent for Del Monte in receiving goods, supplies or services (including leasing and licensing arrangements) Page 31 of 49 that otherwise are nontaxable or have previously been subject to tax. In addition, each of Del Monte and EDS will reasonably cooperate with the other to more accurately determine a Party's tax liability and to minimize such liability, to the extent legally permissible. Each of Del Monte and EDS will provide and make available to the other any resale certificates, information regarding out-of-state sales or use of equipment, materials or services, and any other exemption certificates or information requested by a Party. 12.06 Cost and Quality Benchmarking. (a) Benchmarking. At Del Monte's request, the Parties may from time to time but not more frequently than once in any two (2) year period during the Term measure the quality and cost-effectiveness of the Services through the use of independent third party benchmarking services (each, a "BENCHMARK"). Comparisons will be to determine whether, the Services being delivered are comparable to similar price and service offerings of other information technology service providers, taking into account financial and operational risks, volume, term and any minimum commitments, similar geographies, complexities, services and service levels. The party used to perform the benchmarking services (the "BENCHMARKER") will be reasonably acceptable to both Parties, and will exclude any entity that is a competitor of either party, or that would be conflicted by its status as a corporate auditor of either Party. Agreement upon a Benchmarker shall be contingent upon such Benchmarker's agreement to such non-disclosure obligations as may be reasonably required by either Party. The fees and services charged by the Benchmarker shall be borne by Del Monte. EDS shall fully cooperate with such efforts, investigate unfavorable variances, and take corrective action as necessary. (b) Corrective Action for Quality. If the Benchmark shows that any individual Service quality is not in a mutually agreed position in the top half of the peer group used in the Benchmark, EDS shall take such corrective action as necessary to promptly bring the particular Service into a mutually agreed position in the top half within thirty (30) days from receipt of the Benchmark or such other time period as may otherwise be mutually agreed upon by the Parties. If the cost of EDS performing Services within a mutually agreed position in the top half of the Benchmark would exceed the then-current costs of providing such services , then the costs of such corrective action shall be the subject of good faith negotiations between the Parties. (c) Corrective Action for Charges. If the Benchmark shows that the charges paid by Del Monte to EDS for the Services are not in a mutually agreed position in the lowest half of the costs paid for Services by the peer group used in the Benchmark and the Parties in good faith agree that the Benchmark has fairly compared the EDS pricing to the peer group, then the Parties will negotiate in good faith an adjustment to the EDS charges so that Del Monte is placed within the mutually agreed position in the lowest 50% of the costs paid for Services by the peer group. ARTICLE XIII. DISPUTE ESCALATION, MEDIATION AND ARBITRATION 13.01 Dispute Escalation. Page 32 of 49 Subject to Section 13.02 below, in the event of any dispute, controversy or claim of any kind or nature arising under or in connection with this Agreement, including without limitation disputes as to the creation, validity, interpretation, breach or termination of this Agreement (a "DISPUTE"), then upon the written request of either Party, each of the Parties will comply with the following procedures: (a) Meetings. Each Party will appoint a designate(s) whose task it will be to meet for the purpose of endeavoring to resolve the Dispute. The designated executives will meet as often as the Parties reasonably deem necessary in order to gather and furnish to the other all information with respect to the matter in issue that the Parties believe to be appropriate and germane in connection with its resolution. Such executives will discuss the Dispute and will negotiate in good faith in an effort to resolve the Dispute without the necessity of any formal proceeding relating thereto. The specific format for such discussions will be left to the discretion of the designated executives but may include the preparation of agreed upon statements of fact or written statements of position furnished to the other Party. No formal proceedings for the resolution of the Dispute under Section 13.01(b) or (c) may be commenced until the earlier to occur of (i) a good faith mutual conclusion by the designated executives that amicable resolution through continued negotiation of the matter in issue does not appear likely or (ii) the 10th day after the initial request to negotiate the Dispute. (b) Mediation. Any Dispute that the Parties are unable to resolve through informal discussions or negotiations pursuant to Section 13.01(a) will be submitted to non-binding mediation, which will be held in San Francisco, California. The Parties will mutually determine who the mediator will be from a list of mediators obtained from the American Arbitration Association office located in the city in which the proceeding will take place, determined as set forth above (the "AAA"). If the Parties are unable to agree on the mediator within ten (10) days of the demand of either party for mediation, the AAA will select the mediator. Each Party will bear its own costs and expenses with respect to the mediation, including one-half of the fees and expenses of the mediator. (c) Arbitration. Any Dispute that the Parties are unable to resolve through mediation pursuant to Section 13.01(b) will be submitted to arbitration in accordance with the following procedures: (i) Demand for Arbitration; Location. Either Party may demand arbitration by giving the other Party written notice to such effect, which notice will describe, in reasonable detail, the facts and legal grounds forming the basis for the filing Party's request for relief and will include a statement of the total amount of damages claimed, if any, and any other remedy sought by that Party. The arbitration will be held before one neutral arbitrator in San Francisco, California. (ii) Identification of Arbitrator. Within ten (10) days after the other Party's receipt of such demand, the Parties will mutually determine who the arbitrator will be. If the Parties are unable to agree on the arbitrator within that time period, the AAA will select the arbitrator. In any event, the arbitrator will have a background in, and knowledge of, the information technology services industry and will be an appropriate person based on the nature of the Dispute. If a person with such industry experience is not available, Page 33 of 49 the arbitrator will be chosen from the large and complex case panel or, if an appropriate person is not available from such panel, the retired federal judges pool. (iii) Conduct of Arbitration. The Commercial Arbitration Rules of the AAA will govern the arbitration, except as expressly provided in this Section 13.01(c). However, the arbitration will be administered by any organization mutually agreed to in writing by the Parties. If the Parties are unable to agree on the organization to administer the arbitration, it will be administered by the AAA under its procedures for large and complex cases. (iv) Scope of Discovery. Discovery will be limited to the request for and production of documents, depositions and interrogatories. Interrogatories will be allowed only as follows: a Party may request the other Party to identify by name, last known address and telephone number (A) all persons having knowledge of facts relevant to the Dispute and a brief description of that person's knowledge, (B) any experts who may be called as an expert witness, the subject matter about which the expert is expected to testify, the mental impressions and opinions held by the expert and the facts known by the expert (regardless of when the factual information was acquired) that relate to or form the basis for the mental impressions and opinions held by the expert and (C) any experts who have been used for consultation, but who are not expected to be called as an expert witness, if such consulting expert's opinions or impressions have been reviewed by an expert witness. All discovery will be guided by the Federal Rules of Civil Procedure. All issues concerning discovery upon which the Parties cannot agree will be submitted to the arbitrator for determination. (v) Authority of Arbitrator. The arbitrator will determine the rights and obligations of the Parties according to the laws of the State of California. The arbitrator will not have authority to award damages in excess of the amount or other than the types allowed by Section 15.02 and may not, in any event, make any ruling, finding or award that does not conform to the terms and conditions of this Agreement. (vi) Joinder of Parties. Each of EDS and Del Monte agree that it will use commercially reasonable efforts to join (and will allow the other Party to join) any third party that the Parties have agreed is indispensable to the arbitration. If any such third party does not agree to be joined, the arbitration will proceed nonetheless. (vii) Award. The decision of, and award rendered by, the arbitrator will be final and binding on the Parties. Upon the request of a Party, the arbitrator's award will include written findings of fact and conclusions of law. Judgment on the award may be entered in and enforced by any court of competent jurisdiction. Each Party will bear its own costs and expenses (including filing fees) with respect to the arbitration, including one-half of the fees and expenses of the arbitrator. 13.02 Exclusive Remedy. Other than those matters involving injunctive or other extraordinary relief or any action necessary to enforce the award of the arbitrator, the Parties agree that the provisions of this Article XIII are a complete defense to any suit, action or other proceeding instituted in any court or before any administrative tribunal with respect to any Page 34 of 49 Dispute or the provision of the Services by EDS. Nothing in this Article XIII prevents the Parties from exercising their rights to terminate this Agreement in accordance with Article XIV. ARTICLE XIV. TERMINATION 14.01 Material Default. If either Party materially defaults in the performance of any of its duties or obligations under this Agreement (except for a default in payments to EDS hereunder, which will be governed by Section 14.02), which default is not substantially cured within thirty (30) days after written notice is given to the defaulting Party specifying such default or, with respect to those defaults that cannot reasonably be cured within thirty (30) days, should the defaulting Party fail to proceed within thirty (30) days to commence curing the default and thereafter to either cure the default or proceed with reasonable diligence to substantially cure the default within sixty (60) days, the Party not in default may, by giving written notice thereof to the defaulting Party, terminate this Agreement as of the date of receipt by the defaulting Party of such notice or as of a future date specified in such notice of termination. In the event of a termination for cause under this Section 14.01, the sole rights and obligations of the respective Parties shall be those set forth in Section 14.06. 14.02 Termination for Nonpayment. If Del Monte defaults in the payment when due of any amount due to EDS pursuant to this Agreement and does not cure such default within thirty (30) days after being given written notice of such default or otherwise does not comply with Section 12.04, EDS may, by giving written notice thereof to Del Monte, terminate this Agreement as of the date of receipt by Del Monte of such notice or as of a future date specified in such notice of termination. In the event EDS terminates this Agreement for nonpayment, EDS in its sole discretion may require prepayment for any requested services under Section 14.06. 14.03 Termination for Bankruptcy and Related Events. Subject to Title 11, United States Code, if either Party becomes or is declared insolvent or bankrupt, is the subject of any proceedings relating to its liquidation, insolvency or for the appointment of a receiver or similar officer for it, makes an assignment for the benefit of all or substantially all of its creditors or enters into an agreement for the composition, extension or readjustment of all or substantially all of its obligations, then the other Party may, by giving written notice thereof to such Party, terminate this Agreement as of a date specified in such notice of termination. 14.04 Termination upon Material Change in Del Monte Business. Del Monte may terminate this Agreement upon at least six (6) months prior written notice to EDS in the event Del Monte (or the controlling shareholders of Del Monte) (a) enters into a transaction to sell all or substantially all of the assets of Del Monte, (b) enters into a transaction to sell one or more business units of Del Monte accounting for 40% or more of Del Monte's annual net sales, (c) enters into a transaction to merge Del Page 35 of 49 Monte into another entity, (d) is acquired by another entity or (e) makes an acquisition that increases Del Monte' annual net sales by 50% or more. Del Monte's announced merger into the H. J. Heinz business is excluded as a material change for purposes of this section 14.04. 14.05 Termination for Convenience. Del Monte may provide notice of termination at any time after the first anniversary of the Effective Date by providing at least six (6) months prior written notice to EDS. Termination fees in addition to any due under Section 14.06 (b) are as follows: Termination effective in Year 2: [XXX] Termination effective in Year 3 through 10: [XXX] 14.06 Effect of Expiration or Termination. (a) Termination Assistance Services. (i) Commencing up to six (6) months before the expiration or earlier termination of this Agreement, upon the request of and as specified by Del Monte, and continuing through the effective date of expiration or termination of the Agreement, EDS will provide, at no additional charge to Del Monte to the extent that such assistance can be provided through resources included in the Services Fees, all information and assistance reasonably necessary to provide for the smooth transition of the Services (and other functions being performed by EDS and EDS' subcontractors and agents at the time of such expiration or termination) to Del Monte or another service provider of Del Monte's choosing, which such assistance will include capacity planning, consulting services, facilities planning, telecommunications planning, Software configuration, reviewing all system Software with a new service provider or its agents, generating machine readable listings of source code, uploading production databases, providing parallel processing, testing and providing Equipment where practical (individually and collectively, the "TERMINATION SERVICES"). (ii) Del Monte may also require EDS, upon the request of and as specified by Del Monte, to provide Services and the Termination Services for an extension period of up to six (6) months following the effective date of expiration or termination of the Agreement (collectively, the period of Termination Services prior to the effective date of expiration or termination of the Agreement together with any extension period hereinafter referred to as the "TERMINATION ASSISTANCE PERIOD"). (iii) During the Termination Assistance Period, EDS will continue to provide the Services in addition to the Termination Services until Del Monte, in its sole discretion, provides EDS notice that the Services have been satisfactorily transferred to Del Monte or another service provider, at which time EDS will cease providing any Services or Termination Services. (iv) The quality and level of Termination Services and other Service performed during the Termination Assistance Period will not be degraded from the Service Levels provided by EDS and EDS' subcontractors and agents for similar Services prior to such termination. [XXX] OMITTED PURSUANT TO REQUEST FOR CONFIDENTIAL TREATMENT. FULL TEXT FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. Page 36 of 49 (v) After the expiration of the Termination Assistance Period, EDS will (A) answer questions from Del Monte regarding the Services on an "as needed" basis at EDS's then-standard billing rates and (B) deliver to Del Monte any remaining Del Monte-owned reports and documentation still in EDS's possession. (vi) Del Monte will have the right to extend offers of employment to all EDS personnel who have been or are assigned to or have or are performing any Services or other work on behalf of EDS with respect to Del Monte. EDS will provide reasonable access to such personnel and will not interfere in any way with any such solicitation by Del Monte. (vii) EDS will provide such training and documentation as Del Monte may reasonably require for Del Monte to understand, operate, maintain and enhance the information technology systems and understand and provide the Services. (b) Termination Services Fees. (i) With respect to Termination Services that were Services performed under the Agreement prior to the Termination Assistance Period: (A) During the Termination Assistance Period prior to the expiration or termination of the Agreement, EDS will provide Termination Services at no additional charge to Del Monte to the extent that such assistance can be provided through resources included in the Service Fees. To the extent that any Termination Services cannot be provided through resources included in the Service Fees, Del Monte will pay EDS at the rates then applicable under the Agreement for such Services. (B) During the Termination Assistance Period after the expiration or termination of the Agreement, if applicable, Del Monte will pay EDS at EDS's then standard commercial billing rates for such Services. (ii) With respect to Termination Services that were not Services performed under the Agreement prior to the Termination Assistance Period, Del Monte will pay EDS the rates specified in this Agreement. (iii) The fees paid for Termination Services (the "TERMINATION SERVICES FEES") are to be paid in accordance with the payment terms for Services Fees set forth in Article XII. (c) Exit Duties and Exit Rights. Upon the later of the expiration or termination of this Agreement and the last day of the Termination Assistance Period (the "END DATE"), EDS will perform the following: (i) Wind-Down. EDS will cease to perform the Services, and Del Monte will pay to EDS all amounts due to EDS for all Services provided and expenses incurred through the End Date. (ii) Transition Plan. EDS and Del Monte will work together to develop a transition plan (the "TRANSITION PLAN") setting forth the respective tasks to be Page 37 of 49 accomplished by each Party in connection with the Termination Services and a schedule pursuant to which such tasks are to be completed. (iii) Specifications. EDS will, upon Del Monte's request, provide Del Monte with reasonably detailed specifications for the hardware and software needed by Del Monte (or a third party provider) to properly provide the Services then being performed by EDS. (iv) Acquisition of Equipment. Del Monte will have the option to purchase from EDS at its remaining book value any equipment owned by EDS and to assume the leases (provided such leases are assumable) for any equipment leased by EDS, in each case only to the extent that such equipment is dedicated solely to providing the Services to Del Monte as of the effective date of termination or expiration or End Date, whichever is applicable. Such equipment will be provided on an "as is, where is" basis. (v) Vendor Software. EDS will reasonably assist Del Monte in Del Monte's acquisition of any necessary rights to access any EDS-Vendor Software and existing documentation then being used by EDS in performing the Services. (vi) Training. EDS will provide appropriate training for the employees of Del Monte (or the third party provider) who will be assuming responsibility following the Termination Assistance Period for operation of the software then being used by EDS in performing the Services. (vii) Disclosure of Information. Notwithstanding anything to the contrary in this Agreement, EDS will not be required to disclose any of its proprietary information, whether in the nature of a trade secret, software or otherwise, to the third party provider except to the extent that Del Monte is entitled to such information under this Agreement. Prior to providing any termination assistance to the third party provider, Del Monte will cause the third party provider to provide EDS with written assurances, in form and substance reasonably satisfactory to EDS, that the third party provider (i) will maintain at all times the confidentiality of any EDS proprietary information disclosed or provided to, or learned by, the third party provider in connection therewith and (ii) will use such information exclusively for the purposes for which Del Monte is authorized to use such information pursuant to this Agreement. ARTICLE XV. INDEMNITIES AND LIABILITY 15.01 Indemnities. (a) Indemnity by Del Monte. Del Monte will indemnify EDS from, and defend and hold EDS harmless from and against, any losses suffered, incurred or sustained by EDS or to which EDS becomes subject, resulting from, arising out of or relating to any third-party claim: (i) that the (1) Del Monte Software, Del Monte Vendor Software, any other item provided by Del Monte, its subcontractors or agents, or that Del Monte, its Page 38 of 49 subcontractors or agents instructs EDS to use, infringes or constitutes a misappropriation of the intellectual property rights of any third party or (2) EDS infringes or has misappropriated the intellectual property rights of any third party where such infringement or misappropriation arises due to instructions provided by Del Monte, PROVIDED, that Del Monte shall have no liability if (1) the claim of infringement or misappropriation is based upon the use of the software or items by EDS in combination with equipment, devices, or software not intended for use therewith by Del Monte or used in a manner for which the software or items were not designed, (2) EDS modifies any software or items without the consent of Del Monte, and such infringement would not have occurred but for such modification or (3) the claim of infringement or misappropriation arises from the use of the software or items in a manner outside of the scope of the terms set forth in this Agreement; (ii) relating to the inaccuracy, untruthfulness or breach of any representation or warranty made by Del Monte under this Agreement; (iii) relating to (A) a violation by Del Monte of any law for the protection of persons or members of a protected class or category of persons, including unlawful discrimination and (B) work-related injury (except as may be covered by Del Monte's workers' compensation plan) or death caused by Del Monte; (iv) relating to any amount, including taxes, interest and penalties, assessed against EDS that are the obligation of Del Monte pursuant to Section 12.05; (v) relating to bodily injury (including death) or property loss or damage resulting from Del Monte's acts or omissions; (vi) relating to a breach of Section 11.03 (Confidentiality); and (vii) relating to a breach of any of the covenants in Section 9.02 (Covenants). Del Monte will reimburse EDS for any reasonable costs and expenses incurred in connection with the enforcement of this Section. (b) Indemnity by EDS. EDS will indemnify Del Monte from, and defend and hold Del Monte harmless from and against, any losses suffered, incurred or sustained by Del Monte or to which Del Monte becomes subject resulting from, arising out of or relating to any third party claim: (i) that the Developed Software, EDS Software, Other Deliverables, EDS machines, any enhancements or modifications to the Del Monte Software or Del Monte Vendor Software performed by EDS or EDS' subcontractors or agents or any other items provided to Del Monte by EDS, but excluding any EDS-Vendor Software provided to Del Monte by EDS or EDS' subcontractors or agents, infringe or constitutes a misappropriation of the intellectual property rights of any third party PROVIDED, that EDS shall have no liability if (1) the claim of infringement or misappropriation is based upon the use of the software or items by Del Monte in combination with equipment, devices, or software not intended for use therewith or not provided by EDS or used in a Page 39 of 49 manner for which the software or items were not designed, or (2) Del Monte modifies any software or items, and such infringement would not have occurred but for such modification, (3) the claim of infringement arises out of EDS' compliance with specifications provided by Del Monte and such infringement would not have occurred but for such compliance (unless EDS knew, or reasonably should have known, of such infringement), (4) the claim of infringement or misappropriation is based upon the continued infringement or misappropriation by Del Monte after modifications provided by EDS or written instructions to modify have been provided to Del Monte that would have avoided the alleged infringement, or (5) the claim of infringement or misappropriation is based upon the use of the software or items in a manner outside of the scope of the terms set forth in this Agreement; (ii) relating to any duties or obligations of EDS in respect of a third party or any subcontractor of EDS; (iii) by a third party arising from services or systems provided by EDS from a Service Location that is shared with other customers of EDS; (iv) relating to the inaccuracy, untruthfulness or breach of any representation or warranty made by EDS under this Agreement; (v) relating to EDS's failure to obtain, maintain or comply with the Governmental Consents; (vi) relating to (A) a violation by EDS of any law for the protection of persons or members of a protected class or category of persons, including unlawful discrimination and (B) work-related injury (except as may be covered by EDS's workers' compensation plan) or death caused by EDS; (vii) relating to any amounts, including taxes, interest and penalties, assessed against Del Monte that are the obligation of EDS pursuant to Section 12.05 (Taxes); (viii) relating to bodily injury (including death) or property loss or damage resulting from EDS' acts or omissions; (ix) relating to a breach of EDS obligations with respect to Del Monte Data; (x) relating to a breach of Section 11.03 (Confidentiality); and (xi) Relating to a breach of any of the covenants in Section 9.02 (Covenants). EDS will reimburse Del Monte Entities for any reasonable costs and expenses incurred in connection with the enforcement of this Section. (c) Indemnification Procedures. If any third party claim is commenced against a person or entity entitled to indemnification under this Section 15 (the "INDEMNIFIED Page 40 of 49 PARTY"), notice thereof will be given to the Party that is obligated to provide indemnification (the "INDEMNIFYING PARTY") as promptly as practicable. If, after such notice, the Indemnifying Party will acknowledge that this Agreement applies with respect to such claim, then the Indemnifying Party will be entitled, if it so elects, in a notice promptly delivered to the Indemnified Party, but in no event less than ten (10) days prior to the date on which a response to such claim is due, to immediately take control of the defense and investigation of such claim and to employ and engage attorneys reasonably acceptable to the Indemnified Party to handle and defend the same, at the Indemnifying Party's sole cost and expense. The Indemnified Party will cooperate, at the cost of the Indemnifying Party, in all reasonable respects with the Indemnifying Party and its attorneys in the investigation, trial and defense of such claim and any appeal arising therefrom; provided, however, that the Indemnified Party may, at its own cost and expense, participate, through its attorneys or otherwise, in such investigation, trial and defense of such claim and any appeal arising therefrom. No settlement of a claim that involves a remedy other than the payment of money by the Indemnifying Party will be entered into without the consent of the Indemnified Party. After notice by the Indemnifying Party to the Indemnified Party of its election to assume full control of the defense of any such claim, the Indemnifying Party will not be liable to the Indemnified Party for any legal expenses incurred thereafter by such Indemnified Party in connection with the defense of that claim. If the Indemnifying Party does not assume full control over the defense of a claim subject to such defense as provided in this Section, the Indemnifying Party may participate in such defense, at its sole cost and expense, and the Indemnified Party will have the right to defend the claim in such manner as it may deem appropriate, at the cost and expense of the Indemnifying Party. (d) Additional Remedy. If software or other items provided by EDS become the subject of an infringement claim, or in the opinion of EDS are likely to become the subject of such a claim, then, in addition to its obligations hereunder, EDS will (i) replace or modify the software or items to make them non-infringing or cure any claimed misuse of another's trade secret, or (ii) if such alternative is not reasonably available, procure for Del Monte the right to continue using the software or items pursuant to this Agreement, or (iii) if none of the foregoing are commercially reasonable, cease using, or instruct Del Monte to cease using, the infringing software or items. Any costs associated with implementing any of the above alternatives will be borne by EDS. 15.02 Liability. (a) General Limitation. The liability of each Party to the other for all damages arising out of or related to this Agreement, regardless of the form of action that imposes liability, whether in contract, equity, negligence, intended conduct, tort or otherwise, will be limited to and will not exceed, in the aggregate for all claims, actions and causes of action of every kind and nature, the lesser of the sum of $10,000,000 or the total fees paid by Del Monte to EDS for the prior 12 months. (b) Limitation on Other Damages. In no event will the measure of damages payable by either Party include, nor will either Party be liable for, any amounts for loss of income, profit or savings or indirect, incidental, consequential, exemplary, punitive or special damages of any party, including third parties, even if such Party has been Page 41 of 49 advised of the possibility of such damages in advance, and all such damages are expressly disclaimed. (c) Exceptions to Limitations. The limitations set forth in Sections 15.02(a) and 15.02(b) will not apply to (i) the liability of either Party to the extent such liability results from (A) that Party's acts of intentional tortious conduct or gross negligence in the performance or nonperformance of its obligations under this Agreement or (B) that Party's nonperformance of its payment obligations to the other expressly set forth in this Agreement (including, with respect to Del Monte, Del Monte's obligation to make payments to EDS during the term of this Agreement as required hereby, whether in the form of charges for Services performed hereunder or for payment or reimbursement of taxes, out-of-pocket expenses or pass-through expenses. (d) Duty to Mitigate. Each Party has a duty to mitigate the damages that would otherwise be recoverable from the other pursuant to this Agreement by taking appropriate and reasonable actions to reduce or limit the amount of such damages. (e) Contractual Statute of Limitations. No claim and demand for mediation or arbitration or cause of action that arose out of an event or events that occurred more than two years prior to the filing of a demand for mediation or arbitration or suit alleging a claim or cause of action may be asserted by either Party against the other. (f) Acknowledgment. The Parties expressly acknowledge that the limitations and exclusions set forth in this Section 15.02 have been the subject of active and complete negotiation between the Parties and represent the Parties' agreement taking into account each Party's level of risk associated with the performance or nonperformance of its obligations under this Agreement and the payments and other benefits to be derived by each Party pursuant to this Agreement. The provisions of this Section 15.02 will survive the expiration or termination of this Agreement for any reason. ARTICLE XVI. MISCELLANEOUS 16.01 Accounting Terms. All accounting terms that are not specifically defined herein, and all accounting obligations, duties, procedures and practices that are undertaken pursuant to this Agreement, shall be construed, interpreted and undertaken in accordance with generally accepted accounting principles that exist in the United States of America from time to time. 16.02 Amendments; Waiver. Changes or modifications to this Agreement may not be made orally or through a course of dealing, but only by a written amendment or revision signed by the Parties. Any terms and conditions varying from this Agreement on any order, invoice or other notification from either Party are not binding on the other unless specifically accepted by the other. Unless otherwise expressly provided in this Agreement, neither a delay nor omission by either Party to exercise, nor a course of dealing with respect to any right or power under this Agreement will be construed to be a waiver thereof. No waiver of any Page 42 of 49 breach of any provision of this Agreement will constitute a waiver of any prior, concurrent or subsequent breach of the same or any other provision hereof. 16.03 Approvals and Similar Actions. Except as otherwise expressly provided in this Agreement, where agreement, approval, acceptance, consent or similar action is required of either Party by any provision of this Agreement, such action will not be unreasonably withheld or delayed. An approval or consent given by a Party under this Agreement will not relieve the other Party from responsibility for complying with the requirements of this Agreement, nor will it be construed as a waiver of any rights under this Agreement, except as and to the extent otherwise expressly provided in such approval or consent. 16.04 Binding Nature; Assignment. This Agreement will be binding on the Parties and their successors and permitted assigns (it being understood and agreed that nothing contained in this Agreement is intended to confer upon any party other than EDS and Del Monte any rights, benefits or remedies of any kind or character whatsoever under or by reason of this Agreement). Except as otherwise expressly provided in Article II and except as noted below, neither Party may, nor will it have the power to, assign this Agreement, or any part hereof, without the consent of the other. EDS may assign its rights to Del Monte's payments hereunder, including any termination amount payable pursuant to Article XIV, to a financial institution or other third party in connection with any transaction entered into to provide financing related to this Agreement or the obligations of EDS hereunder, and any such assignee may further assign its rights hereunder in connection with such financing. The Parties acknowledge that either of them may become a party to one or more transactions in the form of a merger (including a re-incorporation merger), consolidation, reorganization, stock sale or exchange, sale of all or substantially all of such Party's assets or some similar or related transaction, with the result being that the affected Party is the surviving entity and by operation of law the surviving entity assumes the rights and obligations under this Agreement or, if the affected Party is not the surviving entity, the surviving entity continues to conduct the business conducted by the affected Party prior to consummation of the transaction, including the assumption of the rights and obligations under this Agreement. No such transaction involving either Party will be deemed to be an assignment of this Agreement requiring the consent of the other, unless (a) in the case of EDS being involved in such a transaction, the transaction materially and adversely affects EDS' ability to continue to perform the Services in accordance with this Agreement or (b) in the case of Del Monte being involved in such a transaction, the transaction materially changes the scope of Services as described in this Agreement, or materially changes EDS's costs to provide Services. 16.05 Construction Rules. The Article and Section headings and table of contents used in this Agreement are for convenience of reference only and will not enter into the interpretation hereof. As used in this Agreement, unless otherwise expressly provided to the contrary, (a) any reference to a "Section", "Exhibit" or "Schedule" is a reference to a Section of this Agreement or an Exhibit or Schedule attached to this Agreement, and (b) all references to days, months or years are references to calendar days, months or years. To the extent that the provisions of this Agreement and the Schedules are inconsistent, to the extent Page 43 of 49 possible such provisions will be interpreted so as to make them consistent, and if that is not possible, the provisions of the Schedules will prevail. If any provision of this Agreement is held to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions will not in any way be affected or impaired, and such provision will be deemed to be restated to reflect the original intentions of the Parties as nearly as possible in accordance with applicable law. The Parties agree that this Agreement is an executory contract as contemplated by 11 U.S.C. Section 365. In performing its obligations under this Agreement, neither Party will be required to undertake any activity that would conflict with the requirements of any applicable law, rule, regulation, interpretation, judgment, order or injunction of any governmental authority. This Agreement may be executed in multiple counterparts, each of which will be deemed an original and all of which taken together will constitute one instrument. The Parties acknowledge and agree that each has been represented by legal counsel of its choice throughout the negotiation and drafting of this Agreement, that each has participated in the drafting hereof and that this Agreement will not be construed in favor of or against either Party solely on the basis of a Party's drafting or participation in the drafting of any portion of this Agreement. 16.06 Entire Agreement; Survival. This Agreement (including the Schedules attached hereto, each of which is incorporated into this Agreement by this reference) constitutes the full and complete statement of the agreement of the Parties with respect to the subject matter hereof and supersedes any previous or contemporaneous agreements, understandings or communications, whether written or oral, relating to such subject matter. The expiration or termination of this Agreement for any reason will not release either Party from any liabilities or obligations set forth herein that (a) the Parties have expressly agreed will survive any such expiration or termination or (b) remain to be performed or by their nature would be intended to be applicable following any such expiration or termination. 16.07 Excused Performance. Neither Party will be deemed to be in default hereunder, or will be liable to the other, for failure to perform any of its non-monetary obligations under this Agreement for any period and to the extent that such failure results from any event or circumstance beyond that Party's reasonable control (each, a "FORCE MAJEURE EVENT"), including acts or omissions of the other Party or third parties, natural disasters, riots, war, terrorism, civil disorder, court orders, acts or regulations of governmental bodies, labor disputes or failures, and that it could not have prevented by reasonable precautions or could not have remedied by the exercise of reasonable efforts, provided that the exercise of such reasonable precautions or reasonable efforts will not require the incurrence of any additional cost or expense. To the extent that disaster recovery services are included in the Services, the foregoing will not limit EDS' obligation to provide such services unless they also are affected by the Force Majeure Event. 16.08 Export Regulations. This Agreement is expressly made subject to any United States government laws, regulations, orders or other restrictions regarding export from the United States of computer hardware, software, technical data or derivatives of such hardware, software or technical data. Notwithstanding anything to the contrary in this Agreement, Del Monte will Page 44 of 49 not directly or indirectly export (or re-export) any computer hardware, software, technical data or derivatives of such hardware, software or technical data, or permit the shipment of same: (a) into (or to a national or resident of) Cuba, North Korea, Iran, Iraq, Libya, Syria or any other country to which the United States has embargoed goods; (b) to anyone on the U.S. Treasury Department's List of Specially Designated Nationals, List of Specially Designated Terrorists or List of Specially Designated Narcotics Traffickers, or the U.S. Commerce Department's Denied Parties List; or (c) to any country or destination for which the United States government or a United States governmental agency requires an export license or other approval for export without first having obtained such license or other approval. Each Party will reasonably cooperate with the other and will provide to the other promptly upon request any end-user certificates, affidavits regarding re-export or other certificates or documents as are reasonably requested to obtain approvals, consents, licenses and/or permits required for any payment or any export or import of products or services under this Agreement. The provisions of this Section 16.08 will survive the expiration or termination of this Agreement for any reason. 16.09 Governing Law. This Agreement will be governed by and construed in accordance with the substantive laws of the State of California, without giving effect to any choice-of-law rules that may require the application of the laws of another jurisdiction. 16.10 Independent Contractors. The Parties are independent contractors, and this Agreement will not be construed as constituting either Party as partner, joint venturer or fiduciary of the other, as creating any other form of legal association that would impose liability on one Party for the act or failure to act of the other or as providing either Party with the right, power or authority (express or implied) to create any duty or obligation of the other. Except as otherwise expressly provided in this Agreement, each Party has the sole right and obligation to supervise, manage, contract, direct, procure, perform or cause to be performed all work to be performed by it pursuant to this Agreement. 16.11 Notices. Except as otherwise expressly provided in this Agreement, all notices under this Agreement will be in writing and will be deemed to have been duly given if delivered personally or by a nationally recognized courier service, faxed or mailed by registered or certified mail, return receipt requested, postage prepaid, to the Parties at the addresses set forth in Schedule F. All notices under this Agreement that are addressed as provided in this Section 16.11, (a) if delivered personally or by a nationally recognized courier service, will be deemed given upon delivery, (b) if delivered by facsimile, will be deemed given when confirmed and (c) if delivered by mail in the manner described above, will be deemed given on the fifth business day after the day it is deposited in a regular depository of the United States mail. Either Party from time to time may change its address or designee for notification purposes by giving the other Party notice of the new address or designee and the date upon which such change will become effective. 16.12 Public Relations and Marketing References. Each Party will coordinate with the other regarding any media release, public announcement or similar disclosure relating to this Agreement or its subject matter and Page 45 of 49 receive written approval from the other party prior to its release. This provision does not alter the restrictions on the disclosure of confidential information set forth in Section 11.03 and, subject to Section 11.03, will not be construed so as to delay or restrict either Party from disclosing any information required to be disclosed in order to comply with any applicable laws, rules or regulations. Notwithstanding the foregoing but subject to any applicable laws, rules or regulations, each Party will have the right to list the name of the other Party, to make general references to the basic nature of the relationship between the Parties under this Agreement and to describe generally the type of services being provided by EDS to Del Monte under this Agreement in such Party's promotional and marketing materials, in such Party's oral or visual presentations to third parties, in interviews conducted by the news media or securities analysts and in or through any other available media channels, including print, Internet, radio, cable and broadcast mediums. 16.13 Right to Engage in Other Activities. Subject to the terms set forth in this Agreement, Del Monte acknowledges and agrees that EDS may provide information technology services for third parties at any EDS facility that EDS may utilize from time to time for performing the Services. Subject to the restrictions on the use of data and the disclosure of confidential information set forth in Section 11.03, nothing in this Agreement will impair EDS' right to acquire, license, market, distribute, develop for itself or others or have others develop for EDS similar technology performing the same or similar functions as the technology and Services contemplated by this Agreement. Page 46 of 49 In Witness Whereof, the Parties have duly executed and delivered this Agreement by their duly authorized representatives as of the date set forth below each signature. DEL MONTE CORPORATION ELECTRONIC DATA SYSTEMS CORPORATION Signature: Signature ------------------------- ------------------------ Printed Name: David L Meyers Printed Name: Timothy C. Ryan ---------------------- -------------------- Title: Executive V.P. & CFO Title: Client Executive ----------------------------- --------------------------- Date: June 30, 2002 Date: June 30, 2002 ------------------------------ ---------------------------- EDS Information Services L.L.C. Signature ------------------------ Printed Name: Timothy C. Ryan -------------------- Title: Client Representative --------------------------- Date: June 30, 2002 ---------------------------- Page 47 of 49 SCHEDULE OF DEFINITIONS

Defined Term Location of Definition - ------------ ---------------------- AAA...............................................Section 13.01(b) Access............................................Section 7.03 Account Team......................................Section 2.01(a) Agreement.........................................Introduction Benchmark/Benchmarker.............................Section 12.06 Data Safeguard....................................Section 6.03 Del Monte Data....................................Section 11.01(a) Del Monte Equipment ..............................Section 7.03 Del Monte Representative..........................Section 1.02 Del Monte Service Locations.......................Section 6.01 Del Monte Software................................Section 10.01(c) Del Monte Vendor Software ........................Section 10.01(d) Del Monte.........................................Introduction Developed Software................................Section 10.01(e) Dispute...........................................Section 13.01 EDS Account Executive.............................Section 1.01 EDS Development Tools.............................Section 10.01(g) EDS Service Locations.............................Section 6.01 EDS Software .....................................Section 10.01(a) EDS...............................................Introduction EDS-Vendor Software...............................Section 10.01(b) Effective Date....................................Introduction EIS ..............................................Introduction End Date..........................................Section 14.06(c) Extension Period..................................Section 3.02(b) Fees..............................................Section 12.05(b) Force Majeure Event...............................Section 16.07 Governmental Consents.............................Section 4.03(g)

Page 48 of 49 Indemnified/Indemnifying Party....................Section 15.01(c) Initial Term Expiration Date......................Section 3.01 Initial Term......................................Section 3.01 Key Positions.....................................Section 2.01(b) Licensed Programs.................................Section 10.2 Maintenance Contract .............................Section 8.01 Nonconformance....................................Section 9.01(a)(v) Other Deliverables ...............................Section 10.01(f) Party/Parties.....................................Introduction Privacy Laws......................................Section 11.02 Procedures Manual.................................Section 1.03 Renewal Term......................................Section 3.02(a) Residual Technology...............................Section 10.01(h) Service Fees......................................Section 12.01 Service Levels ...................................Section 4.01, 4.03 Services..........................................Sections 4.01, 4.03 Software .........................................Section 10.01(i) Software Changes..................................Section 10.01 (i) Term..............................................Section 4.01 Termination Assistance Period.....................Section 14.06(a)(ii) Termination Service Fee...........................Section 14.06(b)(iii) Termination Services..............................Section 14.06(a)(i) Transition Plan...................................Section 14.06(c)(ii) SCHEDULES Schedule A - Key Positions Schedule B - Statement of Work Schedule C - Service Level Schedule D - Locations Schedule E - Fees Schedule F - Addresses for Notice Page 49 of 49 EX-10.24 13 f84647exv10w24.txt EXHIBIT 10.24 EXHIBIT 10.24 CONSULTING SERVICES AGREEMENT This Agreement ("Agreement") is effective as of June 5, 2000 by and between Andersen Consulting LLP, an Illinois general partnership registered as a limited liability partnership with an office at 161 North Clark St., Chicago, Illinois ("Andersen Consulting") and Del Monte Corporation, a New York corporation with an office at One Market, San Francisco, California 94105 ("Client"). WHEREAS, Client desires to obtain certain services from Andersen Consulting from time to time; WHEREAS, Andersen Consulting desires to provide such services to Client on the terms let forth below; and WHEREAS, Andersen Consulting and Client are simultaneously with this Agreement entering into an Arrangement Letter, dated as of June 14, 2000, ("June 14 Arrangement Letter") further defining the relationship between them relating to Client's business capabilities improvement project, a copy of which is attached as an Appendix to this Agreement. FOR AND IN CONSIDERATION OF the premises and mutual agreements herein, Andersen Consulting and Client agree as follows: 1. SERVICES. 1.1 Andersen Consulting shall perform for Client the consulting services (the "Services") specified in one or more Appendices to this Agreement signed by both parties, each of which will be attached hereto and made a part hereof. In the event of a conflict between any term of this Agreement and an Appendix, the terms of the Appendix shall prevail. 1.2 Unless otherwise specified in an Appendix, changes to the scope of the Services shall be made only in a writing executed by authorized representatives of both parties. Andersen Consulting shall have no obligation to commence work in connection with any change until the fee and/or schedule impact of the change is agreed upon by the parties in writing. 1.3 If any Appendix requires the provision of third party products, including hardware and software, Andersen Consulting's affiliated entity, Proquire LLC, may, at Client's request and approval, provide such products subject to mutually agreeable terms and conditions to be set forth on an attachment to the applicable Appendix. Andersen Consulting, as agent for Proquire, may invoice, collect, and receive from Client all sums that are or become due to Proquire, including taxes and shipping charges, as applicable. 1.4 Subject to Section 3 of this Agreement, Andersen Consulting will use commercially reasonable efforts to perform the Services according to our estimates and time schedules. 2. PAYMENT FOR SERVICES AND EXPENSES. 2.1 Client shall pay Andersen Consulting for the Services on the terms defined in the applicable Appendix. 2.2 Client shall pay the amounts payable to Andersen Consulting hereunder subject to the payment timeframe as outlined in the applicable Appendix. If not specifically defined in an Appendix, the following payment terms will apply: Andersen Consulting will invoice Client for professional fees to be performed in a given month in advance of that month. Any required adjustments to actual will be made in subsequent invoice(s). Expenses will be invoiced per actual expenses incurred. Payment terms will follow Client's standard terms of Net 45 days. Should any invoice remain unpaid for more than sixty days, interest shall be paid at a rate of 1.5 percent per month or the highest rate allowed by law. In the event of any good faith dispute with regard to a portion of an invoice, the undisputed portion shall be paid as provided herein. Upon resolution of the disputed portion, any amounts owed to Andersen Consulting shall be paid within thirty (30) days of the resolution of the dispute. 2.3 Unless provided otherwise in an Appendix, Andersen Consulting shall be reimbursed by Client for all reasonable expenses incurred by Andersen Consulting in the performance of the Services, including, but not necessarily limited to, travel and lodging expenses, communications charges and supplies, provided, however, that total charges for other than travel (including airfare, taxi or other transportation, parking, per-diems and mileage reimbursements) and lodging expenses costing greater than $1000 per month shall not be reimbursed unless Client approved such charges in writing before they were incurred. In addition, Client shall approve in writing, in advance, the travel and lodging expense estimated for the Project. Andersen Consulting shall use commercially reasonable efforts to manage to the approved estimate and shall advise Client promptly of potential material deviations, and the parties will mutually determine the appropriate action to be taken regarding any material deviations. 2.4 Client shall pay for all taxes, including any interest and penalties from any related deficiency, in connection with this Agreement including any sales, use, excise, value-added, services, consumption and other taxes and duties (except taxes based on or measured by Andersen Consulting's net income or associated with Andersen Consulting's employment of personnel, including payroll and FICA taxes and Social Security and Medicare assessments) assessed on the provision of Services by Andersen Consulting to Client or on Andersen Consulting's charges to Client under this Agreement. 3. CLIENT RESPONSIBILITIES. 3.1 In connection with Andersen Consulting's provision of the Services, Client and its other third-party contractors shall provide the professional resources identified, perform those tasks and fulfill those responsibilities specified in the applicable Appendix ("Client Responsibilities"). In addition, the June 14, 2000 Arrangement Letter contains, and subsequent Appendices may also contain, certain business and other estimating assumptions related to the Services. Client 2 understands that Andersen Consulting's performance is partially dependent on Client's timely and effective delivery of Client Responsibilities hereunder and timely decisions and approvals by Client. Client recognizes that timely approval of deliverables is fundamental towards meeting any applicable project timeframes, budgets and milestones and shall not unreasonably withhold acceptance of a deliverable. Except to the extent an Appendix contains specific acceptance provisions, all work product provided to the Client for approval shall be deemed accepted if within thirty (30) days after delivery, Client has not provided to Andersen Consulting written notice identifying specifically any basis for not approving the work product. Following receipt of notification of non-acceptance by Client, Andersen Consulting shall correct promptly the work product identified by Client in such notice of nonacceptance and shall resubmit the work product for acceptance by the Client. Failure by the Client to provide written notice of non-acceptance within ten (10) days after delivery shall constitute acceptance by the Client. Andersen Consulting shall be entitled to rely on all decisions and approvals of the Client in connection with the Services. Changes in decisions and approvals are subject to Section 1.2. 3.2 In addition to any particular items specified in the Appendix, Client shall supply on-site Andersen Consulting personnel with suitable office space, desks, storage, furniture, and other normal office equipment support, adequate computer resources (including necessary third party rights to use software), telephone and facsimile service, postage, copying, secretarial support, word processing, and general office supplies which may be necessary in connection with Andersen Consulting's performance of the Services. 3.3 Neither party shall use the name of the other party outside the other's organization in connection with its use of the Deliverables or otherwise without the other party's express written consent, which may be withheld in the sole discretion of each party. 3.4 Each party shall retain responsibility for its compliance with all applicable federal, state and local laws and regulations. 4. WORK PRODUCT. 4.1 Upon final payment, Client shall have a perpetual, irrevocable, nontransferable, non-exclusive, worldwide paid-up right and license to use, copy, reproduce, distribute (subject to section 4.3), modify and prepare derivative works of the deliverables originally developed in the course of the Services, whether developed individually by Andersen Consulting or jointly with Client ("Deliverables"). Client's rights in the Deliverables shall be for any of Client's internal business related purposes and, to the extent any Deliverable contains Andersen Consulting Confidential Information, shall be subject to Section 6 below. All other intellectual property rights in the Deliverables remain in and/or are assigned to Andersen Consulting, excluding, however, (i) any third party intellectual property rights (including, but not limited to, products, materials and methodologies) in the Deliverables which are proprietary to third party vendors and which Client lacks the requisite power to grant, convey or assign ownership (including, but not limited to, intellectual property rights in the Deliverables owned by i2 Technologies, Inc., J.D. Edwards or Electronic Data Systems ("EDS")) and (ii) any pre-existing works of authorship and inventions of Client, and any enhancements or modifications to such developed in the course of the performance of this Agreement ("Client Proprietary Items"). Andersen Consulting hereby 3 expressly grants, assigns and conveys to Client all of Andersen Consulting's right, title and interest, if any, in the Client Proprietary Items. The parties will cooperate with each other and execute such other documents as may be reasonably deemed necessary to achieve the objectives of this Section. 4.2 In no event shall Andersen Consulting be precluded from developing for itself, or for others, materials which are competitive with the Deliverables, irrespective of their similarity to the Deliverables. In addition, each party shall be free to use its general knowledge, skills and experience, and any ideas, concepts, know-how, and techniques that are used or developed in the course of providing the Services. 4.3 Andersen Consulting agrees that Client may allow its customers, vendors, agents, outsourcing providers or other entities in a similar relationship to Client to access the Deliverables, subject to the provisions of Section 4.1, Section 5 and Section 6 herein. 5. PROPRIETARY ITEMS. In the course of performance hereunder, Andersen Consulting may use products, materials, tools and methodologies that are proprietary to Andersen Consulting or to third parties (collectively "Proprietary Items"). As between Client and Andersen Consulting, Proprietary Items will be deemed Confidential Information of Andersen Consulting for purposes of Section 6. Included among the Proprietary Items of Andersen Consulting are tools that Andersen Consulting identifies as Solution Construction Aids ("SCAs"), which Andersen Consulting makes available to clients under separate licensing terms. Client shall have or obtain no rights in such Proprietary Items (or in any modifications or enhancements to them) other than (i) to use them as authorized by Andersen Consulting in writing from time to time solely for purposes of performing Client Responsibilities, (ii) to the extent the Proprietary Items are incorporated into a Deliverable, to use them as part of the Deliverable for purposes of Client's internal business only, or (iii) pursuant to Andersen Consulting's standard license for such Proprietary Items or, in the case of Proprietary Items owned by third parties, pursuant to terms acceptable to the applicable third party. If Proprietary Items are made available to Client under (i) or (ii) above, they will be made available in an "AS IS" condition without express or implied warranties of any kind; those Proprietary Items made available under (iii) above shall be subject only to applicable terms of the applicable license. 6. CONFIDENTIAL INFORMATION. During the course of Andersen Consulting performing Services for Client, each party shall protect confidential information of the parties in accordance with the provisions of the Confidentiality Agreement, dated as of September 27, 1999, between Andersen Consulting and Client. 7. WARRANTY. 7.1 Andersen Consulting warrants that its Services will be performed in a good and workmanlike manner, by qualified personnel, in accordance with the specifications set forth in 4 an applicable Appendix to this Agreement. Andersen Consulting agrees to reperform, at no additional cost to client, any work not in compliance with this warranty brought to its attention within a reasonable time (or such specific period, if any, provided in the Appendix) after that work is performed. 7.2 Andersen Consulting warrants that it will use its commercially reasonable efforts to complete the Services so as to meet the time frames and milestone dates, within the budget contained in the Appendix to this Agreement, subject to conditions within Andersen Consulting's reasonable control. 7.3 THE PRECEDING IS ANDERSEN CONSULTING'S ONLY WARRANTY CONCERNING THE SERVICES, ANY DELIVERABLES AND ANY WORK PRODUCT, AND IS MADE EXPRESSLY IN LIEU OF ALL OTHER WARRANTIES AND REPRESENTATIONS, EXPRESS OR IMPLIED, INCLUDING ANY IMPLIED WARRANTIES OF FITNESS FOR A PARTICULAR PURPOSE, MERCHANTABILITY OR OTHERWISE. 8. INDEMNIFICATION. 8.1 Each party shall indemnify, defend and hold harmless the other, its employees, principals (partners, shareholders or holders of an ownership interest, as the case may be) and agents, from and against any third party claims, demands, loss, damage or expense (including reasonable attorneys' fees) relating to bodily injury or death of any person or damage to real and/or tangible personal property directly caused by the negligent acts, omissions or willful misconduct of the indemnifying party, its personnel or agents in connection with the performance of the Services hereunder. 8.2 Subject to the notification provisions contained in Section 8.4 below, Andersen Consulting will indemnify, defend and hold harmless the Client, its employees, and principals (partners, shareholders or holders of an ownership interest, as the case may be) from and against any third party claim, demand, loss, damage or expense (including reasonable attorneys' fees) relating to any claim that any Deliverable or the services provided or performed by Andersen Consulting infringe any United States patent existing at the time of the applicable Deliverable, copyright, trademark or trade name or other intellectual property right of the third party. Andersen Consulting will not indemnify Client, its employees, and principals, however, if the claim of infringement is caused by (1) Client's misuse or modification of the Deliverable (not including those uses or modifications of the Deliverable authorized, approved or participated in by Andersen Consulting); (2) Client's failure to use corrections or enhancements made available to Client by Andersen Consulting; (3) Client's use of the Deliverable in combination with any product or information not owned, developed or authorized by Andersen Consulting; (4) Client's distribution, marketing or use for the benefit of third parties of the Deliverable; (5) Client's use of the Deliverable in a manner not permitted hereunder; (6) information, direction, specification or materials provided by Client; or (7) information provided by any third party where Andersen Consulting had no knowledge that such information provided by the third party potentially infringed any copyright or trade secret of a third party. If any Deliverable is, or in Andersen Consulting's opinion is likely to be, held to be infringing, Andersen Consulting shall at its expense and option either (a) procure the right for Client to continue using it, (b) replace it with a 5 noninfringing equivalent, (c) modify it to make it noninfringing while yielding equivalent performance results or (d) direct the return of the Deliverable and refund to Client the fees paid for such Deliverable less a reasonable amount for Client's use of the Deliverable up to the time of return. The foregoing remedies constitute Client's sole and exclusive remedies and Andersen Consulting's entire liability with respect to infringement. 8.3 To receive the foregoing indemnities, the party seeking indemnification (the "Indemnified Party") must promptly notify the other in writing of a claim or suit once such claim or suit becomes known to the Indemnified Party and provide reasonable cooperation (at the indemnifying party's expense) and full authority to defend or settle the claim or suit. Notwithstanding the preceding sentence, the failure by either party to promptly deliver notice of any claim or notice shall not be deemed a waiver of the Indemnified Party's right to indemnification hereunder. The indemnifying party shall have no obligation to indemnify the Indemnified Party under any settlement made without the indemnifying party's written consent. 8.4 Each party will determine the types and amounts of insurance coverage it requires in connection with this Agreement. Neither party is required to obtain insurance for the benefit of the other party. Each party shall pay all costs and receive all benefits under policies arranged by it. Each party waives rights of subrogation it may otherwise have regarding the other party's insurance policies, including but not limited to property insurance, business interruption insurance, and other first-party insurance. 9. EMPLOYEES. 9.1 Except as otherwise set forth in an Appendix, Andersen Consulting reserves the right to determine which of its personnel shall be assigned to perform Services, and to replace or reassign such personnel during the term hereof; provided, however, that it will, subject to scheduling and staffing considerations, attempt to honor Client's request for specific individuals. If Client reasonably objects to any Andersen Consulting personnel, Client and Andersen Consulting agree to discuss appropriate action to be taken. Andersen Consulting has the sole right and obligation to supervise, manage, contract, direct, procure, perform or cause to be performed all work to be performed by personnel of Andersen Consulting, except as otherwise provided in this Agreement or an applicable Appendix, and under no circumstances are such personnel to be considered employees or agents of Client. Andersen Consulting shall pay all wages, salaries and other amounts due its personnel relative to this Agreement and shall be responsible for all obligations respecting them relating to income tax withholdings, unemployment insurance premiums and pension plan contributions. 9.2 Client may request at any time the removal of any Andersen Consulting personnel assigned to a project covered by this Agreement if Client (i) reasonably believes that such personnel is not qualified to perform services required by this Agreement or does not meet appropriate professional standards and (ii) previously provided Andersen Consulting with written notice of the problem and a reasonable opportunity to remedy the situation, considering the gravity and nature of the problem. Andersen Consulting will utilize commercially reasonable efforts to accommodate the Client request. Replacement personnel, if any, must have sufficient qualifications. 6 9.3 Andersen Consulting will comply with all reasonable workplace standards and policies provided to Andersen Consulting in advance, in writing by Client, applicable to Client's employees, while Andersen Consulting personnel are physically located at Client's premises. 9.4 Except as the other party expressly authorizes in writing in advance, neither party shall solicit for employment, directly or indirectly, any of the other party's Personnel during their participation in the Services or during the twelve (12) months thereafter. For purposes of this Section 9.4, "Personnel" includes partners or employees of each party who are involved in the performance of either party's obligations under this Agreement. However, either party shall have the night to hire any partner or employee employed by the other party who, without other solicitation, responds to any employment advertising in newspapers, trade publications or other public commercial media or any unsolicited walk-in candidates not related to the Project. 9.5 Neither party shall be deemed a joint employer of the other's employees, each party being responsible for any and all claims by its employees, subject to Section 8.1. Neither party's employees shall be deemed "leased" employees of the other for any purpose. 10. INDEPENDENT CONTRACTOR. In connection with this Agreement, each party is an independent contractor and as such will not have any authority to bind or cost the other. Nothing herein shall be deemed or construed to create a joint venture, partnership, fiduciary or agency relationship between the parties for any purpose. 11. LIMITATION OF LIABILITY. 11.1 Except for the indemnity obligations set forth in Section 8 above, the limit of each party's liability hereunder (whether in contract, tort, negligence, strict liability in tort or by statute or otherwise) to the other concerning performance or non-performance, or in any manner related to this Agreement, for any and all claims, shall not in the aggregate exceed: (i) with respect to Andersen Consulting's limitation of liability, the total fees and expenses payable to Andersen Consulting by Client; and (ii) with respect to Client's limitation of liability, the total fees and expenses payable to Andersen Consulting by Client hereunder with respect to the work involved under the applicable Appendix. Client's exclusive remedy for any claim arising out of these arrangements shall be for Andersen Consulting, upon receipt of written notice pursuant to Section 12.2, to use commercially reasonable efforts to cure the breach at its expense, and failing that, the return of fees paid to Andersen Consulting for the work related to the breach. 11.2 In no event shall either party be liable to the other for consequential, incidental or punitive loss, damage or expenses (including but not limited to business interruption, lost profits, or lost savings) even if it has been advised of their possible existence. Any action by either party must be brought within two (2) years after the cause of action arose. 11.3 The allocations of liability in this Section 11 represent the agreed and bargained-for understanding of the parties and Andersen Consulting's compensation for the Services reflects such allocations. The parties agree further that they will look only to the assets of the other party in connection with any liabilities hereunder and in no event shall they have any claim against any 7 shareholder, partner or holder of an ownership interest in the other party in connection with this Agreement. 12. TERMINATION. 12.1 Client may at any time and without cause terminate this Agreement by giving thirty (30) days' written notice of termination to Andersen Consulting. Termination of this Agreement shall not affect any Appendices then in effect. Except as otherwise set forth in an Appendix, Client may at any time and without cause terminate an Appendix by giving Andersen Consulting thirty (30) days' written notice of termination. Except as otherwise set forth in an Appendix, Andersen Consulting shall have the right to terminate an Appendix by giving Client thirty (30) days' prior written notice only if: (i) Client has completely suspended (for any reason other than Andersen Consulting's default) Andersen Consulting's performance of the Services under such Appendix and such suspension has lasted for ninety (90) days or more; (ii) Client merges with a third party (where Client is the surviving entity) or acquires all or substantially all of the business assets of a third party and Andersen Consulting can reasonably demonstrate that there is a substantial likelihood that such surviving entity or acquired entity, as a result of such merger or acquisition, will directly compete with Andersen Consulting with respect to the type of work which is being provided by Andersen Consulting under this Agreement. Termination of an Appendix shall have no impact upon this Agreement or any other Appendix. Upon such termination, Client shall pay Andersen Consulting for all Services rendered and expenses incurred by Andersen Consulting in accordance with the terms and conditions of this Agreement and the applicable Appendix prior to the date of termination. In the event of any termination by Client without cause pursuant to this Section 12.1, Client shall also pay Andersen Consulting for Andersen Consulting's actual out-of-pocket demobilization costs resulting from such early termination. 12.2 Either party may, upon giving thirty (30) days' written notice identifying specifically the basis for such notice, terminate the applicable Appendix (and not any other Appendix) for breach of a material term or condition of the applicable Appendix unless the party receiving the notice cures such breach within the thirty (30) day period. Upon such termination, Client shall pay Andersen Consulting for all Services rendered and expenses incurred by Andersen Consulting in accordance with the terms and conditions of this Agreement and the applicable Appendix prior to the date of termination. In addition, if Andersen Consulting terminates an Appendix under this Section 12.2 for Client's breach, Client shall also pay Andersen Consulting's actual out of pocket demobilization costs resulting from such early termination. 12.3 The parties agree that, in the event of a dispute or alleged breach subject to Section 12.2, they will work together in good faith first, to resolve the matter internally by escalating it to higher levels of management and, then if necessary, to use a mutually agreed alternative dispute resolution technique prior to resorting to litigation. This provision shall not apply to disputes involving confidentiality or infringement of intellectual property rights (in which case either party shall be free to seek available remedies in any forum). 12.4 The terms of Sections 2, 3.3, 4, 5, 6, 7, 8, 10, 11, 12.3 and 17 shall survive termination of this Agreement or completion of any Appendix. 8 13. SEVERABILITY. If any term or provision of this Agreement is found by a court of competent jurisdiction to be invalid, illegal or otherwise unenforceable, the same shall not affect the other terms or provisions hereof or the whole of this Agreement, but such term or provision shall be deemed modified to the extent necessary in the court's opinion to render such term or provision enforceable, and the rights and obligations of the parties shall be construed and enforced accordingly, preserving to the fullest permissible extent the intent and agreements of the parties herein set forth. 14. NOTICES. Any notice or other communication given pursuant to this Agreement shall be in writing and shall be effective either when delivered personally to the party for whom intended, or five (5) days following deposit of the same into the United States mail (certified mail, return receipt requested, or first class postage prepaid), facsimile (with confirmation of delivery) or overnight delivery services (with confirmation of delivery), addressed to such party at the address set forth on the initial page of this Agreement. Either party may designate a different address by notice to the other given in accordance herewith. 15. FORCE MAJEURE. Neither party shall be liable for any delays or failures in performance (other than payment obligations hereunder) due to circumstances beyond its reasonable control. 16. COMPLETE AGREEMENT; MISCELLANEOUS. 16.1 This Agreement sets forth the entire understanding between the parties hereto and supersedes all prior agreements, arrangements and communications, whether oral or written, with respect to the subject matter hereof. Any purchase order issued by the Client shall be for its administrative purposes only and none of its terms and conditions shall be of any force or effect against Andersen Consulting. Each Appendix, except as its terms otherwise expressly provide, shall be a complete statement of its subject matter and shall supplement and modify the terms and conditions of this Agreement for the purposes of that engagement only. No other agreements, representations, warranties or other matters, whether oral or written, shall be deemed to bind the parties hereto with respect to the subject matter hereof. The parties acknowledge that they are entering into this Agreement solely on the basis of the agreements and representations contained herein, and for their own purposes and not for the benefit of any third party. 16.2 Neither this Agreement nor any Appendix may be modified or amended except by the mutual written agreement of the parties. No waiver of any provision of this Agreement shall be effective unless it is in writing and signed by the party against which it is sought to be enforced. 16.3 The delay or failure by either party to exercise or enforce any of its rights under this Agreement shall not constitute or be deemed a waiver of that party's right thereafter to enforce those rights, nor shall any single or partial exercise of any such right preclude any other or further exercise thereof or the exercise of any other right. 9 17. GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of the Southern District of the State of New York, without giving effect to conflict of law rules 18. ASSIGNMENT. Except as provided in this subsection, this Agreement may not be assigned by either party and any attempted assignment shall be void. However, either party's rights hereunder may be transferred to a successor of all or substantially all of the business and assets of the party regardless of how the transaction or series of related transactions is structured and either party may, upon written notice to the other party, assign this Agreement to any affiliate. Any obligations of payment created pursuant to the terms of this Agreement or an Appendix will survive such assignment, and shall transfer to an affiliate or successor that is assigned this Agreement under this Section. 19. COUNTERPARTS. This Agreement may be executed in counterparts. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above. ANDERSEN CONSULTING LLP DEL MONTE CORPORATION ("CLIENT") By /s/ JEFFREY S. HARTIGAN By /s/ ROBERT O. RUECKERT ---------------------------------- ------------------------------- Name JEFFREY S. HARTIGAN Name ROBERT O. RUECKERT --------------------------------- ----------------------------- Title PARTNER Title VICE PRESIDENT AND ------------------------------- CHIEF INFORMATION OFFICER ---------------------------- DATE 11/3/00 DATE 11/3/00 ------------------------------- ---------------------------- 10 EX-10.26 14 f84647exv10w26.txt EXHIBIT 10.26 EXHIBIT 10.26 AMENDMENT TO SUPPLY AGREEMENT THIS AMENDMENT TO SUPPLY AGREEMENT (this "Amendment") is made and entered into as of December 21, 1993 by and between DEL MONTE CORPORATION, a New York corporation ("DM"), and SILGAN CONTAINERS CORPORATION, a Delaware corporation ("Seller"). B A C K G R O U N D DM and Seller are parties to that Supply Agreement made and entered into as of September 3, 1993 (the "Supply Agreement"). DM and Seller desire to amend the Supply Agreement as set forth in this Amendment. Accordingly, the parties agree as follows: ARTICLE I DEFINITIONS Any terms used in this Amendment without definition shall have the meanings set forth in the Supply Agreement. ARTICLE II MEXICAN FACILITIES Schedule 2.1 to the Supply Agreement is hereby amended to clarify that the Mexican Facility referred to in such Schedule 2.1(a) is the DM cannery located in Irapuato, Mexico. ARTICLE III SCHEDULE 2.1(e) Schedule 2.1(e) to the Supply Agreement is hereby amended by deleting such Schedule 2.1(e) in its entirety and replacing it with Schedule 2.1(e) set forth in Exhibit 2 hereto. By January 15, 1994, Seller shall revise and reissue to DM Schedule 2.1(e) to the Supply Agreement (which shall replace the Schedule 2.1(e) attached hereto). Such revised Schedule 2.1(e) shall affect the following: (i) the Metal Cost component of selling price and the Labor Cost component of selling price for each Container will be reduced by the amount of margin contained in those components, and (ii) the Other Cost component of selling price of each Container will be increased by such amount of price reduction in the Metal Cost and Labor Cost components. The result, therefore, will be no change in the individual or aggregate selling price for all Containers as set forth in Schedule 2.1(e) attached hereto. ARTICLE IV AMENDMENT TO SECTION 2.3 The phrase "the last sentence in Section 2.1" that is contained in the third sentence of Section 2.3 of the Supply Agreement is hereby amended by deleting such phrase in its entirety and inserting in place therefor "the second sentence in Section 2.1." -2- ARTICLE V CONTAINER REQUIREMENTS PLAN; SUPPLY SCHEDULE; WORKING CAPITAL 1. Sections 3.1 and 3.2 of the Supply Agreement are hereby amended by deleting such Sections 3.1 and 3.2 in their entirety and inserting in place therefor the following: 3.1 Container Requirements Plan. On the date of effectiveness of this Agreement (for the 1994 Supply Year) and prior to November 15 before each subsequent Supply Year thereafter, DM shall furnish Seller with a "Container Requirements Plan" for such Supply Year, which Container Requirements Plan shall set forth DM's good faith written estimate, by type of Container and delivery location, of the quantity of Cans estimated to be needed for such Supply Year and the quantity of Ends to be affixed to such Cans. "Supply Year" shall mean a calendar year during the Term of this Agreement (based on DM's accounting month). The Container Requirements Plan for a Supply Year shall be adjusted by DM as follows: no later than the 20th calendar day of each month during such Supply Year, DM shall furnish Seller with DM's good faith written estimate of the revised Container Requirements Plan, by type of Container and delivery location, for the remaining months of such Supply Year, provided that during the packing season (which is the period from July 1 to October 31 of each year) DM shall revise such Container Requirements Plan -3- as soon as practical but at least no later than the 20th calendar day of each such month. 3.2 Supply Schedule. On the date of effectiveness of this Agreement (for the 1994 Supply Year) and prior to December 15 before each subsequent Supply Year thereafter, Seller shall furnish DM with a "Supply Schedule" for such Supply Year, which Supply Schedule shall indicate the estimated quantity and type of Cans and Ends to be supplied by Seller by DM accounting month for each DM Facility and which shall satisfy the Container Requirements Plan for such Supply Year. Such Supply Schedule shall be revised monthly on or before the 30th calendar day of each month in which Seller receives a revised Container Requirements Plan and shall serve as the basis for DM's arrangement of shipments and space planning. In any Supply Year, DM shall be obligated to purchase no less than, and Seller shall be obligated to sell no more than, that number and type of Containers as shall equal the sum of the periodic monthly estimates set forth in the Supply Schedule (as revised in accordance with this Section) for each type of Container for that Supply Year. The parties agree to cooperate and use their reasonable best efforts to resell any excess Cans or Ends which DM has purchased. Seller will notify DM immediately if Seller anticipates that it will be unable to provide Containers to DM in accordance with DM's most recent -4- Container Requirements Plan. Seller shall advise DM's transportation department of transit requirements from Seller's location to the DM delivery location for Containers supplied by Seller as required by this Section 3.2 and the most recent Supply Schedule for the current Supply Year. DM's transportation department will arrange for transportation of such Containers. 2. Section 3.4 of the Supply Agreement is hereby amended by deleting such Section 3.4 in its entirety and inserting in place therefor the following: On the date of effectiveness of this Agreement (for the 1994 Supply Year) and prior to December 15 before each subsequent Supply Year thereafter, Seller shall formulate and deliver to DM a Working Capital Plan for such Supply Year (a sample of which is attached hereto as Schedule 3.4(a)) which shall be based on the Containers Requirements Plan and Supply Schedule for such Supply Year and shall indicate the estimated Container Costs for Cans and Ends to be supplied by Seller and purchased by DM (resulting in inventory of DM) in accordance with this Agreement for all Container Requirements Plan requirements for each month of such Supply Year. Such amount of inventory for each such month (revised as provided below), less the estimated amount of accrued and unpaid payables owing to Seller for such Cans and Ends at the end of each such month (as set forth in the Working Capital -5- Plan), shall equal DM's working capital for each such month. The monthly average of such amount of inventory for such Supply Year less the monthly average of such payables for such Supply Year (excluding the average amount of Payables Extension Memos outstanding at each such month end) shall equal DM's "Average Working Capital" for such Supply Year. If DM's Average Working Capital for such Supply Year exceeds the "Cap" for such Supply Year, then Seller shall issue to DM a Payables Extension Memo in such amount, which Payables Extension Memo shall entitle DM to maintain (beyond the terms provided in Section 3.3 hereof) an outstanding payable to Seller in such amount. Each month (within ten days after DM's month end (the "Delivery Date")) the Container Requirements Plan, Supply Schedule and Working Capital Plan for the current Supply Year shall be updated and adjusted by the parties, respectively, for actual information for the prior month (which actual information shall include Container Costs for Containers filled, ending DM Inventory (as hereinafter defined), ending inventory of unfilled Containers supplied by Seller, purchases of Cans and Ends from Seller, and ending payables balance of DM) and, if necessary, as the Container Requirements Plan and Supply Schedule for such Supply Year are adjusted. Each time the Working Capital Plan for a Supply Year is adjusted as provided above: (i) if DM's Average Working -6- Capital for such Supply Year (calculated as provided above) is increased from the amount last calculated for such Supply Year, then, one business day after the Delivery Date, Seller shall issue a new Payables Extension Memo which shall replace the Payables Extension Memo last previously issued for such Supply Year and DM shall be entitled to maintain (beyond the terms provided in Section 3.3 hereof) an outstanding payable to Seller in such new amount or (ii) if DM's Average Working Capital for such Supply Year (calculated as provided above) is decreased from the amount last calculated for such Supply Year, then, one business day after the Delivery Date, Seller shall issue a new Payables Extension Memo which shall replace the Payables Extension Memo last previously issued for such Supply Year and DM (A) shall pay to Seller (such payment to be made with the next payment by DM of payables to Seller in accordance with Section 3.3 hereof) an amount equal to such decrease and (B) shall be entitled to maintain (beyond the terms provided in Section 3.3 hereof) an outstanding payable to Seller in the amount set forth in such new Payables Extension Memo. Examples of adjustments to the sample Working Capital Plan attached hereto as Schedule 3.4(a) and, accordingly, adjustments to DM's Average Working Capital are attached hereto as Schedule 3.4(b). -7- At the end of the Term of this Agreement, the aggregate amount of all outstanding Payable Extension Memos shall be paid by DM to Seller. At the end of each Supply Year during the Term of this Agreement, (i) Seller shall pay to DM an interest charge in an amount equal to the Interest Factor multiplied by the amount by which DM's actual Average Net Working Capital for such Supply Year exceeded the Cap for such Supply Year, or (ii) if DM's actual Average Working Capital for such Supply Year exceeded the Cap and DM's Average Net Working Capital for such Supply Year was less than the Cap, then DM shall pay to Seller an interest charge in an amount equal to the Interest Factor multiplied by the amount by which DM's actual Average Net Working Capital for such Supply Year was less than the Cap for such Supply Year. For purposes hereof, the term "Average Net Working Capital" for a Supply Year shall mean the Average Working Capital for such Supply Year less the average amount of Payables Extension Memos outstanding for such Supply Year and the term "Interest Factor" shall mean LIBOR (or any successor interest rate) at December 31 of the applicable Supply Year plus 2-1/2%. For the 1994 Supply Year, the "Cap" shall be $18,000,000. The Working Capital Plan for the 1994 Supply Year is attached hereto as Schedule 3.4(c). For the 1994 Supply Year, the parties acknowledge that DM will have an inventory of cans not supplied by Seller. DM shall -8- provide Seller with an estimate (to be adjusted for actual and updated monthly) of such inventory as soon as possible (such cans being the "DM Inventory"). For purposes of calculating DM's Average Working Capital, DM Inventory shall not be used in the inventory of Cans used to calculate DM's Average Working Capital. However, the Working Capital Plan shall assume that DM Inventory by Container specification will be used to meet fill requirements before any such Container specification supplied by Seller is used. For all Supply Years other than the 1994 Supply Year, the Working Capital Plan shall assume the following: if all containers purchased by DM other than from Seller (as provided for herein) are expected to be used for a certain percent of the total fill requirements for such Supply Year, then each month's fill requirements for such Supply Year will be assumed to be met using such certain percent of such containers and the remaining percent using Cans supplied by Seller, unless DM can account for such container usage (excluding any containers purchased from PCP which shall be accounted for as provided above) to the reasonable satisfaction of Seller, in which case each month's fill requirements for such Supply Year will be assumed to be met in accordance with such accounting method. -9- For purposes of this Section 3, "month" shall mean DM's accounting month, which in any calendar quarter shall be four, four and five weeks, respectively. The Cap for the second and succeeding Supply Years will be calculated on the last business day of January of each Supply Year by DM (as reasonably agreed to by Seller) by multiplying the Cap for the most recently completed Supply Year by a fraction, the numerator of which will be DM's estimated Container Costs from Seller for such Supply Year as set forth on Schedule 2.1 as of the commencement of such Supply Year and the denominator of which will be Container Costs actually incurred by DM from Seller for the most recently completed Supply Year plus the DM Inventory used in such recently completed Supply Year. Until the Cap for each of the second and succeeding Supply Years is calculated as provided above, the parties shall use a Cap for each such Supply for purposes hereof which is DM's good faith estimate of the Cap for such Supply Year. The term Container Costs shall mean the aggregate of the selling price for each Container as set forth in Schedule 2.1 multiplied by the number of units of such Container supplied by Seller to DM plus applicable freight for the applicable Supply Year. -10- ARTICLE VI METAL COSTS Subparagraph (a) of Section 5.1 of the Supply Agreement (which subparagraph begins "The metal cost component of selling price . . .") is hereby amended by deleting such subparagraph in its entirety and inserting in place therefor the following: At July 1, 1994, the metal cost component of selling price for each Container as set forth in Schedule 2.1 shall be adjusted (increased or decreased) to Seller's actual cost of metal as of that date from the "Base Cost" (as set forth in the letter dated December 16, 1993 from James Beam of Seller to Kevin McKee of DM). Thereafter, the metal cost component of selling price for each Container as set froth in Schedule 2.1 shall be adjusted (increased or decreased) to reflect changes in costs of metal actually incurred by Seller. Such metal price adjustment (increase or decrease) referred to in the immediately preceding sentence shall take place thirty (30) days after the date Seller actually incurs a price change in the cost of metal. Metal prices shall not be increased prior to July 1, 1994. -11- ARTICLE VII PROCTER & GAMBLE The Supply Agreement is hereby amended by adding the following new Section to the Supply Agreement immediately following Section 2.7 and immediately before Article III: 2.8 Procter & Gamble. DM hereby agrees that it will not cancel or terminate that certain Containers Purchase Agreement dated as of March 2, 1990 (the "Container Purchase Agreement") between DM and The Procter & Gamble Company ("P & G") prior to March 2, 1995 and that it will purchase from Seller in accordance with this Agreement all Containers (as defined in such Containers Purchase Agreement) that it is required to sell to P & G under the Containers Purchase Agreement. ARTICLE VIII COST SAVINGS The Supply Agreement is hereby amended by adding the following to Section 5.2 immediately before the penultimate sentence of Section 5.2: Attached hereto as Schedule 5.2 is a list of cost savings items (from which DM and Seller agree to reasonably cooperate to achieve and to work together to test and approve as quickly as possible), it being understood that the cost savings associated with all such items which accrue to Seller are included in the -12- selling prices for Containers set forth in Schedule 2.1(e) and shall not be shared or allocated pursuant to this Section 5.2 or Article VII. ARTICLE IX REAFFIRMATION The parties hereby reaffirm all of the other terms and conditions of the Supply Agreement. This Amendment amends the Supply Agreement only to the extent specified herein and shall not constitute an amendment to any other provision of the Supply Agreement. From and after the date hereof, all references to the Supply Agreement in the Supply Agreement and other documents referred to therein shall be references to the Supply Agreement as amended hereby. IN WITNESS WHEREOF, the parties have caused this Amendment to be duly signed and delivered as of the date that appears in the first paragraph of this Amendment. DEL MONTH CORPORATION By /s/ THOMAS E. GIBBONS -------------------------------------- Its Vice President ------------------------------------ SILGAN CONTAINERS CORPORATION By -------------------------------------- Its Vice President ------------------------------------ -13- EX-10.27 15 f84647exv10w27.txt EXHIBIT 10.27 EXHIBIT 10.27 SECOND AMENDMENT TO SUPPLY AGREEMENT THIS SECOND AMENDMENT TO SUPPLY AGREEMENT (the "Amendment") is made and entered into as of this 12th day of May, 1994, by and between DEL MONTE CORPORATION, a New York corporation ("DM"), and SILGAN CONTAINERS CORPORATION, a Delaware corporation ("Seller"). B A C K G R 0 U N D A. DM and Seller are parties to a Supply Agreement made and entered into as of September 3, 1993, as amended by an amendment made and entered into as of December 21, 1993 (as amended, the "Supply Agreement"). B. Subject to the terms and conditions of this Amendment, the parties desire to further amend the Supply Agreement. THE PARTIES AGREE AS FOLLOWS: ARTICLE I DEFINITIONS Any terms used in this Amendment without definition shall have the meanings set forth in the Supply Agreement. ARTICLE II CONSIGNMENT ENDS The Supply Agreement is hereby amended by adding the following ARTICLE XX to the Supply Agreement immediately following ARTICLE XIX thereof: ARTICLE XX CONSIGNMENT ENDS In order to alleviate Seller's shortage of storage space during each Supply Year hereunder, the parties agree that Seller may ship Ends on consignment (the "Consignment Ends") to the DM Facilities during the period and up to the amounts set forth in the schedule attached as Exhibit 20 hereto. Exhibit 20 may be amended from time to time by the mutual agreement of the parties to add or delete Facilities and to change quantities or shipment periods. Seller will send DM a bill of lading marked "Consignment Bill of Lading" for all Consignment Ends shipped to a Facility at the time of shipment. DM shall store such Consignment Ends at the Facilities in a commercially reasonable manner mutually agreed to by the parties in order to protect such Consignment Ends from deterioration or damage. DM shall also store such Consignment Ends separate and segregated from DM's assets and inventory. Upon receipt by DM of the Consignment Ends DM shall promptly inspect the Consignment Ends to determine compliance with specifications (including diameter), condition and quantity and thereafter DM shall promptly provide Seller with an acknowledgement of receipt of the Consignment Ends. Risk of loss for Consignment Ends that conform to specification shall pass from Seller to DM upon delivery by DM of such acknowledgement to Seller. Title to Consignment Ends shall remain with -2- Seller until, and shall pass to DM upon, the date of usage by DM of such Consignment Ends. DM shall notify Seller of the commencement of packing at any Facility (the "Pack Notice"). After receipt of the Pack Notice, Seller shall send a Payment Invoice for 20% of the Consignment Ends at such Facility on the Monday after the first full week of packing at such Facility as determined by the Pack Notice and for 20% of such Consignment Ends at such Facility on each of the four succeeding Mondays. The parties hereto agree that DM shall first use all Consignment Ends at a Facility (including all Consignment Ends held from a prior packing season as provided below) prior to using any other Ends of the same specification at such Facility. DM shall notify Seller of the conclusion of the packing season at each Facility, and Seller shall promptly thereafter inspect such Facility to determine the amount, if any, of unused Ends at such Facility. Seller shall issue a credit against amounts owed by DM to Seller pursuant to the Agreement for the amount of any full pallets of unused Ends that have not been damaged, and DM shall hold such unused Ends on consignment in accordance with the terms of this paragraph and pay for such Ends when used in the subsequent packing season. DM hereby agrees to execute and deliver to Seller any financing statements or other documents as shall be reasonably requested by Seller to -3- evidence the consignment contemplated by this paragraph. ARTICLE III REAFFIRMATION The parties hereby reaffirm all of the other terms and conditions of the Supply Agreement, including without limitation Sections 3.4 (Working Capital) and 3.7 (Return of Nonconforming Containers). This Amendment amends the Supply Agreement only to the extent specified herein and shall not constitute an amendment to any other provision of the Supply Agreement. From and after the date hereof, all references to the Supply Agreement in the Supply Agreement and other documents referred to therein shall be references to the Supply Agreement as amended hereby. IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly signed and delivered as of the date that appears in the first paragraph of this Amendment. DEL MONTE CORPORATION By /s/ THOMAS E. GIBBONS ------------------------------------- Its VICE PRESIDENT & TREASURER ------------------------------------ SILGAN CONTAINERS CORPORATION By /s/ GEORGE S. HARTLEY ------------------------------------- Its VICE PRESIDENT ------------------------------------ -4- EX-10.28 16 f84647exv10w28.txt EXHIBIT 10.28 EXHIBIT 10.28 THIRD AMENDMENT TO SUPPLY AGREEMENT THIS THIRD AMENDMENT TO SUPPLY AGREEMENT (the "Amendment") is made and entered into as of this 28th day of April, 1995, by and between DEL MONTE CORPORATION, a New York corporation ("DM"),and SILGAN CONTAINERS CORPORATION, a Delaware corporation ("Seller"). B A C K G R O U N D A. DM and Seller are parties to a Supply Agreement made and entered into as of September 3, 1993, as amended by an amendment made and entered into as of December 21, 1993 and a Second Amendment made and entered into as of May 10, 1994 (the "Second Amendment") (as amended, the "Supply Agreement"). B. Subject to the terms and conditions of this Amendment, the parties desire to further amend the Supply Agreement. THE PARTIES AGREE AS FOLLOWS: ARTICLE I DEFINITIONS Any terms used in this Amendment without definition shall have the meanings set forth in the Supply Agreement. ARTICLE II CONSIGNMENT ENDS The Supply Agreement is hereby amended by adding the following as ARTICLE XX to the Supply Agreement immediately following ARTICLE XIX thereof in full substitution of Article XX as added by the Second Amendment: ARTICLE XX CONSIGNMENT ENDS In order to alleviate Seller's shortage of storage space during each Supply Year hereunder, the parties agree that Seller may ship Ends on consignment (the "Consignment Ends") to the DM Facilities (other than Modesto, Plymouth, Crystal City and Mexico) during the period and up to the amounts set forth in the schedule attached as Exhibit 20 hereto. Exhibit 20 will be amended monthly by Seller and DM to reflect actual and projected quantities of Consignment Ends for each Facility, and DM may refuse to store additional Consignment Ends at any Facility. Seller will send DM a bill of lading marked "Consignment Bill of Lading" for all Consignment Ends shipped to a Facility at the time of shipment. DM shall store such Consignment Ends at the Facilities in a commercially reasonable manner mutually agreed to by the parties in order to protect such Consignment Ends from deterioration or damage. DM shall also store such Consignment Ends separate and segregated from DM's assets and inventory. Upon receipt by DM of the Consignment Ends DM shall promptly inspect the Consignment Ends to determine compliance -2- with specifications (including diameter), condition and quantity and thereafter DM shall promptly provide Seller with an acknowledgement of receipt of the Consignment Ends. Risk of loss for Consignment Ends that conform to specification shall pass from Seller to DM upon delivery by DM of such acknowledgement to Seller. Title to Consignment Ends shall remain with Seller until, and shall pass to DM upon, the date of usage by DM of such Consignment Ends. DM shall notify Seller of the commencement of packing at any Facility of the primary product produced at such Facility (the "Primary Pack Notice"). After receipt of the Primary Pack Notice, Seller shall send a Payment Invoice for 10% of the Consignment Ends at such Facility on the Monday after the first full week of packing at such Facility as determined by the Pack Notice and for 10% of such Consignment Ends at such Facility on each of the nine succeeding Mondays. DM shall notify Seller of any change in the primary product produced at any Facility. The parties hereto agree that DM shall first use all Consignment Ends at a Facility (including all Consignment Ends held from a prior packing season as provided below) prior to using any other Ends of the same specification at such Facility. DM shall notify Seller of the conclusion of the packing season at each Facility, and Seller shall promptly thereafter inspect such Facility to determine the amount, if any, of unused Ends at such Facility. Seller shall issue a -3- credit against amounts owed by DM to Seller pursuant to the Agreement for the amount of any full pallets of unused Ends that have not been damaged, and DM shall hold such unused Ends on consignment in accordance with the terms of this paragraph and pay for such Ends when used in the subsequent packing season. DM hereby agrees to execute and deliver to Seller any financing statements or other documents as shall be reasonably requested by Seller to evidence the consignment contemplated by this paragraph. ARTICLE III REAFFIRMATION The parties hereby reaffirm all of the other terms and conditions of the Supply Agreement, including without limitation Sections 3.4 (Working Capital) and 3.7 (Return of Nonconforming Containers. This Amendment amends the Supply Agreement only to the extent specified herein and shall not constitute an amendment to any other provision of the Supply Agreement. From and after the date hereof, all references to the Supply Agreement in the Supply Agreement and other documents referred to therein shall be references to the Supply Agreement as amended hereby. -4- IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly signed and delivered as of the date that appears in the first paragraph of this Amendment. DEL MONTE CORPORATION By: /s/ THOMAS E. GIBBONS -------------------------------------- Its: Sr. VP & Treasurer ------------------------------------- SILGAN CONTAINERS CORPORATION By: -------------------------------------- Its: V.P. Sales/Mkt. ------------------------------------- -5- EX-10.29 17 f84647exv10w29.txt EXHIBIT 10.29 EXHIBIT 10.29 [SILGAN LETTERHEAD] November 5, 1998 Del Monte Corporation One Market Street P.O. Box 193575 San Francisco, CA 94119-3575 Attention: Wes Smith Re: Fifth Amendment to Supply Agreement dated as of September 3, 1993 as amended Dear Wes: This letter shall serve to amend the Supply Agreement dated as of September 3, 1993, as amended through the date hereof (the "Supply Agreement"), by and between Del Monte Corporation ("DM") and Silgan Containers Corporation ("Seller"). Capitalized terms used and not defined herein shall have the meanings assigned to them in the Supply Agreement. Seller and DM hereby agree that the Supply Agreement shall be amended as follows: 1. Notwithstanding anything in the Supply Agreement to the contrary, and after taking into consideration discounts or allowances due to DM, and in order to provide competitive relief to DM, Seller shall make a payment to DM of [XXX] on January 4, 1999. This letter amends the Supply Agreement only to the extent expressly provided herein and shall not constitute an amendment to or modification of any other provision of the Supply Agreement. Seller and DM hereby reaffirm all of the other provisions of the Supply Agreement, and confirm that the Supply Agreement as amended hereby continues in full force and effect. From and after the date hereof, all reference to the Supply Agreement in the Supply Agreement and other documents referred to therein shall be references to the Supply Agreement as amended hereby. [XXX] OMITTED PURSUANT TO REQUEST FOR CONFIDENTIAL TREATMENT. FULL TEXT FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. November 5, 1998 Page 2 of 4 requirements, Seller may substitute and supply to DM, and DM shall accept from Seller, Cans using the two-piece method of manufacturing in place of Cans using the three-piece method of manufacturing, at the same selling prices in the then current Schedule 2.1(e) for such substituted three-piece Cans. DM and Seller acknowledge and agree that the provisions of Article VII of the Supply Agreement shall not be applicable to the particular substitution described in the preceding sentence. 3. Notwithstanding DM's obligation with respect to the purchase of Containers from Seller as set forth in the Supply Agreement, with regard to U.S. domestic businesses acquired by DM from third parties after the date hereof (an "Acquired Business") DM and Seller hereby agree that, within 60 days after the date of consummation of the acquisition of such Acquired Business or, if applicable, the expiration or termination date of an existing written agreement requiring such Acquired Business to purchase containers thereunder from a third party, DM may receive a bona fide written proposal from an Offeror having the capability to manufacture and sell containers to DM of a type and quality similar to the Containers that Seller is required to furnish DM under the Supply Agreement for the remainder of the Term for the Acquired Business, which written proposal provides selling prices and terms that are in DM's good faith opinion more favorable than the selling prices and terms for the Containers to be supplied by Seller for the Acquired Business pursuant to the terms of the Supply Agreement and is based on not less than (i) 100% of the annual volume of all Containers for the Acquired Business for the remainder of the Term or (ii) 100% of the annual volume of all Containers for one or more facilities of the Acquired Business for the remainder of the Term. DM shall notify Seller of any such proposal and shall furnish Seller with a summary of all terms of such proposal with reasonable specificity, including the identity of the Offeror. At Seller's request, such summary shall be reviewed and confirmed by DM's independent certified public accountants as an accurate summary of the terms of such proposal. Seller shall have 30 days from the date of receipt of DM's notice within which to submit a counterproposal to such bona fide competitive proposal. If Seller's counterproposal would result in DM paying the same net selling price for Containers for the Acquired Business that would be paid if the competitive proposal were accepted and if Seller meets all the other terms and conditions, including warranties but excluding any provisions providing for meeting competitive bidding, of the competitive proposal, then DM shall accept Seller's counterproposal. Upon consummation of the acquisition of an Acquired Business (and following the expiration of the 60-day period referenced in the first sentence of this paragraph), the terms of Article VI of the Supply Agreement shall apply to the Containers supplied to the Acquired Business. If Seller declines to meet the competitive proposal, DM shall be free to purchase Containers for the Acquired November 5, 1998 Page 3 of 4 Business from the Offeror pursuant to the competitive proposal commencing (i) 60 days after the expiration of the 30-day period or (ii) in those cases where Seller is the sole supplier of containers to the Acquired Business prior to the acquisition thereof by DM, if later, the date after which DM shall have purchased from Seller pursuant to the terms of the Supply Agreement at a price no greater than Seller's price to the Acquired Business all of Seller's then existing inventory (not to exceed a reasonable and appropriate amount of such inventory, considering the historic amounts of inventory typically maintained by Seller for the Acquired Business at the relevant time and current orders and estimates for containers provided by the Acquired Business to Seller) of Containers for the Acquired Business (including Containers to be made from raw materials then on hand or ordered by Seller for Containers for the Acquired Business and including Containers to be made from work-in-progress for the Acquired Business); provided that, if prior to acceptance of the competitive proposal in the aggregate the terms and conditions of the competitive proposal are changed to be less favorable to DM, DM shall resubmit such changed proposal to Seller for Seller's counterproposal in accordance with this paragraph. Notwithstanding anything herein to the contrary, the Containers purchased from all Offerors shall not exceed, in any Supply Year, one-half of the aggregate number of Containers to be furnished to DM during that Supply Year from Seller and all Offerors. Subject to the preceding sentence, any Containers purchased from the Offerors shall reduce accordingly the minimum requirements which DM must purchase from Seller under the Supply Agreement. 4. DM and Seller hereby acknowledge that the Cap shall be appropriately adjusted to take into account the acquisition by DM of an Acquired Business or Acquired Entity, with any such adjustment to be effective as of the month the Container requirements of such Acquired Business or Acquired Entity become subject to the Supply Agreement. 5. DM and Seller hereby agree to extend the Term and that, accordingly, the Term shall continue through December 21, 2006. This letter amends the Supply Agreement only to the extent expressly provided herein and shall not constitute an amendment to or modification of any other provision of the Supply Agreement. Seller and DM hereby reaffirm all of the other provisions of the Supply Agreement, and confirm that the Supply Agreement as amended hereby continues in full force and effect. From and after the date hereof, all reference to the Supply Agreement in the Supply Agreement and other documents referred to therein shall be references to the Supply Agreement as amended hereby. November 5,1998 Page 4 of 4 If you are in agreement with the foregoing, please execute a copy of this letter in the space provided below. Very truly yours, SILGAN CONTAINERS CORPORATION By: /s/ JAMES D. BEAM --------------------------------- James D. Beam President Agreed to as of the date above: DEL MONTE CORPORATION By: /s/ WESLEY J. SMITH ---------------------------- Name: W J Smith Title: Chief Operating Officer Schedules Schedule 2.1(e) EX-10.30 18 f84647exv10w30.txt EXHIBIT 10.30 EXHIBIT 10.30 [SILGAN CONTAINERS CORPORATION LOGO] 21800 Oxnard Street JAMES D. BEAM Suite 600 President Woodland Hills, CA 91367 Telephone: (818) 348-3700 Fax: (818) 593-2255 November 5,1998 Del Monte Corporation One Market Street P.O. Box 193575 San Francisco, CA 94119-3575 Attention: Wes Smith Re: Fourth Amendment to Supply Agreement dated as of September 3,1993, as amended Dear Wes: This letter shall serve to amend the Supply Agreement dated as of September 3, 1993, as amended through the date hereof (the "Supply Agreement"), by and between Del Monte Corporation ("DM") and Silgan Containers Corporation ("Seller"). Capitalized terms used and not defined herein shall have the meanings assigned to them in the Supply Agreement. Seller and DM hereby agree that the Supply Agreement shall be amended as follows: 1. Effective January 1, 1999, Schedule 2.1(e) to the Supply Agreement is hereby amended and replaced in its entirety by Schedule 2.1(e) hereto. Based upon the estimated volumes of Containers that DM will require for 1998 as set forth in Schedule 2.1(e) hereto, the selling prices reflected in Schedule 2.1(e) hereto would result in an aggregate decrease of approximately [XXX] from the selling prices reflected in the Schedule 2.1(e) dated as of July 1, 1998. 2. Subject to Article XI of the Supply Agreement and the providing of adequate notice to DM for labeling and packaging adjustments, with respect to any and all Containers to be filled with tomato and tomato based Products, DM and Seller hereby agree that, notwithstanding a specification requirements set forth in any applicable Schedule 2.1 for such Containers or any warranty of Seller regarding conformity with such specification. [XXX] OMITTED PURSUANT TO REQUEST FOR CONFIDENTIAL TREATMENT. FULL TEXT FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. November 5,1998 Page 2 of 2 If you are agreement with the foregoing, please execute a copy of this letter in the space provided below. Very truly yours, SILGAN CONTAINERS CORPORATION By: /s/ JAMES D. BEAM -------------------------------------- James D. Beam President Agreed to as of the date above: DEL MONTE CORPORATION By: /s/ WESLEY J. SMITH ------------------------------------ Name: W J Smith Title: Chief Operating Officer EX-10.31 19 f84647exv10w31.txt EXHIBIT 10.31 EXHIBIT 10.31 Del Monte Foods Wesley J. Smith One Market Chief Operating Officer P.O. Box 193575, San Francisco, CA 94119-3575 Telephone: (415) 247-3750 Fax: (415) 247-3503 June 7, 2002 VIA FACSIMILE AND OVERNIGHT COURIER Silgan Containers Corporation 21800 Oxnard Street Suite 600 Woodland Hills, CA 91367 Attention: Mr. James D. Beam Re: S&W/COMPETITIVE PRICING ADJUSTMENT Dear Jim: This letter sets forth the understanding we have reached with respect to the pricing adjustment in connection with (i) Del Monte Corporation's acquisition of the S&W processed foods business from Tri Valley Growers, and (ii) the 2001 competitive proposal made to Del Monte and matched by Silgan Containers Corporation. This letter shall be deemed to amend the Supply Agreement dated as of September 3, 1993, as amended (the "Supply Agreement"), between Del Monte Corporation ("DM") and Silgan Containers Corporation ("Seller"). Capitalized terms used and not defined herein shall have the meaning assigned to them in the Supply Agreement. A. Interim Adjustment (For the time period 7/1/01 - 6/30/02) 1. S&W Products (a) Items Produced in DM Facilities: On or about June 30, 2002, DM shall provide Seller a listing (by DM internal product code) of all S&W items and volumes produced by DM at each of its facilities, by SKU and by can size, during the period July 1, 2001 through June 30, 2002. Based on such items and volumes, DM shall receive a price adjustment from Seller equal to [XXX] [XXX] OMITTED PURSUANT TO REQUEST FOR CONFIDENTIAL TREATMENT. FULL TEXT FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. Silgan Containers Corporation June 7, 2002 Page 2 (b) Items Produced by Co-Packer: DM shall provide Seller a listing (by SKU and by Container size) of all S&W items and volumes shipped into the DM distribution network by Chiquita Processed Foods ("CPF") during the period July 1, 2001 through June 30, 2002 utilizing Containers supplied by Seller. Based on such items and volumes, DM shall receive a price adjustment from Seller equal to [XXX] 2. Del Monte California Fruit and Tomato Products DM shall receive a price adjustment from Seller for Containers purchased by DM for its California production facilities during the period October 1, 2001 through June 30, 2002 for its non-S&W fruit and tomato products. The price adjustment shall be determined by multiplying the rate set forth on Exhibit C ("F'02 CA ADJ") by the volume of the corresponding Container purchased by DM during this time period. 3. Payment Mechanism On or before June 1, 2002, DM shall provide Seller with a good faith estimate of the anticipated Container volumes and price adjustments under items A.l and A.2 above. Based on such good faith estimate, Seller shall issue to DM a credit memo or rebate check in the amount of the estimated price adjustment. Seller shall reasonably cooperate with DM (by issuing a rebate check in lieu of a credit memo if necessary) so that DM receives the financial benefits of the price adjustment for its fiscal year ending June 30, 2002. To the extent actual Container volumes provided to DM differ from DM's good faith estimate, Seller shall adjust subsequent invoices to address such difference. B. Ongoing Price Adjustment (Effective as of July 1, 2002) 1. S&W Products Produced by Co-Packer Beginning July 1, 2002 and continuing through the termination of the Supply Agreement, at the conclusion of each calendar quarter, DM shall provide Seller a listing (by SKU and by Container size) of all S&W dry bean items and volumes shipped into the DM distribution network by CPF (or its successor co-packer) utilizing Containers supplied by Seller. DM shall be entitled to a price adjustment calculated as [XXX] [XXX] OMITTED PURSUANT TO REQUEST FOR CONFIDENTIAL TREATMENT. FULL TEXT FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. Silgan Containers Corporation June 7, 2002 Page 3 [XXX] The price adjustment shall be accomplished through a credit memo issued to DM by Seller within thirty (30) days of receipt of quarterly item and volume information by Seller. In the event that DM decides to internalize production of these presently co-packed dry bean items, DM shall notify Seller in writing and the parties shall meet within fifteen (15) days of such notice to determine a mechanism to provide DM with the same aggregate price benefits as set forth in this Section B.1. New Containers not identified on Exhibit B shall be entitled to receive the same pricing adjustments as set forth in this paragraph, with the adjustment determined by looking at the most nearly comparable Container already being supplied to DM by Seller. 2. Products Produced by DM Prices to be in effect commencing July 1, 2002 (the "7/02 Prices") for Containers purchased by DM from Seller (but excluding any Containers covered under Section B.l above) shall be adjusted by subtracting the amounts set forth on Exhibit D ("Post 7/1/02 Total Business Adjustment Methodology Not Including S&W Beans") from the then current price of the corresponding Container ($/thousand), not taking into effect any other pricing adjustments provided by this letter amendment. The 7/02 Prices, adjusted thereafter as permitted by the Supply Agreement, shall continue through the termination of the Supply Agreement. New Containers not identified on Exhibit D shall be entitled to receive the same pricing adjustments as set forth in this paragraph, with the adjustment determined by looking at the most nearly comparable Container already being supplied to DM by Seller. C. Meeting Competition Clause DM acknowledges that the pricing adjustments referenced herein were in response to a bona fide written proposal from an independent commercial can manufacturer which was matched by Seller and accepted by DM. DM and Seller agree that the pricing referenced under Section B above shall, unless DM and Seller otherwise agree, remain effective during the remaining term of the Supply Agreement (subject to adjustment as provided in the Supply Agreement) and the provisions of Article VI of the Supply Agreement ("Meeting Competition") shall no longer be available to DM excepting with respect to products manufactured by businesses acquired by DM subsequent to the date of this letter agreement. Seller and DM agree that if the term of the Supply Agreement is extended beyond December 21, 2006, the provisions [XXX] OMITTED PURSUANT TO REQUEST FOR CONFIDENTIAL TREATMENT. FULL TEXT FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. Silgan Containers Corporation June 7, 2002 Page 4 of Article VI of the Supply Agreement shall be deemed in full force and effect for purposes of such extension. This letter amends the Supply Agreement only to the extent expressly provided herein and shall not constitute an amendment to or modification of any other provision of the Supply Agreement. Seller and DM hereby reaffirm all of the other provisions of the Supply Agreement as amended hereby continue in full force and effect. From and after the date hereof, all references to the Supply Agreement in the Supply Agreement and other documents referred to therein shall be references to the Supply Agreement as amended hereby. If you are in agreement with the foregoing, please execute a copy of this letter in the space provide below and return one copy to me. Very truly yours, /s/ WESLEY J. SMITH Wesley J. Smith Chief Operating Officer Agreed to as of the date above: SILGAN CONTAINERS CORPORATION By: -------------------------------- James D. Beam President Exhibits A, B, C and D EX-10.32 20 f84647exv10w32.txt EXHIBIT 10.32 EXHIBIT 10.32 DEL MONTE FOODS RETAIL BROKERAGE AGREEMENT THIS AGREEMENT, effective July 1, 2001 between DEL MONTE CORPORATION, a corporation with its main business office at San Francisco, California, hereinafter called "Client," and ADVANTAGE SALES AND MARKETING, a limited liability company with its main business office at Irvine, CA, hereinafter called "Broker." WHEREAS, Client manufactures and distributes food and beverage products under various brands including DEL MONTE, S&W and CONTADINA; WHEREAS, Client desires that Broker act as a broker in connection with the servicing, promotion, and sale of those food and beverage products listed on Attachment A ("Products"), which attachment Client may modify in writing from time to time, and Broker desires to so act; NOW, THEREFORE, Client, in consideration of certain agreements hereinafter set forth and to be performed by Broker, hereby appoints Broker to act as broker in connection with the servicing, promotion, and sale of the Products at the applicable brokerage rates and to the classes of trade listed on Attachment B for direct buying accounts located within Broker's assigned territory listed on Attachment C, and Broker, in consideration of the commissions specified herein, agrees to so act. The parties mutually agree as follows: 1. All Sales Subject to Client's Terms and Conditions. All Products represented by Broker shall be sold subject to Client's prices, terms, conditions, and confirmation by Client at its main office, and in amounts and assortments authorized by, and to customers approved by Client. Broker shall so advise the trade in receiving orders. Broker shall not solicit nor accept orders from buyers located outside Broker's assigned territory and no commissions will be paid on any such orders whether confirmed or not. Broker agrees to assist Client in the collection of all due invoices. All remittances due to Client shall be made by customers directly to Client, unless otherwise instructed by Client. Broker understands that a customer's order shall be subject to credit approval by Client and that Client shall be the sole judge of a customer's credit-worthiness. If for any reason a customer does not accept delivery or if Client does not effect delivery to a customer because in Client's judgment customer's credit standing is impaired, Client shall be entitled to sell or otherwise dispose of Products and in such event Broker shall be entitled to no commission thereon. All orders shall be booked and transmitted in the name of the actual customer. 2. Commission; Full Compensation. For Products sold by Broker to direct accounts located within Broker's territory and confirmed by the main office of Client, and subject to the terms and conditions set forth in this Agreement, Broker shall be entitled to commissions computed as indicated on Attachment B. Such commissions shall be based on Client's base delivered price less: performance allowances, swell allowance, cash discounts and all performance funds/accruals. Commissions shall become payable only after Products are shipped and fully paid for in immediately available funds or, if funds are not immediately available, then commissions shall become payable only to the extent that Client's bank has finally collected such funds and, in either case, customer has not asserted any right of set off or other claim with respect to such funds. Client shall not be liable for any costs or expenses of Broker in connection with any services performed hereunder or the operation or maintenance of Broker's places of business. The commissions specified herein shall constitute full compensation to Broker for all services hereunder. 3. Promotional Programs and Trade Spending. Broker shall accurately and completely convey to customers Client's terms and conditions of sale and all terms and conditions of promotional programs in which the customer is eligible to participate. Broker shall accurately and completely convey terms and conditions of any promotional program. Broker shall use best efforts to ensure that trade spending by Broker's customers does not exceed amounts established by the Client. In the event that trade spending by Broker's customers exceeds such amounts per SBU on a per market basis ("Overspends") and such Overspends are the direct result of the gross negligence or willful misconduct of Broker's or Broker's employees, Client shall have the right to set-off the amount of such Overspends against commissions earned and to be earned by the Broker. Broker shall be responsible for managing customer deductions and program performance (including Overspends and unauthorized performance) but shall have no financial obligation to Client for such Overspends and/or unauthorized performance other than if such event is a direct result of the gross negligence or willful misconduct of Broker or Broker's employees. Broker's commissions shall be adjusted only as provided for herein and in accordance with Client's Deduction Management Policy set forth on Attachment D. 4. Compliance with Law. Broker agrees to act in accordance with applicable federal, state and local laws. Broker agrees not to pay or transfer any part of commissions received from Client to anyone other than employees of Broker other than as required by law. Broker warrants and represents that no customer or account or representative thereof, or governmental employee, has any ownership or financial interest, direct or indirect, in Broker. Broker agrees to indemnify Client for expenses and losses incurred by Client and caused by Broker's negligence or actions in violation of the terms of this Agreement, or in violation of any laws, regulations, or policies of Client, or without written authorization of Client. 5. Fair and Equitable. Client's policy is to treat all competitive customers on a fair, equal, and proportionate basis. Broker agrees to follow such policy in representing the Products under this Agreement. 6. Ownership of Records. Files and records maintained by Broker and directly relating to transactions between Client and Client's customers are the property of Client and shall be delivered to Client promptly following the written request by Client for such records. Broker acknowledges that failure to promptly release records to Client may cause irreparable harm to Client, and that Client shall be entitled to immediate injunctive relief to obtain such records in addition to other remedies available at law. During the term of this Agreement Broker shall maintain custody of such Client records and shall permit Client or its agent(s), upon reasonable notice, to inspect and copy such records at any time deemed appropriate by Client . Broker may make copies of such records for its internal use. 7. (a) Services. Client shall establish quarterly and annual performance objectives in consultation with Broker and Broker shall accomplish the objectives so established and agreed upon by Client and Broker. Broker agrees to provide services as customary in the marketplace in connection with the servicing, promotion and sale of products comparable to the Products. Services shall include but not be limited to (a) retail store coverage at the frequency and depth of coverage as agreed to with Client; (b) retail services to assure the availability for sale of Products to the consumer on the selling floor of all retail stores; (c) promptly providing at Client's request consumer marketing information which shall include but not be limited to the areas of competitive activity, customer coverage, product distribution, national marketing information, and other reasonable information as requested by Client; (d) activities designed to achieve all retail objectives of Client regarding distribution, shelf placement, pricing, and promotional merchandising support; (e) removing from sale Products not meeting Client's standards or policies, (f) reporting retail conditions as requested by Client, (g) management and recovery of unauthorized deductions and customer Overspends (subject to Section 3 and Exhibit D hereof), and (h) conveying to Client information concerning customers' credit-worthiness or changes in financial condition. Services provided hereunder shall not include services provided by divisions of Broker which are not customarily included as part of the principal/broker relationship, including services provided by Broker's Integrated Marketing Solutions and CPG3 divisions and/or any retail specific coverage service options, not specifically set forth in this Agreement. Services not covered by this Agreement shall be provided by Broker pursuant to a separate written contract. (b) Personnel. In performing services hereunder, Broker agrees to dedicate a sufficient number of personnel to effectively accomplish Client's business objectives within the time frames set by Client. Client and Broker agree to meet annually (and more often as deemed necessary by Client) to establish necessary staffing levels, expertise, objectives and goals. Broker shall retain responsibility for supervising Broker personnel. (c) Training. Broker acknowledges that training is essential to the successful and consistent achievement of Client's sales development objectives. Broker agrees to provide transitional and ongoing training as directed by Client to its personnel servicing Client's account to the extent necessary or appropriate to accomplish Broker's obligations under this Agreement. Broker shall designate and shall identify to Client regional training supervisors to provide ongoing training to Broker personnel. Broker acknowledges that ongoing training among Broker's personnel shall be Broker's responsibility and that Client's responsibility shall be limited to providing training guidance and direction to Broker's regional training supervisors. (d) Retailer Services. Client acknowledges that pursuant to this Agreement, Broker shall act as an exclusive broker to Client in connection with the servicing, promotion and sale of the Products for the classes of trade listed on Attachment B for the assigned territory listed on Attachment C. If a retailer performs similar services as those contemplated by Broker under this Agreement ("Retailer Services") and the Retailer charges Client (or deducts amounts due to Client) for the Retailer Services, Client shall not deduct any amounts from Broker's commissions related to such charges. 8. Confidential Information. Broker and Client each acknowledges that from time to time each party to this Agreement will have access to certain confidential and proprietary information and systems of the other party (the "Disclosing Party") which is generally not available to or known by the public, in which the Disclosing Party has a legitimate protectable interest and which has particular value to the Disclosing Party, the disclosure of which could be harmful to the Disclosing Party's interests (the "Confidential Information"). Broker and Client each agree that it shall not directly or indirectly disclose such Confidential Information to any third party except as required by law or regulation or use any Confidential Information for any purposes not expressly authorized in writing by the Disclosing Party. Confidential Information means any and all information, whether disclosed in writing or orally, identified as confidential by the Disclosing Party. For purposes of this Agreement, Client information relating to Client business strategies, deal rates, promotional rates, marketing plans, new item introductions and business development opportunities shall be considered Confidential Information. Confidential Information may also include, but is not limited to: business models and plans, proprietary computer software and sales planning and execution processes, information and/or knowledge regarding products, processes, techniques, trade secrets, strategies and programs, financial data, vendor and customer relationships, methods of operation and other information or materials in any form proprietary to a party. For purposes of this Agreement, Confidential Information shall not include the following: (a) Information available in the public domain, not as a result of the violation of any undertaking herein; (b) Information available to either party on a non-confidential basis prior to disclosure of it by the other party; (c) Information that is available from a third party, provided that such source is not violating any duty or agreement of confidentiality; (d) Information that is independently developed by a party and such independent development can be reasonably substantiated; or (e) Information that is required to be disclosed by law or legal process. 9. Non-Solicitation. During the term of this Agreement and for a period of six (6) months following its termination, the parties agree not to solicit or induce any employee of the other, either directly or indirectly, to leave such employment and/or become an employee of the other or any company affiliated with or related to such party. Notwithstanding the foregoing, a general solicitation, such as through a newspaper, website or trade journal, and any hiring related thereto, shall not be prohibited by this section. 10. No Diversion. Broker agrees not to divert Products to markets outside the United States, and agrees not to divert Products between markets within its assigned United States territory. 11. Insurance. Broker agrees to purchase and maintain general liability and employee theft (crime) insurance naming Client as an additional insured as respects its handling of the Client's account with minimum liability limits of $1,000,000.00 per occurrence. Client shall maintain general liability and product liability insurance coverage in such amounts as deemed reasonable in the normal course of Client's operations. Each of Broker and Client shall have the other named as an additional insured under one another's liability insurance policy and shall provide the other with a certificate of insurance evidencing such coverage. Such certificate of insurance shall provide, without limitation, that such insurance is not subject to modification or termination without at least thirty (30) days' prior written notice to the other party. 12. Software. Any software provided by Client ("Software") is provided pursuant to a license which shall terminate upon the termination of this Agreement. Usage of such Software shall be subject to the following conditions: (a) it is licensed for installation on a single computer only, (b) it may not be copied except for reasonable backup and archival purposes only, (c) it may not be sold, rented, leased, or transferred to any other party except in connection with a permitted assignment pursuant to Section 17 hereof, (d) use shall be limited to Client's business only and it may not be used for any other purpose, and (e) it may not be reverse-engineered, decompiled, disassembled or modified. Broker shall not create any derivatives of Software and shall not remove any product identification, copyright notices or other indicia or ownership. Upon the termination of this Agreement, Broker shall remove all Software from the computer on which it resides and return to Client or destroy any media or materials holding, describing or otherwise related to such Software. 13. (a) Term. This Agreement shall have a term of two years beginning on July 1, 2001 and ending on June 30, 2003. Thereafter, the Agreement shall be automatically renewed for up to three (3) additional one (1)-year terms (running from July 1 - June 30) unless Client or Broker provides written notice of non-renewal at least thirty (30) days prior to the expiration of the then current term. Notwithstanding the foregoing, either party may terminate this Agreement at any time, effective immediately upon written notice if it has good cause for termination. Without limiting the applicable law, the following circumstances shall constitute good cause for termination: (i) the other party shall be in material breach of any of its obligations under this Agreement and, where the breach involves an ongoing obligation that is capable of cure, such party shall have failed to cure such breach within thirty (30) days after receiving written notice from the other party of the existence of such breach. For purposes of this section, "material breach" shall include, without limitation, any failure by Broker to substantially achieve quarterly or annual qualitative and/or quantitative performance objectives; comply with Client's Deduction Management Policy (Attachment D); and comply with Client's Sales Policy and Procedures, Manual and such other policies and procedures as Client may issue from time to time that are agreed to in writing by Client and Broker; "material breach" shall also include Client's failure to compensate Broker in accordance with the terms of this Agreement; or (ii) the other party shall have become insolvent or filed a petition in bankruptcy, or entered into a composition with its creditors, or had a receiver appointed for its assets, or become the subject of any winding up of its business or any judicial proceeding relating to or arising out of its financial condition; or (iii) a merger, consolidation or sale of the other party which transaction would place the other party in breach of its obligations under this Agreement. (b) Liquidated Damages. Broker acknowledges that early termination of this Agreement by Broker without good cause will result in significant damages to the business of Client. Accordingly, Broker agrees to pay to Client the sum of Two Million Dollars ($2,000,000) as liquidated damages in the event Broker terminates this Agreement prior to the expiration of the term of this Agreement and other than in accordance with subsection 13(a) or 13(e). Broker acknowledges and agrees that such amount represents a fair and reasonable estimate of the damages Client would suffer in the event of such termination. (c) Orders after Termination. Immediately upon notice of termination being served by either party, Client shall have the right to obtain orders through another broker or sales office and Broker shall have the right to offer its services to third parties, subject to the confidentiality provisions set forth herein. Since Broker will not be obtaining such Client orders, Broker shall have no right to a commission on said orders. However, Broker shall continue to receive the commission and bonus amounts as applicable provided in this Agreement for any orders, which are obtained by Broker and are actually shipped prior to the termination date. Client is not obligated to accept orders from Broker for shipment after the termination date. (d) Coverage/Commission Adjustments. Notwithstanding any other provision of this Agreement, Client shall have the option to modify this Agreement to implement changes in coverage or services (i.e., converting coverage to retail-only coverage and/or converting services to services payable on a fee-for-service basis). In the event Client exercises this option, commissions payable hereunder shall be adjusted to reflect modified Broker responsibilities, as agreed to by Client and Broker. (e) Termination Upon Coverage/Commission Adjustment. In the event that the parties are unable to agree on amounts payable for such modified Broker responsibilities as set forth in Section 13(d), either party shall have the option to terminate this Agreement upon thirty (30) days' written notice to the other party, in which case Section 13(b) hereof shall not be applicable. 14. Audit. Client shall have the right to inspect and copy Broker's books and records to the extent such books and records directly relate to Client's business. Such inspection shall be conducted by Client or Client's authorized accountants during regular business hours upon at least forty-eight (48) hours' written notice to Broker at a time mutually agreed upon by Broker and Client (but in any event within five (5) days of Client's demand for an inspection). Broker agrees to maintain its records in accordance with generally accepted accounting principles and to conform its accounting practices (to the extent they relate to Client's business and to the extent consistent with generally accepted accounting principles) to reasonable recommendations made by Client's accountants. This provision shall survive the termination or expiration of this Agreement for a period of two (2) years. 15. Conflicts. Broker shall not interview to represent competitive products within the fruit, vegetable, tomato and specialty bean categories without Client's prior written consent, which consent shall not be withheld if Broker can reasonably demonstrate to Client that the proposed representation will not negatively impact Client's business. For purposes of this Agreement, if Broker obtains Client's consent to interview to represent competitive products within the aforementioned categories, such consent shall also act as Client's consent and approval for Broker to act as a broker for such competitive product(s). 16. No Agent. Except as Broker may be specifically authorized in writing by Client, nothing herein contained shall be construed as authorizing Broker to bind Client in any way nor as constituting Broker an agent or representative of Client. Broker shall have no authority to make any expenditure on behalf of Client without Client's prior written consent. 17. Entire Agreement. This Agreement sets forth the entire understanding of the parties with respect to the subject matter hereof, and supercedes all prior or contemporaneous agreements and understandings, whether oral or written, with respect to the same subject matter. In the event any provision of this Agreement is found void or unenforceable, the remainder of this Agreement shall remain in full force and effect. This Agreement may not be altered or amended except in a writing executed by both parties. This Agreement may not be assigned without the prior written consent of the other party. This Agreement is subject to attached Attachments, which are incorporated fully herein. 18. Governing Law; Arbitration. This Agreement shall be governed by California law, without reference to the conflicts of laws principles thereof. Except for breaches of Section 6 and Section 8, any dispute arising out of or related to this Agreement, including the termination thereof, shall be resolved through binding arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association ("AAA"). The arbitration shall take place before a single arbitrator mutually selected by the parties in San Francisco, California. The prevailing party in such dispute shall be awarded its attorneys' fees and costs, in addition to any other relief deemed appropriate, and such award may be entered in any court of competent jurisdiction. In the event the parties are unable to agree to a single arbitrator within fifteen (15) days of the demand by either party for arbitration, the arbitrator shall be appointed by the AAA upon application by either party. Where Broker has breached Section 6 by failing to promptly release records to Client or where either party has breached Section 8 by improperly disclosing or using Confidential Information, the non-breaching party shall be entitled to immediate injunctive relief without a showing of harm upon application to any court of competent jurisdiction. 19. Notices. Any and all notices or other communications required or permitted by this Agreement or by law to be served on or given to the other party hereto shall be in writing, addressed to a senior officer of the other party at its principal business address, and shall be deemed duly served (a) when personally delivered, (b) three days after deposit in the United States mail, first class delivery, return receipt requested, or (c) two days after deposit with a nationally recognized overnight courier service. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first set forth above. DEL MONTE CORPORATION ADVANTAGE SALES AND MARKETING By /s/ ROBERT P. MAGRANN By -------------------------------- -------------------------- Robert P. Magrann Senior VP Sales Name: ----------------------- Title: ----------------------- EX-10.43 21 f84647exv10w43.txt EXHIBIT 10.43 EXHIBIT 10.43 FIRST AMENDMENT TO RETENTION AGREEMENT This First Amendment to Retention Agreement (the "First Amendment") is entered into as of March 28, 2002, by and between DEL MONTE FOODS COMPANY, a Delaware corporation, with its principal place of business in San Francisco, California (the "Company"), and David L. Meyers, an individual residing in the State of California ("Executive"), to amend the Retention Agreement, dated November 1, 1991, among Del Monte Corporation, a New York corporation, and Executive (the "Agreement"), as follows: 1. In the first paragraph on page 1, "Del Monte Foods Company" is substituted for "Del Monte Corporation". 2. In the first paragraph on page 1, "a Delaware corporation" is substituted for "a New York corporation". 3. A new Section 1(a) is added to the Agreement in the following form: (a) Executive shall receive for his services rendered hereunder an annual base salary of Three Hundred Eighty Thousand Dollars ($380,000), as adjusted from time to time, payable in equal installments on the Company's regular pay schedule, subject to standard withholdings for taxes and social security and the like. Executive's base salary shall be reviewed annually by the Compensation Committee of the Board. 4. A new Section 1(b) is added to the Agreement in the following form: (b) While a full-time employee of the Company, Executive shall be entitled to participate in the Company's Annual Incentive Award Plan ("AIAP") pursuant to the terms of which Executive shall be eligible to receive an annual bonus targeted at sixty percent (60%) of Executive's base salary, as adjusted from time to time in accordance with the AIAP or applicable successor plan. Actual payment of the bonus is based on Company performance and Executive's individual achievements. 5. A new Section 1(c) is added to the Agreement in the following form: (c) In the event of a Change of Control (as defined in the Retention Plan referred to herein), if Executive has been designated a "Key Employee" by the Nomination and Compensation Committee of the Board of Directors, Executive shall be eligible to participate in, and entitled to a percentage of, the Company's incentive compensation pool pursuant to the terms of the Retention Plan adopted by the Nominating and Compensation Committee on October 24, 2000. 6. A new Section 1(d) is added to the Agreement in the following form: (d) Executive shall serve in an executive capacity and shall perform such duties as are consistent with his position as Executive Vice President, Administration and Chief Financial Officer. Pursuant to policies, goals and objectives established by the Chief Executive Officer and the Board of Directors, the Executive shall: (i) plan, direct and control the organization's overall financial plans and policies, accounting practices, and relationships with leading institutions, shareholders and the financial community; (ii) direct treasury, budgeting, tax accounting, information systems, real estate and insurance activities; (iii) provide direction and decisions relating to strategic planning of the company; (iv) direct legal activities; (v) plan, direct and control various administration functions as it relates to Human Resources, labor relations and corporate affairs. 7. Section 2(c) is amended to add a new subsection (iv) in the following form: ; or (iv) the failure of the Company to obtain a satisfactory agreement from any successor to assume and agree to perform this Agreement." 8. In Section 2(c), the phrase "described in clauses (i) through (iii)" is replaced by "described in clauses (i) through (iv)". 9. A new Section 3(h) is added to the Agreement in the following form: (h) Termination Upon Change of Control. In the event of Executive's Termination Upon Change of Control (as defined below), Executive shall receive the benefits detailed in Section 3(a) through Section 3(g) on the terms and conditions set forth therein, provided, however, that the payment of the Severance Amount set forth in Section 3(a) shall be made in a lump sum, to be paid within thirty (30) days of Executive's termination date, and not in installments over a three (3) year period, as provided in Section 3(a). No other compensation of any kind or severance or other payment of any kind shall be payable by the Company to Executive after the termination date except as provided in Section 3(a) through Section 3(g). Any amounts due Executive under this Section 3(h) are in the nature of severance payments, or liquidated damages which contemplate both direct damages and consequential damages that may be suffered as a result of Executive's termination, and are not in the nature of a penalty. For purposes of this Section 3(h) "Termination Upon Change of Control" means (i) the termination of Executive's employment by the Company without cause during the period commencing on the date the "Change of Control" (as defined in the Company's 1998 Stock Incentive Plan, as amended through November 15, 2000) occurs and ending on the date which is eighteen (18) months after the Change of Control; or (ii) termination by Executive for Good Reason within eighteen (18) months after the occurrence of a Change of Control; but (iii) "Termination Upon Change of Control" shall not include any termination of Executive's employment by the Company for cause, as a result of the death or disability of Executive, or as a result of the voluntary termination of Executive's employment for reasons other than Good Reason. 2 10. Revise Section 6(a)(i) and 6(a)(ii) so that "Del Monte Foods Company" is substituted for "Del Monte Corporation". 11. Revise Section 6(a)(i) to delete: Henry C. Blackiston, III Shearman & Sterling 599 Lexington Avenue New York, NY 10022 and to insert: Gibson, Dunn & Crutcher LLP One Montgomery Street, 31st Floor San Francisco, CA 94104 Attn: Douglas D. Smith 12. Revise Section 6(g) so that "laws of the State of New York" is replaced by "laws of the State of Delaware". 13. A new Section 7 is added to the Agreement in the following form: 7. Indemnification. In the event Executive is made, or threatened to be made, a party to any legal action or proceeding, whether civil or criminal, by reason of the fact that Executive is or was a director or officer of the Company or serves or served any other corporation fifty percent (50%) or more owned or controlled by the Company in any capacity at the Company's request, Executive shall be indemnified by the Company, and the Company shall pay Executive's related expenses when and as incurred, all to the fullest extent permitted by the laws of the State of Delaware, and the Company's Certificate of Incorporation and Bylaws. Except as expressly provided in this First Amendment, all other provisions of the Agreement are hereby assumed by the Company and remain in full force and effect. IN WITNESS WHEREOF, the parties have executed this First Amendment as of the date first written above. DEL MONTE FOODS COMPANY By: /s/ Richard G. Wolford ------------------------------------------ Name: Richard G. Wolford --------------------------------------- Title: President and Chief Executive Officer, --------------------------------------- Director and Chairman of the Board --------------------------------------- 3 /s/ David L. Meyers --------------------------------------------- David L. Meyers 4 EX-10.45 22 f84647exv10w45.txt EXHIBIT 10.45 EXHIBIT 10.45 First Amendment to Employment Agreement First Amendment, dated as of July 1, 1999, to the Employment Agreement, dated March 16, 1998, among Del Monte Foods Company and Richard G. Wolford (the "Agreement"). The Agreement is hereby amended as follows: 1. The amount "$700,000" is substituted for the amount "$500,000" in the first sentence of Section 2(a). 2. The percentage "100%" is substituted for the percentage "50%" in Section 2(b). All other provisions of the Agreement remain in full force and effect. IN WITNESS WHEREOF, the parties have executed this First Amendment as of the date first written above. DEL MONTE FOODS COMPANY By: /s/ MARK J. BUXTON --------------------------------- Name: Mark J. Buxton Title: Vice President, Corporate HR /s/ RICHARD G. WOLFORD ------------------------------------ Richard G. Wolford EX-10.46 23 f84647exv10w46.txt EXHIBIT 10.46 EXHIBIT 10.46 SECOND AMENDMENT TO EMPLOYMENT AGREEMENT This Second Amendment to Employment Agreement (the "Second Amendment") is entered into as of March 26, 2002, by and between DEL MONTE FOODS COMPANY, a Delaware corporation, with its principal place of business in San Francisco, California (the "Company"), and Richard G. Wolford, an individual residing in the State of California ("Employee"), to amend the Employment Agreement, dated March 16, 1998, among the Company and Employee (the "Agreement"), as follows: 1. In the first paragraph on page 1, "a Delaware corporation" is substituted for "a Maryland corporation." 2. In the first sentence of Section 2(a), the amount "$738,500" is substituted for the amount "$500,000". 3. In Section 2(b), the percentage "100%" is substituted for the percentage "50%". 4. A new Section 2(d) is added to the Agreement in the following form: (d) In the event of a Change of Control (as defined in the Retention Plan referred to herein), if Employee has been designated a "Key Employee" by the Nomination and Compensation Committee of the Board of Directors, Employee shall be eligible to participate in, and entitled to a percentage of, the Company's incentive compensation pool pursuant to the terms of the Retention Plan adopted by the Nominating and Compensation Committee on October 24, 2000 (the "Retention Bonus"). 5. Section 3(a)(ii), Section 3(b)(y), Section 3(c)(ii), and Section 3(d)((i)(2) are amended as follows: the phrase "any earned but unpaid Bonus to which the Employee is entitled pursuant to the AIAP as of the Termination Date" is replaced with the phrase "a pro rata portion of Employee's target Bonus for the year in which Employee's termination occurs, prorated for Employee's actual employment period during such year." 6. A new Section 3(g) is added to the Agreement in the following form: (g) Termination Upon Change of Control. In the event of Employee's Termination Upon Change of Control (as defined below), Employee shall receive the benefits detailed in Section 3(d) on the terms and conditions set forth therein, provided, however, that the payment set forth in Section 3(d)(ii) shall be made in a lump sum, to be paid within thirty (30) days of Employee's termination date, and not in installments until the earlier of (x) the second anniversary of the Termination Date or (y) the Employee's engagement in any aspect of the Company's Business, as provided in Section 3(d)(ii). No other compensation of any kind or severance or other payment of any kind shall be payable by the Company to Employee after the termination date except as provided in Section 3(d). Any amounts due Employee under this Section 3(g) are in the nature of severance payments, or liquidated damages which contemplate both direct damages and consequential damages that may be suffered as a result of Employee's termination, and are not in the nature of a penalty. For purposes of this Section 3(g) "Termination Upon Change of Control" means (i) the termination of Employee's employment by the Company without cause during the period commencing on the date the "Change of Control" (as defined in the Company's 1998 Stock Incentive Plan, as amended through November 15, 2000) occurs and ending on the date which is eighteen (18) months after the Change of Control; or (ii) termination by Employee of the Employment Period within eighteen (18) months after the occurrence of a Change of Control; but (iii) "Termination Upon Change of Control" shall not include any termination of Employee's employment by the Company for cause, or as a result of the death or disability of Employee. 7. Revise Section 6(a) to delete: Arthur H. Kohn, Esq. Cleary, Gottlieb, Stern & Hamilton One Liberty Plaza New York, NY 10006 and to insert: Gibson, Dunn & Crutcher LLP One Montgomery Street, 31st Floor San Francisco, CA 94104 Attn: Douglas D. Smith 8. A new Section 7 is added to the Agreement in the following form: 7. Indemnification. In the event Employee is made, or threatened to be made, a party to any legal action or proceeding, whether civil or criminal, by reason of the fact that Employee is or was a director or officer of the Company or serves or served any other corporation fifty percent (50%) or more owned or controlled by the Company in any capacity at the Company's request, Employee shall be indemnified by the Company, and the Company shall pay Employee's related expenses when and as incurred, all to the fullest extent permitted by the laws of the State of Delaware, and the Company's Certificate of Incorporation and Bylaws. This Second Amendment supersedes and replaces the First Amendment to Employment Agreement, dated July 1, 1999, which is hereby null and void. 2 Except as expressly provided in this Second Amendment, all other provisions of the Agreement remain in full force and effect. IN WITNESS WHEREOF, the parties have executed this Second Amendment as of the date first written above. DEL MONTE FOODS COMPANY By: /s/ David L. Meyers ----------------------------- Name: David L. Meyers ------------------------------ Title: Executive Vice President, Administration and Chief Financial Officer ---------------------------------------- /s/ Richard G. Wolford ---------------------------------------------- Richard G. Wolford 3 EX-10.48 24 f84647exv10w48.txt EXHIBIT 10.48 EXHIBIT 10.48 First Amendment to Employment Agreement First Amendment, dated as of July 1, 1999, to the Employment Agreement, dated March 16, 1998, among Del Monte Foods Company and Wesley J. Smith (the "Agreement"). The Agreement is hereby amended as follows: 1. The amount "$425,000" is substituted for the amount "$400,000" in the first sentence of Section 2(a). 2. The percentage "60%" is substituted for the percentage "50%" in Section 2(b). All other provisions of the Agreement remain in full force and effect. IN WITNESS WHEREOF, the parties have executed this First Amendment as of the date first written above. DEL MONTE FOODS COMPANY By: /s/ MARK J. BUXTON -------------------------------- Name: Mark J. Buxton Title: Vice President, Corporate Human Resources /s/ WESLEY J. SMITH -------------------------------- Wesley J. Smith EX-10.49 25 f84647exv10w49.txt EXHIBIT 10.49 EXHIBIT 10.49 SECOND AMENDMENT TO EMPLOYMENT AGREEMENT This Second Amendment to Employment Agreement (the "Second Amendment") is entered into as of March 26, 2002, by and between DEL MONTE FOODS COMPANY, a Delaware corporation, with its principal place of business in San Francisco, California (the "Company"), and Wesley J. Smith, an individual residing in the State of California ("Employee"), to amend the Employment Agreement, dated March 16, 1998, among the Company and Employee (the "Agreement"), as follows: 1. In the first paragraph on page 1, "a Delaware corporation" is substituted for "a Maryland corporation." 2. In the first sentence of Section 2(a), the amount "$440,000" is substituted for the amount "$400,000". 3. In Section 2(b), the percentage "60%" is substituted for the percentage "50%". 4. A new Section 2(d) is added to the Agreement in the following form: (d) In the event of a Change of Control (as defined in the Retention Plan referred to herein), if Employee has been designated a "Key Employee" by the Nomination and Compensation Committee of the Board of Directors, Employee shall be eligible to participate in, and entitled to a percentage of, the Company's incentive compensation pool pursuant to the terms of the Retention Plan adopted by the Nominating and Compensation Committee on October 24, 2000 (the "Retention Bonus"). 5. Section 3(a)(ii), Section 3(b)(y), Section 3(c)(ii), and Section 3(d)((i)(2) are amended as follows: the phrase "any earned but unpaid Bonus to which the Employee is entitled pursuant to the AIAP as of the Termination Date" is replaced with the phrase "a pro rata portion of Employee's target Bonus for the year in which Employee's termination occurs, prorated for Employee's actual employment period during such year." 6. A new Section 3(g) is added to the Agreement in the following form: (g) Termination Upon Change of Control. In the event of Employee's Termination Upon Change of Control (as defined below), Employee shall receive the benefits detailed in Section 3(d) on the terms and conditions set forth therein, provided, however, that the payment set forth in Section 3(d)(ii) shall be made in a lump sum, to be paid within thirty (30) days of Employee's termination date, and not in installments until the earlier of (x) the second anniversary of the Termination Date or (y) the Employee's engagement in any aspect of the Company's Business, as provided in Section 3(d)(ii). No other compensation of any kind or severance or other payment of any kind shall be payable by the Company to Employee after the termination date except as provided in Section 3(d). Any amounts due Employee under this Section 3(g) are in the nature of severance payments, or liquidated damages which contemplate both direct damages and consequential damages that may be suffered as a result of Employee's termination, and are not in the nature of a penalty. For purposes of this Section 3(g) "Termination Upon Change of Control" means (i) the termination of Employee's employment by the Company without cause during the period commencing on the date the "Change of Control" (as defined in the Company's 1998 Stock Incentive Plan, as amended through November 15, 2000) occurs and ending on the date which is eighteen (18) months after the Change of Control; or (ii) termination by Employee of the Employment Period within eighteen (18) months after the occurrence of a Change of Control; but (iii) "Termination Upon Change of Control" shall not include any termination of Employee's employment by the Company for cause, or as a result of the death or disability of Employee. 7. Revise Section 6(a) to delete: Arthur H. Kohn, Esq. Cleary, Gottlieb, Stern & Hamilton One Liberty Plaza New York, NY 10006 and to insert: Gibson, Dunn & Crutcher LLP One Montgomery Street, 31st Floor San Francisco, CA 94104 Attn: Douglas D. Smith 8. A new Section 7 is added to the Agreement in the following form: 7. Indemnification. In the event Employee is made, or threatened to be made, a party to any legal action or proceeding, whether civil or criminal, by reason of the fact that Employee is or was a director or officer of the Company or serves or served any other corporation fifty percent (50%) or more owned or controlled by the Company in any capacity at the Company's request, Employee shall be indemnified by the Company, and the Company shall pay Employee's related expenses when and as incurred, all to the fullest extent permitted by the laws of the State of Delaware, and the Company's Certificate of Incorporation and Bylaws. This Second Amendment supersedes and replaces the First Amendment to Employment Agreement, dated July 1, 1999, which is hereby null and void. 2 Except as expressly provided in this Second Amendment, all other provisions of the Agreement remain in full force and effect. IN WITNESS WHEREOF, the parties have executed this Second Amendment as of the date first written above. DEL MONTE FOODS COMPANY By: /s/ David L. Meyers ------------------------------------------- Name: David L. Meyers ----------------------------------------- Title: Executive Vice President, Administration and Chief Financial Officer ---------------------------------------- /s/ Wesley J. Smith ----------------------------------------------- Wesley J. Smith 3 EX-10.50 26 f84647exv10w50.txt EXHIBIT 10.50 EXHIBIT 10.50 EMPLOYMENT AGREEMENT This Employment Agreement (the "Agreement") is entered into as of April 2, 2002, by and between DEL MONTE FOODS COMPANY, a Delaware corporation, with its principal place of business in San Francisco, California (the "Company"), and ROBERT P. MAGRANN, an individual residing in the State of California ("Executive"). RECITALS WHEREAS, Executive has been the Senior Vice President, Sales of the Company and has made numerous and invaluable contributions to the leadership and management of the Company; WHEREAS, the Company and Executive desire to reaffirm their employment relationship on the terms and conditions set forth herein; NOW, THEREFORE, in consideration of the foregoing recitals, the mutual promises of the parties and the mutual benefits they will gain by the performance thereof, and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties do hereby agree as follows: 1. EMPLOYMENT BY THE COMPANY AND TERM. (a) Term of Employment. The Company agrees to employ Executive as its Senior Vice President, Sales, and Executive hereby accepts such employment, subject to the terms and conditions set forth herein. The term of employment of Executive under this Agreement shall begin as of the date hereof and continue until terminated pursuant to Section 4 hereof. Notwithstanding the foregoing, the provisions of Sections 4(i) (Ongoing Obligations), 5 (Indemnification), 6 (Proprietary Information Obligations), 7 (Noninterference), 8 (Injunctive Relief), and 10 (Miscellaneous) shall survive the termination of this Agreement. (b) Duties. Executive shall serve in an executive capacity and shall perform such duties as are consistent with his position as Senior Vice President, Sales and as may be reasonably required by the Company's Board of Directors (the "Board"). In such position, Executive shall be responsible for performing such duties as are consistent with his position as Senior Vice President, Sales. Pursuant to policies, goals and objectives established by the Chief Executive Officer, the Executive shall: (i) plan, direct and control the sales force activities to attain maximum sales volume; (ii) plan and develop maximum potential sales volume from all markets for the company's products. (c) Exclusive Performance of Duties. While employed by the Company, Executive agrees that he shall devote substantially all of his business time and best efforts solely and exclusively to the performance of his duties hereunder and to the business and affairs of the Company, whether such business is operated directly by the Company or through any affiliate of the Company. Executive further agrees that while employed by the Company, he will not, directly or indirectly, provide services on behalf of any competing corporation, limited liability company, partnership, joint venture, consortium, or other competing entity or person, whether as an executive, consultant, independent contractor, agent, sole proprietor, partner, joint venturer, creditor, corporate officer or director; nor shall Executive acquire by reason of purchase during the term of his employment with the Company the ownership of more than one percent (1%) of the outstanding equity interest in any such competitive entity. For purposes of this Section 1(c) and this Agreement, a "competing" entity is one engaged in the business of the manufacture and sale of processed fruits and vegetables, pineapple products and tomato products and each other business in which the Company is engaged during Executive's employment with the Company. Subject to the foregoing, Executive may serve on boards of directors of non-competing unaffiliated corporations, subject to advance approval by the Board, and may serve on the boards of charitable organizations. (d) Company Policies. The employment relationship between the parties shall be governed by the general employment policies and practices of the Company, provided, however, that when the terms of this Agreement differ from or are in conflict with the Company's general employment policies or practices, this Agreement shall control. 2. COMPENSATION AND BENEFITS. (a) Salary. Executive shall receive for his services rendered hereunder an annual base salary of Two Hundred Seventy Thousand Dollars ($270,000), as adjusted from time to time in accordance with this Agreement (the "Base Salary"), payable on a semi-monthly basis in twenty-four (24) equal installments, subject to standard withholdings for taxes and social security and the like. (b) Annual Bonus. While a full-time employee of the Company, Executive shall be entitled to participate in the Company's Annual Incentive Award Plan ("AIAP") pursuant to the terms of which Executive shall be eligible to receive an annual bonus (the "Bonus") targeted at 50% of Executive's Base Salary, as adjusted from time to time in accordance with the AIAP or applicable successor plan. Actual payment of the Bonus is based on Company performance and Executive's individual achievements. (c) Retention Bonus. In the event of a Change of Control (as defined in the Retention Plan referenced below), if Executive has been designated a "Key Employee" by the Nomination and Compensation Committee of the Board of Directors of the Company (the "Nomination and Compensation Committee"), Executive shall be eligible to participate in, and entitled to a percentage of, the Company's incentive compensation pool pursuant to the terms of the Retention Plan adopted by the Nominating and Compensation Committee on October 24, 2000 (the "Retention Bonus"). (d) Employee Welfare Benefits. During his employment with the Company, Executive shall be entitled to participate in any group insurance, hospitalization, medical, dental, health and accident, disability, life or similar plan or program of the Company now existing or established hereafter to the extent that he is eligible under the general provisions thereof. The Company may, in its sole discretion and from time to time, establish additional senior management benefit programs as it deems appropriate. Executive understands that any such plans may be modified or eliminated in the discretion of the Company in accordance with applicable law. (e) Pension and Retirement Benefits. During his employment with the Company, Executive shall be entitled to participate in any pension, 401K and retirement plans of the Company now existing or established hereafter to the extent that he is eligible under the general provisions thereof. The Company may, in its sole discretion and from time to time, establish additional senior management benefit programs as it deems appropriate. Executive understands that any such plans may be modified or eliminated in the discretion of the Company in accordance with applicable law. (f) Vacation. Executive shall be entitled to a period of annual paid vacation time equal to not less than four (4) weeks per year as adjusted from time to time in accordance with the Company's vacation policy. The days selected for Executive's vacation shall be mutually agreeable to the Company and Executive. Executive's eligibility to carryover or to be paid for any portion of his accrued vacation shall be subject to the Company policy applicable to employees at a similar level in effect during the term of this Agreement. (g) Expenses. Subject to compliance with the Company's normal and customary policies regarding substantiation and verification of business expenses, Executive is authorized to incur on behalf of the Company, and the Company shall directly pay or shall fully reimburse Executive for all customary and reasonable expenses incurred for promoting, pursuing or otherwise furthering the business of the Company and its affiliates. (h) Perquisites and Supplemental Benefits. During his employment with the Company, Executive shall be entitled to such perquisites and supplemental benefits as may be approved from time to time by the Compensation Committee of the Board. 3. STOCK OPTIONS. (a) During his employment with the Company, Executive shall be eligible to participate in the applicable stock option plans of the Company. The terms and conditions of any stock agreement entered into by Executive and the Company from time to time are hereby incorporated into this Agreement. (b) From time to time during Executive's employment with the Company, the Board (or a committee thereof) shall evaluate the performance of management of the Company and determine whether it is appropriate to grant any additional stock options to management, including without limitation, Executive. The Board (or such committee) shall be under no obligation to grant any such options to Executive (or any other member of management), but will take into consideration industry standards for stock option issuances to Senior Vice President, Sales in similar circumstances. 4. TERMINATION OF EMPLOYMENT. (a) Termination Upon Death. If Executive dies during his employment with the Company, the Company shall pay to Executive's estate, or other designated beneficiary(ies) as shown in the records of the Company, any earned and unpaid Base Salary as of the termination date (which for purposes of this clause (a) shall be the date of Executive's death); accrued but unused vacation time as of the end of the month in which Executive dies; the amount of any unreimbursed expenses described in Section 2(g); and benefits that Executive is then entitled to receive as of the termination date under benefit plans of the Company, including if applicable the Retention Plan, less standard withholdings for tax and social security purposes and the like. Additionally, the Company shall pay to Executive's estate, or other designated beneficiary(ies), at the end of the year in which Executive's termination occurs a pro rata portion of Executive's target Bonus for the year in which Executive's termination occurs, prorated for Executive's actual employment period during such year and adjusted for performance. Except for any bonus, the payment of which would occur after the termination date, the Company shall have no obligation to make any other payment, including severance or other compensation, of any kind. All other benefits provided by the Company to Executive under this Agreement or otherwise shall cease as of the termination date. (b) Termination Upon Disability. The Company may terminate Executive's employment in the event Executive suffers a disability that renders Executive unable, as determined in good faith by the Board, to perform the essential functions of his position, even with reasonable accommodation, for six (6) consecutive months. In the event that Executive's employment is terminated pursuant to this Section 4(b), Executive shall receive payment for any earned and unpaid Base Salary, as of the termination date (which for purposes of this clause (b) shall be the date specified by the Board); accrued but unused vacation time as of the end of the month in which the termination for disability occurs; the amount of any unreimbursed expenses described in Section 2(g); and benefits that Executive is then entitled to receive under applicable benefit plans of the Company, including if applicable the Retention Plan, less standard withholdings for tax and social security purposes and the like. In addition, after the termination date Executive shall receive long term disability benefits under the applicable benefit plans of the Company to the extent Executive qualified for such benefits. Except as expressly provided in this Section 4(b), all benefits provided by the Company to Executive under this Agreement or otherwise shall cease as of the termination date. In the event that Executive's employment is terminated as a result of a determination pursuant to this Section 4(b), and provided that Executive has executed a general release in form and substance satisfactory to the Company and substantially similar to Exhibit A hereto, the Company also shall provide to Executive as severance the payment of an amount equal to Executive's highest Base Salary during the twelve (12) month period prior to the termination date and the target Bonus for the year in which such termination occurs, less standard withholdings for tax and social security purposes and the like, payable in equal installments on the Company's regular pay schedule over a period of twelve (12) months. (c) Voluntary Termination. Executive may voluntarily terminate his employment with the Company at any time. In the event that Executive's employment is terminated under this clause (c), Executive shall receive payment for any earned and unpaid Base Salary, as of the date of such termination; accrued but unused vacation time; the amount of any unreimbursed expenses described in Section 2(g); and benefits the Executive is then entitled to receive under applicable benefit plans of the Company, less standard withholdings for tax and social security purposes and the like, through the termination date, which for purposes of this Section 4(c) shall be the date upon which Executive ceases performing his duties hereunder. The Company shall have no further obligation to pay any compensation of any kind or severance payment of any kind nor to make any further payment in lieu of notice. All benefits provided by the Company to Executive under this Agreement or otherwise shall cease as of the termination date. (d) Termination for Cause. (1) Termination; Payment of Salary and Vacation. The Board may terminate Executive's employment with the Company at any time for "cause" (as defined below). In the event that Executive's employment is terminated under this Section 4(d), Executive shall receive payment for all earned but unpaid Base Salary; accrued but unused vacation time; the amount of any unreimbursed expenses described in Section 2(g); and benefits the Executive is then entitled to receive under applicable benefit plans of the Company, less standard withholdings for tax and social security purposes and the like, through the termination date, which for purposes of this clause (d) shall be the date upon which such notice of termination is given. The Company shall have no further obligation to pay any compensation of any kind nor to make any payment in lieu of notice. All benefits provided by the Company to Executive under this Agreement or otherwise shall cease as of the termination date. (2) Definition of Cause. For purposes of this Agreement, the Company shall have "cause" to terminate Executive's employment upon any of the following: (a) a material breach by Executive of the terms of this Agreement; (b) any act of theft, misappropriation, embezzlement, intentional fraud or similar conduct by Executive involving the Company or any affiliate; (c) the conviction or the plea of nolo contendere or the equivalent in respect of a felony involving an act of dishonesty, moral turpitude, deceit or fraud by Executive; (d) any damage of a material nature to the business or property of the Company or any affiliate caused by Executive's willful or grossly negligent conduct; or (e) Executive's failure to act in accordance with any specific lawful instructions given to Executive in connection with the performance of his duties for the Company or any affiliate. (e) Termination Without Cause. The Company at any time without prior written notice may terminate Executive without cause. In the event that Executive's employment is terminated without cause, Executive shall receive payment for all earned but unpaid Base Salary as of the termination date (which for purposes of this Section 4(e), shall be the date of Executive's termination); accrued but unused vacation time; the amount of any unreimbursed expenses described in Section 2(g); and benefits the Executive is then entitled to receive under applicable benefit plans of the Company, including if applicable the Retention Plan, less standard withholdings for tax and social security purposes and the like, as of the termination date. In such event, and provided that Executive has executed a general release in form and substance satisfactory to the Company and substantially similar to Exhibit A hereto, the Company shall also provide to Executive as severance (i) the payment of an amount equal to Executive's highest Base Salary during the twelve (12) month period prior to the termination date, and the target Bonus for the year in which such termination occurs, less standard withholdings for tax and social security purposes and the like, payable in equal installments on the Company's regular pay schedule over a period of twelve (12) months; (ii) continuation of Executive's participation in the Company's medical benefits until the earlier of (x) eighteen (18) months following Executive's termination or (y) such time as Executive is covered by comparable programs of a subsequent employer; (iii) continuation of Executive's participation in any management perquisites applicable to Executive until the earlier of (x) twelve (12) months following Executive's termination or (y) such time as Executive is covered by comparable perquisites of a subsequent employer; (iv) the payment to Executive, at the end of the year in which Executive's termination occurs, of a pro rata portion of Executive's target Bonus for the year in which Executive's termination occurs, prorated for Executive's actual employment period during such year and adjusted for performance; and (v) the provision of not less than eighteen (18) months of executive-level outplacement services at Company expense; provided, however, the expense for such services in any calendar year shall not exceed eighteen percent (18%) of the amount equal to Executive's highest Base Salary during the twelve (12) month period prior to the termination date and the target Bonus for the year in which such termination occurs. In the event Executive receives continuation of medical benefits for eighteen (18) months under Section 4(e)(ii) hereof, Executive shall be eligible for continued coverage after the end of the eighteen (18) month period to the extent provided by and subject to the terms of the Consolidated Budget Reconciliation Act of 1985 ("COBRA"). No other compensation of any kind or severance or other payment of any kind shall be payable by the Company after such termination date. Except as specifically provided in this Section 4(e) all benefits provided by the Company to Executive under this Agreement or otherwise shall cease as of the termination date. (f) Termination for Good Reason. Notwithstanding anything in this Section 4 to the contrary, Executive may voluntarily end his employment with the Company and receive the benefits detailed in Section 4(e), on the terms and conditions set forth therein, upon or within ninety (90) days following the occurrence of an event constituting "Good Reason," which for purposes of this Section 4(f) shall mean any of the following: (i) a material adverse change in Executive's position causing it to be of materially less stature, responsibility, or authority without Executive's written consent, and such a materially adverse change shall in all events be deemed to occur if Executive no longer serves as Senior Vice President, Sales, unless Executive consents in writing to such change; (ii) a reduction, without Executive's written consent, in Executive's Base Salary or the Bonus Executive is eligible to earn under the AIAP (or successor plan thereto), or Executive's incentive or equity opportunity under any material incentive or equity program of the Company, provided, however, that nothing herein shall be construed to guarantee Executive's bonus for any year if the applicable performance targets are not met; and provided further that it shall not constitute Good Reason hereunder if the Company makes an appropriate pro rata adjustment to the applicable bonus and targets under the annual cash bonus plan in the event of a change in the Company's fiscal year; (iii) a material reduction without Executive's consent in the aggregate welfare benefits provided to Executive pursuant to the welfare plans, programs and arrangements in which Executive is eligible to participate; or (iv) the failure of the Company to obtain a satisfactory agreement from any successor to assume and agree to perform this Agreement. Unless Executive provides written notification of an event described in clauses (i) through (iv) above within ninety (90) days after Executive knows or has reason to know of the occurrence of any such event, Executive shall be deemed to have consented thereto and such event shall no longer constitute Good Reason for purposes of this Agreement. If Executive provides such written notice to the Company, the Company shall have ten (10) business days from the date of receipt of such notice to effect a cure of the event described therein and, upon cure thereof by the Company to the reasonable satisfaction of Executive, such event shall no longer constitute Good Reason for purposes of this Agreement. (g) Termination Upon Change of Control. In the event of Executive's Termination Upon Change of Control (as defined below), Executive shall receive the benefits detailed in Section 4(e) on the terms and conditions set forth therein, provided, however, that the payment set forth in Section 4(e)(i) shall be made in a lump sum, to be paid within thirty (30) days of Executive's termination date, and not in installments over a twelve (12) month period as provided in Section 4(e)(i). No other compensation of any kind or severance or other payment of any kind shall be payable by the Company to Executive after the termination date. Any amounts due Executive under this Section 4(g) are in the nature of severance payments, or liquidated damages which contemplate both direct damages and consequential damages that may be suffered as a result of Executive's termination, and are not in the nature of a penalty. For purposes of this Section 4(g) "Termination Upon Change of Control" means (i) the termination of Executive's employment by the Company without cause during the period commencing on the date the "Change of Control" (as defined in the Company's 1998 Stock Incentive Plan, as amended through November 15, 2000) occurs and ending on the date which is eighteen (18) months after the Change of Control; or (ii) any resignation by Executive for Good Reason within eighteen (18) months after the occurrence of a Change of Control; but (iii) "Termination Upon Change of Control" shall not include any termination of Executive's employment by the Company for cause, as a result of the death or disability of Executive, or as a result of the voluntary termination of Executive's employment for reasons other than Good Reason. (h) At-Will Employment. Executive understands and agrees that employment with the Company is at-will, which means that either Executive or the Company may, subject to the terms of this Agreement, terminate this Agreement at any time with or without cause as set forth in this Agreement. Any modification of the at-will nature of this Agreement must be in writing and executed by Executive and the Company. (i) Ongoing Obligations. Executive acknowledges that the Company and Executive have ongoing rights and obligations relating to intellectual property and confidential information of the Company, together with fiduciary rights and obligations, which will survive the termination of Executive's employment. 5. INDEMNIFICATION. In the event Executive is made, or threatened to be made, a party to any legal action or proceeding, whether civil or criminal, by reason of the fact that Executive is or was a director or officer of the Company or serves or served any other corporation fifty percent (50%) or more owned or controlled by the Company in any capacity at the Company's request, Executive shall be indemnified by the Company, and the Company shall pay Executive's related expenses when and as incurred, all to the fullest extent permitted by the laws of the State of Delaware, and the Company's Certificate of Incorporation and Bylaws. 6. PROPRIETARY INFORMATION OBLIGATIONS. During Executive's employment by the Company, Executive will have access to and become acquainted with the Company's confidential and proprietary information (collectively "Proprietary Information"), including but not limited to information or plans regarding the Company's customer relationships; personnel; technology and intellectual property; sales, marketing and financial operations and methods; and other compilations of information, records and specifications. Executive shall not disclose any Proprietary Information of the Company, or of any affiliate, directly or indirectly, to any person, firm, corporation or other entity for any reason or purpose whatsoever, nor shall Executive make use of any such Proprietary Information for his own purposes or for the benefit of any person, firm, corporation or other entity (except the Company and the affiliate) under any circumstances, during or after the term of this Agreement, except as reasonably necessary in the course of his employment for the Company or as authorized in writing by the Company. All files, records, documents, computer-recorded or electronic information and similar items relating to the business of the Company or the affiliate, whether prepared by Executive or otherwise coming into his possession, shall remain the exclusive property of the Company or the affiliate, respectively, and Executive agrees to return all property of the Company or the affiliate in his possession and under his control immediately upon any termination of Executive's employment, and no copies thereof shall be kept by Executive. 7. NONINTERFERENCE. (a) While employed by or compensated by the Company pursuant to this Agreement and for a period of two (2) years thereafter, Executive agrees not to: (i) directly or indirectly, either on Executive's own account or for any company, limited liability company, partnership, joint venture or other entity or person (including, without limitation, through any existing or future affiliate), solicit any employee of the Company or any existing or future affiliate to leave his or her employment or knowingly induce or knowingly attempt to induce any such employee to terminate or breach his or her employment agreement with the Company or any existing or future affiliate, if any; or (ii) directly or indirectly (including, without limitation, through any existing or future affiliate), solicit, cause in any part or knowingly encourage any current or future customer of or supplier to the Company or any existing or future affiliate to modify the business relationship, or cease doing business in whole or in part, with the Company or any such affiliate. (b) In the event a court of competent jurisdiction or other tribunal or person(s) mutually selected by the parties to resolve any dispute (collectively a "Court") has determined that Executive has violated the provisions of this Agreement, the running of the time period of such provisions so violated shall be automatically suspended as of the date of such violation and shall be extended for the period of time from the date such violation commenced through the date that the Court determines that such violation has permanently ceased. 8. INJUNCTIVE RELIEF. The parties hereto agree that damages would be an inadequate remedy for the Company in the event of a breach or threatened breach of Sections 6 or 7 of this Agreement by Executive, and in the event or any such breach or threatened breach, the Company may, either with or without pursuing any potential damage remedies, obtain and enforce an injunction prohibiting Executive from violating this Agreement and requiring Executive to comply with the terms of this Agreement. 9. WARRANTIES AND REPRESENTATIONS. Executive hereby represents and warrants to the Company that he: (a) is not now under any obligation of a contractual or quasi-contractual nature known to him that is inconsistent or in conflict with this Agreement or that would prevent, limit or impair the performance by Executive of his obligations hereunder; and (b) has been or has had the opportunity to be represented by legal counsel in the preparation, negotiation, execution and delivery of this Agreement and understands fully the terms and provisions hereof. 10. MISCELLANEOUS. (a) Notices. Any notice or communication required or permitted by this Agreement shall be deemed sufficiently given if in writing and, if delivered personally, when it is delivered or, if delivered in another manner, including without limitation, by facsimile (with confirmation of receipt and a confirmation copy sent by U.S. Mail or overnight delivery), the earlier of when it is actually received by the party to whom it is directed or when the period set forth below expires (whether or not it is actually received): (i) if deposited with the U.S. Postal Service, postage prepaid, and addressed to the party to receive it as set forth below, forty-eight (48) hours after such deposit as registered or certified mail; or (ii) if accepted by Federal Express or a similar delivery service in general usage for delivery to the address of the party to receive it as set forth next below, twenty-four (24) hours after the delivery time promised by the delivery service. To the Company: Del Monte Foods Company One Market at The Landmark P.O. Box 193575 San Francisco, CA 94119-3575 Fax: 415/247-3263 Attention: Board of Directors and Secretary With a copy to: Gibson, Dunn & Crutcher LLP One Montgomery Street San Francisco, California 94104-4505 Fax: 415/986-5309 Attention: Douglas D. Smith, Esq. To Executive: -------------------------- Fax: With a copy to: Fax: Attention: or to such other address or to the attention of such other person as the recipient party will have specified by prior written notice to the sending party. (b) Severability. If any term or provision (or any portion thereof) of this Agreement is determined by a court to be invalid, illegal or incapable of being enforced by any rule of law or public policy, all other terms and provisions (or other portions thereof) of this Agreement shall nevertheless remain in full force and effect. Upon such determination that any term or provision (or any portion thereof) is invalid, illegal or incapable of being enforced, this Agreement shall be deemed to be modified so as to effect the original intent of the parties as closely as possible to the end that the transactions contemplated hereby and the terms and provisions hereof are fulfilled to the greatest extent possible. (c) Entire Agreement. This Agreement supersedes and replaces in all respects the Retention Agreement between Executive and Company, dated April 30, 2001 (the "Prior Employment Agreement") and, upon Executive's acceptance of this Agreement, the Prior Employment Agreement shall be null and void. This Agreement, including any documents incorporated herein, together with the applicable terms of the Company's options plans and benefit plans, contains the Company's entire understanding with Executive related to the subject matter hereof, and supersedes and preempts any prior or contemporaneous understandings, agreements, or representations by or between the parties, written or oral. Without limiting the generality of the foregoing, except as provided in this Agreement, all understandings and agreements, written or oral, relating to the employment of Executive by the Company, or the payment of any compensation or the provision of any benefit in connection therewith or otherwise are hereby terminated and shall be of no future force and effect. (d) Counterparts. This Agreement may be executed on separate counterparts, any one of which need not contain signatures of more than one party, but all of which taken together will constitute one and the same agreement. Signatures may be exchanged by electronic facsimile with machine evidence of transmission. (e) Successors and Assigns. This Agreement is intended to bind and inure to the benefit of and be enforceable by Executive and the Company, and their respective successors and assigns, except that Executive may not assign any of his duties hereunder and he may not assign any of his rights hereunder without the prior written consent of the Company, which consent will not unreasonably be withheld. If Executive should die while any amounts would still be payable to him hereunder if he had continued to live, all amounts payable hereunder shall be paid in accordance with the terms of this Agreement to Executive's estate, unless Executive has provided written notice to the Company specifying a different beneficiary or beneficiaries (which notice(s) may be changed from time to time at the sole discretion of Executive). (f) Attorneys' Fees. If any legal proceeding is necessary to enforce or interpret the terms of this Agreement, or to recover damages for breach thereof, the prevailing party shall be entitled to reasonable attorneys' fees, as well as costs and disbursements, in addition to any other relief to which he or it may be entitled. (g) Amendments. No amendments or other modifications to this Agreement may be made except by a writing signed by both parties. Except for Executive's estate under Section 4(a), nothing in this Agreement, express or implied, is intended to confer upon any third person any rights or remedies under or by reason of this Agreement. (h) Choice of Law. All questions concerning the construction, validity and interpretation of this Agreement will be governed by the internal law, and not the law of conflicts, of the State of California except as otherwise provided in Section 10 above. (i) Further Assurances. Each of the parties hereto agrees to use all reasonable efforts to take or cause to be taken, all appropriate actions, and to cause to take or to be taken, all things necessary, proper or advisable under applicable laws to effect the transactions contemplated by this Agreement, including without limitation, execution and delivery to the Company of such representations in writing as may be requested by the Company in order for its to comply with applicable federal and state securities laws. (j) Fees and Expenses Relating to Agreement. Each of the parties hereto shall bear its own fees and expenses incurred in connection with the preparation of this Agreement and the transactions contemplated hereby. IN WITNESS WHEREOF, the parties have executed this Agreement effective as of the date set forth above. EXECUTIVE: /s/ Robert P. Magrann - ------------------------------------------------ Robert P. Magrann COMPANY: DEL MONTE FOODS COMPANY By: /s/ David L. Meyers --------------------------------------------- Name: David L. Meyers --------------------------------------------- Title: Executive Vice President, Administration --------------------------------------------- and Chief Financial Officer --------------------------------------------- EX-10.51 27 f84647exv10w51.txt EXHIBIT 10.51 EXHIBIT 10.51 EMPLOYMENT AGREEMENT This Employment Agreement (the "Agreement") is entered into as of March 28, 2002, by and between DEL MONTE FOODS COMPANY, a Delaware corporation, with its principal place of business in San Francisco, California (the "Company"), and MARC D. HABERMAN, an individual residing in the State of California ("Executive"). RECITALS WHEREAS, Executive has been the Senior Vice President, Marketing of the Company and has made numerous and invaluable contributions to the leadership and management of the Company; WHEREAS, the Company and Executive desire to reaffirm their employment relationship on the terms and conditions set forth herein; NOW, THEREFORE, in consideration of the foregoing recitals, the mutual promises of the parties and the mutual benefits they will gain by the performance thereof, and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties do hereby agree as follows: 1. EMPLOYMENT BY THE COMPANY AND TERM. (a) Term of Employment. The Company agrees to employ Executive as its Senior Vice President, Marketing, and Executive hereby accepts such employment, subject to the terms and conditions set forth herein. The term of employment of Executive under this Agreement shall begin as of the date hereof and continue until terminated pursuant to Section 4 hereof. Notwithstanding the foregoing, the provisions of Sections 4(i) (Ongoing Obligations), 5 (Indemnification), 6 (Proprietary Information Obligations), 7 (Noninterference), 8 (Injunctive Relief), and 10 (Miscellaneous) shall survive the termination of this Agreement. (b) Duties. Executive shall serve in an executive capacity and shall perform such duties as are consistent with his position as Senior Vice President, Marketing and as may be reasonably required by the Company's Board of Directors (the "Board"). In such position, Executive shall be responsible for performing such duties as are consistent with his position as Senior Vice President, Marketing. Pursuant to policies, goals and objectives established by the Chief Executive Officer, the Executive shall: (i) plan, direct and coordinate the marketing of the company's products; (ii) evaluate adjustments of marketing strategies to meet changing and competitive marketing conditions; (iii) recommend changes in marketing philosophy and policy to serve the best interest of the company; (iv) provide marketing advice and guidance to various operating units to ensure overall marketing effectiveness. (c) Exclusive Performance of Duties. While employed by the Company, Executive agrees that he shall devote substantially all of his business time and best efforts solely and exclusively to the performance of his duties hereunder and to the business and affairs of the Company, whether such business is operated directly by the Company or through any affiliate of the Company. Executive further agrees that while employed by the Company, he will not, directly or indirectly, provide services on behalf of any competing corporation, limited liability company, partnership, joint venture, consortium, or other competing entity or person, whether as an executive, consultant, independent contractor, agent, sole proprietor, partner, joint venturer, creditor, corporate officer or director; nor shall Executive acquire by reason of purchase during the term of his employment with the Company the ownership of more than one percent (1%) of the outstanding equity interest in any such competitive entity. For purposes of this Section 1(c) and this Agreement, a "competing" entity is one engaged in the business of the manufacture and sale of processed fruits and vegetables, pineapple products and tomato products and each other business in which the Company is engaged during Executive's employment with the Company. Subject to the foregoing, Executive may serve on boards of directors of non-competing unaffiliated corporations, subject to advance approval by the Board, and may serve on the boards of charitable organizations. (d) Company Policies. The employment relationship between the parties shall be governed by the general employment policies and practices of the Company, provided, however, that when the terms of this Agreement differ from or are in conflict with the Company's general employment policies or practices, this Agreement shall control. 2. COMPENSATION AND BENEFITS. (a) Salary. Executive shall receive for his services rendered hereunder an annual base salary of Two Hundred Sixty-seven Thousand Five Hundred Dollars ($267,500), as adjusted from time to time in accordance with this Agreement (the "Base Salary"), payable on a semi-monthly basis in twenty-four (24) equal installments, subject to standard withholdings for taxes and social security and the like. (b) Annual Bonus. While a full-time employee of the Company, Executive shall be entitled to participate in the Company's Annual Incentive Award Plan ("AIAP") pursuant to the terms of which Executive shall be eligible to receive an annual bonus (the "Bonus") targeted at 50% of Executive's Base Salary, as adjusted from time to time in accordance with the AIAP or applicable successor plan. Actual payment of the Bonus is based on Company performance and Executive's individual achievements. (c) Retention Bonus. In the event of a Change of Control (as defined in the Retention Plan referenced below), if Executive has been designated a "Key Employee" by the Nomination and Compensation Committee of the Board of Directors of the Company (the "Nomination and Compensation Committee"), Executive shall be eligible to participate in, and entitled to a percentage of, the Company's incentive compensation pool pursuant to the terms of the Retention Plan adopted by the Nominating and Compensation Committee on October 24, 2000 (the "Retention Bonus"). (d) Employee Welfare Benefits. During his employment with the Company, Executive shall be entitled to participate in any group insurance, hospitalization, medical, dental, health and accident, disability, life or similar plan or program of the Company now existing or established hereafter to the extent that he is eligible under the general provisions thereof. The Company may, in its sole discretion and from time to time, establish additional senior management benefit programs as it deems appropriate. Executive understands that any such plans may be modified or eliminated in the discretion of the Company in accordance with applicable law. (e) Pension and Retirement Benefits. During his employment with the Company, Executive shall be entitled to participate in any pension, 401K and retirement plans of the Company now existing or established hereafter to the extent that he is eligible under the general provisions thereof. The Company may, in its sole discretion and from time to time, establish additional senior management benefit programs as it deems appropriate. Executive understands that any such plans may be modified or eliminated in the discretion of the Company in accordance with applicable law. (f) Vacation. Executive shall be entitled to a period of annual paid vacation time equal to not less than four (4) weeks per year as adjusted from time to time in accordance with the Company's vacation policy. The days selected for Executive's vacation shall be mutually agreeable to the Company and Executive. Executive's eligibility to carryover or to be paid for any portion of his accrued vacation shall be subject to the Company policy applicable to employees at a similar level in effect during the term of this Agreement. (g) Expenses. Subject to compliance with the Company's normal and customary policies regarding substantiation and verification of business expenses, Executive is authorized to incur on behalf of the Company, and the Company shall directly pay or shall fully reimburse Executive for all customary and reasonable expenses incurred for promoting, pursuing or otherwise furthering the business of the Company and its affiliates. (h) Perquisites and Supplemental Benefits. During his employment with the Company, Executive shall be entitled to such perquisites and supplemental benefits as may be approved from time to time by the Compensation Committee of the Board. 3. STOCK OPTIONS. (a) During his employment with the Company, Executive shall be eligible to participate in the applicable stock option plans of the Company. The terms and conditions of any stock agreement entered into by Executive and the Company from time to time are hereby incorporated into this Agreement. (b) From time to time during Executive's employment with the Company, the Board (or a committee thereof) shall evaluate the performance of management of the Company and determine whether it is appropriate to grant any additional stock options to management, including without limitation, Executive. The Board (or such committee) shall be under no obligation to grant any such options to Executive (or any other member of management), but will take into consideration industry standards for stock option issuances to Senior Vice President, Marketing in similar circumstances. 4. TERMINATION OF EMPLOYMENT. (a) Termination Upon Death. If Executive dies during his employment with the Company, the Company shall pay to Executive's estate, or other designated beneficiary(ies) as shown in the records of the Company, any earned and unpaid Base Salary as of the termination date (which for purposes of this clause (a) shall be the date of Executive's death); accrued but unused vacation time as of the end of the month in which Executive dies; the amount of any unreimbursed expenses described in Section 2(g); and benefits that Executive is then entitled to receive as of the termination date under benefit plans of the Company, including if applicable the Retention Plan, less standard withholdings for tax and social security purposes and the like. Additionally, the Company shall pay to Executive's estate, or other designated beneficiary(ies), at the end of the year in which Executive's termination occurs a pro rata portion of Executive's target Bonus for the year in which Executive's termination occurs, prorated for Executive's actual employment period during such year and adjusted for performance. Except for any bonus, the payment of which would occur after the termination date, the Company shall have no obligation to make any other payment, including severance or other compensation, of any kind. All other benefits provided by the Company to Executive under this Agreement or otherwise shall cease as of the termination date. (b) Termination Upon Disability. The Company may terminate Executive's employment in the event Executive suffers a disability that renders Executive unable, as determined in good faith by the Board, to perform the essential functions of his position, even with reasonable accommodation, for six (6) consecutive months. In the event that Executive's employment is terminated pursuant to this Section 4(b), Executive shall receive payment for any earned and unpaid Base Salary, as of the termination date (which for purposes of this clause (b) shall be the date specified by the Board); accrued but unused vacation time as of the end of the month in which the termination for disability occurs; the amount of any unreimbursed expenses described in Section 2(g); and benefits that Executive is then entitled to receive under applicable benefit plans of the Company, including if applicable the Retention Plan, less standard withholdings for tax and social security purposes and the like. In addition, after the termination date Executive shall receive long term disability benefits under the applicable benefit plans of the Company to the extent Executive qualified for such benefits. Except as expressly provided in this Section 4(b), all benefits provided by the Company to Executive under this Agreement or otherwise shall cease as of the termination date. In the event that Executive's employment is terminated as a result of a determination pursuant to this Section 4(b), and provided that Executive has executed a general release in form and substance satisfactory to the Company and substantially similar to Exhibit A hereto, the Company also shall provide to Executive as severance the payment of an amount equal to Executive's highest Base Salary during the twelve (12) month period prior to the termination date and the target Bonus for the year in which such termination occurs, less standard withholdings for tax and social security purposes and the like, payable in equal installments on the Company's regular pay schedule over a period of twelve (12) months. (c) Voluntary Termination. Executive may voluntarily terminate his employment with the Company at any time. In the event that Executive's employment is terminated under this clause (c), Executive shall receive payment for any earned and unpaid Base Salary, as of the date of such termination; accrued but unused vacation time; the amount of any unreimbursed expenses described in Section 2(g); and benefits the Executive is then entitled to receive under applicable benefit plans of the Company, less standard withholdings for tax and social security purposes and the like, through the termination date, which for purposes of this Section 4(c) shall be the date upon which Executive ceases performing his duties hereunder. The Company shall have no further obligation to pay any compensation of any kind or severance payment of any kind nor to make any further payment in lieu of notice. All benefits provided by the Company to Executive under this Agreement or otherwise shall cease as of the termination date. (d) Termination for Cause. (1) Termination; Payment of Salary and Vacation. The Board may terminate Executive's employment with the Company at any time for "cause" (as defined below). In the event that Executive's employment is terminated under this Section 4(d), Executive shall receive payment for all earned but unpaid Base Salary; accrued but unused vacation time; the amount of any unreimbursed expenses described in Section 2(g); and benefits the Executive is then entitled to receive under applicable benefit plans of the Company, less standard withholdings for tax and social security purposes and the like, through the termination date, which for purposes of this clause (d) shall be the date upon which such notice of termination is given. The Company shall have no further obligation to pay any compensation of any kind nor to make any payment in lieu of notice. All benefits provided by the Company to Executive under this Agreement or otherwise shall cease as of the termination date. (2) Definition of Cause. For purposes of this Agreement, the Company shall have "cause" to terminate Executive's employment upon any of the following: (a) a material breach by Executive of the terms of this Agreement; (b) any act of theft, misappropriation, embezzlement, intentional fraud or similar conduct by Executive involving the Company or any affiliate; (c) the conviction or the plea of nolo contendere or the equivalent in respect of a felony involving an act of dishonesty, moral turpitude, deceit or fraud by Executive; (d) any damage of a material nature to the business or property of the Company or any affiliate caused by Executive's willful or grossly negligent conduct; or (e) Executive's failure to act in accordance with any specific lawful instructions given to Executive in connection with the performance of his duties for the Company or any affiliate. (e) Termination Without Cause. The Company at any time without prior written notice may terminate Executive without cause. In the event that Executive's employment is terminated without cause, Executive shall receive payment for all earned but unpaid Base Salary as of the termination date (which for purposes of this Section 4(e), shall be the date of Executive's termination); accrued but unused vacation time; the amount of any unreimbursed expenses described in Section 2(g); and benefits the Executive is then entitled to receive under applicable benefit plans of the Company, including if applicable the Retention Plan, less standard withholdings for tax and social security purposes and the like, as of the termination date. In such event, and provided that Executive has executed a general release in form and substance satisfactory to the Company and substantially similar to Exhibit A hereto, the Company shall also provide to Executive as severance (i) the payment of an amount equal to Executive's highest Base Salary during the twelve (12) month period prior to the termination date, and the target Bonus for the year in which such termination occurs, less standard withholdings for tax and social security purposes and the like, payable in equal installments on the Company's regular pay schedule over a period of twelve (12) months; (ii) continuation of Executive's participation in the Company's medical benefits until the earlier of (x) twelve (12) months following Executive's termination or (y) such time as Executive is covered by comparable programs of a subsequent employer; (iii) continuation of Executive's participation in any management perquisites applicable to Executive until the earlier of (x) twelve (12) months following Executive's termination or (y) such time as Executive is covered by comparable perquisites of a subsequent employer; (iv) the payment to Executive, at the end of the year in which Executive's termination occurs, of a pro rata portion of Executive's target Bonus for the year in which Executive's termination occurs, prorated for Executive's actual employment period during such year and adjusted for performance; and (v) the provision of not less than eighteen (18) months of executive-level outplacement services at Company expense; provided, however, the expense for such services in any calendar year shall not exceed eighteen percent (18%) of the amount equal to Executive's highest Base Salary during the twelve (12) month period prior to the termination date and the target Bonus for the year in which such termination occurs. In the event Executive receives continuation of medical benefits for twelve (12) months under Section 4(e)(ii) hereof, Executive shall be eligible for continued coverage after the end of the twelve (12) month period to the extent provided by and subject to the terms of the Consolidated Budget Reconciliation Act of 1985 ("COBRA"). No other compensation of any kind or severance or other payment of any kind shall be payable by the Company after such termination date. Except as specifically provided in this Section 4(e) all benefits provided by the Company to Executive under this Agreement or otherwise shall cease as of the termination date. (f) Termination for Good Reason. Notwithstanding anything in this Section 4 to the contrary, Executive may voluntarily end his employment with the Company and receive the benefits detailed in Section 4(e), on the terms and conditions set forth therein, upon or within ninety (90) days following the occurrence of an event constituting "Good Reason," which for purposes of this Section 4(f) shall mean any of the following: (i) a material adverse change in Executive's position causing it to be of materially less stature, responsibility, or authority without Executive's written consent, and such a materially adverse change shall in all events be deemed to occur if Executive no longer serves as Senior Vice President, Marketing, unless Executive consents in writing to such change; (ii) a reduction, without Executive's written consent, in Executive's Base Salary or the Bonus Executive is eligible to earn under the AIAP (or successor plan thereto), or Executive's incentive or equity opportunity under any material incentive or equity program of the Company, provided, however, that nothing herein shall be construed to guarantee Executive's bonus for any year if the applicable performance targets are not met; and provided further that it shall not constitute Good Reason hereunder if the Company makes an appropriate pro rata adjustment to the applicable bonus and targets under the annual cash bonus plan in the event of a change in the Company's fiscal year; (iii) a material reduction without Executive's consent in the aggregate welfare benefits provided to Executive pursuant to the welfare plans, programs and arrangements in which Executive is eligible to participate; or (iv) the failure of the Company to obtain a satisfactory agreement from any successor to assume and agree to perform this Agreement. Unless Executive provides written notification of an event described in clauses (i) through (iv) above within ninety (90) days after Executive knows or has reason to know of the occurrence of any such event, Executive shall be deemed to have consented thereto and such event shall no longer constitute Good Reason for purposes of this Agreement. If Executive provides such written notice to the Company, the Company shall have ten (10) business days from the date of receipt of such notice to effect a cure of the event described therein and, upon cure thereof by the Company to the reasonable satisfaction of Executive, such event shall no longer constitute Good Reason for purposes of this Agreement. (g) Termination Upon Change of Control. In the event of Executive's Termination Upon Change of Control (as defined below), Executive shall receive the benefits detailed in Section 4(e) on the terms and conditions set forth therein, provided, however, that the payment set forth in Section 4(e)(i) shall be made in a lump sum, to be paid within thirty (30) days of Executive's termination date, and not in installments over a twelve (12) month period as provided in Section 4(e)(i). No other compensation of any kind or severance or other payment of any kind shall be payable by the Company to Executive after the termination date. Any amounts due Executive under this Section 4(g) are in the nature of severance payments, or liquidated damages which contemplate both direct damages and consequential damages that may be suffered as a result of Executive's termination, and are not in the nature of a penalty. For purposes of this Section 4(g) "Termination Upon Change of Control" means (i) the termination of Executive's employment by the Company without cause during the period commencing on the date the "Change of Control" (as defined in the Company's 1998 Stock Incentive Plan, as amended through November 15, 2000) occurs and ending on the date which is eighteen (18) months after the Change of Control; or (ii) any resignation by Executive for Good Reason within eighteen (18) months after the occurrence of a Change of Control; but (iii) "Termination Upon Change of Control" shall not include any termination of Executive's employment by the Company for cause, as a result of the death or disability of Executive, or as a result of the voluntary termination of Executive's employment for reasons other than Good Reason. (h) At-Will Employment. Executive understands and agrees that employment with the Company is at-will, which means that either Executive or the Company may, subject to the terms of this Agreement, terminate this Agreement at any time with or without cause as set forth in this Agreement. Any modification of the at-will nature of this Agreement must be in writing and executed by Executive and the Company. (i) Ongoing Obligations. Executive acknowledges that the Company and Executive have ongoing rights and obligations relating to intellectual property and confidential information of the Company, together with fiduciary rights and obligations, which will survive the termination of Executive's employment. 5. INDEMNIFICATION. In the event Executive is made, or threatened to be made, a party to any legal action or proceeding, whether civil or criminal, by reason of the fact that Executive is or was a director or officer of the Company or serves or served any other corporation fifty percent (50%) or more owned or controlled by the Company in any capacity at the Company's request, Executive shall be indemnified by the Company, and the Company shall pay Executive's related expenses when and as incurred, all to the fullest extent permitted by the laws of the State of Delaware, and the Company's Certificate of Incorporation and Bylaws. 6. PROPRIETARY INFORMATION OBLIGATIONS. During Executive's employment by the Company, Executive will have access to and become acquainted with the Company's confidential and proprietary information (collectively "Proprietary Information"), including but not limited to information or plans regarding the Company's customer relationships; personnel; technology and intellectual property; sales, marketing and financial operations and methods; and other compilations of information, records and specifications. Executive shall not disclose any Proprietary Information of the Company, or of any affiliate, directly or indirectly, to any person, firm, corporation or other entity for any reason or purpose whatsoever, nor shall Executive make use of any such Proprietary Information for his own purposes or for the benefit of any person, firm, corporation or other entity (except the Company and the affiliate) under any circumstances, during or after the term of this Agreement, except as reasonably necessary in the course of his employment for the Company or as authorized in writing by the Company. All files, records, documents, computer-recorded or electronic information and similar items relating to the business of the Company or the affiliate, whether prepared by Executive or otherwise coming into his possession, shall remain the exclusive property of the Company or the affiliate, respectively, and Executive agrees to return all property of the Company or the affiliate in his possession and under his control immediately upon any termination of Executive's employment, and no copies thereof shall be kept by Executive. 7. NONINTERFERENCE. (a) While employed by or compensated by the Company pursuant to this Agreement and for a period of two (2) years thereafter, Executive agrees not to: (i) directly or indirectly, either on Executive's own account or for any company, limited liability company, partnership, joint venture or other entity or person (including, without limitation, through any existing or future affiliate), solicit any employee of the Company or any existing or future affiliate to leave his or her employment or knowingly induce or knowingly attempt to induce any such employee to terminate or breach his or her employment agreement with the Company or any existing or future affiliate, if any; or (ii) directly or indirectly (including, without limitation, through any existing or future affiliate), solicit, cause in any part or knowingly encourage any current or future customer of or supplier to the Company or any existing or future affiliate to modify the business relationship, or cease doing business in whole or in part, with the Company or any such affiliate. (b) In the event a court of competent jurisdiction or other tribunal or person(s) mutually selected by the parties to resolve any dispute (collectively a "Court") has determined that Executive has violated the provisions of this Agreement, the running of the time period of such provisions so violated shall be automatically suspended as of the date of such violation and shall be extended for the period of time from the date such violation commenced through the date that the Court determines that such violation has permanently ceased. 8. INJUNCTIVE RELIEF. The parties hereto agree that damages would be an inadequate remedy for the Company in the event of a breach or threatened breach of Sections 6 or 7 of this Agreement by Executive, and in the event or any such breach or threatened breach, the Company may, either with or without pursuing any potential damage remedies, obtain and enforce an injunction prohibiting Executive from violating this Agreement and requiring Executive to comply with the terms of this Agreement. 9. WARRANTIES AND REPRESENTATIONS. Executive hereby represents and warrants to the Company that he: (a) is not now under any obligation of a contractual or quasi-contractual nature known to him that is inconsistent or in conflict with this Agreement or that would prevent, limit or impair the performance by Executive of his obligations hereunder; and (b) has been or has had the opportunity to be represented by legal counsel in the preparation, negotiation, execution and delivery of this Agreement and understands fully the terms and provisions hereof. 10. MISCELLANEOUS. (a) Notices. Any notice or communication required or permitted by this Agreement shall be deemed sufficiently given if in writing and, if delivered personally, when it is delivered or, if delivered in another manner, including without limitation, by facsimile (with confirmation of receipt and a confirmation copy sent by U.S. Mail or overnight delivery), the earlier of when it is actually received by the party to whom it is directed or when the period set forth below expires (whether or not it is actually received): (i) if deposited with the U.S. Postal Service, postage prepaid, and addressed to the party to receive it as set forth below, forty-eight (48) hours after such deposit as registered or certified mail; or (ii) if accepted by Federal Express or a similar delivery service in general usage for delivery to the address of the party to receive it as set forth next below, twenty-four (24) hours after the delivery time promised by the delivery service. To the Company: Del Monte Foods Company One Market at The Landmark P.O. Box 193575 San Francisco, CA 94119-3575 Fax: 415/247-3263 Attention: Board of Directors and Secretary With a copy to: Gibson, Dunn & Crutcher LLP One Montgomery Street San Francisco, California 94104-4505 Fax: 415/986-5309 Attention: Douglas D. Smith, Esq. To Executive: -------------------------- Fax: With a copy to: Fax: Attention: or to such other address or to the attention of such other person as the recipient party will have specified by prior written notice to the sending party. (b) Severability. If any term or provision (or any portion thereof) of this Agreement is determined by a court to be invalid, illegal or incapable of being enforced by any rule of law or public policy, all other terms and provisions (or other portions thereof) of this Agreement shall nevertheless remain in full force and effect. Upon such determination that any term or provision (or any portion thereof) is invalid, illegal or incapable of being enforced, this Agreement shall be deemed to be modified so as to effect the original intent of the parties as closely as possible to the end that the transactions contemplated hereby and the terms and provisions hereof are fulfilled to the greatest extent possible. (c) Entire Agreement. This Agreement supersedes and replaces in all respects the Retention Agreement between Executive and Company, dated September 12, 2001 (the "Prior Employment Agreement") and, upon Executive's acceptance of this Agreement, the Prior Employment Agreement shall be null and void. This Agreement, including any documents incorporated herein, together with the applicable terms of the Company's options plans and benefit plans, contains the Company's entire understanding with Executive related to the subject matter hereof, and supersedes and preempts any prior or contemporaneous understandings, agreements, or representations by or between the parties, written or oral. Without limiting the generality of the foregoing, except as provided in this Agreement, all understandings and agreements, written or oral, relating to the employment of Executive by the Company, or the payment of any compensation or the provision of any benefit in connection therewith or otherwise are hereby terminated and shall be of no future force and effect. (d) Counterparts. This Agreement may be executed on separate counterparts, any one of which need not contain signatures of more than one party, but all of which taken together will constitute one and the same agreement. Signatures may be exchanged by electronic facsimile with machine evidence of transmission. (e) Successors and Assigns. This Agreement is intended to bind and inure to the benefit of and be enforceable by Executive and the Company, and their respective successors and assigns, except that Executive may not assign any of his duties hereunder and he may not assign any of his rights hereunder without the prior written consent of the Company, which consent will not unreasonably be withheld. If Executive should die while any amounts would still be payable to him hereunder if he had continued to live, all amounts payable hereunder shall be paid in accordance with the terms of this Agreement to Executive's estate, unless Executive has provided written notice to the Company specifying a different beneficiary or beneficiaries (which notice(s) may be changed from time to time at the sole discretion of Executive). (f) Attorneys' Fees. If any legal proceeding is necessary to enforce or interpret the terms of this Agreement, or to recover damages for breach thereof, the prevailing party shall be entitled to reasonable attorneys' fees, as well as costs and disbursements, in addition to any other relief to which he or it may be entitled. (g) Amendments. No amendments or other modifications to this Agreement may be made except by a writing signed by both parties. Except for Executive's estate under Section 4(a), nothing in this Agreement, express or implied, is intended to confer upon any third person any rights or remedies under or by reason of this Agreement. (h) Choice of Law. All questions concerning the construction, validity and interpretation of this Agreement will be governed by the internal law, and not the law of conflicts, of the State of California except as otherwise provided in Section 10 above. (i) Further Assurances. Each of the parties hereto agrees to use all reasonable efforts to take or cause to be taken, all appropriate actions, and to cause to take or to be taken, all things necessary, proper or advisable under applicable laws to effect the transactions contemplated by this Agreement, including without limitation, execution and delivery to the Company of such representations in writing as may be requested by the Company in order for its to comply with applicable federal and state securities laws. (j) Fees and Expenses Relating to Agreement. Each of the parties hereto shall bear its own fees and expenses incurred in connection with the preparation of this Agreement and the transactions contemplated hereby. IN WITNESS WHEREOF, the parties have executed this Agreement effective as of the date set forth above. EXECUTIVE: /s/ Marc D. Haberman - ------------------------------------------------ Marc D. Haberman COMPANY: DEL MONTE FOODS COMPANY By: /s/ David L. Meyers -------------------------------------------- Name: David L. Meyers -------------------------------------------- Title: Executive Vice President, Administration -------------------------------------------- and Chief Financial Officer -------------------------------------------- EX-12 28 f84647exv12.txt EXHIBIT 12 EXHIBIT 12 DEL MONTE FOODS COMPANY AND SUBSIDIARIES STATEMENT RE: COMPUTATION OF EARNINGS TO FIXED CHARGES

YEAR ENDED JUNE 30, --------------------------------------------------- 2002 2001 2000 1999 1998 -------- -------- -------- -------- ------- (IN MILLIONS, EXCEPT RATIO) EARNINGS: Consolidated pre-tax income ....... $ 55.8 $ 56.7 $ 79.4 $ 33.2 $ 6.0 Interest expense .................. 57.5 74.6 67.1 77.6 77.5 Interest portion of rent expense(a) 9.9 11.5 9.9 9.8 9.4 -------- -------- -------- -------- ------- Earnings ............ $ 123.2 $ 142.8 $ 156.4 $ 120.6 $ 92.9 ======== ======== ======== ======== ======= FIXED CHARGES: Interest expense .................. $ 57.5 $ 74.6 $ 67.1 $ 77.6 $ 77.5 Interest portion of rent expense(a) 9.9 11.5 9.9 9.8 9.4 -------- -------- -------- -------- ------- Fixed charges ....... $ 67.4 $ 86.1 $ 77.0 $ 87.4 $ 86.9 ======== ======== ======== ======== ======= FIXED CHARGE RATIO: Ratio of earnings to fixed charges 1.8x 1.7x 2.0x 1.4x 1.1x Surplus of earnings available to cover fixed charges ........... $ 55.8 $ 56.7 $ 79.4 $ 33.2 $ 6.0

(a) Interest portion of rent expense is assumed equal to 33% of operating lease and rental expense for the period. EX-23 29 f84647exv23.txt EXHIBIT 23 EXHIBIT 23 CONSENT OF INDEPENDENT AUDITORS The Board of Directors Del Monte Foods Company: We consent to the incorporation by reference in the registration statements on Form S-8 (Nos. 333-40867, 333-52226, 333-38394, 333-34280 and 333-79315) and on Form S-4 (Nos. 333-64802 and 333-98827) of Del Monte Foods Company of our report dated July 26, 2002, relating to the consolidated balance sheets of Del Monte Foods Company and subsidiaries as of June 30, 2002 and 2001, and the related consolidated statements of income, stockholders' equity (deficit) and comprehensive income and cash flows for each of the years in the three-year period ended June 30, 2002, which report appears in the annual report on Form 10-K of Del Monte Foods Company for the year ended June 30, 2002. /s/ KPMG LLP San Francisco, California September 26, 2002 EX-99 30 f84647exv99.txt EXHIBIT 99 EXHIBIT 99 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 Each of the undersigned, in his capacity as the Chief Executive Officer and Chief Financial Officer, respectively, of Del Monte Foods Company for purposes of 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, certifies that to his knowledge: 1. The Annual Report of Del Monte Foods Company on Form 10-K for the period ended June 30, 2002 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in such report fairly presents, in all material respects, the financial condition and results of operations of Del Monte Foods Company. Date: September 30, 2002 /s/ RICHARD G. WOLFORD ----------------------------------------- Richard G. Wolford President and Chief Executive Officer, Director and Chairman of the Board /s/ DAVID L. MEYERS ----------------------------------------- David L. Meyers Executive Vice President, Administration and Chief Financial Officer GRAPHIC 31 f84647f84647.gif GRAPHIC begin 644 f84647f84647.gif M1TE&.#EA8P`[`-4``/^9F?]\@/'Q\9G,`/^9`/\S,_]04/^9S/]F`.?GUF:9 M`/__S#.9`/\S`,S_`#.9,YG,F?]F9F:99O_,`/\`,V;,`,S_S,#KJ MZIG,S#.99O^99O\S9N_6QOCX^/]F,Z;*\,SL_\S_F6;,F9G_S&:9,P"``/_, MS/__`/\``/___P`````````````````````````````````````````````` M`````````````````````````````````"'Y!```````+`````!C`#L```;_ MP)5P2"P:C\BD$PNF\_HM'K-;KO?4\O# M`H>?[O7Q0I#45%(*&$@)`H5/$@\2=0(7B'>)"A!"`A`8#P,I`Y`+*P*(#W>/ M&X)*%QH6(1=N(Q"A#*^AC[&8`[&@=Z\*NJ$/$'Q'$(D2DFH"H!68*7O!7?I3I-=(`&I6!R5B)6:8;"NH)J`(?@8%@&04$JM!@;S8J&,&$`.`77&E^ M*;9"9CMJ<,:/'-JW0(,K>,1:=AFA(*41M?._9(AH;. M!3F)`04(,-Z1BOD5P9C=%;C8A"O8J<*$!S3025[[S=A)0U-A2,9+B#G)V`&. MS>IH<`8XZ%`!*(!`7;&;J<`!"HO^]:"3@1T@X:P!!#;/`+Z.44VP@I7;60H, M?%;_DE:I;6ON22G$A88$+P7ZE&@%_'92BX*-U%,:)_P1ZE&D?53M1P;DI@)E M'_'UU%0G>#GO"S/3;+-2",-G(\%(*!+\4KT8D&]OA@6;>R^^ %$D$``#L_ ` end -----END PRIVACY-ENHANCED MESSAGE-----

EX-10.12

                                                                   EXHIBIT 10.12


                                LEASE AGREEMENT
                                 by and between

                              DELMO (PA) QRS 11-36

                                       and

                              DELMO (PA) QRS 12-10

                       each a Pennsylvania business trust

                            collectively, as LANDLORD

                                       and

                             DEL MONTE CORPORATION,
                             a New York corporation,



                                    as TENANT


                         Premises:    Mendota, Illinois
                                      Toppenish, Washington
                                      Yakima, Washington
                                      Plover, Wisconsin


                          Dated as of: October 31, 1995




                               TABLE OF CONTENTS



                                                                   Page
                                                                   ----
                                                             
1.    Demise of Premises .........................................   1
2.    Certain Definitions ........................................   1
3.    Title and Condition ........................................  12
4.    Use of Leased Premises; Quiet Enjoyment ....................  14
5.    Term .......................................................  14
6.    Basic Rent .................................................  15
7.    Additional Rent ............................................  16
8.    Net Lease; Non-Terminability ...............................  17
9.    Payment of Impositions .....................................  18
10.   Compliance with Laws and Easement Agreements;
      Environmental Matters ......................................  20
11.   Liens; Recording ...........................................  22
12.   Maintenance and Repair .....................................  22
13.   Alterations and Improvements ...............................  23
14.   Permitted Contests .........................................  24
15.   Indemnification ............................................  25
16.   Insurance ..................................................  26
17.   Casualty and Condemnation ..................................  30
18.   Termination Events .........................................  31
19.   Restoration; Reduction of Rent .............................  33
20.   Procedures Upon Purchase ...................................  35
21.   Assignment and Subletting ..................................  36
22.   Events of Default ..........................................  40
23.   Remedies and Damages Upon Default ..........................  43
24.   Notices ....................................................  47
25.   Estoppel Certificate .......................................  48
26.   Surrender ..................................................  48
27.   No Merger of Title .........................................  48
28.   Books and Records ..........................................  49
29.   Determination of Value .....................................  51
30.   Non-Recourse as to Landlord ................................  54
31.   Financing ..................................................  54
32.   Subordination ..............................................  54
33.   Tax Treatment; Reporting ...................................  55
34.   Financing Major Alterations ................................  55
35.   Security Deposit ...........................................  57
36.   Economic Abandonment .......................................  59
37.   Option to Purchase .........................................  61
38.   Right of First Refusal .....................................  62
39.   Miscellaneous ..............................................  64


EXHIBITS
- --------
       Exhibit "A"  - Premises
       Exhibit "B"  - Machinery and Equipment
       Exhibit "C"  - Schedule of Permitted Encumbrances
       Exhibit "D"  - Rent Schedule
       Exhibit "E"  - Landlord's Share of Project Costs
       Exhibit "F"  - Percentage Allocation of Basic Rent


                                      -i-



        LEASE AGREEMENT, made as of this 31st day of October, 1995, between
BARCLAY G. JONES III, TRUSTEE OF DELMO (PA) QRS 11-36 under a certain Trust
Agreement dated as of October 11, 1995, and BARCLAY G. JONES III, TRUSTEE OF
DELMO (PA) QRS 12-10 under a certain Trust Agreement dated as of October 11,
1995, each a Pennsylvania business trust (collectively, "Landlord"), with its
principal place of business c/o W.P. Carey & Co., Inc., 50 Rockefeller Plaza,
2nd Floor, New York, New York 10020, and DEL MONTE CORPORATION, a New York
corporation ("Tenant"), with an address at Market Place, Steuart Tower, San
Francisco, California 94105.

        In consideration of the rents and provisions herein stipulated to be
paid and performed, Landlord and Tenant hereby covenant and agree as follows:

        1. Demise of Premises. The Leased Premises shall be comprised of four
(4) parcels of Land, Improvements to be constructed thereon by Landlord and
Equipment to be installed therein by Landlord, all as set forth in this Lease
and the Construction Agency Agreement. Landlord hereby demises and lets to
Tenant, and Tenant hereby takes and leases from Landlord, for the term and upon
the provisions hereinafter specified, the following described property
(hereinafter referred to collectively as the "Leased Premises" and individually
as the "Mendota Premises" "Toppenish Premises" "Yakima Premises" and "Plover
Premises" each of which premises is more particularly described in the
applicable description in Exhibit "A" attached hereto and made a part hereof
and shall include the portions of items (a), (b) and (c) of this Paragraph 1
located thereon or therein and appertaining thereto): (a) the premises described
in Exhibit "A" hereto, together with the Appurtenances (collectively, the
"Land"); (b) the buildings, structures and other improvements constructed or to
be constructed on the Land by Landlord (collectively, the "Improvements"); and
(c) the fixtures, machinery, equipment, including conveyor equipment, and other
property to be installed in the Improvements by Landlord described in Exhibit
"B" hereto (collectively, the "Equipment").

        2. Certain Definitions.

            "Abandonment Date" shall mean the Abandonment Date as defined in
Paragraph 36.

            "Abandonment Notice" shall mean Abandonment Notice as defined in
Paragraph 36.

            "Abandonment Offer Amount" shall mean the Abandonment Offer Amount
as defined in Paragraph 36.

            "Abandonment Premises" shall mean one of the Related Premises so
designated by Tenant.

            "Acquisition Fee" shall mean $990,000 and shall be payable by
Landlord to W.P. Carey & Co., Inc. and/or Carey Institutional Properties
Incorporated and/or Corporate Property Associates 12 Incorporated.



                                      -1-


            "Additional Rent" shall mean Additional Rent as defined in Paragraph
7.

            "Adjoining Property" shall mean all sidewalks, driveways, curbs,
gores and vault spaces adjoining each Related Premises and which Tenant has the
legal obligation to maintain.

            "Affected Premises" shall mean the Affected Premises as defined in
Paragraph 18.

            "Affiliate" shall mean, as to any Person, any other Person which,
directly or indirectly, is in control of, is controlled by, or is under common
control with, such Person. For purposes of this definition and otherwise in
this Lease, a Person shall be deemed to control another Person if the
controlling Person possesses, directly or indirectly, the power to direct or
cause the direction of the management and policies of the other Person only
through the ownership of voting securities (but not by contract or otherwise).

            "Alterations" shall mean all changes, additions, improvements or
repairs to, all alterations, reconstructions, renewals, replacements or removals
of and all substitutions or replacements for any of the Improvements or
Equipment, both interior and exterior, structural and non-structural, and
ordinary and extraordinary and shall include any Major Alterations.

            "Appurtenances" shall mean all tenements, hereditaments, easements,
rights-of-way, rights, privileges in and to the Land, including (a) easements
over other lands granted by any Easement Agreement and (b) any streets, ways,
alleys, vaults, gores or strips of land adjoining the Land.

            "Assignment" shall mean any assignment of rents and leases from
Landlord to a Lender which (a) encumbers any of the Leased Premises and (b)
secures Landlord's obligation to repay a Loan, as the same may be amended,
supplemented or modified from time to time.

            "Assumable Loan" shall mean Assumable Loan as defined in Paragraph
38.

            "Basic Rent" shall mean Basic Rent as defined in Paragraph 6.

            "Basic Rent Payment Dates" shall mean the Basic Rent Payment Dates
as defined in Paragraph 6.

            "Cash Security" shall mean Cash Security as defined in Paragraph 35.

            "Casualty" shall mean any injury to or death of any person or any
loss of or damage to any property (including the


                                      -2-


Leased Premises) included within or related to the Leased Premises or arising
from the Adjoining Property.

            "Commencement Date" shall mean Commencement Date as defined in
Paragraph 5.

            "Condemnation" shall mean a Taking and/or a Requisition.

            "Condemnation Notice" shall mean written notice or knowledge of the
institution of or intention to institute any proceeding for Condemnation.

            "Construction Agency Agreement" shall mean that certain Construction
Agency Agreement of even date between Landlord, as owner, and Tenant, as agent
for Landlord in connection with the construction of the Improvements.

            "Construction Contingency" shall mean the Construction Contingency
as defined in the Construction Agency Agreement.

            "Costs" of a Person or associated with a specified transaction shall
mean all reasonable costs and expenses incurred by such Person or associated
with such transaction, including without limitation, attorneys' fees and
expenses, court costs, brokerage fees, escrow fees, title insurance premiums,
mortgage commitment fees, mortgage points, recording fees and transfer taxes, as
the circumstances require.

            "CPI" shall mean CPI as defined in Exhibit "D" hereto.

            "Default Rate" shall mean the Default Rate as defined in Paragraph
7(a)(iv).

            "Default Termination Amount" shall mean the Default Termination
Amount as defined in Paragraph 23(a)(iii).

            "Direct Costs" shall mean Direct Costs as defined in Section 1.01 of
the Construction Agency Agreement.

            "Easement Agreement" shall mean any conditions, covenants,
restrictions, easements, declarations, licenses and other agreements listed as
Permitted Encumbrances or as may hereafter affect any Leased Premises.

            "Environmental Law" shall mean (i) whenever enacted or promulgated,
any applicable federal, state, foreign or local law, statute, ordinance, rule,
regulation, license, permit, authorization, approval, consent, court order,
judgment, decree, injunction, code, requirement or agreement with any
governmental entity, (x) relating to pollution (or the cleanup thereof), or the
protection of air, water vapor, surface water, groundwater,


                                      -3-


drinking water supply, land (including land surface or subsurface), plant,
aquatic and animal life from injury or damage caused by a Hazardous Substance or
(y) concerning exposure to, or the use, containment, storage, recycling,
reclamation, reuse, treatment, generation, discharge, transportation,
processing, handling, labeling, production, disposal or remediation of Hazardous
Substances, Hazardous Condition or Hazardous Activity, in each case as amended
and as now or hereafter in effect, and (ii) any common law or equitable doctrine
(including, without limitation, injunctive relief and tort doctrines such as
negligence, nuisance, trespass and strict liability) that may impose liability
or obligations for injuries or damages due to or threatened as a result of the
presence of, exposure to, or ingestion of, any Hazardous Substance. The term
Environmental Law includes, without limitation, the federal Comprehensive
Environmental Response Compensation and Liability Act of 1980, the Superfund
Amendments and Reauthorization Act, the federal Water Pollution Control Act, the
federal Clean Air Act, the federal Clean Water Act, the federal Resources
Conservation and Recovery Act of 1976 (including the Hazardous and Solid Waste
Amendments to RCRA), the federal Solid Waste Disposal Act, the federal Toxic
Substance Control Act, the federal Insecticide, Fungicide and Rodenticide Act,
the federal Occupational Safety and Health Act of 1970, the federal National
Environmental Policy Act and the federal Hazardous Materials Transportation Act,
each as amended and as now or hereafter in effect and any similar state or local
Law.

            "Environmental Violation" shall mean (a) any direct or indirect
discharge, disposal, spillage, emission, escape, pumping, pouring, injection,
leaching, release, seepage, filtration or transporting of any Hazardous
Substance at, upon, under, onto or within the Leased Premises, or from the
Leased Premises to the environment, in violation of any Environmental Law or in
excess of any reportable quantity established under any Environmental Law or
which results, or could reasonably be expected to result, in any material
liability to Landlord, Tenant or Lender, any Federal, state or local government
or any other Person for the costs of any removal or remedial action or natural
resources damage or for bodily injury or property damage, (b) any deposit,
storage, dumping, placement or use of any Hazardous Substance at, upon, under or
within the Leased Premises or which extends to any Adjoining Property in
violation of any Environmental Law or in excess of any reportable quantity
established under any Environmental Law or which results, or could reasonably be
expected to result, in any material liability to any Federal, state or local
government or to any other Person for the costs of any removal or remedial
action or natural resources damage or for bodily injury or property damage, (c)
the abandonment or discarding on or from the Leased Premises of any barrels,
drums, containers or other receptacles containing any Hazardous Substances in
violation of any Environmental Laws, (d) any activity, occurrence or condition
under any Environmental Law which results, or could reasonably be expected to
result, in any


                                      -4-


material liability, cost or expense to Landlord or Lender or any other owner or
occupier of the Leased Premises, or which results, or could result, in a
creation of a lien on any Related Premises under any Environmental Law or (e)
any violation of or noncompliance with any Environmental Law.

            "Equipment" shall mean the Equipment as defined in Paragraph 1.

            "Event of Default" shall mean an Event of Default as defined in
Paragraph 22(a).

            "Expiration Date" shall mean Expiration Date as defined in
Paragraph 5.

            "Fair Market Value" shall be as defined in Paragraph 29.

            "Fair Market Value Date" shall mean the date when the Fair Market
Value is determined in accordance with Paragraph 29.

            "Federal Funds" shall mean federal or other immediately available
funds which at the time of payment are legal tender for the payment of public
and private debts in the United States of America.

            "Final Completion Date" shall mean Final Completion Date as defined
in Section 1.01 of the Construction Agency Agreement.

            "Guarantor" shall mean Del Monte Foods Company, a Maryland
corporation.

            "Guaranty" shall mean the Guaranty and Suretyship Agreement dated as
of the date hereof from Guarantor to Landlord guaranteeing the payment and
performance by Tenant of all of Tenant's obligations under the Lease.

            "Hazardous Activity" means any activity, process, procedure or
undertaking which directly or indirectly (i) procures, generates or creates any
Hazardous Substance in violation of any Environmental Law; (ii) causes or
results in (or threatens to cause or result in) the release, seepage, spill,
leak, flow, discharge or emission of any Hazardous Substance into the
environment (including the air, ground water, watercourses or water systems) in
violation of any Environmental Law or in excess of any reportable quantity;
(iii) involves the containment or storage of any Hazardous Substance; or (iv)
would cause any of the Leased Premises or any portion thereof to become a
hazardous waste treatment, recycling, reclamation, processing, storage or
disposal facility within the meaning of any Environmental Law.


                                      -5-

            "Hazardous Condition" means any condition which could reasonably be
expected to give rise to any claim or liability under any Environmental Law,
including the presence of underground storage tanks.

            "Hazardous Substance" means (i) any substance, material, product,
petroleum, petroleum product, derivative, compound or mixture, mineral
(including asbestos), chemical, gas, medical waste, or other pollutant, in each
case whether naturally occurring, man-made or the by-product of any process,
that is toxic, harmful or hazardous or acutely hazardous to the environment or
public health or safety or (ii) any substance subject to regulations under any
Environmental Law, whether or not defined as hazardous as such under any
Environmental Law. Hazardous Substances include, without limitation, any toxic
or hazardous waste, pollutant, contaminant, industrial waste, petroleum or
petroleum-derived substances or waste, radon, radioactive materials, asbestos,
asbestos containing materials, urea formaldehyde foam insulation, lead,
polychlorinated biphenyls.

            "Impositions" shall mean the Impositions as defined in Paragraph
9(a).

            "Improvements" shall mean the Improvements as defined in Paragraph 1
and shall include any Major Alterations.

            "Indemnitee" shall mean an Indemnitee as defined in Paragraph 15.

            "Indirect Costs" shall mean Indirect Costs as defined in Section
1.01 of the Construction Agency Agreement.

            "Initial Lender" shall mean Creditanstalt Corporate Finance, Inc. or
any other Lender who makes the Initial Loan.

            "Initial Loan" shall mean the initial permanent Loan following
completion of construction of the Improvements.

            "Initial Loan Commitment" shall mean the commitment of Creditanstalt
Corporate Finance, Inc., to make the Initial Loan pursuant to that certain
Application and Commitment dated November 7, 1995 by and between Creditanstalt
Corporate Finance, Inc., and Landlord.

            "Initial Term" shall mean Initial Term as defined in Paragraph 5.

            "Initial Term Commencement Date" shall mean Initial Term
Commencement Date as defined in Paragraph 5.

            "Insurance Requirements" shall mean the requirements of all
insurance policies maintained in accordance with this Lease.


                                      -6-


            "Land" shall mean the Land as defined in Paragraph 1.

            "Landlord Encumbrances" shall mean any defects in title or matters
affecting title to the Leased Premises created by Landlord, except for the
Mortgage and Assignment and defects or matters created at the request of, with
the concurrence of or as a result of any act of Tenant.

            "Landlord's Share of Project Costs" shall mean with respect to each
Related Premises the sum of (i) actual Direct Costs expended by Landlord with
respect to such Related Premises, including amounts charged against the
Construction Contingency for such Related Premises, plus (ii) Indirect Costs
(exclusive of the Construction Contingency) expended by Landlord, allocated to
such Related Premises based on the percentages set forth in Exhibit F hereto.
Landlord's Share of Project Costs for the Leased Premises shall refer to the
total of Landlord's Share of Project Costs for all of the Related Premises,
which shall in no event exceed $21,990,000.

            "Law" shall mean any constitution, statute, rule of law, code,
ordinance, order, judgment, decree, injunction, rule, regulation, policy,
requirement or administrative or judicial determination, even if unforeseen or
extraordinary, of every duly constituted governmental authority, court or
agency, now or hereafter enacted or in effect.

            "Lease" shall mean this Lease Agreement.

            "Lease Year" shall mean, with respect to the first Lease Year, the
period commencing on the Commencement Date and ending at midnight on the last
day of the twelfth (12th) consecutive calendar month following the month in
which the Commencement Date occurred, and each succeeding twelve (12) month
period during the Term.

            "Leased Premises" shall mean the Leased Premises as defined in
Paragraph 1.

            "Legal Requirements" shall mean the requirements of all present and
future Laws (including but not limited to Environmental Laws) and all covenants,
restrictions and conditions now or hereafter of record which may be applicable
to any of the Leased Premises, or to the use, manner of use, occupancy,
possession, operation, maintenance, alteration, repair or restoration of any of
the Leased Premises, even if compliance therewith necessitates structural
changes or improvements or results in interference with the use or enjoyment of
any of the Leased Premises.

            "Lender" shall mean (a) Initial Lender, its successors and assigns,
and (b) any person or entity (and their


                                      -7-


respective successors and assigns) which may, after the date hereof, make a Loan
to Landlord or is the holder of any Note.

            "Letter of Credit" shall mean the Letter of Credit as defined in
Paragraph 35.

            "Loan" shall mean any loan made by one or more Lenders to Landlord,
which loan is secured by a Mortgage and an Assignment and evidenced by a Note.

            "Major Alterations" shall mean Major Alterations as defined in
Paragraph 34.

            "Monetary Obligations" shall mean Rent and all other sums payable by
Tenant under this Lease to Landlord, to any third party on behalf of Landlord or
to any Indemnitee.

            "Mortgage" shall mean, singly or collectively, any one or more
mortgages or deeds of trust from Landlord to a Lender or a trustee for the
benefit of a Lender which (a) encumbers any of the Leased Premises and (b)
secures Landlord's obligation to repay a Loan, as the same may be amended,
supplemented or modified.

            "Net Award" shall mean (a) the entire award payable to Landlord or
Lender by reason of a Condemnation whether pursuant to a judgment or by
agreement or otherwise, or (b) the entire proceeds of any insurance required
under clauses (i), (ii) (to the extent payable to Landlord or Lender), (iv), (v)
or (vi) of Paragraph 16(a), as the case may be, less any reasonable expenses
incurred by Landlord and Lender in collecting such award or proceeds.

            "Non-Preapproved Assignment" shall have the meaning set forth in
Paragraph 21.

            "Note" shall mean any promissory note evidencing Landlord's
obligation to repay a Loan, as the same may be amended, supplemented or
modified.

            "Occupancy Date" shall mean with respect to each Related Premises
the date on which all of the following events have occurred: (i) the
Improvements have been substantially completed in accordance with the Plans, as
certified to by the General Contractor and Construction Manager (as such terms
are defined in the Construction Agency Agreement), and (ii) a temporary or
permanent permit required for the occupancy of the Improvements has been
obtained, but in no event shall the Occupancy Date occur later than 60 days
following the Completion Date (as defined in the Construction Agency Agreement)
for such Related Premises.

            "Offer Amount" shall mean the greater of (a) Fair Market Value or
(b) the sum of the Landlord's Share of Project


                                      -8-


Costs for the Leased Premises and any Prepayment Premium which Landlord will be
required to pay in prepaying the Loan with proceeds of the Offer Amount.

            "Outside Date" shall mean July 1, 1996.

            "Partial Casualty" shall mean any Casualty which does not constitute
a Termination Event.

            "Partial Condemnation" shall mean any Condemnation which does not
constitute a Termination Event.

            "Permitted Encumbrances" shall mean those covenants, restrictions,
reservations, liens, conditions and easements and other encumbrances, other than
any Mortgage or Assignment, listed on Exhibit "C" hereto (but such listing shall
not be deemed to revive any such encumbrances that have expired or terminated or
are otherwise invalid or unenforceable).

            "Person" shall mean an individual, partnership, association,
corporation or other entity.

            "Plans" shall mean Plans as defined in the Construction Agency
Agreement.

            "Prepayment Premium" shall mean any payment (other than a payment of
principal and/or interest which Landlord is required to make under a Note or a
Mortgage) by reason of any prepayment by Landlord of any principal due under a
Note or Mortgage, and which may be (in lieu of such prepayment premium or
prepayment penalty) a "make whole" clause requiring a prepayment premium in an
amount sufficient to compensate the Lender for the loss of the benefit of the
Loan due to prepayment; provided, however, that Tenant shall not be required to
pay the Prepayment Premium on any amount in excess of $13,000,000.

            "Present Value" of any amount shall mean such amount discounted by a
rate per annum which is the lower of (a) the Prime Rate at the time such present
value is determined or (b) eight percent (8%) per annum.

            "Primary Term" shall mean Primary Term as defined in Paragraph 5(a).

            "Primary Term Commencement Date" shall mean the date of this Lease.

            "Prime Rate" shall mean the interest rate per annum as published,
from time to time, in the Wall Street Journal as the "Prime Rate" in its column
entitled "Money Rate". The Prime Rate may not be the lowest rate of interest
charged by any "large U.S. money center commercial banks" and Landlord makes no
representations or warranties to that effect. In the event the Wall Street
Journal ceases publication or ceases to publish the


                                      -9-


"Prime Rate" as described above, the Prime Rate shall be the average per annum
discount rate (the "Discount Rate") on ninety-one (91) day bills ("Treasury
Bills") issued from time to time by the United States Treasury at its most
recent auction, plus three hundred (300) basis points. If no such 91-day
Treasury Bills are then being issued, the Discount Rate shall be the discount
rate on Treasury Bills then being issued for the period of time closest to
ninety-one (91) days.

            "Related Premises" shall mean any one of the Mendota Premises,
Toppenish Premises, Yakima Premises and Plover Premises.

            "Relevant Amount" shall mean the Abandonment 0ffer Amount, the Offer
Amount, the Termination Amount or the Default Termination Amount, as the case
may be.

            "Relevant Date" shall mean (a) the date immediately prior to the
date on which the applicable Condemnation Notice is received, in the event of a
Termination Notice under Paragraph 18 which is occasioned by a Taking, (b) the
date immediately prior to the date on which the applicable Casualty occurs, in
the event of a Termination Notice under Paragraph 18 which is occasioned by a
Casualty, (c) the date when Fair Market Value is redetermined, in the event of a
redetermination of Fair Market Value pursuant to Paragraph 20(c), (d) the date
immediately prior to the Event of Default giving rise to the need to determine
Fair Market Value in the event Landlord provides Tenant with notice of its
intention to require Tenant to make a Termination Offer under Paragraph
23(a)(iii), (e) the Fair Market Value Date in the event Tenant exercises its
option to purchase the Leased Premises pursuant to Paragraph 37, or (f) with
respect to a Non-Preapproved Assignment, the earlier of the date on which
Landlord issues notice of the Non-Preapproved Assignment to Tenant or the date
that is immediately prior to the date on which the Non-Preapproved Assignment
occurs.

            "Remaining Premises" shall mean the Related Premises which are not
Abandonment Premises or Affected Premises under Paragraph 18.

            "Remaining Sum" shall mean Remaining Sum as defined in Paragraph
19(c).

            "Rent" shall mean, collectively, Basic Rent and Additional Rent.

            "Requisition" shall mean any temporary requisition or confiscation
of the use or occupancy of any of the Leased Premises by any governmental
authority, civil or military, whether pursuant to an agreement with such
governmental authority in settlement of or under threat of any such requisition
or confiscation, or otherwise.

                                      -10-


            "Retention Date" shall mean the later of the date on which the
amount of the Remaining Sum is finally determined or the date on which
Landlord's right to the Remaining Sum is finally determined.

            "Security Deposit" shall mean Security Deposit as defined in
Paragraph 35.

            "Silgan" shall mean Silgan Containers Corporation.

            "Silgan Subleases" shall mean the sublease agreements for 30,000
square feet of space in the Plover Premises and 35,000 square feet in space in
the Toppenish Premises between Tenant, as landlord, and Silgan (or a subsidiary
of Silgan, so long as Silgan guarantees the obligations of such subsidiary under
such sublease), as tenant, which shall be satisfactory in form and substance to
Landlord and Initial Lender and which shall require, among other things, that
Silgan shall execute such documents as Landlord or Lender shall reasonably
request in connection with the disbursement of the Loan from Initial Lender to
Landlord, including an estoppel certificate and a consent to assignment of
leases, rents and any applicable guaranties.

            "Site Assessment" shall mean a Site Assessment as defined in
Paragraph 10(c).

            "State" shall mean the States of Illinois, Washington and Wisconsin.
..

            "Surviving Obligations" shall mean any obligations of Tenant under
this Lease, actual or contingent, which arise on or prior to the expiration or
prior termination of this Lease or which survive such expiration or termination
by their own terms.

            "Taking" shall mean (a) any taking or damaging of all or a portion
of any of the Leased Premises (i) in or by condemnation or other eminent domain
proceedings pursuant to any Law, general or special, or (ii) by reason of any
agreement with any condemnor in settlement of or under threat of any such
condemnation or other eminent domain proceeding, or (iii) by any other means, or
(b) any de facto condemnation. The Taking shall be considered to have taken
place as of the later of the date actual physical possession is taken by the
condemnor, or the date on which the right to compensation and damages accrues
under the law applicable to the Related Premises.

            "Term" shall mean the Primary Term and Initial Term and any
extensions thereof.

            "Termination Amount" shall mean the greater of (a) Fair Market Value
or (b) the sum of the Landlord's Share of Project Costs for the applicable
Related Premises or the Leased Premises, as the case may be, and any Prepayment
Premium which


                                      -11-


Landlord will be required to pay in prepaying any Loan with proceeds of the
Termination Amount.

            "Termination Date" shall mean the Termination Date as defined in
Paragraph 18.

            "Termination Event" shall mean a Termination Event as defined in
Paragraph 18.

            "Termination Notice" shall mean Termination Notice as defined in
Paragraph 18(a).

            "Third Party Purchaser" shall mean the Third Party Purchaser as
defined in Paragraph 21(h).

            "Yakima Funding Deadline" shall mean August 31, 1996.

        3. Title and Condition.

            (a) The Leased Premises are demised and let subject to (i) the
rights of any Persons in possession of the Leased Premises, (ii) the existing
state of title of any of the Leased Premises, including any Permitted
Encumbrances, (iii) any state of facts which an accurate survey or physical
inspection of the Leased Premises might show, (iv) all Legal Requirements,
including any existing violation of any thereof, and (v) the condition of the
Leased Premises as of the commencement of the Term, without representation or
warranty by Landlord except as to Landlord Encumbrances.

            (b) LANDLORD LEASES AND WILL LEASE AND TENANT TAKES AND WILL TAKE
THE LEASED PREMISES AS IS. TENANT ACKNOWLEDGES THAT LANDLORD (WHETHER ACTING AS
LANDLORD HEREUNDER OR IN ANY OTHER CAPACITY) HAS NOT MADE AND WILL NOT MAKE, NOR
SHALL LANDLORD BE DEEMED TO HAVE MADE, ANY WARRANTY OR REPRESENTATION, EXPRESS
OR IMPLIED, WITH RESPECT TO ANY OF THE LEASED PREMISES, INCLUDING ANY WARRANTY
OR REPRESENTATION AS TO (i) ITS FITNESS, DESIGN OR CONDITION FOR ANY PARTICULAR
USE OR PURPOSE, (ii) THE QUALITY OF THE MATERIAL OR WORKMANSHIP THEREIN, (iii)
THE EXISTENCE OF ANY DEFECT, LATENT OR PATENT, (iv) LANDLORD'S TITLE THERETO
(EXCEPT THAT LANDLORD REPRESENTS AND WARRANTS THAT THERE ARE NO LANDLORD
ENCUMBRANCES), (v) VALUE, (vi) COMPLIANCE WITH SPECIFICATIONS, (vii) LOCATION,
(viii) USE, (ix) CONDITION, (x) MERCHANTABILITY, (xi) QUALITY, (xii)
DESCRIPTION, (xiii) DURABILITY (xiv) OPERATION OR (xv) THE EXISTENCE OF ANY
HAZARDOUS SUBSTANCE; AND ALL RISKS INCIDENT THERETO ARE TO BE BORNE BY TENANT.
TENANT ACKNOWLEDGES THAT THE LEASED PREMISES ARE OF ITS SELECTION AND TO ITS
SPECIFICATIONS AND THAT LANDLORD HAS NO OBLIGATION WITH RESPECT TO CONSTRUCTION
OF THE IMPROVEMENTS. IN THE EVENT OF ANY DEFECT OR DEFICIENCY IN ANY OF THE
LEASED PREMISES OF ANY NATURE, WHETHER LATENT OR PATENT, LANDLORD AND LENDER
SHALL NOT HAVE ANY RESPONSIBILITY OR LIABILITY WITH RESPECT THERETO OR FOR ANY
INCIDENTAL OR CONSEQUENTIAL DAMAGES (INCLUDING STRICT LIABILITY IN


                                      -12-


TORT). THE PROVISIONS OF THIS PARAGRAPH 3(b) HAVE BEEN NEGOTIATED, AND ARE
INTENDED TO BE A COMPLETE EXCLUSION AND NEGATION OF ANY WARRANTIES BY LANDLORD
OR LENDER, EXPRESS OR IMPLIED, WITH RESPECT TO ANY OF THE LEASED PREMISES,
ARISING PURSUANT TO THE UNIFORM COMMERCIAL CODE OR ANY OTHER LAW NOW OR
HEREAFTER IN EFFECT OR ARISING OTHERWISE. TENANT DOES NOT WAIVE ANY CLAIM
AGAINST ANY PARTY EXCEPT LANDLORD AND LENDER UNDER THE FOREGOING LANGUAGE.

            (c) Tenant represents to Landlord that Tenant has examined the title
to the Leased Premises prior to the execution and delivery of this Lease and has
found the same to be satisfactory for the purposes contemplated hereby. Tenant
acknowledges that (i) fee simple title (both legal and equitable) to the Leased
Premises is in Landlord and that Tenant has only the leasehold right of
possession and use of the Leased Premises as provided herein, (ii) on the
Occupancy Date for each Related Premises the Improvements shall conform to all
material Legal Requirements and all Insurance Requirements, (iii) all easements
necessary for Tenant's use or operation of each Related Premises have been or by
the relevant Occupancy Date shall have been obtained, (iv) subject to Tenant's
rights under Paragraph 14 no later than the Final Completion Date for each
Related Premises all contractors and subcontractors who have performed work on
or supplied materials to such Related Premises shall have been fully paid, and
all materials and supplies have been fully paid for, and (v) no later than the
Final Completion Date for each Related Premises all Equipment necessary or
appropriate for Tenant's use or operation of the Leased Premises shall have been
installed and shall be operational.

            (d) Landlord hereby assigns to Tenant, without recourse or warranty
whatsoever, all warranties, guaranties, indemnities and similar rights which
Landlord may have against any manufacturer, seller, engineer, contractor or
builder in respect of any of the Leased Premises. Such assignment shall remain
in effect until an Event of Default occurs or until the expiration or earlier
termination of this Lease, whereupon such assignment shall cease and all of said
warranties, guaranties, indemnities and other rights shall automatically revert
to Landlord.

            (e) Pursuant to the Construction Agency Agreement, Tenant will cause
the Improvements to be constructed and the Equipment to be acquired and
installed with funds more particularly described in the Construction Agency
Agreement. The Improvements and Equipment will be owned by Landlord and are
included within the Leased Premises. Tenant acknowledges that the Improvements
have not yet been constructed and the Equipment has not yet been acquired and
installed and that, pursuant to the Construction Agency Agreement entered into
by Landlord and Tenant, Tenant has the responsibility for causing the
Improvements and Equipment to be completed in accordance with the terms of the
Construction Agency Agreement. Landlord will not make any representations or
warranties with respect to the Improvements and


                                      -13-


Equipment. Tenant further acknowledges that, upon occurrence of an Event of
Default, Landlord may terminate the Construction Agency Agreement, and in
addition to all other remedies of Landlord under this Lease, Landlord shall have
the right but not the obligation to complete construction of the Improvements
and installation of the Equipment in accordance with the Plans. If Landlord so
completes construction of the Improvements and installation of the Equipment,
Tenant will not be excused from paying all Rent due pursuant to the terms of
this Lease as long as this Lease is not terminated, and Landlord shall have the
right to exercise any or all of its remedies hereunder following an Event of
Default. All acknowledgments of Tenant regarding each Related Premises contained
in Paragraph 3(b) shall be deemed to have been made again as of the Final
Completion Date for such Related Premises.

        4. Use of Leased Premises; Quiet Enjoyment.

            (a) Tenant may occupy and use the Leased Premises for commercial or
industrial uses and for no other purpose without the prior written consent of
Landlord. Tenant shall not use or occupy or permit any of the Leased Premises to
be used or occupied, nor do or permit anything to be done in or on any of the
Leased Premises, in a manner which would or be reasonably likely to (i) violate
any Law or Legal Requirement, (ii) make void or voidable or cause any insurer to
cancel any insurance required by this Lease, or make it difficult or impossible
to obtain any such insurance at commercially reasonable rates, (iii) cause
structural injury to any of the Improvements or (iv) constitute a public or
private nuisance or waste.

            (b) Subject to the provisions hereof, so long as no Event of Default
has occurred and is continuing, Tenant shall quietly hold, occupy and enjoy the
Leased Premises throughout the Term, without any hindrance, ejection or
molestation by Landlord with respect to matters that arise after the date
hereof, provided that Landlord or its agents may enter upon and examine any of
the Leased Premises at such reasonable times as Landlord may select and upon
reasonable notice to Tenant (except in the case of any emergency, in which event
no notice shall be required) for the purpose of inspecting the Leased Premises,
verifying compliance or non-compliance by Tenant with its obligations hereunder
and the existence or non-existence of an Event of Default or event which with
the passage of time and/or notice would constitute an Event of Default, showing
the Leased Premises to prospective Lenders and purchasers and taking such other
action with respect to the Leased Premises as is permitted by any provision
hereof.

        5. Term.

            (a) Subject to the provisions hereof, Tenant shall have and hold the
Leased Premises for a primary term ("Primary Term") commencing on November __,
1995 ("Commencement Date") and


                                      -14-


terminating at midnight on the last day of the calendar month in which the Final
Completion Date for the final Related Premises occurs which shall not, in any
event, occur later than October 1, 1996 ("Primary Term Expiration Date") and for
an initial term (such initial term as extended or renewed in accordance with the
provisions hereof being called herein the "Initial Term") commencing on the day
("Initial Term Commencement Date") immediately following the Primary Term
Expiration Date. The Initial Term shall expire on the last day of the two
hundred fortieth (240th) calendar month following the Initial Term Commencement
Date ("Expiration Date"). Immediately following the Primary Term Expiration
Date, Landlord and Tenant shall execute an addendum to this Lease and an
amendment to each memorandum of lease setting forth the Initial Term
Commencement Date and the Expiration Date.

            (b) Provided that if, on or prior to the Expiration Date or any
other Renewal Date (as hereinafter defined), this Lease shall not have been
terminated pursuant to any provision hereof, then Tenant shall have the right on
the Expiration Date and on the tenth (10th), twentieth (20th) and thirtieth
(30th) anniversaries of the Expiration Date (the Expiration Date and each such
anniversary being a "Renewal Date"), to extend the Term for an additional period
of ten (10) years (each such period being referred to herein as "Renewal Term"),
upon written notice to Landlord in recordable form at least one (1) year prior
to the next Renewal Date (each such notice, a "Renewal Notice") that Tenant is
extending this Lease as of the next Renewal Date for the next Renewal Term. If
Tenant fails to provide any Renewal Notice, Landlord shall provide to Tenant a
reminder notice that Tenant has failed to provide the required Renewal
Notice, and Tenant shall have thirty (30) days after receipt of such reminder
notice to give the required Renewal Notice, time being of the essence. Any such
extension of the Term shall be subject to all of the provisions of this Lease,
as the same may be amended, supplemented or modified.

            (c) If Tenant does not exercise its option pursuant to Paragraph
5(b) to extend the Term, or if an Event of Default occurs, then Landlord shall
have the right during the remainder of the Term then in effect and, in any
event, Landlord shall have the right during the last year of the Term, to (i)
advertise the availability of any of the Leased Premises for sale or reletting
and to erect upon any of the Leased Premises signs indicating such availability
and (ii) upon reasonable prior notice to Tenant show any of the Leased Premises
to prospective purchasers or tenants or their agents at such reasonable times
during business hours as Landlord may select.

        6. Basic Rent. Tenant shall pay to Landlord, as annual rent for the
Leased Premises during the Term, the amounts determined in accordance with
Exhibit "D" hereto ("Basic Rent") and on the dates described in Paragraphs 1 and
2 of Exhibit "D" (each such date being a "Basic Rent Payment Date"). Basic Rent


                                      -15-


shall be paid to Landlord at its address set forth above and/or to such one
other Person, at such addresses and in such proportions as Landlord may direct
by fifteen (15) days' prior written notice to Tenant (in which event Tenant
shall give Landlord notice of each such payment concurrent with the making
thereof) in funds available to Landlord or such other Person on each Basic Rent
Payment Date.

        7. Additional Rent.

            (a) Tenant shall pay and discharge, as additional rent
(collectively, "Additional Rent"):

                  (i) except as otherwise specifically provided herein, all
costs and expenses of Tenant, and all reasonable costs and expenses of Landlord
and any other Persons specifically referenced herein which are incurred in
connection or associated with (A) the ownership, use, non-use, occupancy,
possession, operation, condition, design, construction, maintenance, alteration,
repair or restoration of any of the Leased Premises, (B) the performance of any
of Tenant's obligations under this Lease, (C) any sale or other transfer of any
of the Leased Premises to Tenant under this Lease, (D) any Condemnation
proceedings, (E) the adjustment, settlement or compromise of any insurance
claims (including any contest or prosecution in connection therewith) under
insurance covering any of the Leased Premises, (F) the prosecution or defense of
any litigation related to the Leased Premises, this Lease, or the sale of the
Leased Premises to Landlord and arising from an act or omission of Tenant
provided, however, that in the event of legal action between Landlord and Tenant
where Tenant is the prevailing party, Landlord shall pay Tenant's reasonable
costs and attorneys' fees, (G) the exercise or enforcement by Landlord, its
successors and assigns, of any of its rights under this Lease, (H) any amendment
to or modification or termination of this Lease made at the request of Tenant,
(I) Costs of Landlord's counsel and reasonable internal Costs of Landlord
incurred in connection with the preparation, negotiation and execution of this
Lease, or incurred in connection with any act undertaken by Landlord (or its
counsel) at the written request of Tenant, or incurred in connection with any
act of Landlord performed on behalf of Tenant if Tenant is obligated to take
such action under this Lease and has refused to do so within the period required
herein or if no such period is specified, within a reasonable time following
notice from Landlord, (J) the commitment for and the financing of the Initial
Loan pursuant to the Initial Loan Commitment, including commitment fees, net
interest cost to Landlord from July 1, 1996 to the closing of the Initial Loan
(if the Initial Loan does not close on or before July 1, 1996), a "funding
failure" fee equal to $62,540 if the Initial Loan fails to close, title
premiums, inspection costs, and mortgage and recording taxes and costs
(provided, however, that Tenant shall not be obligated to pay any such costs and
expenses which result from the failure of the Initial Loan to close by July 1,
1996, or the failure of the Initial Loan to close


                                      -16-


at all, if Tenant has performed its obligations under Article VI of the
Construction Agency Agreement, and Tenant and Guarantor are otherwise prepared
to satisfy the conditions of the Initial Loan Application that pertain to them,
and the Initial Loan Application has not been terminated by reason of any act by
or circumstance relating to Tenant or Guarantor), and (K) any other items
specifically required to be paid by Tenant under this Lease;

                  (ii) after the date all or any portion of any installment of
Basic Rent is due and not paid, an amount ("Late Charge") equal to five percent
(5%) of the amount of such unpaid installment or portion thereof, provided,
however, that with respect to the first late payment in any Lease Year the Late
Charge shall not be due and payable unless two (2) days have elapsed elapsed
following telephonic notice followed by facsimile notice that such payment has
not been received;

                  (iii) a sum equal to any additional sums (including any late
charge, default penalties, interest and fees of Lender's counsel) which are
payable by Landlord to any Lender under any Note by reason of Tenant's late
payment or nonpayment of Basic Rent or by reason of an Event of Default; and

                  (iv) interest at the rate (the "Default Rate") of three
percent (3%) over the Prime Rate per annum on the following sums until paid in
full: (A) all overdue installments of Basic Rent from the respective due dates
thereof, (B) all overdue amounts of Additional Rent relating to obligations
which Landlord shall have paid on behalf of Tenant, from the date of payment
thereof by Landlord, and (C) all other overdue amounts of Additional Rent, from
the date when Tenant has received notice that any such amount has become
overdue.

            (b) Tenant shall pay and discharge (i) any Additional Rent referred
to in Paragraph 7(a)(i) when the same shall become due, provided that amounts
which are billed to Landlord or any third party, but not to Tenant, shall be
paid within thirty (30) days after Landlord's demand for payment thereof, and
(ii) any other Additional Rent, within thirty (30) days after Landlord's demand
for payment thereof.

            (c) In no event shall amounts payable under Paragraph 7(a)(ii),
(iii) and (iv) exceed the maximum amount permitted by applicable Law.

        8. Net Lease; Non-Terminality.

            (a) This is a net lease and all Monetary Obligations shall be paid
without notice or demand and without set-off, counterclaim, recoupment,
abatement, suspension, deferment, diminution, deduction, reduction or defense
(collectively, a "Set-Off").


                                      -17-


            (b) Except as otherwise expressly provided herein, this Lease and
the rights of Landlord and the obligations of Tenant hereunder shall not be
affected by any event or for any reason, including the following: (i) any damage
to or theft, loss or destruction of any of the Leased Premises, (ii) any
Condemnation, (iii) Tenant's acquisition of ownership of any of the Leased
Premises other than pursuant to an express provision of this Lease, (iv) any
default on the part of Landlord hereunder or under any Note, Mortgage,
Assignment or any other agreement, including the Construction Agency Agreement,
(v) any latent or other defect in any of the Leased Premises, (vi) the breach of
any warranty of any seller or manufacturer of any of the Equipment, (vii) any
violation of Paragraph 4(b) or any other provision of reorganization,
composition, readjustment, liquidation, dissolution or winding-up of, or other
proceeding affecting Landlord, (ix) the exercise of any remedy, including
foreclosure, under any Mortgage or Assignment, (x) any action with respect to
this Lease (including the disaffirmance hereof) which may be taken by Landlord,
any trustee, receiver or liquidator of Landlord or any court under the Federal
Bankruptcy Code or otherwise, (xi) any interference with Tenant's use of the
Leased Premises, (xii) market or economic changes or (xiii) any other cause,
whether similar or dissimilar to the foregoing, any present or future Law to the
contrary notwithstanding.

            (c) The obligations of Tenant hereunder shall be separate and
independent covenants and agreements, all Monetary Obligations shall continue to
be payable in all events (or, in lieu thereof, Tenant shall pay amounts equal
thereto), and the obligations of Tenant hereunder shall continue unaffected
unless the requirement to pay or perform the same shall have been terminated
pursuant to an express provision of this Lease. All Rent payable by Tenant
hereunder shall constitute "rent" for all purposes (including Section 502(b)(6)
of the Bankruptcy Code).

            (d) Except as otherwise expressly provided herein, Tenant shall have
no right and hereby waives all rights which it may have under any Law (i) to
quit, terminate or surrender this Lease or any of the Leased Premises, or (ii)
to any Set-Off of any Monetary Obligations.

        9. Payment of Impositions.

            (a) Tenant shall, before interest or penalties are due thereon, pay
and discharge all taxes (including real and personal property, franchise, sales
and rent taxes), all charges for any easement or agreement maintained for the
benefit of any of the Leased Premises, all assessments and levies, all permit,
inspection and license fees, all rents and charges for water, sewer, utility and
communication services relating to the any of Leased Premises, all ground rents
and all other public charges whether of a like or different nature, even if
unforeseen, or extraordinary, imposed upon or assessed against (i) Tenant's


                                      -18-


possessory interest in the Leased Premises, (ii) any of the Leased Premises,
(iii) Landlord as a result of or arising in respect of the acquisition,
ownership, occupancy, leasing, use, possession or sale of any of the Leased
Premises, any activity conducted on any of the Leased Premises, or the Rent, or
(iv) any Lender by reason of any Note, Mortgage, Assignment or other document
evidencing or securing a Loan and which (as to this clause (iv)) Landlord has
agreed to pay and that is normal and customary for similar financings
(collectively, the "Impositions"); provided, that nothing herein shall obligate
Tenant to pay (A) income, excess profits or other taxes of Landlord (or Lender)
which are determined on the basis of Landlord's (or Lender's) net income or
net worth (unless such taxes are in lieu of or a substitute for respect to the
Leased Premises which, if it were in effect, would be payable by Tenant under
the provisions hereof or by the terms of such tax, assessment or other charge),
(B) any estate, inheritance, succession, gift or similar tax imposed on Landlord
or Lender or (C) any capital gains or other tax imposed on Landlord in
connection with the sale of the Leased Premises to any Person, except for any
transfer or recording tax payable in connection with a sale to Tenant or its
designee. If any Imposition may be paid in installments without interest or
penalty, Tenant shall have the option to pay such Imposition in installments; in
such event, Tenant shall be liable only for those installments which accrue or
become due and payable during the Term. Tenant shall prepare and file all tax
reports required by governmental authorities which relate to the Impositions.
Tenant shall deliver to Landlord, (1) receipts for payment of all taxes required
to be paid by Tenant hereunder within thirty (30) days after the due date
thereof and (2) within thirty (30) days following Landlord's request, (A) copies
of all settlements and notices pertaining to the Impositions which may be issued
by any governmental authority and (B) receipts for payment of all other
Impositions.

            (b) Landlord shall have the right during the existence of an Event
of Default to require Tenant to pay to Landlord or Lender, if required by the
terms of any Mortgage, an additional monthly sum (each an "Escrow Payment")
sufficient to pay the Escrow Charges (as hereinafter defined) as they become
due. As used herein, "Escrow Charges" shall mean real estate taxes on the Leased
Premises or payments in lieu thereof and premiums on any insurance required by
this Lease. Landlord shall determine the amount of the Escrow Charges and of
each Escrow Payment. As long as the Escrow Payments are being held by Landlord
and not Lender, the Escrow Payments shall not be commingled with other funds of
Landlord or other Persons and interest shall accrue thereon for the benefit of
Tenant and which shall serve as additional security for the obligations of
Tenant hereunder from the date such monies are received by or on behalf of
Landlord to the date such monies are disbursed to pay Escrow Charges in such
order or priority as Landlord shall determine or as required by law. If at any
time the Escrow Payments theretofore paid to Landlord shall be insufficient for
the


                                      -19-


payment of the Escrow Charges, Tenant, within ten (10) days after Landlord's
demand therefor, shall pay the amount of the deficiency to Landlord or Lender,
as the case may be.

        10. Compliance with Laws and Easement Agreements; Environmental Matters.

            (a) Tenant shall, at its expense, be in material compliance with and
conform to, and cause the Leased Premises and any other Person occupying any
part of the Leased Premises to be in material compliance with and conform to,
all Insurance Requirements and Legal Requirements (except that Tenant and the
Leased Premises shall be in absolute compliance with all applicable
Environmental Laws pertaining to the Leased Premises). Tenant shall not at any
time (i) cause, permit or suffer to occur any Environmental Violation or (ii)
permit any sublessee, assignee or other Person occupying the Leased Premises
under or through Tenant to cause, permit or suffer to occur any Environmental
Violation.

            (b) Tenant, at its sole cost and expense, will at all times promptly
and faithfully abide by, discharge and perform all of the covenants, conditions
and agreements contained in any Easement Agreement on the part of Landlord or
the occupier to be kept and performed thereunder. Tenant will not alter, modify,
amend or terminate any Easement Agreement, give any consent or approval
thereunder, or enter into any new Easement Agreement without, in each case,
prior written consent of Landlord, which consent shall not be unreasonably
conditioned. If Landlord fails to respond to any request for consent to any such
alteration, modification, amendment or termination of an existing Easement
Agreement, or for consent to any new Easement agreement, in any case within ten
(10) days after receipt of Tenant's request therefor, Landlord shall be deemed
to have given such consent. Any such Easement Agreement, as altered, modified or
amended, or any such new Easement Agreement, shall automatically be a Permitted
Encumbrance.

            (c) Not more frequently than once every three (3) years and at any
other time required by a Lender or if in the opinion of Landlord or Lender, a
reasonable basis exists to believe that an Environmental Violation exists, upon
prior written notice from Landlord, Tenant shall permit such professional
environmental consultants as Landlord may designate ("Site Reviewers") to visit
the Leased Premises at reasonable times and upon reasonable prior notice to
Tenant and perform environmental site investigations and assessments ("Site
Assessments") on the Leased Premises for the purpose of determining whether
there exists on the Leased Premises any Environmental Violation or any condition
which could reasonably be expected to result in any Environmental Violation.
Such Site Assessments may include both above and, if a reasonable basis exists
to believe that an Environmental Violation exists or if reasonably recommended
by a Site Reviewer, below the ground testing for Environmental


                                      -20-

Violations and such other tests (other than below the ground or groundwater
testing except as permitted above) as may be necessary, in the opinion of the
Site Reviewers, to conduct the Site Assessments. Tenant shall supply to the Site
Reviewers such historical and operational information regarding the Leased
Premises as may be reasonably requested by the Site Reviewers to facilitate the
Site Assessments, and shall make available for meetings with the Site Reviewers
appropriate personnel having knowledge of such matters. Not more frequently than
once every three (3) years during the Term Tenant shall pay up to $7,000 of the
Cost of a Phase I Site Assessment for each Related Premises except that, if an
Environmental Violation is found to exist, Tenant shall pay all of the costs of
performing and reporting any Site Assessments required by Landlord or Lender
with respect to such Environmental Violation.

            (d) If an Environmental Violation occurs or is found to exist and,
in Landlord's reasonable judgment, the cost of remediation of the same is likely
to exceed $500,000, Tenant shall provide to Landlord, within ten (10) days after
Landlord's request therefor, reasonable financial assurances that Tenant will
effect such remediation in accordance with applicable Environmental Laws.

            (e) Notwithstanding any other provision of this Lease, if an
Environmental Violation occurs or is found to exist with respect to any Related
Premises that in the reasonable opinion of Landlord causes the fair market
rental value of such Related Premises to be less than would otherwise be the
case and the Term would otherwise terminate or expire, then, at the option of
Landlord, the Term shall be automatically extended beyond the date of
termination or expiration and this Lease shall remain in full force and effect
with respect to such Related Premises but at a monthly rent equal to the fair
market rental value of such Related Premises absent such Environmental Violation
beyond such date until the earlier to occur of (i) the completion of all
remedial action in accordance with applicable Environmental Laws or (ii) the
date specified in a written notice from Landlord to Tenant terminating this
Lease.

            (f) If, in Landlord's reasonable discretion, Tenant fails to
promptly commence to comply and diligently pursue compliance with any
requirement of any Environmental Law in connection with any Environmental
Violation which occurs or is found to exist, Landlord shall have the right, at
Tenant's expense (but no obligation), to take any and all actions as Landlord
shall deem reasonably necessary or advisable in order to cure such Environmental
Violation.

            (g) Tenant shall notify Landlord immediately after becoming aware of
any violation of any Environmental Law or other material Environmental Violation
(or alleged violation of any Environmental Law or other material Environmental
Violation) and upon the request of Landlord shall forward to Landlord
immediately upon receipt thereof copies of all orders, reports, notices,


                                      -21-

permits, applications or other communications relating to any such violation.

            (h) All future leases, subleases or concession agreements relating
to the Leased Premises entered into by Tenant shall contain covenants of the
other party; thereto which are comparable to the covenants contained in this
Paragraph 10(b), (c), (f) and (g).

        11. Liens; Recording.

            (a) Tenant shall not, directly or indirectly, create or permit to be
created or to remain and shall promptly discharge or remove any lien, levy or
encumbrance on and of the Leased Premises or on any Rent or any other sums
payable by Tenant under this Lease, other than any Mortgage or Assignment, the
Permitted Encumbrances and any mortgage, lien, encumbrance or other charge
created by or resulting solely from any act or omission of Landlord. NOTICE IS
HEREBY GIVEN THAT LANDLORD SHALL NOT BE LIABLE FOR ANY LABOR, SERVICES OR
MATERIALS FURNISHED OR TO BE FURNISHED TO TENANT OR TO ANYONE HOLDING OR
OCCUPYING ANY OF THE LEASED PREMISES THROUGH OR UNDER TENANT, AND THAT NO
MECHANICS' OR OTHER LIENS FOR ANY SUCH LABOR, SERVICES OR MATERIALS SHALL ATTACH
TO OR AFFECT THE INTEREST OF LANDLORD IN AND TO ANY OF THE LEASED PREMISES.
LANDLORD MAY AT ANY TIME POST ANY NOTICES ON THE LEASED PREMISES REGARDING SUCH
NON-LIABILITY OF LANDLORD.

            (b) Tenant shall execute, deliver and record, file or register
(collectively, "record") all such instruments as may be required or permitted by
any present or future Law in order to evidence the respective interests of
Landlord and Tenant in any of the Leased Premises, and shall cause a memorandum
of this Lease (or, if such a memorandum cannot be recorded, this Lease), and any
supplement hereto or thereto, to be recorded in such manner and in such places
as may be required or permitted by any present or future Law in order to protect
the validity and priority of this Lease.

        12. Maintenance and Repair.

            (a) Tenant shall at all times maintain each Related Premises and the
Adjoining Property in as good repair and appearance as each is in on the Final
Completion Date and fit to be used for their intended use in accordance with
recognized industry standards and, in the case of the Equipment, in good
mechanical condition, in all cases except for ordinary wear and tear. Tenant
shall take every other reasonable action necessary or appropriate for the
preservation and safety of each Related Premises. Tenant shall promptly make all
Alterations of every kind and nature, whether foreseen or unforeseen, which may
be required to comply with the foregoing requirements of this Paragraph 12(a).
Landlord shall not be required to make any Alteration, whether foreseen or
unforeseen, or to maintain any of


                                      -22-



the Related Premises or Adjoining Property in any way, and Tenant hereby
expressly waives any right which may be provided for in any Law now or hereafter
in effect to make Alterations at the expense of Landlord or to require Landlord
to make Alterations. Any Alteration made by Tenant pursuant to this Paragraph 12
shall be made in conformity with the provisions of Paragraph 13.

            (b) If any Improvement, now or hereafter constructed, shall (i)
encroach upon any setback or any property, street or right-of-way adjoining any
of the Leased Premises, (ii) violate the provisions of any restrictive covenant
affecting any of the Leased Premises, (iii) hinder or obstruct any easement or
right-of-way to which any of the Leased Premises is subject or (iv) impair the
rights of others in, to or under any of the foregoing, Tenant shall, promptly
after receiving a demand to remove or correct such condition from a Person
entitled to make such demand, either (A) obtain from all necessary parties
waivers or settlements of all claims, liabilities and damages resulting from
each such encroachment, violation, hindrance, obstruction or impairment, whether
the same shall affect Landlord, Tenant or both, or (B) take such action as shall
be necessary to remove all such encroachments, hindrances or obstructions and to
end all such violations or impairments, including, if necessary, making
Alterations.

        13. Alterations and Improvements.

            (a) Tenant shall have the right, without having obtained the prior
written consent of Landlord and Lender, to make Alterations or a series of
related Alterations that, as to any such Alterations or series of related
Alterations, do not cost in excess of $1,000,000 with respect to any Related
Premises and to install Equipment in the Improvements or accessions to the
Equipment that, as to such Equipment or accessions, do not cost in excess of
$1,000,000, so long as at the time of construction or installation of any such
Equipment or Alterations no Event of Default exists and the value and utility of
the Leased Premises is not diminished thereby. If the cost of any Alterations,
series of related Alterations or Equipment or accessions thereto is in excess of
the amounts specified above, the prior written approval of Landlord and Lender
shall be required, such approval not to be unreasonably withheld, delayed or
conditioned. Tenant shall not construct upon the Land any additional buildings
costing in excess of $1,000,000 without having first obtained the prior written
consent of Landlord and Lender, such consent not to be unreasonably withheld,
conditioned or delayed. If Landlord or Lender fails to respond to any written
request for consent within thirty (30) days after receipt of such consent, such
consent shall be deemed given.

            (b) If Tenant makes any Alterations pursuant to this Paragraph 13 or
Paragraph 34 or as required by Paragraph 12 or 17 (such Alterations and actions
being hereinafter collectively referred to as "Work"), then (i) as to Work other
than Work done

                                      -23-




pursuant to a Legal Requirement, the market value of the Leased Premises shall
not be lessened by any such Work or its usefulness impaired, (ii) all such Work
shall be performed by Tenant in a good and workmanlike manner, (iii) all such
Work shall be expeditiously completed in compliance with all Legal Requirements,
(iv) all such Work shall comply with the requirements of all insurance policies
required to be maintained by Tenant hereunder, (v) if any such Work involves the
replacement of Equipment or parts thereto, all replacement Equipment or parts
shall function in a manner that is the better of (A) the functioning of the
Equipment or parts being replaced or (B) the functioning of similar Equipment or
parts in other warehouses owned or used by Tenant, (vi) subject to Tenant's
rights under Paragraph 14, Tenant shall promptly discharge or remove all liens
filed against any of the Leased Premises arising out of such Work, (vii) Tenant
shall procure and pay for all permits and licenses required in connection with
any such Work, (viii) all such Work (except for additions that are paid for by
Tenant and can be readily removed without substantial damage to the Improvements
and are not a replacement for any of the Improvements or Equipment) shall be the
property of Landlord and shall be subject to this Lease, and Tenant shall
execute and deliver to Landlord any document requested by Landlord evidencing
the assignment to Landlord of all estate, right, title and interest (other than
the leasehold estate created hereby) of Tenant or any other Person thereto or
therein, and (ix) Tenant shall comply, to the extent reasonably requested by
Landlord or required by this Lease, with the provisions of Paragraph 19(a),
whether or not such Work involves restoration of the Leased Premises.

        14. Permitted Contests. Notwithstanding any other provision of this
Lease, Tenant shall not be required to (a) pay any Imposition, (b) discharge or
remove any lien referred to in Paragraph 11 or 13, (c) take any action with
respect to any encroachment, violation, hindrance, obstruction or impairment
referred to in Paragraph 12(b) or (d) comply with any Legal Requirements (such
non-compliance with the terms hereof being hereinafter referred to collectively
as "Permitted Violations"), so long as at the time of such non-compliance no
Event of Default exists and so long as Tenant shall contest, in good faith, the
existence, amount, validity or interpretation thereof, the amount of the damages
caused thereby, or the extent of its or Landlord's liability therefore by
appropriate proceedings which shall operate during the pendency thereof to
prevent or stay (i) the collection of, or other realization upon, the Permitted
Violation so contested, (ii) the sale, forfeiture or loss of any of the Leased
Premises or any Rent to satisfy or to pay any damages caused by any Permitted
Violation, (iii) any material interference with the use or occupancy of any of
the Leased Premises, (iv) any interference with the payment of any Rent, (v) the
cancellation or increase in the rate of any insurance policy or a statement by
the carrier that coverage will be denied or (vi) the enforcement or execution of
any injunction, order or Legal Requirement with respect to the Permitted
Violation. If the amount being contested

                                      -24-




is reasonably estimated by Landlord to be in excess of Two Hundred Fifty
Thousand Dollars ($250,000) or if otherwise required by the terms of the
Mortgage, Tenant shall provide Landlord security which is satisfactory in
Landlord's reasonable judgment, to assure that such Permitted Violation is
corrected if Tenant's contest is unsuccessful, including all Costs, interest and
penalties that may reasonably be expected to be incurred or become due in
connection therewith. While any proceedings which comply with the requirements
of this Paragraph 14 are pending and the required security is held by Landlord,
Landlord shall not have the right to correct any Permitted Violation thereby
being contested unless a Landlord is required by law to correct such Permitted
Violation and Tenant's contest does not prevent or stay such requirement as to
Landlord. Each such contest shall be promptly and diligently prosecuted by
Tenant to a final conclusion, except that Tenant, so long as the conditions of
this Paragraph 14 are at all times complied with, has the right to attempt to
settle or compromise such contest through negotiations. Tenant shall pay any and
all losses, judgments, decrees and Costs in connection with any such contest and
shall, promptly after the final determination of such contest, fully pay and
discharge the amounts which shall be levied, assessed, charged or imposed or be
determined to be payable therein or in connection therewith, together with all
penalties, fines, interest and Costs thereof or in connection therewith, and
perform all acts the performance of which shall be ordered or decreed as a
result thereof. No such contest shall subject Landlord to the risk of any civil
or criminal liability.

        15. Indemnification.

            (a) Tenant shall pay, protect, indemnify, defend, save and hold
harmless Landlord, Lender and all other Persons described in Paragraph 30 (each
an "Indemnitee") for, from and against any and all liabilities, losses, damages
(including punitive damages), penalties, Costs (including attorneys' fees and
costs), causes of action, suits, claims, demands or judgments of any nature
whatsoever, howsoever caused, without regard to the form of action and whether
based on strict liability, gross negligence, negligence or any other theory of
recovery at law or in equity (other than those based on the gross negligence or
willful misconduct of such Indemnitee or based on activities by such Indemnitee
in connection with the sale or reletting of the Leased Premises to any Person
except a sale to Tenant or its designee and except for activities that are based
on representations by or obligations and liabilities of Tenant or Guarantor),
arising from (i) any matter pertaining to the acquisition (or the negotiations
leading thereto), ownership, leasing, use, non-use, occupancy, operation,
management, condition, design, construction, maintenance, repair or restoration
of any of the Leased Premises or Adjoining Property, (ii) any casualty in any
manner arising from any of the Leased Premises or Adjoining Property, whether
or not Indemnitee has or should have knowledge or notice of any defect or
condition causing or contributing to said casualty, (iii) any violation by
Tenant of

                                      -25-




any provision of this Lease, any contract or agreement to which Tenant is a
party and which relates to the Leased Premises, any Legal Requirement or any
Permitted Encumbrance or (iv) any alleged, threatened or actual Environmental
Violation, including (A) liability for response costs and for costs of removal
and remedial action incurred by the United States Government, any state or local
governmental unit or any other Person, or damages from injury to or destruction
or loss of natural resources, including the reasonable costs of assessing such
injury, destruction or loss, incurred pursuant to Section 107 of CERCLA, or any
successor section or act or provision of any similar state or local Law, (B)
liability for costs and expenses of abatement, correction or clean-up, fines,
damages, response costs or penalties which arise from the provisions of any of
the other Environmental Laws and (C) liability for personal injury or property
damage arising under any statutory or common-law tort theory, including damages
assessed for the maintenance of a public or private nuisance or for carrying on
of a dangerous activity.

            (b) In case any action or proceeding is brought against any
Indemnitee by reason of any such claim, (i) Tenant may, except in the event of a
conflict of interest or a dispute between Tenant and any such Indemnitee or
during the continuance of an Event of Default, retain its own counsel at its
expense and defend such action (it being understood that Landlord may employ
counsel of its choice to monitor the defense of any such action) and (ii) such
Indemnitee shall notify Tenant to resist or defend such action or proceeding by
retaining counsel reasonably satisfactory to such Indemnitee, and such
Indemnitee will cooperate and assist in the defense of such action or proceeding
if reasonably requested to do so by Tenant.

            (c) The obligations of Tenant under this Paragraph 15 shall survive
any termination, expiration or rejection in bankruptcy of this Lease.

            (d) For the sole purpose of effecting the indemnification
obligations under this Lease and not for the benefit of any employees of Tenant
or Guarantor or any third parties unrelated to the parties indemnified under
this Lease Tenant specifically and expressly waives any immunity that may be
granted it under the Washington State Industrial Insurance Act, Title 51 RCW.
(Tenant's Initials: WRS). Further the indemnification obligations under this
Lease shall not be limited in any way by any limitation on the amount or type of
damages, compensation or benefits payable to or for any third party under Worker
Compensation Acts, Disability Benefit Acts or other employee benefit acts.

        16. Insurance.

            (a) Tenant shall maintain the following insurance on or in
connection with the Leased Premises:

                                      -26-




                  (i) Insurance against physical loss or damage to the
Improvements and Equipment as provided under a standard "All Risk" property
policy including but not limited to flood (to the extent that a Related Premises
is in a flood zone) and earthquake coverage (to the extent any Related Premises
is in a critical earthquake zone) in amounts not less than the actual
replacement cost of the Improvements and Equipment, subject to a deductible or
self-insurance retention not to exceed $500,000 except that with respect to
earthquake coverage, the deductible or self-insurance retention shall not exceed
5% of replacement cost as long as such insurance is available. Such policies
shall contain Replacement Cost and Agreed Amount Endorsements.

                  (ii) Commercial general liability and automobile liability
insurance against claims for personal and bodily injury, death or property
damage occurring on, in or as a result of the use of the Leased Premises, in an
amount not less than $15,000,000 per occurrence/annual aggregate, subject to a
deductible or self-insurance retention not to exceed $500,000 including but not
limited to garagekeepers liability, non-owned and hired automobile liability and
all other coverage extensions that are usual and customary for properties of
this size and type provided, however, that the Landlord shall have the right to
require such higher limits, up to a maximum of $50 million, as may be reasonable
and customary for properties of this size and type.

                  (iii) Worker's compensation insurance covering all persons
employed by Tenant in connection with any work done on or about any of the
Leased Premises for which claims for death, disease or bodily injury may be
asserted against Landlord, Tenant or any of the Leased Premises or, in lieu of
such Worker's Compensation Insurance, a program of self-insurance complying with
the rules, regulations and requirements of the appropriate agency of the State
or States in which the Leased Premises are located.

                  (iv) Comprehensive boiler and machinery insurance on any of
the Equipment or any other equipment on or in the Leased Premises including but
not limited to service interruption, expediting expenses, ammonia
contamination, hazardous clean-up and comprehensive object definition, in an
amount not less than $15,000,000, subject to a deductible or self-insurance
retention not to exceed $500,000 for damage to property resulting from such
covered perils as found in a standard comprehensive boiler & machinery policy.

                  (v) Business income/interruption insurance to include loss of
rents at limits sufficient to cover 100% of the annual rental income on an
actual loss sustained basis with a period of indemnity not less than one year
from the time of loss, subject to deductible or self-insurance retention not to
exceed $500,000.

                  (vi) During any period in which substantial Alterations at any
Related Premises are being undertaken,

                                      -27-




builder's risk insurance covering the total completed value including any "soft
costs" with respect to the Improvements being altered or repaired (on a
completed value, non-reporting basis), replacement cost of work performed and
equipment, supplies and materials furnished in connection with such construction
or repair of Improvements or Equipment, together with such "soft cost"
endorsements and such other endorsements as Landlord may reasonably require.

                  (vii) Such other insurance which at the time is usual and
commonly obtained in connection with properties similar in type of building
size, use and location to the Leased Premises.

            (b) The insurance required by Paragraph 16(a) shall be written by
companies which have a Best's rating of A:VIII or above (provided that any
carrier providing such insurance which is not rated by Best shall also be deemed
acceptable unless Landlord objects to such carrier within ten (10) days of
receipt of notice by Landlord that such carrier is providing coverage). The
insurance policies shall be in amounts sufficient at all times to satisfy any
coinsurance requirements thereof, unless such coinsurance requirements are
waived in writing by the insurer. The insurance referred to in Paragraphs
16(a)(i), 16(a)(iv) and 16(a)(vi) shall name Landlord, Lender and Tenant as loss
payees and as their interests may appear. If said insurance or any part thereof
shall expire, be withdrawn, become void, voidable, unreliable or unsafe for any
reason, including a breach of any condition thereof by Tenant or the failure or
impairment of the capital of any insurer, Tenant shall immediately obtain new or
additional insurance in compliance with Paragraph 16(a).

            (c) Each insurance policy referred to in clauses (i), (iv), (v) and
(vi) of Paragraph 16(a) shall contain standard non-contributory mortgagee
clauses in favor of and acceptable to Lender. Each policy required by any
provision of Paragraph 16(a), except clause (iii) thereof, shall provide that it
may not be cancelled except after thirty (30) days' prior written notice to
Landlord and Lender. Each such policy shall also provide that any loss otherwise
payable thereunder with respect to the Leased Premises shall be payable
notwithstanding (i) any act or omission of Landlord or Tenant which might,
absent such provision, result in a forfeiture of all or a part of such insurance
payment, (ii) the occupation or use of any of the Leased Premises for purposes
more hazardous than those permitted by the provisions of such policy, (iii) any
foreclosure or other action or proceeding taken by Lender pursuant to any
provision of the Mortgage, Note, Assignment or other document evidencing or
securing the Loan upon the happening of an event of default therein or (iv) any
change in title to or ownership of Landlord's fee simple interest in any of the
Leased Premises.

            (d) Tenant shall pay as they become due all premiums for the
insurance required by Paragraph 16(a), shall renew or replace each policy and
deliver to Landlord evidence


                                      -28-




thereof prior to the expiration date of such policy, and shall promptly deliver
to Landlord copies of all such insurance certified by a senior officer of Tenant
to be true and correct.

            (e) Anything in this Paragraph 16 to the contrary notwithstanding,
any insurance which Tenant is required to obtain pursuant to Paragraph 16(a) may
be carried under a "blanket" or umbrella policy or policies covering other
properties or liabilities of Tenant, provided that such "blanket" or umbrella
policy or policies otherwise comply with the provisions of this Paragraph 16. A
copy of each such "blanket" or umbrella policy certified by a senior officer of
Tenant to be true and correct shall promptly be delivered to Landlord.

            (f) Replacement costs of Improvements and Equipment may be
redetermined not more frequently than once every twelve (12) months at the
Landlord's request and shall be determined based on insurance carrier trends for
corporations of established reputation engaged in the same or similar business
of the Tenant.

            (g) Tenant shall promptly comply with and conform to (i) all
provisions of each insurance policy required by this Paragraph 16 and (ii) all
reasonable requirements of the insurers thereunder applicable to Landlord,
Tenant (in connection with the Leased Premises) or any of the Leased Premises or
to the use, manner of use, occupancy, possession, operation, maintenance,
alteration or repair of any of the Leased Premises, even if such compliance
necessitates Alterations or results in interference with the use or enjoyment of
any of the Leased Premises.

            (h) Tenant shall not carry separate insurance concurrent in form or
contributing in the event of a Casualty with that required in this Paragraph 16
unless (i) Landlord and Lender are included therein as named insureds, with loss
payable as provided herein, and (ii) such separate insurance complies with the
other provisions of this Paragraph 16. Tenant shall immediately notify Landlord
of such separate insurance and shall deliver to Landlord copies thereof
certified by a senior officer of Tenant.

            (i) All policies shall contain effective waivers by the carrier
against all claims for insurance premiums against Landlord and shall contain
full waivers of subrogation against the Landlord.

            (j) All proceeds of any insurance required under Paragraph 16(a)
shall be payable as follows:

                (i) The insurance referred to in Paragraphs 16(a)(i), 16(a)(iv)
and 16(a)(vi) shall name Landlord, Lender and Tenant as loss payees, as their
interests may appear. The insurance referred to in Paragraph 16(a)(ii) shall
name Landlord and Lender as additional insureds, and the insurance referred to
in Paragraph 16(a)(v) shall name Tenant as insured and Lender and

                                      -29-




Landlord as loss payees to the extent of amounts payable by Tenant under the
Lease.

                (ii) Each insurer is hereby authorized and directed to make
payment of insurance proceeds in excess of $500,000, or if an Event of Default
exists, in any amount directly to Landlord or, if required by the Mortgage or
requested by Lender pursuant to the Mortgage, to Lender instead of to Landlord
and Tenant jointly, and Tenant hereby appoints each of Landlord and Lender as
Tenant's attorneys-in-fact to endorse any draft therefor. If no Event of Default
exists, proceeds up to and including $500,000 shall be paid directly to Tenant.

        17. Casualty and Condemnation

            (a) If any Casualty occurs the insurance proceeds for which is
reasonably estimated by Tenant to be equal to or in excess of One Hundred
Thousand Dollars ($100,000), Tenant shall give Landlord and Lender immediate
notice thereof. So long as no Event of Default exists Tenant is hereby
authorized to adjust, collect and compromise all claims under any of the
insurance policies required by Paragraph 16(a) and to execute and deliver on
behalf of Landlord all necessary proofs of loss, receipts, vouchers and releases
required by the insurers, and Landlord shall have the right to join with Tenant
if the amount of any such claim is in excess of Five Hundred Thousand Dollars
($500,000). Any adjustment, settlement or compromise of any such claim in excess
of $500,000 shall be subject to the prior written approval of Landlord, which
shall not be unreasonably withheld, conditioned or delayed. Landlord shall have
the right to prosecute or contest any such claim, adjustment, settlement or
compromise and, in connection therewith, Tenant hereby irrevocably assigns to
Landlord any and all interest it has or may have in such claim. If an Event of
Default exists, Tenant shall not be entitled to adjust, collect or compromise
any such claim or to participate with Landlord in any adjustment, collection or
compromise of the Net Award payable in connection with a Casualty. Tenant agrees
to sign, upon the request of Landlord, all such proofs of loss, receipts,
vouchers and releases. Each insurer is hereby authorized and directed to make
payment under said policies in excess of $500,000 directly to Landlord or, if
required by the Mortgage or requested by Landlord or Lender pursuant to the
Mortgage, to Lender instead of to Landlord and Tenant jointly, and Tenant hereby
appoints each of Landlord and Lender as Tenant's attorneys-in-fact to endorse
any draft therefor. The rights of Landlord under this Paragraph 17(a) shall be
extended to Lender if and to the extent that any Mortgage so provides.

            (b) Tenant, immediately upon receiving a Condemnation Notice, shall
notify Landlord and Lender thereof. Landlord and Lender are authorized to
collect, settle and compromise, in their discretion (and, if no Event of Default
exists, upon notice to Tenant), the amount of any Net Award. Provided that no
Event of Default has occurred and is continuing,


                                      -30-




Tenant shall be entitled to participate with Landlord and Lender in any
Condemnation proceeding or negotiations under threat thereof and to contest the
Condemnation or the amount of the Net Award therefor. No agreement with any
condemnor in settlement or under threat of any Condemnation shall be made by
Tenant without the written consent of Landlord and Lender, which shall not be
unreasonably withheld, conditioned or delayed. Subject to the provisions of this
Paragraph 17(b), Tenant hereby irrevocably assigns to Landlord any award or
payment to which Tenant is or may be entitled by reason of any Condemnation,
whether the same shall be paid or payable for Tenant's leasehold interest
hereunder or otherwise; but nothing in this Lease shall impair Tenant's right to
any award or payment on account of Tenant's trade fixtures, equipment or other
tangible property which is not part of the Equipment, moving expenses or loss of
business, if available, to the extent that and so long as (i) Tenant shall have
the right to make, and does make, a separate claim therefor against the
condemnor and (ii) such claim does not in any way reduce either the amount of
the award otherwise payable to Landlord for the Condemnation of Landlord's fee
interest in the Leased Premises or the amount of the award (if any) otherwise
payable for the Condemnation of Tenant's leasehold interest hereunder.

            (c) If any Partial Casualty (whether or not insured against) or
Partial Condemnation shall occur to any Related Premises, this Lease shall
continue, notwithstanding such event, and there shall be no abatement or
reduction of any Monetary Obligations, except as provided in Paragraph 19(c).
Promptly after such Partial Casualty or Partial Condemnation, Tenant, as
required in Paragraph 12(a), shall commence and diligently continue to restore
the Leased Premises as nearly as practicable to their value, condition and
character immediately prior to such event (assuming the Leased Premises to have
been in the condition required by this Lease). Upon the receipt by Landlord of
the entire Net Award of such Partial Casualty or Partial Condemnation, Landlord
shall make such Net Award Available to Tenant for restoration in accordance with
and subject to the provisions of Paragraph 19(a). If any Casualty or
Condemnation which is not a Partial Casualty or Partial Condemnation shall
occur, Tenant shall comply with the terms and conditions of Paragraph 18.

        18. Termination Events.

            (a) If (i) all of any Related Premises shall be taken by a Taking or
(ii) any substantial portion of any Related Premises shall be taken by a Taking
or all or any substantial portion of any Related Premises shall be totally
damaged or destroyed by a Casualty and, in any such case, Tenant certifies and
covenants to Landlord that it will forever abandon operations at the Related
Premises, (any one or all of the Related Premises described in the above clauses
(i) and (ii) above being hereinafter referred to as the "Affected Premises" and
each of the events described in the above clauses (i) and (ii) shall hereinafter
be referred to as a "Termination Event"), then (x) in


                                      -31-



the case of (i) above, Tenant shall be obligated, within thirty (30) days after
Tenant receives a Condemnation Notice and (y) in the case of (ii) above, Tenant
shall have the option, within thirty (30) days after Tenant receives a
Condemnation Notice or thirty (30) days after the Casualty, as the case may be,
to give to Landlord written notice (a "Termination Notice") of the Tenant's
option to terminate this Lease as to the Affected Premises in the form described
in Paragraph 18(b).

            (b) A Termination Notice shall contain (i) notice of Tenant's
intention to terminate this Lease as to the Affected Premises on the first Basic
Rent Payment Date which occurs at least ninety (90) days after the Fair Market
Value Date (the "Termination Date"), (ii) a binding and irrevocable offer of
Tenant to purchase the Leased Premises for a price equal to the Termination
Amount and (iii) if the Termination Event is an event described in Paragraph
18(a)(ii), the certification and covenant described therein and a certified
resolution of the Board of Directors of Tenant authorizing the same. Promptly
upon the delivery to Landlord of a Termination Notice, Landlord and Tenant shall
commence to determine Fair Market Value.

            (c) If Landlord shall reject such offer to terminate this Lease as
to the Affected Premises by written notice to Tenant (a "Rejection"), which
Rejection shall contain the written consent of Lender, not later than thirty
(30) days following the Fair Market Value Date, then this Lease shall terminate
as to the Affected Premises on the Termination Date; provided that, if Tenant
has not satisfied all Monetary Obligations and all other obligations and
liabilities under this Lease which have arisen as to the Affected Property
(collectively, "Remaining Obligations") on or prior to the Termination Date,
then Landlord may, at its option, extend the date on which this Lease may
terminate as to the Affected Premises to a date which is no later than the first
Basic Rent Payment Date after the Termination Date on which Tenant has satisfied
all Remaining Obligations. Upon such termination (i) all obligations of Tenant
hereunder as to the Affected Premises shall terminate except for any Surviving
Obligations, (ii) Tenant shall promptly vacate and shall have no further right,
title or interest in or to any of the Affected Premises and (iii) the Net Award
shall be retained by Landlord. Notwithstanding anything to the contrary
hereinabove contained, if Tenant shall have received a Rejection and, on the
date when this Lease would otherwise terminate as provided above, Landlord shall
not have received the full amount of the Net Award payable by reason of the
applicable Termination Event, then on the Termination Date Tenant shall assign
to Landlord all of its right, title and interest, if any, in and to the Net
Award.

            (d) Unless Tenant shall have received a Rejection not later than the
thirtieth (30th) day following the Fair Market Value Date, Landlord shall be
conclusively presumed to have accepted such offer. If such offer is accepted by
Landlord then, on the Termination Date, Tenant shall pay to Landlord or Lender,


                                      -32-




if the Mortgage requires or permits Lender to so require, the Termination Amount
and all Remaining obligations and, if requested by Tenant, Landlord shall convey
to Tenant or its designee the Affected Premises or the remaining portion
thereof, if any, all in accordance with Paragraph 20.

            (e) In the event of the termination of this Lease as to the Affected
Premises as hereinabove provided, this Lease shall remain in full force and
effect as to the Remaining Premises; provided, that the Basic Rent for the
Remaining Premises to be paid after such termination shall be the Basic Rent
otherwise payable hereunder with respect to the Leased Premises multiplied by a
percentage equal to the sum of the percentages set forth on Exhibit "F" for the
Remaining Premises.

        19. Restoration; Reduction of Rent.

            (a) If (on the basis of a cost breakdown provided by Tenant) the
cost of restoration in the event of a Casualty is reasonably estimated by
Landlord and Lender to be Five Hundred Thousand ($500,000) or less, then, so
long as an Event of Default has not occurred and is continuing, such amount
shall be paid to and retained by Tenant, and Tenant shall promptly restore the
Related Premises in accordance with and subject to Paragraph 12 and Paragraph 13
hereof. As long as an Event of Default has not occurred and is continuing, any
Net Award in excess of Five Hundred Thousand ($500,000) that is paid to Landlord
or Lender shall be made available to Tenant for restoration of the Leased
Premises and Landlord (or Lender if required by any Mortgage) shall hold such
Net Award in a separate trust fund not commingled with any other funds (the
"Restoration Fund") and disburse amounts from the Restoration Fund only in
accordance with the following conditions:

                (i) prior to commencement of restoration, (A) the architects,
contracts, contractors, plans and specifications for the restoration shall have
been approved by Landlord, which approval shall not be unreasonably withheld,
delayed or conditioned, (B) Landlord and Lender shall be provided with
mechanics' lien insurance or an acceptable payment bond which insures
satisfactory payment for the restoration, is in an amount and form and have a
surety reasonably acceptable to Landlord, and name Landlord and Lender as
additional dual obligees;

                (ii) at the time of any disbursement, no Event of Default shall
exist and no mechanics' or materialmen's liens shall have been filed against any
of the Leased Premises and remain undischarged;

                (iii) disbursements shall be made from time to time in an amount
not exceeding the cost of the work completed since the last disbursement, upon
receipt of (A) satisfactory evidence, including architects' certificates, of the
stage of completion, the estimated total cost of completion and performance


                                      -33-



of the work to date in a good and workmanlike manner in accordance with the
contracts, plans and specifications, (B) conditional waivers of liens, (C) a
satisfactory bringdown of title insurance and (D) other evidence of cost and
payment so that Landlord and Lender can verify that the amounts disbursed from
time to time are represented by work that is completed, in place and free and
clear of mechanics' and materialmen's lien claims;

                (iv) each request for disbursement shall be accompanied by a
certificate of Tenant, signed by the president or a vice president or the
Director of Property Management of Tenant, describing the work for which payment
is requested, stating the cost incurred in connection therewith, stating that
Tenant has not previously received payment for such work and, upon completion of
the work, also stating that the work has been fully completed and complies with
the applicable requirements of this Lease;

                (v) Landlord may retain ten percent (10$) of the restoration
fund until 50% of the restoration is fully completed;

                (vi) the Restoration Fund shall not be commingled with
Landlord's other funds and shall bear interest at a commercially available rate;
and

                (vii) such other reasonable conditions consistent with customary
construction loan disbursement practices as Landlord or Lender may impose.

            (b) Prior to commencement of restoration and at any time during
restoration, if the estimated cost of completing the restoration work free and
clear of all liens, as reasonably determined by Landlord or Lender, exceeds the
amount of the Net Award available for such restoration, the amount of such
excess shall, upon demand by Landlord, be paid by Tenant to Landlord or Lender,
if so required or permitted by the terms of the Mortgage, to be added to the
Restoration Fund. Any sum so added by Tenant which remains in the Restoration
Fund upon completion of restoration shall be refunded to Tenant. For purposes of
determining the source of funds with respect to the disposition of funds
remaining after the completion of restoration, the Net Award shall be deemed to
be disbursed prior to any amount added by Tenant.

            (c) If any sum remains in the Restoration Fund after completion of
the restoration and any refund to Tenant pursuant to Paragraph 19(b), such sum
(the "Remaining Sum") shall be retained by Landlord or Lender, each installment
of Basic Rent payable on or after the date on which the Net Award is paid to
Landlord shall be reduced by a fraction, the denominator of which shall be the
total amount of all Basic Rent due from such date to and including the last day
of the Term and the numerator of which shall be the amount of such Net Award
retained by Landlord and/or Lender.


                                      -34-




        20. Procedures Upon Purchase.

            (a) If the Leased Premises or any of the Related Premises are
purchased by Tenant pursuant to any provision of this Lease, Landlord need not
convey any better title thereto than that which was conveyed to Landlord, and
Tenant or its designee shall accept such title, subject, however, to the
Permitted Encumbrances and to all other liens, exceptions and restrictions on,
against or relating to any of the Leased Premises or the applicable Related
Premises and to all applicable Laws, but free of the lien of and security
interest created by any Mortgage or Assignment and liens, exceptions and
restrictions on, against or relating to the Leased Premises or the applicable
Related Premises which have been created by or resulted solely from acts of
Landlord after the date of this Lease, unless the same are Permitted
Encumbrances or customary utility easements benefiting the Leased Premises or
were created with the concurrence of Tenant or as a result of a default by
Tenant under this Lease.

            (b) Upon the date fixed for any such purchase of the Leased Premises
or any of the Related Premises pursuant to any provision of this Lease (any such
date the "Purchase Date"), Tenant shall pay to Landlord, or to any Person to
whom Landlord directs payment, the Relevant Amount therefor specified herein, in
Federal Funds, less any credit of the Net Award received and retained by
Landlord or a Lender and allowed against the Relevant Amount, and Landlord shall
deliver to Tenant (i) a special warranty deed which describes the premises being
conveyed and conveys the title thereto as provided in Paragraph 20(a), (ii) such
other instruments as shall be necessary to transfer to Tenant or its designee
any other property (or rights to any Net Award not yet received by Landlord or a
Lender) then required to be sold by Landlord to Tenant pursuant to this Lease
and (iii) any Net Award received by Landlord, not credited to Tenant against the
Relevant Amount and required to be delivered by Landlord to Tenant pursuant to
this Lease; provided, that if any Monetary Obligations remain outstanding on
such date, then Landlord may deduct from the Net Award the amount of such
Monetary Obligations; and further provided, that if any event has occurred
which, in Landlord's reasonable judgment, is likely to subject any Indemnitee to
any liability which Tenant is required to indemnify against pursuant to
Paragraph 15, then an amount shall be deducted from the Net Award which, in
Landlord's reasonable judgment, is sufficient to satisfy such liability, which
amount shall be deposited in an escrow account with a financial institution
reasonably satisfactory to Landlord and Tenant on terms and conditions
reasonably satisfactory to Landlord and Tenant, pending resolution of such
matter. If on the Purchase Date any Monetary Obligations remain outstanding and
no Net Award is payable to Tenant by Landlord or the amount of such Net Award is
less than the amount of the Monetary Obligations, then Tenant shall pay to
Landlord on the Purchase Date the amount of such Monetary Obligations. Upon the
completion of such purchase, this Lease and all obligations and liabilities of
Tenant hereunder with respect to the applicable


                                      -35-




Related Premises (but not with respect to the Remaining Premises) shall
terminate, except any Surviving Obligations.

            (c) If the completion of such purchase shall be delayed after (i)
the Termination Date, in the event of a purchase pursuant to Paragraph 18 or,
(ii) the date scheduled for such purchase, in the event of a purchase under any
other provision of this Lease then, except as specifically provided in the
following sentence, (x) Rent shall continue to be due and payable until
completion of such purchase and (y) at Landlord's sole option, Fair Market value
shall be redetermined and the Relevant Amount payable by Tenant pursuant to the
applicable provision of this Lease shall be adjusted to reflect such
redetermination. If, however, the delay for completion of such purchase is
caused solely by an act of or failure to act by Landlord, Tenant's obligation to
pay Rent until completion of the purchase shall be limited to that portion of
Basic Rent equal to the payments of principal and interest payable on the Loan,
and such payments shall be payable directly to the Lender and shall be credited
against the purchase price payable by Tenant to Landlord.

            (d) Any prepaid Monetary Obligations paid to Landlord shall be
prorated as of the Purchase Date, and the prorated unapplied balance shall be
deducted from the Relevant Amount due to Landlord.

        21. Assignment and Subletting.

            (a) (i) Tenant shall have the right, upon thirty (30) days prior
written notice to Landlord and Lender, with no consent of Landlord or Lender
being required or necessary ("Preapproved Assignment") to assign this Lease by
operation of law or otherwise to any Person ("Preapproved Assignee") (A) that is
an Affiliate of Tenant or (B) which immediately following such assignment has,
or is a direct or indirect subsidiary of a parent corporation that has executed
(or will, as a condition to such assignment, execute) a guaranty of the
obligations of Tenant hereunder substantially in the form of the Guaranty and
has, a publicly traded unsecured senior debt rating that is the higher of (1)
the then publicly traded unsecured senior debt rating of Guarantor or (2) a
rating of "A" or better from Moody's Investors Services, Inc. or a rating of "A"
or better from Standard & Poor's Corporation (or in the event both of such
rating agencies cease to furnish such ratings, then a comparable rating by any
rating agency reasonably acceptable to Landlord and Lender).

                (ii) If Tenant desires to assign this Lease to a Person
("Non-Preapproved Assignee") who would not be a Preapproved Assignee
("Non-Preapproved Assignment") then Tenant shall, not less than forty-five (45)
days prior to the date on which it desires to make a Non-Preapproved Assignment
submit to Landlord and Lender information regarding the following with respect
to the Non-Preapproved Assignee: (A) credit, (B) capital structure, (C)
management, (D) operating history, (E) proposed use


                                      -36-




of the Leased Premises and (F) risk factors associated with the proposed use of
the Leased Premises by the Non-Preapproved Assignee, taking into account factors
such as environmental concerns, product liability and the like. Landlord and
Lender shall review such information and shall approve or disapprove the
Non-Preapproved Assignee no later than the twentieth (20th) day following
receipt of all such information, and Landlord and Lender shall be deemed to have
acted reasonably in granting or withholding consent if such grant or disapproval
is based on a review of the above-described criteria applying such review
standards as are customary in private placement transactions.

                (iii) If Landlord or Lender withhold consent to the
Non-Preapproved Assignment and Tenant desires to complete the Non-Preapproved
Assignment, Tenant shall make a rejectable offer (the "Intended Assignment
Offer") to purchase the Leased Premises for a purchase price equal to the Offer
Amount and to consummate the purchase on the first Basic Rent Payment Date
occurring thirty (30) days after the determination of Fair Market Value (the
"Intended Assignment Purchase Date"). Notwithstanding the foregoing, if the
Intended Assignment Offer is accepted by Landlord and Lender and the
Non-Preapproved Assignment occurs on a date (the "Assignment Date") that is
prior to the Intended Assignment Purchase Date, then, no later than the
Assignment Date, Tenant shall deposit in escrow with Lender an amount (the
"Deposit Amount") equal to one hundred percent (100%) of the sum of the Project
Cost and any Prepayment Premium. The Deposit Amount shall be held by and
invested by Landlord and the Deposit Amount, together with any interest earned
thereon, shall be applied on the Intended Assignment Purchase Date to payment of
the Offer Amount.

                (iv) If Landlord shall reject the Intended Assignment Offer by
notice to Tenant, such notice to contain the written consent of Lender to such
rejection, no later than the thirtieth (30th) day following receipt of the
Intended Assignment Offer by Landlord, then this Lease shall remain in full
force and effect and Landlord and Lender shall be deemed to have consented to
the Non-Preapproved Assignment. Nothing provided herein-shall constitute a
waiver by Landlord of the obligation of Tenant to comply with the requirements
of this Paragraph 21(a)(iv) if a subsequent Non-Preapproved Assignment arises.
No rejection of the Intended Assignment Offer shall be effective for any purpose
unless consented to in writing by Lender.

                (v) Unless Landlord shall have rejected the Intended Assignment
Offer by the foregoing notice to Tenant not later than the thirtieth (30th) day
following receipt of information described in the foregoing Paragraph 21(a)(iv),
Landlord shall be conclusively presumed to have accepted the Intended Assignment
Offer. If the Intended Assignment Offer is accepted by Landlord, Tenant shall
pay to Landlord the Offer Amount (less the Deposit Amount and interest thereon
paid to Landlord) on the Intended Assignment Purchase Date and, provided


                                      -37-




that no Rent or any other charge is due and unpaid under this Lease as of the
Intended Assignment Purchase Date and Tenant is otherwise in compliance with the
terms of this Lease, Landlord shall convey to Tenant the Leased Premises in
accordance with the provisions of Paragraph 20 of this Lease.

            (b) (i) In addition to the Silgan Subleases Tenant shall have the
right, upon thirty (30) days prior written notice to Landlord and Lender, to
enter into one or more subleases that demise, in the aggregate, up to but not in
excess at any time of thirty-three and one-third percent (33 1/3%) of the gross
space in the Improvements for a term of up to ten (10) years (but not extending
beyond the Expiration Date) with no consent or approval of Landlord being
required or necessary ("Preapproved Sublet"). Other than pursuant to a
Preapproved Sublet, no portion of the Leased Premises shall be subleased during
the Term to any other Person without the prior written consent of Landlord and
Lender, which consent shall not be unreasonably withheld or delayed, and which
consent shall be granted or withheld based on a review of the following criteria
as they relate to the proposed sublessee: (1) credit, (2) capital structure, (3)
management, (4) operating history and (5) the proposed use of the sublet portion
of the Improvements, taking in account factors related to the proposed
subtenant's use of the Leased Premises such as environmental concerns. Landlord
and Lender shall be deemed to have acted reasonably in granting or withholding
consent if such grant or disapproval is based on their reasonable review of the
above-described criteria.

            (c) If Tenant assigns all its rights and interest under this Lease,
the assignee under such assignment shall expressly assume all the obligations of
Tenant hereunder, actual or contingent, including obligations of Tenant which
may have arisen on or prior to the date of such assignment, by a written
instrument delivered to Landlord at the time of such assignment. Each sublease
of any of the Leased Premises shall be subject and subordinate to the provisions
of this Lease. Following any assignment (i) to a Person that satisfies the test
for a Preapproved Assignee under clause (B) of Paragraph 21(a)(i) or (ii) to a
Non-Preapproved Assignee that is approved by Lender and that immediately
following the Non-Preapproved Assignment has a publicly traded unsecured senior
debt rating of not less than "Baal" from Moody's Investors Services, Inc. or a
rating of not less than "BBB" from Standard & Poor's Corporation (or in the
event both of such rating agencies cease to furnish such ratings, then a
comparable rating by a rating agency reasonably acceptable to Landlord and
Lender), Tenant and Guarantor shall be deemed released from their respective
obligations and liabilities under this Lease and the Guaranty that arise after
the date of such Preapproved Assignment or Non-Preapproved Assignment described
in clause (ii) above, as the case may be, and do not relate to any act or
failure to act by Guarantor or Tenant that occurred prior to the date of such
assignment. Except as specifically provided in the foregoing sentence, no
assignment or sublease made as


                                      -38-




permitted by this Paragraph 21 shall affect or reduce any of the obligations of
Tenant hereunder or of Guarantor under the Guaranty, and all such obligations
shall continue in full force and effect as obligations of a principal and not as
obligations of a guarantor, as if no assignment or sublease had been made. No
assignment or sublease shall impose any additional obligations on Landlord under
this Lease.

            (d) With respect to any Preapproved Assignment or Preapproved
Sublet, Tenant shall provide to Landlord information reasonably required by
Landlord to establish that any proposed Preapproved Assignment or Preapproved
Sublet satisfies the criteria set forth above.

            (e) Tenant shall, within ten (10) days after the execution and
delivery of any assignment or sublease, deliver a duplicate original copy
thereof to Landlord which, in the event of an assignment, shall be in recordable
form.

            (f) As security for performance of its obligations under this Lease,
Tenant hereby grants, conveys and assigns to Landlord all right, title and
interest of Tenant in and to all subleases, including the Silgan Subleases and
any guaranty executed in connection therewith, now in existence or hereafter
entered into for any or all of the Leased Premises, any and all extensions,
modifications and renewals thereof and all rents, issues and profits therefrom.
Landlord hereby grants to Tenant a license to collect and enjoy all rents and
other sums of money payable under any sublease of any the Leased Premises,
provided, however, that Landlord shall have the absolute right at any time
during the existence of an Event of Default, upon notice to Tenant and any
subtenants, to revoke said license and to collect such rents and sums of money
and to retain the same as a credit against Rent. Tenant shall not (i) consent
to, cause or allow any material modification or alteration of any of the terms,
conditions or covenants of the subleases or any guaranty thereof or the
termination or surrender of any sublease or guaranty thereof, (ii) anticipate
Rents prior to the accrual thereof, or (iii) waive or release any tenant or
guarantor thereunder from any material obligation or performance, without the
prior written approval of Landlord, which consent shall not be unreasonably
withheld (provided, however, that Landlord in its sole and absolute discretion
may give or withhold its consent to any proposed modification to the term or
rent provisions of either of the Silgan Subleases), nor shall Tenant do or
permit anything to be done, the doing of which, nor omit or refrain from doing
anything, the omission of which, will or could be a breach of or default in the
terms of the Silgan Subleases or a material breach of or material default in the
terms of any of the other subleases. Tenant shall, with respect to each
sublease, observe and perform each and every condition to be performed by Tenant
thereunder, give prompt notice to Landlord and Lender of any notice given or
received under any sublease or guaranty thereof, enforce, short of termination,
each sublease and guaranty thereof and appear in and

                                      -39-




defend any action growing out of or in any manner connected with any sublease or
guaranty thereof, provided, that, if Tenant shall fail or refuse to so enforce
or defend Landlord or Lender shall have such right which shall be exercisable at
the sole cost and expense of Tenant.

            (g) Tenant shall have the right to grant a first lien leasehold
mortgage on, or to pledge its leasehold interest in, the Leased Premises to its
senior lender, and a second and a third lien leasehold mortgage on the Leased
Premises to its other lenders but shall not have the power to otherwise
mortgage, pledge or otherwise encumber its interest under this Lease or any
sublease of the Leased Premises, and any other such mortgage, pledge or
encumbrance made in violation of this Paragraph 21 shall be void. Landlord and
Lender shall execute such documents as may be reasonably requested by Tenant's
lender who holds a first lien leasehold mortgage and are customarily acceptable
to Landlord and Lender in order to afford to such leasehold mortgagee rights of
notice and an opportunity to cure an Event of Default and the benefits of any
non-disturbance and attornment agreement in favor of Tenant, provided, however,
that any entity that becomes a successor tenant under this Paragraph 21(g) shall
be required to be in compliance with all of the terms of this Lease.

            (h) No later than April 1, 1996 Tenant shall, and shall cause Silgan
to execute the Silgan Subleases and a non-disturbance and attornment agreement
in form and substance reasonably satisfactory to Landlord.

            (i) Subject to Tenant's rights under Paragraphs 38 and 39, Landlord
may sell or transfer the Leased Premises (but not any Related Premises
separately) at any time without Tenant's consent to any third party (a "Third
Party Purchaser"). In the event of any such transfer, Tenant shall attorn to any
Third Party Purchaser as Landlord so long as such Third Party Purchaser and
Landlord notify Tenant in writing of such transfer and such Third Party
Purchaser assumes in writing the obligations of Landlord under this Lease. At
the request of Landlord, Tenant, at no cost or expense to Tenant, will execute
such documents confirming the agreement referred to above and such other
agreements as Landlord may reasonably request, provided that such agreements do
not increase the liabilities and obligations of Tenant hereunder. In no event
shall Tenant have any obligation to attorn to, or recognize more than one Person
at one time as, Landlord.

        22. Events of Default.

            (a) The occurrence of any one or more of the following (after
expiration of any applicable cure period as provided in Paragraph 22(b)) shall,
at the sole option of Landlord, constitute an "Event of Default" under this
Lease:


                                      -40-




                (i) a failure by Tenant to make any payment of any Monetary
Obligation, regardless of the reason for such failure;

                (ii) a failure by Tenant duly to perform and observe, or a
violation or breach of, any other provision hereof not otherwise specifically
mentioned in this Paragraph 22(a);

                (iii) any representation or warranty made by Tenant herein or by
Guarantor under the Guaranty or by Tenant or Guarantor in any certificate,
demand or request made pursuant hereto proves to be incorrect in any material
respect when made;

                (iv) a default beyond any applicable cure period or at maturity
by Tenant or Guarantor in any payment of principal or interest on any
obligations for borrowed money having an outstanding principal balance of
$10,000,000 or more in the aggregate, or in the performance of any other
provision contained in any instrument under which any such obligation is created
or secured (including the breach of any covenant thereunder);

                (v) a final, non-appealable judgment or judgments for the
payment of money in excess of $15,000,000 in the aggregate shall be rendered
against Tenant or Guarantor and the same shall remain undischarged for a period
of sixty (60) consecutive days;

                (vi) Tenant or Guarantor shall (A) voluntarily be adjudicated a
bankrupt or insolvent, (B) seek or consent to the appointment of a receiver or
trustee for itself or for any of the Related Premises, (C) file a petition
seeking relief under the bankruptcy or other similar laws of the United States,
any state or any jurisdiction, (D) make a general assignment for the benefit of
creditors, or (E) be unable to pay its debts as they mature;

                (vii) a court shall enter an order, judgment or decree
appointing, without the consent of Tenant and Guarantor, a receiver or trustee
for it or for any of the Related Premises or approving a petition filed against
Tenant or Guarantor, as the case may be, which seeks relief under the bankruptcy
or other similar laws of the United States, any state or any jurisdiction, and
such order, judgment or decree shall remain undischarged or unstayed ninety (90)
days after it is entered;

                (viii) any of the Related Premises shall have been vacated or
abandoned except as specifically permitted by the terms of Paragraph 36;

                (ix) Tenant or Guarantor shall be liquidated or dissolved or
shall begin proceedings towards its liquidation or dissolution;

                (x) the estate or interest of Tenant in any of the Related
Premises shall be levied upon or attached in any



                                      -41-





proceeding and such estate or interest is about to be sold or transferred or
such process shall not be vacated or discharged within ninety (94) days after it
is made;

                (xi) a failure by Tenant to perform or observe, or a violation
or breach of, or a misrepresentation by Tenant under, any provision of any
Assignment or any other document executed by Tenant and Lender with respect to
this Lease or the Loan, if such failure, violation, breach or misrepresentation
gives rise to a default beyond any applicable cure period with respect to any
Loan, giving the Lender the right to accelerate the Loan and such default has
not been cured;

                (xii) a failure by Tenant to maintain in effect any license or
permit necessary for the use, occupancy or operation of any of the Related
Premises;

                (xiii) A Non-Preapproved Assignment shall occur and Tenant shall
have failed to comply with the provisions of Paragraph 21(a)(iii) through (v);

                (xiv) an Event of Default (as defined in the Construction Agency
Agreement) beyond any applicable cure period shall occur under the Construction
Agency Agreement;

                (xv) Tenant shall fail to commence to occupy and operate any
Related Premises by the forty-fifth (45th) day following the occupancy Date with
respect to such Related Premises;

                (xvi) A default shall occur under Paragraph 35;

                (xvii) Guarantor shall have failed to comply with or a breach
shall occur with respect to any of the representations, warranties or covenants
set forth in the Guaranty;

                (xviii) Fully executed Silgan Subleases and a non-disturbance
and attornment reasonably satisfactory to Landlord shall not have been delivered
to Landlord by April 1, 1996; or

                (xix) Tenant shall sell or transfer or enter into an agreement
to sell or transfer all or substantially all of its assets unless such sale
shall include an assignment of this Lease in compliance with Paragraph 21.

            (b) No notice or cure period shall be required in any one or more of
the following events: (A) the occurrence of an Event of Default under clause
(iv), (v), (vi), (vii), (viii), (ix), (x), (xi), (xii), (xiii), (xiv), (xv),
(xvi), or (xix) of Paragraph 22(a); (B) the default consists of a failure to
provide insurance with the types of coverage and in the amounts referred to in
clauses (i), (ii), (iv), (v) and (vi) of Paragraph 16(a) (but excluding a
default consisting of a failure to provide


                                      -42-



insurance which meets any of the other specific requirements in clauses (i),
(ii), (iv), (v) and (vi) of Paragraph 16(a)) or an assignment or sublease
entered into in violation of Paragraph 21; or (C) the default is such that any
delay in the exercise of a remedy by Landlord could reasonably be expected to
cause irreparable harm to Landlord. If the default consists of the failure to
pay any Monetary Obligation under clause (i) of Paragraph 22(a), the applicable
cure period shall be five (5) days from the date on which notice is given, but
Landlord shall not be obligated to give notice of, or allow any cure period for,
any such default more than one (1) time within any Lease Year. If the default
consists of a default under clause (ii) of Paragraph 22(a), other than the
events specified in clauses (B) and (C) of the first sentence of this Paragraph
22(b) the applicable cure period shall be twenty (20) days from the date on
which notice is given or, if the default cannot with reasonable diligence be
cured within such twenty (20) day period and delay in the exercise of a remedy
would not (in Landlord's reasonable judgment) cause any material adverse harm to
Landlord or any of the Leased Premises, the cure period shall be extended for
the period required to cure the default (but such cure period, including any
extension, shall not in the aggregate exceed ninety (90) days), provided that
Tenant shall commence to cure the default within the said twenty-day period and
shall actively, diligently and in good faith proceed with and continue the
curing of the default until it shall be fully cured. If the default consists of
a default under clause (ii) with respect to the failure to provide insurance
which meets all of the requirements in clauses (i), (ii), (iv), (v) and (vi) of
Paragraph 16(a), or clauses (iii), (xvii) or (xviii) of Paragraph 22(a), the
applicable cure period shall be twenty (20) days from the date on which notice
is given provided that the default or the granting of a cure period does not
directly or indirectly cause the Lender to declare Landlord in default of the
Loan.

        23. Remedies and Damages Upon Default. If an Event of Default shall have
occurred and is continuing:

            (a) Landlord shall have the right, at its sole option, then or at
any time thereafter, to exercise its remedies and to collect damages from Tenant
in accordance with this Paragraph 23, subject in all events to applicable Law,
without demand upon or notice to Tenant except as otherwise provided in
Paragraph 22(b) and this Paragraph 23.

                (i) Landlord may give Tenant notice of Landlord's intention to
terminate this Lease on a date specified in such notice. Upon such date, this
Lease, the estate hereby granted and all rights of Tenant hereunder shall expire
and terminate. Upon such termination, Tenant shall immediately surrender and
deliver possession of the Leased Premises to Landlord in accordance with
Paragraph 26. If Tenant does not so surrender and deliver possession of all of
the Leased Premises, Landlord may re-enter and repossess any of the Leased
Premises

                                      -43-




not surrendered, with or without legal process, by peaceably entering any of the
Leased Premises and changing locks or by summary proceedings, ejectment or any
other lawful means or procedure. Upon or at any time after taking possession of
any of the Leased Premises and whether or not the Lease has been terminated,
Landlord may, by peaceable means or legal process, remove any Persons or
property therefrom. Landlord shall be under no liability for or by reason of any
such entry, repossession or removal. Notwithstanding such entry or repossession,
Landlord may (A) exercise the remedy set forth in and collect the damages
permitted by Paragraph 23(a)(iii) or (B) collect the damages set forth in
Paragraph 23(b)(i) or 23(b)(ii).

                (ii) After repossession of any of the Leased Premises pursuant
to clause (i) above, Landlord shall have the right with or without terminating
this Lease and as agent of Tenant, if appropriate, to relet any of the Leased
Premises to such tenant or tenants, for such term or terms, for such rent, on
such conditions and for such uses as Landlord in its sole discretion may
determine, and collect and receive any rents payable by reason of such
reletting. Landlord may make such Alterations in connection with such reletting
as it may deem advisable in its sole discretion. Notwithstanding any such
reletting, Landlord may collect the damages set forth in Paragraph 23(b)(ii).

                (iii) Landlord may, upon notice to Tenant, require Tenant to
make an irrevocable offer to terminate this Lease in its entirety for an amount
(the "Default Termination Amount") specified in the next sentence. The "Default
Termination Amount" shall be the greater of (A) the Fair Market Value of the
Leased Premises or (B) the sum of the Project Cost and Prepayment Premium which
Landlord will be required to pay in prepaying any Loan with proceeds of the
Default Termination Amount. Upon such notice to Tenant, Tenant shall be deemed
to have made such offer and shall, if requested by Landlord, within ten (10)
days following such request, deposit with Landlord as payment against the
Default Termination Amount the amount described in (B) above, Landlord and
Tenant shall promptly commence to determine Fair Market Value. Within thirty
(30) days after the Fair Market Value Date, Landlord shall accept or reject such
offer. If Landlord accepts such offer then, on the tenth (10th) business day
after such acceptance, Tenant shall pay to Landlord the Default Termination
Amount and, at the request of Tenant, Landlord will convey the Leased Premises
to Tenant or its designee "as is," with all faults and without warranty in
accordance with Paragraph 20. Any rejection by Landlord of such offer shall have
no effect on any other remedy Landlord may have under this Lease.

                (iv) Landlord may declare by notice to Tenant the entire Basic
Rent (in the amount of Basic Rent then in effect) for the remainder of the then
current Term to be

                                      -44-




immediately due and payable. Tenant shall immediately pay to Landlord all such
Basic Rent discounted to its Present Value, all accrued Rent then due and
unpaid, all other Monetary Obligations which are then due and unpaid and all
Monetary Obligations which arise or become due by reason of such Event of
Default (including any Costs of Landlord). Upon receipt by Landlord of all such
accelerated Basic Rent and Monetary obligations, this Lease shall remain in full
force and effect and Tenant shall have the right to possession of the Leased
Premises from the date of such receipt by Landlord to the end of the Term, and
subject to all the provisions of this Lease, including the obligation to pay all
increases in Basic Rent and all Monetary Obligations that subsequently become
due, except that (A) no Basic Rent which has been prepaid hereunder shall be due
thereafter during the said Term and (B) Tenant shall have no option to extend or
renew the Term.

            (b) The following constitute damages to which Landlord shall be
entitled if Landlord exercises its remedies under Paragraph 23(a)(i) or
23(a)(ii):

                (i) If Landlord exercises its remedy under Paragraph 23(a)(i)
but not its remedy under Paragraph 23(a)(ii) (or attempts to exercise such
remedy and is unsuccessful in reletting the Leased Premises) then, upon written
demand from Landlord, Tenant shall pay to Landlord, as liquidated and agreed
final damages for Tenant's default and in lieu of all current damages beyond the
date of such demand (it being agreed that it would be impracticable or extremely
difficult to fix the actual damages), an amount equal to the Present Value of
the excess, if any, of (A) all Basic Rent from the date of such demand to the
date on which the Term is scheduled to expire hereunder in the absence of any
earlier termination, re-entry or repossession over (B) the then fair market
rental value of the Leased Premises for the same period. Tenant shall also pay
to Landlord all of Landlord's Costs in connection with the repossession of the
Leased Premises and any attempted reletting thereof, including all brokerage
commissions, legal expenses attorneys' fees, employees' expenses, costs of
Alterations and expenses and preparation for reletting.

                (ii) If Landlord exercises its remedy under Paragraph 23(a)(i)
or its remedies under Paragraph 23(a)(i) and 23(a)(ii), then Tenant shall, until
the end of what would have been the Term in the absence of the termination of
the Lease, and whether or not any of the Leased Premises shall have been relet,
be liable to Landlord for, and shall pay to Landlord, as liquidated and agreed
current damages on the date on which the same are due and payable under the
terms of this Lease all Monetary Obligations which would be payable under this
Lease by Tenant in the absence of such termination less the net proceeds, if
any, of any reletting pursuant to Paragraph 23(a)(ii), after deducting from such
proceeds all of Landlord's Costs (including the items listed in the last
sentence of Paragraph 23(b)(i)


                                      -45-



hereof) incurred in connection with such repossessing and reletting; provided,
that if Landlord has not relet the Leased Premises, such Costs of Landlord shall
be considered to be Monetary Obligations payable by Tenant. Tenant shall be and
remain liable for all sums aforesaid, and Landlord may recover such damages from
Tenant and institute and maintain successive actions or legal proceedings
against Tenant for the recovery of such damages. Nothing herein contained shall
be deemed to require Landlord to wait to begin such action or other legal
proceedings until the date when the Term would have expired by its own terms had
there been no such Event of Default.

            (c) Landlord shall be entitled to apply the Security Deposit to any
amounts due under Paragraph 23(a) if this Lease shall be terminated, or, if this
Lease shall remain in full force and effect, to any amounts due under Paragraph
23(b) or in the following order (i) to past due Basic Rent, (ii) to cure any
other monetary Event of Default and (iii) to installments of Basic Rent in
inverse order of maturity commencing with the last installment of the Term.

            (d) Notwithstanding anything to the contrary herein contained, in
lieu of or in addition to any of the foregoing remedies and damages, Landlord
may exercise any remedies and collect any damages available to it at law or in
equity. If Landlord is unable to obtain full satisfaction pursuant to the
exercise of any remedy, it may pursue any other remedy which it has hereunder or
at law or in equity.

            (e) Notwithstanding anything to the contrary herein contained, if
the Event of Default is solely an Event of Default under Paragraph 22(a)(iv)
hereof, and such Event of Default ceases to exist prior to the date that
Landlord commences a judicial action to exercise a remedy hereunder, then
Landlord shall discontinue the exercise of remedies under this Paragraph 23(b)
with respect to such Event of Default but not with respect to any other Event of
Default.

            (f) Landlord shall not be required to mitigate any of its damages
hereunder unless required to by applicable Law. If any Law shall validly limit
the amount of any damages provided for herein to an amount which is less than
the amount agreed to herein, Landlord shall be entitled to the maximum amount
available under such Law.

            (g) No termination of this Lease, repossession or reletting of any
of the Leased Premises, exercise of any remedy or collection of any damages
pursuant to this Paragraph 23 shall relieve Tenant of any Surviving Obligations.

            (h) WITH RESPECT TO ANY REMEDY OR PROCEEDING HEREUNDER, LANDLORD AND
TENANT WAIVE ANY RIGHT TO A TRIAL BY JURY.


                                      -46-



            (i) During the existence of any Event of Default, Landlord shall
have the right (but no obligation) to perform any act required of Tenant
hereunder and, if performance of such act requires that Landlord enter the
Leased Premises, Landlord may enter the Leased Premises for such purpose.

            (j) No failure of Landlord (i) to insist at any time upon the strict
performance of any provision of this Lease or (ii) to exercise any option,
right, power or remedy contained in this Lease shall be construed as a waiver,
modification or relinquishment thereof. A receipt by Landlord of any sum in
satisfaction of any Monetary Obligation with knowledge of the breach of any
provision hereof shall not be deemed a waiver of such breach, and no waiver by
Landlord of any provision hereof shall be deemed to have been made unless
expressed in a writing signed by Landlord.

            (k) Tenant hereby waives and surrenders, for itself and all those
claiming under it, including creditors of all kinds, (i) any right and privilege
which it or any of them may have under any present or future Law to redeem any
of the Leased Premises or to have a continuance of this Lease after termination
of this Lease or of Tenant's right of occupancy or possession pursuant to any
court order or any provision hereof, and (ii) the benefits of any present or
future Law which exempts property from liability for debt or for distress for
rent.

            (1) Except as otherwise provided herein, all remedies are cumulative
and concurrent and no remedy is exclusive of any other remedy. Each remedy may
be exercised at any time an Event of Default has occurred and is continuing and
may be exercised from time to time. No remedy shall be exhausted by any exercise
thereof.

      24. Notices. All notices, demands, requests, consents, approvals, offers,
statements and other instruments or communications required or permitted to be
given pursuant to the provisions of this Lease shall be in writing and shall be
deemed to have been given for all purposes when delivered in person or by
Federal Express or other reliable 24-hour delivery service or facsimile followed
by Federal Express or other reliable delivery service or by five (5) business
days after being deposited in the United States mail, by registered or certified
mail, return receipt requested, postage prepaid, addressed to the other party at
its address stated above. A copy of any notice given by Tenant to Landlord shall
simultaneously be given by Tenant to Reed Smith Shaw & McClay, 2500 One Liberty
Place, Philadelphia, PA 19103, Attention: Chairman, Real Estate Department. For
the purposes of this Paragraph, any party may substitute another address stated
above (or substituted by a previous notice) for its address by giving fifteen
(15) days' notice of the new address to the other party, in the manner provided
above.


                                      -47-


      25. Estoppel Certificate. At any time upon not less than ten (10) days'
prior written request by Landlord Lender, or Tenant (the "Requesting Party") to
Landlord or Tenant (the "Responding Party"), the Responding Party shall deliver
to the Requesting Party or its designee a statement in writing, executed by an
authorized officer of the Responding Party, certifying (a) that, except as
otherwise specified, this Lease is unmodified and in full force and effect, (b)
the dates to which Basic Rent, Additional Rent and all other Monetary
Obligations have been paid, (c) that, to the knowledge of the signer of such
certificate and except as otherwise specified, no default by either Landlord or
Tenant exists hereunder, (d) such other matters as the Requesting Party may
reasonably request, and (e) if Tenant is the Responding Party that, except as
otherwise specified, there are no proceedings pending or, to the knowledge of
the signer, threatened, against Tenant before or by an court or administrative
agency which, if adversely decided, would materially and adversely affect the
financial condition and operations of Tenant. Any such statements by the
Responding Party may be relied upon by the Requesting Party, any Person whom the
Requesting Party notifies the Responding Party in its request for the
Certificate is an intended recipient or beneficiary of the Certificate, any
Lender or their assignees and by any prospective purchase or mortgagee of any of
the Leased Premises. Any certificate required under this Paragraph 25 and
delivered by Tenant shall state that, in the opinion of each person signing the
same, he has made such examination or investigation as is necessary to enable
him to express an informed opinion as to the subject matter of such certificate,
and shall briefly state the nature of such examination or investigation.

      26. Surrender. Upon the expiration or earlier termination of this Lease,
Tenant shall peaceably leave and surrender the Leased Premises to Landlord in
the same condition in which the Leased Premises was at the commencement of this
Lease, except as repaired, rebuilt, restored, altered, replaced or added to as
permitted or required by any provision of this Lease, and except for ordinary
wear and tear. Upon such surrender, Tenant shall (a) remove from the Leased
Premises all property which is owned by Tenant or third parties other than
Landlord and (b) repair any damage caused by such removal. Property not so
removed shall become the property of Landlord, and Landlord may thereafter cause
such property to be removed from the Leased Premises. The cost of removing and
disposing of such property and repairing any damage to any of the Leased
Premises caused by such removal shall be paid by Tenant to Landlord upon demand.
Landlord shall not in any manner or to any extent be obligated to reimburse
Tenant for any such property which becomes the property of Landlord pursuant to
this Paragraph 26.

      27. No Merger of Title. There shall be no merger of the leasehold estate
created by this Lease with the fee estate


                                      -48-


in any of the Leased Premises by reason of the fact that the same Person may
acquire or hold or own, directly or indirectly, (a) the leasehold estate created
hereby or any part thereof or interest therein and (b) the fee estate in any of
the Leased Premises or any part thereof or interest therein, unless and until
all Persons having any interest in the interests described in (a) and (b) above
which are sought to be merged shall join in a written instrument effecting such
merger and shall duly record the same.

      28. Books and Records.


            (a) Tenant shall keep or shall cause Guarantor to keep adequate
records with respect to the Leased Premises and books of account with respect to
the finances and business of Tenant generally and in accordance with generally
accepted accounting principles ("GAAP") consistently applied, and shall permit
Landlord and Lender by their respective agents, accountants and attorneys, upon
reasonable notice to Tenant, to visit and inspect the Leased Premises and
examine (and make copies of) the records and books of account and to discuss the
finances and business with the officers of Tenant, at such reasonable times as
may be requested by Landlord. Upon the request of Lender or Landlord (either
telephonically or in writing), Tenant shall provide and shall cause Guarantor to
provide the requesting party with copies of any information to which such party
would be entitled in the course of a personal visit.

            (b) Tenant shall deliver to Landlord and to Lender within
ninety-five (95) days of the close of each fiscal year, annual audited financial
statements of Tenant or Guarantor prepared by nationally recognized independent
certified public accountants. Tenant shall also furnish to Landlord (i) within
fifty (50) days after the end of each of the three remaining quarters unaudited
financial statements, certified by Tenant's chief financial officer or a
financial vice president together with a copy of any compliance certificate
furnished by Tenant to its senior lender or lenders, (ii) as and when provided
to Tenant's senior lender or lenders (A) Tenant's annual operating plan and (B)
until the funding of the Initial Loan, Tenant's monthly management reporting
package and (iii) all filings, if any, of Form 10-K, Form 10-Q and other
required filings with the Securities and Exchange Commission pursuant to the
provisions of the Securities Exchange Act of 1934, as amended, or any other Law.
All financial statements of Tenant shall be prepared in accordance with GAAP
consistently applied, except that quarterly statements shall be subject to
year-end adjustments and to the absence of footnotes. All annual financial
statements shall be accompanied by an opinion of said accountants stating that
(C) there are no qualifications as to the scope of the audit and (D) the audit
was performed in accordance with GAAP, and the certificate of the chief
financial officer or a financial vice president of Tenant, dated within five (5)
days of the delivery


                                      -49-


of such statement, stating that (E) such Person knows of no Event of Default, or
event which, upon notice or the passage of time or both, would become an Event
of Default which has occurred and is continuing hereunder or, if any such event
has occurred and is continuing, specifying the nature and period of existence
thereof and what action Tenant has taken or proposes to take with respect
thereto and (F) except as otherwise specified in such affidavit, that such
Person has no knowledge if any respect in which Tenant has not fulfilled all of
its obligations under this Lease which are required to be fulfilled on or prior
to the date of such affidavit.

            (c) Landlord and its agents, accountants and attorneys, shall
consider and treat on a strictly confidential basis (i) any information
contained in the books and records of Tenant, (ii) any copies of any books and
records of Tenant, and any financial statements of Tenant pursuant to Paragraph
28(b) which are delivered to or received by them. Neither Landlord nor its
agents, accountants and attorneys, shall disclose any information contained in
Tenant's books and records nor distribute copies of any of such books and
records nor Tenant's financial statements to any other Persons without the prior
written consent of the chief operating officer or the financial vice president
of Tenant.

            The restrictions contained in this Paragraph 28(c) shall not prevent
disclosure by Landlord any information that is generally available to the public
or in any of the following circumstances:

                  (i) Upon the order of any court or administrative agency to
the extent required by such order and not effectively stayed or by appeal or
otherwise;

                  (ii) Upon the request, demand or requirement of the Securities
and Exchange Commission (the "SEC") or otherwise upon the request, demand or
requirement of any other regulatory agent or authority having jurisdiction over
such party, but subject to the consent of Tenant, which shall not be
unreasonably withheld and shall be deemed given if required by law;

                  (iii) That has been publicly disclosed by Tenant in a press
release or other public announcement of general circulation;

                  (iv) To counsel or accountants for Landlord who has agreed to
abide by the provisions of this Paragraph 28(c);

                  (v) While an Event of Default exists, in connection with the
exercise of any right or remedy under this Lease or any other related document;


                                      -50-


                  (vi) Independently developed by Landlord to the extent that
confidential information provided by Tenant is not used to develop such
information;

                  (vii) With respect to financial information and information
that Landlord, the SEC or its attorneys deem to be material, in any reporting to
the shareholders of Landlord or the shareholders or prospective shareholders
(whether through a registered public offering or otherwise) of Landlord's parent
company;

                  (viii) In connection with any sale, financing or refinancing
of the Leased Premises, provided that any recipient of such information shall
agree to be bound by the terms of this Paragraph 28(c);

                  (ix) From Landlord to Lender; or

                  (x) As otherwise required by Law.

      29. Determination of Value.

            (a) Whenever a determination of Fair Market Value is required
pursuant to any provision of this Lease, such Fair Market Value shall be
determined in accordance with the following procedure:

                  (i) Landlord and Tenant shall endeavor to agree upon such Fair
Market Value within thirty (30) days after the date (the "Applicable Initial
Date") on which (A) Tenant provides Landlord with notice of its intention to
terminate this Lease and purchase the Affected Premises pursuant to Paragraph
18, (B) Landlord provides Tenant with notice of its intention to redetermine
Fair Market Value pursuant to Paragraph 20(c), (C) Tenant provides Landlord with
an Intended Assignment Notice pursuant to Paragraph 21(a)(iii), (D) Landlord
provides Tenant with notice of Landlord's intention to require Tenant to make an
offer to purchase the Leased Premises pursuant to Paragraph 23(a)(iii), or (E)
Tenant provides Landlord with notice pursuant to Paragraph 38(a) of its
intention to exercise its option to purchase the Leased Premises. Upon reaching
such agreement, the parties shall execute an agreement setting forth the amount
of such Fair Market Value.

                  (ii) If the parties shall not have signed such agreement
within thirty (30) days after the Applicable Initial Date, Tenant shall within
fifty (50) days after the Applicable Initial Date select an appraiser and notify
Landlord in writing of the name, address and qualifications of such appraiser.
Within twenty (20) days following Landlord's receipt of Tenant's notice of the
appraiser selected by Tenant, Landlord shall select an appraiser and notify
Tenant of the name, address and qualifications of such appraiser. Such two
appraisers shall endeavor to agree upon Fair Market Value based on a written


                                      -51-


appraisal made by each of them as of the Relevant Date (and given to Landlord by
Tenant). If such two appraisers shall agree upon a Fair Market Value, the amount
of such Fair Market Value as so agreed shall be binding and conclusive.

                  (iii) If such two appraisers shall be unable to agree upon a
Fair Market Value within twenty (20) days after the selection of an appraiser by
Landlord, then such appraisers shall advise Landlord and Tenant of their
respective determination of Fair Market Value and shall select a third appraiser
to make the determination of Fair Market Value. The selection of the third
appraiser shall be binding and conclusive upon Landlord and Tenant.

                  (iv) If such two appraisers shall be unable to agree upon the
designation of a third appraiser within ten (10) days after the expiration of
the twenty (20) day period referred to in clause (iii) above, or if such third
appraiser does not make a determination of Fair Market Value within twenty (20)
days after his selection, then such third appraiser or a substituted third
appraiser, as applicable, shall, at the request of either party hereto (with
respect to the other party), be appointed by the President or Chairman of the
American Arbitration Association in New York, New York. The determination of
Fair Market Value made by the third appraiser appointed pursuant hereto shall be
made within twenty (20) days after such appointment.

                  (v) If a third appraiser is selected, Fair Market Value shall
be the average of the determination of Fair Market Value made by the third
appraiser and the determination of Fair Market Value made by the appraiser
(selected pursuant to Paragraph 29(a)(ii) hereof) whose determination of Fair
Market Value is nearest to that of the third appraiser. Such average shall be
binding and conclusive upon Landlord and Tenant.

                  (vi) All appraisers selected or appointed pursuant to this
Paragraph 29(a) shall (A) be independent qualified MAI appraisers (B) have no
right, power or authority to alter or modify the provisions of this Lease, (C)
utilize the definition of Fair Market Value hereinabove set forth above, and (D)
be registered in the State if the State provides for or requires such
registration.

                  (vii) The Cost of the procedure described in this Paragraph
29(a) above shall be borne entirely by Tenant.

            (b) If, by virtue of any delay, Fair Market Value is not determined
by the expiration or termination of the then current Term, then the date on
which the Term would otherwise expire or terminate shall be extended with
respect to the Leased Premises or the Affected Premises, as applicable, to the
date specified for termination in the particular provision of this


                                      -52-


Lease pursuant to which the determination of Fair Market Value is being made.

            (c) "Fair Market Value" of the Leased Premises or any Related
Premises, as the case may be, and the context may require, shall mean (i) for
all purposes except for the determination of the Default Termination Amount, the
fair market value of the Leased Premises or Related Premises, as the case may be
as of the Relevant Date as affected and encumbered by this Lease, without any
assumption that the Term will or will not be extended for any of the extension
periods provided for herein, or (ii) for the purpose of a determination of the
Default Termination Amount, the fair market value of the Leased Premises as of
the Relevant Date as affected and encumbered by this Lease and assuming that the
Term has been extended for all extension periods provided for herein. For
purposes of determining Fair Market Value under clause (i) of the foregoing
sentence, the appraisers shall:

            (I) determine the Basic Rent payable hereunder during the remainder
      of the Initial Term or then effective Renewal Term, assuming that CPI
      increases during the remainder of the Initial Term will occur at the same
      average rate of increase as during the portion of the Term already then
      past; and then

            (II) discount such Basic Rent so as to represent a present value,
      using a discount rate intended to represent the market capitalization rate
      applicable to long-term lease obligations of the Tenant (based on the
      credit standing of the Tenant), as affected by the location (or locations)
      of the Related Premises; and then

            (III) determine the assumed future replacement cost of the
      Improvements at the end of the Initial Term, using Landlord's Share of
      Project Costs and assuming increases therein using the Means Construction
      Cost Index (the "Means Index") for the portion of the Term already past
      and increases in the Means Index which occur at the same average rate of
      increase thereafter until the end of the Term; and then

            (IV) subtract from such assumed future replacement cost physical
      depreciation and functional obsolescence (but not external obsolescence)
      applicable to the Improvements as of the end of the Term; and then

            (V) discount the result obtained under the foregoing clause (IV) so
      as to represent a present value, using a discount rate based on the market
      capitalization rate for properties similar to the Related Premises in the
      location or respective locations of the Related Premises; and then


                                      -53-


            (VI) add together the present values determined under the foregoing
      clause (II) and (V).

      30. Non-Recourse as to Landlord. Anything contained herein to the contrary
notwithstanding, any claim based on or in respect of any liability of Landlord
under this Lease shall be enforced only against the Leased Premises and not
against any other assets, properties or funds of (a) Landlord, (b) any director,
officer, general partner, limited partner, employee or agent of Landlord, or any
general partner of Landlord, any of its general partners or shareholders (or any
legal representative, heir, estate, successor or assign of any thereof), (c) any
predecessor or successor partnership or corporation (or other entity) of
Landlord, or any of its general partners, either directly or through Landlord or
its general partners or any predecessor or successor partnership or corporation
or their shareholders, officers, directors, employees or agents (or other
entity), or (d) any other Person (including Carey Property Advisors, Carey
Fiduciary Advisors, Inc., W.P. Carey & Co., Inc., W.P. Carey Incorporated and
any Person affiliated with any of the foregoing, or any director, officer,
employee or agent of any thereof).

      31. Financing. If Landlord desires to obtain or refinance any Loan,
Tenant, except as otherwise provided in Paragraph 7(a)(i), shall, at no cost to
Tenant, negotiate in good faith with Landlord concerning any request made by any
Lender or proposed Lender for changes or modifications in this Lease. In
particular, Tenant agrees, upon request of Landlord, to supply any such Lender
with such notices and information as Tenant is required to give to Landlord
hereunder and to extend the rights of Landlord hereunder to any such Lender and
to consent to such financing if such consent is requested by such Lender. Tenant
shall provide any other consent or statement and shall execute any and all other
documents that such Lender reasonably requires in connection with such
financing, including a Certificate of No Default with respect to its then
existing credit agreements, any environmental indemnity agreement which shall
contain substantially similar provisions to the applicable provisions in this
Lease and any subordination, non-disturbance and attornment agreement, so long
as in any such case the same do not materially adversely affect any right,
benefit or privilege of Tenant under this Lease or materially increase Tenant's
obligations under this Lease. Such subordination, nondisturbance and attornment
agreement may require Tenant to confirm that (a) Lender and its assigns will not
be liable for any misrepresentation, act or omission of Landlord and (b) Lender
and its assigns will not be subject to any counterclaim, demand or offsets which
Tenant may have against Landlord.

      32. Subordination. This Lease and Tenant's interest hereunder shall
be subordinate to any Mortgage or other security instrument hereafter placed
upon the Leased Premises by Landlord, and to any and all advances made or to be
made


                                      -54-


thereunder, to the interest thereon, and all renewals, replacements and
extensions thereof, provided that any such Mortgage or other security instrument
(or a separate instrument in recordable form duly executed by the holder of any
such Mortgage or other security instrument and delivered to Tenant) shall
provide, in form and substance reasonably satisfactory to Tenant, for the
recognition of this Lease and all Tenant's rights hereunder by any purchaser at
foreclosure or acceptance of a deed in lieu thereof unless and until an Event of
Default exists, that the Lender recognizes and agrees to be bound by the
provisions of Paragraphs 16, 17 and 19 of this Lease, and, with respect to any
Loan after the Initial Loan, that the Lender agrees to release the Mortgage
insofar as it encumbers Abandonment Premises under Paragraph 36 hereof upon such
terms and conditions as may be agreed to between Lender and Landlord, but which
shall not require a payment to Lender in excess of the Abandonment Offer Amount
or otherwise impose conditions upon such release not within the control of
Landlord.

      33. Tax Treatment; Reporting. Landlord and Tenant each acknowledge that
each shall treat this transaction as a true lease for state law purposes and
shall report this transaction as a Lease for Federal income tax purposes. For
Federal income tax purposes each shall report this Lease as a true lease with
Landlord as the owner of the Leased Premises and Equipment and Tenant as the
lessee of such Leased Premises and Equipment including: (1) treating Landlord as
the owner of the property eligible to claim depreciation deductions under
Section 167 or 168 of the Internal Revenue Code of 1986 (the "Code") with
respect to the Leased Premises and Equipment, (2) Tenant reporting its Rent
payments as business expense under Section 162 of the Code, and (3) Landlord
reporting the Rent payments as rental income.

      34. Financing Major Alterations.

            (a) Should Tenant, during the Term of this Lease, desire to make
Alterations to any of the Leased Premises which are not readily removable
without causing material damage to the Leased Premises and which will cost in
excess of $500,000 as to any one of the Related Premises or $500,000 in the
aggregate as to the Leased Premises ("Major Alterations"), Tenant shall, prior
to the commencement of construction of such Major Alterations, offer by written
notice to Landlord (a "Payment Offer") to accept payment from Landlord for the
costs (the "Alteration Cost") thereof, to wit: cost of labor and materials,
financing fees, legal fees, survey, title insurance and other normal and
customary loan or construction costs.

            (b) Should Landlord accept Tenant's offer, which acceptance shall be
made in writing within sixty (60) days after receipt by Landlord of such offer,
Landlord and Tenant shall enter into good faith negotiations regarding the
execution and


                                      -55-


delivery of a written agreement of modification of this Lease, which agreement
shall provide for the following:

                  (i) payment by Landlord to Tenant of the Alteration Cost
within one hundred twenty (120) days of the date of Landlord's acceptance of
such Payment Offer, or in installment payments as agreed, or on the date of
completion of the Major Alterations, whichever shall be the later;

                  (ii) an increase in the annual Basic Rent payable during the
Amortization Period (as hereinafter defined) to an amount sufficient to amortize
the Alteration Cost ("Total Financing") over a period (the "Amortization
Period") which shall be the remainder of the then current Term and, if Tenant so
elects, any additional extension periods provided for herein (so long as Tenant
shall confirm any such extension periods included in the Amortization Period by
a written waiver of its right to give notice of its intention not to renew this
Lease prior to the expiration of such extension periods), at such rate of
interest and upon such other terms as shall be agreed upon between Landlord and
Tenant, but which shall be no less favorable than the prevailing interest rate
and terms for unsecured loans in a principal amount equal to the Total Financing
for borrowers with credit ratings equivalent to that of Tenant's at that time;

                  (iii) provide a rate of return to Landlord on Landlord's
equity investment in the Leased Premises equal to that enjoyed by Landlord
hereunder immediately prior to such proposed increase in Basic Rent; and

                  (iv) such other changes and amendments to this Lease as may be
necessary and appropriate in view of such payment of the Alteration Cost by
Landlord to Tenant.

Tenant shall pay all Costs incurred by Landlord in connection with any such
modification to this Lease and such financing, including closing costs,
brokerage fees, taxes, recording charges and legal fees and expenses.

            (c) To the extent that the terms of the Mortgage or any other
document encumbering any of the Leased Premises shall require the consent of
Lender and/or the holder or holders of any encumbrance on any of the Leased
Premises (the "Encumbrancers") to the addition or construction of any Major
Alterations or to the financing thereof by Landlord, the rights and obligations
of Landlord and Tenant under Paragraph 12 and this Paragraph 35 are expressly
conditioned upon Tenant's obtaining, prior to the commencement of any
construction, the Encumbrancers' written consent to such construction and to
Landlords obtaining, in the event Landlord has accepted Tenant's offer to accept
payment for the Major Alterations, the Encumbrancers' written consent to such
financing.


                                      -56-


            (d) Should Tenant's offer to accept payment for the Major
Alterations not be accepted by Landlord within said sixty (60) day period, or
should Landlord and Tenant be unable in good faith to agree upon the terms of
the modification of this Lease, Tenant shall, subject to the provisions of
Paragraph 13 of this Lease, have the right to construct the Major Alterations at
Tenant's sole cost and expense. In any event, the construction of the Major
Alterations shall be performed in accordance with the provisions of Paragraph 12
hereof and the Major Alterations shall be the property of Landlord and part of
the Leased Premises subject to this Lease.

            (e) Nothing contained in this Paragraph 34 shall be construed to
modify Paragraph 13 hereof, and the provisions of Paragraph 12 and Paragraph 13
shall apply to all Major Alterations made or constructed hereunder provided,
however, that Landlord's consent shall be required for all Major Alterations.

      35. Security Deposit.

            (a) Concurrently with the execution of this Lease, Tenant shall
deliver to Landlord an irrevocable Letter of Credit (the "Letter of Credit") in
the original face amount of one Million Three Hundred Thousand and No/100
Dollars ($1,300,000) (as increased pursuant to the following sentence, the
"Security Deposit") issued by Bank of America or another bank selected y Tenant
and reasonably acceptable to Landlord and in form and substance satisfactory to
Landlord. The Security Deposit shall be increased to $2,600,000 on January 1,
1996, to $3,900,000 on April 1, 1996, and on the later of July 1, 1996 or the
Yakima Funding Deadline the Security Deposit shall be in the amount of and shall
be maintained at an amount equal to two times the annual Basic Rent for the
first year of the Initial Term, and on the earlier of the closing of the Initial
Loan or the date the Tenant has performed or is prepared to perform its
obligations under Article VI of the Construction Agency Agreement in order to
close the Initial Loan and provided that at such time the Initial Loan
Application has not been terminated by reason of any act by or circumstance
relating to Tenant or Guarantor, the amount of the Security Deposit shall be
reduced so as to be equal to the annual Basic Rent for the first year of the
Initial Term, and in each such instance the Letter of Credit shall be reissued
or amended accordingly. The Letter of Credit shall remain in full force and
effect until satisfaction of one of the conditions set forth in the following
subparagraph (b) provided, however, that all or any portion of the Security
Deposit may be in cash (U.S. dollars) ("Cash Security"), in which event the
required amount of the Letter of Credit shall be reduced by the amount of the
Cash Security. The Cash Security shall not be commingled with other funds of
Landlord or other Persons and interest shall accrue thereon for the benefit of
Tenant from the date the Cash Security is withdrawn and applied or released in
accordance with the terms


                                      -57-


of this Lease. The Security Deposit shall be security for the payment by Tenant
of the Rent and all other charges or payments to be paid hereunder and the
performance of the covenants and obligations contained herein and during the
existence of an Event of Default may be applied as provided in Paragraph 23(c)
hereof. The Letter of Credit shall be renewed at least thirty (30) days prior to
any expiration thereof, unless Cash Security is substituted therefor. If Tenant
fails to renew the Letter of Credit by such date, time being of the essence,
Landlord shall have the right at any time after the thirtieth (30th) day before
such expiration date to draw on the Letter of Credit and to deposit the Security
Deposit in any account for the benefit of Landlord or to declare an Event of
Default. If at any time Rent is not paid as and when due, Landlord shall have
the right to draw on the Letter of Credit or withdraw Cash Security to make such
payment, and within twenty-four (24) hours of such draw or withdrawal Tenant
shall replenish the Security Deposit.

            (b) On the earliest to occur of any of the following conditions and
provided that an Event of Default does not then exist, the Letter of Credit or
Cash Security and interest earned thereon, as the case may be, shall be released
to Tenant and thereafter no Security Deposit shall be required:

                  (i) If Tenant or Guarantor has received with respect to its
senior unsecured debt a credit rating of Baa from Moody's Investors Services,
Inc. or a credit rating of BBB from Standard and Poor's Corporation; or

                  (ii) If at any time after the first day of the fifth year of
the Initial Term (but in no event earlier than November 30, 2000) the
Consolidated Fixed Charge Coverage Ratio of Guarantor and its Consolidated
Subsidiaries is not less than 2:1 and the Indebtedness to EBITDA Ratio of
Guarantor and its Consolidated Subsidiaries is not greater than 4:1 as of the
last day of the most recently completed four (4) fiscal quarters of Guarantor;
or

                  (iii) The Initial Term shall have expired on the Expiration
Date.

            (c) For the purpose of this Paragraph 35, the following terms shall
have the following meanings:

      "Consolidated Fixed Charge Coverage Ratio" shall mean the ratio of EBITDA
to Consolidated Interest Expense.

      "Consolidated Interest Expense" shall mean the total interest expense of
Guarantor and its Consolidated Subsidiaries, determined in accordance with GAAP.

      "Consolidated Net Income" means the aggregate of the net income (or loss)
of Guarantor and its Consolidated Subsidiaries, determined in accordance with
GAAP.


                                      -58-


      "Consolidated Subsidiaries" means, at any particular time, Tenant and
those other subsidiaries of Guarantor whose accounts either (i) are consolidated
with those of Guarantor or (ii) should be consolidated with those of Guarantor
in accordance with GAAP.

      "EBITDA" means (i) Consolidated Net Income (excluding items considered
extraordinary items under GAAP), plus (ii) all Consolidated Interest Expense,
income tax expense, depreciation and amortization (including amortization of any
goodwill or other intangibles), minus (iii) gains (plus losses) attributable to
any asset sales otherwise included in clause (j) above and plus (iv) any other
non-cash charges which have been subtracted in calculating Consolidated Net
Income.

      "Fiscal quarter of Guarantor" means each of the four quarter periods
within the fiscal year of Guarantor and its Consolidated Subsidiaries which
commences on July 1st.

      "GAAP" means generally accepted accounting principles in effect from time
to time.

      "Indebtedness" means at any date, without duplication, (a) any liability
to the extent it would appear as a liability upon obligor's balance sheet
prepared on a consolidated basis in accordance with GAAP, (i) for borrowed money
evidenced by a bond, note, debenture or similar instrument (other than a letter
of credit or a trade payable or a current liability arising in the ordinary
course of business) and (ii) for the monetary obligation regarding a lease of
property that, in accordance with GAAP, should be reflected as a capital lease
on obligor's balance sheet and (b) any liability of others that obligor has
guaranteed or that is otherwise its legal liability, except guaranties by
endorsement of negotiable instruments for deposit or collection or similar
transactions in the normal course of business and except guaranties of
obligations of any subsidiary of Guarantor.

            (d) Landlord shall have the right to designate Lender or any other
holder of a Mortgage as the beneficiary of the Letter of Credit (or as the
holder of the Cash Security Account) during the term of the applicable Loan and,
upon such designation, such designated Lender shall have all of the rights and
obligations of Landlord under this Paragraph 35. Tenant covenants and agrees to
execute such agreements, consents and acknowledgments as may be requested by
Landlord from time to time to change the beneficiary of the Letter of Credit (or
the holder of Cash Security Account) as hereinabove provided.

      36. Economic Abandonment. Provided that an Event of Default does not
exist, Tenant shall have the right at any time after the fifth (5th) year of the
Initial Term (but, in no event earlier than November 30, 2000) to terminate this
Lease with respect to one of the Related Premises (such Related Premises,


                                      -59-


an "Abandonment Premises") that Tenant shall have determined that the
Abandonment Premises shall not be used for at least seven (7) years in its
business operations. In the event Tenant elects to exercise such right, Tenant
shall give notice (the "Abandonment Notice") to Landlord (with a copy to Lender)
of its intention so to terminate this Lease as to the Abandonment Premises, no
later than nine (9) months prior to the date (the "Abandonment Date") of such
intended termination, which notice shall specify the Abandonment Date and shall
contain (a) an irrevocable offer of Tenant to terminate this Lease as to the
Abandonment Premises on the Abandonment Date for the Abandonment Offer Amount
and (b) a certificate of Tenant (i) stating that the Abandonment Premises are no
longer economic for Tenant's continued use and occupancy in its business
operations, (ii) specifying in reasonable detail the reasons therefor and (iii)
certifying that Tenant then intends forever to abandon its operations at the
Abandonment Premises, which certificate shall be conclusively binding upon
Landlord and Tenant, and (c) a resolution of the Board of Directors of Tenant
authorizing such notice.

      Tenant may exercise its rights under this Paragraph 36 only one time and
only with respect to one of the Related Premises.

      The Abandonment Offer Amount shall be the sum of (A) (i) 110% of (ii)
Landlord's Share of Project Costs with respect to the Abandonment Premises,
reduced by the portion of the Acquisition Fee allocated to the Abandonment
Premises according to the percentages specified in Exhibit "F" attached hereto
and made a part hereof, and (B) any Prepayment Premium which Landlord will be
required to pay in prepayment of any Loan with proceeds of the Abandonment Offer
Amount. Promptly upon the delivery of such notice from Tenant to Landlord,
Landlord and Tenant shall commence to determine such Fair Market Value in
accordance with the procedure specified in Paragraph 29.

      Landlord shall accept or reject such offer by notice to Tenant given not
later than ninety (90) days prior to the Abandonment Date. If Landlord shall
reject such offer, which rejection shall not be valid unless accompanied by the
written consent of Lender thereto, then upon (i) payment of all Rent and any
other sums due and unpaid hereunder as of the Abandonment Date and (ii)
compliance by Tenant with all other obligations and liabilities under this Lease
which have arisen on or prior to the Abandonment Date, this Lease shall
terminate as to the Abandonment Premises on the Abandonment Date and Tenant
shall immediately vacate and have no further right, title or interest in or to
any of the Abandonment Premises.

      After the Abandonment Date, whether or not Landlord shall have accepted or
rejected Tenant's offer, the terms of this Lease will remain in full force and
effect with respect to the remaining Related Premises except that the Basic Rent
will be that percentage of the then Basic Rent which is allocated to the
remaining Related Premises as set forth on Exhibit "F" attached hereto and made
a part hereof.


                                      -60-


      Unless Landlord shall have rejected such offer by the foregoing notice to
Tenant not later than the ninetieth (90th) day prior to the Abandonment Date,
Landlord shall be conclusively presumed to have accepted such offer. If such
offer is accepted by Landlord, Tenant shall pay to Landlord the Abandonment
Offer Amount on the Abandonment Date and, provided an Event of Default does not
then exist hereunder, at the request of Tenant, Landlord shall convey to Tenant
the Abandonment Premises in accordance with the provisions of Paragraph 20.

      Landlord shall have the right, at Landlord's sole option, to treat any
vacating or abandonment of the Abandonment Premises which is prohibited pursuant
to Paragraph 22(a) hereof as constituting an election by Tenant of its rights
under this Paragraph 36 and as an irrevocable offer of Tenant to purchase the
Abandonment Premises at the price and upon the terms hereinabove more
specifically provided.

      37. Option to Purchase.

            (a) Landlord does hereby give and grant to Tenant the option to
purchase the entire Leased Premises (i) for a Purchase Price (the "Purchase
Price") equal to the Offer Amount and (ii) on any date (the "Option Purchase
Date") during the one year period that commences on the tenth (10th) anniversary
of the Initial Term Commencement Date (the "Option Period") which is mutually
agreeable to Landlord and Tenant, but in any event not sooner than thirty (30)
days after the Fair Market Value Date. If Tenant intends to exercise such
option, Tenant shall give written notice to Landlord to such effect not later
than six (6) months prior to the tenth (10th) Lease Year. Promptly upon receipt
of such notice by Landlord, the parties shall commence to determine Fair Market
Value.

            (b) If Tenant shall exercise the foregoing option to purchase the
Leased Premises, on the later to occur of (i) the Option Purchase Date or (ii)
the date when Tenant has paid the Offer Amount and has satisfied all other
Monetary Obligations, Landlord shall convey the Leased Premises to Tenant in
accordance with Paragraph 20 hereof; provided, that if an Event of Default has
occurred and is continuing on the Option Purchase Date, Landlord, at its sole
option, may terminate Tenant's option to purchase hereunder. If this Lease shall
terminate for any reason prior to the date originally fixed herein for the
expiration of the Term, or if Tenant shall fail to give the aforesaid notice of
intention to purchase, time being of the essence, the option provided in this
Paragraph 38 and any exercise thereof by Tenant shall cease and terminate and
shall be null and void.

            (c) Landlord shall use all reasonable efforts to obtain the
agreement of the Lender that the Loan that shall encumber the Leased Premises
during the Option Period (the


                                      -61-


"Assumable Loan") may be assumed by the Tenant as partial payment of the Offer
Amount; provided that (i) Landlord shall have no obligation to make or to be
obligated to make any payment to Lender as a condition to requesting or
obtaining such consent and (ii) Tenant shall agree (A) to be personally liable
and, if requested by Lender, that Guarantor will be personally liable for
repayment and performance of the Assumable Loan and (B) that the Lease and
Guaranty shall remain in full force and effect during the term of the Assumable
Loan.

      38. Right of First Refusal.

            (a) Except as otherwise provided in Paragraph 38(e), and provided an
Event of Default does not then exist, if Landlord shall enter into a contract
(the "Sale Contract") for the sale of the Leased Premises with a Third Party
Purchaser, which Sale Contract shall be conditioned upon Tenant's failure to
exercise its right under this Paragraph 38(a), then promptly following the
execution thereof, Landlord shall give written notice to Tenant, together with a
copy of the executed Sale Contract.

                For a period of fifteen (15) days following receipt of such
notice, Tenant shall have the right and option, exercisable by written notice to
Landlord given within said fifteen (15) day period, to elect to purchase the
Leased Premises at the purchase price and upon all the terms and conditions set
forth in the Sale Contract except that no contingencies contained in such Sale
Contract as to environmental assessments, engineering studies, inspection of the
Leased Premises, sale of other property, state of the title to or encumbrances
on the Leased Premises, or any other condition or contingency to the Third Party
Purchaser's obligation to purchase the Leased Premises which pertains to the
condition of the Leased Premises, shall apply to Tenant's obligation to purchase
the Leased Premises under this Paragraph 38, and Tenant shall be obligated to
purchase the Leased Premises without any such condition or contingency.

                If at the expiration of the aforesaid fifteen (15) day period
Tenant shall have failed to exercise the aforesaid option, Landlord may sell the
Leased Premises to such Third Party Purchaser upon the terms set forth in such
contract.

            (b) Except as otherwise specifically provided herein, the closing
date for any purchase of the Leased Premises by Tenant pursuant to this
Paragraph 38 shall be the earlier to occur of (i) ninety (90) days after the
date of Tenant's notice to Landlord of its intention to purchase the Leased
Premises upon the terms of the Sale Contract or (ii) the closing date provided
in such Sale Contract. At such closing Landlord shall convey the Leased Premises
to Tenant in accordance with, and Tenant shall pay to Landlord the purchase
price and other consideration set forth in, the applicable Sale Contract.


                                      -62-


            (c) Tenant shall have the right to exercise the foregoing right of
first refusal upon (i) each proposed sale of the Leased Premises prior to the
tenth (10th) anniversary of the Initial Term Commencement Date and (ii)
notwithstanding the lack of exercise by Tenant in (i) above, one (1) time after
the tenth (10th) anniversary of the Initial Term Commencement Date; provided,
that if, following compliance with the procedure described in Paragraph 38(a), a
Third Party Purchaser does not purchase the Leased Premises, such event shall
not count as an exercise of Tenant's right of first refusal. Notwithstanding
anything to the contrary, if Tenant fails to exercise the right of first refusal
granted pursuant to this Paragraph (c), subsection (ii), after the first day of
the tenth (10th) anniversary of the Initial Term Commencement Date and the sale
to the Third Party Purchaser is consummated, or if the Term of this Lease shall
terminate or expire, such rights of first refusal granted pursuant to this
Paragraph 38 shall terminate and be null and void and of no further force and
effect.

            (d) If Tenant does not exercise its right of first refusal to
purchase the Leased Premises and the Leased Premises are transferred to a Third
Party Purchaser, Tenant will attorn to any Third Party Purchaser as Landlord so
long as such Third Party Purchaser and Landlord notify Tenant in writing of such
transfer. At the request of Landlord and at not cost or expense to Tenant,
Tenant will execute such documents confirming the agreement referred to above
and such other agreements as Landlord may reasonably request, provided that such
agreements do not increase the liabilities and obligations of Tenant hereunder.

            (e) The provisions of Paragraph 38 shall not apply to or prohibit
(i) any mortgaging, subjection to deed of trust or other hypothecation of
Landlord's interest in the Leased Premises, (ii) any sale of the Leased Premises
pursuant to a private power of sale under or judicial foreclosure of any
Mortgage or other security instrument or device to which Landlord's interest in
the Leased Premises is now or hereafter subject, (iii) any transfer of
Landlord's interest in the Leased Premises to a Lender, beneficiary under deed
of trust or other holder of a security interest therein by deed in lieu of
foreclosure, (iv) any transfer of the Leased Premises to any governmental or
quasi-governmental agency with power of condemnation, (v) any transfer of the
Leased Premises to any affiliate of Landlord or to any entity sponsored by W.P.
Carey & Co., Inc., W.P. Carey Incorporated or either of their successors, (vi)
any transfer of the interest of one of the Persons that comprise Landlord to the
other Person that comprises Landlord, (vii) any sale to any Person to whom
either of the parents of the Landlord sells all or substantially all of its
assets, or (viii) any transfer of the Leased Premises to any of the successors
or assigns of any of the Persons referred to in the foregoing clauses (ii) and
(iii).


                                      -63-


      39. Miscellaneous.

            (a) The paragraph headings in this Lease are used only for
convenience in finding the subject matters and are not part of this Lease or to
be used in determining the intent of the parties or otherwise interpreting this
Lease.

            (b) As used in this Lease, the singular shall include the plural and
any gender shall include all genders as the context requires and the following
words and phrases shall have the following meanings: (i) "including" shall mean
"including without limitation"; (ii) "provisions" shall mean "provisions, terms,
agreements, covenants and/or conditions"; (iii) "lien" shall mean "lien, charge,
encumbrance, title retention agreement, pledge, security interest, mortgage
and/or deed of trust"; (iv) "obligation" shall mean "obligation, duty,
agreement, liability, covenant and/or condition"; (v) "any of the Leased
Premises" shall mean "the Leased Premises or any part thereof or interest
therein"; (vi) "any of the Land" shall mean "the Land or any part thereof or
interest therein"; (vii) "any of the Improvements" shall mean "the Improvements
or any part thereof or interest therein"; (viii) "any of the Equipment" shall
mean "the Equipment or any part thereof or interest therein"; and (ix) "any of
the Adjoining Property" shall mean "the Adjoining Property or any part thereof
or interest therein".

            (c) Any act which Landlord is permitted to perform under this Lease
may be performed at any time and from time to time by Landlord or any person or
entity designated by Landlord. Each appointment of Landlord as attorney-in-fact
for Tenant hereunder is irrevocable and coupled with an interest. Except as
otherwise specifically provided herein, Landlord shall have the right, at its
sole option, to withhold or delay its consent whenever such consent is required
under this Lease for any reason or no reason. Time is of the essence with
respect to the performance by Tenant of its obligations under this Lease.

            (d) Landlord shall in no event be construed for any purpose to be a
partner, joint venturer or associate of Tenant or of any subtenant, operator,
concessionaire or licensee of Tenant with respect to any of the Leased Premises
or otherwise in the conduct of their respective businesses.

            (e) This Lease and any documents which may be executed by Tenant on
or about the effective date hereof at Landlord's request constitute the entire
agreement between the parties and supersede all prior understandings and
agreements, whether written or oral, between the parties hereto relating to the
Leased Premises and the transactions provided for herein. Landlord and Tenant
are business entities having substantial experience with the subject matter of
this Lease and have each fully participated in the negotiation and drafting of
this Lease. Accordingly, this Lease shall be construed without


                                      -64-


regard to the rule and ambiguities in a document are to be construed against the
drafter.

            (f) This Lease may be modified, amended, discharged or waived only
by an agreement in writing signed by the party against whom enforcement of any
such modification, amendment, discharge or waiver is sought.

            (g) The covenants of this Lease shall run with the land and bind
Tenant, its successors and assigns and all present and subsequent encumbrances
and subtenants of any of the Leased Premises, and shall inure to the benefit of
Landlord, its successors and assigns. If there is more than one Tenant, the
obligations of each shall be joint and several.

            (h) Notwithstanding any provision in this Lease to the contrary, all
Surviving Obligations of Tenant shall survive the expiration or termination of
this Lease with respect to any Related Premises.

            (i) If any one or more of the provisions contained in this Lease
shall for any reason be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any
other provision of this Lease, but this Lease shall be construed as if such
invalid, illegal or unenforceable provision had never been contained herein.

            (j) All exhibits attached hereto are incorporated herein as if fully
set forth.

            (k) This Lease shall be governed by and construed and enforced in
accordance with the Laws of the State.

      IN WITNESS WHEREOF, Landlord and Tenant have caused this Lease to be duly
executed under seal as of the day and year first above written.


                                        LANDLORD:

                                        DELMO (PA) QRS 11-36


                                        By: /s/ BARCLAY G. JONES III
                                           -------------------------------------
                                                Barclay G. Jones III

                                           A Trustee under a certain Trust
                                           Agreement dated as of
                                           October 11, 1995


                                      -65-


                                        DELMO (PA) QRS 12-10


                                        By: /s/ BARCLAY G. JONES III
                                           -------------------------------------

                                        Title:
                                              ----------------------------------
                                                Barclay G. Jones III

                                           A Trustee under a certain Trust
                                           Agreement dated as of
                                           October 11, 1995



                                        TENANT:

                                        DEL MONTE CORPORATION,
                                        a New York corporation


                                        By:       /s/ THOMAS E. GIBBONS
                                           -------------------------------------
                                                    Thomas E. Gibbons
                                                  Senior Vice President
                                                           and
                                                        Treasurer


                                      -66-

EX-10.13

                                                                   EXHIBIT 10.13


                       FIRST AMENDMENT TO LEASE AGREEMENT

        THIS FIRST AMENDMENT TO LEASE AGREEMENT, made as of this 28th day of
June, 1996, by and between BARCLAY G. JONES III, AS TRUSTEE of DELMO (PA) QRS
11-36 and BARCLAY G. JONES III, AS TRUSTEE OF DELMO (PA) QRS 12-10, a
Pennsylvania business trust (collectively, "Landlord") and DEL MONTE
CORPORATION, a New York corporation ("Tenant").

                                  WITNESSETH:

        WHEREAS, Landlord and Tenant entered into a Lease Agreement dated as of
October 31, 1995 (the "Lease Agreement") for premises located in Mendota,
Illinois, Toppenish, Washington, Yakima, Washington and Plover, Wisconsin; and

        WHEREAS, Landlord and Tenant desire to amend the Lease as hereinafter
set forth.

        NOW, THEREFORE, and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, Landlord leases and demises to Tenant and
Tenant leases from Landlord the premises described on Exhibit A-1 and Exhibit
A-2 attached hereto and Landlord and Tenant further covenant and agree as
follows:

        1. EXHIBIT A, LEGAL DESCRIPTION: YAKIMA, WASHINGTON is hereby deleted in
its entirety and EXHIBIT A, LEGAL DESCRIPTION: YAKIMA, WASHINGTON attached
hereto as Exhibit A-1 is hereby inserted in lieu thereof.

        2. EXHIBIT A, LEGAL DESCRIPTION: TOPPENISH, WASHINGTON - Parking
attached hereto as Exhibit A-2 is hereby incorporated into the Lease as part of
Exhibit A to the Lease.

        3. EXHIBIT C, PERMITTED EXCEPTIONS (YAKIMA, YAKIMA COUNTY, WASHINGTON)
is hereby deleted in its entirety and EXHIBIT C, PERMITTED EXCEPTIONS (YAKIMA,
YAKIMA COUNTY, WASHINGTON) attached hereto as Exhibit C-1 is hereby inserted in
lieu thereof.

        4. EXHIBIT C, PERMITTED EXCEPTIONS (TOPPENISH PARKING, YAKIMA COUNTY,
WASHINGTON) attached hereto as Exhibit C-2 is hereby incorporated into the Lease
as part of Exhibit C.

        5. Paragraph 2 of EXHIBIT D, BASIC RENT PAYMENTS is hereby deleted in
its entirety and the following Paragraph 2 is inserted in lieu thereof:

                "2. Basic Rent From and After June 28, 1996. Commencing on July
        1, 1996 annual Basic Rent shall be $2,572,500 payable on the first day
        of July, 1996 and on the first day of each October, January, April and
        July thereafter until the expiration of the Term in quarterly
        installments of $643,125.00. Basic Rent shall be subject to the
        adjustments provided for in subparagraphs A, B and C of Paragraph 5
        below."


                                       1.




        6. EXHIBIT E, LANDLORD'S SHARE OF PROJECT COSTS is hereby deleted in its
entirety and EXHIBIT E, LANDLORD'S SHARE OF PROJECT COSTS attached hereto as
Exhibit E is hereby inserted in lieu thereof.

        7. EXHIBIT F, PERCENTAGE ALLOCATION OF BASIC RENT is hereby deleted in
its entirety and EXHIBIT F, PERCENTAGE ALLOCATION OF BASIC RENT attached hereto
as Exhibit F is hereby inserted in lieu thereof.

        8. Paragraph 1. Demise of Premises. is hereby amended by adding the
phrase "Toppenish Parking" after "Toppenish Premises".

        9. Paragraph 2. Certain Definitions. is hereby amended as follows:

                "Construction Agency Agreement" shall mean that certain
        Construction Agency Agreement dated as of October 31, 1995, between
        Landlord, as owner, and Tenant, as agent for Landlord in connection with
        the construction of the Improvements, as amended by a First Amendment to
        Construction Agency Agreement.

                "Ground Lease" shall mean that certain Term Lease, lease no.
        524,425, dated as of May 1, 1996 between Ground Lessor and Tenant and
        assigned by Tenant to Landlord by Assignment of Term Lease dated as of
        June 28, 1996 (such assignment having been consented to by Ground
        Lessor).

                "Ground Lessor" shall mean Burlington Northern Railroad Company,
        a Delaware corporation and Washington Central Railroad Company, a
        Washington corporation.

                "Related Premises" shall mean any one of the Mendota Premises,
        Toppenish Premises, Toppenish Parking, Yakima Premises and Plover
        Premises.

                "Surviving Obligations" shall mean any obligations of Tenant
        under this Lease and any obligations of the tenant under the Ground
        Lease, actual or contingent, which arise on or prior to the expiration
        or prior termination of this Lease or the Ground Lease, as the case may
        be, or which survive such expiration or termination by their own terms.

                The definition of "Yakima Funding Deadline" is hereby deleted.

        10. Subparagraph (a) of Paragraph 5. Term. is hereby restated in its
entirety as follows:

                "(a) Subject to the provisions hereof, Tenant shall have and
        hold the Leased Premises for a primary term ("Primary Term") commencing
        on November 1, 1995 ("Commencement Date") and terminating at midnight on
        June 27,1996 ("Primary Term Expiration Date") and for an initial term
        (such initial term as extended or renewed in accordance with the
        provisions hereof being called herein the Initial Term")


                                               2.




        commencing on June 28, 1996 ("Initial Term Commencement Date"). The
        Initial Term shall expire on June 30, 2016 "Expiration Date").

        11. Paragraph 10. Compliance with Laws and Easement Agreements;
Environmental Matters. is hereby renamed Compliance with Laws, Easement
Agreements and Ground Lease Environmental Matters. and is hereby modified by
adding thereto the following subparagraph (i):

                "(i) Tenant, at its sole cost and expense, will at all times and
        faithfully abide by, discharge and perform all of the covenants,
        conditions and agreements contained in the Ground Lease and will not
        alter, modify, amend or terminate or attempt to alter, modify, amend or
        terminate the Ground Lease, give any consent or approval thereunder
        without in each case prior written consent of Landlord and Lender."

        12. Subparagraphs (a) through (c) of Paragraph 18. Termination Events.
are hereby restated in their entirety as follows:

                "(a) If (i) all of any Related Premises shall be taken by a
        Taking or (ii) any substantial portion of any Related Premises shall be
        taken by a Taking or all or any substantial portion of any Related
        Premises shall be totally damaged or destroyed by a Casualty and, in any
        such case, Tenant certifies and covenants to Landlord that it will
        forever abandon operations at the Related Premises or (iii) Landlord
        receives notice from Ground Lessor that Ground Lessor is exercising its
        right under Section 11(b) of the Ground Lease to terminate the Ground
        Lease or (iv) the holder of any mortgage encumbering the interest of
        Ground Lessor in the Yakima Premises commences to foreclose or otherwise
        acquire the interest of Ground Lessor in the Yakima Premises, (any one
        or all of the Related Premises described in the above clauses (i) and
        (ii) above and the Yakima Premises with respect to (iii) and (iv) above
        being hereinafter referred to as the "Affected Premises" and each of the
        events described in the above clauses (i), (ii), (iii) and (iv) shall
        hereinafter be referred to as a "Termination Event"), then (x) in the
        case of (i) and (iii) above, Tenant shall be obligated, within thirty
        (30) days after Tenant receives a Condemnation Notice or within thirty
        days after Tenant receives a termination notice from Ground Lessor, as
        the case may be, and (x) in the case of (iv) above within ten (10) days
        after Tenant receives notice that any such holder has commenced to
        foreclose or otherwise acquire Ground Lessor's interest in the Yakima
        Premises, and (y) in the case of (ii) above, Tenant shall have the
        option, within thirty (30) days after Tenant receives a Condemnation
        Notice or thirty (30) days after the Casualty, as the case may be, to
        give to Landlord written notice (a "Termination Notice" of the Tenant's
        option to terminate this Lease as to the Affected Premises in the form
        described in Paragraph 18(b).

                (b) A Termination Notice shall contain (i) notice of Tenant's
        intention to terminate this Lease as to the Affected Premises on the
        first Basic Rent Payment Date which occurs at least thirty (30) days
        after the Fair Market Value Date (the "Termination Date"), (ii) a
        binding and irrevocable offer of Tenant to purchase the Affected
        Premises


                                       3.

for a price equal to the Termination Amount and (iii) if the Termination Event
is an event described in Paragraph 18(a)(ii), the certification and covenant
described therein and a certified resolution of the Board of Directors of Tenant
authorizing the same. Promptly upon the delivery to Landlord of a Termination
Notice, Landlord and Tenant shall commence to determine Fair Market Value.

                (c) If Landlord shall reject such offer to terminate this Lease
        as to the Affected Premises by written notice to Tenant (a "Rejection"),
        which Rejection shall contain the written consent of Lender, not later
        than thirty (30) days following the Fair Market Value Date, then this
        Lease shall terminate as to the Affected Premises on the Termination
        Date; provided that, if Tenant has not satisfied all Monetary
        Obligations and all other obligations and liabilities under this Lease
        which have arisen as to the Affected Property (collectively, "Remaining
        Obligations") on or prior to the Termination Date, then Landlord may, at
        its option, extend the date on which this Lease may terminate as to the
        Affected Premises to a date which is no later than the first Basic Rent
        Payment Date after the Termination Date on which Tenant has satisfied
        all Remaining Obligations. Upon such termination (i) all obligations of
        Tenant hereunder as to the Affected Premises shall terminate except for
        any Surviving Obligations, (ii) Tenant shall promptly vacate and shall
        have no further right, title or interest in or to any of the Affected
        Premises and (iii) the Net Award or payment by Ground Lessor, as the
        case may be, shall be retained by Landlord. Notwithstanding anything to
        the contrary hereinabove contained, if Tenant shall have received a
        Rejection and, on the date when this Lease would otherwise terminate as
        provided above, Landlord shall not have received the full amount of the
        Net Award payable by reason of the applicable Termination Event, then on
        the Termination Date Tenant shall assign to Landlord all of its right,
        title and interest, if any, in and to the Net Award."

        13. Paragraph 20. Procedures Upon Purchase. is hereby amended by
deleting clause (i) of subparagraph (b) and inserting in lieu thereof the
following:

                "(i) a Special Warranty Deed (or with respect to the Yakima
        Premises a Special Warranty Assignment of Ground Lease) which describes
        the premises being conveyed and conveys the title thereto as provided in
        Paragraph 20(a), . . ."

        14. Paragraph 22. Events of Default. is hereby amended in the following
respects:

                (a) Subparagraph (a) is hereby amended by changing the date in
        clause (xviii) from "April 1, 1996" to "June 28, 1996" and by adding
        thereto the following clause (xx) and (xxi):

                    "(xx) a default shall occur under the Ground Lease, or

                    (xxi) Tenant shall fail to comply with the terms of Section
        6.07 of the Construction Agency Agreement with respect to the Yakima
        Premises, or


                                       4.



                    (xxii) Tenant shall fail to make a rejectable offer under
        Paragraph 12(a)(iii) or (iv) within the time periods provided therein."

                (b) Subparagraph (b) is hereby amended by deleting the word "or"
        in the fourth line thereof and adding the phrase "(xx), (xxi) or (xxii)"
        after "(xix)".

        15. Paragraph 35. Security Deposit. is hereby amended by deleting the
second full sentence in subparagraph (a) and inserting in lieu thereof the
following:

                "The Security Deposit shall be increased to $2,600,000 on
        January 1, 1996, to $3,900,000 on April 1, 1996, to June 1, 1996 and
        commencing on June 28, 1996 and continuing until completion of the
        Yakima Premises in accordance with the terms of Article VI of the
        Construction Agency Agreement shall be maintained at an amount equal to
        $5,395,000. Upon completion of the Yakima Premises in accordance with
        the terms of Article VI of the Construction Agency Agreement, the amount
        of the Security Deposit shall be reduced to $3,072,500. In each instance
        the Letter of Credit shall be reissued or amended accordingly."

        16. Except as specifically amended hereby, the terms and conditions of
the Lease Agreement shall be binding on Landlord and Tenant and their respective
successors and assigns, and from and after the date hereof the term "Lease"
shall mean the Lease as amended by this First Amendment to Lease Agreement.

        IN WITNESS WHEREOF, the parties hereto have caused this First Amendment
to Lease Agreement to be duly executed under seal as of the day and year first
above written.

                      BALANCE OF PAGE INTENTIONALLY BLANK


                                               5.


             SIGNATURE PAGE FOR FIRST AMENDMENT TO LEASE AGREEMENT


                                   DELMO (PA) QRS 11-36,
                                   a Pennsylvania Business Trust


                                   By: /s/ BARCLAY G. JONES
                                       -----------------------------------------
                                       Barclay G. Jones, Trustee



                                   DELMO (PA) QRS 12-10,
                                   a Pennsylvania Business Trust


                                   By: /s/ BARCLAY G. JONES
                                       -----------------------------------------
                                       Barclay G. Jones, Trustee



ATTEST:                            DEL MONTE CORPORATION
                                   A New York corporation

By: /s/ RAYMOND S. VOLAN           By: /s/ JON W. GRAVES
   ----------------------------       ------------------------------------------
Title: Real Estate Mgr.            Title: Assistant Treasurer

[Corporate Seal]

EX-10.14

                                                                   EXHIBIT 10.14

                      SECOND AMENDMENT TO LEASE AGREEMENT

        This SECOND AMENDMENT TO LEASE AGREEMENT, made as of this 31st day of
this 31st day of October, 1996 by and between Barclay G. Jones III as Trustee of
DELMO (PA) QRS 11-36 and Barclay G. Jones III as Trustee of DELMO (PA) QRS
12-10, each a Pennsylvania Business Trust (collectively, "Landlord") and DEL
MONTE CORPORATION, a New York corporation ("Tenant").

                               W I T N E S S E T H

        WHEREAS, Landlord and Tenant entered into a Lease Agreement, dated as of
October 31, 1995, as amended by a First Amendment to Lease Agreement, dated as
of June 28, 1996 (said Lease Agreement, as amended, the "Lease Agreement") for
premises located in Mendota, Illinois, Toppenish, Washington, Yakima, Washington
and Plover, Wisconsin; and

        WHEREAS, Landlord and Tenant desire to amend the Lease Agreement as
hereinafter set forth.

        NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Landlord and Tenant hereby agree to
amend the Lease Agreement in the following respects:

        1. Paragraph 2. of Exhibit D Basic Rent Payments is hereby deleted in
its entirety and the following Paragraph 2 is inserted in lieu thereof:

                2. Basic Rent from and after January 1, 1997. On January 1,
        1997, a quarterly installment of Basic Rent shall be due in the amount
        of $613,396.80. Commencing on April 1, 1997, annual Basic Rent shall be
        $2,501,152.30 payable in quarterly installments of $625,288.08 on the
        first day of April, 1997 and on the first day of each July, October,
        January and April thereafter until the expiration of the term. Basic
        Rent shall be subject to the adjustments provided for in subparagraphs
        (a), (b) and (c) of Paragraph 5 below.

        2 . Exhibit E Landlord's Share of Project Costs is hereby deleted in its
entirety and Exhibit E Landlord's Share of Project Costs attached hereto as
Exhibit E is hereby inserted in lieu thereof.

        3. Paragraph 35. Security Deposit is hereby amended by deleting the
first two sentences of subparagraph (a) and inserting the following in lieu
thereof:

                Concurrently with the execution hereof, Tenant shall deliver to
        Landlord an irrevocable letter of





        credit (the "Letter of Credit") in the face amount of $2,751,152.30
        issued by Bank of America or another bank selected by Tenant and
        reasonably acceptable to Landlord and in form and substance satisfactory
        to Landlord.

        4. Except as specifically amended hereby, the terms and conditions of
the Lease Agreement shall be binding on Landlord and Tenant and their respective
successors and assigns and from and after the date hereof the term "Lease" shall
mean the Lease Agreement as amended by this Second Amendment to Lease Agreement.

        IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment
to Lease Agreement to be duly executed under seal as of the day and year first
above written.



ATTEST:                                              DELMO (PA) QRS 11-36, a
                                                     Pennsylvania Business Trust

By:                                                  By: /s/ BARCLAY G. JONES
   ------------------------                             ------------------------
Title: ASSISTANT SECRETARY                           Title:  TRUSTEE
      ---------------------                                ---------------------
      [Corporate Seal]



ATTEST:                                              DELMO (PA) QRS 12-10, a
                                                     Pennsylvania Business Trust

By:                                                  By: /s/ BARCLAY G. JONES
   ------------------------                             ------------------------
Title:  ASSISTANT SECRETARY                          Title:  TRUSTEE
      ---------------------                                ---------------------
      [Corporate Seal]


ATTEST:                                              DEL MONTE CORPORATION


By:                                                  By: /s/ JON W. GRAVES
   ------------------------                             ------------------------
Title:                                               Title:  ASSISTANT TREASURER
      ---------------------                                ---------------------
      [Corporate Seal]


                                      -2-


                                     CONSENT

        Del Monte Foods Company, guarantor of the obligations of Tenant under
the Lease hereby joins in and consents to the within Second Amendment to Lease
Agreement and agrees to be bound by the terms thereof.

                                                     DEL MONTE FOODS COMPANY

                                                     By: /s/ JON W. GRAVES
                                                        -----------------------
                                                     Title: ASSISTANT TREASURER
                                                           --------------------
                                                     Date: October 31, 1996
                                      -3-

EX-10.15

                                                                   EXHIBIT 10.15


                       THIRD AMENDMENT TO LEASE AGREEMENT


            This THIRD AMENDMENT TO LEASE AGREEMENT, made as of this 24th day of
June, 1997, by and between Barclay G. Jones III, as Trustee of DELMO (PA) QRS
11-36 and Barclay G. Jones III, as Trustee of DELMO (PA) QRS 12-10, each a
Pennsylvania business trust (collectively, "Landlord") and DEL MONTE
CORPORATION, a New York corporation ("Tenant").


                              W I T N E S S E T H


            WHEREAS, Landlord and Tenant entered into a Lease Agreement, dated
as of October 31, 1995, for premises located in Mendota, Illinois, Toppenish,
Washington, Yakima, Washington and Plover, Wisconsin;

            WHEREAS, the Lease Agreement was amended pursuant to a First
Amendment to Lease Agreement, dated as of June 28, 1996, and pursuant to a
Second Amendment to Lease Agreement, dated as of October 31, 1996 (the Lease
Agreement, as amended, being hereinafter referred to as the "Lease Agreement");

            WHEREAS, Landlord has agreed to fund to Tenant an additional
$582,430.20 to be used by Tenant in the following manner (1) $288,203.91 to pay
past due Basic Rent due Landlord, (2) $282,856 to construct certain improvements
to the Leased Premises (as defined in the Lease Agreement) and (3) $11,370.29 to
pay certain unpaid Landlord's Share of Project Costs, which amount shall be
disbursed pursuant to the terms and conditions set forth in that certain
Construction Agency Agreement, dated as of October 31, 1995, between Tenant and
Landlord, as amended by that certain First Amendment to Construction Agency
Agreement, dated as of June 28, 1996, and by that certain Second Amendment to
Construction Agency Agreement of even date herewith; and

            WHEREAS, Landlord and Tenant desire to amend the Lease as
hereinafter set forth.

            NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Landlord and Tenant covenant and
agree as follows:

            1. Paragraph 2 of Exhibit D, Basic Rent Payments is hereby deleted
in its entirety and the following Paragraph 2 is inserted in lieu thereof:

                  "2. Basic Rent From and After July 1, 1997. Commencing on July
            1, 1997 annual Basic Rent shall be $2,572,500 payable on the first
            day of July, 1997 and


            on the first day of each October, January, April and July thereafter
            until the expiration of the Term in quarterly installments of
            $643,125.00. Basic Rent shall be subject to the adjustments provided
            for in subparagraphs A, B and C of Paragraph 5 below."

            2. Paragraph 35 of the Lease Agreement is hereby amended by deleting
the first sentence thereof in its entirety and inserting the following sentence
in lieu thereof:

                  "Concurrently with the execution hereof, Tenant shall deliver
            to Landlord an irrevocable letter of credit (the "Letter of Credit")
            in the face amount of Two Million Eight Hundred Twenty-Two Thousand
            Five Hundred Dollars ($2,822,500) issued by Bank of America or
            another bank selected by Tenant and reasonably acceptable to
            Landlord and in form and substance satisfactory to Landlord."

            3. Except as specifically amended hereby, the terms and conditions
of the Lease Agreement shall be binding on Landlord and Tenant and their
respective successors and assigns, and from and after the date hereof the term
"Lease" shall mean the Lease as amended by this Third Amendment to Lease
Agreement.










                                      -2-



            IN WITNESS WHEREOF, the parties hereto have caused this Third
Amendment to Lease Agreement to be duly executed under seal as of the day and
year first above written.

                                          DELMO (PA) QRS 11-36,
                                          a Pennsylvania Business Trust



                                          By:  /s/ BARCLAY G. JONES
                                              ----------------------------------
                                              Barclay G. Jones, Trustee

                                          DELMO (PA) QRS 12-10,
                                          a Pennsylvania Business Trust



                                          By:  /s/ BARCLAY G. JONES
                                              ----------------------------------
                                              Barclay G. Jones, Trustee


                                          DEL MONTE CORPORATION,
ATTEST:                                   a New York corporation



By:                                       By:
   ------------------------------------      -----------------------------------
Title:                                    Title:
      ---------------------------------         --------------------------------

     [Corporate Seal]

     [Signatures to Third Amendment to Lease Agreement]







                                       -3-



            IN WITNESS WHEREOF, the parties hereto have caused this Third
Amendment to Lease Agreement to be duly executed under seal as of the day and
year first above written.

                                          DELMO (PA) QRS 11-36,
                                          a Pennsylvania Business Trust



                                          By:
                                              ----------------------------------
                                              Barclay G. Jones, Trustee

                                          DELMO (PA) QRS 12-10,
                                          a Pennsylvania Business Trust



                                          By:
                                              ----------------------------------
                                              Barclay G. Jones, Trustee


                                          DEL MONTE CORPORATION,
ATTEST:                                   a New York corporation



By: /s/ RAYMOND S. VOLAN                  By: /s/ JON W. GRAVES
   ------------------------------------      -----------------------------------
Title:  Real Estate Mgr.                  Title: Assistant Treasurer
      ---------------------------------         --------------------------------

     [Corporate Seal]

     [Signatures to Third Amendment to Lease Agreement]








                                      -3-


                       CONSENT OF MORTGAGEE AND ASSIGNEE

            CREDITANSTALT CORPORATE FINANCE, INC. ("Lender"), the Mortgagee
under that certain Mortgage, Assignment of Rents and Security Agreement, dated
as of June 28, 1996, from Landlord to Lender and the Assignee under that certain
Absolute Assignment of Leases and Rentals from Landlord to Lender, dated as of
June 28, 1996, hereby consents to the foregoing Third Amendment to Lease
Agreement.

                         CREDITANSTALT CORPORATE
                         FINANCE, INC.



                         By:
                             ---------------------------------------------------

                         Title:  Senior Vice President     Vice President
                                ------------------------------------------------

                         Dated:   6/25/97
                               -------------------------------------------------

EX-10.16

                                                                   EXHIBIT 10.16


                       FOURTH AMENDMENT TO LEASE AGREEMENT

        THIS FOURTH AMENDMENT to LEASE AGREEMENT (this "Amendment") is made and
entered into as of this day of October, 2001, by and among DELMO (PA) QRS 11-36,
a Pennsylvania business trust ("QRS 11-36"), DELMO (PA) QRS 12-10, a
Pennsylvania business trust ("QRS 12-10"; collectively, QRS 11-26 and QRS 12-10
are referred to here in as the "Landlord") having an address at c/o W.P. Carey &
Co. LLC, 50 Rockefeller Plaza, 2nd Floor, New York, NY 10020, and DEL MONTE
CORPORATION, a New York corporation ("Tenant"), having an address at Market
Place, Steuart Tower, San Francisco, California, 94105.

                                  WITNESSETH:

        WHEREAS, Landlord and Tenant entered into a certain lease agreement for
the property situate in Mendota, Illinois, Toppenish, Washington, Yakima,
Washington and Plover, Wisconsin (the "Property") dated as of October 31,1995,
as amended by that certain First Amendment to Lease Agreement made as of June
28, 1996, that certain Second Amendment to Lease Agreement made as of October
31,1996 and that certain Third Amendment to Lease Agreement made as of June
24,1997 (collectively the "Lease").

        WHEREAS, Landlord and Tenant now desire to amend the terms of the Lease
pursuant to the terms of this Amendment.

        NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Landlord and Tenant covenant and
agree as follows:

        1. The Cover Page of the Lease is hereby amended by deleting the
reference "Yakima, Washington".

        2. Paragraph 1 of the Lease is hereby amended by deleting the phrase
"four (4)" parcels" contained in the first sentence and inserting in lieu
thereof the phrase "three (3) parcels".

        3. Paragraph 1 of the Lease is hereby further amended by deleting the
defined term "Yakima Premises" contained in the second sentence.

        4. Paragraph 2 of the Lease is hereby amended by deleting the term
"Paragraph "38" contained in the definition of "Assumable Loan" and inserting in
lieu thereof the term "Paragraph 37".

        5. Paragraph 2 of the Lease is hereby further amended by deleting the
definitions "Ground Lease" and "Ground Lessor".

        6. Paragraph 2 of the Lease is hereby further amended by inserting the
phrase "as may be amended or modified from time to time" at the end of the
definition of "Guaranty".




        7. Paragraph 2 of the Lease is hereby further amended by deleting the
definition "Lender" in its entirety and inserting in lieu thereof the following
definition:

        " "Lender" shall mean any person or entity (and their respective
        successors and assigns) which may make a Loan to Landlord or is the
        holder of any Note."

        8. Paragraph 2 of the Lease is hereby further amended by adding the
following definition:

            " "MSDW Loan" shall mean the Loan to be made by Morgan Stanley Dean
            Witter Mortgage Capital Inc., or an accommodation party on behalf
            thereof, to Landlord and secured by a Mortgage and that closes in
            calendar year 2001."

        9. Paragraph 2 of the Lease is hereby further amended by deleting the
definition of "Prepayment Premium" and inserting the following in lieu thereof:

            " "Prepayment Premium" shall mean any and all amounts (other than
            (1) principal and interest payable by Landlord to Lender in
            connection with the prepayment of a Loan or (ii) scheduled payments
            of principal and interest which would be payable but for the
            defeasance of a Loan) payable by Landlord to Lender in connection
            with the prepayment or defeasance of a Loan pursuant to and in
            accordance with the terms and provisions of the related Note,
            Mortgage and other Loan documents, including, without limitation,
            prepayment premiums payable in connection therewith; provided,
            however, that Tenant shall not be required to pay the portion of the
            Prepayment Premium applicable to that portion of the then
            outstanding principal balance of a Loan that is in excess of
            $12,500,000."

        10. Paragraph 2 of the Lease is hereby further amended by deleting the
phrase "Yakima Premises" from the definition "Related Premises".

        11. Paragraph 2 of the Lease is hereby further amended by deleting the
definition "Surviving Obligations" and inserting in lieu thereof the following
definition:

            " "Surviving Obligations" shall mean the obligations of Tenant under
            this Lease, actual or contingent, which arise on or prior to the
            expiration or prior




            termination of this Lease or which survive such expiration or
            termination by their own terms."

        12. Paragraph 10 of the Lease is hereby amended by renaming the
paragraph as "Paragraph 10. Compliance with Laws and Easement Agreements;
Environmental Matters".

        13. Paragraph 10 of the Lease is hereby further amended by deleting
subparagraph (1) in its entirety.

        14. Paragraph 18 of the Lease is hereby amended by restating
subparagraphs (a) through (c) in their entirety as follows:

            "(a) If (1) all of any Related Premises shall be taken by a Taking
            or (ii), any substantial portion of any Related Premises shall be
            taken by a Taking or all or any substantial portion of any Related
            Premises shall be totally damaged or destroyed by a Casualty and, in
            any such case, Tenant certifies and covenants to Landlord that it
            will forever abandon operations at such Related Premises (any one or
            all of the Related Premises at the Related Premises, described in
            the above clauses (1) and (ii) above being hereinafter referred to
            as the "Affected Premises" and each of the events described ire the
            above clauses (1) and (ii) shall hereinafter be referred to as a
            "Termination Event"), then (x) in the case of (1) above, Tenant
            shall be obligated, within thirty (30) days after Tenant receives a
            Condemnation Notice to give to Landlord written notice (a
            "Termination Notice") of the termination of this Lease as to the
            Affected Premises in the form described in Paragraph 18(b) and (y)
            in the case of (ii) above, Tenant shall have the option, within
            thirty (30) days after Tenant receives a Condemnation Notice or
            thirty (30) days after the Casualty, as the case may be, to give to
            Landlord Termination Notice exercising such option of Tenant to
            terminate this Lease as to the Affected Premises under this
            Paragraph.

            (b) A Termination Notice shall contain (1) notice of Tenant's
            intention to terminate this Lease as to the Affected Premises on the
            first Basic Rent Payment Date which occurs at least thirty (30) days
            after the Fair Market Value Date (the "Termination Date"), (II) a
            binding and irrevocable offer of Tenant to purchase the Leased
            Premises for a price equal to the Termination Amount and (iii) if
            the Termination Event is an event described in Paragraph 18(a)(ii),
            the certification and covenant described therein and a certified
            resolution of the Board of Directors of Tenant authorizing the same.




            Promptly upon the delivery to Landlord of a Termination Notice,
            Landlord and Tenant shall commence to determine Fair Market Value.

            (c) If Landlord shall reject such offer to terminate this Lease as
            to the Affected Premises by written notice to Tenant (a
            "Rejection"), which Rejection shall contain the written consent of
            Lender, not later than thirty (30) days following the Fair Market
            Value Date, then this Lease shall terminate as to the Affected
            Premises on the Termination Date; provided that, if Tenant has not
            satisfied all Monetary Obligations and all other obligations and
            liabilities under this Lease which have arisen as to the Affected
            Property (collectively, "Remaining Obligations") on or prior to the
            Termination Date, then Landlord may, at its option, extend the date
            on which this Lease may terminate as to the Affected Premises to a
            date which is no later than the first Basic Rent Payment Date after
            the Termination Date on which Tenant has satisfied all Remaining
            Obligations. Upon such termination (i) all obligations of Tenant
            hereunder as to the Affected Premises shall terminate except for any
            Surviving Obligations, (ii) Tenant shall promptly vacate and shall
            have no further right, title or interest in or to any of the
            Affected Premises and (iii) the Net Award shall be retained by
            Landlord. Notwithstanding anything to the contrary hereinabove
            contained, if Tenant shall have received a Rejection and, on the
            date when this Lease would otherwise terminate as provided above,
            Landlord shall not have received the full amount of the Net Award
            payable by reason of the applicable Termination Event, then on the
            Termination Date Tenant shall assign to Landlord all of its right,
            title and interest, if any, in and to the Net Award."

        15. Paragraph 20 of the Lease is hereby amended by deleting the phrase
"(or with respect to the Yakima Premises a Special Warranty Assignment of Ground
Lease)" contained in subparagraph (b)(1).

        16. Paragraph 21 of the Lease is hereby amended by inserting at the end
of subparagraph 21(a)(iii) the following:

            "Notwithstanding anything to the contrary set forth in this
            subparagraph 21(a), Tenant shall not have the right to make the
            Intended Assignment Offer until aver the date which is the earlier
            of four years after the funding of the MSDW Loan or two years after
            the MSDW Loan is securitized."




        17. Paragraph 21 of the Lease is hereby amended by deleting the phrase
"Paragraphs 38 and 39" contained in the first sentence of subparagraph (1) and
inserting in lieu thereof the phrase "Paragraphs 38 and 39."

        18. Paragraph 22 of the Lease is hereby amended by deleting
subparagraphs (xx), (xxi) and (xxii) in their entirety from subparagraph (a).

        19. Paragraph 22 of the Lease is further hereby amended by inserting the
word "or" in clause (A) of the first sentence of subparagraph (b) after "(xvi)"
and deleting the phrase "(xx), (xxi) or (xxii)" after "(xix)".

        20. Paragraph 23 of the Lease is hereby amended by deleting the phrase
"Project Cost" contained in the sixth (6th) line of subparagraph 23(a)(iii) and
inserting in lieu thereof the phrase "Landlord's Share of Project Costs".

        21. Paragraph 35 of the Lease is hereby amended by deleting the first
and second sentences of subparagraph 35(a) and inserting in lieu thereof the
following:

            "Tenant has delivered to Landlord an irrevocable letter of credit
            (the "Letter of Credit") in the original face amount of Two Million
            One Hundred Sixteen Thousand Eight Hundred Seventy-Five Dollars
            ($2,116,875) (the "Security Deposit") issued a bank selected by
            Tenant."

        22. Paragraph 36 of the Lease is hereby amended by deleting the phrase
"fifth (5th) year of the Initial Term (but in no event earlier than November 30,
2000)" contained in the first (1st) sentence of Paragraph 36 and inserting in
lieu thereof the phrase "earlier of four years after the funding of the MSDW
Loan or two years after the MSDW Loan is securitized".

        23. Exhibit "A" of the Lease is hereby amended by deleting in its
entirety the legal description for Yakima, Yakima County, Washington.

        24. Exhibit "C" of the Lease is hereby amended by deleting in its
entirety the Permitted Exceptions applicable to Yakima, Yakima County,
Washington.

        25. Exhibit "D" to the Lease is hereby amended by deleting Paragraphs 1
and 2 in their entirety and inserting in lieu thereof the following:

            "l. Basic Rent. (a) Basic Rent has been paid in full through
            December 31, 2001. (b) Commencing on January 1, 2002 and continuing
            on the first day of each April, July, October and January thereafter
            until the expiration of the Term, Basic Rent shall be payable in
            equal quarterly installments of $595,212.19. Basic Rent shall be
            subject to





            the adjustments provided for in subparagraphs (a), (b) and (c) of
            Paragraph 4 below."

        26. Exhibit "D" to the Lease is hereby further amended by renumbering
Paragraphs 3, 4, and 5 to Paragraphs 2, 3, and 4, respectively.

        27. Exhibit "D" to the Lease is hereby further amended by deleting
Paragraph 3 in its entirety and inserting in lieu thereof the following:

            "3. Effective Dates of CPI Adjustments. As of July 1 of 2002, 2008,
            and 2014 and if the term is extended, July 1 of 2020, 2026, 2032,
            2038, 2044, 2050 and 2056, Basic Rent shall be adjusted to reflect
            increases in the CPI during the most recent six year period
            immediately preceding each of the foregoing dates (each such date
            being hereinafter referred to as the "Basic Rent Adjustment Date")."

        28. Exhibit "E" to the Lease is hereby amended by deleting Exhibit "E"
in its entirety and replacing in lieu thereof with Exhibit "E" attached hereto
and made a part hereof.

        29. Exhibit "F" to the Lease is hereby amended by deleting Exhibit "F"
in its entirety and replacing in lieu thereof with Exhibit "F" attached hereto
and made a part hereof.

        30. Landlord and Tenant each hereby release the other from all
obligations under the Lease relating to the period or accruing after October __,
2001 with respect to the property situated in Yakima, Washington, which property
constituted a portion of the Leased Premises prior to such date.

        31. Except as expressly set forth herein, nothing herein is intended to
or shall be deemed to modify or amend any of the other terns or provisions of
the Lease.

        32. All undefined capitalized terms used herein shall have the same
meanings as set forth in the Lease.

        33. This Amendment may be executed in any number of and by different
parties hereto on separate counterparts, all of which, when so executed, shall
be deemed an original, but all such counterparts shall constitute one and the
same agreement.

        34. This Amendment and the Lease together contain the entire
understanding between the parties hereto and supersedes all prior agreements and
understandings, if any, relating to the subject matter hereof or thereof. Any
promises, representations, warranties or guarantees not herein or therein
contained and hereinafter made shall have no force and effect unless in writing,
and executed by the party or parties making such representations, warranties or
guarantees. Neither this Amendment nor the Lease nor any portion or provisions
hereof or thereof may be changed, modified, amended, waived, supplemented,
discharged, cancelled or



terminated orally or by any course of dealing, or in any manner other than by an
agreement in writing, signed by the party to be charged.

            THE REMAINDER OF THIS PAGE IS INTENTIONALLY BLANK




        IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed under seal as of the day and year first above written.

                                    LANDLORD:


                                    DELMO (PA) QRS 11-36, a Pennsylvania
                                    business trust


                                    By: /s/ GORDON J. WHITING
                                        ----------------------------------------
                                        Name: Gordon J. Whiting
                                        Title: Trustee


                                    DELMO (PA) QRS 12-10, a Pennsylvania
                                    business trust


                                    By: /s/ GORDON J. WHITING
                                        ----------------------------------------
                                        Name: Gordon J. Whiting
                                        Title: Trustee


                                    TENANT:

                                    DEL MONTE CORPORATION, a New York
                                    corporation


                                    By:
                                        ----------------------------------------
                                        Name:
                                        Title:








        IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed under seal as of the day and year first above written.

                                    LANDLORD:

                                    DELMO (PA) QRS 11-36, a Pennsylvania
                                    business trust


                                    By:
                                        ----------------------------------------
                                        Name: Gordon J. Whiting
                                        Title: Trustee


                                    DELMO (PA) QRS 12-10, a Pennsylvania
                                    business trust


                                    By:
                                        ----------------------------------------
                                        Name: Gordon J. Whiting
                                        Title: Trustee


                                    TENANT:

                                    DEL MONTE CORPORATION, a New York
                                    corporation

                                    By: /s/ THOMAS E. GIBBONS
                                        ----------------------------------------
                                        Name: THOMAS E. GIBBONS
                                        Title: SENIOR VICE PRESIDENT & TREASURER

EX-10.17

                                                                   EXHIBIT 10.17



                                 LEASE AGREEMENT
                                 by and between


                              DELMO (PA) QRS 11-36

                                       and

                              DELMO (PA) QRS 12-10


                       each a Pennsylvania business trust
                            collectively, as LANDLORD

                                       and

                             DEL MONTE CORPORATION,
                             a New York corporation,

                                    as TENANT

                          Premises: Yakima, Washington


                         Dated as of: October 24, 2001




                               Table of Contents



                                                                            Page
                                                                         
    1.    Demise of Premises ................................................  1
    2.    Certain Definitions................................................  1
    3.    Title and Condition ...............................................  8
    4.    Use of Leased Premises; Quiet Enjoyment ...........................  9
    5.    Term ..............................................................  9
    6.    Basic Rent ........................................................ 10
    7.    Additional Rent ................................................... 10
    8.    Net Lease; Non-Terminability....................................... 11
    9.    Payment of Impositions ............................................ 12
    10.   Compliance with Laws, Easement Agreements and Railroad Ground
          Lease; Environmental Matters ...................................... 13
    11.   Liens; Recording .................................................. 15
    12.   Maintenance and Repair ............................................ 15
    13.   Alterations and Improvements ...................................... 15
    14.   Permitted Contests ................................................ 16
    15.   Indemnification ................................................... 17
    16.   Insurance ......................................................... 18
    17.   Casualty and Condemnation ......................................... 20
    18.   Termination Events ................................................ 22
    19.   Restoration; Reduction of Rent .................................... 23
    20.   Procedures Upon Purchase .......................................... 24
    21.   Assignment and Subletting ......................................... 25
    22.   Events of Default ................................................. 28
    23.   Remedies and Damages Upon Default ................................. 30
    24.   Notices ........................................................... 33
    25.   Estoppel Certificate .............................................. 33
    26.   Surrender.......................................................... 33
    27.   No Merger of Title ................................................ 34
    28.   Books and Records ................................................. 34
    29.   Determination of Value ............................................ 35
    30.   Non-Recourse as to Landlord ....................................... 37
    31.   Financing.......................................................... 37
    32.   Subordination ..................................................... 38
    33.   Tax Treatment; Reporting .......................................... 38



                                      -i-



                                Table of Contents
                                   (continued)


                                                                            Page
                                                                         
    34.    Financing Major Alterations ...................................... 38
    35.    INTENTIONALLY DELETED ............................................ 39
    36.    Economic Abandonment ............................................. 39
    37.    Option to Purchase ............................................... 39
    38.    Right of First Refusal ........................................... 40
    39.    Miscellaneous .................................................... 41



                                      -ii-





EXHIBITS
                                         
    Exhibit "A" ......................................................- Premises
    Exhibit "B" .......................................- Machinery and Equipment
    Exhibit "C" ............................- Schedule of Permitted Encumbrances
    Exhibit "D" ................................................ - Rent Schedule



                                     -iii-




        LEASE AGREEMENT, made as of this ______day of October, 2001, between
DELMO (PA) QRS 11-36 and DELMO (PA) QRS 12-10, each a Pennsylvania business
trust (collectively, "Landlord"), with its principal place of business c/o W.P.
Carey & Co LLC, 50 Rockefeller Plaza, 2nd Floor, New York, New York 10020, and
DEL MONTE CORPORATION, a New York corporation ("Tenant"), with an address at
Market Place, Steuart Tower, San Francisco, California 94105.

        WHEREAS, Landlord and Tenant entered into that certain Lease Agreement
dated as of October 31,1995 for property situate in Mendota, Illinois,
Toppenish, Washington, Plover, Wisconsin, and Yakima, Washington, as amended by
that certain First Amendment to Lease Agreement made as of June 28, 1996, that
certain Second Amendment to Lease made as of October 31, 1996, that certain
Third Amendment to Lease Agreement made as of June 24, 1997 and that certain
Fourth Amendment to Lease Agreement dated as of the date hereof (the "Original
Lease"); and

        WHEREAS, Landlord and Tenant now desire to amend the Original Lease in
order to remove the demised premises in Yakima, Washington, and to enter into
this Lease for the demised premises in Yakima, Washington, such that the
Original Lease would now apply to the property situate in Mendota, Illinois,
Toppenish, Washington, and Plover, Wisconsin and this Lease would apply to the
property situate in Yakima, Washington.

        In consideration of the rents and provisions herein stipulated to be
paid and performed, Landlord and Tenant hereby covenant and agree as follows:

            1. Demise of Premises. The Leased Premises shall be comprised of one
(1) parcel of Land, Improvements constructed thereon by Landlord and Equipment
installed therein by Landlord, all as set forth in this Lease. Landlord hereby
demises and lets to Tenant, and Tenant hereby takes and leases from Landlord,
for the term and upon the provisions hereinafter specified, the following
described property (hereinafter referred to as the "Leased Premises" which
premises is more particularly described in Exhibit "A" attached hereto and made
a part hereof and shall include the portions of items (a), (b) and (c) of this
Paragraph 1 located thereon or therein and appertaining thereto): (a) the
premises described in Exhibit "A" hereto, together with the Appurtenances
(collectively, the "Land"); (b) the buildings, structures and other improvements
constructed or to be constructed on the Land by Landlord (collectively, the
"Improvements"); and (c) the fixtures, machinery, equipment, including conveyor
equipment, and other property to be installed in the Improvements by Landlord
described in Exhibit "B" hereto (collectively, the "Equipment").

            2. Certain Definitions.

               "Abandonment Date" shall mean the Abandonment Date as defined in
Paragraph 36.

               "Abandonment Notice" shall mean Abandonment Notice as defined in
Paragraph 36.

               "Abandonment Offer Amount" shall mean the Abandonment Offer
Amount as defined in Paragraph 36.

               "Abandonment Premises" shall mean the Abandonment Premises as
defined in Paragraph 36.



                                      -1-





               "Additional Rent" shall mean Additional Rent as defined in
Paragraph 7.

               "Adjoining Property" shall mean all sidewalks, driveways, curbs,
gores and vault spaces adjoining the Leased Premises and which Tenant has the
legal obligation to maintain.

               "Affiliate" shall mean, as to any Person, any other Person which,
directly or indirectly, is in control of, is controlled by, or is under common
control with, such Person. For purposes of this definition and otherwise in this
Lease, a Person shall be deemed to control another Person if the controlling
Person possesses, directly or indirectly, the power to direct or cause the
direction of the management and policies of the other Person only through the
ownership of voting securities (but not by contract or otherwise).

               "Alterations" shall mean all changes, additions, improvements or
repairs to, all alterations, reconstructions, renewals, replacements or removals
of and all substitutions or replacements for any of the Improvements or
Equipment, both interior and exterior, structural and non-structural, and
ordinary and extraordinary and shall include any Major Alterations.

               "Appurtenances" shall mean all tenements, hereditaments,
easements, rights-of-way, rights, privileges in and to the Land, including (a)
easements over other lands granted by any Easement Agreement and (b) any
streets, ways, alleys, vaults, gores or strips of land adjoining the Land.

               "Assignment" shall mean any assignment of rents and leases from
Landlord to a Lender which (a) encumbers any of the Leased Premises and (b)
secures Landlord's obligation to repay a Loan, as the same may be amended,
supplemented or modified from time to time.

               "Assumable Loan" shall mean Assumable Loan as defined in
Paragraph 38.

               "Basic Rent" shall mean Basic Rent as defined in Paragraph 6.

               "Basic Rent Payment Dates" shall mean the Basic Rent Payment
Dates as defined in Paragraph 6.

               "Casualty" shall mean any injury to or death of any person or
any loss of or damage to any property (including, the Leased Premises) included
within or related to the Leased Premises or arising from the Adjoining Property.

               "Condemnation" shall mean a Taking and/or a Requisition.

               "Condemnation Notice" shall mean written notice or knowledge of
the institution of or intention to institute any proceeding for Condemnation.

               "Costs" of a Person or associated with a specified transaction
shall mean all reasonable costs and expenses incurred by such Person or
associated with such transaction, including without limitation, attorneys' fees
and expenses, court costs, brokerage fees, escrow fees, title insurance
premiums, mortgage commitment fees, mortgage points, recording fees and transfer
taxes, as the circumstances require.

               "CPI" shall mean CPI as defined in Exhibit "D" hereto.



                                      -2-



               "Default Rate" shall mean the Default Rate as defined in
Paragraph 7(a)(iv).

               "Default Termination Amount" shall mean the Default Termination
Amount as defined in Paragraph 23(a)(iii).

               "Easement Agreement" shall mean any conditions, covenants,
restrictions, easements, declarations, licenses and other agreements listed as
Permitted Encumbrances or as may hereafter affect the Leased Premises.

               "Environmental Law" shall mean (i) whenever enacted or
promulgated, any applicable federal, state, foreign or local law, statute,
ordinance, rule, regulation, license, permit, authorization, approval, consent,
court order, judgment, decree, injunction, code, requirement or agreement with
any governmental entity, (x) relating to pollution (or the cleanup thereof), or
the protection of air, water vapor, surface water, groundwater, drinking water
supply, land (including land surface or subsurface), plant, aquatic and animal
life from injury or damage caused by a Hazardous Substance or (y) concerning
exposure to, or the use, containment, storage, recycling, reclamation, reuse,
treatment, generation, discharge, transportation, processing, handling,
labeling, production, disposal or remediation of Hazardous Substances,
Hazardous Condition or Hazardous Activity, in each case as amended and as now or
hereafter in effect, and (ii) any common law or equitable doctrine (including,
without limitation, injunctive relief and tort doctrines such as negligence,
nuisance, trespass and strict liability) that may impose liability or
obligations for injuries or damages due to or threatened as a result of the
presence of, exposure to, or ingestion of, any Hazardous Substance. The term
Environmental Law includes, without limitation, the federal Comprehensive
Environmental Response Compensation and Liability Act of 1980, the Superfund
Amendments and Reauthorization Act, the federal water Pollution Control Act, the
federal Clean Air Act, the federal Clean Water Act, the federal Resources
Conservation and Recovery Act of 1976 (including the Hazardous and Solid Waste
Amendments to RCRA), the federal Solid Waste Disposal Act, the federal Toxic
Substance Control Act, the federal Insecticide, Fungicide and Rodenticide Act,
the federal occupational Safety and Health Act of 1970, the federal National
Environmental Policy Act and the federal Hazardous Materials Transportation Act,
each as amended and as now or hereafter in effect and any similar state or local
Law.

               "Environmental ,Violation" shall mean (a) any direct or indirect
discharge, disposal, spillage, emission, escape, pumping, pouring, injection,
leaching, release, seepage, filtration or transporting of any Hazardous
Substance at, upon, under, onto or within the Leased Premises, or from the
Leased Premises to the environment, in violation of any Environmental Law or in
excess of any reportable quantity established under any Environmental Law or
which results, or could reasonably be expected to result, in any material
liability to Landlord, Tenant or Lender, any Federal, state or local government
or any other Person for the costs of any removal or remedial action or natural
resources damage or for bodily injury or property damage, (b) any deposit,
storage, dumping, placement or use of any Hazardous Substance at, upon, under or
within the Leased Premises or which extends to any Adjoining Property
in-violation of any Environmental Law or in excess of any reportable quantity
established under any Environmental Law or which results, or could reasonably be
expected to result, in any material liability to any Federal, state or local
government or to any other Person for the costs of any removal or remedial
action or natural resources damage or for bodily injury or property damage, (c)
the abandonment or discarding on or from the Leased Premises of any barrels,
drums, containers or other receptacles containing any Hazardous Substances in
violation of any Environmental Laws, (d) any activity, occurrence or condition
under any Environmental Law which results, or could reasonably be expected to
result, in any material liability, cost or expense to Landlord or Lender or any
other owner or occupier of the Leased Premises, or which results, or could
result, in a


                                      -3-



creation of a lien on the Leased Premises under any Environmental Law or (e) any
violation of or noncompliance with any Environmental Law.

               "Equipment" shall mean the Equipment as defined in Paragraph 1.

               "Event of Default" shall mean an Event of Default as defined in
Paragraph 22(a).

               "Expiration Date" shall mean Expiration Date as defined in
Paragraph 5.

               "Fair Market Value" shall be as defined in Paragraph 29.


               "Fair Market Value Date" shall mean the date when the Fair
Market Value is determined in accordance with Paragraph 29.

               "Federal Funds" shall mean federal or other immediately available
funds which at the time of payment are legal tender for the payment of public
and private debts in the United States of America.

               "Ground Lessor" shall mean the Burlington Northern Railroad
Company, a Delaware corporation and Washington Central Railroad Company, a
Washington corporation.

               "Guarantor" shall mean Del Monte Foods Company, a Maryland
corporation.

               "Guaranty" shall mean the Guaranty and Suretyship Agreement dated
as of the date hereof from Guarantor to Landlord guaranteeing the payment and
performance by Tenant of all of Tenant's obligations under the Lease.

               "Hazardous Activity" means any activity, process, procedure or
undertaking which directly or indirectly (i) procures, generates or creates any
Hazardous Substance in violation of any Environmental Law; (ii) causes or
results in (or threatens to cause or result in) the release, seepage, spill,
leak, flow, discharge or emission of any Hazardous Substance, into the
environment (including the air, ground water, watercourses or water systems) in
violation of any Environmental Law or in excess of any reportable quantity;
(iii) involves the containment or storage of any Hazardous Substance; or (iv)
would cause any of the Leased Premises or any portion thereof to become a
hazardous waste treatment, recycling, reclamation, processing, storage or
disposal facility within the meaning of any Environmental Law.

               "Hazardous Condition" means any condition which could reasonably
be expected to give rise to any claim or liability under any Environmental Law,
including the presence of underground storage tanks.

               "Hazardous Substance" means (i) any substance, material, product,
petroleum, petroleum product, derivative, compound or mixture, mineral
(including asbestos), chemical, gas, medical waste, or other pollutant, in each
case whether naturally occurring, man-made or the by-product of any process,
that is toxic, harmful or hazardous or acutely hazardous to the environment or
public health or safety or (ii) any substance subject to regulations under any
Environmental Law, whether or not defined as hazardous as such under any
Environmental Law. Hazardous Substances include, without limitation, any toxic
or hazardous waste, pollutant, contaminant, industrial waste, petroleum or
petroleum-derived substances or waste, radon, radioactive materials, asbestos,
asbestos containing materials, urea formaldehyde foam insulation, lead,
polychlorinated biphenyls.


                                      -4-


               "Impositions" shall mean the Impositions as defined in Paragraph
9(a).

               "Improvements" shall mean the Improvements as defined in
Paragraph 1 and shall include any Major Alterations.

               "Indemnitee" shall mean an Indemnitee as defined in Paragraph 15.

               "Initial Term" shall mean Initial Term as defined in Paragraph 5.

               "Initial Term Commencement Date" shall mean Initial Term
Commencement Date as defined in Paragraph 5.

               "Insurance Requirements" shall mean the requirements of all
insurance policies maintained in accordance with this Lease.

               "Land" shall mean the Land as defined in Paragraph 1.

               "Landlord Encumbrances" shall mean any defects in title or
matters affecting title to the Leased Premises created by Landlord, except for
the Mortgage and Assignment and defects or matters created at the request of,
with the concurrence of or as a result of any act of Tenant.

               "Landlord's Share of Project Costs" shall mean $1,737,754.79.

               "Law" shall mean any constitution, statute, rule of law, code,
ordinance, order, judgment, decree, injunction, rule, regulation, policy,
requirement or administrative or judicial determination, even if unforeseen or
extraordinary, of every duly constituted governmental authority, court or
agency, now or hereafter enacted or in effect.

               "Lease" shall mean this Lease Agreement.

               "Lease Year" shall mean, with respect to the first Lease Year,
the period commencing on the Initial Term Commencement Date and ending at
midnight on the last day of the twelfth (12th) consecutive calendar month
following the month in which the Initial Term Commencement Date occurred, and
each succeeding twelve (12) month period during the Term.

               "Leased Premises" shall mean the Leased Premises as defined in
Paragraph 1.

               "Legal Requirements" shall mean the requirements of all present
and future Laws (including but not limited to Environmental Laws) and all
covenants, restrictions and conditions now or hereafter of record which may be
applicable to any of the Leased Premises, or to the use, manner of use,
occupancy, possession, operation, maintenance, alteration, repair or restoration
of any of the Leased Premises, even if compliance therewith necessitates
structural changes or improvements or results in interference with the use or
enjoyment of any of the Leased Premises.

               "Lender" shall mean any person or entity (and their respective
successors and assigns) which may make a Loan to Landlord or is the holder of
any Note.

               "Loan" shall mean any loan made by one or more Lenders to
Landlord, which loan is secured by a Mortgage and an Assignment and evidenced by
a Note.


                                      -5-


               "Major Alterations" shall mean Major Alterations as defined in
Paragraph 34.

               "Monetary Obligations" shall mean Rent and all other sums payable
by Tenant under this Lease to Landlord, to any third party on behalf of Landlord
or to any Indemnitee.

               "Mortgage" shall mean, singly or collectively, any one or more
mortgages or deeds of trust from Landlord to a Lender or a trustee for the
benefit of a Lender which (a) encumbers any of the Leased Premises and (b)
secures Landlord's obligation to repay a Loan, as the same may be amended,
supplemented or modified.

               "Net Award" shall mean (a) the entire award payable to Landlord
or Lender by reason of a Condemnation whether pursuant to a judgment or by
agreement or otherwise, or (b) the entire proceeds of any insurance required
under clauses (1), (ii) (to the extent payable to Landlord or Lender), (iv), (v)
or (vi) of Paragraph 16(a), as the case may be, less any reasonable-expenses
incurred by Landlord and Lender in collecting such award or proceeds.

               "Non-Preapproved Assignment" shall have the meaning set forth in
Paragraph 21.

               "Note" shall mean any promissory note evidencing Landlord's
obligation to repay a Loan, as the same may be amended, supplemented or
modified.

               "Offer Amount" shall mean the greater of (a) Fair Market Value or
(b) the sum of the Landlord's Share of Project Costs for the Leased Premises and
any Prepayment Premium which Landlord will be required to pay in prepaying the
Loan with proceeds of the Offer Amount.

               "Original Lease" shall mean Original Lease as defined in the
Recitals.

               "Partial Casualty" shall mean any Casualty which does not
constitute a Termination Event.

               "Partial Condemnation" shall mean any Condemnation which does not
constitute a Termination Event.

               "Permitted Encumbrances" shall mean those covenants,
restrictions, reservations, liens, conditions and easements and other
encumbrances, other than any Mortgage or Assignment, listed on Exhibit "C"
hereto (but such listing shall not be deemed to revive any such encumbrances
that have expired or terminated or are otherwise invalid or unenforceable).

               "Person" shall mean an individual, partnership, association,
corporation or other entity.

               "Prepayment Premium" shall mean any payment (other than a payment
of principal and/or interest which Landlord is required to make under a Note or
a Mortgage) by reason of any prepayment by Landlord of any principal due under a
Note or Mortgage, and which may be (in lieu of such prepayment premium or
prepayment penalty) a "make whole" clause requiring a prepayment premium in an
amount sufficient to compensate the Lender for the loss of the benefit of the
Loan due to prepayment; provided, however, that Tenant shall not be required to
pay the Prepayment Premium on any amount in excess of $500,000.


                                      -6-


               "Present Value" of any amount shall mean such amount discounted
by a rate per annum which is the lower of (a) the Prime Rate at the time such
present value is determined or (b) eight percent (8%) per annum.

               "Prime Rate" shall mean the interest rate per annum as published,
from time to time, in the Wall Street Journal as the "Prime Rate" in its column
entitled "Money Rate". The Prime Rate may not be the lowest rate of interest
charged by any "large U.S. money center commercial banks" and Landlord makes no
representations or warranties to that effect. In the event the Wall Street
Journal ceases publication or ceases to publish the "Prime Rate" as described
above, the Prime Rate shall be the average per annum discount rate (the
"Discount Rate") on ninety-one (91) day bills ("Treasury Bills") issued from
time to time by the United States Treasury at its most recent auction, plus
three hundred (300) basis points. If no such 91-day Treasury Bills are then
being issued, the Discount Rate shall be the discount rate on Treasury Bills
then being issued for the period of time closest to ninety-one (91) days.

               "Railroad Ground Lease" shall mean that certain Term Lease (Lease
No. 524,245) made May 1, 1996 between Burlington Northern Railroad Company and
Washington Central Railroad Company, as lessor, and Tenant, as lessee, for a
portion of the Leased Premises, as assigned to Landlord by that certain
Assignment of Lease dated June 27, 1996 by Burlington Northern Railroad Company
and Washington Central Railroad Company.

               "Relevant Amount" shall mean the Offer Amount, the Termination
Amount or the Default Termination Amount, as the case may be.

               "Relevant Date" shall mean (a) the date immediately prior to the
date on which the applicable Condemnation Notice is received, in the event of a
Termination Notice under Paragraph 18 which is occasioned by a Taking, (b) the
date immediately prior to the date on which the applicable Casualty occurs, in
the event of a Termination Notice under Paragraph 18 which is occasioned by a
Casualty, (c) the date when Fair Market Value is redetermined, in the event of a
redetermination of Fair Market Value pursuant to Paragraph 20(c), (d) the date
immediately prior to the Event of Default giving rise to the need to determine
Fair Market Value in the event Landlord provides Tenant with notice of its
intention to require Tenant to make a Termination Offer under Paragraph
23(a)(iii), (e) the Fair Market Value Date in the event Tenant exercises its
option to purchase the Leased Premises pursuant to Paragraph 37, or (f) with
respect to a Non-Preapproved Assignment, the earlier of the date on which
Landlord issues notice of the Non-Preapproved Assignment to Tenant or the date
that is immediately prior to the date on which the Non-Preapproved Assignment
occurs.

               "Remaining Sum" shall mean Remaining Sum as defined in Paragraph
19(c).

               "Rent" shall mean, collectively, Basic Rent and Additional Rent.

               "Requisition" shall mean any temporary requisition or
confiscation of the use or occupancy of any of the Leased Premises by any
governmental authority, civil or military, whether pursuant to an agreement with
such governmental authority in settlement of or under threat of any such
requisition or confiscation, or otherwise.

               "Retention Date" shall mean the later of the date on which the
amount of the Remaining Sum is finally determined or the date on which
Landlord's right to the Remaining Sum is finally determined.

               "Site Assessment" shall mean a Site Assessment as defined in
Paragraph 10(c).


                                      -7-


               "State" shall mean the State of Washington.

               "Surviving Obligations" shall mean any obligations of Tenant
under this Lease, actual or contingent, which arise on or prior to the
expiration or prior termination of this Lease, or which survive such expiration
or termination by their own terms.

               "Taking" shall mean (a) any taking or damaging of all or a
portion of any of the Leased Premises (1) in or by condemnation or other eminent
domain proceedings pursuant to any Law, general or special, or (ii) by reason
of any agreement with any condemnor in settlement of or under threat of any such
condemnation or other eminent domain proceeding, or (iii) by any other means, or
(b) any de facto condemnation. The Taking shall be considered to have taken
place as of the later of the date actual physical possession is taken by the
condemnor, or the date on which the right to compensation and damages accrues
under the law applicable to the Leased Premises.

               "Term" shall mean the Initial Term and any extensions thereof.

               "Termination Amount" shall mean the greater of (a) Fair Market
Value or (b) the sum of the Landlord's Share of Project Costs for the Leased
Premises, and any Prepayment Premium which Landlord will be required to pay in
prepaying any Loan with proceeds of the Termination Amount.

               "Termination Date" shall mean the Termination Date as defined in
Paragraph 18.

               "Termination Event" shall mean a Termination Event as defined in
Paragraph 18.

               "Termination Notice" shall mean Termination Notice as defined in
Paragraph 18(a).

               "Third Party Purchaser" shall mean the Third Party Purchaser as
defined in Paragraph 21(h).

        3. Title and Condition.

            (a) The Leased Premises are demised and let subject to (1) the
rights of any Persons in possession of the Leased Premises, (ii) the existing
state of title of any of the Leased Premises, including any Permitted
Encumbrances, (iii) any state of facts which an accurate survey or physical
inspection of the Leased Premises might show, (iv) all Legal Requirements,
including any existing violation of any thereof, and (v) the condition of the
Leased Premises as of the commencement of the Term, without representation or
warranty by Landlord except as to Landlord Encumbrances.

            (b) LANDLORD LEASES AND WILL LEASE AND TENANT TAKES AND WILL TAKE
THE LEASED PREMISES AS IS. TENANT ACKNOWLEDGES THAT LANDLORD (WHETHER ACTING AS
LANDLORD HEREUNDER OR IN ANY OTHER CAPACITY) HAS NOT MADE AND WILL NOT MAKE, NOR
SHALL LANDLORD BE DEEMED TO HAVE MADE, ANY WARRANTY OR REPRESENTATION, EXPRESS
OR IMPLIED, WITH RESPECT TO ANY OF THE LEASED PREMISES, INCLUDING ANY WARRANTY
OR REPRESENTATION AS TO (i) ITS FITNESS, DESIGN OR CONDITION FOR ANY PARTICULAR
USE OR PURPOSE, (ii) THE QUALITY OF THE MATERIAL OR WORKMANSHIP THEREIN, (iii)
THE EXISTENCE OF ANY DEFECT, LATENT OR PATENT, (iv) LANDLORD'S TITLE THERETO
(EXCEPT


                                      -8-

THAT LANDLORD REPRESENTS AND WARRANTS THAT THERE ARE NO LANDLORD ENCUMBRANCES),
(v) VALUE, (vi) COMPLIANCE WITH SPECIFICATIONS, (vii) LOCATION, (viii) USE, (ix)
CONDITION, (x) MERCHANTABILITY, (xi) QUALITY, (xii) DESCRIPTION, (xiii)
DURABILITY (xiv) OPERATION OR (xv) THE EXISTENCE OF ANY HAZARDOUS SUBSTANCE; AND
ALL RISKS INCIDENT THERETO ARE TO BE BORNE BY TENANT. TENANT ACKNOWLEDGES THAT
THE LEASED PREMISES ARE OF ITS SELECTION AND TO ITS SPECIFICATIONS AND THAT
LANDLORD HAS NO OBLIGATION WITH RESPECT TO CONSTRUCTION OF THE IMPROVEMENTS. IN
THE EVENT OF ANY DEFECT OR DEFICIENCY IN ANY OF THE LEASED PREMISES OF ANY
NATURE, WHETHER LATENT OR PATENT, LANDLORD AND LENDER SHALL NOT HAVE ANY
RESPONSIBILITY OR LIABILITY WITH RESPECT THERETO OR FOR ANY INCIDENTAL OR
CONSEQUENTIAL DAMAGES (INCLUDING STRICT LIABILITY IN TORT). THE PROVISIONS OF
THIS PARAGRAPH 3(b) HAVE BEEN NEGOTIATED, AND ARE INTENDED TO BE A COMPLETE
EXCLUSION AND NEGATION OF ANY WARRANTIES BY LANDLORD OR LENDER, EXPRESS OR
IMPLIED, WITH RESPECT TO ANY OF THE LEASED PREMISES, ARISING PURSUANT TO THE
UNIFORM COMMERCIAL CODE OR ANY OTHER LAW NOW OR HEREAFTER IN EFFECT OR ARISING
OTHERWISE. TENANT DOES NOT WAIVE ANY CLAIM AGAINST ANY PARTY EXCEPT LANDLORD AND
LENDER UNDER THE FOREGOING LANGUAGE.

            (c) Tenant represents to Landlord that Tenant has examined the title
to the Leased Premises prior to the execution and delivery of this Lease and has
found the same to be satisfactory for the purposes contemplated hereby. Tenant
acknowledges that (i) fee simple title (both legal and equitable) to the Leased
Premises is in Landlord and that Tenant has only the leasehold right of
possession and use of the Leased Premises as provided herein, (ii) the
Improvements conform to all material Legal Requirements and all Insurance
Requirements, (iii) all easements necessary for Tenant's use or operation of
each Leased Premises have been obtained, (iv) subject to Tenant's rights under
Paragraph 14 all contractors and subcontractors who have performed work on or
supplied materials to the Leased Premises shall have been fully paid, and all
materials and supplies have been fully paid for, and (v) all Equipment necessary
or appropriate for Tenant's use or operation of the Leased Premises shall have
been installed and shall be operational.

            (d) Landlord hereby assigns to Tenant, without recourse or warranty
whatsoever, all warranties, guaranties, indemnities and similar rights which
Landlord may have against any manufacturer, seller, engineer, contractor or
builder in respect of any of the Leased Premises. Such assignment shall remain
in effect until an Event of Default occurs or until the expiration or earlier
termination of this Lease, whereupon such assignment shall cease and all of said
warranties, guaranties, indemnities and other rights shall automatically revert
to Landlord.

        4. Use of Leased Premises; Quiet Enjoyment.

            (a) Tenant may occupy and use the Leased Premises for commercial or
industrial uses and for no other purpose without the prior written consent of
Landlord. Tenant shall not use or occupy or permit any of the Leased Premises to
be used or occupied, nor do or permit anything to be done in or on any of the
Leased Premises, in a manner which would or be reasonably likely to (i) violate
any Law or Legal Requirement, (ii) make void or voidable or cause any insurer to
cancel any insurance required by this Lease, or make it difficult or impossible
to obtain any such insurance at commercially reasonable rates, (iii) cause
structural injury to any of the Improvements or (iv) constitute a public or
private nuisance or waste.

            (b) Subject to the provisions hereof, so long as no Event of Default
has occurred and is continuing, Tenant shall quietly hold, occupy and enjoy the
Leased Premises




                                      -9-


throughout the Term, without any hindrance, ejection or molestation by Landlord
with respect to matters that arise after the date hereof, provided that Landlord
or its agents may enter upon and examine any of the Leased Premises at such
reasonable times as Landlord may select and upon reasonable notice to Tenant
(except in the case of any emergency, in which event no notice shall be
required) for the purpose of inspecting the Leased Premises, verifying
compliance or noncompliance by Tenant with its obligations hereunder and the
existence or non-existence of an Event of Default or event which with the
passage of time and/or notice would constitute an Event of Default, showing the
Leased Premises to prospective Lenders and purchasers and taking such other
action with respect to the Leased Premises as is permitted by any provision
hereof.

        5. Term.

            (a) Subject to the provision hereof, Tenant shall have and hold the
Leased Premises for an initial term (such initial term as extended or renewed in
accordance with the provisions hereof being called herein the "Initial Term")
commenced on October ____, 2001 ("Initial Term Commencement Date"). Subject to
the provisions hereof, the Initial Term shall expire on June 30, 2016
("Expiration Date").

            (b) Provided that if, on or prior to the Expiration Date or any
other Renewal Date (as hereinafter defined), this Lease shall not have been
terminated pursuant to any provision hereof, then Tenant shall have the right on
the Expiration Date and on the tenth (10th), twentieth (20th) and thirtieth
(30th) anniversaries of the Expiration Date (the Expiration Date and each such
anniversary being a "Renewal Date"), to extend the Term for an additional period
of ten (10) years (each such period being referred to herein as "Renewal Term"),
upon written notice to Landlord in recordable form at least one (1) year prior
to the next Renewal Date (each such notice, a "Renewal Notice") that Tenant is
extending this Lease as of the next Renewal Date for the next Renewal Term. If
Tenant fails to provide any Renewal Notice, Landlord shall provide to Tenant a
reminder notice that Tenant has failed to provide the required Renewal Notice,
and Tenant shall have thirty (30) days after receipt of such reminder notice to
give the required Renewal Notice, time being of the essence. Any such extension
of the Term shall be subject to all of the provisions of this Lease, as the same
may be amended, supplemented or modified.

            (c) If Tenant does not exercise its option pursuant to Paragraph
5(b) to extend the Term, or if an Event of Default occurs, then Landlord shall
have the right during the remainder of the Term then in effect and, in any
event, Landlord shall have the right during the last year of the Term, to (i)
advertise the availability of any of the Leased Premises for sale or reletting
and to erect upon any of the Leased Premises signs indicating such availability
and (ii) upon reasonable prior notice to Tenant show any of the Leased Premises
to prospective purchasers or tenants or their agents at such reasonable times
during business hours as Landlord may select.

        6. Basic Rent. Tenant shall pay to Landlord, as annual rent for the
Leased Premises during the Term, the amounts determined in accordance with
Exhibit "D" hereto ("Basic Rent") and on the dates described in Paragraph 1 of
Exhibit "D" (each such date being a "Basic Rent Payment Date"). Basic Rent shall
be paid to Landlord at its address set forth above and/or to such one other
Person, at such addresses and in such proportions as Landlord may direct by
fifteen (15) days, prior written notice to Tenant (in which event Tenant shall
give Landlord notice of each such payment concurrent with the making thereof) in
funds available to Landlord or such other Person on each Basic Rent Payment
Date.

        7. Additional Rent.



                                      -10-



            (a) Tenant shall pay and discharge, as additional rent
(collectively, "Additional Rent"):

               (i) except as otherwise specifically provided herein, all costs
and expenses of Tenant, and all reasonable costs and expenses of Landlord and
any other Persons specifically referenced herein which are incurred in
connection or associated with (A) the ownership, use, non-use, occupancy,
possession, operation, condition, design, construction, maintenance, alteration,
repair or restoration of any of the Leased Premises, (B) the performance of any
of Tenant's obligations under this Lease, (C) any sale or other transfer of any
of the Leased Premises to Tenant under this Lease, (D) any Condemnation
proceedings, (E) the adjustment, settlement or compromise of any insurance
claims (including any contest or prosecution in connection therewith) under
insurance covering any of the Leased Premises, (F) the prosecution or defense of
any litigation related to the Leased Premises, this Lease, or the sale of the
Leased Premises to Landlord and arising from an act or omission of Tenant
provided, however, that in the event of legal action between Landlord and Tenant
where Tenant is the prevailing party, Landlord shall pay Tenant's reasonable
costs and attorneys' fees, (G) the exercise or enforcement by Landlord, its
successors and assigns, of any of its rights under this Lease, (H) any amendment
to or modification or termination of this Lease made at the request of Tenant,
(I) Costs of Landlord's counsel and reasonable internal Costs of Landlord
incurred in connection with the preparation, negotiation and execution of this
Lease, or incurred in connection with any act undertaken by Landlord (or its
counsel) at the written request of Tenant, or incurred in connection with any
act of Landlord performed on behalf of Tenant if Tenant is obligated to take
such action under this Lease and has refused to do so within the period required
herein or if no such period is specified, within a reasonable time following
notice from Landlord, and (J) any other items specifically required to be paid
by Tenant under this Lease;

               (ii) after the date all or any portion of any installment of
Basic Rent is due and not paid, an amount ("Late Charge") equal to five percent
(5%) of the amount of such unpaid installment or portion thereof, provided,
however, that with respect to the first late payment in any Lease Year the Late
Charge shall not be due and payable unless two (2) days have elapsed following
telephonic notice followed by facsimile notice that such payment has not been
received;

               (iii) a sum equal to any additional sums (including any late
charge, default penalties, interest and fees of Lender's counsel) which are
payable by Landlord to any Lender under any Note by reason of Tenant's late
payment or non-payment of Basic Rent or by reason of an Event of Default; and

               (iv) interest at the rate (the "Default Rate") of three percent
(3%) over the Prime Rate per annum on the following sums until paid in full: (A)
all overdue installments of Basic Rent from the respective due dates thereof,
(B) all overdue amounts of Additional Rent relating to obligations which
Landlord shall have paid on behalf of Tenant, from the date of payment thereof
by Landlord, and (C) all other overdue amounts of Additional Rent, from the date
when Tenant has received notice that any such amount has become overdue.

            (b) Tenant shall pay and discharge (i) any Additional Rent referred
to in Paragraph 7(a)(i) when the same shall become due, provided that amounts
which are billed to Landlord or any third party, but not to Tenant, shall be
paid within thirty (30) days after Landlord's demand for payment thereof, and
(ii) any other Additional Rent, within thirty (30) days after Landlord's demand
for payment thereof.

            (c) In no event shall amounts payable under Paragraph 7(a)(ii),
(iii) and (iv) exceed the maximum amount permitted by applicable Law.


                                      -11-




        8. Net Lease; Non-Terminability.

            (a) This is a net lease and all Monetary Obligations shall be paid
without notice or demand and without set-off, counterclaim, recoupment,
abatement, suspension, deferment, diminution, deduction, reduction or defense
(collectively, a "Set-Off").

            (b) Except as otherwise expressly provided herein, this Lease and
the rights of Landlord and the obligations of Tenant hereunder shall not be
affected by any event or for any reason, including the following: (i) any damage
to or theft, loss or destruction of any of the Leased Premises, (ii) any
Condemnation, (iii) Tenant's acquisition of ownership of any of the Leased
Premises other than pursuant to an express provision of this Lease, (iv) any
default on the part of Landlord hereunder or under any Note, Mortgage,
Assignment or any other agreement, (v) any latent or other defect in any of the
Leased Premises, (vi) the breach of any warranty of any seller or manufacturer
of any of the Equipment, (vii) any violation of Paragraph 4(b) or any other
provision of this Lease by Landlord, (viii) the bankruptcy, insolvency,
reorganization, composition, readjustment, liquidation, dissolution or
winding-up of, or other proceeding affecting Landlord, (ix) the exercise of any
remedy, including foreclosure, under any Mortgage or Assignment, (x) any action
with respect to this Lease (including the disaffirmance hereof) which may be
taken by Landlord, any trustee, receiver or liquidator of Landlord or any court
under the Federal Bankruptcy Code or otherwise, (xi) any interference with
Tenant's use of the Leased Premises, (xii) market or economic changes or (xiii)
any other cause, whether similar or dissimilar to the foregoing, any present or
future Law to the contrary notwithstanding.

            (c) The obligations of Tenant hereunder shall be separate and
independent covenants and agreements, all Monetary obligations shall continue to
be payable in all events (or, in lieu thereof, Tenant shall pay amounts equal
thereto), and the obligations of Tenant hereunder shall continue unaffected
unless the requirement to pay or perform the same shall have been terminated
pursuant to an express provision of this Lease. All Rent payable by Tenant
hereunder shall constitute "rent" for all purposes (including Section 502(b)(6)
of the Bankruptcy Code).

            (d) Except as otherwise expressly provided herein, Tenant shall have
no right and hereby waives all rights which it may have under any Law (i) to
quit, terminate or surrender this Lease or any of the Leased Premises, or (ii)
to any Set-Off of any Monetary Obligations.

        9. Payment of Impositions.

            (a) Tenant shall, before interest or penalties are due thereon, pay
and discharge all taxes (including real and personal property, franchise, sales
and rent taxes), all charges for any easement or agreement maintained for the
benefit of any of the Leased Premises, all assessments and levies, all permit,
inspection and license fees, all rents and charges for water, sewer, utility and
communication services relating to the any of Leased Premises, all ground rents
and all other public charges whether of a like or different nature, even if
unforeseen or extraordinary, imposed upon or assessed against (i) Tenant's
possessory interest in the Leased Premises, (ii) any of the Leased Premises,
(iii) Landlord as a result of or arising in respect of the acquisition,
ownership, occupancy, leasing, use, possession or sale of any of the Leased
Premises, any activity conducted on any of the Leased Premises, or the Rent, or
(iv) any Lender by reason of any Note, Mortgage, Assignment or other document
evidencing or securing a Loan and which (as to this clause (iv)) Landlord has
agreed to pay and that is normal and customary for similar financings
(collectively, the "Impositions"); provided, that nothing herein shall obligate
Tenant to pay (A) income, excess profits or other taxes of Landlord (or Lender)
which are determined on the basis of Landlord's (or Lender's) net income or net
worth (unless such taxes are in lieu of or a substitute for any other tax,
assessment or other charge upon or with respect to



                                      -12-



the Leased Premises which, if it were in effect, would be payable by Tenant
under the provisions hereof or by the terms of such tax, assessment or other
charge), (B) any estate, inheritance, succession, gift or similar tax imposed
on Landlord or Lender or (C) any capital gains or other tax imposed on Landlord
in connection with the sale of the Leased Premises to any Person, except for any
transfer or recording tax payable in connection with a sale to Tenant or its
designee. If any Imposition may be paid in installments without interest or
penalty, Tenant shall have the option to pay such Imposition in installments; in
such event, Tenant shall be liable only for those installments which accrue or
become due and payable during the Term. Tenant shall prepare and file all tax
reports required by governmental authorities which relate to the Impositions.
Tenant shall deliver to Landlord, (1) receipts for payment of all taxes required
to be paid by Tenant hereunder within thirty (30) days after the due date
thereof and (2) within thirty (30) days following Landlord's request, (A) copies
of all settlements and notices pertaining to the Impositions which may be issued
by any governmental authority and (B) receipts for payment of all other
Impositions.

            (b) Landlord shall have the right during the existence of an Event
of Default to require Tenant to pay to Landlord or Lender, if required by the
terms of any Mortgage, an additional monthly sum (each an "Escrow Payment")
sufficient to pay the Escrow Charges (as herein defined) as they become due. As
used herein, "Escrow Charges" shall mean real estate taxes on the Leased
Premises or payments in lieu thereof and premiums on any insurance required by
this Lease. Landlord shall determine the amount of the Escrow Charges and of
each Escrow Payment. As long as the Escrow Payments are being held by Landlord
and not Lender, the Escrow Payments shall not be commingled with other funds of
Landlord or other Persons and interest shall accrue thereon for the benefit of
Tenant and which shall serve as additional security for the obligations of
Tenant hereunder from the date such monies are received by or on behalf of
Landlord to the date such monies are disbursed to pay Escrow Charges in such
order or priority as Landlord shall determine or as required by law. If at any
time the Escrow Payments theretofore paid to Landlord shall be insufficient for
the payment of the Escrow Charges, Tenant, within ten (10) days after Landlord's
demand therefor, shall pay the amount of the deficiency to Landlord or Lender,
as the case may be.

        10. Compliance with Laws, Easement Agreements and Railroad Ground Lease;
Environmental Matters.

            (a) Tenant shall, at its expense, be in material compliance with and
conform to, and cause the Leased Premises and any other Person occupying any
part of the Leased Premises to be in material compliance with and conform to,
all Insurance Requirements and Legal Requirements (except that Tenant and the
Leased Premises shall be in absolute compliance with all applicable
Environmental Laws pertaining to the Leased Premises). Tenant shall not at any
time (i) cause, permit or suffer to occur any Environmental Violation or (ii)
permit any sublessee, assignee or other Person occupying the Leased Premises
under or through Tenant to cause, permit or suffer to occur any Environmental
Violation.

            (b) Tenant, at its sole cost and expense, will at all times promptly
and faithfully abide by, discharge and perform all of the covenants, conditions
and agreements contained in the Railroad Ground Lease and in any Easement
Agreement on the part of Landlord or the occupier to be kept and performed
thereunder. Tenant will not alter, modify, amend or terminate any Easement
Agreement, give any consent or approval thereunder, or enter into any new
Easement Agreement without, in each case, prior written consent of Landlord,
which consent shall not be unreasonably conditioned. If Landlord fails to
respond to any request for consent to any such alteration, modification,
amendment or termination of an existing Easement Agreement, or for consent to
any new Easement Agreement, in any case within ten (10) days after receipt of
Tenant's request therefor, Landlord shall be deemed to have given such consent.



                                      -13-




Any such Easement Agreement, as altered, modified or amended, or any such new
Easement Agreement, shall automatically be a Permitted Encumbrance.

            (c) Not more frequently than once every three (3) years and at any
other time required by a Lender or if in the opinion of Landlord or Lender, a
reasonable basis exists to believe that an Environmental Violation exists, upon
prior written notice from Landlord, Tenant shall permit such professional
environmental consultants as Landlord may designate ("Site Reviewers") to visit
the Leased Premises at reasonable times and upon reasonable prior notice to
Tenant and perform environmental site investigations and assessments ("Site
Assessments") on the Leased Premises for the purpose of determining whether
there exists on the Leased Premises any Environmental Violation or any condition
which could reasonably be expected to result in any Environmental Violation.
Such Site Assessments may include both above and, if a reasonable basis exists
to believe that an Environmental Violation exists or if reasonably recommended
by a Site Reviewer, below the ground testing for Environmental Violations and
such other tests (other than below the ground or groundwater testing except as
permitted above) as may be necessary, in the opinion of the Site Reviewers, to
conduct the Site Assessments. Tenant shall supply to the Site Reviewers such
historical and operational information regarding the Leased Premises as may be
reasonably requested by the Site Reviewers to facilitate the Site Assessments,
and shall make available for meetings with the Site Reviewers appropriate
personnel having knowledge of such matters. Not more frequently than once every
three (3) years during the Term Tenant shall pay up to $7,000 of the Cost of a
Phase I Site Assessment for the Leased Premises except that, if an Environmental
Violation is found to exist, Tenant shall pay all of the costs of performing and
reporting any Site Assessments required by Landlord or Lender with respect to
such Environmental Violation.

            (d) If an Environmental Violation occurs or is found to exist and,
in Landlord's reasonable judgment, the cost of remediation of the same is likely
to exceed $500,000, Tenant shall provide to Landlord, within ten (10) days after
Landlord's request therefor, reasonable financial assurances that Tenant will
effect such remediation in accordance with applicable Environmental Laws.

            (e) Notwithstanding any other provision of this Lease, if an
Environmental Violation occurs or is found to exist with respect to the Leased
Premises that in the reasonable opinion of Landlord causes the fair market
rental value of the Leased Premises to be less than would otherwise be the case
and the Term would otherwise terminate or expire, then, at the option of
Landlord, the Term shall be automatically extended beyond the date of
termination or expiration and this Lease shall remain in full force and effect
but at a monthly rent equal to the fair market rental value of the Leased
Premises absent such Environmental Violation beyond such date until the earlier
to occur of (i) the completion of all remedial action in accordance with
applicable Environmental Laws or (ii) the date specified in a written notice
from Landlord to Tenant terminating this Lease.

            (f) If, in Landlord's reasonable discretion, Tenant fails to
promptly commence to comply and diligently pursue compliance with any
requirement of any Environmental Law in connection with any Environmental
Violation which occurs or is found to exist, Landlord shall have the right, at
Tenant's expense (but no obligation), to take any and all actions as Landlord
shall deem reasonably necessary or advisable in order to cure such Environmental
Violation.

            (g) Tenant shall notify Landlord immediately after becoming aware of
any violation of any Environmental Law or other material Environmental Violation
(or alleged violation of any Environmental Law or other material Environmental
Violation) and upon the request of Landlord shall forward to Landlord
immediately upon receipt thereof copies of all



                                      -14-



orders, reports, notices, permits, applications or other communications relating
to any such violation.

            (h) All future leases, subleases or concession agreements relating
to the Leased Premises entered into by Tenant shall contain covenants of the
other party thereto which are comparable to the covenants contained in this
Paragraph 10(b), (c), (f) and (g).

            (i) Tenant, at its sole cost and expense, will at all times and
faithfully abide by, discharge and perform all of the covenants, conditions,
and agreements contained in the Railroad Ground Lease and will not alter,
modify, amend or terminate or attempt to alter, modify, amend or terminate the
Railroad Ground Lease, or give any consent or approval thereunder without in
each case prior written consent of Landlord.

        11. Liens; Recording.

            (a) Tenant shall not, directly or indirectly, create or permit to be
created or to remain and shall promptly discharge or remove any lien, levy or
encumbrance on any of the Leased Premises or on any Rent or any other sums
payable by Tenant under this Lease, other than any Mortgage or Assignment, the
Permitted Encumbrances and any mortgage, lien, encumbrance or other charge
created by or resulting solely from any act or omission of Landlord. NOTICE IS
HEREBY GIVEN THAT LANDLORD SHALL NOT BE LIABLE FOR ANY LABOR, SERVICES OR
MATERIALS FURNISHED OR TO BE FURNISHED TO TENANT OR TO ANYONE HOLDING OR
OCCUPYING ANY OF THE LEASED PREMISES THROUGH OR UNDER TENANT, AND THAT NO
MECHANICS' OR OTHER LIENS FOR ANY SUCH LABOR, SERVICES OR MATERIALS SHALL ATTACH
TO OR AFFECT THE INTEREST OF LANDLORD IN AND TO ANY OF THE LEASED PREMISES.
LANDLORD MAY AT ANY TIME POST ANY NOTICES ON THE LEASED PREMISES REGARDING SUCH
NON-LIABILITY OF LANDLORD.

            (b) Tenant shall execute, deliver and record, file or register
(collectively, "record") all such instruments as may be required or permitted by
any present or future Law in order to evidence the respective interests of
Landlord and Tenant in any of the Leased Premises, and shall cause a memorandum
of this Lease (or, if such a memorandum cannot be recorded, this Lease), and any
supplement hereto or thereto, to be recorded in such manner and in such places
as may be required or permitted by any present or future Law in order to protect
the validity and priority of this Lease.

        12. Maintenance and Repair.

            (a) Tenant shall at all times maintain the Leased Premises and the
Adjoining Property in as good repair and appearance as each is in on the Initial
Term Commencement Date and fit to be used for their intended use in accordance
with recognized industry standards and, in the case of the Equipment, in good
mechanical condition, in all cases except for ordinary wear and tear. Tenant
shall take every other reasonable action necessary or appropriate for the
preservation and safety of the Leased Premises. Tenant shall promptly make all
Alterations of every kind and nature, whether foreseen or unforeseen, which may
be required to comply with the foregoing requirements of this Paragraph 12(a).
Landlord shall not be required to make any Alteration, whether foreseen or
unforeseen, or to maintain the Leased Premises or Adjoining Property in any
way, and Tenant hereby expressly waives any right which may be provided for in
any Law now or hereafter in effect to make Alterations at the expense of
Landlord or to require Landlord to make Alterations. Any Alteration made by
Tenant pursuant to this Paragraph 12 shall be made in conformity with the
provisions of Paragraph 13.


                                      -15-




            (b) If any Improvement, now or hereafter constructed, shall (i)
encroach upon any setback or any property, street or right-of-way adjoining any
of the Leased Premises, (ii) violate the provisions of any restrictive covenant
affecting any of the Leased Premises, (iii) hinder or obstruct any easement or
right-of-way to which any of the Leased Premises is subject or (iv) impair the
rights of others in, to or under any of the foregoing, Tenant shall, promptly
after receiving a demand to remove or correct such condition from a Person
entitled to make such demand, either (A) obtain from all necessary parties
waivers or settlements of all claims, liabilities and damages resulting from
each such encroachment, violation, hindrance, obstruction or impairment, whether
the same shall affect Landlord, Tenant or both, or (B) take such action as shall
be necessary to remove all such encroachments, hindrances or obstructions and to
end all such violations or impairments, including, if necessary, making
Alterations.

        13. Alterations and Improvements.

            (a) Tenant shall have the right, without having obtained the prior
written consent of Landlord and Lender, to make Alterations or a series of
related Alterations that, as to any such Alterations or series of related
Alterations, do not cost in excess of $1,000,000 with respect to the Leased
Premises and to install Equipment in the Improvements or accessions to the
Equipment that, as to such Equipment or accessions, do not cost in excess of
$1,000,000, so long as at the time of construction or installation of any such
Equipment or Alterations no Event of Default exists and the value and utility of
the Leased Premises is not diminished thereby. If the cost of any Alterations,
series of related Alterations or Equipment or accessions thereto is in excess of
the amounts specified above, the prior written approval of Landlord and Lender
shall be required, such approval not to be unreasonably withheld, delayed or
conditioned. Tenant shall not construct upon the Land any additional buildings
costing in excess of $1,000,000 without having first obtained the prior written
consent of Landlord and Lender, such consent not to be unreasonably withheld,
conditioned or delayed. If Landlord or Lender fails to respond to any written
request for consent within thirty (30) days after receipt of such consent, such
consent shall be deemed given.

            (b) If Tenant makes any Alterations pursuant to this Paragraph 13 or
Paragraph 34 or as required by Paragraph 12 or 17 (such Alterations and actions
being hereinafter collectively referred to as "Work"), then (1) as to Work other
than Work done pursuant to a Legal Requirement, the market value of the Leased
Premises shall not be lessened by any such Work or its usefulness impaired, (ii)
all such work shall be performed by Tenant in a good and workmanlike manner,
(iii) all such Work shall be expeditiously completed in compliance with all
Legal Requirements, (iv) all such Work shall comply with the requirements of all
insurance policies required to be maintained by Tenant hereunder, (v) if any
such work involves the replacement of Equipment or parts thereto, all
replacement Equipment or parts shall function in a manner that is the better of
(A) the functioning of the Equipment or parts being replaced or, (B) the
functioning of similar Equipment or parts in other warehouses owned or used by
Tenant, (vi) subject to Tenant's rights under Paragraph 14, Tenant shall
promptly discharge or remove all liens filed against any of the Leased Premises
arising out of such Work, (vii) Tenant shall procure and pay for all permits and
licenses required in connection with any such Work, (viii) all such Work (except
for additions that are paid for by Tenant and can be readily removed without
substantial damage to the Improvements and are not a replacement for any of the
Improvements or Equipment) shall be the property of Landlord and shall be
subject to this Lease, and Tenant shall execute and deliver to Landlord any
document. requested by Landlord evidencing the assignment to Landlord of all
estate, right, title and interest (other than the leasehold estate created
hereby) of Tenant or any other Person thereto or therein, and (ix) Tenant shall
comply, to the extent reasonably requested by Landlord or required by this
Lease, with the provisions of Paragraph 19(a), whether or not such Work involves
restoration of the Leased Premises.



                                      -16-




        14. Permitted Contests. Notwithstanding any other provision of this
Lease, Tenant shall not be required to (a) pay any Imposition, (b) discharge or
remove any lien referred to in Paragraph 11 or 13, (c) take any action with
respect to any encroachment, violation, hindrance, obstruction or impairment
referred to in Paragraph 12(b) or (d) comply with any Legal Requirements (such
non-compliance with the terms hereof being hereinafter referred to collectively
as "Permitted Violations"), so long as at the time of such non-compliance no
Event of Default exists and so long as Tenant shall contest, in good faith, the
existence, amount, validity or interpretation thereof, the amount of the damages
caused thereby, or the extent of its or Landlord's liability therefor by
appropriate proceedings which shall operate during the pendency thereof to
prevent or stay (1) the collection of, or other realization upon, the Permitted
Violation so contested, (ii) the sale, forfeiture or loss of any of the Leased
Premises or any Rent to satisfy or to pay any damages caused by any Permitted
Violation, (iii) any material interference with the use or occupancy of any of
the Leased Premises, (iv) any interference with the payment of any Rent, (v) the
cancellation or increase in the rate of any insurance policy or a statement by
the carrier that coverage will be denied or (vi) the enforcement or execution of
any injunction, order or Legal Requirement with respect to the Permitted
Violation. If the amount being contested is reasonably estimated by Landlord to
be in excess of Two Hundred Fifty Thousand Dollars ($250,000) or if otherwise
required by the terms of the Mortgage, Tenant shall provide Landlord security
which is satisfactory in Landlord's reasonable judgment, to assure that such
Permitted Violation is corrected if Tenant's contest is unsuccessful, including
all Costs, interest and penalties that may reasonably be expected to be incurred
or become due in connection therewith. While any proceedings which comply with
the requirements of this Paragraph 14 are pending and the required security is
held by Landlord, Landlord shall not have the right to correct any Permitted
Violation thereby being contested unless Landlord is required by law to correct
such Permitted Violation and Tenant's contest does not prevent or stay such
requirement as to Landlord. Each such contest shall be promptly and diligently
prosecuted by Tenant to a final conclusion, except that Tenant, so long as the
conditions of this Paragraph 14 are at all times complied with, has the right to
attempt to settle or compromise such contest through negotiations. Tenant shall
pay any and all losses, judgments, decrees and Costs in connection with any such
contest and shall, promptly after the final determination of such contest, fully
pay and discharge the amounts which shall be levied, assessed, charged or
imposed or be determined to be payable therein or in connection therewith,
together with all penalties, fines, interest and Costs thereof or in connection
therewith, and perform all acts the performance of which shall be ordered or
decreed as a result thereof. No such contest shall subject Landlord to the risk
of any civil or criminal liability.

        15. Indemnification.

            (a) Tenant shall pay, protect, indemnify, defend, save and hold
harmless Landlord, Lender and all other Persons described in Paragraph 30 (each
an "Indemnitee") for, from and against any and all liabilities, losses, damages.
(including punitive damages), penalties, Costs (including attorneys, fees and
costs), causes of action, suits, claims, demands or judgments of any nature
whatsoever, howsoever caused, without regard to the form of action and whether
based on strict liability, gross negligence, negligence or any other theory of
recovery at law or in equity (other than those based on the gross negligence or
willful misconduct of such Indemnitee or based on activities by such Indemnitee
in connection with the sale or reletting of the Leased Premises to any Person
except a sale to Tenant or its designee and except for activities that are based
on representations by or obligations and liabilities of Tenant or Guarantor),
arising from (i) any matter pertaining to the acquisition (or the negotiations
leading thereto), ownership, leasing, use, non-use, occupancy, operation,
management, condition, design, construction, maintenance, repair or restoration
of any of the Leased Premises or Adjoining Property, (ii) any casualty in any
manner arising from any of the Leased Premises or Adjoining Property, whether or
not Indemnitee has or should have knowledge or notice of any defect or condition
causing or contributing to said casualty, (iii) any violation by Tenant of any



                                      -17-



provision of this Lease, any contract or agreement to which Tenant is a party
and which relates to the Leased Premises, any Legal Requirement or any Permitted
Encumbrance or (iv) any alleged, threatened or actual Environmental Violation,
including (A) liability for response costs and for costs of removal and remedial
action incurred by the United States Government, any state or local governmental
unit or any other Person, or damages from injury to or destruction or loss of
natural resources, including the reasonable costs of assessing such injury,
destruction or loss, incurred pursuant to Section 107 of CERCLA, or any
successor section or act or provision of any similar state or local Law, (13)
liability for costs and expenses of abatement, correction or cleanup, fines,
damages, response costs or penalties which arise from the provisions of any of
the other Environmental Laws and (C) liability for personal injury or property
damage arising under any statutory or common-law tort theory, including damages
assessed for the maintenance of a public or private nuisance or for carrying on
of a dangerous activity.

            (b) In case any action or proceeding is brought against any
Indemnitee by reason of any such claim, (i) Tenant may, except in the event of a
conflict of interest or a dispute between Tenant and any such Indemnitee or
during the continuance of an Event of Default, retain its own counsel at its
expense and defend such action (it being understood that Landlord may employ
counsel of its choice to monitor the defense of any such action) and (ii) such
Indemnitee shall notify Tenant to resist or defend such action or proceeding by
retaining counsel reasonably satisfactory to such Indemnitee, and such
Indemnitee will cooperate and assist in the defense of such action or proceeding
if reasonably requested to do so by Tenant.

            (c) The obligations of Tenant under this Paragraph 15 shall survive
any termination, expiration or rejection in bankruptcy of this Lease.

            (d) For the sole purpose of effecting the indemnification
obligations under this Lease and not for the benefit of any employees of Tenant
or Guarantor or any third parties unrelated to the parties indemnified under
this Lease Tenant specifically and expressly waives any immunity that may be
granted it under the Washington State Industrial Insurance Act, Title 51 RCW.
(Tenant's Initials:____). Further the indemnification obligations under this
Lease shall not be limited in any way by any limitation on the amount or type of
damages, compensation or benefits payable to or for any third party under Worker
Compensation Acts, Disability Benefit Acts or other employee benefit acts.

        16. Insurance.

            (a) Tenant shall maintain the following insurance on or in
connection with the Leased Premises:

               (i) Insurance against physical loss or damage to the Improvements
and Equipment as provided under a standard "All Risk" property policy including
but not limited to flood (to the extent that the Leased Premises are in a flood
zone) and earthquake coverage (to the extent the Leased Premises are in a
critical earthquake zone) in amounts not less than the actual replacement cost
of the Improvements and Equipment, subject to a deductible or self-insurance
retention not to exceed $500,000 except that with respect to earthquake
coverage, the deductible or self-insurance retention shall not exceed 5% of
replacement cost as long as such insurance is available. Such policies shall
contain Replacement Cost and Agreed Amount Endorsements.

               (ii) Commercial general liability and automobile liability
insurance against claims for personal and bodily injury, death or property
damage occurring on, in or as a result of the use of the Leased Premises, in an
amount not less than $15,000,000 per occurrence/annual aggregate, subject to a
deductible or self-insurance retention not to exceed $500,000 including but not
limited to garagekeepers liability, non-owned and hired automobile


                                      -18-


liability and all other coverage extensions that are usual and customary for
properties of this size and type provided, however, that the Landlord shall have
the right to require such higher limits, up to a maximum of $50 million, as may
be reasonable and customary for properties of this size and type.

               (iii) Worker's compensation insurance covering all persons
employed by Tenant in connection with any work done on or about any of the
Leased Premises for which claims for death, disease or bodily injury may be
asserted against Landlord, Tenant or any of the Leased Premises or, in lieu of
such worker's Compensation Insurance, a program of self-insurance complying with
the rules, regulations and requirements of the appropriate agency of the State
or States in which the Leased Premises are located.

               (iv) Comprehensive boiler and machinery insurance on any of the
Equipment or any other equipment on or in the Leased Premises including but not
limited to service interruption, expediting expenses, ammonia contamination,
hazardous clean-up and comprehensive object definition, in an amount not less
than $15,000,000, subject to a deductible or self-insurance retention not to
exceed $500,000 for damage to property resulting from such covered perils as
found in a standard comprehensive boiler & machinery policy.

               (v) Business income/interruption insurance to include loss of
rents at limits sufficient to cover 100% of the annual rental income on an
actual loss sustained basis with a period of indemnity not less than one year
from the time of loss, subject to deductible or self-insurance retention not to
exceed $500,000.

               (vi) During any period in which substantial Alterations at the
Leased Premises are being undertaken, builder's risk insurance covering the
total completed value including any "soft costs" with respect to the
Improvements being altered or repaired (on a completed value, non-reporting
basis), replacement cost of work performed and equipment, supplies and materials
furnished in connection with such construction or repair of Improvements or
Equipment, together with such "soft cost" endorsements and such other
endorsements as Landlord may reasonably require.

               (vii) Such other insurance which at the time is usual and
commonly obtained in connection with properties similar in type of building
size, use and location to the Leased Premises.

               (b) The insurance required by Paragraph 16(a) shall be written by
companies which have a Best's rating of A:VIII or above (provided that any
carrier providing such insurance which is not rated by Best shall also be deemed
acceptable unless Landlord objects to such carrier within ten (10) days of
receipt of notice by Landlord that such carrier is providing coverage). The
insurance policies shall be in amounts sufficient at all times to satisfy any
coinsurance requirements thereof, unless such coinsurance requirements are
waived in writing by the insurer. The insurance referred to in Paragraphs
16(a)(i), 16(a)(iv) and 16(a)(vi) shall name Landlord, Lender and Tenant as loss
payees and as their interests may appear. If said insurance or any part thereof
shall expire, be withdrawn, become void, voidable, unreliable or unsafe for any
reason, including a breach of any condition thereof by Tenant or the failure or
impairment of the capital of any insurer, Tenant shall immediately obtain new or
additional insurance in compliance with Paragraph 16(a).

               (c) Each insurance policy referred to in clauses (i), (iv), (v)
and (vi) of Paragraph 16(a) shall contain standard non-contributory mortgagee
clauses in favor of and acceptable to Lender. Each policy required by any
provision of Paragraph 16(a), except clause (iii) thereof, shall provide that it
may not be cancelled except after thirty (30) days, prior written notice to
Landlord and Lender. Each such policy shall also provide that any loss otherwise


                                      -19-

payable thereunder with respect to the Leased Premises shall be payable
notwithstanding (i) any act or omission of Landlord or Tenant which might,
absent such provision, result in a forfeiture of all or a part of such insurance
payment, (ii) the occupation or use of any of the Leased Premises for purposes
more hazardous than those permitted by the provisions of such policy, (iii) any
foreclosure or other action or proceeding taken by Lender pursuant to any
provision of the Mortgage, Note, Assignment or other document evidencing or
securing the Loan upon the happening of an event of default therein or (iv) any
change in title to or ownership of Landlord's fee simple interest in any of the
Leased Premises.

            (d) Tenant shall pay as they become due all premiums for the
insurance required by Paragraph 16(a), shall renew or replace each policy and
deliver to Landlord evidence thereof prior to the expiration date of such
policy, and shall promptly deliver to Landlord copies of all such insurance
certified by a senior officer of Tenant to be true and correct.

            (e) Anything in this Paragraph 16 to the contrary notwithstanding,
any insurance which Tenant is required to obtain pursuant to Paragraph 16(a) may
be carried under a "blanket" or umbrella policy or policies covering other
properties or liabilities of Tenant, provided that such "blanket" or umbrella
policy or policies otherwise comply with the provisions of this Paragraph 16. A
copy of each such "blanket" or umbrella policy certified by a senior officer of
Tenant to be true and correct shall promptly be delivered to Landlord.

            (f) Replacement costs of Improvements and Equipment may be
redetermined not more frequently than once every twelve (12) months at the
Landlord's request and shall be determined based on insurance carrier trends for
corporations of established reputation engaged in the same or similar business
of the Tenant.

            (g) Tenant shall promptly comply with and conform to (i) all
provisions of each insurance policy required by this Paragraph 16 and (ii) all
reasonable requirements of the insurers thereunder applicable to Landlord,
Tenant (in connection with the Leased Premises) or any of the Leased Premises or
to the use, manner of use, occupancy, possession, operation, maintenance,
alteration or repair of any of the Leased Premises, even if such compliance
necessitates Alterations or results in interference with the use or enjoyment of
any of the Leased Premises.

            (h) Tenant shall not carry separate insurance concurrent in form or
contributing in the event of a Casualty with that required in this Paragraph 16
unless (i) Landlord and Lender are included therein as named insureds, with loss
payable as provided herein, and (ii) such separate insurance complies with the
other provisions of this Paragraph 16. Tenant shall immediately notify Landlord
of such separate insurance and shall deliver to Landlord copies thereof
certified by a senior officer of Tenant.

            (i) All policies shall contain effective waivers by the carrier
against all claims for insurance premiums against Landlord and shall contain
full waivers of subrogation against the Landlord.

            (j) All proceeds of any insurance required under Paragraph 16(a)
shall be payable as follows:

               (i) The insurance referred to in Paragraphs 16(a)(i), 16(a)(iv)
and 16(a)(vi) shall name Landlord, Lender and Tenant as loss payees, as their
interests may appear. The insurance referred to in Paragraph 16(a)(ii) shall
name Landlord and Lender as additional insureds, and the insurance referred to
in Paragraph 16(a)(v) shall name Tenant as insured and Lender and Landlord as
loss payees to the extent of amounts payable by Tenant under the Lease.


                                      -20-




               (ii) Each insurer is hereby authorized and directed to make
payment of insurance proceeds in excess of $500,000, or if an Event of Default
exists, in any amount directly to Landlord or, if required by the Mortgage or
requested by Lender pursuant to the Mortgage, to Lender instead of to Landlord
and Tenant jointly, and Tenant hereby appoints each of Landlord and Lender as
Tenant's attorneys-in-fact to endorse any draft therefor. If no Event of Default
exists, proceeds up to and including $500,000 shall be paid directly to Tenant.

        17. Casualty and Condemnation.

            (a) If any Casualty occurs the insurance proceeds for which is
reasonably estimated by Tenant to be equal to or in excess of One Hundred
Thousand Dollars ($100,000), Tenant shall give Landlord and Lender immediate
nonce thereof: So long as no Event of Default exists Tenant is hereby authorized
to adjust, collect and compromise all claims under any of the insurance policies
required by Paragraph 16(a) and to execute and deliver on behalf of Landlord all
necessary proofs of loss, receipts, vouchers and releases required by the
insurers, and Landlord shall have the right to join with Tenant if the amount of
any such claim is in excess of Five Hundred Thousand Dollars ($500,000). Any
adjustment, settlement or compromise of any such claim in excess of $500,000
shall be subject to the prior written approval of Landlord, which shall not be
unreasonably withheld, conditioned or delayed. Landlord shall have the right to
prosecute or contest any such claim, adjustment, settlement or compromise and,
in connection therewith, Tenant hereby irrevocably assigns to Landlord any and
all interest it has or may have in such claim. If an Event of Default exists,
Tenant shall not be entitled to adjust, collect or compromise any such claim or
to participate with Landlord in any adjustment, collection or compromise of the
Net Award payable in connection with a Casualty. Tenant agrees to sign, upon the
request of Landlord, all such proofs of loss, receipts, vouchers and releases.
Each insurer is hereby authorized and directed to make payment under said
policies in excess of $500,000 directly to Landlord or, if required by the
Mortgage or requested by Landlord or Lender pursuant to the Mortgage, to Lender
instead of to Landlord and Tenant jointly, and Tenant hereby appoints each of
Landlord and Lender as Tenant's attorneys-in-fact to endorse any draft therefor.
The rights of Landlord under this Paragraph 17(a) shall be extended to Lender if
and to the extent that any Mortgage so provides.

            (b) Tenant, immediately upon receiving a Condemnation Notice, shall
notify Landlord and Lender thereof. Landlord and Lender are authorized to
collect, settle and compromise, in their discretion (and, if no Event of Default
exists, upon notice to Tenant), the amount of any Net Award. Provided that no
Event of Default has occurred and is continuing, Tenant shall be entitled to
participate with Landlord and Lender in any Condemnation proceeding or
negotiations under threat thereof and to contest the Condemnation or the amount
of the Net Award therefor. No agreement with any condemnor in settlement or
under threat of any Condemnation shall be made by Tenant without the written
consent, of Landlord and Lender, which shall not be unreasonably withheld,
conditioned or delayed. Subject to the provisions of this Paragraph 17(b),
Tenant hereby irrevocably assigns to Landlord any award or payment to which
Tenant is or may be entitled by reason of any Condemnation, whether the same
shall be paid or payable for Tenant's leasehold interest hereunder or otherwise;
but nothing in this Lease shall impair Tenant's right to any award or payment on
account of Tenant's trade fixtures, equipment or other tangible property which
is not part of the Equipment, moving expenses or loss of business, if available,
to the extent that and so long as (i) Tenant shall have the right to make, and
does make, a separate claim therefor against the condemnor and (ii) such claim
does not in any way reduce either the amount of the award otherwise payable to
Landlord for the Condemnation of Landlord's fee interest in the Leased Premises
or the amount of the award (if any) otherwise payable for the Condemnation of
Tenant's leasehold interest hereunder.

            (c) If any Partial Casualty (whether or not insured against) or
Partial Condemnation shall occur, this Lease shall continue, notwithstanding
such event, and there shall


                                      -21-


be no abatement or reduction of any Monetary obligations, except as provided in
Paragraph 19(c). Promptly after such Partial Casualty or Partial Condemnation,
Tenant, as required in Paragraph 12(a), shall commence and diligently continue
to restore the Leased Premises as nearly as practicable to their value,
condition and character immediately prior to such event (assuming the Leased
Premises to have been in the condition required by this Lease). Upon the receipt
by Landlord of the entire Net Award of such Partial Casualty or Partial
Condemnation, Landlord shall make such Net Award available to Tenant for
restoration in accordance with and subject to the provisions of Paragraph 19(a).
If any Casualty or Condemnation which is not a Partial Casualty or Partial
Condemnation shall occur, Tenant shall comply with the terms and conditions of
Paragraph 18.

        18. Termination Events.

               (a) If (i) all of the Leased Premises shall be taken by a Taking
or (ii) any substantial portion of any Leased Premises shall be taken by a
Taking or all or any substantial portion of the Leased Premises shall be totally
damaged or destroyed by a Casualty and, in any such case, Tenant certifies and
covenants to Landlord that it will forever abandon operations at the Lease
Premises or (iii) Landlord receives notice from Ground Lessor that Ground Lessor
is exercising its right under Section 11(b) of the Railroad Ground Lease to
terminate the Ground Lease or (iv) the holder of any mortgage encumbering the
interest of Ground Lessor commences to foreclose or otherwise acquire the
interest of Ground Lessor in the Leased Premises (each of the events described
in the above clauses (i), (ii), (iii) and (iv) shall hereinafter be referred to
as a "Termination Event"), then (x) in the case of (i) and (iii) above, Tenant
shall be obligated, within thirty (30) days after Tenant receives a Condemnation
Notice or within thirty (30) days after Tenant receives a termination notice
from Ground Lessor, as the case may be, and (y) in the case of (iv) above within
ten (10) days after Tenant receives notice that any such holder has commenced to
foreclose or otherwise acquire Ground lessor's interest in the Leased Premises,
and (z) in the case of (ii) above, Tenant shall have the option, within thirty
(30) days after Tenant receives a Condemnation Notice or thirty (30) days after
the Casualty, as the case may be, to give to Landlord written notice (a
"Termination Notice") of the Tenant's option to terminate this Lease in the form
described in Paragraph 18(b).

               (b) A Termination Notice shall contain (i) notice of Tenant's
intention to terminate this Lease on the first Basic Rent Payment Date which
occurs at least thirty (30) days after the Fair Market Value Date (the
"Termination Date"), (ii) a binding and irrevocable offer of Tenant to purchase
the Leased Premises for a price equal to the Termination Amount and (iii) if the
Termination Event is an event described in Paragraph 18(a)(ii), the
certification and covenant described therein and a certified resolution of the
Board of Directors of Tenant authorizing the same. Promptly upon the delivery to
Landlord of a Termination Notice, Landlord and Tenant shall commence to
determine Fair Market Value.

               (c) If Landlord shall reject such offer to terminate this Lease
by written notice to Tenant (a "Rejection"), which Rejection shall contain the
written consent of Lender, not later than thirty (30) days following the Fair
Market Value Date, then this Lease shall terminate on the Termination Date;
provided that, if Tenant has not satisfied all Monetary Obligations and all
other obligations and liabilities under this Lease which have arisen
(collectively, "Remaining Obligations") on or prior to the Termination Date,
then Landlord may, at its option, extend the date on which this Lease may
terminate to a date which is no later than the first Basic Rent Payment Date
after the Termination Date on which Tenant has satisfied all Remaining
Obligations. Upon such termination (i) all obligations of Tenant hereunder shall
terminate except for any Surviving Obligations, (ii) Tenant shall promptly
vacate and shall have no further right, title or interest in or to the Leased
Premises and (iii) the Net Award or payment by Ground Lessor, as the case may
be, shall be retained by Landlord. Notwithstanding anything to the contrary
hereinabove contained, if Tenant shall have received a Rejection and, on the
date


                                      -22-

when this Lease would otherwise terminate as provided above, Landlord shall not
have received the full amount of the Net Award payable by reason of the
applicable Termination Event, then on the Termination Date Tenant shall assign
to Landlord all of its right, title and interest, if any, in and to the Net
Award.

               (d) Unless Tenant shall have received a Rejection not later than
the thirtieth (30th) day following the Fair Market Value Date, Landlord shall be
conclusively presumed to have accepted such offer. If such offer is accepted by
Landlord then, on the Termination Date, Tenant shall pay to Landlord or Lender,
if the Mortgage requires or permits Lender to so require, the Termination Amount
and all Remaining Obligations and, if requested by Tenant, Landlord shall convey
to Tenant or its designee the Leased Premises or the remaining portion thereof,
if any, all in accordance with Paragraph 20.

        19. Restoration; Reduction of Rent.

               (a) If (on the basis of a cost breakdown provided by Tenant) the
cost of restoration in the event of a Casualty is reasonably estimated by
Landlord and Lender to be Five Hundred Thousand ($500,000) or less, then, so
long as an Event of Default has not occurred and is continuing, such amount
shall be paid to and retained by Tenant, and Tenant shall promptly restore the
Leased Premises in accordance with and subject to Paragraph 12 and Paragraph 13
hereof. As long as an Event of Default has not occurred and is continuing, any
Net Award in excess of Five Hundred Thousand ($500,000) that is paid to Landlord
or Lender shall be made available to Tenant for restoration of the Leased
Premises and Landlord (or Lender if required by any Mortgage) shall hold such
Net Award in a separate trust fund not commingled with any other funds (the
"Restoration Fund") and disburse amounts from the Restoration Fund only in
accordance with the following conditions:

                      (i) prior to commencement of restoration, (A) the
architects, contracts, contractors, plans and specifications for the restoration
shall have been approved by Landlord, which approval shall not be unreasonably
withheld, delayed or conditioned, (B) Landlord and Lender shall be provided with
mechanics, lien insurance or an acceptable payment bond which insures
satisfactory payment for the restoration, is in an amount and form and have a
surety reasonably acceptable to Landlord, and name Landlord and Lender as
additional dual obligees;

                      (ii) at the time of any disbursement, no Event of Default
shall exist and no mechanics' or materialmen's liens shall have been filed
against any of the Leased Premises and remain undischarged;

                      (iii) disbursements shall be made from time to time in an
amount not exceeding the cost of the work completed since the last disbursement,
upon receipt of (A) satisfactory evidence, including architects' certificates,
of the stage of completion, the estimated total cost of completion and
performance of the work to date in a good and workmanlike manner in accordance
with the contracts, plans and specifications, (B) conditional waivers of liens,
(C) a satisfactory bringdown of title insurance and (D) other evidence of cost
and payment so that Landlord and Lender can verify that the amounts disbursed
from time to time are represented by work that is completed, in place and free
and clear of mechanics, and materialmen's lien claims;

                      (iv) each request for disbursement shall be accompanied by
a certificate of Tenant, signed by the president or a vice president or the
Director of Property Management of Tenant, describing the work for which payment
is requested, stating the cost incurred in connection therewith, stating that
Tenant has not previously received payment for such work and, upon completion of
the work, also stating that the work has been fully completed and complies with
the applicable requirements of this Lease;


                                      -23-

                      (v) Landlord may retain ten percent (10%) of the
restoration fund until 50% of the restoration is fully completed;

                      (vi) the Restoration Fund shall not be commingled with
Landlord's other funds and shall bear interest at a commercially available rate;
and

                      (vii) such other reasonable conditions consistent with
customary construction loan disbursement practices as Landlord or Lender may
impose.

               (b) Prior to commencement of restoration and at any time during
restoration, if the estimated cost of completing the restoration work free and
clear of all liens, as reasonably determined by Landlord or Lender, exceeds the
amount of the Net Award available for such restoration, the amount of such
excess shall, upon demand by Landlord, be paid by Tenant to Landlord or Lender,
if so required or permitted by the terms of the Mortgage, to be added to the
Restoration Fund. Any sum so added by Tenant which remains in the Restoration
Fund upon completion of restoration shall be refunded to Tenant. For purposes of
determining the source of finds with respect to the disposition of funds
remaining after the completion of restoration, the Net Award shall be deemed to
be disbursed prior to any amount added by Tenant.

               (c) If any sum remains in the Restoration Fund after completion
of the restoration and any refund to Tenant pursuant to Paragraph 19(b), such
sum (the "Remaining Sum") shall be retained by Landlord or Lender, each
Installment of Basic Rent payable on or after the date on which the Net Award is
paid to Landlord shall be reduced by a fraction, the denominator of which shall
be the total amount of all Basic Rent due from such date to and including the
last day of the Term and the numerator of which shall be the amount of such Net
Award retained by Landlord and/or Lender.

        20. Procedures Upon Purchase.

               (a) If the Leased Premises are purchased by Tenant pursuant to
any provision of this Lease, Landlord need not convey any better title thereto
than that which was conveyed to Landlord, and Tenant or its designee shall
accept such title, subject, however, to the Permitted Encumbrances and to all
other liens, exceptions and restrictions on, against or relating to any of the
Leased Premises and to all applicable Laws, but free of the lien of and security
interest created by any Mortgage or Assignment and liens, exceptions and
restrictions on, against or relating to the Leased Premises which have been
created by or resulted solely from acts of Landlord after the date of this
Lease, unless the same are Permitted Encumbrances or customary utility easements
benefiting the Leased Premises or were created with the concurrence of Tenant or
as a result of a default by Tenant under this Lease.

               (b) Upon the date fixed for any such purchase of the Leased
Premises pursuant to any provision of this Lease (any such date the "Purchase
Date"), Tenant shall pay to Landlord, or to any Person to whom Landlord directs
payment, the Relevant Amount therefor specified herein, in Federal Funds, less
any credit of the Net Award received and retained by Landlord or a Lender and
allowed against the Relevant Amount, and Landlord shall deliver to Tenant (i) a
special warranty deed (or with respect to the leasehold portion of the Leased
Premises, a special warranty assignment of ground lease) which describes the
premises being conveyed and conveys the title thereto as provided in Paragraph
20(a), (ii) such other instruments as shall be necessary to transfer to Tenant
or its designee any other property (or rights to any Net Award not yet received
by Landlord or a Lender) then required to be sold by Landlord to Tenant pursuant
to this Lease and (iii) any Net Award received by Landlord, not credited to
Tenant against the Relevant Amount and required. to be delivered by Landlord to
Tenant pursuant to this Lease; provided, that if any Monetary Obligations remain
outstanding on such date, then Landlord may deduct from the Net Award the amount
of such Monetary Obligations; and further


                                      -24-

provided, that if any event has occurred which, in Landlord's reasonable
judgment, is likely to subject any Indemnitee to any liability which Tenant is
required to indemnify against pursuant to Paragraph 15, then an amount shall be
deducted from the Net Award which, in Landlord's reasonable judgment, is
sufficient to satisfy such liability, which amount shall be deposited in an
escrow account with a financial institution reasonably satisfactory to Landlord
and Tenant on terms and conditions reasonably satisfactory to Landlord and
Tenant, pending resolution of such matter. If on the Purchase Date any Monetary
Obligations remain outstanding and no Net Award is payable to Tenant by Landlord
or the amount of such Net Award is less than the amount of the Monetary
Obligations, then Tenant shall pay to Landlord on the Purchase Date the amount
of such Monetary Obligations. Upon the completion of such purchase, this Lease
and all obligations and liabilities of Tenant hereunder with respect to the
Leased Premises shall terminate, except any Surviving Obligations.

               (c) If the completion of such purchase shall be delayed after (i)
the Termination Date, in the event of a purchase pursuant to Paragraph 18 or,
(ii) the date scheduled for such purchase, in the event of a purchase under any
other provision of this Lease then, except as specifically provided in the
following sentence, (x) Rent shall continue to be due and payable until
completion of such purchase and (y) at Landlord's sole option, Fair Market Value
shall be redetermined and the Relevant Amount payable by Tenant pursuant to the
applicable provision of this Lease shall be adjusted to reflect such
redetermination. If, however, the delay for completion of such purchase is
caused solely by an act of or failure to act by Landlord, Tenant's obligation to
pay Rent until completion of the purchase shall be limited to that portion of
Basic Rent equal to the payments of principal and interest payable on the Loan,
and such payments shall be payable directly to the Lender and shall be credited
against the purchase price payable by Tenant to Landlord.

               (d) Any prepaid Monetary Obligations paid to Landlord shall be
prorated, as of the Purchase Date, and the prorated unapplied balance shall be
deducted from the Relevant Amount due to Landlord.

        21. Assignment and Subletting.

               (a)(i) Tenant shall have the right, upon thirty (30) days prior
written notice to Landlord and Lender, with no consent of Landlord or Lender
being required or necessary ("Preapproved Assignment") to assign this Lease by
operation of law or otherwise to any Person ("Preapproved Assignee") (A) that is
an Affiliate of Tenant or (B) which immediately following such assignment has,
or is a direct or indirect subsidiary of a parent corporation that has executed
(or will, as a condition to such assignment, execute) a guaranty of the
obligations of Tenant hereunder substantially in the form of the Guaranty and
has, a publicly traded unsecured senior debt rating that is the higher of (1)
the then publicly traded unsecured senior debt rating of Guarantor or (2) a
rating of "A" or better from Moody's Investors Services, Inc. or a rating of "A"
or better from Standard & Poor's Corporation (or in the event both of such
rating agencies cease to furnish such ratings, then a comparable rating by any
rating agency reasonably acceptable to Landlord and Lender).

                      (ii) If Tenant desires to assign this Lease to a Person
("Non-Preapproved Assignee") who would not be a Preapproved Assignee
("Non-Preapproved Assignment") then Tenant shall, not less than forty-five (45)
days prior to the date on which it desires to make a Non-Preapproved Assignment
submit to Landlord and Lender information regarding the following with respect
to the Non-Preapproved Assignee: (A) credit, (B) capital structure, (C)
management, (D) operating history, (E) proposed use of the Leased Premises and
(F) risk factors associated with the proposed use of the Leased Premises by the
Non-Preapproved Assignee, taking into account factors such as environmental
concerns, product liability and the like. Landlord and Lender shall review such
information and shall approve or disapprove the


                                      -25-

Non-Preapproved Assignee no later than the twentieth (20th) day following
receipt of all such information, and Landlord and Lender shall be deemed to have
acted reasonably in granting or withholding consent if such grant or disapproval
is based on a review of the above-described criteria applying such review
standards as are customary in private placement transactions.

                      (iii) If Landlord or Lender withhold consent to the
Non-Preapproved Assignment and Tenant desires to complete the Non-Preapproved
Assignment, Tenant shall make a rejectable offer (the "Intended Assignment
Offer") to purchase the Leased Premises for a purchase price equal to the Offer
Amount and to consummate the purchase on the first Basic Rent Payment Date
occurring thirty (30) days after the determination of Fair Market Value (the
"Intended Assignment Purchase Date"). Notwithstanding the foregoing, if the
Intended Assignment offer is accepted by Landlord and Lender and the
Non-Preapproved Assignment occurs on a date (the "Assignment Date") that is
prior to the Intended Assignment Purchase Date, then, no later than the
Assignment Date, Tenant shall deposit in escrow with Lender an amount (the
"Deposit Amount") equal to one hundred percent (100%) of the sum of the Project
Cost and any Prepayment Premium. The Deposit Amount shall be held by and
invested by Landlord and the Deposit Amount, together with any interest earned
thereon, shall be applied on the Intended Assignment Purchase Date to payment of
the Offer Amount.

                      (iv) If Landlord shall reject the Intended Assignment
Offer by notice to Tenant, such notice to contain the written consent of Lender
to such rejection, no later than the thirtieth (30th) day following receipt of
the Intended Assignment Offer by Landlord, then this Lease shall remain in full
force and effect and Landlord and Lender shall be deemed to have consented to
the Non-Preapproved Assignment. Nothing provided herein shall constitute a
waiver by Landlord of the obligation of Tenant to comply with the requirements
of this Paragraph 21(a)(iv) if a subsequent Non-Preapproved Assignment arises.
No rejection of the Intended Assignment Offer shall be effective for any purpose
unless consented to in writing by Lender.

                      (v) Unless Landlord shall have rejected the Intended
Assignment Offer by the foregoing notice to Tenant not later than the thirtieth
(30th) day following receipt of information described in the foregoing Paragraph
21(a)(iv), Landlord shall be conclusively presumed to have accepted the Intended
Assignment Offer. If the Intended Assignment Offer is accepted by Landlord,
Tenant shall pay to Landlord the Offer Amount (less the Deposit Amount and
interest thereon paid to Landlord) on the Intended Assignment Purchase Date and,
provided that no Rent or any other charge is due and unpaid under this Lease as
of the Intended Assignment Purchase Date and Tenant is otherwise in compliance
with the terms of this Lease, Landlord shall convey to Tenant the Leased
Premises in accordance with the provisions of Paragraph 20 of this Lease.

               (b) (i) Upon thirty (30) days prior written notice to Landlord
and Lender, to enter into one or more subleases that demise, in the aggregate,
up to but not in excess at any time of thirty-three and one-third percent
(33 1/3%) of the gross space in the Improvements for a term of up to ten (10)
years (but not extending beyond the Expiration Date) with no consent or approval
of Landlord being required or necessary ("Preapproved Sublet"). Other than
pursuant to a Preapproved Sublet, no portion of the Leased Premises shall be
subleased during the Term to any other Person without the prior written consent
of Landlord and Lender, which consent shall not be unreasonably withheld or
delayed, and which consent shall be granted or withheld based on a review of the
following criteria as they relate to the proposed sublessee: (1) credit, (2)
capital structure, (3) management, (4) operating history and (5) the proposed
use of the sublet portion of the Improvements, taking in account factors related
to the proposed subtenant's use of the Leased Premises such as environmental
concerns. Landlord and Lender shall be deemed to have acted reasonably in
granting or withholding consent if such grant or disapproval is based on their
reasonable review of the above-described criteria.


                                      -26-

      (c) If Tenant assigns all its rights and interest under this Lease, the
assignee under such assignment shall expressly assume all of the obligations of
Tenant hereunder, actual or contingent, including obligations of Tenant which
may have arisen on or prior to the date of such assignment, by a written
instrument delivered to Landlord at the time of such assignment. Each
sublease of any of the Leased Premises shall be subject and subordinate to the
provisions of this Lease. Following any assignment (i) to a Person that
satisfies the test for a Preapproved Assignee under clause (B) of Paragraph 21
(a)(i) or (ii) to a Non-Preapproved Assignee that is approved by Lender and
that immediately following the Non-Preapproved Assignment has a publicly traded
unsecured senior debt rating of not less than "Baa" from Moody's Investors
Services, Inc. or a rating of not less than "BBB" from Standard & Poor's
Corporation (or in the event both of such rating agencies cease to furnish such
ratings, then a comparable rating by a rating agency reasonably acceptable to
Landlord and Lender), Tenant and Guarantor shall be deemed released from their
respective obligations and liabilities under this Lease and the Guaranty that
arise after the date of such Preapproved Assignment or Non-Preapproved
Assignment described in clause (ii) above, as the case may be, and do not
relate to any act or failure to act by Guarantor or Tenant that occurred prior
to the date of such assignment. Except as specifically provided in the
foregoing sentence, no assignment or sublease made as permitted by this
Paragraph 21 shall affect or reduce any of the obligations of Tenant hereunder
or of Guarantor under the Guaranty, and all such obligations shall continue in
full force and effect as obligations of a principal and not as obligations of a
guarantor, as if no assignment or sublease had been made. No assignment or
sublease shall impose any additional obligations on Landlord under this Lease.

      (d) With respect to any Preapproved Assignment or Preapproved Sublet,
Tenant shall provide to Landlord information reasonably required by Landlord to
establish that any proposed Preapproved Assignment or Preapproved Sublet
satisfies the criteria set forth above.

      (e) Tenant shall, within ten (10) days after the execution and delivery
of any assignment or sublease, deliver a duplicate original copy thereof to
Landlord which, in the event of an assignment, shall be in recordable form.

      (f) As security for performance of its obligations under this Lease,
Tenant hereby grants, conveys and assigns to Landlord all right, title and
interest of Tenant in and to all subleases and any guaranty executed in
connection therewith, now in existence or hereafter entered into for any or all
of the Leased Premises, any and all extensions, modifications and renewals
thereof and all rents, issues and profits therefrom. Landlord hereby grants to
Tenant a license to collect and enjoy all rents and other sums of money payable
under any sublease of any Leased Premises, provided, however, that Landlord
shall have the absolute right at any time during the existence of an Event of
Default, upon notice to Tenant and any subtenants, to revoke said license and
to collect such rents and sums of money and to retain the same as a credit
against Rent. Tenant shall not (i) consent to, cause or allow any material
modification or alteration of any of the terms, conditions or covenants of the
subleases or any guaranty thereof or the termination or surrender of any
sublease or guaranty thereof, (ii) anticipate Rents prior to the accrual
thereof, or (iii) waive or release any tenant or guarantor thereunder from any
material obligation or performance, without the prior written approval of
Landlord, which consent shall not be unreasonably withheld, nor shall Tenant do
or permit anything to be done, the doing of which, nor omit or refrain from
doing anything, the omission of which, will or could be a material breach of or
material default in the terms of any subleases. Tenant shall, with respect to
each sublease, observe and perform each and every condition to be performed by
Tenant thereunder, give prompt notice to Landlord and Lender of any notice
given or received under any sublease or guaranty thereof, enforce, short of
termination, each sublease and guaranty thereof and appear in and defend any
action growing out of or in any manner connected with any sublease or guaranty
thereof, provided, that, if Tenant shall fail or refuse to


                                      -27-

so enforce or defend Landlord or Lender shall have such right which shall be
exercisable at the sole cost and expense of Tenant.

               (g) Tenant shall have the right to grant a first lien leasehold
mortgage on, or to pledge its leasehold interest in, the Leased Premises to its
senior lender, and a second and a third lien leasehold mortgage on the Leased
Premises to its other lenders but shall not have the power to otherwise
mortgage, pledge or otherwise encumber its interest under this Lease or any
sublease of the Leased Premises, and any other such mortgage, pledge or
encumbrance made in violation of this Paragraph 21 shall be void. Landlord and
Lender shall execute such documents as may be reasonably requested by Tenant's
lender who holds a first lien leasehold mortgage and are customarily acceptable
to Landlord and Lender in order to afford to such leasehold mortgagee rights of
notice and an opportunity to cure an Event of Default and the benefits of any
non-disturbance and attornment agreement in favor of Tenant, provided, however,
that any entity that becomes a successor tenant under this Paragraph 21(g) shall
be required to be in compliance with all of the terms of this Lease.

               (h) Subject to Tenant's rights under Paragraphs 37 and 38,
Landlord may sell or transfer the Leased Premises at any time without Tenant's
consent to any third party (a "Third Party Purchaser"). In the event of any such
transfer, Tenant shall attorn to any Third Party Purchaser as Landlord so long
as such Third Party Purchaser and Landlord notify Tenant in writing of such
transfer and such Third Party Purchaser assumes in writing the obligations of
Landlord under this Lease. At the request of Landlord, Tenant, at no cost or
expense to Tenant, will execute such documents confirming the agreement referred
to above and such other agreements as Landlord may reasonably request, provided
that such agreements do not increase the liabilities and obligations of Tenant
hereunder. no event shall Tenant have any obligation to attorn to, or recognize
more than one Person at one time as, Landlord.

        22. Events of Default.

               (a) The occurrence of any one or more of the following (after
expiration of any applicable cure period as provided in Paragraph 22(b)) shall,
at the sole option of Landlord, constitute an "Event of Default" under this
Lease:

                      (i) a failure by Tenant to make any payment of any
Monetary Obligation, regardless of the reason for such failure;

                      (ii) a failure by Tenant duly to perform and observe, or a
violation or breach of, any other provision hereof not otherwise specifically
mentioned in this Paragraph 22(a);

                      (iii) any representation or warranty made by Tenant herein
or by Guarantor under the Guaranty or by Tenant or Guarantor in any certificate,
demand or request made pursuant hereto proves to be incorrect in any material
respect when made;

                      (iv) a default beyond any applicable cure period or at
maturity by Tenant or Guarantor in any payment of principal or interest on any
obligations for borrowed money having an outstanding principal balance of
$10,000,000 or more in the aggregate, or in the performance of any other
provision contained in any instrument under which any such obligation is created
or secured (including the breach of any covenant thereunder);

                      (v) a final, non-appealable judgment or judgments for the
payment of money in excess of $15,000,000 in the aggregate shall be rendered
against Tenant or Guarantor and the same shall remain undischarged for a period
of sixty (60) consecutive days;


                                      -28-

                      (vi) Tenant or Guarantor shall (A) voluntarily be
adjudicated a bankrupt or insolvent, (B) seek or consent to the appointment of a
receiver or trustee for itself or the Leased Premises, (C) file a petition
seeking relief under the bankruptcy or other similar laws of the United States,
any state or any jurisdiction, (D) make a general assignment for the benefit of
creditors, or (E) be unable to pay its debts as they mature;

                      (vii) a court shall enter an order, judgment or decree
appointing, without the consent of Tenant and Guarantor, a receiver or trustee
for it or for the Leased Premises or approving a petition filed against Tenant
or Guarantor, as the case may be, which seeks relief under the bankruptcy or
other similar laws of the United States, any state or any jurisdiction, and such
order, judgment or decree shall remain undischarged or unstayed ninety (90) days
after it is entered;

                      (viii) the Leased Premises shall have been vacated or
abandoned;

                      (ix) Tenant or Guarantor shall be liquidated or dissolved
or shall begin proceedings towards its liquidation or dissolution;

                      (x) the estate or interest of Tenant in the Leased
Premises shall be levied upon or attached in any proceeding and such estate or
interest is about to be sold or transferred or such process shall not be vacated
or discharged within ninety (90) days after it is made;

                      (xi) a failure by Tenant to perform or observe, or a
violation or breach of, or a misrepresentation by Tenant under, any provision of
any Assignment or any other document executed by Tenant and Lender with respect
to this Lease or the Loan, if such failure, violation, breach or
misrepresentation gives rise to a default beyond any applicable cure period with
respect to any Loan, giving the Lender the right to accelerate the Loan and such
default has not been cured;

                      (xii) a failure by Tenant to maintain in effect any
license or permit necessary for the use, occupancy or operation of the Leased
Premises;

                      (xiii) a Non-Preapproved Assignment shall occur and Tenant
shall have failed to comply with the provisions, of Paragraph 21(a)(iii) through
(v);

                      (xiv) Guarantor shall have failed to comply with or a
breach shall occur with respect to any of the representations, warranties or
covenants set forth in the Guaranty;

                      (xv) Tenant shall sell or transfer or enter into an
agreement to sell or transfer all or substantially all of its assets unless such
sale shall include an assignment of this Lease in compliance with Paragraph 21;

                      (xvi) an Event of Default shall exist under the Original
Lease;

                      (xvii) a default shall exist under the Railroad Ground
Lease which would give the ground lessor under the Railroad Ground Lease the
right to terminate; or

                      (xviii) Tenant shall fail to make a rejectable offer under
Paragraph 18(a)(iii) or (iv) within the time periods provided therein.

               (b) No notice or cure period shall be required in any one or more
of the following events: (A) the occurrence of an Event of Default under clause
(iv), (v), (vi), (vii),


                                      -29-

(viii), (ix), (x), (xi), (xii), (xiii), (xiv), (xv), (xvi), (xvii) or (xviii) of
Paragraph 22(a); (B) the default consists of a failure to provide insurance with
the types of coverage and in the amounts referred to in clauses (i), (ii), (iv),
(v) and (vi) of Paragraph 16(a) (but excluding a default consisting of a failure
to provide insurance which meets any of the other specific requirements in
clauses (i), (ii), (iv), (v) and (vi) of Paragraph 16(a)) or an assignment or
sublease entered into in violation of Paragraph 21; or (C) the default is such
that any delay in the exercise of a remedy by Landlord could reasonably be
expected to cause irreparable harm to Landlord. If the default consists of the
failure to pay any Monetary Obligation under clause (i) of Paragraph 22(a), the
applicable cure period shall be five (5) days from the date on which notice is
given, but Landlord shall not be obligated to give notice of, or allow any cure
period for, any such default more than one (1) time within any Lease Year. If
the default consists of a default under clause (ii) of Paragraph 22(a), other
than the events specified in clauses (B) and (C) of the first sentence of this
Paragraph 22(b), the applicable cure period shall be twenty (20) days from the
date on which notice is given or, if the default cannot with reasonable
diligence be cured within such twenty (20) day period and delay in the exercise
of a remedy would not (in Landlord's reasonable judgment) cause any material
adverse harm to Landlord or any of the Leased Premises, the cure period shall be
extended for the period required to cure the default (but such cure period,
including any extension, shall not in the aggregate exceed ninety (90) days),
provided that Tenant shall commence to cure the default within the said
twenty-day period and shall actively, diligently and in good faith proceed with
and continue the curing of the default until it shall be fully cured. If the
default consists of a default under clause (ii) with respect to the failure to
provide insurance which meets all of the requirements in clauses (i), (ii),
(iv), (v) and (vi) of Paragraph 16(a), or clauses (iii) or (xiv) of Paragraph
22(a), the applicable cure period shall be twenty (20) days from the date on
which notice is given provided that the default or the granting of a cure period
does not directly or indirectly cause the Lender to declare Landlord in default
of the Loan.

        23. Remedies and Damages Upon Default. If an Event of Default shall have
occurred and is continuing.

               (a) Landlord shall have the right, at its sole option, then or at
any time thereafter, to exercise its remedies and to collect damages from Tenant
in accordance with this Paragraph 23, subject in all events to applicable Law,
without demand upon or notice to Tenant except as otherwise provided in
Paragraph 22(b) and this Paragraph 23.

                      (i) Landlord may give Tenant notice of Landlord's
intention to terminate this Lease on a date specified in such notice. Upon such
date, this Lease, the estate hereby granted and all rights of Tenant hereunder
shall expire and terminate. Upon such termination, Tenant shall immediately
surrender and deliver possession of the Leased Premises to Landlord in
accordance with Paragraph 26. If Tenant does not so surrender and deliver
possession of all of the Leased Premises, Landlord may re-enter and repossess
any of the Leased Premises not surrendered, with or without legal process, by
peaceably entering any of the Leased Premises and changing locks or by summary
proceedings, ejectment or any other lawful means or procedure. Upon or at any
time after taking possession of any of the Leased Premises and whether or not
the Lease has been terminated, Landlord may, by peaceable means or legal
process, remove any Persons or property therefrom. Landlord shall be under no
liability for or by reason of any such entry, repossession or removal.
Notwithstanding such entry or repossession, Landlord may (A) exercise the remedy
set forth in and collect the damages permitted by Paragraph 23(a)(iii) or (B)
collect the damages set forth in Paragraph 23(b)(i) or 23(b)(ii).

                      (ii) After repossession of any of the Leased Premises
pursuant to clause (i) above, Landlord shall have the right with or without
terminating this Lease and as agent of Tenant, if appropriate, to relet any of
the Leased Premises to such tenant or tenants, for


                                      -30-

such term or terms, for such rent, on such conditions and for such uses as
Landlord in its sole discretion may determine, and collect and receive any rents
payable by reason of such reletting. Landlord may make such Alterations in
connection with such reletting as it may deem advisable in its sole discretion.
Notwithstanding any such reletting, Landlord may collect the damages set forth
in Paragraph 23(b)(ii).

                      (iii) Landlord may, upon notice to Tenant, require Tenant
to make an irrevocable offer to terminate this Lease in its entirety for an
amount (the "Default Termination Amount") specified in the next sentence. The
"Default Termination Amount" shall be the greater of (A) the Fair Market Value
of the Leased Premises or (B) the sum of the Project Cost and Prepayment Premium
which Landlord will be required to pay in prepaying any Loan with proceeds of
the Default Termination Amount. Upon such notice to Tenant, Tenant shall be
deemed to have made such offer and shall, if requested by Landlord, within ten
(10) days following such request, deposit with Landlord as payment against the
Default Termination Amount the amount described in (B) above, Landlord and
Tenant shall promptly commence to determine Fair Market Value. Within thirty
(30) days after the Fair Market Value Date, Landlord shall accept or reject such
offer. If Landlord accepts such offer then, on the tenth (10th) business day
after such acceptance, Tenant shall pay to Landlord the Default Termination
Amount and, at the request of Tenant, Landlord will convey the Leased Premises
to Tenant or its designee "as is," with all faults and without warranty in
accordance with Paragraph 20. Any rejection by Landlord of such offer shall have
no effect on any other remedy Landlord may have under this Lease.

                      (iv) Landlord may declare by notice to Tenant the entire
Basic Rent (in the amount of Basic Rent then in effect) for the remainder of the
then current Term to be immediately due and payable. Tenant shall immediately
pay to Landlord all such Basic Rent discounted to its Present Value, all accrued
Rent then due and unpaid, all other Monetary obligations which are then due and
unpaid and all Monetary obligations which arise or become due by reason of such
Event of Default (including any Costs of Landlord). Upon receipt by Landlord of
all such accelerated Basic Rent and Monetary Obligations, this Lease shall
remain in full force and effect and Tenant shall have the right to possession of
the Leased Premises from the date of such receipt by Landlord to the end of the
Term, and subject to all the provisions of this Lease, including the obligation
to pay all increases in Basic Rent and all Monetary Obligations that
subsequently become due, except that (A) no Basic Rent which has been prepaid
hereunder shall be due thereafter during the said Term and (B) Tenant shall have
no option to extend or renew the Term.

               (b) The following constitute damages to which Landlord shall be
entitled if Landlord exercises its remedies under Paragraph 23(a)(i) or
23(a)(ii):

                      (i) If Landlord exercises its remedy under Paragraph
23(a)(i) but not its remedy under Paragraph 23(a)(ii) (or attempts to exercise
such remedy and is unsuccessful in reletting the Leased Premises) then, upon
written demand from Landlord, Tenant shall pay to Landlord, as liquidated and
agreed final damages for Tenant's default and in lieu of all current damages
beyond the date of such demand (it being agreed that it would be impracticable
or extremely difficult to fix the actual damages), an amount equal to the
Present Value of the excess, if any, of (A) all Basic Rent from the date of such
demand to the date on which the Term is scheduled to expire hereunder in the
absence of any earlier termination, re-entry or repossession over (B) the then
fair market rental value of the Leased Premises for the same period. Tenant
shall also pay to Landlord all of Landlord's Costs in connection with the
repossession of the Leased Premises and any attempted reletting thereof,
including all brokerage commissions, legal expenses attorneys, fees, employees,
expenses, costs of Alterations and expenses and preparation for reletting.


                                      -31-

                      (ii) If Landlord exercises its remedy under Paragraph
23(a)(i) or its remedies under Paragraph 23(a)(i) and 23(a)(ii), then Tenant
shall, until the end of what would have been the Term in the absence of the
termination of the Lease, and whether or not any of the Leased Premises shall
have been relet, be liable to Landlord for, and shall pay to Landlord, as
liquidated and agreed current damages on the date on which the same are due and
payable under the terms of this Lease all Monetary Obligations which would be
payable under this Lease by Tenant in the absence of such termination less the
net proceeds, if any, of any reletting pursuant to Paragraph 23(a)(ii), after
deducting from such proceeds all of Landlord's Costs (including the items listed
in the last sentence of Paragraph 23(b)(i) hereof) incurred in connection with
such repossessing and reletting; provided, that if Landlord has not relet the
Leased Premises, such Costs of Landlord shall be considered to be Monetary
Obligations payable by Tenant. Tenant shall be and remain liable for all sums
aforesaid, and Landlord may recover such damages from Tenant and institute and
maintain successive actions or legal proceedings against Tenant for the recovery
of such damages. Nothing herein contained shall be deemed to require Landlord to
wait to begin such action or other legal proceedings until the date when the
Term would have expired by its own terms had there been no such Event of
Default.

               (c) Notwithstanding anything to the contrary herein contained, in
lieu of or in addition to any of the foregoing remedies and damages, Landlord
may exercise any remedies and collect any damages available to it at law or in
equity. If Landlord is unable to obtain full satisfaction pursuant to the
exercise of any remedy, it may pursue any other remedy which it has hereunder or
at law or in equity.

               (d) Notwithstanding anything to the contrary herein contained, if
the Event of Default is solely an Event of Default under Paragraph 22(a)(iv)
hereof, and such Event of Default ceases to exist prior to the date that
Landlord commences a judicial action to exercise a remedy hereunder, then
Landlord shall discontinue the exercise of remedies under this Paragraph 23(b)
with respect to such Event of Default but not with respect to any other Event of
Default.

               (e) Landlord shall not be required to mitigate any of its damages
hereunder unless required to by applicable Law. If any Law shall validly limit
the amount of any damages provided for herein to an amount which is less than
the amount agreed to herein, Landlord shall be entitled to the maximum amount
available under such Law.

               (f) No termination of this Lease, repossession or reletting of
any of the Leased Premises, exercise of any remedy or collection of any damages
pursuant to this Paragraph 23 shall relieve Tenant of any Surviving Obligations.

               (g) WITH RESPECT TO ANY REMEDY OR PROCEEDING HEREUNDER, LANDLORD
AND TENANT WAIVE ANY RIGHT TO A TRIAL BY JURY.

               (h) During the existence of any Event of Default, Landlord shall
have the right (but no obligation) to perform any act required of Tenant
hereunder and, if performance of such act requires that Landlord enter the
Leased Premises, Landlord may enter the Leased Premises for such purpose.

               (i) No failure of Landlord (i) to insist at any time upon the
strict performance of any provision of this Lease or (ii) to exercise any
option, right, power or remedy contained in this Lease shall be construed as a
waiver, modification or relinquishment thereof. A receipt by Landlord of any sum
in satisfaction of any Monetary obligation with knowledge of the breach of any
provision hereof shall not be deemed a waiver of such breach, and no waiver by
Landlord of any provision hereof shall be deemed to have been made unless
expressed in a writing signed by Landlord.


                                      -32-

               (j) Tenant hereby waives and surrenders, for itself and all those
claiming under it, including creditors of all kinds, (i) any right and privilege
which it or any of them may have under any present or future Law to redeem any
of the Leased Premises or to have a continuance of this Lease after termination
of this Lease or of Tenant's right of occupancy or possession pursuant to any
court order or any provision hereof, and (ii) the benefits of any present or
future Law which exempts property from liability for debt or for distress for
rent.

               (k) Except as otherwise provided herein, all remedies are
cumulative and concurrent and no remedy is exclusive of any other remedy. Each
remedy may be exercised at any time an Event of Default has occurred and is
continuing and may be exercised from time to time. No remedy shall be exhausted
by any exercise thereof.

        24. Notices. All notices, demands, requests, consents, approvals,
offers, statements and other instruments or communications required or permitted
to be given pursuant to the provisions of this Lease shall be in writing and
shall be deemed to have been given for all purposes when delivered in person or
by Federal Express or other reliable 24-hour delivery service or facsimile
followed by Federal Express or other reliable delivery service or by five (5)
business days after being deposited in the United States mail, by registered or
certified mall, return receipt requested, postage prepaid, addressed to the
other party at its address stated above. A copy of any notice given by Tenant
to Landlord shall simultaneously be given by Tenant to Reed Smith LLP, 2500 One
Liberty Place, Philadelphia, PA 19103, Attention: Chairman, Real Estate
Department. For the purposes of this Paragraph, any party may substitute another
address stated above (or substituted by a previous notice) for its address by
giving fifteen (15) days' notice of the new address to the other party, in the
manner provided above.

        25. Estoppel Certificate. At any time upon not less than ten (10) days,
prior written request by Landlord Lender, or Tenant (the "Requesting Party") to
Landlord or Tenant (the "Responding Party"), the Responding Party shall deliver
to the Requesting Party or its designee a statement in writing, executed by an
authorized officer of the Responding Party, certifying (a) that, except as
otherwise specified, this Lease is unmodified and in full force and effect, (b)
the dates to which Basic Rent, Additional Rent and all other Monetary
Obligations have been paid, (c) that, to the knowledge of the signer of such
certificate and except as otherwise specified, no default by either Landlord or
Tenant exists hereunder, (d) such other matters as the Requesting Party may
reasonably request, and (e) if Tenant is the Responding Party that, except as
otherwise specified, there are no proceedings pending or, to the knowledge of
the signer, threatened, against Tenant before or by a court or administrative
agency which, if adversely decided, would materially and adversely affect the
financial condition and operations of Tenant. Any such statements by the
Responding Party may be relied upon by the Requesting Party, any Person whom the
Requesting Party notifies the Responding Party in its request for the
Certificate is an intended recipient or beneficiary of the Certificate, any
Lender or their assignees and by any prospective purchase or mortgagee of any of
the Leased Premises. Any certificate required under this Paragraph 25 and
delivered by Tenant shall state that, in the opinion of each person signing the
same, he has made such examination or investigation as is necessary to enable
him to express an informed opinion as to the subject matter of such certificate,
and shall briefly state the nature of such examination or investigation.

        26. Surrender. Upon the expiration or earlier termination of this Lease,
Tenant shall peaceably leave and surrender the Leased Premises to Landlord in
the same condition in which the Leased Premises was at the commencement of this
Lease, except as repaired, rebuilt, restored, altered, replaced or added to as
permitted or required by any provision of this Lease, and except for ordinary
wear and tear. Upon such surrender, Tenant shall (a) remove from the Leased
Premises all property which is owned by Tenant or third parties other than
Landlord and (b) repair any damage caused by such removal. Property not so
removed shall become the property of Landlord, and Landlord may thereafter cause
such property to be


                                      -33-

removed from the Leased Premises. The cost of removing and disposing of such
property and repairing any damage to any of the Leased Premises caused by such
removal shall be paid by Tenant to Landlord upon demand. Landlord shall not in
any manner or to any extent be obligated to reimburse Tenant for any such
property which becomes the property of Landlord pursuant to this Paragraph 26.

        27. No Merger of Title. There shall be no merger of the leasehold estate
created by this Lease with the fee estate in any of the Leased Premises by
reason of the fact that the same Person may acquire or hold or own, directly or
indirectly, (a) the leasehold estate created hereby or any part thereof or
interest therein and (b) the fee estate in any of the Leased a Premises or any
part thereof or interest therein, unless and until all Persons having any
interest in the interests described in (a) and (b) above which are sought to be
merged shall join in a written instrument effecting such merger and shall duly
record the same.

        28. Books and Records.

               (a) Tenant shall keep or shall cause Guarantor to keep adequate
records with respect to the Leased Premises and books of account with respect to
the finances and business of Tenant generally and in accordance with generally
accepted accounting principles ("GAAP") consistently applied, and shall permit
Landlord and Lender by their respective agents, accountants and attorneys, upon
reasonable notice to Tenant, to visit and inspect the Leased Premises and
examine (and make copies of) the records and books of account and to discuss the
finances and business with the officers of Tenant, at such reasonable times as
may be requested by Landlord. Upon the request of Lender or Landlord (either
telephonically or in writing), Tenant shall provide and shall cause Guarantor to
provide the requesting party with copies of any information to which such party
would be entitled in the course of a personal visit.

               (b) Tenant shall deliver to Landlord and to Lender within
ninety-five (95) days of the close of each fiscal year, annual audited financial
statements of Tenant or Guarantor prepared by nationally recognized independent
certified public accountants. Tenant shall also furnish to Landlord (i) within
fifty (50) days after the end of each of the three remaining quarters unaudited
financial statements, certified by Tenant's chief financial officer or a
financial vice president together with a copy of any compliance certificate
furnished by Tenant to its senior lender or lenders, (ii) as and when provided
to Tenant's senior lender or lenders Tenant's annual operating plan and (iii)
all filings, if any, of Form 10-K, Form 10-Q and other required flings with the
Securities and Exchange Commission pursuant to the provisions of the Securities
Exchange Act of 1934, as amended, or any other Law. All financial statements of
Tenant shall be prepared in accordance with GAAP consistently applied, except
that quarterly statements shall be subject to year-end adjustments and to the
absence of footnotes. All annual financial statements shall be accompanied by an
opinion of said accountants stating that (C) there are no qualifications as to
the scope of the audit and (D) the audit was performed in accordance with GAAP,
and the certificate of the chief financial officer or a financial vice president
of Tenant, dated within five (5) days of the delivery of such statement, stating
that (E) such Person knows of no Event of Default, or event which, upon notice
or the passage of time or both, would, become an Event of Default which has
occurred and is continuing hereunder or, if any such event has occurred and is
continuing, specifying the nature and period of existence thereof and what
action Tenant has taken or proposes to take with respect thereto and (F) except
as otherwise specified in such affidavit, that such Person has no knowledge if
any respect in which Tenant has not fulfilled all of its obligations under this
Lease which are required to be fulfilled on or prior to the date of such
affidavit.

               (c) Landlord and its agents, accountants and attorneys, shall
consider and treat on a strictly confidential basis (i) any information
contained in the books and records of Tenant, (ii) any copies of any books and
records of Tenant, and any financial statements of


                                      -34-

Tenant pursuant to Paragraph 28(b) which are delivered to or received by them.
Neither Landlord nor its agents, accountants and attorneys, shall disclose any
information contained in Tenant's books and records nor distribute copies of any
of such books and records nor Tenant's financial statements to any other
Persons without the prior written consent of the chief operating officer or the
financial vice president of Tenant.

               The restrictions contained in this Paragraph 28(c) shall not
prevent disclosure by Landlord any information that is generally available to
the public or in any of the following circumstances:

                      (i) Upon the order of any court or administrative agency
to the extent required by such order and not effectively stayed or by appeal or
otherwise;

                      (ii) Upon the request, demand or requirement of the
Securities and Exchange Commission (the "SEC") or otherwise upon the request,
demand or requirement of any other regulatory agent or authority having
Jurisdiction over such party, but subject to the consent of Tenant, which shall
not be unreasonably withheld and shall be deemed given if required by law;

                      (iii) That has been publicly disclosed by Tenant in a
press release or other public announcement of general circulation;

                      (iv) To counsel or accountants for Landlord who has agreed
to abide by the provisions of this Paragraph 28(c);

                      (v) While an Event of Default exists, in connection with
the exercise of any right or remedy under this Lease or any other related
document;

                      (vi) Independently developed by Landlord to the extent
that confidential information provided by Tenant is not used to develop such
information;

                      (vii) with respect to financial information and
information that Landlord, the SEC or its attorneys deem to be material, in any
reporting to the shareholders of Landlord or the shareholders or prospective
shareholders (whether through a registered public offering or otherwise) of
Landlord's parent company;

                      (viii) In connection with any sale, financing or
refinancing of the Leased Premises, provided that any recipient of such
information shall agree to be bound by the terms of this Paragraph 28(c);

                      (ix) From Landlord to Lender; or

                      (x) As otherwise required by Law.

        29. Determination of Value.

               (a) Whenever a determination of Fair Market Value is required
pursuant to any provision of this Lease, such Fair Market Value shall be
determined in accordance with the following procedure:

                      (i) Landlord and Tenant shall endeavor to agree upon such
Fair Market Value within thirty (30) days after the date (the "Fair Market Value
Date") on which (A) Tenant provides Landlord with notice of its intention to
terminate this Lease and purchase the Leased Premises pursuant to Paragraph 18,
(B) Landlord provides Tenant with notice of its


                                      -35-

intention to redetermine Fair Market Value pursuant to Paragraph 20(c), (C)
Tenant provides Landlord with an Intended Assignment Notice pursuant to
Paragraph 21(a)(iii), (D) Landlord provides Tenant with notice of Landlord's
intention to require Tenant to make an offer to purchase the Leased Premises
pursuant to Paragraph 23(a)(iii), or (E) Tenant provides Landlord with notice
pursuant to Paragraph 38(a) of its intention to exercise its option to purchase
the Leased Premises. Upon reaching such agreement, the parties shall execute an
agreement setting forth the amount of such Fair Market Value.

                      (ii) If the parties shall not have signed such agreement
within thirty (30) days after the Fair Market Value Date, Tenant shall within
fifty (50) days after the Fair Market Value Date select an appraiser and notify
Landlord in writing of the name, address and qualifications of such appraiser.
Within twenty (20) days following Landlord's receipt of Tenant's notice of the
appraiser selected by Tenant, Landlord shall select an appraiser and notify
Tenant of the name, address and qualifications of such appraiser. Such two
appraisers shall endeavor to agree upon Fair Market Value based on a written
appraisal made by each of them as of the Relevant Date (and given to Landlord by
Tenant). If such two appraisers shall agree upon a Fair Market Value, the amount
of such Fair Market Value as so agreed shall be binding and conclusive.

                      (iii) If such two appraisers shall be unable to agree upon
a Fair Market Value within twenty (20) days after the selection of an appraiser
by Landlord, then such appraisers shall advise Landlord and Tenant of their
respective determination of Fair Market value and shall select a third appraiser
to make the determination of Fair Market Value. The selection of the third
appraiser shall be binding and conclusive upon Landlord and Tenant.

                      (iv) If such two appraisers shall be unable to agree upon
the designation of a third appraiser within ten (10) days after the expiration
of the twenty (20) day period referred to in clause (iii) above, or if such
third appraiser does not make a determination of Fair Market Value within twenty
(20) days after his selection, then such third appraiser or a substituted third
appraiser, as applicable, shall, at the request of either party hereto (with
respect to the other party), be appointed by the President or Chairman of the
American Arbitration Association in New York, New York. The determination of
Fair Market Value made by the third appraiser appointed pursuant hereto shall be
made within twenty (20) days after such appointment.

                      (v) If a third appraiser is selected, Fair Market Value
shall be the average of the determination of Fair Market Value made by the third
appraiser and the determination of Fair Market Value made by the appraiser
(selected pursuant to Paragraph 29(a)(ii) hereof) whose determination of Fair
Market Value is nearest to that of the third appraiser. Such average shall be
binding and conclusive upon Landlord and Tenant.

                      (vi) All appraisers selected or appointed pursuant to this
Paragraph 29(a) shall (A) be independent qualified MAI appraisers (B) have no
right, power or authority to alter or modify the provisions of this Lease, (C)
utilize the definition of Fair Market Value hereinabove set forth above, and (D)
be registered in the State if the State provides for or requires such
registration.

                      (vii) The Cost Of the procedure described in this
Paragraph 29(a) above shall be borne entirely by Tenant.

               (b) If, by virtue of any delay, Fair Market Value is not
determined by the expiration or termination of the then current Term, then the
date on which the Term would otherwise expire or terminate shall be extended
with respect to the Leased Premises to the date


                                      -36-

specified for termination in the particular provision of this Lease pursuant to
which the determination of Fair Market Value is being made.

               (c) "Fair Market Value" of the Leased Premises shall mean (i) for
all purposes except for the determination of the Default Termination Amount, the
fair market value of the Leased Premises as of the Relevant Date as affected and
encumbered by this Lease, without any assumption that the Term will or will not
be extended for any of the extension periods provided for herein, or (ii) for
the purpose of a determination of the Default Termination Amount, the fair
market value of the Leased Premises as of the Relevant Date as affected and
encumbered by this Lease and assuming that the Term has been extended for all
extension periods provided for herein. For purposes of determining Fair Market
Value under clause (i) of the foregoing sentence, the appraisers shall:

                      (I) determine the Basic Rent payable hereunder during the
remainder of the Initial Term or then effective Renewal Term, assuming that CPI
increases during the remainder of the Initial Term will occur at the same
average rate of increase as during the portion of the Term already then past;
and then

                      (II) discount such Basic Rent so as to represent a present
value, using a discount rate intended to represent the market capitalization
rate applicable to long-term lease obligations of the Tenant (based on the
credit standing of the Tenant), as affected by the location of the Leased
Premises; and then

                      (III) determine the assumed future replacement cost of the
Improvements at the end of the Initial Term, using Landlord's Share of Project
Costs and assuming increases therein using the Means Construction Cost Index
(the "Means Index") for the portion of the Term already past and increases in
the Means Index which occur at the same average rate of increase thereafter
until the end of the Term; and then

                      (IV) subtract from such assumed future replacement cost
physical depreciation and functional obsolescence (but not external
obsolescence) applicable to the Improvements as of the end of the Term; and then

                      (V) discount the result obtained under the foregoing
clause (IV) so as to represent a present value, using a discount rate based on
the market capitalization rate for properties similar to the Leased Premises in
the location of the Leased Premises; and then

                      (VI) add together the present values determined under the
foregoing clause (II) and (V).

        30. Non-Recourse as to Landlord. Anything contained herein to the
contrary notwithstanding, any claim based on or in respect of any liability of
Landlord under this Lease shall be enforced only against the Leased Premises and
not against any other assets, properties or funds of (a) Landlord, (b) any
director, officer, general partner, limited partner, employee or agent of
Landlord, or any general partner of Landlord, any of its general partners or
shareholders,(or any legal representative, heir, estate, successor or assign of
any thereof), (c) any predecessor or successor partnership or corporation (or
other entity) of Landlord, or any of its general partners, either directly or
through Landlord or its general partners or any predecessor or successor
partnership or corporation or their shareholders, officers, directors, employees
or agents (or other entity), or (d) any other Person (including Carey Property
Advisors, Carey Fiduciary Advisors, Inc., W.P. Carey & Co. LLC, W.P. Carey
Incorporated and any Person affiliated with any of the foregoing, or any
director, officer, employee or agent of any thereof).


                                      -37-

        31. Financing. If Landlord desires to obtain or refinance any Loan,
Tenant, except as otherwise provided in Paragraph 7(a)(i), shall, at no cost to
Tenant, negotiate in good faith with Landlord concerning any request made by any
Lender or proposed Lender for changes or modifications in this Lease. In
particular, Tenant agrees, upon request of Landlord, to supply any such Lender
with such notices and information as Tenant is required to give to Landlord
hereunder and to extend the rights of Landlord hereunder to any such Lender and
to consent to such financing if such consent is requested by such Lender. Tenant
shall provide any other consent or statement and shall execute any and all other
documents that such Lender reasonably requires in connection with such
financing, including a Certificate of No Default with respect to its then
existing credit agreements, any environmental indemnity agreement which shall
contain substantially similar provisions to the applicable provisions in this
Lease and any subordination, non-disturbance and attornment agreement, so long
as in any such case the same do not materially adversely affect any right,
benefit or privilege of Tenant under this Lease or materially increase Tenant's
obligations under this Lease. Such subordination, non-disturbance and attornment
agreement may require Tenant to confirm that (a) Lender and its assigns will not
be liable for any misrepresentation, act or omission of Landlord and (b) Lender
and its assigns will not be subject to any counterclaim, demand or offsets which
Tenant may have against Landlord.

        32. Subordination. This Lease and Tenant's interest hereunder shall be
subordinate to any Mortgage or other security instrument hereafter placed upon
the Leased Premises by Landlord, and to any and all advances made or to be made
thereunder, to the interest thereon, and all renewals, replacements and
extensions thereof, provided that any such Mortgage or other security instrument
(or a separate instrument in recordable form duly executed by the holder of any
such Mortgage or other security instrument and delivered to Tenant) shall
provide, in form and substance reasonably satisfactory to Tenant, for the
recognition of this Lease and all Tenant's rights hereunder by any purchaser at
foreclosure or acceptance of a deed in lieu thereof unless and until an Event of
Default exists, and that the Lender recognizes and agrees to be bound by the
provisions of Paragraphs 16, 17 and 19 of this Lease, and, with respect to any
Loan, that the Lender agrees to release the Mortgage insofar as it encumbers
Abandonment Premises under Paragraph 36 hereof upon such terms and conditions as
may be agreed to between Lender and Landlord, but which shall not require a
payment to Lender in excess of the Abandonment Offer Amount or otherwise impose
conditions upon such release not within the control of Landlord.

        33. Tax Treatment; Reporting. Landlord and Tenant each acknowledge that
each shall treat this transaction as a true lease for state law purposes and
shall report this transaction as a Lease for Federal income tax purposes. For
Federal income tax purposes each shall report this Lease as a true lease with
Landlord as the owner of the Leased Premises and Equipment and Tenant as the
lessee of such Leased Premises and Equipment including: (1) treating Landlord
as, the owner of the property eligible to claim depreciation deductions under
Section 167 or 168 of the Internal Revenue Code of 1986 (the "Code") with
respect to the Leased Premises and Equipment, (2) Tenant reporting its Rent
payments as business expense under Section 162 of the Code, and (3) Landlord
reporting the Rent payments as rental income.

        34. Financing Major Alterations.

               (a) Should Tenant, during the Term of this Lease, desire to make
Alterations to the Leased Premises which are not readily removable without
causing material damage to the Leased Premises and which will cost in excess of
$500,000 ("Major Alterations"), Tenant shall, prior to the commencement of
construction of such Major Alterations, offer by written notice to Landlord (a
"Payment Offer") to accept payment from Landlord for the costs (the "Alteration
Cost") thereof, to wit: cost of labor and materials, financing fees, legal fees,
survey, title insurance and other normal and customary loan or construction
costs.


                                      -38-

               (b) Should Landlord accept Tenant's offer, which acceptance shall
be made in writing within sixty (60) days after receipt by Landlord of such
offer, Landlord and Tenant shall enter into good faith negotiations regarding
the execution and delivery of a written agreement of modification of this Lease,
which agreement shall provide for the following:

                      (i) payment by Landlord to Tenant of the Alteration Cost
within one hundred twenty (120) days of the date of Landlord's acceptance of
such Payment Offer, or in installment payments as agreed, or on the date of
completion of the Major Alterations, whichever shall be the later;

                      (ii) an increase in the annual Basic Rent payable during
the Amortization Period (as hereinafter defined) to an amount sufficient to
amortize the Alteration Costs ("Total Financing") over a period (the
"Amortization Period") which shall be the remainder of the then current Term
and, if Tenant so elects, any additional extension periods provided for herein
(so long as Tenant shall confirm any such extension periods included in the
Amortization Period by a written waiver of its right to give notice of its
intention not to renew this Lease prior to the expiration of such extension
periods), at such rate of interest and upon such other terms as shall be agreed
upon between Landlord and Tenant, but which shall be no less favorable than the
prevailing interest rate and terms for unsecured loans in a principal amount
equal to the Total Financing for borrowers with credit ratings equivalent to
that of Tenant's at that time;

                      (iii) provide a rate of return to Landlord on Landlord's
equity investment in the Leased Premises equal to that enjoyed by Landlord
hereunder immediately prior to such proposed increase in Basic Rent; and

                      (iv) such other changes and amendments to this Lease as
may be necessary and appropriate in view of such payment of the Alteration Cost
by Landlord to Tenant.

Tenant shall pay all Costs incurred by Landlord in connection with any such
modification to this Lease and such financing, including closing costs,
brokerage fees, taxes, recording charges and legal fees and expenses.

               (c) To the extent that the terms of the Mortgage or any other
document encumbering any of the Leased Premises shall require the consent of
Lender and/or the holder or holders of any encumbrance on any of the Leased
Premises (the "Encumbrancers") to the addition or construction of any Major
Alterations or to the financing thereof by Landlord, the rights and obligations
of Landlord and Tenant under Paragraph 12 and this Paragraph 34 are expressly
conditioned upon Tenant's obtaining, prior to the commencement of any
construction, the Encumbrances' written consent to such construction and to
Landlords obtaining, in the event Landlord has accepted Tenant's offer to accept
payment for the Major Alterations, the Encumbrancers' written consent to such
financing.

               (d) Should Tenant's offer to accept payment for the Major
Alterations not be accepted by Landlord within said sixty (60) day period, or
should Landlord and Tenant be unable in good faith to agree upon the terms of
the modification of this Lease, Tenant shall, subject to the provisions of
Paragraph 13 of this Lease, have the right to construct the Major Alterations at
Tenant's sole cost and expense. In any event, the construction of the Major
Alterations shall be performed in accordance with the provisions of Paragraph 12
hereof and the Major Alterations shall be the property of Landlord and part of
the Leased Premises subject to this Lease.

               (e) Nothing contained in this Paragraph 34 shall be construed to
modify Paragraph 13 hereof, and the provisions of Paragraph 12 and Paragraph 13
shall apply to


                                      -39-

all Major Alterations made or constructed hereunder provided, however, that
Landlord's consent shall be required for all Major Alterations.

        35. INTENTIONALLY DELETED.

        36. Economic Abandonment. Provided that an Event of Default does not
exist, Tenant shall have the right at any time during the Term hereof to
terminate this Lease with respect to the Leased Premises (the "Abandonment
Premises") that Tenant shall have determined that the Abandonment Premises shall
not be used for at least seven (7) years in its business operations. In the
event Tenant elects to exercise such right, Tenant shall give notice (the
"Abandonment Notice") to Landlord (with a copy to Lender) of its intention so to
terminate this Lease as to the Abandonment Premises, no later than nine (9)
months prior to the date (the "Abandonment Date") of such intended termination,
which notice shall specify the Abandonment Date and shall contain (a) an
irrevocable offer of Tenant to terminate this Lease as to the Abandonment
Premises on the Abandonment Date for the Abandonment Offer Amount and (b) a
certificate of Tenant (i) stating that the Abandonment Premises are no longer
economic for Tenant's continued use and occupancy in its business operations,
(ii) specifying in reasonable detail the reasons there for and (iii) certifying
that Tenant then intends forever to abandon its operations at the Abandonment
Premises, which certificate shall be conclusively binding upon Landlord and
Tenant, and (c) a resolution of the Board of Directors of Tenant authorizing
such notice.

        Tenant may exercise its rights under this Paragraph 36 only one time.

        The Abandonment Offer Amount shall be the sum of (A)(i) 110% of (ii)
Landlord's Share of Project Costs with respect to the Abandonment Premises,
reduced by the Acquisition Fee, and (B) any Prepayment Premium which Landlord
will be required to pay in prepayment of any Loan with proceeds of the
Abandonment Offer Amount. Promptly upon the delivery of such notice from Tenant
to Landlord, Landlord and Tenant shall commence to determine such Fair Market
Value in accordance with the procedure specified in Paragraph 29.

        Landlord shall accept or reject such offer by notice to Tenant given not
later than ninety (90) days prior to the Abandonment Date. If Landlord shall
reject such offer, which rejection shall not be valid unless accompanied by the
written consent of Lender thereto, then upon (i) payment of all Rent and any
other sums due and unpaid hereunder as of the Abandonment Date and (ii)
compliance by Tenant with all other obligations and liabilities under this Lease
which have arisen on or prior to the Abandonment Date, this Lease shall
terminate as to the Abandonment Premises on the Abandonment Date and Tenant
shall immediately vacate and have no further right, title or interest in or to
any of the Abandonment Premises.

        Unless Landlord shall have rejected such offer by the foregoing notice
to Tenant not later than the ninetieth (90th) day prior to the Abandonment Date,
Landlord shall be conclusively presumed to have accepted such offer. If such
offer is accepted by Landlord, Tenant shall pay to Landlord the Abandonment
Offer Amount on the Abandonment Date and, provided an Event of Default does not
then exist hereunder, at the request of Tenant, Landlord shall convey to Tenant
the Abandonment Premises in accordance with the provisions of Paragraph 20.

        Landlord shall have the right, at Landlord's sole option, to treat any
vacating or abandonment of the Abandonment Premises which is prohibited pursuant
to Paragraph 22(a) hereof as constituting an election by Tenant of its rights
under this Paragraph 36 and as an irrevocable offer of Tenant to purchase the
Abandonment Premises at the price and upon the terms hereinabove more
specifically provided.

        37. Option to Purchase.


                                      -40-

               (a) Subject to the consent of the ground lessor under the
Railroad Ground Lease, Landlord does hereby give and grant to Tenant the option
to purchase the entire Leased Premises (i) for a Purchase Price (the "Purchase
Price") equal to the Offer Amount and (ii) on any date (the "Option Purchase
Date") during the one year period that commences on June 28, 2006 (the "Option
Period") which is mutually agreeable to Landlord and Tenant, but in any event
not sooner than thirty (30) days after the Fair Market Value Date. If Tenant
intends to exercise such option, Tenant shall give written notice to Landlord to
such effect not later than December 28, 2005. Promptly upon receipt of such
notice, by Landlord, the parties shall commence to determine Fair Market Value.

               (b) If Tenant shall exercise the foregoing option to purchase the
Leased Premises, on the later to occur of (i) the Option Purchase Date or (ii)
the date when Tenant has paid the Offer Amount and has satisfied all other
Monetary Obligations, Landlord shall convey the Leased Premises to Tenant in
accordance with Paragraph 20 hereof; provided, that if an Event of Default has
occurred and is continuing on the Option Purchase Date, Landlord, at its sole
option, may terminate Tenant's option to purchase hereunder. If this Lease shall
terminate for any reason prior to the date originally fixed herein for the
expiration of the Term, or if Tenant shall fail to give the aforesaid notice of
intention to purchase, time being of the essence, the option provided in this
Paragraph 38 and any exercise thereof by Tenant shall cease and terminate and
shall be null and void.

               (c) Landlord shall use all reasonable efforts to obtain the
agreement of the Lender that the Loan that shall encumber the Leased Premises
during the Option Period (the "Assumable Loan") may be assumed by the Tenant as
partial payment of the Offer Amount; provided that (i) Landlord shall have no
obligation to make or to be obligated to make any payment to Lender as a
condition to requesting or obtaining such consent and (ii) Tenant shall agree
(A) to be personally liable and, if requested by Lender, that Guarantor will be
personally liable for repayment and performance of the Assumable Loan and (B)
that the Lease and Guaranty shall remain in full force and effect during the
term of the Assumable Loan.

        38. Right of First Refusal.

               (a) Except as otherwise provided in Paragraph 38(e), and provided
an Event of Default does not then exist, if Landlord shall enter into a contract
(the "Sale Contract") for the sale of the Leased Premises with a third Party
Purchaser, which Sale Contract shall be conditioned upon Tenant's failure to
exercise its right under this Paragraph 38(a), then promptly following the
execution thereof, Landlord shall give written notice to Tenant, together with a
copy of the executed Sale Contract.

               For a period of fifteen (15) days following receipt of such
notice, Tenant shall have the right and option, exercisable by written notice to
Landlord given within said fifteen (15) day period, to elect to purchase the
Leased Premises at the purchase price and upon all the terms and conditions set
forth in the Sale Contract except that no contingencies contained in such Sale
Contract as to environmental assessments, engineering studies, inspection of the
Leased Premises, sale of other property, state of the title to or encumbrances
on the Leased Premises, or any other condition or contingency to the Third Party
Purchaser's obligation to purchase the Leased Premises which pertains to the
condition of the Leased Premises, shall apply to Tenant's obligation to purchase
the Leased Premises under this Paragraph 38, and Tenant shall be obligated to
purchase the Leased Premises without any such condition or contingency.

               If at the expiration of the aforesaid fifteen (15) day period
Tenant shall have failed to exercise the aforesaid option, Landlord may sell the
Leased Premises to such Third Party Purchaser upon the terms set forth in such
contract.


                                      -41-

               (b) Except as otherwise specifically provided herein, the closing
date for any purchase of the Leased Premises by Tenant pursuant to this
Paragraph 38 shall be the earlier to occur of (i) ninety (90) days after the
date of Tenant's notice to Landlord of its intention to purchase the Leased
Premises upon the terms of the Sale Contract or (ii) the closing date provided
in such Sale Contract. At such closing Landlord shall convey the Leased Premises
to Tenant in accordance with, and Tenant shall pay to Landlord the purchase
price and other consideration set forth in, the applicable Sale Contract.

               (c) Tenant shall have the right to exercise the foregoing right
of first refusal upon (i) each proposed sale of the Leased Premises prior to
June 28, 2006 and (ii) notwithstanding the lack of exercise by Tenant in (i)
above, one (1) time on or after June 28, 2006; provided, that if, following
compliance with the procedure described in Paragraph 38(a), a Third Party
Purchaser does not purchase the Leased Premises, such event shall not count as
an exercise of Tenant's right of first refusal. Notwithstanding anything to the
contrary, if Tenant falls to exercise the right of first refusal granted
pursuant to this Paragraph (c), subsection (ii), on or after June 28, 2006 and
the sale to the Third Party Purchaser is consummated, or if the Term of this
Lease shall terminate or expire, such rights of first refusal granted pursuant
to this Paragraph 38 shall terminate and be null and void and of no further
force and effect.

               (d) If Tenant does not exercise its right of first refusal to
purchase the Leased Premises and the Leased Premises are transferred to a Third
Party Purchaser, Tenant will attorn to any Third Party Purchaser as Landlord so
long as such Third Party Purchaser and Landlord notify Tenant in writing of such
transfer. At the request of Landlord and at not cost or expense to Tenant,
Tenant will execute such documents confirming the agreement referred to above
and such other agreements as Landlord may reasonably request, provided that such
agreements do not increase the liabilities and obligations of Tenant hereunder.

               (e) The provisions of Paragraph 38 shall not apply to or prohibit
(i) any mortgaging, subjection to deed of trust or other hypothecation of
Landlord's interest in the Leased Premises, (ii) any sale of the Leased Premises
pursuant to a private power of sale under or judicial foreclosure of any
Mortgage or other security instrument or device to which Landlord's interest in
the Leased Premises is now or hereafter subject, (iii) any transfer of
Landlord's interest in the Leased Premises to a Lender, beneficiary under deed
of trust or other holder of a security interest therein by deed in lieu of
foreclosure, (iv) any transfer of the Leased Premises to any governmental or
quasi-governmental agency with power of condemnation, (v) any transfer of the
Leased Premises to any affiliate of Landlord or to any entity sponsored by W.P.
Carey & Co., LLC, W.P. Carey Incorporated or either of their successors, (vi)
any transfer of the interest of one of the Persons that comprise Landlord to the
other Person that comprises Landlord, (vii) any sale to any Person to whom
either of the parents of the Landlord sells all or substantially all of its
assets, or (viii) any transfer of the Leased Premises to any of the successors
or assigns of any of the Persons referred to in the foregoing clauses (ii) and
(iii).

        39. Miscellaneous.

               (a) The paragraph headings in this Lease are used only for
convenience in finding the subject matters and are not part of this Lease or to
be used in determining the intent of the parties or otherwise interpreting this
Lease.

               (b) As used in this Lease, the singular shall include the plural
and any gender shall include all genders as the context requires and the
following words and phrases shall have the following meanings: (i) "including"
shall mean "including without limitation"; (ii) "provisions" shall mean
"provisions, terms, agreements, covenants and/or conditions"; (iii) "lien"
shall mean "lien, charge, encumbrance, title retention agreement, pledge,
security interest, mortgage and/or deed of trust"; (iv) "obligation" shall mean
"obligation, duty, agreement,


                                      -42-

liability, covenant and/or condition"; (v) "any of the Leased Premises" shall
mean "the Leased Premises or any part thereof or interest therein"; (vi) "any of
the Land" shall mean "the Land or any part thereof or interest therein"; (vii)
"any of the Improvements" shall mean "the Improvements or any part thereof or
interest therein"; (viii) "any of the Equipment" shall mean "the Equipment or
any part thereof or interest therein"; and (ix) "any of the Adjoining Property"
shall mean "the Adjoining Property or any part thereof or interest therein".

               (c) Any act which Landlord is permitted to perform under this
Lease may be performed at any time and from time to time by Landlord or any
person or entity designated by Landlord. Each appointment of Landlord as
attorney-in-fact for Tenant hereunder is irrevocable and coupled with an
interest. Except as otherwise specifically provided herein, Landlord shall have
the right, at its sole option, to withhold or delay its consent whenever such
consent is required under this Lease for any reason or no reason. Time is of the
essence with respect to the performance by Tenant of its obligations under this
Lease.

               (d) Landlord shall in no event be construed for any purpose to
be a partner, joint venturer or associate of Tenant or of any subtenant,
operator, concessionaire or licensee of Tenant with respect to any of the
Leased Premises or otherwise in the conduct of their respective businesses.

               (e) This Lease and any documents which may be executed by Tenant
on or about the effective date hereof at Landlord's request constitute the
entire agreement between the parties and supersede all prior understandings and
agreements, whether written or oral, between the parties hereto relating to the
Leased Premises and the transactions provided for herein. Landlord and Tenant
are business entities having substantial experience with the subject matter of
this Lease and have each fully participated in the negotiation and drafting of
this Lease. Accordingly, this Lease shall be construed without regard to the
rule and ambiguities in a document are to be construed against the drafter.

               (f) This Lease may be modified, amended, discharged or waived
only by an agreement in writing signed by the party against whom enforcement of
any such modification, amendment, discharge or waiver is sought.

               (g) The covenants of this Lease shall run with the land and bind
Tenant, its successors and assigns and all present and subsequent encumbrancers
and subtenants of any of the Leased Premises, and shall inure to the benefit of
Landlord, its successors and assigns. If there is more than one Tenant, the
obligations of each shall be joint and several.

               (h) Notwithstanding any provision in this Lease to the contrary,
all Surviving Obligations of Tenant shall survive the expiration or termination
of this Lease with respect to the Leased Premises.

               (i) If any one or more of the provisions contained in this Lease
shall for any reason be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any
other provision of this Lease, but this Lease shall be construed as if such
invalid, illegal or unenforceable provision had never been contained herein.

               (j) All exhibits attached hereto are incorporated herein as if
fully set forth.

               (k) This Lease shall be governed by and construed and enforced in
accordance with the Laws of the State.


                                      -43-

               IN WITNESS THEREOF, Landlord and Tenant have caused this Lease to
be duly executed under seal as of the day and year first above written.

                              LANDLORD:

                              DELMO (PA) QRS 11-36,
                              a Pennsylvania business trust

                              By: /s/ GORDON J. WHITING
                                 ----------------------------------
                              Title: Trustee
                                    -------------------------------

                              DELMO (PA) QRS 12-10,
                              a Pennsylvania business trust

                              By: /s/ GORDON J. WHITING
                                 ----------------------------------
                              Title: Trustee
                                    -------------------------------


                              TENANT:

                              DEL MONTE CORPORATION,
                              a New York corporation

                              By:
                                 ----------------------------------
                              Title:
                                    -------------------------------


                                      -1-



               IN WITNESS THEREOF, Landlord and Tenant have caused this Lease to
be duly executed under seal as of the day and year first above written.

                              LANDLORD

                              DELMO (PA) QRS 11-36,
                              a Pennsylvania business trust

                              By:
                                 ----------------------------------
                              Title:
                                    -------------------------------

                              DELMO (PA) QRS 12-10,
                              a Pennsylvania business trust

                              By:
                                 ----------------------------------
                              Title:
                                    -------------------------------


                              TENANT:

                              DEL MONTE CORPORATION,
                              a New York corporation

                              By: /s/ THOMAS E. GIBBONS
                                 ----------------------------------
                              Title: SENIOR VICE PRESIDENT & TREASURER
                                    -------------------------------


                                      -1-

EX-10.18

                                                                   EXHIBIT 10.18


================================================================================


                       AMENDED AND RESTATED MASTER LEASE

                    (Del Monte Corporation Trust No. 1998-A)

                           Dated as of April 5, 1999


                                    between


            STATE STREET BANK AND TRUST COMPANY OF CALIFORNIA, N.A.,
                 not in its individual capacity, but solely as
                              Certificate trustee,
                                   as Lessor,


                                      and


                        DEL MONTE CORPORATION, as Lessee


================================================================================

THIS MASTER LEASE HAS BEEN EXECUTED IN _____ MANUALLY EXECUTED SERIALLY NUMBERED
COUNTERPARTS OF WHICH THIS IS COUNTERPART NUMBER ___. TO THE EXTENT, IF ANY,
THAT THIS MASTER LEASE CONSTITUTES CHATTEL PAPER (AS SUCH TERM IS DEFINED IN THE
UNIFORM COMMERCIAL CODE AS IN EFFECT IN ANY APPLICABLE JURISDICTION), NO
SECURITY INTEREST IN THIS MASTER LEASE MAY BE CREATED THROUGH THE TRANSFER OR
POSSESSION OF ANY COUNTERPART HEREOF OTHER THAN COUNTERPART "NUMBER 1", WHICH
SHALL BE IDENTIFIED AS THE COUNTERPART CONTAINING THE RECEIPT THEREFOR EXECUTED
BY CERTIFICATE TRUSTEE ON OR FOLLOWING THE SIGNATURE PAGE THEREOF.

SEE SECTION 23.20 FOR THE NATURE OF THIS TRANSACTION AND INTENTION OF THE
PARTIES.




                               TABLE OF CONTENTS
                                    (Lease)



                                                                            Page
                                                                         
ARTICLE I - DEFINITIONS; LESSEE LIABILITY

ARTICLE II - LEASE OF PREMISES; LEASE TERM
     SECTION 2.1.   Acceptance and Lease of Sites..........................    2
     SECTION 2.2.   Acceptance Procedure...................................    2
     SECTION 2.3.   Term...................................................    3

ARTICLE III - OTHER PROPERTY

ARTICLE IV - RENT
     SECTION 4.1.   Basic Rent.............................................    3
     SECTION 4.2.   Supplemental Rent......................................    4
     SECTION 4.3.   Method and Amount of Payment...........................    4
     SECTION 4.4.   Late Payment...........................................    4

ARTICLE V - NET LEASE

ARTICLE VI - UTILITY CHARGES

ARTICLE VII - CONDITION AND USE OF PREMISES
     SECTION 7.1.   Waivers................................................

ARTICLE VIII - NO LESSOR CONSENT OR LIABILITY

ARTICLE IX - MAINTENANCE AND REPAIR; ALTERATIONS AND ADDITIONS
     SECTION 9.1.   Maintenance and Repair;
               Compliance With Law.........................................    9
     SECTION 9.2.   Improvements and Alterations...........................    9
     SECTION 9.3.   Title to Alterations...................................   11
     SECTION 9.4.   Maintenance and Repair Reports.........................   12
     SECTION 9.5.   Permitted Contests.....................................   12
     SECTION 9.6.   Liens..................................................   13

ARTICLE X - USE

ARTICLE XI - INSURANCE
     SECTION 11.1.  Required Coverages.....................................   14
     SECTION 11.2.  Delivery of Insurance Certificates.....................   16

ARTICLE XII
ASSIGNMENT AND SUBLEASING


                                       ii



                                                                       
ARTICLE XIII - LOSS, DESTRUCTION, CONDEMNATION OR DAMAGE
     SECTION 13.1.  Event of Loss; Condemnation or Casualty...............    17
     SECTION 13.2.  Application of Payments Relating to an Event
               of Loss....................................................    18
     SECTION 13.3.  Application of Certain Payments Relating to a
               Condemnation...............................................    18
     SECTION 13.4.  Casualty..............................................    18
     SECTION 13.5.  Negotiations..........................................    19
     SECTION 13.6.  No Rent Abatement.....................................    19
     SECTION 13.7.  Notice of Environmental Matters.......................    19

ARTICLE XIV - NON-INTERFERENCE
     SECTION 14.1.  Non-Interference......................................    20
     SECTION 14.2.  Certain Duties and Responsibilities
               of Lessor..................................................    20

ARTICLE XV - INSPECTION AND REPORTS
     SECTION 15.1.  Inspection............................................    21
     SECTION 15.2.  Reports...............................................    21

ARTICLE XVI - OWNERSHIP, GRANT OF LIEN AND FURTHER ASSURANCES
     SECTION 16.1.  Grant of Security Interest............................    21
     SECTION 16.2.  Attorney-in-Fact......................................    22

ARTICLE XVII - LEASE EVENTS OF DEFAULT

ARTICLE XVIII - ENFORCEMENT
     SECTION 18.1.  Remedies..............................................    25
     SECTION 18.2.  Proceeds of Sale; Deficiency..........................    30
     SECTION 18.3.  Mortgage and Lease Supplement Remedies................    30
     SECTION 18.4.  Remedies Cumulative; No Waiver; Consents..............    30
     SECTION 18.5.  Limitation of Recourse Liability......................    31

ARTICLE XIX - RIGHT TO PERFORM FOR LESSEE
     SECTION 19.1.  Right to Cure.........................................    31
     SECTION 19.2.  Grants and Releases of Easements......................    31
     SECTION 19.3.  Power of Attorney.....................................    32

ARTICLE XX - EARLY TERMINATION OPTION AND OBLIGATION TO PURCHASE
     SECTION 20.1.  Early Termination Option..............................    33
     SECTION 20.2.  Required Purchase.....................................    34

ARTICLE XXI - END OF TERM OPTIONS
     SECTION 21.1.  End of Term Options...................................    34
     SECTION 21.2.  Election of Options...................................    35
     SECTION 21.3.  Renewal Options; Extension Options....................    35


                                      iii



                                                                     
ARTICLE XXII - SALE OPTION
     SECTION 22.1.  Sale Option Procedures..............................   36
     SECTION 22.2.  Sale................................................   37
     SECTION 22.3.  Application of Sale Proceeds and Recourse Payments..   38
     SECTION 22.4.  Appraisal...........................................   39

ARTICLE XXIII - MISCELLANEOUS
     SECTION 23.1.  Binding Effect; Successors and Assigns; Survival....   39
     SECTION 23.2.  Severability........................................   39
     SECTION 23.3.  Notices.............................................   40
     SECTION 23.4.  Amendment; Complete Agreements......................   40
     SECTION 23.5.  Headings............................................   40
     SECTION 23.6.  Original Lease......................................   40
     SECTION 23.7.  GOVERNING LAW.......................................   41
     SECTION 23.8.  RESERVED............................................   41
     SECTION 23.9.  Liability of Lessor Limited.........................   41
     SECTION 23.10. Estoppel Certificates...............................   42
     SECTION 23.11. No Joint Venture....................................   42
     SECTION 23.12. No Accord and Satisfaction..........................   42
     SECTION 23.13. No Merger...........................................   43
     SECTION 23.14. Successor Lessor....................................   43
     SECTION 23.15. Survival............................................   43
     SECTION 23.16. Transfer of Premises................................   43
     SECTION 23.17. Enforcement of Certain Warranties...................   44
     SECTION 23.18. Security Interest in Funds..........................   44
     SECTION 23.19. Recording of Lease Supplements......................   45
     SECTION 23.20. Nature of Transaction...............................   45

EXHIBIT A-1 - Form of Lease Supplement (California)
EXHIBIT A-2 - Form of Lease Supplement (Indiana)


      THIS AMENDED AND RESTATED MASTER LEASE, dated as of April 5, 1999 (as
amended, supplemented, or otherwise modified from time to time, this "Lease"),
is between STATE STREET BANK AND TRUST COMPANY OF CALIFORNIA, N.A., a national
banking association, not in its individual capacity, except as expressly stated
herein, but solely as Certificate Trustee under the Trust Agreement, as Lessor
("Lessor"), and DEL MONTE CORPORATION, as Lessee ("Lessee").

                              W I T N E S S E T H:

      A.    Lessee desired to enter into the Overall Transaction for the
purpose of financing the acquisition of a fee interest in certain of the Sites
and the construction on the Sites of the Financed Improvements.

      B.    Subject to the terms and conditions set forth in the Operative
Documents, (i) Lessor has purchased the Hanford and Kingsburg Sites and has
entered into the Ground Lease pursuant to which Lessee has leased the Modesto
Site to Lessor, using Advances funded by the Participants; (ii) Lessor will
purchase on the Site Acquisition Date the Plymouth Site from one or more third
parties designated by Lessee on the Site Acquisition Date, using Advances
funded by the Participants; (iii) during the Construction Period, Construction
Agent, using Advances funded by the Participants, will construct on the Sites
the Financed Improvements on behalf of Lessor, and (iv) pursuant to this Lease,
Lessor will lease the Sites (or in the case of the Modesto Site, sublease such
Site) and the Financed Improvements to Lessee, and Lessee will lease such Sites
(or in the case of the Modesto Site, sublease such Site) and Financed
Improvements from Lessor.

      C.    This Lease is intended to amend and completely restate and
supersede the Master Lease dated as of November 19, 1998, by and between Lessor
and Lessee, as amended to the date hereof (the "ORIGINAL MASTER LEASE").

      NOW, THEREFORE, in consideration of the mutual agreements herein
contained and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto, intending to
be legally bound hereby, hereby agree as follows:

                                   ARTICLE I
                         DEFINITIONS; LESSEE LIABILITY

      For all purposes hereof, the capitalized terms used herein and not
otherwise defined shall have the meanings assigned thereto in Appendix 1 to
that certain Amended and Restated Participation Agreement dated as of even date
herewith, among Lessee, Guarantor, Lessor, Agent, and the Participants
identified therein (the "Participation Agreement"). Except as specially
provided for at Section 18.5 hereof, all obligations imposed on the "Lessee" in
this Lease shall be the full recourse liability of Lessee. Upon the effective
date of the Participation Agreement, this Lease will amend and completely
restate and supersede the Original Master Lease.


                                   ARTICLE II
                         LEASE OF PREMISES; LEASE TERM

      SECTION 2.1. Acceptance and Lease of Sites. Lessor, subject to the
satisfaction or waiver of the conditions set forth in Article III of the
Participation Agreement, hereby agrees to accept delivery on each Site
Acquisition Date of fee title to each Site (or in the case of the Modesto Site,
a leasehold interest) to be delivered on such Site Acquisition Date and of the
Financed Improvements to be constructed thereon pursuant to the terms of the
Construction Agency Agreement and to lease all of Lessor's interest in such
Site and Financed Improvements to Lessee hereunder, and Lessee hereby agrees,
expressly for the direct benefit of Lessor, to lease from Lessor for the Site
Term applicable to such Site, Lessor's interest in such Site and such Financed
Improvements.

      SECTION 2.2. Acceptance Procedure. Lessor hereby authorizes one or more
employees of Lessee, to be designated by Lessee, as the authorized
representative or representatives of Lessor to accept delivery of each Site
identified on the applicable Advance Request and the Financed Improvements to be
constructed thereon. Lessee hereby agrees that acceptance of delivery by such
authorized representative or representatives and the execution and delivery by
Lessee on each Site Acquisition Date of a Lease Supplement (in the form of
Exhibit A-1 or Exhibit A-2 attached hereto, as applicable, appropriately
completed) with respect to such Site and the Improvements now on such site and
all Improvements, including without limitation all Financed Improvements, to be
constructed during the applicable Site Term shall, without further act,
constitute the irrevocable acceptance by Lessee of such Site and all such
Improvements for all purposes of this Lease and the other Operative Documents on
the terms set forth therein and herein and


                                      -2-

that such Site and such Improvements shall be deemed to be included in the
Premises and shall be subject to the terms and conditions of this Lease during
the applicable Site Term.

     SECTION 2.3.  Term.

     (a)  Site Term. Unless earlier terminated, the term of the Lease
Supplement with respect to each Site shall consist of (a) an interim period
(the "Interim Term") commencing on and including the Site Acquisition Date for
such Site and ending on but not including the earlier of (i) the Completion
Date for such Site or (ii) such Site becoming subject to this Lease pursuant to
Section 5.1 of the Construction Agency Agreement, (b) a base term (the "Base
Term") commencing on and including the last day of the Interim Term for such
Site (such day, the "Base Term Commencement Date") and ending on but not
including the fifth anniversary of the First Document Closing Date, and (c) if
exercised and approved pursuant to each of the terms and conditions of Section
2.14 of the Participation Agreement, each Lease Renewal Term (the Interim Term,
the Base Term and the Lease Renewal Terms, if any, with respect to a Site
collectively the "Site Term").

     (b)  Lease Term. The term of this Lease (the "Lease Term") shall begin on
the first occurring Site Acquisition Date and shall end on the last occurring
Site Expiration Date.

                                  ARTICLE III
                                 OTHER PROPERTY

     Lessee may from time to time own or hold under lease from Persons other
than Lessor, furniture, trade fixtures, equipment and other tangible personal
property located on or about any Site that is not subject to this Lease and
does not constitute a portion of the Financed Improvements.

                                   ARTICLE IV
                                      RENT

     SECTION 4.1.  Basic Rent. During the Base Term with respect to a Site and
any Lease Renewal Term, Lessee shall pay to Lessor Basic Rent (i) on each
Quarterly Payment Date, (ii) on the date required under Section 22.3 hereof in
connection with Lessee's exercise of the Sale Option and (iii) on any date on
which this Lease terminates or upon demand following a Lease Event of Default
pursuant to Section 17.1 hereof. Basic Rent payable on each Quarterly Payment
Date shall be allocated to each Lease Supplement.

                                      -3-

in the same proportion that the Advances with respect to, or allocated to, the
Site subject to such Lease Supplement bears to the aggregate amount of all
Advances made by the Participants.

     SECTION 4.2.  Supplemental Rent. Lessee shall pay to Lessor, or to
whomever shall be entitled thereto as expressly provided herein or in any other
Operative Document (and Lessor hereby directs Lessee, on behalf of Lessor, to
so pay any such other Person), any and all Supplemental Rent promptly as the
same shall become due and payable and, in the event of any failure on the part
of Lessee to pay any Supplemental Rent, Lessor shall have all rights, powers
and remedies provided for herein or by law or in equity or otherwise in the
case of nonpayment of Basic Rent. Lessee hereby reaffirms that is obligation to
pay Supplement Rent shall include the payment of any and all Additional Costs.
The expiration or other termination of Lessee's obligations to pay Basic Rent
hereunder shall not limit or modify the obligations of Lessee with respect to
Supplemental Rent.

     SECTION 4.3.  Method and Amount of Payment. Basic Rent and Supplemental
Rent shall be paid by wire transfer to Lessor (or, in the case of Supplemental
Rent, to such Person as may be entitled thereto) at such place as Lessor (or
such other Person) shall specify in writing to Lessee pursuant to Schedule II
to the Participation Agreement or Section 9.3 of the Participation Agreement;
provided, however, that, so long as the Notes remain outstanding, Lessor
directs Lessee to pay Basic Rent directly to the Agent. Each payment of Rent
shall be made by Lessee prior to 12:00 noon New York time (and payments made
after such time shall be deemed to have been made on the next day) at the place
of payment in funds consisting of lawful currency of the United States of
America which (in the case of any amount payable to Lessor, Agent or any
Participant or any other Indemnitee) shall be immediately available on the
scheduled date when such payment shall be due unless with respect to
Supplemental Rent, the scheduled date shall not be a Business Day, in which
case such payment shall be due and made on the next succeeding Business Day.
The provisions of the foregoing sentence of this Section 4.3 shall be
applicable only to Basic Rent and to Supplement Rent payable to, or on behalf
of or for the account of, Lessor, Agent, any Participant and any other
Indemnitee.

     SECTION 4.4.  Late Payment. If any Basic Rent shall not be paid when due,
Lessee shall pay to Lessor, or if any Supplemental Rent payable to or on behalf
or for the account of Lessor, Agent, any Participant, or other Indemnitee is
not paid when due, Lessee shall pay to whomever shall be entitled thereto, in
each case as Supplemental Rent, interest at the Overdue Rate (to the maximum

                                      -4-

extent permitted by law) on such overdue amount from and including the due date
thereof (without regard to any applicable grace period) to but excluding the
Business Day of payment thereof.

                                   ARTICLE V
                                   NET LEASE

     This Lease shall constitute a net lease and, notwithstanding any other
provision of this Lease, it is intended that Basic Rent, Supplemental Rent, the
Lease Balance and all other amounts due and payable under the Operative
Documents shall be paid without counterclaim, setoff, deduction or defense of
any kind and without abatement, suspension, deferment, diminution or reduction
of any kind, and Lessee's obligation to pay all such amounts throughout the
Lease Term is absolute and unconditional. The obligations and liabilities of
Lessee hereunder shall in no way be released, discharged or otherwise affected
for any reason, including, to the maximum extent permitted by law: (a) any
defect in the condition, merchantability, design, construction, quality or
fitness for use of any portion of any Leased Property, or any failure of any
Leased Property to comply with all Applicable Laws and Regulations, including
any inability to occupy or use any Leased Property by reason of such
non-compliance; (b) any damage to, abandonment, loss, contamination of or
Release from or destruction of or any requisition or taking of any Leased
Property or any part thereof, including eviction; (c) any restriction,
prevention or curtailment of or interference with any use of any Leased Property
or any part thereof, including eviction; (d) any defect in title to or rights to
any Leased Property or any Lien on such title or rights or on any Leased
Property; (e) any change, waiver, extension, indulgence or other action or
omission or breach in respect of any obligation or liability of or by Lessor,
Agent or any Participant; (f) any bankruptcy, insolvency, reorganization,
composition, adjustment, dissolution, liquidation or other like proceedings
relating to Lessee, Lessor, Agent, any Participant or any other Person, or any
action taken with respect to this Lease by any trustee or receiver of Lessee,
Lessor, Agent, any Participant or any other Person, or by any court, in any such
proceeding; (g) any claim that Lessee has or might have against any Person,
including, without limitation, Lessor, Agent, or any Participant; (h) any
failure on the part of Lessor to perform or comply with any of the terms of this
Lease, any other Operative Document or of any other agreement whether or not
related to the Overall Transaction; (i) any invalidity or unenforceability or
disaffirmance against or by Lessee of this Lease or any provision hereof or any
of the other Operative Documents or any provision of any thereof; (j) the
impossibility of performance by Lessee, Lessor or both; (k) any action by any
court,

                                      -5-


administrative agency or other Authority; (1) any restriction, prevention or
curtailment of or any use of any Leased Property or any part thereof or the
construction of any Alterations; (m) the failure of Lessee or Guarantor to
achieve any accounting or tax benefits or the characterization of the
transaction intended by Section 23.20 hereinbelow and Section 2.7 of the
Participation Agreement; or (n) any other occurrence whatsoever, whether
similar or dissimilar to the foregoing, whether or not Lessee shall have notice
or knowledge of any of the foregoing. Except as specifically set forth in
Article XIII or Section 20.1 of this Lease, this Lease shall be noncancellable
by Lessee for any reason whatsoever, and Lessee, to the extent permitted by
Applicable Laws and Regulations, waives all rights now or hereafter conferred
by statute or otherwise to quit, terminate or surrender this Lease, or to any
diminution, abatement or reduction of Rent payable by Lessee hereunder. If for
any reason whatsoever this Lease shall be terminated in whole or in part by
operation of law or otherwise, except as expressly provided in Article XIII or
Section 20.1 of this Lease, Lessee shall, unless prohibited by Applicable Laws
and Regulations, nonetheless pay to Lessor (or, in the case of Supplemental
Rent, to whomever shall be entitled thereto) an amount equal to each Rent
payment (including the Lease Balance or any other amount due and payable under
any Operative Documents) at the time and in the manner that such payment would
have become due and payable under the terms of this Lease if it had not been
terminated in whole or in part. Each payment of Rent and any payment of the
Lease Balance made by Lessee hereunder shall be final and, absent manifest
error in the computation of the amount thereof, Lessee shall not seek or have
any right to recover all or any part of such payment from Lessor, Agent, any
Participant or any party to any agreements related thereto for any reason
whatsoever. Lessee assumes the sole responsibility for the condition, use,
operation, maintenance, and management of the Premises and Lessor shall have no
responsibility in respect thereof and shall have no liability for damage to the
property of Lessee or any subtenant of Lessee on any account or for any reason
whatsoever other than by reason of Lessor's willful misconduct or gross
negligence or negligence in the handling of funds; provided, however, any
liability of Lessor with respect to any such willful misconduct or gross
negligence or negligence in the handling of funds shall not limit or affect
Lessee's absolute obligations as set forth in this Article V. Without affecting
Lessee's obligation to pay Basic Rent, Supplemental Rent, the Lease Balance and
all other amounts due and payable under the Operative Documents or to perform
its obligations under the Operative Documents, Lessee may seek damages or any
other remedy at law or equity against Lessor for a breach by Lessor of its
obligations under this Lease or the Participation Agreement, subject to the
limitations set forth at Section 23.9 hereof.


                                      -6-



                                   ARTICLE VI
                                UTILITY CHARGES

     During the Lease Term Lessee shall pay or cause to be paid all charges for
electricity, power, gas, oil, water, telephone, sanitary sewer service and all
other rents and utilities used in or on each Leased Property during the Lease
Term. Lessee shall be entitled to receive any credit or refund with respect to
any utility charge paid by Lessee and the amount of any credit or refund
received by Lessor on account of any utility charges paid by Lessee, net of the
costs and expenses reasonably incurred by Lessor in obtaining such credit or
refund, shall be promptly paid over to Lessee. All charges for utilities
imposed with respect to a Leased Property for a billing period during which
this Lease expires or terminates (except pursuant to Article XX or Section
21.1(b) hereof, in which case Lessee shall be solely responsible for all such
charges) shall be adjusted and prorated on a daily basis between Lessee and any
purchaser or such Leased Property, and each party shall pay or reimburse the
other for each party's pro rata share thereof; provided, that in no event shall
Lessor have any liability therefor.

                                  ARTICLE VII
                         CONDITION AND USE OF PREMISES

     SECTION 7.1. Waivers. LESSEE ACKNOWLEDGES AND AGREES THAT, ALTHOUGH LESSOR
WILL OWN AND HOLD RECORD TITLE TO THE PREMISES, LESSEE SELECTED THE SITES AND
IS SOLELY RESPONSIBLE FOR THE DESIGN, DEVELOPMENT, BUDGETING AND THE
SUPERVISION OF CONSTRUCTION OF THE FINANCED IMPROVEMENTS AND ANY ALTERATIONS.
The Premises are let by Lessor "AS IS" in its present condition, subject to (a)
any rights of any parties in possession thereof, (b) the state of the title
thereto existing at the time Lessor acquired its interest in the Premises, (c)
any state of facts which an accurate survey or physical inspection might show
(including any survey delivered on the First Document Closing Date, the Second
Document Closing Date, and Advance Date or any Completion Date), (d) all
Applicable Laws and Regulations, and (e) any violations of Applicable Laws and
Regulations which may exist at the commencement of the Lease Term. Lessee has
examined the Premises and (insofar as Lessor is concerned) has found the same
to be satisfactory. WITHOUT LIMITING THE SPECIFIC REPRESENTATIONS AND
WARRANTIES IN SECTIONS 4.2, 4.3 AND 4.4 OF THE PARTICIPATION AGREEMENT, NONE OF
LESSOR, AGENT NOR ANY PARTICIPANT HAS MADE OR SHALL BE DEEMED TO HAVE MADE ANY
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, OR SHALL BE DEEMED TO HAVE ANY
LIABILITY WHATSOEVER AS TO THE TITLE TO THE PREMISES OR


                                      -7-


TO THE VALUE, MERCHANTABILITY, HABITABILITY, CONDITION, OR FITNESS FOR USE OF
THE PREMISES, OR ANY PART THEREOF, OR ANY OTHER REPRESENTATION OR WARRANTY
WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO THE PREMISES, OR ANY PART
THEREOF, AND NONE OF LESSOR, AGENT NOR ANY PARTICIPANT SHALL BE LIABLE FOR ANY
LATENT, HIDDEN, OR PATENT DEFECT THEREIN OR THE FAILURE OF THE PREMISES, OR ANY
PART THEREOF, TO COMPLY WITH ANY APPLICABLE LAWS AND REGULATIONS, except that
Lessor hereby represents and warrants that as of the date of this Lease, the
Premises are free of Certificate Trustee Liens (such Certificate Trustee
representations and warranty being made by (x) Bank with respect to any
Certificate Trustee Liens attributable to Bank, and (y) Certificate Trustee
with respect to any Certificate Trustee Liens attributable to Certificate
Trustee). Lessee has been afforded full opportunity to inspect the Premises, is
satisfied with the results of its inspections and is entering into this Lease
solely on the basis of the results of its own inspections, and all risks
incident to the matters discussed in the preceding sentence, as between Lessor,
Agent and the Participants, on the one hand, and Lessee, on the other, are to
be borne by Lessee. The provisions of this Article VII have been negotiated,
and, except to the extent otherwise expressly stated, the foregoing provisions
are intended to be a complete exclusion and negation of any representations or
warranties by any of Lessor, Agent or the Participants, express or implied,
with respect to the Premises (or any interest therein), that may arise pursuant
to any law now or hereinafter in effect or otherwise.

                                  ARTICLE VIII
                         NO LESSOR CONSENT OR LIABILITY

     Nothing contained in this Lease shall be construed as constituting the
consent or request of Lessor, expressed or implied, to or for the performance
by any contractor, mechanic, laborer, materialman, supplier or vendor of any
labor or services or for the furnishing of any materials for any construction,
alteration, addition, repair or demolition of or to the Premises or any part
thereof. NOTICE IS HEREBY GIVEN THAT NONE OF LESSOR, AGENT OR ANY PARTICIPANT
IS OR SHALL BE LIABLE FOR ANY LABOR, SERVICES OR MATERIALS FURNISHED OR TO BE
FURNISHED TO LESSEE, OR TO ANYONE HOLDING THE PREMISES OR ANY PART THEREOF
THROUGH OR UNDER LESSEE, AND THAT NO MECHANIC'S OR OTHER LIENS FOR ANY SUCH
LABOR, SERVICES OR MATERIALS SHALL ATTACH TO OR AFFECT THE INTEREST OF LESSOR
OR AGENT IN AND TO THE PREMISES.

                                      -8-






                                   ARTICLE IX
               MAINTENANCE AND REPAIR; ALTERATIONS AND ADDITIONS

     SECTION 9.1.   Maintenance and Repair; compliance With Law. At all times
during each Site Term with respect to each Site on and after the Base Term
Commencement Date for each Site with respect to the Financed Improvements to be
constructed thereon, Lessee, at its own expense, shall at all times (a) maintain
such Leased Property in good operating condition, subject to ordinary wear and
tear, and in any event at least as good as the condition of similar buildings
owned or leased by Guarantor or its Subsidiaries and in good repair and
condition; (b) maintain such Leased Property in accordance with all Applicable
Laws and Regulations in all material respects, whether or not such maintenance
requires structural modifications; (c) comply in all material respects with the
Insurance Requirements which are in effect any time with respect to such Leased
Property or any part thereof; (d) use such Leased Property only in accordance
with Article X below and cause such Leased Property to have at all times the
capacity and functional ability to be used, on a continuing basis and in
commercial operation, in accordance with such Article X; (e) make all necessary
or appropriate repairs, replacements and renewals of such Leased Property or any
part thereof which may be required to keep such Leased Property in the condition
required by the preceding clauses (a) through (d), whether interior or exterior,
structural or nonstructural, ordinary or extraordinary, foreseen or unforeseen,
and including, without limitation, repairs, replacements and renewals that would
constitute capital expenditures under GAAP if incurred by an owner of property;
and (f) procure, maintain and comply in all material respects with all material
licenses, permits, orders, approvals, consent and other authorizations required
for the construction, use, maintenance and operation of such Leased Property.
Lessee waives any right that it may now have or hereafter acquire to (x) require
Lessor to maintain, repair, replace, alter, remove or rebuild all or any part of
such Leased Property or (y) make repairs at the expense of Lessor pursuant to
any Applicable Laws and Regulations or other agreements.

     SECTION 9.2.   Improvements and Alterations.

          (a)  In addition to Lessee's obligations as Construction Agent to
build the Financed Improvements on each Site under the Construction Agency
Agreement, on and after the Base Term Commencement Date with respect to a Site
(i) Lessee, at lessee's own cost and expense, shall make alterations,
renovations, improvements and additions to such Leased Property or any part
thereof and substitutions and replacements therefor (collectively,
"Alterations") which are (A) necessary to repair or maintain such

                                      -9-




Leased Property in the condition required by Section 9.1 above; (B) necessary in
order for such Leased Property to be in compliance in all material respects with
Applicable Laws and Regulations; or (C) necessary or advisable to restore such
Leased Property to its condition existing prior to a Casualty or Condemnation to
the extent required pursuant to Article XIII hereof; and (ii) so long as no
Lease Event of Default has occurred and is continuing, Lessee, at Lessee's own
cost and expense, may undertake Alterations on such Leased Property so long as
such Alterations comply in all material respects with Applicable Laws and
Regulations except to the extent such non-compliance would not have a Material
Adverse Effect with Section 9.1 above and subsection (b) of this Section 9.2.

          (b)  The making of any Alterations must be in compliance with the
following requirements:

          (1)  No such Alterations with a cost exceeding $1,000,000 shall be
     made or undertaken except upon not less than thirty days' prior written
     notice to Lessor.

          (2)  Lessee shall not make any Alterations in violation of the terms
     of any restriction, easement, condition, covenant or other similar matter
     affecting title to or binding on such Leased Property.

          (3)  No Alterations shall be undertaken until Lessee shall have
     procured and paid for, so far as the same may be required from time to
     time, all permits and authorizations relating to such Alterations of all
     municipal and other Authorities having jurisdiction over such Leased
     Property. Lessor, at Lessee's expense, shall join in the application for
     any such permit or authorization and execute and deliver any document in
     connection therewith, whenever such joinder is necessary or advisable.

          (4)  The Alterations shall be completed in a good and workmanlike
     manner and in compliance in all material respects with all Applicable Laws
     and Regulations then in effect and with the standards imposed by any
     insurance policies required to be maintained hereunder.

          (5)  All Alterations shall, when completed, be of such a character as
     to not materially adversely affect the Fair Market Value, utility,
     remaining economic useful life or residual value of such Leased Property
     from its Fair Market Value, utility, remaining economic useful life or
     residual value immediately prior to the making thereof or, in the case

                                      -10-



     of Alterations being made by virtue of a Casualty or Condemnation,
     immediately prior to the occurrence of such Casualty or Condemnation. If
     such alterations have a cost exceeding $1,000,000 and if requested by
     Required Participants, Lessor may engage an appraiser of nationally
     recognized standing, at Lessee's sole cost and expense, to determine (by
     appraisal methods satisfactory to the Required Participants) the projected
     Fair Market Value of such Leased Property following completion of the
     Alterations relating thereto.

          (6)  Lessee shall have made adequate arrangements for payment of the
     cost of all Alterations when due so that the Leased Property shall at all
     times be free of Liens for Labor and materials supplied or claimed to have
     been supplied to the Premises, other than Permitted Liens; provided, that
     Lessee shall have the right to engage in Permitted Contests in accordance
     with Section 9.5 below.

          (7)  The Alterations must be located solely on such Site.

     SECTION 9.3.   Title to Alterations.  Title to the following described
Alterations shall without further act vest in Lessor and shall be deemed to
constitute a part of a Leased Property and be subject to this Lease:

          (a)  each of the Financed Improvements;

          (b)  Alterations that are in replacement of or in substitution for a
portion of any Improvements existing on the date of this Lease with respect to a
Site or any Financed Improvements with respect to a Site;

          (c)  Alterations that are required to be made pursuant to the terms of
Section 9.1 or 9.2(a)(i) hereof; or

          (d)  Alterations that are Nonseverable.

          Lessee, at Lessor's request, shall execute and deliver any deeds,
bills of sale, assignments or other documents of conveyance reasonably necessary
to evidence the vesting of title in and to such Alterations to Lessor.

          If such Alterations are not within any of the categories set forth in
clauses (a) through (d) of this Section 9.3, then title to such Alterations
shall vest in Lessee and such Alterations shall not be deemed to be Alterations
which are part of the Premises.

                                      -11-

     All alterations to which Lessee shall have title may, so long as removal
thereof shall not result in the violation of any Applicable Laws and
Regulations and no Lease Event of Default is continuing, be removed at any
time by Lessee. Lessee agrees to notify Lessor in writing at least 30 days
before it removes any such Alterations which individually or in aggregate had
an original cost exceeding $1,000,000, and Lessee shall at its expense prior to
the Lease Term Expiration Date repair any damage to the Premises caused by the
removal of such Alterations. Lessor (or the purchaser of the applicable Leased
Property if Lessee elects the Sale Option or in connection with a Sale pursuant
to Section 18.1 below) may purchase from Lessee any such Alterations (if not
already owned by Lessor) that Lessee intends to remove from a Leased Property
prior to the Lease Term Expiration Date, which purchase shall be at the Fair
Market Value of such Alterations as determined by the Appraiser at the time of
such purchase. Title to any such Alterations shall vest in Lessor (or the
purchaser of the applicable Leased Property) if not removed from the Leased
Property by Lessee prior to the return of such Leased Property to Lessor or
sale of such Leased Property if Lessee elects the Sale Option or in connection
with a Sale pursuant to Section 18.1 below.

     SECTION 9.4. Maintenance and Repair Reports. During the Lease Term Lessee
shall keep maintenance and repair reports in sufficient detail, on the same
basis as records are kept for similar properties owned or leased by Guarantor
or its Subsidiaries, to indicate the nature and date of major work done. Such
reports shall be kept on file by Lessee at its offices during the Lease Term,
and shall be made available at Lessee's office to Lessor upon reasonable
request. Lessee shall give notice to Lessor of any Condemnation of Casualty the
cost to repair which is reasonably expected by Lessee to exceed $500,000,
promptly after Lessee has knowledge thereof.

     SECTION 9.5. Permitted Contests. If, to the extent and for so long as (a) a
contest of the legality, validity or applicability to any Leased Property or any
interest therein of, or the operation, use or maintenance thereof by, Lessee of
(i) any Applicable Laws and Regulations, (ii) any term or condition of, or any
revocation or amendment of, or other proceeding relating to, any Governmental
Action, or (iii) any Lien or Tax shall be made in good faith, by appropriate
proceedings initiated timely and diligently prosecuted, by Lessee, or (b)
compliance with such Applicable Laws and Regulations, Governmental Action, Lien
or Tax shall have been excused or exempted by a valid nonconforming use permit,
waiver, extension or forbearance, Lessee shall not be required to comply with
such Applicable Laws and Regulations, Governmental Action, Lien or Tax but only
if and so long as any


                                      -12-



such contest or noncompliance shall in the reasonable opinion of Lessor, acting
at the direction of the Required Participants, constitute a Permitted Contest.

     Lessor will not be required to join in any Permitted Contest pursuant to
this Section 9.5 unless a provision of any Applicable Laws and Regulations
requires, or, in the good faith opinion of Lessee, it is helpful to Lessee,
that such proceedings be brought by or in the name of Lessor; and in that
event, Lessor will join in the proceedings or permit them or any part thereof
to be brought in its name if and so long as no Lease Event of Default is
continuing and Lessee pays all related expenses, and Lessee shall be deemed to
have acknowledged and agreed that Lessor is indemnified therefor pursuant to
Article VII of the Participation Agreement.

     SECTION 9.6. Liens. During the Lease Term Lessee will not directly or
indirectly create, incur, assume or suffer to exist any Lien (other than
Permitted Liens) on or with respect to any portion of any Leased Property,
Lessor's title thereto, or any interest therein. Lessee, at its own expense,
will promptly pay, satisfy and otherwise take such actions as may be necessary
to keep the Premises free and clear of, and duly to discharge, eliminate or
bond in a manner reasonably satisfactory to Lessor, Agent and the Required
Participants, any such Lien (other than Permitted Liens) not accepted above if
the same shall arise at any time.

                                   ARTICLE X
                                      USE

     Each Leased Property shall be used only for the production (including
labeling), storage and distribution of processed and fresh fruits and
vegetables and fruit and vegetable products. Lessee shall not use any Site or
any part thereof for any purpose or in any manner that would materially
adversely affect the Fair Market Value, utility, remaining useful life or
residual value of such Leased Property. Lessee shall use each Leased Property
in compliance in all material respects with (a) any Applicable Laws and
Regulations, except to the extent permitted by Section 9.5 above, (b) any
insurance policies required by Article XI below, and (c) all of the Operative
Documents. Lessee shall pay, or cause to be paid, all charges and costs
required in connection with the use of each Leased Property in accordance with
this Lease and the Participation Agreement. Lessee shall not commit or permit
any waste of any Leased Property or any part thereof.

                                      -13-


                                   ARTICLE XI
                                   INSURANCE

     SECTION 11.1. Required Coverages. During the Site Term for each Leased
Property Lessee will provide or cause to be provided insurance with respect to
each such Leased Property of a character usually insured by Persons engaged in
the same or similar business similarly situated against loss or damage of the
kinds and in the amounts customarily insured against by such Persons, and carry
such other insurance as is usually carried by such Persons; provided, that in
any event Lessee will maintain:

          (a) Commercial General Liability Insurance. Combined single limit
insurance against claims for third-party bodily injury, including death and
third-party property damage occurring on, in or about each Leased Property
(including adjoining streets and sidewalks) in an amount at least equal to
$19,000,000 per occurrence. Following the Base Term Commencement Date for each
Leased Property, such coverage may be subject to deductibles or self-insured
retentions up to an amount that is customarily carried by a company of similar
size and engaged in business similar to Lessee; provided however, that during
the Construction Period with respect to a Leased Property there shall be no
such deductibles and self insurance amounts. (This coverage may be provided in
a combination of umbrella and excess liability policies.)

          (b) Property Insurance. Insurance against loss or damage covering
each Leased Property or any portion thereof by reason of any Peril (as defined
below) in an amount (following the Base Term Commencement Date) for each Leased
Property, subject to such deductibles and/or self-insurance in such minimum
amounts as is carried by corporations owning and/or operating similar
properties; provided, however, that during the Construction Period with respect
to a Leased Property there shall be no such deductibles and self insurance
amounts; provided, however, that at no time shall the amount of such coverage
be less than the replacement cost of the Improvements with respect to a Leased
Property, including any costs that may be required to cause such Leased
Property to be reconstructed to then current Applicable Laws and Regulations.
The term "Peril" shall mean (i) collectively, fire, lightning, flood,
windstorm, hail, explosion, riot and civil commotion, vandalism and malicious
mischief, damage from aircraft, vehicles and smoke and all other perils covered
by the "all risk endorsement" then in use in the State in which such Leased
Property is located and (ii) earthquake. Alternatively, at Lessee's election,
such insurance shall be on a coverage form reasonably available in the
commercial insurance market at the time of the

                                      -14-




most recent policy reviewed, provided that all Perils are covered by such
alternate coverage form or forms.

          (c)  Workers' Compensation Insurance.  Lessee shall, in the
construction of the Financed Improvements or other Alterations and the operation
of each Leased Property, comply with the applicable Workers' Compensation laws
and protect Lessor, Agent and the Participants against any liability under such
laws.

          (d)  Builder's Risk Insurance.  During the construction of any
Alteration costing in excess of $1,000,000, Lessee shall also maintain, for the
benefit of Lessor, all-risk Builders' Risk Insurance in an amount equal to the
greater of the replacement value of such Alterations and the aggregate cost for
the construction of same.

          (e)  Other Insurance.  Such other insurance, including earthquake,
worker's compensation and business interruption insurance, in each case as is
generally carried by owners of similar properties in such amounts and against
such risks as are then customary for properties similar in use and to the extent
required by any Participant, and flood insurance to the extent required by
Applicable Law and Regulations applicable to such Participant.

          Such insurance shall be written by reputable insurance companies that
are financially sound and solvent and otherwise reasonably appropriate
considering the amount and type of insurance being provided by such companies.
Any insurance company selected by Lessee shall be rated in A.M. Best's Insurance
Guide or any successor thereto (of if there be none, an organization having a
similar national reputation) and shall have a general policyholder rating of "A"
(or comparable rating for a rating by an organization other than A.M. Best) and
a financial rating of at least "X" (or comparable rating for a rating by an
organization other than A.M. Best) or be otherwise acceptable to the Required
Participants. In the case of liability insurance maintained by Lessee, it shall
name Lessor (both in its individual capacity and as trustee), Agent and each of
the Participants as additional insureds and, in the case of property insurance
maintained by Lessee, it shall name Agent as mortgagee and loss payee as its
interests may appear. Each policy referred to in this Section 11.1 shall provide
that: (i) it will not be canceled, materially modified or its limits reduced, or
allowed to lapse without renewal, except after not less than 30 days' prior
written notice to Lessor; (ii) the interests of Lessor, Agent and any
Participant shall not be invalidated by any act or negligence of or breach of
warranty or representation by Lessee or any Person having an interest in the
Premises or the

                                      -15-





Improvements; (iii) such insurance is primary with respect to any other
insurance carried by or available to Lessor, Agent or any Participant; (iv) the
insurer shall waive and right of subrogation, setoff, counterclaim, or other
deduction, whether by attachment or otherwise, against Lessor; and (v) such
policy shall contain a cross-liability clause providing for coverage of Lessor,
Agent and each Participant, as if separate policies had been issued to each of
them. Lessee will notify Lessor promptly of any policy cancellation, reduction
in policy limits, modification or amendment.

     SECTION 11.2.  Delivery of Insurance Certificates.  With respect to the
Site or Sites to be acquired on each Site Acquisition Date, Lessee shall deliver
to Lessor certificates of insurance satisfactory to Lessor evidencing the
existence of all insurance required to be maintained hereunder and setting forth
the respective coverages, limits of liability, carrier, policy number and period
of coverage. Thereafter, throughout the Lese Term, at the time each of Lessee's
insurance policies is renewed (but in no event less frequently than once each
year on or before December 31) or upon written request by any Lessor following a
Lease Event of Default, Lessee shall deliver to Lessor certificates of insurance
evidencing that all insurance required by Section 11.1 to be maintained by
Lessee with respect to the Premises is in effect.

                                  ARTICLE XII
                           ASSIGNMENT AND SUBLEASING

     Lessee during the Lease Term may not assign, mortgage or pledge to any
Person, including an Affiliate of Lessee, at any time, in whole or in part, any
of its right, title or interest in, to or under this Lease or any portion of any
Leased Property, and any such assignment, mortgage or pledge shall be void.
Except for the leasehold interest in the Modesto Site granted to Lessor pursuant
to the Ground Lease and as expressly permitted in this Article XII, Lessee may
not sublease, in whole or in part, any of its right, title or interest in, to or
under this Lease or any portion of any Leased Property to any Person, except
that, following the final Completion Date, Lessee may enter into subleases with
(i) a direct or indirect wholly-owned Subsidiary of Guarantor and (ii) a Person
which is not a direct or indirect wholly-owned Subsidiary of Lessee ("Third
Party Sublease"); provided, however, that in no event shall the aggregate
subleased space (together with the nonexclusive use of any related or necessary
portion of any Site as necessary to access and parking) subject to all Third
Party Subleases exceed 30% of the aggregate net rentable square feet of any
Site. Lessee shall not sublease

                                      -16-




any portion of any Leased Property to, or permit the sublease of any portion of
any Leased Property by, any Person who shall then be engaged in any proceedings
for relief under any bankruptcy or insolvency law or laws relating to the relief
of debtors.

     No sublease hereunder will discharge or diminish any of Lessee's
obligations to Lessor hereunder, and Lessee shall remain directly and primarily
liable under the Lease with respect to the entire Premises. Each sublease
permitted hereby shall be made and shall expressly provide in writing that it is
subject and subordinate to this Lease and the rights of Lessor hereunder, shall
expressly provide for the surrender of the space subleased by the applicable
sublessee at the election of Lessor after a Lease Event of Default, and that
such provisions may be directly enforced by Lessor or Agent. All such subleases
under this Article XII shall expressly provide in writing for termination on or
prior to the Lease Expiration Date unless Lessee shall purchase all of the
Premises pursuant to Section 21.1(b) of this Lease.

     Lessee shall, within fifteen (15) days after the execution of any Third
Party Sublease, deliver to Agent a fully executed copy of such sublease.

                                  ARTICLE XIII
                   LOSS, DESTRUCTION, CONDEMNATION OR DAMAGE

     SECTION 13.1.  Event of Loss; Condemnation or Casualty.

          (a)  If an Event of Loss shall occur during the Lease Term, Lessee
shall give Lessor prompt written notice of such occurrence and the date thereof
and Lessee shall purchase the Leased Property(ies) affected thereby from Lessor
on the next succeeding Quarterly Payment Date after the date such Event of Loss
shall have occurred or, if such Event of Loss shall have occurred within ten
(10) Business Days preceding a Quarterly Payment Date, then on the next
succeeding Quarterly Payment Date after such Event of Loss shall have occurred,
at a purchase price equal to the Purchase Amount of such Leased Property. In the
case of an Event of Taking which is deemed to have occurred because of a
requisition which is not scheduled to last beyond the earlier of the Lease
Expiration Date and Lessee's election of the Sale Option but which in fact is
continuing on the earlier of such dates, the foregoing purchase price shall be
paid on such earlier date.

          (b)  Upon payment in full of all amounts payable pursuant to Section
13.1(a), (i) the Site Term shall end with respect to the affected Leased
Property(ies), (ii) the obligations of Lessee

                                      -17-


hereunder with respect to the affected Leased Property(ies) (other than any
obligations expressed herein or any other Operative Document as surviving
termination of this Lease) shall terminate as of the date of such payment.
Lessor shall thereupon transfer its right, title and interest in the affected
Leased Property(ies) to Lessee in accordance with Section 23.16(a) and (iii)
the Lease Supplement for the affected Leased Property(ies) shall be canceled.

      SECTION 13.2. Application of Payments Relating to an Event of Loss. All
net Condemnation Proceeds and property insurance proceeds received at any time
by Lessee during the Lease Term from any Authority or other Person with respect
to any Event of Loss shall be promptly remitted to Lessor (up to, but not
exceeding, the amounts owed under Section 13.1(a) above) and, upon the purchase
of the affected Leased Property(ies) by Lessee pursuant to such Section 13.1(a)
and the payment by Lessee of the purchase price and all other amounts payable
by Lessee pursuant to such Section 13.1(a), any such Net Condemnation Proceeds
and property insurance proceeds remaining thereafter shall be paid over to, or
retained by, Lessee, or as Lessee may direct.

      SECTION 13.3. Application of Certain Payments Relating to a Condemnation.
In case of a requisition for temporary use of all or a portion of any Leased
Property which is not an Event of Taking, this Lease shall remain in full force
and effect, without any abatement or reduction of Rent, and the proceeds
received from any Authority relating to a Condemnation for the affected portion
of the Leased Property shall, so long as no Lease Event of Default exists and
subject to Section 16.2 hereof, be paid to Lessee and, to the extent
applicable, shall be used by Lessee to repair and restore the affected Premises
to the condition required by Section 9.1 hereof. Notwithstanding anything
herein to the contrary, any portion of such proceeds that is awarded with
respect to the time period after the expiration or termination of the Lease
Term (unless Lessee shall have exercised an option to purchase all of the
Premises and consummated such purchase) shall be paid to Lessor; provided, that
if Lessee has paid the Lease Balance to Lessor, such proceeds (or the portion
of such proceeds in excess of portion thereof applied to the Lease Balance)
shall be paid over to Lessee.

      SECTION 13.4. Casualty. Upon any Casualty during the Lease Term with
respect to any portion of any Leased Property the cost of repair of which would
exceed $500,000 Lessee shall give to Lessor written notice thereof. As soon as
practicable after a Casualty, Lessee shall repair and rebuild the affected
portions of the Leased Property suffering such Casualty (or cause such affected
portions to be repaired and rebuilt) to the condition required to be


                                      -18-

maintained by Section 9.1 hereof; provided, that the value and functional
capability of such item as restored is at least equivalent to the value and
functional capability of such item as in effect immediately prior to the
occurrence of such Casualty. So long as no Lease Event of Default or Material
Default is continuing, any insurance proceeds received with respect to any
Casualty shall be paid over to or retained by Lessee up to $500,000. Insurance
proceeds received with respect to any Casualty in excess of $500,000 shall be
held by Agent and made available to Lessee to pay costs actually incurred by
Lessee to restore the Premises as required herein.

      SECTION 13.5. Negotiations. In the event any part of any Leased Property
becomes subject to condemnation or requisition proceedings during the Lease
Term, Lessee shall give notice thereof to Lessor promptly after Lessee has
knowledge thereof and, to the extent permitted by any Applicable Laws and
Regulations, Lessee shall control the negotiations with the relevant Authority
unless a Lease Event of Default exists, in which case Lessor shall be entitled
to control such negotiations; provided, that in any event Lessor may
participate at Lessor's expense (or if a Lease Event of Default exists, at
Lessee's expense) in such negotiations; and provided in all cases, that no
settlement will be made without Lessor's prior written consent acting at the
direction of the Required Participants, not to be unreasonably withheld. Lessee
shall give to Lessor such information, and copies of such documents, which
relate to such proceedings, or which relate to the settlement of amounts due
under insurance policies required by Section 11.1 above, and are in the
possession of Lessee, as are reasonably requested by Lessor. If the proceedings
relate to an Event of Taking, Lessee shall act diligently in connection
therewith. Nothing contained in this Section 13.5 shall diminish Lessor's
rights with respect to Condemnation Proceeds and property insurance proceeds
under Section 13.2 above.

      SECTION 13.6. No Rent Abatement. Rent shall not abate hereunder by reason
of any Casualty, any Event of Loss, any Event of Taking or any Condemnation of
any portion of any Leased Property, and Lessee shall continue to perform and
fulfill all of Lessee's obligations, covenants and agreement hereunder
notwithstanding such Casualty, Event of Loss, Event of Taking or Condemnation
until the Lease Expiration Date.

      SECTION 13.7. Notice of Environmental Matters. Promptly, but in an event
within thirty (30) days from the date a Responsible Officer of Lessee has
actual knowledge thereof, Lessee shall provide to Lessor written notice of any
pending or, to Lessee's knowledge, threatened claim, action or proceeding
involving any


                                      -19-

Environmental Law or any Release on or in connection with any Leased Property,
which claim, action or proceeding would require in excess of $250,000 in
remediation costs in respect of such Leased Property (such claim, action or
proceeding, a "Material Environmental Claim"). All such notices shall describe
in reasonable detail the nature of the claim, action or proceeding and Lessee's
proposed response thereto. In addition, Lessee shall provide to Lessor, within
thirty (30) days of receipt, copies of all Material Environmental Claim. Lessee
shall also promptly provide such detailed reports of any such Material
Environmental Claims as may reasonably be requested by Lessor or Agent.


                                  ARTICLE XIV
                                NON-INTERFERENCE

      SECTION 14.1. Non-Interference. Subject to Lessor's cure rights, as
provided for in Article XIX below, Lessor covenants that it will not interfere
in Lessee's use or possession of the Premises during the Lease Term, so long as
no Lease Event of Default has occurred and is continuing; it being agreed that
Lessee's remedies for breach of the foregoing covenant shall be limited to a
claim for damages or the commencement of proceedings to enjoin such breach. Such
right is independent of and shall not affect Lessee's obligations hereunder and
under the other Operative Documents or Lessor's rights otherwise to initiate
legal action to enforce the obligations of Lessee under this Lease. The
foregoing covenant shall not require Lessor to take any action contrary to, or
which would permit Lessee to use the Premises for a use not permitted under the
provisions of, this Lease.

      SECTION 14.2. Certain Duties and Responsibilities of Lessor. Lessor
undertakes to perform such duties and only such duties as are specifically set
forth herein and in the other Operative Documents, and no implied covenants or
obligations shall be read into this Lease against Lessor, and Lessor agrees that
it shall not, nor shall it have a duty to, manage, control, use, sell, maintain,
insure, register, lease, operate, modify, dispose of or otherwise deal with the
Premises or any other part of the Trust Estate in any manner whatsoever, except
as required by the terms of the Operative Documents and as otherwise provided
herein.


                                      -20-

                                   ARTICLE XV
                             INSPECTION AND REPORTS

        SECTION 15.1. Inspection. Upon five (5) Business Days prior  notice to
Lessee, Lessor or its authorized representatives (the "Inspecting Parties") at
any time during the Lease Term may inspect (a) the Premises and (b) the books
and records of Lessee relating to the Premises and make copies and abstracts
therefrom. All such inspections shall be during Lessee's normal business hours
(unless a Lease Event of Default has occurred and is existing) and shall be at
the expense and risk of the Inspecting Parties, except that one such inspection
in each calendar year shall be at Lessee's expense at a cost not to exceed
$1,000 per Site inspected and except that if a Lease Event of Default or Lease
Default has occurred and is continuing, Lessee shall reimburse the Inspecting
Parties for the reasonable costs of such inspections and, except for the
Inspecting Party's gross negligence or willful misconduct, such inspection shall
be at Lessee's risk. No inspection shall unreasonably interfere with Lessee's
operations. None of the Inspecting Parties shall have any duty to make any such
inspection or inquiry. None of the Inspecting Parties shall incur any liability
or obligation by reason of making any such inspection or inquiry unless and to
the extent such Inspecting Party causes damage to the Premises or any property
of Lessee or any other Person during the course of such inspection.

        SECTION 15.2. Reports. To the extent permissible under Applicable Laws
and Regulations, during the Lease Term Lessee shall prepare and file in timely
fashion, or, where Lessor shall be required to file, Lessee shall prepare and
make available to Lessor within a reasonable time prior to the date for filing
and Lessor shall file, any reports with respect to the condition or operation of
the Premises that shall be required to be filed with any Authority.

                                  ARTICLE XVI
                OWNERSHIP, GRANT OF LIEN AND FURTHER ASSURANCES

        SECTION 16.1. Grant of Security Interest. Title to the Premises are held
by Lessor, as security for the obligations of Lessee hereunder and under each of
the other Operative Documents to which it is a party until such time as Lessee
shall have fulfilled all of its obligations hereunder and under such other
Operative Documents. Lessee hereby assigns, grants, warrants and pledges to
Lessor for the benefit of the Participants a Lien against all of the Lessee's
right, title and interest, whether now or hereafter existing or acquired, in the
Premises and the other Del Monte




                                      -21-




Collateral to secure the payment and performance of all obligations of Lessee
now or hereafter existing under this Lease or any other Operative Document.
Lessee shall, at its expense, promptly and duly execute, acknowledge and
deliver to Lessor and file, register and record such documents and assurances
including the Mortgages and any financing statements and fixture filings and
take such further actions as Lessor, Agent or any Participant may from time to
time reasonably request in order to carry out more effectively the intent and
purpose of this Lease and the other Operative Documents, to establish and
protect the rights and remedies created or intended to be created in favor of
Lessor hereunder and thereunder, and to establish, perfect and maintain the
right, title and interest of Lessor in and to the Premises and the other Del
Monte Collateral, subject to no Lien other than Permitted Liens, and Lessee
agrees to execute and deliver promptly such of the foregoing Mortgages,
financing statements and fixture filings or other documents as may require
execution by Lessee. To the extent permitted by Applicable Laws and
Regulations, Lessee hereby authorizes any such Mortgages, financing statements
and fixture filings to be filed without the necessity of the signature of
Lessee. Upon Lessee's request, Lessor shall at such time as all of the
obligations of Lessee under this Lease or any other Operative Documents have
been indefeasibly paid or performed in full (other than Lessee's contingent
obligations, if any, under Article VII of the Participation Agreement and under
Article VI of the Construction Agency Agreement) execute and deliver
termination statements and other appropriate documentation reasonably requested
by Lessee, all at Lessee's expense, to evidence Lessor's release of its Lien
against the Del Monte Collateral.

        SECTION 16.2. Attorney-in-Fact. Lessee hereby irrevocably appoints
Lessor as Lessee's attorney-in-fact, with full authority in the place and stead
of Lessee and in the name of Lessee or otherwise, from time to time in Lessor's
discretion, to execute any instrument which Lessor may deem necessary or
advisable to accomplish the purposes of this Lease (subject to any limitations
set forth in the Operative Documents), and to take any action (including any
action that Lessee is entitled to take), including, without limitation:

                (a) to ask, demand, collect, sue for, recover, compromise,
receive and give acquittance and receipts for money due and to become due under
or in connection with all or any portion of the Premises and the other Del
Monte Collateral;

                (b) to receive, endorse and collect any drafts or other
instruments, documents and chattel paper in connection with the foregoing
clause (a);


                                      -22-


                (c) to file any claim or take any action or institute any
proceedings which Lessor may deem to be necessary or advisable for the
collection thereof or to enforce compliance with the terms and conditions of
this Lease; and

                (d) to perform any affirmative obligations of Lessee hereunder,
including the execution of mortgages, financing statements and other documents.

Lessee hereby acknowledges, consents and agrees that the power of attorney
granted pursuant to this Section 16.2 is irrevocable and coupled with an
interest. Notwithstanding anything contained herein to the contrary, the rights
and powers presently granted Lessor by this Section 16.2 may be exercised by
Lessor only upon the occurrence and during the continuance of a Lease Event of
Default.

                                  ARTICLE XVII
                            LEASE EVENTS OF DEFAULT

        The occurrence of any one or more of the following events, whether any
such event shall be voluntary or involuntary or come about or be effected by
operation of law or pursuant to or in compliance with any judgment, decree or
order of any court or any order, rule or regulation of any administrative or
governmental body, shall constitute a "Lease Event of Default":

                (a) Lessee shall fail to make any payment of (i) Basic Rent and
such failure shall continue for a period of three days or (ii) amounts payable
pursuant to Section 13.1(a), Article XX, or Sections 21.1(b), 22.3 or 22.4
hereof when due;

                (b) Lessee or Guarantor shall fail to make payment of any other
amount payable hereunder or under any of the other Operative Documents and such
failure shall continue for a period of five (5) days after the earlier of
notice to Lessee or Guarantor, as the case may be, of such failure or a
Responsible Officer of Lessee or Guarantor knew or reasonably should have known
of such failure;

                (c) Lessee shall fail to maintain insurance as required by
Section 11.1 above;

                (d) Lessee shall fail to purchase the Premises in accordance
with Section 20.2 below or Lessee shall fail to sell all of the Premises on the
Lease Expiration Date in accordance with and satisfaction of each of the terms,
covenants, conditions and


                                      -23-





agreements set forth at Articles XXI and XXII hereof in connection with and
following its exercise of the Sale Option, including each of Lessee's
obligations at Sections 21.1 and 21.2 hereof;

          (e)  Lessee or Guarantor shall fail timely to perform or observe any
covenant, condition or agreement (not included in any other clause of this
Article XVII) to be performed or observed by it hereunder or under any other
Operative Document and such failure shall continue for a period of 30 days (but
in no event later than the Lease Expiration Date) after the earlier to occur of
(i) written notice thereof to Lessee from any Lessor, Agent or any Participant
or (ii) the date upon which a Responsible Officer of Lessee knew or reasonably
should have known thereof;

          (f)  the occurrence of a Del Monte Event of Default;

          (g)  Any Operative Document or the security interest and lien granted
under this Lease (except in accordance with its terms), in whole or in part,
terminates, ceases to be effective or ceases to be the legal, valid and binding
enforceable obligation of Lessee, Guarantor, or any of their Affiliates, as the
case may be, on account of, or as a result of, directly or indirectly, any act
or omission of Lessee, Guarantor or any of their Affiliates, or Lessee,
Guarantor or any of their Affiliates, directly or indirectly, contests in any
manner in any court the effectiveness, validity, binding nature or
enforceability thereof; or the security interest and lien securing Lessee's or
Guarantor's obligations under the Operative Documents, in whole or in part,
ceases to be a perfected first priority security interest and lien on account
of, or as a result of, directly or indirectly, any action or omission of Lessee,
Guarantor of any of their Affiliates;

          (h) A Construction Agency Agreement Event of Default shall have
occurred and be continuing;

          (i)  An Event of Default shall occur under any Material Credit
Agreement;

          (j)  Lessee fails to provide and maintain the Letter of Credit as
described in Section 5.2(k) of the Participation Agreement; or

          (k)  Lessee fails to replace any Non-Funding Participant within the
ninety (90) day period permitted to such replacement in Section 2.17 of the
Participation Agreement.

                                      -24-




                                 ARTICLE XVIII
                                  ENFORCEMENT


     SECTION 18.1.  Remedies.  During the existence of a Lease Event of Default,
at Lessor's option and without limiting Lessor in the exercise of any other
right or remedy Lessor may have on account of such default (including, without
limitation, the obligation of Lessee to purchase the Premises as set forth
below), and without any further demand or notice, Lessor may cause the following
to occur:

          (i)  By notice to Lessee, Lessor may terminate Lessee's right to
     possession of the Premises. A notice given  in connection with unlawful
     detainer proceedings specifying a time within which to cure a default shall
     terminate Lessee's right to possession if Lessee fails to cure the default
     within the time specified in the notice.

          (ii)  Upon termination of Lessee's right to possession and without
     further demand or notice, Lessee shall surrender possession and vacate the
     Premises and deliver possession thereof, and Lessor may re-enter the
     Premises and remove any Persons in possession thereof.

          (iii)  Lessor may terminate this Lease with respect to all or any of
     the Leased Properties and/or on and after the Base Term Commencement Date
     with respect to a Leased Property declare the aggregate outstanding Site
     Balance for such Leased Property to be immediately due and payable, and
     Lessor shall be entitled to (x) recover from Lessee the following amounts
     and (y) take the following actions:

                    (A)  Lessee shall pay all accrued and unpaid Rent hereunder
     (including, without limitation, Basic Rent and Supplemental Rent) with
     respect to such Leased Property for the period commencing on the Base Term
     Commencement Date with respect to such Leased Property through the Final
     Rent Payment Date with respect to such Leased Property;

                    (B)  Lessor may elect either of the following with respect
     to any or all of the Leased Properties:

                         (1)  Lessor may demand, by written notice to the Lessee
               specifying a payment date (the "Final Rent Payment Date") not
               earlier than ten (10) days after the date of such notice, that
               Lessee purchase such Leased Property, and Lessee shall pay to
               Lessor, on the Final Rent Payment Date (in lieu of Basic Rent
               with respect to

                                      -25-



          such Leased Property due after the Final Rent Payment Date with
          respect to such Leased Property), an amount equal to the sum of (A)
          the Site Balance for such Leased Property computed for the period
          commencing on the Base Term Commencement Date with respect to such
          Leased Property to and including the Final Rent Payment Date with
          respect to such Leased Property, plus (B) all accrued and unpaid Rent
          with respect to such Leased Property due and unpaid for the period
          commencing on the Base Term Commencement Date with respect to such
          Leased Property to and including the Final Rent Payment Date with
          respect to such Leased Property, and upon payment of such amount, and
          the amount of all other sums due and payable by Lessee under this
          Lease and the other Operative Documents (and interest at the Overdue
          Rate on the amounts payable under this clause (B)(1) from the Final
          Rent Payment Date to the date of actual payment) with respect to such
          Leased Property, Lessor shall transfer to Lessee all of Lessor's
          right, title and interest in and to such Leased Property pursuant to
          Section 23.16 below; or

                    (2)  Lessor may sell its interest in such leased Property
          and the other applicable Del Monte Collateral in which event Lessee
          shall pay to Lessor an amount equal to the excess, if any, of (x) all
          amounts due Lessor under clause (B)(1) above over (y) the net Sale
          Proceeds received by Lessor from the foregoing sale (provided, that in
          calculating such net Sale Proceeds, all expenses and Taxes incurred by
          Lessor or any of the Participants in connection with such sale,
          including, without limitation, legal fees, shall be deducted from such
          Sale Proceeds);

               (C)  Any other amount necessary to compensate Lessor for all the
     damages proximately caused by Lessee's failure to perform Lessee's
     obligation under this Lease or which in the ordinary course of things would
     be likely to result therefrom, including, but not limited to, the costs and
     expenses (including, without limitation, reasonable attorneys' fees,
     advertising costs and brokers' commissions) of recovering possession of the
     Premises, removing Persons or property therefrom, placing the Premises in
     good order, condition and repair, preparing and altering the Premises for
     reletting, and all other costs and expenses of reletting; and

                                      -26-

          (D) Such other amounts in addition to or in lieu of the foregoing as
may be permitted from time to time by Applicable Laws and Regulations.

     (iv) Lessor may enforce the Lien given hereunder pursuant to Section 16.1
hereof, Section 5 of the Lease Supplements, the Mortgages, the Uniform
Commercial Code or any other Applicable Laws and Regulations to recover all
damages caused by a Lease Event of Default, including any damages arising from
Lessee's failure to purchase the Premises pursuant to Section 20.2 hereof.

     (v) If Lessee has breached this Lease, this Lease shall continue in effect
for so long as Lessor does not terminate this Lease, and Lessor may enforce all
of Lessor's rights and remedies under this Lease, including the right to
recover the Rent hereunder (including, without limitation, Basic Rent (when
applicable) and Supplemental Rent) as it becomes due under this Lease. Lessee's
right to possession shall not be deemed to have been terminated by Lessor
except pursuant to clause (iii) above. The following do not constitute a
termination of this Lease:

          (A) Acts of maintenance or preservation or efforts to relet the
Premises;

          (B) The appointment of a receiver upon the initiative of Lessor to
protect Lessor's interest under this Lease; or

          (C) Withholding of consent to an assignment or subletting, or
terminating a subletting or assignment by Lessee.

     (vi) In the event that Lessor elects to continue this Lease in full force
and effect following the termination of Lessee's right of possession, Lessor, to
the maximum extent permitted by Applicable Laws and Regulations, may enforce all
its rights and remedies under this Lease, including, but not limited to, the
right to recover Rent hereunder as it becomes due. During the continuance of a
Lease Event of Default or following the termination of Lessee's right to
possession, Lessor may enter the Premises in accordance with Applicable Laws and
Regulations without terminating this Lease and sublet all or any part of the
Premises for Lessee's account to any Person, for such term (which may be a
period beyond the remaining Lease Term), at such rents and on such other terms
and conditions as are commercially reasonable. In the event


                                      -27-


of any such subletting, rents received by Lessor from such subletting shall be
applied (a) first, to the payment of the reasonable costs incurred by Lessor in
maintaining, preserving, altering and preparing the Premises for subletting and
other reasonable costs of subletting, including, but not limited to, brokers'
commissions and attorneys' fees; (b) second, to the payment of Rent hereunder
then due and payable; (c) third, to the payment of future Rent hereunder as the
same may become due and payable hereunder; (d) fourth, to the payment of all
other obligations of Lessee hereunder and under the other Operative Documents
(including, without limitation, the Lease Balance), and (e) fifth, the balance,
if any, shall be paid to Lessee upon (but not before) expiration of the Lease
Term. If the rents received by Lessor from such subletting, after application as
provided above, are insufficient in any period to pay the Rent due and payable
hereunder for such period, Lessee shall pay such deficiency to Lessor upon
demand. Notwithstanding any such subletting for Lessee's account without
termination, Lessor may at any time thereafter, by written notice to Lessee,
elect to terminate this Lease.

     (vii) Lessor may exercise any other right or remedy that may be available
to it under Applicable Laws and Regulations or in equity, or proceed by
appropriate court action (legal or equitable) to enforce the terms or to
recover damages for the breach hereof, including those arising from a breach by
Lessee of its obligations under Section 20.2 hereof. Separate suits may be
brought to collect any such damages for any Rent installment period(s), and
such suits shall not in any manner prejudice Lessor's right to collect any such
damages for any subsequent Rent installment period(s), or Lessor may defer any
such suit until after the expiration of the Basic Term or any Renewal Term, in
which event such suit shall be deemed not to have accrued until the expiration
of the Lease Term.

     (viii) Lessor may retain and apply against Lessor's damages all sums which
Lessor would, absent such Lease Event of Default, be required to pay to, or
turn over to, Lessee pursuant to the terms of this Lease.

     (ix) As a matter of right and without notice to Lessee or anyone claiming
under Lessee, and without regard to the then value of the Del Monte Collateral
or the interest of Lessee therein, Lessor shall have the right to apply to any
court having jurisdiction to appoint a receiver or receivers of the Del Monte
Collateral at Lessee's sole cost and expense, and Lessee hereby irrevocably
consents to such appointment and

                                      -28-


waives notice of any application therefor. Any such receiver or receivers shall
have all the usual powers and duties of receivers in like or similar cases and
all the powers and duties of Lessor in case of entry as provided in this Lease
and shall continue as such and exercise all such powers until the latest to
occur of (i) the date of confirmation of sale of the Del Monte Collateral; (ii)
the disbursement of all proceeds of the Del Monte Collateral collected by such
receiver and the payment of all expenses incurred in connection therewith; or
(iii) the termination of such receivership with the consent of Lessor or
pursuant to an order by a court of competent jurisdiction.

     (x) Lessor may exercise the remedies described in Section 5 of the Lease
Supplements.

     (xi) Lessee hereby grants to Chicago Title Company, as trustee (together
with all successor trustees, the "Trustee"), IN TRUST for the benefit of Lessor
as security for the obligations hereunder A SECURITY INTEREST AND LIEN against
the Premises WITH POWER OF SALE, and that, upon the occurrence of any Lease
Event of Default, Lessor shall have the power and authority, to the extent
provided by Applicable Laws, after proper notice and lapse of such time as may
be required by Applicable Laws, to cause the Trustee to sell the Premises, or
any portion thereof, at the time and place of sale fixed by Lessor in said
notice of sale, either as a whole, or in separate lots or parcels or items and
in such order as Lessor may elect, at auction to the highest bidder for cash in
lawful money of the United States payable at the time of sale; accordingly, it
is acknowledged that A POWER OF SALE HAS BEEN GRANTED IN THIS INSTRUMENT; A
POWER OF SALE MAY ALLOW LESSOR TO TAKE THE APPLICABLE PREMISES AND SELL IT
WITHOUT GOING TO COURT IN A FORECLOSURE ACTION UPON DEFAULT BY LESSEE UNDER THIS
INSTRUMENT, and (ii) upon the occurrence of Lease Event of Default, Lessor, in
lieu of or in addition to exercising any power of sale hereinabove given, may
proceed by a suit or suits in equity or at law, whether for a foreclosure, or
for the sale of the premises, or against Lessee on a recourse basis for the
Lease Balance and all accrued and unpaid interest on the Loans, all accrued and
unpaid Yield on the Certificate Amounts, and all other amounts owing by Lessee
under the Operative Documents with respect to such Premises, or for the specific
performance of any covenant or agreement herein contained or in aid of the
execution of any power herein granted, or for the appointment of a receiver
pending any foreclosure hereunder or the sale of the Premises, or for

                                      -29-


     the enforcement of any other appropriate legal or equitable remedy.

          (xii) The Agent may draw under the Letter of Credit and apply the
     proceeds thereof, all as described in the Loan Agreement.

     Lessor acknowledges and agrees that upon the declaration of a Lease Event
of Default the amount due and owing by it to Lessor hereunder shall be the
Lease Balance and that to the maximum extent permitted by Applicable Laws,
Lessee waives any right to contest the Lease Balance as the liquidated sum due
upon acceleration of this Lease.

     SECTION 18.2. Proceeds of Sale; Deficiency. All payments received and
amounts held or realized by Lessor at any time when a Lease Event of Default
shall be continuing and after the Lease Balance shall have been accelerated
pursuant to this Article XVIII as well as all payments or amounts then held or
thereafter received by Lessor (except for rents received by Lessor from
subletting pursuant to Section 18.1(vi) above, which shall be distributed as
set forth therein) and the proceeds of sale pursuant to Section 18.1(iii)(B)(2)
above or pursuant to the Mortgages shall be distributed forthwith upon receipt
by Lessor in accordance with Article III of the Loan Agreement.

     SECTION 18.3. Mortgage and Lease Supplement Remedies. Without limiting any
other remedies set forth in this Lease, Lessor and Lessee agree that upon the
occurrence of a Lease Event of Default, the Lessor and Agent shall have all the
rights and may pursue any of the remedies provided to it in the Mortgages and
Lease Supplements, the terms and provisions of which Mortgages and Lease
Supplements, the terms and provisions of which Mortgages and the Lease
Supplements are incorporated herein by this reference.

     SECTION 18.4. Remedies Cumulative; No Waiver; Consents. To the extent
permitted by, and subject to the mandatory requirements of, Applicable Laws and
Regulations, each and ever right, power and remedy herein specifically given to
Lessor or otherwise in this Lease shall be cumulative and shall be in addition
to every other right, power and remedy herein specifically given or now or
hereafter existing at law, in equity or by statute, and each and ever right,
power and remedy whether specifically herein given or otherwise existing may be
exercised from time to time and as often and in such order as may be deemed
expedient by Lessor, and the exercise or the beginning of the exercise of any
power or remedy shall not be construed to be a waiver of the right to exercise
at the same time or thereafter any other right, power or remedy. No delay or
omission by Lessor in the exercise of any right, power or

                                      -30-

remedy or in the pursuit of any remedy shall impair any such right, power or
remedy or be construed to be a waiver of any default on the part of Lessee or
be acquiescence therein. Lessor's consent to any request made by Lessee shall
not be deemed to constitute or preclude the necessity for obtaining Lessor's
consent, in the future, to all similar requests. No express or implied waiver
by Lessor of any Lease Event of Default shall in any way be, or be construed to
be, a waiver of any future or subsequent Lease Default or Lease Event of
Default. To the extent permitted by Applicable Laws and Regulations and subject
to the provisions of Section 18.1 above, Lessee hereby waives any rights now or
hereafter conferred by statute or otherwise that may require Lessor to sell,
lease or otherwise use the Premises, the other Del Monte Collateral or any part
thereof in mitigation of Lessor's damages upon the occurrence of a Lease Event
of Default or that may otherwise limit or modify any of Lessor's rights or
remedies under this Article XVIII.

     Section 18.5. Limitation of Recourse Liability. Notwithstanding anything
set forth herein to the contrary, prior to the commencement of the Base Term
with respect to a Lease Supplement for a Site, the aggregate amount payable by
Lessee on a recourse basis under this Article XVIII shall be subject to the
limitations on recourse liability set forth in Section 7.9 of the Participation
Agreement to the extent such amounts arose solely as a result of an Nonrelated
Construction Event relating directly to such Leased Property.


                                  ARTICLE XIX
                          RIGHT TO PERFORM FOR LESSEE

     SECTION 19.1. Right to Cure. If any Lease Default or Lease Event of
Default shall be continuing and in Lessor's reasonably exercised judgment
Lessee is not acting diligently and appropriately to cure such Lease Default or
Lease Event of Default, Lessor may, but shall not be obligated to, on five (5)
Business Day's prior notice to Lessee (except in the event of an emergency, in
which case only one Business Day's prior notice shall be required), cure such
Lease Default or Lease Event of Default, and Lessor shall not thereby be deemed
to have waived any default caused by such failure to cure, and the amount of
such payment and the amount of the expenses of Lessor (including reasonable
attorneys' fees and expenses) incurred in connection with such cure, together
with interest thereon at the Overdue Rate, shall be deemed Supplemental Rent,
payable by Lessee to Lessor upon demand.

     SECTION 19.2. Grants and Releases of Easements. Provided that no Default
or Lease Event of Default shall have occurred and

                                      -31-

be continuing, Lessor hereby consents in each instance to the following actions
by Lessee, in the name and stead of Lessor and as Lessor's attorney-in-fact,
but at Lessee's sole cost and expense: (i) the granting of easements, licenses,
rights-of-way and other rights and privileges in the nature of easements
reasonably necessary or desirable for the use, repair or maintenance of any
Leased Property in accordance with this Lease; (ii) the release of existing
easements or other rights in the nature of easements which are for the benefit
of any Leased Property; (iii) the dedication or transfer of unimproved portions
of any Leased Property for road, highway or other public purposes; (iv) the
execution of petitions to have any Leased Property annexed to any municipal
corporation or utility district; (v) the execution of any covenants and
restrictions affecting any Leased Property or amendments or modifications
thereto; and (vi) the execution or release of any similar agreements; provided,
however, that in each case Lessee, prior to taking any such action, shall have
delivered to Lessor an Officer's Certificate stating that (x) such grant,
release, dedication, transfer, annexation, or amendment or similar agreement
does not materially impair the Fair Market Value, residual value, utility,
operation or remaining useful life of the applicable Leased Property, (y) such
grant, release, dedication, transfer, annexation or amendment will not cause
the applicable Leased Property or any portion thereof to fail to comply in any
respect with the provisions of this Lease of any other Operative Document or in
any material respect with all Applicable Laws and Regulations (including,
without limitation, all applicable zoning, planning, building and subdivision
ordinances, all applicable restrictive covenants and all applicable
architectural approval requirements), and (z) Lessee shall timely pay and
perform any obligations of Lessor under such grant, release, dedication,
transfer, annexation or amendment during the Lease Term. Without limiting the
effectiveness of the foregoing or the power of attorney granted to Lessee
pursuant to Section 19.3 below, provided that no Material Default or Lease
Event of Default shall have occurred and be continuing, Lessor shall, upon the
request of Lessee, and at Lessee's sole cost and expense, execute and deliver
any instruments necessary or appropriate to confirm any such grant, release,
dedication, transfer, annexation or amendment to any Person permitted under
Sections 19.2 and 19.3 hereof.

     SECTION 19.3. Power of Attorney. Unless and until a Default or Lease
Event of Default has occurred and is continuing, the Lessor does, solely for
the purposes stated in Section 19.2 above, hereby irrevocably make, constitute
and appoint Lessee and any of its officers or designees its true and lawful
attorney-in-fact, with full power and authority to do any and all acts
necessary or proper to carry out the intent of Sections 19.2 and 19.3 hereof,

                                      -32-




including, without limitation, the right, power and authority (i) to take such
actions described in Section 19.2 above, and (ii) to execute such documents and
agreements as Lessee may reasonably determine are necessary for the purposes of
carrying out the intent of such Sections 19.2 and 19.3, and Lessor hereby
ratifies and confirms all that Lessee as such attorney-in-fact or its
substitute undertakes by virtue of this power of attorney, which power is
coupled with an interest and is irrevocable. Lessor hereby agrees to execute,
at Lessee's sole cost and expense, such additional powers of attorney in
recordable form as may be necessary for Lessee to carry out the intent of such
Sections 19.2 and 19.3.


                                   ARTICLE XX
              EARLY TERMINATION OPTION AND OBLIGATION TO PURCHASE

     SECTION 20.1 Early Termination Option. Without limitation of Lessee's
purchase obligation pursuant to Section 20.2, on (1) any scheduled Quarterly
Payment Date following the expiration of the Construction Period for all of the
Sites, or (2) on an Business Day following the occurrence of a Lease Event of
Default of the types described in clause (ii) of the next sentence, Lessee may,
at its options, purchase all, but not less than all, of the Premises (the
"Early Termination Option") at a price equal to the Purchase Amount. Lessee's
right to purchase all of the Premises pursuant to this Section 20.1 shall
terminate automatically and without notice (i) upon the occurrence of a Lease
Event of Default arising as a result of an Insolvency Event and (ii) upon the
occurrence of any other Lease Event of Default, unless in the case of a Lease
Event of Default described in this clause (ii) Lessee delivers a written notice
of its election to exercise this option to purchase not less than three (3)
days prior to the date of the purchase and consummates the purchase within ten
(10) Business Days following the occurrence of such Lease Event of Default. In
order to exercise its option to purchase the Premises pursuant to this Section
20.1 and except as provided for in clause (ii) of the foregoing sentence,
Lessee shall give to Lessor not less than ten (10) days' prior written notice
of such election to exercise, which election shall become irrevocable if not
revoked or extended by written notice to Lessor not later than five (5) days
prior to the end of such ten (10) day period. Upon receipt of the Purchase
Amount, Lessor shall transfer the Premises to Lessee, or its assigns, pursuant
to Section 23.16 below, on the date set forth in the written notice delivered
by Lessee pursuant to this Section 20.1. If a Lease Event of Default of the
type described in clause (ii) above (other than a Lease Event of Default of the
type described in clause (a) or (b) of Article XVII hereof) relates only to a
specific Leased Property but not all Leased Properties, the


                                      -33-



exercise of the Early Termination Option and the purchase of such Leased
Properties for the applicable Purchase Amount in accordance with the
requirements hereof shall be deemed to cure such Lease Event of Default;
provided that Lessee may, if all of the Participants consent, cure such Lease
Event of Default for a specific Leased Property by exercising the Early
Termination Option and paying the Purchase Amount for such Leased Property;
provided, further, if any Participant fails to consent, Lessee may nonetheless
exercise the Early Termination Option and pay the Purchase Amount for all of
the Leased Properties.

     SECTION 20.2.  Required Purchase. Provided that Lessor has not exercised
any other remedy inconsistent therewith, Lessee shall be obligated to purchase
Lessor's interest in the Premises for the Purchase Amount (a) automatically
and without notice upon the occurrence of any Lease Event of Default arising as
a result of an Insolvency Event, (b) immediately upon the written demand of
Lessor upon the occurrence of any other Lease Event of Default.


                                  ARTICLE XXI
                              END OF TERM OPTIONS

     SECTION 21.1.  End of Term Options. At least 270 days before the scheduled
expiration date of the Lease Term, Lessee shall, by delivery of written notice
to Lessor and the Agent, exercise one of the following options:

     (a)  Renew this Lease (together with each Lease Supplement) with respect
to all, but not less than all, of the Premises for five (5) additional one-year
Lease Renewal Terms (the "Renewal Option") on the terms and conditions set
forth set forth herein and in the other Operative Documents; provided, however,
such Renewal Option shall be available at the end of the Base Term only if the
conditions to the Extension Option set forth in Section 2.14 of the
Participation Agreement are satisfied; and provided further, that the Renewal
Option shall not be available during the fifth Renewal Term; or

     (b)  Purchase for cash for the Purchase Amount all, but not less than all,
of the Premises then subject to this Lease on the last day of the Lease Term
(the "Purchase Option"); and if Lessee shall have elected the Purchase Option,
Lessor shall, upon the payment to Lessor of the Purchase Amount, transfer all
of Lessor's right, title and interest in and to the Premises pursuant to
Section 23.16 below; or


                                      -34-



     (c)  Sell on behalf of Lessor for cash to a single purchaser not in any way
affiliated with Lessee or any of its Affiliates all, but not less than all, of
the Premises then subject to this Lease on the last day of the Lease Term (the
"Sale Option"). Lessee's right to sell the Premises pursuant to the Sale Option
shall be conditioned upon the subject to (i) the full performance by Lessee of
its obligations pursuant to Section 2 of each of the Utility Easements before
such election of the Sale Option is made, (ii) the fulfillment by Lessee of each
of the terms and conditions set forth in Article XXII below, and (iii) there not
being at the time of such election any existing Third Party Subleases. Lessee
shall not enter into any additional subleases or renew any subleases with
respect to the Premises following Lessee's election of the Sale Option.
Following Lessee's election of the Sale Option, Lessee shall not remove any
Alterations.

     SECTION 21.2.  Election of Options. To the extent that the Renewal Option
is available, unless Lessee shall have affirmatively elected in accordance
herewith the Purchase Option or the Sale Option, Lessee shall be deemed to have
elected the Renewal Option. To the extent that the Renewal Option is not
available for any reason (including because of the Participants' refusal to
consent to an Extension Option Request), unless Lessee shall have (a)
affirmatively elected the Sale Option within the time period provided for in
Section 21.1. and (b) satisfied each of the requirements in Article XXII hereof,
Lessee shall be deemed to have elected the Purchase Option. In addition, the
Sale Option shall automatically be revoked if there exists a Lease Default,
Lease Event of Default or Event of Loss at any time after the Sale Option is
properly elected or Lessee fails to comply with each of the terms and conditions
set forth at such Article XXII and Lessor shall be entitled to exercise all
rights and remedies provided in Article XVIII hereof. Lessee may not elect the
Sale Option if there exists on the date the election is made a Lease Default, a
Lease Event of Default, an Event of Loss, or an outstanding Extension Option
Request.

     SECTION 21.3.  Renewal Options; Extension Options. The exercise of any
Renewal Option by Lessee shall be subject to satisfaction of the following
conditions:

          (i)  on the Lease Expiration Date then in effect and on the date
     Lessee gives notice of its exercise of the Renewal Option, no Lease Event
     of Default or Lease Default shall have occurred and be continuing; and

          (ii) Lessee shall not have exercised the Sale Option or the Purchase
     Option.


                                      -35-

Lessee's exercise of a Renewal Option shall be deemed to be a representation by
Lessee that on both the Lease Expiration Date then in effect and the date Lessee
gives notice of its exercise of the Renewal Option, no Lease Event of Default or
Lease Default shall have occurred and be continuing. Following the Extension
Effective Date, each Renewal Option (other than the first) shall be at the sole
option of Lessee, not subject to the consent of the Participants.

                                  ARTICLE XXII
                                  SALE OPTION

     SECTION 22.1. Sale Option Procedures. If Lessee elects the Sale Option,
Lessee shall use its best commercial efforts as nonexclusive agent for Lessor to
obtain the highest all cash purchase price for the purchase of the Premises, and
in the event Lessee receives any bid, Lessee shall within five (5) Business Days
after receipt thereof, and at least twenty (20) Business Days prior to the Lease
Expiration Date, certify to Lessor in writing the amount and terms of such bid,
the name and address of the party (who shall not be Lessee, Guarantor or any
Affiliate of Lessee or Guarantor or any Person with whom Lessee or Guarantor has
an understanding or arrangement regarding their future use, possession or
ownership of the Premises), but who may be Lessor or a Participant, any
Affiliates thereof, or any Person contacted by any Participant (other than any
Person referred to in the foregoing parenthetical) submitting such bid. Unless
pursuant to the terms of the bid submitted, the Sale Proceeds shall exceed the
aggregate outstanding Lease Balance as of the Lease Expiration Date any
Participant may submit a bid to Lessee not later than five (5) Business Days
prior to the Lease Expiration Date. Lessee shall bear its own expense and pay
the expenses of Lessor and each Participant in connection with any such bidding
and sale process pursuant to this Section 22.1 as well as all costs and expenses
incurred by any party (including a buyer or potential buyer) to place the
Premises in the condition required by Section 9.1 above and costs of repair and
alterations for improvements desired by such buyer. None of the foregoing costs
or expenses shall be deducted from the Sale Proceeds or serve to reduce the
purchase price to be paid for the Premises. After Lessee shall have certified to
Lessor all bids received, if all such bids received on an all cash basis are for
less than the aggregate outstanding Lease Balance as of the Lease Expiration
Date, any Participant, any Affiliate thereof, or any Person contacted by any
Participant may submit a further bid or bids to Lessee not later than five (5)
Business Days prior to the Lease Expiration Date. On or before the Lease
Expiration Date, so long as no Lease Event of Default or


                                      -36-

Lease Default shall have occurred and be continuing: (i) Lessee shall transfer
all of Lessee's right, title and interest in the Premises, or cause the Premises
to be transferred, to the bidder, if any, which shall have submitted the highest
bid therefor at least twenty (20) (or in the case of a Participant, any
Affiliate thereof or Person contacted by a Participant, five (5)) Business Days)
prior to such Lease Expiration Date, in the same manner and in the same
condition and otherwise in accordance with all of the terms of this Lese; (ii)
subject to the prior or current payment by Lessee of all amounts due under
clause (iii) of this sentence, Lessor shall comply with any conditions to
transfer set forth in Section 22.2 hereof and the transfer provisions of Section
23.16 hereof in order to transfer Lessor's right, title and interest in and to
the Premises for cash to such bidder; and (iii) Lessee shall simultaneously pay
to Lessor all of the amounts required pursuant to Section 22.3 below. All costs
related to a sale and delivery pursuant to this Section 22.1 including the cost
of sales agents retained by Lessee, Lessor or the Participants, improvements
desired by the potential buyer, delivery of documents, filing and documentary
transfer fees, Taxes relating to or arising as a result of such transfer, title
insurance, certification and testing of the Premises, environmental audits,
legal costs, costs of notices, any advertisement or other similar costs shall be
borne entirely by Lessee, without regard to whether such costs were incurred by
Lessor, Lessee or any potentially qualified buyer, and shall in no event be paid
by the purchaser of the Premises or from any of the Sale Proceeds or as a
reduction to the purchase price. Neither Lessor nor any Participant shall have
any responsibility for procuring any purchaser; provided, however, that Lessor
and its designees may, at the direction of the Required Participants, engage in
activities to market and sell the Premises. Any such activities undertaken by
Lessor pursuant to this Section 22.1 shall not reduce Lessee's obligations under
this Section 22.1 to use its best commercial efforts to sell the Premises in
accordance with the requirements of this Article XXII.

     SECTION 22.2. Sale. Lessee shall, on the Lease Expiration Date at Lessee's
own expense, transfer each Leased Property to the purchaser thereof free and
clear of all Liens other than Permitted Exceptions, in as good condition as it
was on the applicable Site Acquisition Date and on the applicable Completion
Date, ordinary wear and tear excepted, and in compliance with all Applicable
Laws and Regulations (and in any event without (x) any asbestos installed or
maintained in any part of the Premises, (y) any polychlorinated biphenyls (PCBs)
in, on or used, stored or located at the Premises, and (z) any other Hazardous
Materials). As a condition to Lessees' rights hereunder, Lessee shall obtain all
necessary governmental consents and approvals and make all


                                      -37-

governmental filings required by Lessee or Lessor in connection with any third
party sale. Lessee shall cooperate with the purchaser of the Premises in order
to facilitate the ownership and operation of each Leased Property by such
purchaser after the date of the sale or transfer, including providing all books,
reports and records regarding the maintenance, repair and ownership of the
Premises and granting or assigning all licenses necessary for the operation of
each Leased Property and cooperating in seeking and obtaining all necessary
Governmental Action. As a further condition to Lessee's rights hereunder, Lessee
shall pay the total cost for the completion of the Financed Improvements and of
all Alterations commenced prior to the Lease Expiration Date and for the repair
and rebuilding of the affected portions of each Leased Property suffering a
Casualty. All Financed Improvements and Alterations and all such repairs and
rebuilding shall be completed prior to the date of Lessee's election of the Sale
Option. Prior to the Lease Expiration Date, Lessee shall furnish to the
Certificate Trustee, the Agent, and the Participants and the independent
purchaser hereunder a reasonably current Environmental Audit for each Leased
Property dated not earlier than 45 days prior to the Lease Expiration Date and
addressed to each such party in form and substance satisfactory in the sole
discretion of such purchaser, the Certificate Trustee, the Agent and the
Required Participants. The obligations of Lessee under this Section 22.2 shall
survive the expiration or termination of this Lease. Unless Lessee shall have
exercised or been deemed to have exercised its Purchase Option, Lessor shall at
Lessee's expense be entitled to perform such investigation, including obtaining
reports of engineers and other experts as to the condition and state of repair
and maintenance of the Premises required by this Section 22.2 and as to the
compliance of the Premises with Applicable Laws and Regulations including
Environmental Laws, as it deems appropriate. Lessee, at its sole cost and
expense, shall cause the repair or other remediation of any discrepancies
between the actual condition of the Premises and the condition required under
this Lease, such repair or remediation to be completed not later than the Lease
Expiration Date.

     SECTION 22.3. Application of Sale Proceeds and Recourse Payments.

          (a) On the Lease Expiration Date in connection with an exercise of the
Sale Option, Lessee shall pay to Lessor all Rent then due together with all
other amounts due and payable by Lessee to Lessor, Agent, any Participant or any
Indemnitee. Lessee also shall pay to Lessor, as Supplemental Rent, from the
aggregate Sale Proceeds the aggregate outstanding Lease Balance as of the Lease
Expiration Date (as determined after the payment of all Rent due on


                                      -38-

such date). If the Sale Proceeds exceed the Lease Balance as of the Lease
Expiration Date, Lessee shall retain the portion of the Sale Proceeds in excess
thereof. If the Sale Proceeds are less than the aggregate outstanding Lease
Balance, Lessee shall pay or shall cause to be paid to Lessor, as Supplemental
Rent, on the Lease Expiration Date, in addition to the Sale Proceeds an
additional amount equal to the lesser of (x) the Sales Recourse Amount and (y)
the amount that the Lease Balance exceeds the Sale Proceeds.

          (b)   The obligation of Lessee to pay the amounts determined pursuant
to Sections 22.3(a) and 22.4 hereof shall be recourse obligations of Lessee, and
such payments by Lessee shall not limit any other obligation of Lessee under the
Operative Documents, including pursuant to Article VII of the Participation
Agreement.

      SECTION 22.4. Appraisal. If any Participant expects that the Sale Proceeds
will be less than the outstanding Lease Balance as of the Lease Expiration Date,
Lessor (upon direction from such Participant) shall engage an appraiser
reasonably satisfactory to Lessee, at Lessee's expense, to determine (by
appraisal methods reasonably satisfactory to the Required Participants) the Fair
Market Value of the Premises then subject to this Lease as of the Lease
Expiration Date. If the Appraiser concludes that the Fair Market Value of such
Premises as of the Lease Expiration Date is in excess of the Sale Proceeds to be
obtained from the sale of the Premises, Lessee shall promptly pay to Lessor on
the date of such sale together with the Sale Proceeds, as Supplemental Rent,
such excess which, together with such Sale Proceeds and the Sale Recourse Amount
so paid to Lessor, shall not exceed the Lease Balance determined immediately
before the application of the foregoing amounts.


                                 ARTICLE XXIII
                                 MISCELLANEOUS

      SECTION 23.1. Binding Effect; Successors and Assigns; Survival. The terms
and provisions of this Lease, and the respective rights and obligations
hereunder of Lessor, Lessee, Agent and the Participants shall be binding upon
them and their respective successors, legal representatives and assigns
(including, in the case of Lessor, any Person to whom Lessor may transfer the
Premises or any interest therein in accordance with the provisions of the
Operative Documents), and inure to their benefit and the benefit of their
respective permitted successors, legal representatives and assigns.


                                      -39-

      SECTION 23.2. Severability. Any provision of this Lease that shall be
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction, and Lessee shall remain
liable to perform its obligations hereunder except to the extent of such
unenforceability. To the extent permitted by Applicable Laws and Regulations,
Lessee hereby waives any provision of law that renders any provision hereof
prohibited or unenforceable in any respect.

      SECTION 23.3. Notices. Unless otherwise specified herein, all notices,
requests, demands or other communications to or upon the respective parties
hereto shall be in writing and shall be delivered and shall be deemed to have
been given in accordance with Section 9.3 of the Participation Agreement.

      SECTION 23.4. Amendment; Complete Agreements. Neither this Lease nor any
of the terms hereof may be terminated, amended, supplemented, waived or modified
orally, but only by an instrument in writing signed by the party against which
the enforcement of the termination, amendment, supplement, waiver or
modification shall be sought. This Lease, together with the other Operative
Documents, is intended by the parties as a final expression of their agreement
and as a complete and exclusive statement of the terms thereof, all
negotiations, considerations and representations between the parties having been
incorporated herein and therein. No course of prior dealings between the parties
or their officers, employees, agents or Affiliates shall be relevant or
admissible to supplement, explain, or vary any of the terms of this Lease or any
other Operative Document. Acceptance of, or acquiescence in, a course of
performance rendered under this or any prior agreement between the parties or
their Affiliates shall not be relevant or admissible to determine the meaning of
any of the terms of this Lease or any other Operative Document. No
representations, undertakings, or agreements have been made or relied upon in
the making of this Lease other than those specifically set forth in the
Operative Documents.

      SECTION 23.5. Headings. The Table of Contents and headings of the various
Articles and Sections of this Lease are for convenience of reference only and
shall not modify, define or limit any of the terms or provisions hereof.

      SECTION 23.6. Original Lease. The single executed original of this Lease
containing the receipt of Lessor therefor on or following the signature page
thereof shall be the "original


                                      -40-


executed counterpart" of this Lease. To the extent that this Lease constitutes
chattel paper, as such term is defined in the UCC as in effect in any
applicable jurisdiction, no security interest in this Lease may be created
through the transfer or possession of any counterpart other than the "original
executed counterpart."

      SECTION 23.7. GOVERNING LAW. THIS LEASE HAS BEEN DELIVERED IN, AND SHALL
IN ALL RESPECTS BE GOVERNED BY AN CONSTRUED IN ACCORDANCE WITH THE LAWS OF, THE
STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES (EXCEPT
SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW), EXCEPT AS TO MATTERS
RELATING TO THE GRANTING, CONVEYANCING, OR LEASING OF, AND CREATION OF LIENS
AND THE EXERCISE OF REMEDIES WITH RESPECT TO, THE PREMISES CONSTITUTING REAL
PROPERTY, WHICH, TO THE EXTENT REQUIRED BY APPLICABLE LAWS AND REGULATIONS,
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE IN
WHICH THE APPLICABLE LEASED PROPERTY IS LOCATED.

      SECTION 23.8. RESERVED.

      SECTION 23.9. Liability of Lessor Limited. The parties hereto agree that
State Street Bank and Trust Company of California, N.A., in its individual
capacity (the "State Street CA"), shall have no personal liability whatsoever to
Lessee or its respective successors and assigns for any Claim based on or in
respect of this Lease or any of the other Operative Documents or arising in any
way from the transactions contemplated hereby or thereby; provided, however,
that State Street CA shall be liable in its individual capacity (a) for its own
willful misconduct or gross negligence (or negligence in the handling of funds),
(b) for liabilities that may result from the incorrectness of any representation
or warranty expressly made by it in its individual capacity in Section 4.3 of
the Participation Agreement or from the failure of State Street CA to perform
its covenants and agreements set forth in Section 6.2(a) of the Participation
Agreement, or (c) for any Tax based on or measured by any fees, commission or
compensation received by it for acting as Lessor as contemplated by the
Operative Documents. It is understood and agreed that, except as provided in the
preceding proviso: (i) State Street CA shall have no personal liability under
any of the Operative Documents as a result of acting pursuant to and consistent
with any of the Operative Documents; (ii) all obligations of the Certificate
Trustee to Lessee are solely nonrecourse obligations except to the extent that
it has received payment from others; (iii) all such personal liability of State
Street CA is expressly waived and released as a condition of, and as
consideration for, the execution and delivery of the Operative Documents by
State Street CA; and (iv) this Lease is executed and delivered by State Street
CA solely


                                      -41-



as Certificate Trustee in the exercise of the powers expressly conferred upon it
as Lessor under the Trust Agreement.

     SECTION 23.10.  Estoppel Certificates.  Each party hereto agrees that at
any time and from time to time during the Lease Term, it will promptly, but in
no event later than thirty (30) days after request by the other party hereto,
execute, acknowledge and deliver to such other party or to any prospective
purchaser (if such prospective purchase has signed a commitment letter or letter
of intent to purchase the Premises or any part thereof or to purchase any
Certificate), assignee or mortgagee or third party designated by such other
party, a certificate stating (a) that this Lease is unmodified and in force and
effect (or if there have been modifications, that this Lease is in force and
effect as modified, and identifying the modification agreements); (b) the date
to which Basic Rent has been paid; (c) in the case of an estoppel certificate to
be given by Lessee, whether or not there is any existing default by Lessee in
the payment of Basic Rent or any other sum of money hereunder, and whether or
not there is any other existing Lease Default or Lease Event of Default with
respect to which a notice of default has been served, and, if there is any such
default, specifying the nature and extent thereof; (d) in the case of an
estoppel certificate to be given by Lessee, whether or not, to the knowledge of
Lessee after due inquiry and investigation, there are any purported setoffs,
defenses or counterclaims against enforcement of the obligations to be performed
hereunder existing in favor Lessee; and (e) other items that may be reasonably
requested; provided, that no such certificate may be requested unless the
requesting party has a good faith reason for such request. In addition, Lessee,
promptly, but in no event later than ten (10) Business Days after request by any
other party hereto, shall use commercially reasonable efforts to obtain and
deliver to such other party or to any prospective purchaser (if such prospective
purchaser has signed a commitment letter or letter of intent to purchase the
Premises or any part thereof or to purchase any Certificate), assignee,
mortgagee or third party designated by such other party, an estoppel certificate
from each subtenant under each sublease containing such items as reasonably
requested by the party requesting the same; provided, that no such certificate
may be requested unless the requesting party has a good faith reason for such
request.

     SECTION 23.11  No Joint Venture.  Any intention to create a joint venture
or partnership relation hereunder or pursuant to any other Operative Document
between Lessor and lessee is hereby expressly disclaimed.

                                      -42-




     SECTION 23.12.   No Accord and Satisfaction.  The acceptance by Lessor of
any sums from Lessee (whether as Basic Rent or otherwise) in amounts which are
less than the amounts due and payable by Lessee hereunder is not intended, nor
shall be construed, to constitute an accord and satisfaction of any dispute
between Lessor and Lessee regarding sums due and payable by Lessee hereunder,
unless the Required Participants specifically deem it as such in writing.

     SECTION 23.13.   No Merger.  In no event shall the leasehold estate of
Lessee hereunder merge with any interests, estates or rights of Lessor in or to
the Premises, it being understood that such leasehold estate of Lessee hereunder
shall be deemed to be separate and distinct from Lessor's interests, estates and
rights in or to the Premises, notwithstanding that any such interests, estates
or rights shall at any time or times be held by or vested in the same Person.

     SECTION 23.14.  Successor Lessor.  Lessee agrees that, in the case of the
appointment of any successor certificate trustee pursuant to the Trustee
Agreement and the other Operative Documents, such successor certificate trustee
shall, upon written notice by such successor certificate trustee to Lessee,
succeed to all the rights, powers and title of Lessor hereunder and shall be
deemed to be Lessor for all purposes hereof and without in any way altering the
terms of this Lease or Lessee's obligations hereunder.

     SECTION 23.15.  Survival.  The termination of this Lease pursuant to
Section 18.1 hereof shall in no event relieve Lessee of its liabilities and
obligations  hereunder which accrued prior to such termination, all of which
shall survive any such termination. The extension of any applicable statute of
limitations by Lessor, Lessee, any Participant or any other Indemnitee shall not
affect such survival.

     SECTION 23.16.  Transfer of Premises.  (a) Whenever pursuant to any
provision of this Lease, Lessor is required to transfer all or any portion of
the Premises or to any Leased Property to Lessee or to an independent third
party, such transfer shall be made at Lessee's expense by the transfer by a deed
and assignment of all of Lessor's interest in and to the applicable Premises on
an "as is, where is, with all faults" basis free and clear of all Certificate
Trustee Liens, without covenants or warranties of title, except for matters
arising by, through or under Lessor, and otherwise without recourse,
representation or warranty of any kind, and together with the due assumption by
Lessee (or such third party) of, and due release of Lessor from, all obligations
relating to the applicable Premises and the applicable Del Monte Collateral. In
connection

                                      -43-





with any transfer to an independent third party, Lessee shall execute and
deliver such documents, certificates and estoppels as may be required to
facilitate the transfer of the applicable Premises. Any provision in this Lease
or other Operative Document to the contrary notwithstanding, Lessor shall not be
obligated to make any such transfer until Lessor and the Participants have
received all Rent and other amounts then due and owing by Lessee hereunder and
under the other Operative Documents. At or subsequent to the transfer or return
of all or any of the Premises, Lessee will provide Lessor with such lien and
title searches as Lessor may reasonably request to demonstrate to Lessor's
satisfaction that the applicable Premises are subject to no liens for which
Lessor would be liable under any warranties of title.

          (b) Lessee may assign to another Person its right, upon a purchase by
Lessee, to take title to the Premises or to any Leased Property pursuant to
Article XX or Section 21.1(b) hereof; provided, that (i) Lessee shall exercise
any such option, (ii) such assignee shall be bound by the provisions of such
Article XX or Section 21.1(b), as applicable, with respect to the Premises or
the Leased Property to be purchased by it, (iii) Lessee shall have delivered to
Lessor proof that all necessary governmental approvals, consents and filings
with respect to such transfer, including the purchase of the Premises or any
Leased Property by any other Person as contemplated herein, have been obtained
or made, as applicable, and (iv) no such assignment shall release Lessee from
its obligations under any such Section, and Lessee shall remain personally
liable to Lessor for the payment of all amounts due under any such section and
this Section 23.16.

     SECTION 23.17.  Enforcement of Certain Warranties.  Unless a Lease Event of
Default shall have occurred and be continuing, Lessor authorizes lessee
(directly or through agents), at Lessee's expense, to assert, during the Lease
Term, all of Lessor's rights (if any) under any applicable warranty and any
other claim that Lessee or Lessor may have under the warranties provided to
Lessor in connection with the Financed Improvements and Lessor agrees to
cooperate, at Lessee's expense, with Lessee and its agents in asserting such
rights. Any amount recovered by Lessee under any such warranties shall be
retained by or paid over to Lessee, subject to Section 23.18 below.

     SECTION 23.18.  Security Interest in Funds.  As long as a Lease Event of
Default, or a Lease Default that upon notice or lapse of time, or both, would
become an Insolvency Event, shall have occurred and be continuing, any amount
that would otherwise be payable to Lessee under the Operative Documents shall be
paid to or retained by Lessor (including amounts to be paid to Lessee pursuant

                                      -44-

to Article XIII or Section 23.17 hereof) as security for the performance by
Lessee in full of its obligations under this Lease and the other Operative
Documents, and it may be applied to the obligations of Lessee hereunder and
under the other Operative Documents and distributed pursuant to Section 18.2
hereof. At such time as no Lease Event of Default, or no Lease Event of Default
that upon notice or lapse of time, or both, would become an Insolvency Event, or
failure to perform shall be continuing, such amounts, net of any amounts
previously applied to Lessee's obligations hereunder or under any other
Operative Documents, shall be paid to Lessee. Any such amounts which are held
pending paying to Lessee or application hereunder shall be invested by Lessor as
directed from time to time in writing by Lessee, and at the expense and risk of
Lessee, in Permitted Investments. Any gain (including interest received)
realized as the result of any such investment (net of any fees, commissions and
other expenses, if any, incurred in connection with such investment) shall be
applied from time to time in the same manner as the principal invested. Lessor
shall not be liable for any losses on such investments or for any failure to
make any investment. Lessee will promptly pay to Lessor, on demand, the amount
of any loss realized as the result of any such investment (together with any
fees, commissions and other expenses, if any, incurred in connection with such
investment), such amount to be held, paid and applied in the same manner as
other amounts subject to this Section 23.18.

     SECTION 23.19. Recording of Lease Supplements. Concurrently with the
execution and delivery of this Lease and concurrently with the execution and
delivery of each Lease Supplement, Lessor and Lessee shall execute, acknowledge
and cause to be recorded each such Lease Supplement or a memorandum thereof in
the official records of the Counties where each Site that is the subject of this
Lease or such Lease Supplement is located and in such other places as Lessor
deems necessary to perfect the Lien granted pursuant to this Lease or such Lease
Supplement. Notwithstanding the execution, delivery and recording of any such
Lease Supplement or memorandum thereof, the terms, covenants and conditions of
this Lease shall control.

     SECTION 23.20. Nature of Transaction. It is the intention of the parties
that:

          (a) the Overall Transaction constitutes an operating lease from
Lessor to Lessee for purposes of Lessee's and Guarantor's financial reporting;

          (b) for federal and state income tax, property tax, bankruptcy
(including the substantive law upon which bankruptcy

                                      -45-


proceedings are based) and real estate and Uniform Commercial Code purposes:

          (i) the Overall Transaction constitutes a financing by the
     Participants to Lessee, and on each Site Acquisition Date beneficial
     ownership in the Premises shall be deemed to pass directly to and that the
     Overall Transaction preserves beneficial ownership in the Premises in
     Lessee, and the obligations of Lessee to pay Basic Rent shall be treated
     as payments of interest to the Participants, and the payment by Lessee of
     any amounts in respect of the Lease Balance shall be treated as payments
     of principal to the Participants;

          (ii) Lessor holds title in the Premises as security for Lessee's and
     Guarantor's obligations under the Operative Documents, and the Lease
     grants a security interest or a lien, as the case may be, in the Premises
     and the other Del Monte Collateral in favor of the Certificate Trustee,
     and for the benefit of the Participants; and

          (iii) the Mortgages create liens and security interests in the
     Mortgaged Property defined therein for the benefit of all the Participants.

Nevertheless, Lessee acknowledges and agrees that none of Certificate Trustee,
Agent, Arranger, or any Participant has made any representations or warranties
concerning the tax, accounting or legal characteristics of the Operative
Documents or any aspect of the Overall Transaction and that Lessee and
Guarantor have obtained and relied upon such tax, accounting and legal advice
concerning the Operative Documents and the Overall Transaction as each deems
appropriate.

                            [SIGNATURE PAGES FOLLOW]

                                      -46-


                                               Amended and Restated Master Lease

     IN WITNESS WHEREOF, the undersigned have each caused this Amended and
Restated Master Lease to be duly executed and delivered by their respective
officers thereunto duly authorized as of the day and year first above written.

                                        STATE STREET BANK AND TRUST COMPANY OF
                                        CALIFORNIA, N.A., not in its individual
                                        capacity, but solely as Certificate
                                        Trustee


                                        By:  /s/ MARK HENSON
                                             ----------------------------------
                                        Name :    Mark Henson
                                        Title:    Assistant Vice President


                                        DEL MONTE CORPORATION, as Lessee


                                        By:
                                             ----------------------------------
                                        Name :    William R. Sawyers
                                        Title:    Vice President, General
                                                  Counsel, Secretary



                                      S-1

                                               Amended and Restated Master Lease

     IN WITNESS WHEREOF, the undersigned have each caused this Amended and
Restated Master Lease to be duly executed and delivered by their respective
officers thereunto duly authorized as of the day and year first above written.

                                        STATE STREET BANK AND TRUST COMPANY OF
                                        CALIFORNIA, N.A., not in its individual
                                        capacity, but solely as Certificate
                                        Trustee


                                        By:
                                             ----------------------------------
                                        Name :    Mark Henson
                                        Title:    Assistant Vice President


                                        DEL MONTE CORPORATION, as Lessee


                                        By:  /s/ WILLIAM R. SAWYERS
                                             ----------------------------------
                                        Name :    William R. Sawyers
                                        Title:    Vice President, General
                                                  Counsel, Secretary



                                      S-1

EX-10.20

                                                                   EXHIBIT 10.20

                            FIRST AMENDMENT TO LEASE

        THIS FIRST AMENDMENT TO LEASE ("Amendment") is entered into this 30 day
of April, 2000, by and between TMG/ONE MARKET, L.P., A Delaware limited
partnership and CROSSMARKET, LLC, a Nevada limited liability company
(collectively, "Landlord") and DEL MONTE CORPORATION, a New York corporation
("Tenant"), in the following factual context.

                                    RECITALS

        This Amendment is based upon the following facts, understandings and
intentions of the parties.

        A. Tenant and Landlord entered into that certain Lease dated as of
October 7, 1999 (the "Lease") of certain premises located in the building
commonly known as The Landmark @ One Market, California, more particularly
described in the Lease.

        B. Del Monte Foods Company, a New York corporation ("Guarantor")
executed that certain Lease Guaranty, dated as of October 7, 1999 (the
"Guaranty") guaranteeing the obligations of Tenant under the Lease.

        C. Concurrent with the execution of this Amendment, Tenant and Landlord
are entering into that certain Annex Sublease (the "Annex Sublease") for the
sublease by Tenant of certain space in a building located adjacent to the
Building.

        D. Landlord and Tenant now desire to amend the Lease.

        NOW, therefore, in consideration of the mutual covenants and promises
set forth in this Amendment and other valuable consideration, receipt of which
is hereby acknowledged, the parties do hereby agree as follows:

        1. Definitions. Terms defined in the Lease shall have the same meanings
when used in this Amendment.

        2. Premises. The definition of the "Premises" set forth in the Basic
Lease Information of the Lease is hereby deleted in its entirety and the
following is hereby substituted in its place:

               92,487 square feet of Rentable Area located on the 3rd, 9th, 10th
               and 11th Floor(s) of the Building (of which 8,189 square feet are
               located on the 3rd floor, 36,310 square feet are located on the
               9th Floor, 36,310 square feet are located on the 10th Floor, and
               11,678 square feet are located on the 1lth Floor), as shown on
               the Floor Plan(s) attached to this Lease as Exhibit A. The
               Premises shall also include the storage area outlined on the
               Floor Plan(s) and 3,500 square feet located in the basement of
               the Building (the "Storage Space"). The entire Building contains
               362,109 square feet of Rentable Area.


                                      -1-


        3. Rent. The description of Base Rent set forth in the Basic Lease
Information of the Lease is hereby deleted in its entirety and the following is
hereby substituted in its place:



PERIOD OF TERM                                         AMOUNT
- --------------                                         -------
                                        
Commencement Date to
Fourth anniversary of
Commencement Date                          $4,787,867.16/year (the "Initial Base
                                           Rent")

Fourth anniversary of
Commencement Date to
Eighth Anniversary of
Commencement Date                          $4,876,865.16/year (the "Middle Base
                                           Rent")
Eighth anniversary of
Commencement Date to
End of Initial Term                        $5,038,483.16/year (the "Final Base
                                           Rent")

Extended Terms:                            The fair market rent for the Premises
                                           as of the first day of each Extended
                                           Term, as determined in accordance
                                           with Section 3.2 of the Lease.




        4. Percentage Share. The definition of "Tenant's Percentage Share" set
forth in the Basic Lease Information of the Lease is hereby amended to be
25.54%.

        5. Construction Allowance. The first sentence of Section 1.2 of the Work
Letter is hereby deleted in its entirety and the following is hereby substituted
in its place:

               In the manner provided in this Section 1.2, Landlord shall pay to
               Tenant a "Construction Allowance" equal to Forty Dollars ($40.00)
               multiplied by the Rentable Area of the portion of the Premises
               located on the 9th, lOth and 11th Floors of the Building plus
               Thirty-Two and 50/100s Dollars ($32.50) multiplied by the
               Rentable Area of the portion of the Premises located on the 3rd
               Floor of the Building.

        6. Cross Default. The Lease is hereby amended to add the following as
Section 20.1(f) of the Lease:

                (f) the occurrence of a default by Tenant under the Annex Lease.

        7. Options to Extend. Section 3.2 of the Lease is hereby amended to add
the following at the end of Section 3.2.1: "Notwithstanding any provision in
this Lease to the contrary, Tenant shall have no right to exercise either
Extension Option unless Tenant simultaneously properly exercises the applicable
extension option under the Annex Lease."

        8. Deletion of 3rd Floor. The Lease is hereby amended to add the
following as Section 2.3 of the Lease:






                2.3. Deletion of 3rd Floor. If at any time during the Term the
        Annex Lease terminates, then Tenant shall have the option (the "Deletion
        Option") to elect, as of the date of termination of the Annex Lease (the
        "Deletion Date"), to delete from the Premises the portion of the
        Premises located on the 3rd Floor of the Building (the "Third Floor
        Portion"). If Tenant properly exercises the Deletion Option in
        accordance with the terms of this Section 2.3, then as of the Deletion
        Date: (i) the Third Floor Portion shall automatically be deemed deleted
        from the Premises, (ii) Tenant shall surrender the Third Floor Portion
        to Landlord in the condition required under this Lease, and (iii)
        Landlord shall concurrently deliver to Tenant an amendment to this Lease
        memorializing the deletion of the Third Floor Portion from the Premises
        (the "Deletion Amendment"). The Deletion Amendment shall provide the
        following: (i) the definition of the Premises shall be modified to
        exclude the Third Floor Portion; (ii) Tenant's Percentage Share shall be
        decreased to reflect the deletion of the Third Floor Portion from the
        Premises, (iii) the Initial Base Rent shall be decreased by an amount
        equal to the Initial Multiple multiplied by any decrease in the Rentable
        Area of the Premises, (iv) the Middle Base Rent shall be decreased by an
        amount equal to the Middle Multiple multiplied by any decrease in the
        Rentable Area of the Premises, and (v) the Final Base Rent shall be
        decreased by an amount equal to the Final Multiple multiplied by any
        decrease in the Rentable Area of the Premises. If Tenant fails to
        execute the Deletion Amendment within thirty (30) days after receipt of
        the Deletion Amendment from Landlord, or if Tenant fails to vacate the
        Third Floor Portion of the Premises on or before the effective date of
        the Deletion Amendment, then Tenant shall be in default under this Lease
        and Landlord shall have the right to exercise all of its rights and
        remedies under this Lease. Tenant shall have the right to exercise the
        Deletion Option by delivering written notice of exercise to Landlord at
        any time during a thirty (30) day period following Tenant's receipt of
        written notice from Landlord that the Annex Lease is terminating. If
        Tenant fails to exercise the Deletion Option in accordance with this
        Section 2.3, then the Third Floor Portion shall remain a part of the
        Premises.

        9. Representations and Warranties of Tenant. As a material inducement to
Landlord to enter into this Amendment, Tenant represents and warrants to
Landlord that, as of the date of this Amendment:

               9.1. No Defaults. The Lease is in full force and effect. There
are no defaults by Landlord or Tenant under the Lease, and no circumstance has
occurred which, but for the expiration of an applicable grace period, would
constitute an event of default by Landlord or Tenant under the Lease. Tenant has
no defenses or rights of offset under the Lease.

               9.2. Authority. Tenant has full right, power and authority to
enter into this Amendment, and has obtained all necessary consents and
resolutions from its members required under the documents governing its affairs
in order to consummate this transaction, and the persons executing this
Amendment have been duly authorized to do so. The Amendment and the Lease are
binding obligations of Tenant, enforceable in accordance with their terms.

               9.3 No Assignments. Tenant is the sole lawful tenant under the
Lease, and Tenant has not sublet, assigned or otherwise transferred any of the
right, title or interest of Tenant under the Lease or arising from its use or
occupancy of the Premises, and no other person, partnership, corporation or
other entity has any right, title or interest in the Lease or the Premises, or
the right to occupy or use all or any part of the Premises.


                                      -3-


        10. Amendment to Lease. This Amendment is and shall constitute an
amendment to the Lease and shall be effective as of the date of this Amendment.
Except as modified hereby, all of the terms and conditions of the Lease shall
remain in full force and effect.

        IN WITNESS WHEREOF, the parties hereto have executed this Amendment the
day and year first above written.

LANDLORD:

TMG/ONE MARKET, L.P.,
A Delaware limited partnership

By: Martin/One Market LLC,
    A California limited liability company
    Its General Partner

    By: The Martin Group of Companies, Inc.,
        A California corporation
        Its Managing Member

By:
   -------------------------
Its:
    ------------------------


CROSSMARKET, LLC
A Nevada limited liability company

By: Martin/Crossman, LLC
    A California limited liability company
    Its: managing member

     By: /s/ MICHAEL A. COVARRUBIAS
        ----------------------------
        Michael A. Covarrubias
        Managing Member


TENANT:

DEL MONTE CORPORATION,
A New York corporation

By:  DAVID L. MEYERS
   -------------------------
Its:
    ------------------------



By: WILLIAM R. SAWYERS
   -------------------------
Its:
    ------------------------





                               GUARANTOR'S CONSENT

        The undersigned is the Guarantor under the Guaranty. Guarantor hereby
approves the foregoing Amendment and consents to Tenant's execution of the
Amendment. Guarantor agrees that the Amendment, and Tenant's execution of the
Amendment, shall in no way limit, void, or vitiate the Guaranty or any of the
provisions of the Guaranty, and the Amendment, and Tenant's execution of the
Amendment, shall in no way alter, limit or otherwise affect the Guaranty or the
liability of Guarantor under the Guaranty.

        IN WITNESS WHEREOF, Guarantor has executed this Amendment and
Guarantor's Consent the day and year first above written.

DEL MONTE FOODS COMPANY,
A New York corporation

By: DAVID L. MEYERS
   -------------------------

Its:
    ------------------------

By: WILLIAM R. SAWYERS
   -------------------------

Its:
    ------------------------



                                      -5-

EX-10.21

                                                                   EXHIBIT 10.21


                            SECOND AMENDMENT TO LEASE

      THIS SECOND AMENDMENT TO LEASE ("Amendment") is entered into this 23rd day
of March, 2001, by and between TMG/ONE MARKET, L.P., A Delaware limited
partnership ("Landlord") and DEL MONTE CORPORATION, a New York corporation
("Tenant"), in the following factual context.

                                    RECITALS

      This Amendment is based upon the following facts, understandings and
intentions of the parties.

      A. Tenant and Landlord entered into that certain Lease dated as of October
7, 1999 as amended by that certain First Amendment to Lease dated April 30, 2000
(collectively, the "Lease") of certain premises located in the building commonly
known as The Landmark @ One Market, California, more particularly described in
the Lease.

      B. Del Monte Foods Company, a New York corporation ("Guarantor") executed
that certain Lease Guaranty, dated as of October 7, 1999 (the "Guaranty")
guaranteeing the obligations of Tenant under the Lease.

      C. Landlord and Tenant now desire to amend the Lease.

      NOW, therefore, in consideration of the mutual covenants and promises set
forth in this Amendment and other valuable consideration, receipt of which is
hereby acknowledged, the parties do hereby agree as follows:

      l . Definitions. Terms defined in the Lease shall have the same meanings
when used in this Amendment.

      2. Premises. The term "Premises" set forth in the Basic Lease Information
of the Lease is hereby amended to delete from the Premises the portion of the
third floor of the Building outlined on Exhibit A attached to this Amendment.
Accordingly, the definition of the "Premises" set forth in the Basic Lease
Information of the Lease is hereby deleted in its entirety and the following is
hereby substituted in its place:

        92,417 square feet of Rentable Area located on the 3rd, 9th, 10th and
        11th Floor(s) of the Building (of which 8,119 square feet are located on
        the 3rd floor, 36,310 square feet are located on the 9th Floor, 36,310
        square feet are located on the 10th Floor, and 11,678 square feet are
        located on the 11th Floor), as shown on the Floor Plan(s) attached to
        this Lease as Exhibit A. The Premises shall also include the storage
        area outlined on the Floor Plan(s) and 3,500 square feet located in the
        basement of the Building (the "Storage Space"). The entire Building
        contains 362,109 square feet of Rentable Area.

      3. Percentage Share. The definition of "Tenant's Percentage Share" set
forth in the Basic Lease Information of the Lease is hereby amended to be
25.52%.

      4. Rent. In consideration for this Amendment, the Base Rent payable by
Tenant as set forth in the Basis Lease Information shall be reduced in the
following amounts during the following periods: (i) during the period from the
Commencement Date until the fourth anniversary of the Commencement Date,
$398.80/month, (ii) during the period from the fourth anniversary of the


                                       -1-


Commencement Date until the eighth anniversary of the Commencement Date,
$416.92/month, and (iii) during the remainder of the Initial Term,
$435.05/month.

      5. Amendment to Lease. This Amendment is and shall constitute an
amendment to the Lease and shall be effective as of the date of this Amendment.
Except as modified hereby, all of the terms and conditions of the Lease shall
remain in full force and effect.

      IN WITNESS WHEREOF, the parties hereto have executed this Amendment the
day and year first above written.

LANDLORD:

TMG/ONE MARKET, L.P.,
A Delaware limited partnership

By:  Martin/One Market LLC,
     A California limited liability company
     Its General Partner

     By:  The Martin Group of Companies, Inc.,
          A California corporation
          Its Managing Member


     By:
         -----------------------------
     Its:     SVP
         -----------------------------

TENANT:

DEL MONTE CORPORATION,
A New York corporation

By:  /s/  STEVEN P. RONZONE
    ----------------------------------
Its: DIR/RE & Facilities
    ----------------------------------


By: /s/  WILLIAM R. SAWYERS
    ----------------------------------
Its:   V.P. & General Counsel
    ----------------------------------


                               GUARANTOR'S CONSENT

      The undersigned is the Guarantor under the Guaranty. Guarantor hereby
approves the foregoing Amendment and consents to Tenant's execution of the
Amendment. Guarantor agrees that the Amendment, and Tenant's execution of the
Amendment, shall in no way limit, void, or vitiate the Guaranty or any of the
provisions of the Guaranty, and the Amendment, and Tenant's execution of the
Amendment, shall in no way alter, limit or otherwise affect the Guaranty or the
liability of Guarantor under the Guaranty.

      IN WITNESS WHEREOF, Guarantor has executed this Amendment and Guarantor's
Consent the day and year first above written.

DEL MONTE FOODS COMPANY,
A New York corporation

By:  /s/ STEVEN P. RONZONE
    ---------------------------------
Its: DIR/RE & Facilities
    ---------------------------------
By: /s/ WILLIAM R. SAWYERS
    ---------------------------------
Its:  V.P. & General Counsel
    ---------------------------------


                                      -3-


                           CONFIRMATION OF LEASE TERM

LANDLORD: TMG/ONE MARKET, L.P., A California limited partnership

TENANT: DEL MONTE CORPORATION, A New York corporation

LEASE DATE: October 7,1999

PREMISES: all or portions of the 3rd, 9th, 10th and 11th Floor(s) of the
          Landmark@One Market

Pursuant to Section 3 of the above referenced Lease, the Commencement Date as
defined in Section 3 shall be December 19, 2000.

LANDLORD:

TMG/ONE MARKET, L.P.,
A Delaware limited partnership

By:  Martin/One Market LLC,
     A California limited liability company
     Its General Partner

     By:  The Martin Group of Companies, Inc.,
          A California corporation
          Its Managing Member


     By:
         -----------------------------
     Its:           SVP
         -----------------------------

TENANT:

DEL MONTE CORPORATION,
A New York corporation

By:  /s/  STEVEN P. RONZONE
    ----------------------------------
Its:  DIR/R.E. & Fac.
    ----------------------------------



By: /s/  RAYMOND S. VOLAN
    ----------------------------------
Its:   Real Estate Mgr.
    ----------------------------------

EX-10.23

                                                                   EXHIBIT 10.23


                  AGREEMENT FOR INFORMATION TECHNOLOGY SERVICES

                                     BETWEEN

                              DEL MONTE CORPORATION

                                       AND

                       ELECTRONIC DATA SYSTEMS CORPORATION

                                       AND

                          EDS INFORMATION SERVICES LLC

                                  JUNE 30, 2002





                                  Page 1 of 49


                                TABLE OF CONTENTS


                                                                                  
ARTICLE I. RELATIONSHIP MANAGEMENT....................................................6
1.01    EDS Account Executive.........................................................6
1.02    Del Monte Representative......................................................6
1.03    Procedures Manual.............................................................7

ARTICLE II. PERSONNEL.................................................................8
2.01    Use and Replacement of Personnel..............................................8
2.02    Qualifications and Retention of EDS Personnel.................................8
2.03    Use of Subcontractors.........................................................9
2.04    Hiring of Employees...........................................................9

ARTICLE III. TERM....................................................................10
3.01    Initial Term.................................................................10
3.02    Renewal Term; Extension Period...............................................10

ARTICLE IV. EDS SERVICES.............................................................11
4.01    Services.....................................................................11
4.02    Scope and Volume of Services.................................................11
4.03    Services, Additional Details.................................................11
4.04    Services not Specifically Noted..............................................14
4.05    Services from Third Parties..................................................14
4.06    Reliance on Instructions.....................................................14
4.07    Savings Clause...............................................................15

ARTICLE V. SERVICE LEVELS............................................................15
5.01    Service Levels...............................................................15
5.02    Measurement and Monitoring Tools.............................................15
5.03    Continuous Improvement and Best Practices....................................15
5.04    Adjustment of Service Levels.................................................15
5.05    Root Cause Analysis..........................................................15
5.06    Service Level Failures.......................................................16

ARTICLE VI. SERVICE LOCATIONS........................................................16





                                  Page 2 of 49


                                                                                  
6.01    Facilities...................................................................16
6.02    Safety and Security Procedures...............................................17
6.03    Data Security................................................................17
6.04    Security Relating to Competitors and other Interested Parties................17
6.05    Use of Del Monte Service Locations...........................................17

ARTICLE VII. DEL MONTE'S ROLE........................................................18
7.01    Del Monte Responsibilities...................................................18
7.02    Access to Del Monte Facilities and Infrastructure............................19
7.03    Access to Del Monte Equipment................................................19
7.04    Use of Del Monte Software and Del Monte-Vendor Software......................19
7.05    Additional Items of Property.................................................19
7.06    Consents; Further Assurances.................................................19

ARTICLE VIII. MAINTENANCE CONTRACTS..................................................20
8.01    EDS Management of Del Monte-Vendor Software and other Information
        Technology related maintenance contracts.....................................20
8.02    Notification.................................................................20

ARTICLE IX. REPRESENTATIONS, WARRANTIES AND COVENANTS................................20
9.01    Warranties...................................................................20
9.02    Covenants....................................................................22

ARTICLE X. PROPRIETARY RIGHTS........................................................23
10.01   Definitions..................................................................23
10.02   EDS Software.................................................................24
10.03   EDS-Vendor Software..........................................................25
10.04   Del Monte Software...........................................................25
10.05   Del Monte-Vendor Software....................................................25
10.06   Developed Software and Other Deliverables....................................26
10.07   EDS Development Tools; Residual Technology...................................26
10.08   Further Assurances...........................................................26

ARTICLE XI. DATA, CONFIDENTIALITY AND AUDIT RIGHTS...................................27
11.01   Data of Del Monte............................................................27
11.02   Privacy Laws.................................................................28
11.03   Confidentiality..............................................................28



                                  Page 3 of 49


                                                                                  
11.04   Audit Rights.................................................................29

ARTICLE XII. PAYMENTS................................................................30
12.01   Charges for EDS Services.....................................................30
12.02   Out-of-Pocket Expenses.......................................................30
12.03   Time of Payment..............................................................30
12.04   Disputed Amounts.............................................................31
12.05   Taxes........................................................................31
12.06   Cost and Quality Benchmarking................................................32

ARTICLE XIII. DISPUTE ESCALATION, MEDIATION AND ARBITRATION..........................32
13.01   Dispute Escalation...........................................................32
13.02   Exclusive Remedy.............................................................34

ARTICLE XIV. TERMINATION.............................................................35
14.01   Material Default.............................................................35
14.02   Termination for Nonpayment...................................................35
14.03   Termination for Bankruptcy and Related Events................................35
14.04   Termination upon Material Change in Del Monte Business.......................35
14.05   Termination for Convenience..................................................36
14.06   Effect of Expiration or Termination..........................................36

ARTICLE XV. INDEMNITIES AND LIABILITY................................................38
15.01   Indemnities..................................................................38
15.02   Liability....................................................................41

ARTICLE XVI. MISCELLANEOUS...........................................................42
16.01   Accounting Terms.............................................................42
16.02   Amendments; Waiver...........................................................42
16.03   Approvals and Similar Actions................................................43
16.04   Binding Nature; Assignment...................................................43
16.05   Construction Rules...........................................................43
16.06   Entire Agreement; Survival...................................................44
16.07   Excused Performance..........................................................44
16.08   Export Regulations...........................................................44
16.09   Governing Law................................................................45
16.10   Independent Contractors......................................................45




                                  Page 4 of 49


                                                                                  
16.11   Notices......................................................................45
16.12   Public Relations and Marketing References....................................45
16.13   Right to Engage in Other Activities..........................................46






                                  Page 5 of 49


                  AGREEMENT FOR INFORMATION TECHNOLOGY SERVICES

        This AGREEMENT FOR INFORMATION TECHNOLOGY SERVICES (referred to,
together with the exhibits and schedules attached hereto, as the "AGREEMENT"),
effective as of November 1st, 2002 (the "EFFECTIVE DATE"), is between Del Monte
Corporation, a New York corporation ("DEL MONTE"), Electronic Data Systems
Corporation, a Delaware corporation ("EDS CORPORATION") and EDS Information
Services L.L.C. a Delaware limited liability company ("EIS"). The obligations of
EDS Corporation set forth in this Agreement will be performed by EDS
Corporation, itself and through its direct and indirect wholly-owned
subsidiaries, including EIS (collectively "EDS"). EDS Corporation will remain
responsible for the obligations performed by EIS and such other subsidiaries to
the same extent as if such obligations were performed by EDS Corporation. By
executing this Agreement, EIS also agrees to be bound by, and subject to, the
terms and conditions of this Agreement to the same extent as EDS Corporation. By
way of background, Del Monte desires that certain of its technology and
information systems operations and functions, which are currently being
performed by EDS under an agreement that will expire at 23:59:59 on October 31,
2002, continue to be performed and managed by a third party experienced in
performing and managing such operations and functions. Del Monte has selected
EDS as its vendor of choice to continue to provide the technology and
information systems services during the term of this Agreement. This Agreement
documents the terms and conditions under which Del Monte agrees to purchase, and
EDS agrees to provide, such services. EDS and Del Monte may be referred to in
this Agreement individually as a "PARTY" and together as the "PARTIES." For
convenience of reference, the Schedule of Definitions attached hereto sets forth
the capitalized terms that are used in this Agreement and identifies the
sections hereof in which the definitions for such terms appear.

                       ARTICLE I. RELATIONSHIP MANAGEMENT

1.01 EDS Account Executive.

        At all times during the term of this Agreement, EDS will provide an
individual who will be dedicated, on a full-time basis, to Del Monte's account
and who will maintain an office at Del Monte's headquarters or at such other
location as Del Monte shall specify in accordance with Section 6.01 (the "EDS
ACCOUNT EXECUTIVE"). The EDS Account Executive will (a) be acceptable to Del
Monte, (b) be the primary contact for Del Monte in dealing with EDS under this
Agreement, (c) have overall responsibility for managing and coordinating the
delivery of the EDS Services, (d) meet regularly with the Del Monte
Representative and (e) have the power and authority to make decisions with
respect to actions to be taken by EDS in the ordinary course of day-to-day
management of Del Monte's account in accordance with this Agreement. Unless
otherwise requested by Del Monte, EDS will assign the EDS Account Executive for
a minimum of three (3) year periods and will not reassign such individual during
such period (e.g., EDS will not reassign the current EDS Account Executive until
at least three (3) years at the Del Monte account).

1.02 Del Monte Representative.



                                  Page 6 of 49


        At all times during the term of this Agreement, Del Monte will designate
a senior level individual who will be authorized to act as Del Monte's primary
contact for EDS in dealing with Del Monte under this Agreement and who will have
the power and authority to make decisions with respect to actions to be taken by
Del Monte under this Agreement (the "DEL MONTE REPRESENTATIVE"). The Del Monte
Representative will be Del Monte's Chief Information Officer. The Del Monte
Representative may designate in writing a reasonable number of additional Del
Monte employees to be points of contact for EDS with respect to particular
matters of expertise relating to this Agreement.

1.03 Procedures Manual.

        (a) Procedures Manual. The EDS Representative and the Del Monte
Representative will agree on the content and structure of the Procedures Manual
within sixty (60) days of the Effective Date. The procedures manual (the
"PROCEDURES MANUAL"), sets forth but is not limited to:

            (i) Periodic Reports. Periodic reports and detailed requirements for
the periodic reports that shall be provided to Del Monte by EDS regarding EDS 's
provision of the Services;

            (ii) Goals. Additional goals, specifications and documentation
(e.g., operations manuals, user guides, specifications, version control
management, and management reporting) consistent with the provisions of this
Agreement;

            (iii) Program Management. EDS' proprietary Service Excellence
Dashboard, Systems Life Cycle Methodology, Project Management Methodology, and
other management tools and techniques that EDS shall use to perform the
services;

            (iv) Disaster Recovery Procedures. Disaster recovery procedures,
together with problem escalation policies and procedures and such other matters
as Del Monte and EDS may agree; and

            (v) Change Control Procedures. A description of the change control
procedures and implementation techniques to be used therefore, including
policies and procedures relating to hardware, software, facility changes, system
problem management and emergency changes.

            (vi) Security Procedures, A description of the security procedures
and processes to be used.

            (vii) Service levels. A description of the Service Levels as noted
in Article V of this Agreement.

        (b) Updates to Procedures Manual. EDS shall periodically update the
Procedures Manual (but in no event less frequently than once during any six (6)
month period during the term) to reflect changes in the operations, policies and
procedures described therein. EDS will submit all updates to the Procedures
Manual to Del Monte for Del Monte's review and prior written approval, which
approval will not be unreasonably



                                  Page 7 of 49


withheld. EDS shall, at Del Monte's reasonable request, expand the Procedures
Manual to include additional information.

        (c) Services. It is the Parties' intention that EDS's respective
obligations under this Agreement will be consistently performed in accordance
with the Procedures Manual.

                             ARTICLE II. PERSONNEL

2.01  Use and Replacement of Personnel.

        (a) Account Team. If Del Monte is dissatisfied for any significant
reason with any EDS personnel providing the Services (the EDS Account Executive
together with any EDS personnel providing Service hereinafter referred to as the
"ACCOUNT TEAM"), Del Monte will give written notice to EDS of such
dissatisfaction and the specific reasons for such dissatisfaction. EDS will have
thirty (30) days from the receipt of such notice in which to remedy such problem
to the reasonable satisfaction of Del Monte. If Del Monte remains dissatisfied
(in Del Monte's reasonable discretion) with the EDS Account Team personnel in
question after such 30-day period, then EDS will promptly replace that EDS
person. If for any reason, Del Monte requests the replacement of the EDS Account
Executive, EDS will promptly replace that individual.

        (b) Key Personnel. EDS agrees that each of the EDS personnel listed in
Schedule A (the "KEY POSITIONS") will devote his or her full time and effort to
the performance of the Services. Before assigning a replacement individual to
any of the Key Positions, EDS will notify Del Monte of the proposed assignment,
will provide Del Monte with a resume and any other job-related information about
the individual reasonably requested by Del Monte and will introduce (either by
telephone or, if requested by Del Monte, in person) the individual for an
interview by the appropriate Del Monte representatives. If Del Monte in good
faith objects to the proposed assignment, the Parties shall attempt to resolve
Del Monte's concerns on a mutually agreeable basis. If the Parties have not been
able to resolve Del Monte's concerns within five (5) business days, EDS shall
not assign the individual to that position and shall propose to Del Monte the
assignment of another individual of similar and suitable ability and
qualifications. Personnel filling Key Positions may not be transferred or
re-assigned until Del Monte has approved a suitable replacement, which approval
shall not be unreasonably withheld. Unless otherwise requested by Del Monte, EDS
will assign EDS Level 6 personnel for a minimum of two (2) years and Level 5
personnel for a minimum of eighteen (18) months and will not reassign such
individual during such period. EDS agrees to use reasonable efforts to provide
Del Monte with at least thirty (30) days advance written notice prior to
transferring or reassigning any personnel filling EDS Key Positions.

2.02 Qualifications and Retention of EDS Personnel.

        (a) Qualifications. EDS shall assign personnel to perform the Services
in a professional and workmanlike manner. The Account Team shall be: (i) of good
name and character and without, to the extent permitted by applicable law, a
history of misconduct or dishonesty; (ii) appropriately competent and
experienced in performing the tasks, works, functions or obligations to be
performed by such personnel; and (iii) if



                                  Page 8 of 49


required to perform the applicable task, work, function or obligation, qualified
with appropriate U.S. qualifications or qualifications that are recognized in,
or equivalent to qualifications recognized in, the United States.

        (b) Turnover Rate. Del Monte and EDS both agree that it is in their best
interests to keep the turnover rate of the Account Team to a reasonably low
level. Accordingly, if Del Monte believes that EDS's turnover rate may be
excessive and so notifies EDS, EDS shall provide data concerning its turnover
rate, meet with Del Monte to discuss the reasons for, and impact of, the
turnover rate and otherwise use reasonable efforts to keep such turnover rate to
a reasonably low level. If appropriate, EDS shall submit to Del Monte its
proposals for reducing the turnover rate, and the Parties shall mutually agree
on a program to bring the turnover rate down to an acceptable level. In any
event, notwithstanding transfer or turnover of personnel, EDS shall at all times
during the Term remain obligated to perform the Services without degradation and
in accordance with this Agreement.

        (c) Training. EDS shall implement and maintain a policy of ongoing
training for the Account Team members to provide that all Account Team members
have the requisite skills and knowledge required to perform the tasks, works,
functions and obligations assigned to them by EDS.

2.03 Use of Subcontractors.

        The Services will be performed by EDS, itself and its wholly owned
affiliates or through an approved subcontractor in accordance with this Section
2.03. Prior to subcontracting the Services or any material portion thereof
defined as $10,000 per month or more, EDS will: (a) notify Del Monte of the
proposed subcontract; (b) provide the name of the proposed subcontractor, a
description of the work to be subcontracted and descriptive information about
each subcontractor's ability to perform the work; and (c) obtain Del Monte's
written consent of such subcontract, which shall not be unreasonably withheld.
Del Monte will not be bound by the provisions of any agreements entered into
between EDS and its subcontractors. Prior to materially amending, modifying or
otherwise supplementing any subcontract relating to the Services, EDS will
notify Del Monte of the proposed amendment, modification or supplement and will
obtain Del Monte's written consent thereof. EDS will not disclose any
confidential information of Del Monte to any such subcontractor unless and until
the subcontractor has agreed in writing to protect the confidentiality of such
confidential information in the manner required by Section 11.03 hereof and then
only to the extent necessary for the subcontractor to perform those Services
subcontracted to it. No subcontracting will release EDS from its responsibility
for its obligations under this Agreement. EDS will be responsible for the work
and activities of each of its subcontractors, including compliance with the
terms of this Agreement, to the same extent as if EDS performed such
obligations. Any third party chosen by EDS to develop products or deliver
services will be required to adhere to Del Monte's standards, policies and
procedures in effect at the time. EDS will be responsible for all payments to
its subcontractors. EDS will promptly pay for all services, materials, equipment
and labor used in providing the Services and EDS will keep Del Monte's premises
free of all liens.

2.04 Hiring of Employees.


                                  Page 9 of 49


        During the term of this Agreement and for a period of twelve (12) months
thereafter, EDS will not solicit, directly or indirectly, for employment any
employee of Del Monte who is or was actively involved in the consumption of the
Services without the prior written consent of Del Monte. Notwithstanding the
foregoing, the Parties acknowledge and agree that this Agreement will not
prohibit (a) any executive search or similar business controlled by EDS from
engaging in its business in the ordinary course in a manner consistent with past
practices on behalf of clients other than EDS or (b) solicitations through
advertising or other publications of general circulation. Subject to Section
14.06, during the term of the Agreement, Del Monte will have the right to extend
offers of employment to a reasonable number of EDS personnel who have been or
are assigned to or have or are performing any Services or other work on behalf
of EDS with respect to Del Monte. Del Monte will provide EDS prior notification
and EDS will provide reasonable access to such personnel after providing written
approval which approval shall not be withheld unless such person is reasonably
deemed essential to the on-going business of EDS.

                               ARTICLE III. TERM

3.01 Initial Term.

        The initial term of this Agreement (the "INITIAL TERM") will commence on
the Effective Date and continue until 23:59:59 (Pacific Standard Time) on
October 31st, 2012 (the "INITIAL TERM EXPIRATION DATE"), or such earlier date
upon which this Agreement may be terminated in accordance with the provisions
hereof.

3.02 Renewal Term; Extension Period.

        (a) Renewal Term. Unless this Agreement is terminated in accordance with
the provisions hereof, Del Monte will notify EDS at least one hundred twenty
(120) days prior to the Initial Term Expiration Date as to whether or not Del
Monte desires to renew this Agreement. If Del Monte provides EDS with notice
that it desires to renew this Agreement for a specified period (the "RENEWAL
TERM") and the Parties agree on the terms and conditions applicable to the
Renewal Term, then this Agreement will continue in effect beyond the Initial
Term Expiration Date in accordance with the terms and conditions agreed upon by
the Parties for the Renewal Term. If Del Monte does not provide EDS with notice
that it desires to renew this Agreement, this Agreement will expire on the
Initial Term Expiration Date, subject to EDS' obligation to provide Termination
Assistance Services as set forth in this Agreement.

        (b) Extension Period. If Del Monte provides EDS with notice that it
desires to renew this Agreement and the Parties have not agreed on the terms and
conditions applicable to a Renewal Term prior to the Initial Term Expiration
Date, then the term of this Agreement will extend for a period determined by Del
Monte of up to twelve (12) months beyond the Initial Term Expiration Date (the
"EXTENSION PERIOD"), at the charges, terms and conditions in effect as of the
Initial Term Expiration Date. If, during the Extension Period, the Parties are
able to reach agreement on the terms and conditions applicable to a Renewal
Term, then this Agreement will continue in effect beyond the end of the
Extension Period in accordance with the terms and conditions agreed upon by the


                                 Page 10 of 49


Parties for the Renewal Term. If, during the Extension Period, the Parties are
unable to reach agreement on the terms and conditions applicable to a Renewal
Term, this Agreement will expire at the end of the Extension Period, subject to
EDS' obligation to provide Termination Assistance Services as set forth in this
Agreement.

                            ARTICLE IV. EDS SERVICES

4.01 Services.

        Commencing on the Effective Date and continuing throughout the Initial
Term and any Renewal Term or Extension Period, if applicable (collectively,
"TERM"), EDS will be responsible for providing to Del Monte the Services (as
defined in this Article IV) (hereinafter referred to as "SERVICES"). Except as
otherwise expressly provided in this Agreement, EDS shall provide the
facilities, personnel, and other resources necessary to provide the Services.
EDS shall perform the Services in a manner (including, the degree of accuracy,
quality, completeness, timeliness, responsiveness and efficiency) that meets or
exceeds the specifications and the service levels referred to in or established
in this Agreement ("SERVICE LEVELS") which specifications and Service Levels
shall be consistent with methods and standards satisfied by well-managed
operations performing services similar to the Services.

4.02 Scope and Volume of Services.

         (a) Del Monte reserves the right to add or remove EDS Services
subject to Sections 4.02 (b) and 4.04 or increase or decrease EDS Services,
subject to Schedule E, Attachment P, during the term of this Agreement. Del
Monte will share such information with EDS as may be necessary for EDS to
determine which resources will be required to meet Del Monte's needs relative to
such increases or decreases in Services. Del Monte will not be obligated to
obtain Services from EDS with respect to any additional entity or business unit
acquired by Del Monte (whether pursuant to acquisition or merger).

        (b) Del Monte may not completely eliminate EDS Services for either
Applications, Desktop, Help Desk or Servers and still receive the pricing noted
in this Agreement, unless for cause. For purposes of this Section, cause will be
Del Monte's reasonable dissatisfaction with the Service and the processes
established in the Agreement to handle these matters have been executed and the
dissatisfaction reasonably remains.

4.03 Services, Additional Details.

        (a) Definition. For purposes of this Agreement, "SERVICES" means: (i)
the services, functions and responsibilities described in this Agreement
(including the services, functions, and responsibilities described in the
Schedule B Statement of Work); and (ii) any services, functions or
responsibilities that are not specifically described in this Agreement, but that
are required for the proper performance and delivery of the Services, including
without limitation meeting Service Levels (as such term is defined in Schedule C
hereto); and (iii) any other services, functions or responsibilities that will
be provided under the terms of this Agreement and amendments or revision
thereto.



                                 Page 11 of 49


        (b) Technological Advancements. Throughout the Term, at no additional
cost to Del Monte, EDS will jointly, with Del Monte, identify the least
cost/highest benefit methods to implement technology changes and improved
methodologies and processes. Upon Del Monte's written request and in accordance
with Section 12.01 (charges for EDS services), EDS will implement technology
changes and improved methodologies and processes to maintain a level of
technology used to provide the Services that (A) allows Del Monte to take
advantage of technological advances in order to remain competitive in the
markets that Del Monte serves, (B) is at least current with the level of
technology that EDS uses in providing services to its other comparable customers
and (C) is at least current with the level of technology generally adopted from
time to time in Del Monte's industries. In addition, EDS shall meet with Del
Monte, upon Del Monte's reasonable request, to inform Del Monte of any new
information processing technology EDS is developing or information technology
trends and directions that could reasonably be expected to have an impact on Del
Monte's business.

        (c) Technical Architecture and Product Standards. EDS will comply with
Del Monte's information management technical architecture and product standards,
as may be modified by Del Monte from time to time during the Term and the
Termination Assistance Period. In the event that Del Monte makes an enterprise
wide change in technical architecture and product standards that is not related
to the normal evolution of information technology and that materially impacts
EDS's cost to deliver Services, EDS and Del Monte will meet to discuss a
mutually acceptable go-forward strategy.

        (d) Efficiencies. EDS will, without charge or expense to Del Monte, and
at least once annually, perform a review of the systems, technology and EDS
service delivery methods and methodologies used at the Del Monte account. This
review will be performed by appropriately skilled and experienced individuals
not on the Del Monte Account Team. The results of this review will be provided
to the Del Monte Representative and the Account Executive. The objective of the
review is to identify material opportunities to improve the quality of or
delivery of information technology and how to reduce the cost of information
technology to Del Monte.

        (e) Reports. EDS will provide to Del Monte, in a format and containing
information mutually agreed by the Parties, a set of reports, including
performance, utilization, billing and status reports, as frequently as Del Monte
reasonably requires.

        (f) Knowledge Sharing. EDS will provide knowledge sharing assistance to
Del Monte, including explaining how the information technology systems work and
should be operated and how the Services are provided.

        (g) Governmental Consents. EDS will, at its own expense, obtain and
maintain all licenses, approvals, permits, consents and authorizations of any
governmental authority, or any notice to any governmental authority, the
granting of which to EDS is required by law, including regulatory requirements,
for the consummation of the transactions contemplated by this Agreement
("GOVERNMENTAL CONSENTS").

        (h) Compliance with Laws.



                                 Page 12 of 49


            (i) At all times during the Term, EDS will monitor, and promptly
identify and notify Del Monte of, all laws (including regulatory requirements)
and any changes thereto that might relate to Del Monte's use of the Services or
EDS' delivery of the Services. Del Monte shall notify EDS of any laws and
changes in laws applicable to the principal business of Del Monte (excluding
laws applicable to the provision of systems integration, data processing, and
information technology products and services) that it reasonably believes may
impact EDS' delivery of Services and shall cooperate with EDS to identify the
impact of such laws and changes in laws on EDS's performance and Del Monte's
receipt of such Services. EDS and Del Monte will work together to identify how
Del Monte uses, and EDS delivers, the Services in light of such laws and changes
thereto. EDS will be responsible for implementing all changes necessary to
comply with regulatory requirements on a timely basis. EDS will be responsible
for any fines and penalties arising from any noncompliance with any law relating
to the delivery or use of the Services, except that Del Monte will be
responsible for any fines and penalties arising from any noncompliance by Del
Monte with any law relating to Del Monte's use of the Services to the extent
that (A) EDS notifies Del Monte in writing and in a timely manner of changes in
such law in accordance with this subsection (and sufficiently in advance of the
applicability of such law to provide Del Monte a reasonable opportunity to
comply with such law) and (B) such noncompliance was not caused by EDS.

            (ii) EDS will perform the Services regardless of changes in law,
including regulatory requirements. If such changes prevent EDS from performing
its obligations under this Agreement, EDS will develop and, upon Del Monte's
written consent, implement a suitable workaround until such time as EDS can
perform its obligations under this Agreement without such workaround; provided,
however, that if such workaround results in a material increase in the charges
to Del Monte under this Agreement, then Del Monte will have the right to
terminate the affected portion of the Services.

        (i) Procurement. EDS may have the ability to acquire hardware, software
or services for Del Monte at a cost more favorable then Del Monte could acquire
by itself. EDS agrees to cooperate fully to accommodate Del Monte's procurement
requests, and EDS agrees to invoice Del Monte for purchases on the monthly EDS
invoice at the cost noted in Schedule E. Del Monte will pay to EDS, the
supplier, third party lessor or third party licensor, as applicable, the
purchase, lease or license fees, as applicable. Except as otherwise agreed in
writing by the Parties, all rights in and title to any purchases, leases or
licenses by EDS on behalf of Del Monte and paid for by Del Monte will belong to
Del Monte. All third party warranties, maintenance or support agreements will
run to and be for the express benefit of Del Monte.

        (j) Customer Surveys. At least once, but no more than twice during any
twelve (12) month period during the term of this Agreement, EDS and Del Monte
will jointly conduct surveys of at least three (3) Del Monte personnel selected
by Del Monte's Representative to determine the level of Del Monte's satisfaction
with the Services and the EDS relationship. The Parties will review the survey
results and work together to mutually agree on any appropriate adjustments to
EDS's practices and procedures as they relate to the provision of the Services
and the Parties' relationship.


                                 Page 13 of 49


4.04 Services not Specifically Noted.

        In addition to the Services described on Schedule B (including those
services, functions or responsibilities not specifically described but that are
required for the proper performance and delivery of the Services), EDS will
provide to Del Monte such other services as Del Monte may reasonably request in
writing from time to time during the term of this Agreement. EDS shall provide
Del Monte with a written estimate according to the Fees noted in Schedule E of
the cost of such services, which estimate Del Monte shall accept or reject. EDS
will invoice Del Monte on the monthly EDS invoice for these additional services.

4.05 Services from Third Parties.

        (a) Rights to Use Third Parties. Nothing in this Agreement will be
deemed to limit Del Monte's right to solicit or use providers other than EDS
(including any Del Monte in-house capabilities) to render information technology
services.

        (b) EDS Responsibilities to Other Service Providers. To the extent Del
Monte performs any information technology services itself, or retains a third
party provider to do so, EDS shall cooperate fully with Del Monte or any such
third party provider, all at Del Monte's reasonable direction.

        (c) Del Monte Conditions to Using Third Party Services. Del Monte agrees
that if it uses a third party to perform services related to its information
technology needs, Del Monte will use commercially reasonable efforts to provide
for such services will not affect the ability of, or cost to, EDS to perform its
obligations under this Agreement, and EDS agrees to reasonably cooperate with
any such third party. As a condition to any such cooperation, the third party
must agree in writing to the security and confidentiality obligations and
procedures reasonably required by EDS. Del Monte will keep EDS apprised of any
material changes to Del Monte's information technology environment that are made
by Del Monte or any third party. EDS will not be responsible or penalized for
any adverse impact on Del Monte, the Services or the Service Levels resulting
from the acts or omissions of Del Monte or a third party, but will use
commercially reasonable efforts to mitigate it. EDS shall immediately notify Del
Monte if an act or omission of EDS or a third party may cause a problem or delay
in providing the Services and shall diligently work with Del Monte or the third
party to prevent or circumvent the problem or delay.

4.06 Reliance on Instructions.

        Unless specifically provided otherwise in this Agreement, in performing
its obligations under this Agreement, EDS will be entitled to rely upon any
routine instructions, authorizations, approvals or other information provided to
EDS by the Del Monte Representative or, as to areas of competency specifically
identified in writing by the Del Monte Representative, by any other Del Monte
personnel identified by the Del Monte Representative in writing, from time to
time, as having authority to provide the same on behalf of Del Monte in such
person's area of competency. Unless EDS knew or reasonably should have known of
any error, incorrectness or inaccuracy in such instructions, authorizations,
approvals or other information, EDS will incur no liability or



                                 Page 14 of 49


responsibility of any kind in relying on or complying with any such instructions
or information.

4.07 Savings Clause.

        EDS' failure to perform its responsibilities under this Agreement or to
meet the Service Levels shall be excused if and to the extent (i) such EDS
non-performance results from a material act or omission by Del Monte, a material
breach by Del Monte of a covenant, representation or warranty under this
Agreement; or a material failure by Del Monte to perform Del Monte's
responsibilities under this Agreement; and (ii) EDS uses commercially reasonable
efforts to perform notwithstanding such act or omission, breach or failure to
perform by Del Monte.

                           ARTICLE V. SERVICE LEVELS.

5.01 Service Levels.

        During the Term and the Termination Assistance Period, EDS will perform
all Services in accordance with the terms of this Agreement, and as improved
from time to time as noted in Section 5.03 (Continuous Improvement and Best
Practices).

5.02 Measurement and Monitoring Tools.

        As of the Effective Date, EDS will implement the measurement and
monitoring tools and procedures required to measure and report EDS's performance
of the Services against applicable Service Levels. Such measurement and
monitoring and procedures will (a) permit reporting at a level of detail
sufficient to verify compliance with the Service Levels and (b) be subject to
audit by Del Monte or its designee. EDS will provide Del Monte and its designees
with information concerning access to such measurement and monitoring tools and
procedures upon request for inspection and verification purposes.

5.03 Continuous Improvement and Best Practices.

        EDS will, on a continuous basis, (a) identify ways to improve the
Service Levels and (b) identify and apply proven techniques and tools from other
installations within its operations that would benefit Del Monte either
operationally or financially. EDS will, from time to time, include updates with
respect to such improvements, techniques and tools in the reports provided to
Del Monte.

5.04 Adjustment of Service Levels.

        At least annually, the Del Monte Representative and EDS Account
Executive (a) will review the Service Levels for the preceding twelve (12)
months, (b) with respect to any Service Levels that are no longer appropriate,
will adjust the Service Levels. In addition, either Party may, at any time upon
notice to the other Party, initiate negotiations to review and, upon agreement
by the Del Monte Representative and EDS Account Executive, adjust any Service
Level that such Party in good faith believes is inappropriate at the time, or
establish new Service levels.

5.05 Root Cause Analysis.



                                 Page 15 of 49


          If EDS fails to attain one or more Service Levels or a material
Service disruption or Service issue occurs, EDS shall

            (i) Investigate. Promptly investigate the root cause of the failure;

            (ii) Describe. Provide a description of the failure, the root cause
of the failure and a plan for the corrective action to be taken by EDS in
connection therewith;

            (iii) Correct the Error. Upon Del Monte's written consent of the
plan for corrective action, implement such plan to correct the problem giving
rise to such failure and begin attaining the Service Level as soon as
practicable;

            (iv) Provide Assurance. Provide Del Monte with assurance
satisfactory to Del Monte that such failure will not recur following the
completion of the implementation of the procedures; and

            (v) Report. Keep the Del Monte Representative apprised of the status
and efficacy of the remedial efforts being undertaken by EDS to correct such
problem.

        (b) Meeting. If, after pursuing avenues to address Del Monte's concerns
about the standard of service being provided by EDS remains, then the Del Monte
Representative may request a meeting with senior executives of EDS to discuss
such concerns. The meeting shall be held at Del Monte's headquarters at a
mutually convenient time on a day that is not more than ten (10) business days
following the day on which the request for the meeting is made by Del Monte.
Notwithstanding the foregoing, if EDS's performance fails to meet the applicable
Services Levels, then at any time during the Term, Del Monte may seek all
remedies available to it in under the terms of this Agreement

5.06 Service Level Failures.

        In the event of a repeated failure to provide the Services in accordance
with the applicable Service Levels, Del Monte will request a meeting with senior
executives of EDS. The meeting shall be held at Del Monte's headquarters at a
mutually convenient time on a day that is not more than ten (10) business days
following the day on which the request for the meeting is made by Del Monte. EDS
will thereafter have thirty (30) days to resolve the Service issue. If the
Service failure thereafter still exists, EDS and Del Monte will negotiate in
good faith to provide Del Monte with an appropriate financial or other
adjustment for not delivering the Service acceptably in addition to such other
remedies available to it under the terms of this Agreement.

                         ARTICLE VI. SERVICE LOCATIONS

6.01 Facilities.

        The Services will be provided to Del Monte from (a) the Del Monte
locations as agreed to from time to time (the "DEL MONTE SERVICE LOCATIONS"),
(b) the EDS locations as listed on Schedule D, and such additional locations as
agreed to from time to time or as operational necessities dictate (the "EDS
SERVICE LOCATIONS") and (c) any other



                                 Page 16 of 49


location for which EDS has received Del Monte's written consent (together with
the Del Monte Service Locations and EDS Service Locations, the "SERVICE
LOCATIONS" listed on Schedule D). Any incremental expenses incurred as a result
of a relocation to, or use of, any location other than the locations set forth
on Schedule D will, be paid by the party requesting the change unless otherwise
agreed. EDS may not provide or market any services to a third party from a Del
Monte Service Location without Del Monte's written consent, to be given in Del
Monte's sole discretion.

6.02 Safety and Security Procedures.

        EDS will maintain and enforce at the EDS Service Locations safety and
security procedures that are at least equal to the most stringent of the
following: (a) best practices for locations similar to the EDS Service
Locations; (b) SAS 70 standards; (c)those procedures applicable to the Del Monte
Service Locations, as amended by Del Monte from time to time during the Term;
and (d) any higher standard otherwise agreed upon by the Parties. EDS will
comply with the safety and security procedures that are applicable to the Del
Monte Service Locations. EDS will, at EDS's expense, provide the results of an
annual SAS 70 security audit to Del Monte.

6.03 Data Security.

        EDS will (a) establish and maintain environmental, security, and other
safeguards against the destruction, loss or alteration of Del Monte Data in the
possession of EDS and during the electronic transmission, storage and shipping
thereof (the "DATA SAFEGUARDS") that will comply with industry standard
practices or as may be required by laws and (b) provide dedicated shared storage
devices for Del Monte data secured against any shared access with the data of
any EDS's data or data of EDS's other customers. EDS will revise and maintain
the Data Safeguards at Del Monte's request. In the event EDS intends to
implement a change to the Data Safeguards (including pursuant to Del Monte's
request), EDS will notify Del Monte and, upon Del Monte's consent, implement
such change. In the event EDS discovers or is notified of a breach or potential
breach of security relating to Del Monte data, EDS will immediately notify the
Del Monte Representative of such breach or potential breach and, if the
applicable Del Monte data was in the possession of EDS at the time of such
breach or potential breach, EDS will investigate and remediate the effects of
the breach or potential breach and provide Del Monte with assurance satisfactory
to Del Monte that such breach or potential breach will not recur.

6.04 Security Relating to Competitors and other Interested Parties.

        EDS shall use commercially reasonable efforts to protect all Del Monte
proprietary information in its possession from being accessed by or made
available to a competitor or other interested party. EDS shall comply with
applicable privacy laws, privacy guidelines and the Del Monte Privacy Policy
with respect to information (including consumer and customer information) in its
possession as a result of providing the Services.

6.05 Use of Del Monte Service Locations.

        (a) Except as expressly provided in this Agreement, EDS will use the Del
Monte Service Locations for the sole and exclusive purpose of providing the
Services.



                                 Page 17 of 49


Use of such facilities by EDS does not constitute a leasehold interest in favor
of EDS or any of EDS's customers.

        (b) EDS will use the Del Monte Service Locations in an efficient manner.
To the extent that EDS operates the space in a manner that unnecessarily
increases facility costs incurred by Del Monte, Del Monte reserves the right to
set-off the excess utility costs of such practices. Prior to setting-off such
excess costs, Del Monte will notify EDS of its awareness of the inefficient use
as soon as it reasonably can and provide EDS an opportunity to cure the
situation.

        (c) EDS will keep the Del Monte Service Locations in good order, not
commit or permit waste or damage to such facilities, not use such facilities for
any unlawful purpose or act and comply with all of Del Monte's standard and
site-specific policies and procedures as in effect from time to time, including
procedures for the physical security of the Del Monte Service Locations.

        (d) EDS will permit Del Monte personnel and agents to enter into those
portions of the Del Monte Service Locations occupied by EDS's staff at any time
to perform facilities-related services.

        (e) EDS will not make any improvements or changes involving structural,
mechanical or electrical alterations to the Del Monte Service Locations without
Del Monte's prior written consent. Any additions, improvements or changes made
by EDS will be deemed the property of Del Monte without further consideration.

        (f) In the event that Del Monte sells, divests or experiences another
change regarding a Del Monte Service Location, Del Monte will provide reasonable
assistance to EDS in transitioning to alternate facilities, if needed, provided
that Del Monte will have the option to provide an alternate Del Monte Service
Location.

        g) When the Del Monte Service Locations are no longer required for
performance of the Services, EDS will return such locations to Del Monte in
substantially the same condition as when EDS began using such locations,
ordinary wear and tear excepted.

        (h) In the event that a Lessor to Del Monte of Del Monte Service
Locations requires acceptance of additional use conditions, EDS agrees to
cooperate with Del Monte in good faith to accommodate such use conditions.

                         ARTICLE VII. DEL MONTE'S ROLE

7.01 Del Monte Responsibilities.

        During the term of this Agreement and in connection with EDS'
performance of its obligations hereunder, Del Monte will, at its own cost and
expense, have the obligations, and retain the responsibilities, set forth in
this Agreement. Del Monte acknowledges and agrees that EDS' ability to perform
the Services in accordance with this Agreement might be affected by Del Monte's
timely performance of those obligations assigned to Del Monte hereunder.



                                 Page 18 of 49


7.02 Access to Del Monte Facilities and Infrastructure.

        Del Monte shall, throughout the Term, provide to EDS personnel assigned
to perform Services at Del Monte Service Locations, adequate access to
facilities, use of Del Monte's voice system and basic office infrastructure and
services.

7.03 Access to Del Monte Equipment.

        During the term of this Agreement, Del Monte will allow, or will obtain
the right to allow, EDS (and any subcontractors of EDS engaged in accordance
with this Agreement) to Access (as defined below) at no charge any equipment
owned or leased by Del Monte that is reasonably necessary for EDS to perform
Services hereunder (the "DEL MONTE EQUIPMENT"). For purposes of this Agreement,
the term "ACCESS" means the enjoyment of physical and legal use and operation of
a specified item of property in order for EDS to perform the Services. EDS
agrees that it will use the Del Monte Equipment leased by Del Monte in a manner
consistent with the terms and conditions of such lease.

7.04 Use of Del Monte Software and Del Monte-Vendor Software.

        During the term of this Agreement, Del Monte will allow, or will obtain
the right to allow, EDS (and any subcontractors of EDS engaged in accordance
with this Agreement) to Access at no charge to EDS (a) the Del Monte Software
and (b) subject to Del Monte having obtained any required consents, the Del
Monte-Vendor Software. Del Monte will pay all costs and expenses with respect to
the Del Monte Software and the Del Monte-Vendor Software. Del Monte represents
and warrants to EDS that (a) it is not (and, to its knowledge, the licensor is
not) in default in any material respect under any of the licenses applicable to
the Del Monte-Vendor Software and (b) Del Monte has delivered, or will deliver,
to EDS complete copies of those license terms and conditions relating to the use
and operation of the Del Monte-Vendor Software (including all amendments
thereto) as in effect on the Effective Date. EDS covenants that it will use the
Del Monte-Vendor Software in a manner consistent with such terms and conditions.

7.05 Additional Items of Property.

        If any additional items of property, whether in the form of equipment,
software and upgrades thereto or otherwise, are required by EDS to perform the
Services or otherwise to meet its obligations hereunder, and such items of
property are not the responsibility of EDS to provide under this Agreement, EDS
will inform Del Monte and Del Monte will obtain such additional items (if in Del
Monte's reasonable view the acquisition is warranted) and will provide them at
Del Monte's expense or on such other terms and conditions as the Parties
mutually agree and if Del Monte acquires any additional items of property for
use in Del Monte's information technology environment, whether in addition to or
in replacement of any then existing property, and EDS reasonably contemplates an
adverse impact on Service Levels due to Del Monte's not approving an acquisition
proposed by EDS, or Del Monte's acquisition of additional items of property, EDS
will use commercially reasonable efforts to mitigate such adverse impact on the
Service Levels and the Parties will discuss in good faith appropriate
adjustments to Service Levels, if any.

7.06 Consents; Further Assurances.

        EDS will work with and assist Del Monte in Del Monte's efforts to obtain
such consents as are required for the transactions contemplated by this Article
VII, with Del



                                 Page 19 of 49


Monte paying such transfer, upgrade or other fees as are necessary to obtain a
required consent. Del Monte will provide EDS with written evidence of such
consents upon Del Monte's receipt thereof, if EDS has not otherwise received
satisfactory evidence thereof. If a required consent is not obtained, (a) unless
and until such required consent is obtained, EDS will determine and adopt,
subject to Del Monte's prior written consent, such alternative approaches as are
necessary and sufficient to perform the Services without such required consent
and (b) the Parties will mutually agree in writing on any appropriate
adjustments to this Agreement, whether with respect to the scope of the
Services, the Service Levels, EDS' charges or otherwise. In addition, EDS and
Del Monte agree to execute and deliver such other instruments and documents as
either Party reasonably requests to evidence or effect the transactions
contemplated by this Article VII.

                      ARTICLE VIII. MAINTENANCE CONTRACTS

8.01 EDS Management of Del Monte-Vendor Software and other Information
Technology related maintenance contracts.

        Subject to Del Monte having obtained any required consents, Del Monte
will designate EDS as Del Monte's representative for purposes of obtaining
maintenance support pursuant to the terms of Del Monte-Vendor Software and other
information technology related maintenance contracts ("MAINTENANCE CONTRACTS").

8.02 Notification.

        EDS shall promptly notify Del Monte of any breach of, or misuse or fraud
in connection with, any maintenance contracts of which EDS becomes aware and
shall cooperate with Del Monte to prevent or stay any such breach, misuse or
fraud. EDS shall not be liable for failures by third parties to perform in
accordance with the applicable Maintenance Contract requirements except to the
extent such failure is attributable to EDS's failure to properly perform
management services hereunder.

             ARTICLE IX. REPRESENTATIONS, WARRANTIES AND COVENANTS

9.01 Warranties.

        (a) By EDS. EDS warrants that:

            (i) EDS Corporation is a corporation duly incorporated, validly
existing and in good standing under the Laws of the State of Delaware and EIS is
a limited liability company duly formed, validly existing and in good standing
under the Laws of the State of Delaware;

            (ii) EDS is duly licensed, authorized or qualified to do business
and is in good standing in every jurisdiction in which a license, authorization
or qualification is required for the ownership or leasing of its assets or the
transaction of business of the character transacted by it, except where the
failure to be so licensed, authorized or qualified would not have a material
adverse effect on EDS's ability to fulfill its obligations under this Agreement;


                                 Page 20 of 49


            (iii) EDS is in compliance as of the Effective Date with all Laws
applicable to EDS's obligations under this Agreement and has obtained all
applicable permits and licenses required of EDS in connection with its
obligations under this Agreement, provided that nothing in this paragraph shall
be deemed to make any warranty with respect to intellectual property laws,
permits, or licenses;

            (iv) there is no outstanding litigation or arbitrated matter to
which EDS is a party that, if decided unfavorably to EDS, would reasonably be
expected to have a material adverse effect on EDS's ability to fulfill its
obligations under this Agreement; and

            (v) for a period of 180 days following acceptance of any Developed
Software (as defined in Article X) in accordance with the approval procedures
adopted by the Parties each item of Developed Software will conform in all
material respects to the written technical specifications agreed to by the
Parties in accordance with the software development methodologies adopted by the
Parties. As soon as reasonably practicable after discovery by Del Monte or EDS
of a failure of the Developed Software to so conform (a "NONCONFORMANCE"), Del
Monte or EDS, as applicable, will deliver to the other a statement and
supporting documentation describing in reasonable detail the alleged
Nonconformance. If EDS confirms that there is a Nonconformance, then EDS will
use commercially reasonable efforts to correct such Nonconformance as requested
by Del Monte. The methods and techniques for correcting Nonconformances will be
at the sole discretion of EDS. The foregoing warranty will not extend to any
Nonconformances caused (A) by any change or modification to software without
EDS' prior written consent or (B) by Del Monte operating software otherwise than
(1) in accordance with the applicable documentation, (2) for the purpose for
which it was designed or (3) on hardware not recommended, supplied or approved
in writing by EDS. Furthermore, if, after undertaking commercially reasonable
efforts to remedy a breach by EDS of the foregoing warranty, EDS, in the
exercise of its reasonable business judgment, determines that any repair,
adjustment, modification or replacement is not feasible, or if the Developed
Software subsequent to all repairs, adjustments, modifications and replacements
continues to fail to meet the foregoing warranty, then Del Monte will return the
Developed Software to EDS and EDS will credit to Del Monte, in a manner and on a
schedule agreed to by the Parties and as Del Monte's sole and exclusive remedy
for such failure, an amount equal to the charges actually paid by Del Monte to
EDS for the Developed Software that has failed to meet the foregoing warranty.
Notwithstanding the other provisions of this Section 9.01, upon the written
request of Del Monte, EDS will use commercially reasonable efforts to correct an
alleged Nonconformance for which EDS is not otherwise responsible hereunder
because it is caused or contributed to by one of the factors listed above.

        (b) By Del Monte. Del Monte warrants:

            (i) Del Monte is a corporation duly incorporated, validly existing
and in good standing under the Laws of the State of New York;

            (ii) Del Monte is duly licensed, authorized or qualified to do
business and is in good standing in every jurisdiction in which a license,
authorization or qualification is required for the ownership or leasing of its
assets or the transaction of



                                 Page 21 of 49


business of the character transacted by it, except where the failure to be so
licensed, authorized or qualified would not have a material adverse effect on
Del Monte's ability to fulfill its obligations under this Agreement;

            (iii) Del Monte has obtained all applicable permits and licenses
required of Del Monte in connection with its obligations under this Agreement;
and

        (c) Disclaimer of Warranties. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN
SECTION 9.01, NEITHER PARTY MAKES ANY REPRESENTATIONS OR WARRANTIES, EXPRESS OR
IMPLIED, INCLUDING WITHOUT LIMITATION THOSE REGARDING THE MERCHANTABILITY,
SUITABILITY, ORIGINALITY OR FITNESS FOR A PARTICULAR USE OR PURPOSE OR RESULTS
TO BE DERIVED FROM THE USE OF ANY INFORMATION TECHNOLOGY SERVICES, SOFTWARE,
HARDWARE, OR OTHER MATERIALS PROVIDED UNDER THIS AGREEMENT, OR THAT THE
OPERATION OF ANY SUCH SERVICES, SOFTWARE, HARDWARE OR OTHER MATERIALS WILL BE
UNINTERRUPTED OR ERROR FREE.

9.02 Covenants.

        (a) By EDS. Without limitation of any of EDS's other representations,
warranties and covenants, EDS covenants and agrees with Del Monte that during
the Term and the Termination Assistance Period:

            (i) in addition to meeting or exceeding all Service Levels, EDS will
at all times render the Services promptly and diligently and perform in a
professional and workmanlike manner consistent with high standards in the
industry;

            (ii) all Services will be performed consistent with the
specifications and conditions set forth in this Agreement or any attachment
thereto;

            (iii) EDS will at all times use qualified individuals with suitable
training, education, competence and skill to perform the Services;

            (iv) EDS will comply with all laws applicable to EDS and will obtain
all applicable permits and licenses required of EDS in connection with its
obligations under this Agreement, provided that nothing in this paragraph shall
be applicable to intellectual property or intellectual property laws, permits,
or licenses (subject to EDS' obligations set forth in Section 15.01);

            (v) EDS will use commercially reasonable efforts to prevent any
viruses or similar items from being coded or introduced into the Systems and, in
the event a virus or similar item is found to have been introduced into the
Systems, EDS will use commercially reasonable efforts to assist Del Monte in
reducing the effects of the virus or similar item and, if the virus or similar
item causes a loss of operational efficiency or loss of data, to assist Del
Monte Entities to the same extent to mitigate and restore such losses; and

            (vi) without the consent of Del Monte, EDS will not knowingly and
intentionally insert into the Software used to provide the Services any code
that would



                                 Page 22 of 49


have the effect of disabling or otherwise shutting down all or any portion of
the Services. EDS further covenants that, with respect to any disabling code
that may be part of the Software used to provide the Services, EDS will not
knowingly and intentionally invoke such disabling code at any time, including
upon expiration or termination of this Agreement, without Del Monte's consent.

            (vii) EDS will pass through to Del Monte any rights it obtains under
warranties and indemnities given by its third party subcontractors or suppliers
in connection with any services, software, equipment or other products provided
by EDS pursuant to this Agreement to the extent permitted by the applicable
subcontractors or suppliers. If pass-through warranties and indemnities
reasonably acceptable to Del Monte are not available from a particular
subcontractor or supplier, EDS will discuss the matter with Del Monte prior to
engaging the particular subcontractor or supplier, and the Parties will mutually
determine to either accept the terms available from such subcontractor or
supplier, in which case EDS will enforce the applicable warranty or indemnity on
behalf of Del Monte as provided below, or deal with another vendor of comparable
services, software, equipment or other products that will provide warranties and
indemnities reasonably acceptable to Del Monte. In the event of a third party
software or equipment nonconformance, EDS will coordinate with, and be the point
of contact for resolution of the problem through, the applicable vendor and,
upon becoming aware of a problem, will notify such vendor and will use
commercially reasonable efforts to cause such vendor to promptly repair or
replace the nonconforming item in accordance with such vendor's warranty. If any
warranties or indemnities may not be passed through, EDS agrees that it will,
upon the request of Del Monte, take reasonable action to enforce any applicable
warranty or indemnity that is enforceable by EDS in its own name. However, EDS
will have no obligation to resort to litigation or other formal dispute
resolution procedures to enforce any such warranty or indemnity unless EDS
chooses to do so and Del Monte agrees to reimburse EDS for all costs and
expenses incurred in connection therewith, including reasonable attorneys' fees
and expenses.

        (b) By Del Monte. Del Monte covenants and agrees with EDS that during
the Term and the Termination Assistance Period:

            (i) Del Monte will comply with all laws applicable to Del Monte's
receipt of the Services and, except as otherwise provided in this Agreement,
will obtain all applicable permits and licenses required of Del Monte in
connection with its obligations under this Agreement.

                          ARTICLE X. PROPRIETARY RIGHTS

10.01 Definitions.

        For purposes of this Agreement:

        (a) "EDS SOFTWARE" means any Software that is owned or developed by or
on behalf of EDS before the Effective Date and any Software that is acquired or
developed by or on behalf of EDS after the Effective Date without reference to
or use of the intellectual property of Del Monte (but excluding Developed
Software).



                                 Page 23 of 49


        (b) "EDS-VENDOR SOFTWARE" means any Software that is proprietary to any
party other than EDS or Del Monte and is licensed to EDS.

        (c) "DEL MONTE SOFTWARE" means any Software that is owned or developed
by or on behalf of Del Monte before the Effective Date and any Software that is
acquired or developed by or on behalf of Del Monte after the Effective Date
without reference to or use of the intellectual property of EDS.

        (d) "DEL MONTE-VENDOR SOFTWARE" means any Software that is proprietary
to any party other than Del Monte or EDS and is licensed to Del Monte.

        (e) "DEVELOPED SOFTWARE" means any Software that is developed and
delivered by EDS under this Agreement, and paid for by Del Monte, including any
Software Changes made by EDS to Del Monte Software or Del Monte-Vendor Software
as part of the Services, but excluding (i) any Software Changes made by EDS to
EDS Software or EDS-Vendor Software, (ii) any EDS Software or EDS Development
Tools that are used in developing, modifying or enhancing any Developed Software
hereunder and (iii) any Residual Technology.

        (f) "OTHER DELIVERABLES" means those tangible, viewable items other than
Software that are developed and delivered by EDS under this Agreement, and paid
for by Del Monte.

        (g) "EDS DEVELOPMENT TOOLS" means all know-how, intellectual property,
methodologies, processes, technologies, algorithms, software tools or
development tools used in performing the Services that (i) are based on trade
secrets or proprietary information of EDS, (ii) are developed or created by or
on behalf of EDS without reference to or use of the intellectual property of Del
Monte or (iii) are otherwise owned or licensed by EDS.

        (h) "RESIDUAL TECHNOLOGY" means the ideas, concepts, methodologies,
processes and know-how that are developed or created by EDS in the course of
performing the Services and may be retained by EDS' employees in intangible
form.

        (i) "SOFTWARE," as used in the terms that are defined in this Section
10.01, means computer programs, together with input and output formats, source
and object codes, program listings, data models, flow charts, outlines,
narrative descriptions, operating instructions and supporting documentation, and
includes the tangible media upon which such programs and documentation are
recorded, including all authorized reproductions of such programs. Except as
otherwise expressly provided in this Agreement, Software includes any
corrections, enhancements, translations, modifications, updates, new releases,
new versions and other changes thereof or thereto (collectively, "SOFTWARE
CHANGES").

10.02 EDS Software.

        All rights, title and interest in and to the EDS Software (including all
Software Changes made thereto) will be and remain EDS' property, and Del Monte
will have no rights or interest therein. EDS will, where possible, grant to Del
Monte a perpetual, irrevocable (subject to compliance with the applicable
license), nontransferable,



                                 Page 24 of 49


nonexclusive license to use, after the expiration or termination of this
Agreement, the object code form of any application software programs, including
existing documentation, of the EDS Software (if any) then being used by EDS in
performing the Services, including those items of EDS Software being used at one
or more EDS data centers as part of the Services, as may be reasonably necessary
for Del Monte's continued use of Del Monte Software, Del Monte Vendor Software
and any other Software to which Del Monte has continuing rights, solely for the
purpose of Del Monte (or the third party provider assuming the obligations of
EDS hereunder) performing the information and technology systems services
previously performed by EDS hereunder (the "LICENSED PROGRAMS), subject to EDS
and Del Monte entering into an agreement containing terms and conditions
including pricing that may be appropriate. Notwithstanding anything to the
contrary in this Agreement, such license will not include the right to use any
Software Changes with respect to the EDS Software other than those in use at the
time the license is granted.

10.03 EDS-Vendor Software.

        All rights, title and interest in and to the EDS-Vendor Software, will
be and remain the property of the applicable third party vendor(s) and, as
between EDS and Del Monte, all Software Changes made by EDS thereto will be
owned by EDS. EDS will obtain all consents necessary to permit EDS (and any
subcontractors of EDS engaged in accordance with this Agreement) to Access the
EDS-Vendor Software in connection with the performance of the Services and will
pay all costs and expenses associated therewith. During the term of this
Agreement, EDS will pay all required license, installation, maintenance and
upgrade fees with respect to the EDS-Vendor Software.

10.04 Del Monte Software.

        All rights, title and interest in and to the Del Monte Software
(excluding any Software Changes made by EDS thereto as part of the Services),
will be and remain Del Monte's property. With respect to Software Changes to Del
Monte Software made by EDS as part of the Services, EDS agrees to assign,
conditioned upon payment by Del Monte of the Fee for the underlying Service, its
entire right, title, and interest in and to the copyright in and to all Software
Changes to Del Monte. Other intellectual property rights of EDS with respect to
such Software Changes shall be licensed to Del Monte at no additional cost as
set forth below. Del Monte will make available the Del Monte Software to EDS in
such form and on such media as EDS may reasonably request, together with
appropriate documentation and Del Monte hereby grants to EDS (and its
subcontractors, affiliates, and agents) a limited, world-wide, royalty-free,
nonexclusive license, during the Term, to use such Del Monte Software and any
other items provided by Del Monte hereunder for the sole benefit of Del Monte.

10.05 Del Monte-Vendor Software.

        All rights, title and interest in and to the Del Monte-Vendor Software
(excluding any Software Changes made by EDS thereto as part of the Services),
will be and remain the property of the applicable third party vendor(s). With
respect to Software Changes to Del Monte-Vendor Software made by EDS as part of
the Services, EDS agrees to assign, conditioned upon payment by Del Monte of the
Fee for the underlying Service, its entire right, title, and interest in and to
the copyright in and to all Software Changes to Del Monte-Vendor Software. Other
intellectual property rights of EDS with respect to such Software



                                 Page 25 of 49


Changes shall be licensed to Del Monte at no additional cost as set forth below.
Del Monte will make available the Del Monte-Vendor Software to EDS in such form
and on such media as EDS may reasonably request and Del Monte hereby grants to
EDS (and its subcontractors, affiliates, and agents) a limited, worldwide,
royalty free, non-exclusive license, during the Term, to use such Del
Monte-Vendor Software for the sole benefit of Del Monte, according to the terms
of the Vendor.

10.06 Developed Software and Other Deliverables.

        Del Monte will own the copyright in and to all Developed Software and
Other Deliverables. Conditioned upon payment by Del Monte of the Fee for the
underlying Service, EDS will assign to Del Monte its entire right, title, and
interest in and to the copyright in and to all Developed Software. Del Monte
hereby grants to EDS (and any subcontractors, affiliates, or agents of EDS) a
worldwide, paid-up, royalty-free, nontransferable except as permitted under this
Agreement, nonexclusive license during the term of this Agreement to use, copy,
maintain, modify, enhance, create derivative works of, or otherwise exploit the
Developed Software solely to perform the Services for Del Monte. If any EDS
Software, EDS-Vendor Software, EDS Development Tools, and/or pre-existing EDS
copyrighted materials are embedded in such Developed Software, Software Changes
to Del Monte-Vendor Software, Software Changes to Del Monte Software, or Other
Deliverables, EDS hereby grants to Del Monte a perpetual, irrevocable,
worldwide, paid-up, royalty-free, nontransferable (except as expressly permitted
under this Agreement), nonexclusive license, to use, reproduce, modify, create
derivative works of, display, and perform, by all means now known or later
developed, such embedded EDS Software, EDS-Vendor Software (to the extent
provided in the applicable license of such Software to EDS on a royalty free
basis), EDS Development Tools, and/or pre-existing EDS copyrighted materials
solely in connection with Del Monte's internal use and internal exploitation of
such Developed Software, Software Changes to Del Monte-Vendor Software, Software
Changes to Del Monte Software, or Other Deliverables, and only so long as such
EDS Software, EDS-Vendor Software, EDS Development Tools, and/or pre-existing
EDS copyrighted materials remain embedded in such Developed Software and are not
separated therefrom.

10.07 EDS Development Tools; Residual Technology.

        Notwithstanding anything to the contrary in this Agreement, EDS will
retain all right, title and interest in and to, and will be free to use, (a) the
EDS Development Tools and (b) subject to the confidentiality obligations set
forth in Section 11.03, the Residual Technology. The Parties acknowledge and
agree that EDS' right, title and interest in and to the Residual Technology
constitute substantial rights in the technology developed as a result of the
Services performed under this Agreement. No licenses will be deemed to have been
granted by either Party to any of its patents, trade secrets, trademarks or
copyrights, except as otherwise expressly provided in this Agreement. Nothing in
this Agreement will require EDS or Del Monte to violate the proprietary rights
of any third party in any software or otherwise.

10.08 Further Assurances.

        EDS and Del Monte agree to execute and deliver such other instruments
and documents as either Party reasonably requests to evidence or effect the
transactions contemplated by this Article X. The provisions of this Article X
will survive the expiration or termination of this Agreement for any reason.



                                 Page 26 of 49


               ARTICLE XI. DATA, CONFIDENTIALITY AND AUDIT RIGHTS

11.01 Data of Del Monte.

        (a) Certain Obligations. "DEL MONTE DATA" means information relating to
Del Monte or its customers. Del Monte Data is confidential, will be subject to
Section 11.03 and will be and remain the property of Del Monte. EDS (and any
subcontractors of EDS engaged in accordance with this Agreement) is hereby
authorized to have access to and to make use of the Del Monte Data for the Term
of this Agreement as is appropriate for the performance by EDS of its
obligations hereunder. Upon expiration or termination of this Agreement for any
reason, subject to any record retention requirements of EDS, EDS will, at EDS'
expense, return to Del Monte all of the Del Monte Data in EDS' possession and in
EDS' then existing machine-readable format and media. EDS will not use the Del
Monte Data for any purpose other than providing the Services. At no time shall
any of the computer or other files or other materials or information containing
Del Monte Data be stored or held in a form or manner not reasonably accessible
to Del Monte through the Del Monte Representative. Subject to restrictions
contained in any relevant contracts, EDS shall provide the Del Monte
Representative or such other person or persons as may be designated in writing
by Del Monte all such files and other materials promptly upon the reasonable
request of Del Monte, including hardware and software keys and such information
as to format encryption (if any) and any other specification or information
necessary for Del Monte to retrieve, read, revise and/or maintain such files and
information.

        (b) Safeguards. EDS will maintain safeguards against the destruction,
loss or alteration of the Del Monte Data in the possession of EDS. EDS will
maintain safeguards that are no less rigorous than those maintained by EDS for
its own information of a similar nature. Del Monte will have the right to
establish backup security for the Del Monte Data and to keep backup data and
data files in its possession if it so chooses, provided, however, that EDS will
have access to such backup data and data files as is reasonably required by EDS.

        (c) Restricted Access. EDS Personnel shall not attempt to access, or
allow access to, any data, files or programs to which they are not entitled
under this Agreement. If such Access is attained, EDS shall immediately report
the incident to the Del Monte Representative, describe in detail any accessed
materials and the method of access and, upon request, provide to the Del Monte
Representative copies of any accessed materials.

        (d) Security System. EDS shall institute reasonable system security
measures to guard against the unauthorized access, alteration or destruction of
software and Del Monte Data. Such measures shall include, when possible, the
installation of software that (i) requires all users to enter a user
identification code and password prior to gaining access to the system, (ii)
controls and tracks the addition and deletion of users, and (iii) controls user
access to areas and features of the system.

        (e) Loss of Data. If any Del Monte Data is lost or damaged due to EDS'
failure to perform Services as required under this Agreement, EDS shall use
commercially



                                 Page 27 of 49


reasonable efforts to replace or regenerate such lost or damaged Del Monte Data
without charge or expense to Del Monte and shall not require Del Monte to pay
for any resource usage from the replacement or regeneration of such lost or
damaged data.

11.02 Privacy Laws.

        The Parties acknowledge and agree that Del Monte will be and remain the
controller of the Del Monte Data for purposes of all applicable laws relating to
data privacy, trans-border data flow and data protection (collectively, the
"PRIVACY LAWS"), and nothing in this Agreement will restrict or limit in any way
Del Monte's rights or obligations as owner and/or controller of the Del Monte
Data for such purposes. The Parties also acknowledge and agree that EDS may have
certain responsibilities prescribed by applicable Privacy Laws as a processor of
the Del Monte Data, and EDS hereby acknowledges such responsibilities to the
extent required thereby for processors of data and agrees that such
responsibilities will be considered as a part of the Services to be provided by
EDS under this Agreement, provided, however, that if the Privacy Laws to which
the activities contemplated by this Agreement are subject are modified, then EDS
will continue to comply with such Privacy Laws, as so modified, but to the
extent that such modifications expand the scope of the activities previously
undertaken by EDS pursuant to this Section 11.02, EDS will, at Del Monte's
reasonable request, provide such additional activities in accordance with
Section 4.04.

11.03 Confidentiality.

        (a) Scope of Obligation. Except as otherwise expressly provided in this
Agreement, EDS and Del Monte each agrees that (i) all information communicated
to it by the other and identified as confidential, whether before or after the
Effective Date, (ii) all information identified as confidential to which it has
access in connection with the Services, whether before or after the Effective
Date, and (iii) this Agreement and the Parties' rights and obligations
hereunder, will be and will be deemed to have been received in confidence and
will be used only for purposes of this Agreement, and each of EDS and Del Monte
agrees to use the same means as it uses to protect its own confidential
information, but in no event less than reasonable means, to prevent the
disclosure and to protect the confidentiality thereof. No such information will
be disclosed by the recipient Party without the prior written consent of the
other Party, provided, however, that each Party may disclose this Agreement and
the other Party's confidential information to those of the recipient Party's
attorneys, auditors, insurers (if applicable), subcontractors and full time
employees to the extent they have a need to have access to such information in
connection with their employment (or engagement, if applicable) by the recipient
Party, so long as the recipient Party requires, in the case of its attorneys,
auditors, insurers and subcontractors that each of them execute a
confidentiality agreement containing terms and conditions no less restrictive
than those set forth in this Section 11.03 and advises, in the case of its
employees, each such employee of the confidentiality obligations set forth in
this Section 11.03. In any event, compliance by each of the persons referenced
in the preceding sentence with the confidentiality obligations set forth in this
Section 11.03 will remain the responsibility of the Party employing or engaging
such persons.



                                 Page 28 of 49


        (b) Exceptions. The foregoing will not prevent either Party from
disclosing information that belongs to such Party or (i) is already known by the
recipient Party without an obligation of confidentiality other than under this
Agreement, (ii) is publicly known or becomes publicly known through no
unauthorized act of the recipient Party, (iii) is rightfully received from a
third party or (iv) is independently developed without use of the other Party's
confidential information. If confidential information is required to be
disclosed pursuant to a requirement of a governmental authority, such
confidential information may be disclosed pursuant to such requirement so long
as the Party required to disclose the confidential information, to the extent
possible, provides the other Party with timely prior notice of such requirement
and coordinates with such other Party in an effort to limit the nature and scope
of such required disclosure, provided, however, that in the event of a tax
audit, (A) notice of a disclosure requirement in connection therewith will not
be given and (B) the Parties will use commercially reasonable efforts to ensure
that any confidential information that is subject to a valid request for
delivery of a copy of such information (including a copy of this Agreement) to
the taxing authority is not subject to further disclosure by it (such as by
marking such information as a trade secret). If confidential information is
required to be disclosed in connection with the conduct of any mediation or
arbitration proceeding carried out pursuant to Article XIII, such confidential
information may be disclosed pursuant to and in accordance with the approval and
at the direction of the mediator or arbitrator, as the case may be, conducting
such proceeding. Upon written request of the disclosing Party at the expiration
or termination of this Agreement for any reason, all such documented
confidential information (and all copies thereof) of the disclosing Party will
be returned to the disclosing Party or will be destroyed, with written
certification thereof being given to the disclosing Party. The provisions of
this Section 11.03 will survive the expiration or termination of this Agreement
for any reason.

11.04 Audit Rights.

        (a) General. Employees of Del Monte and its auditors who are from time
to time designated by Del Monte and who agree in writing to the security and
confidentiality obligations and procedures reasonably required by EDS will be
provided with reasonable access to any facility at which the Services are being
performed to enable them to conduct audits of EDS' performance of the Services
and other matters relevant to this Agreement, including (i) verifying the
accuracy of EDS' charges to Del Monte and (ii) verifying that the Services are
being provided in accordance with this Agreement, including any Service Levels.
Any audit of EDS' pricing methodology will be conducted by an independent audit
firm acceptable to EDS. EDS will retain documentation supporting the pricing
methodology used to develop the pricing noted in this Agreement and any
subsequent revisions thereof.

        (b) Procedures. Such audits will be conducted during reasonable business
hours, and with the frequency deemed reasonably necessary or appropriate by Del
Monte. Del Monte will provide EDS with prior written notice of an audit. EDS
will cooperate in the audit, will make the information reasonably required to
conduct the audit available on a timely basis and will assist the designated
employees of Del Monte or its auditors as reasonably necessary. If Del Monte
requests resources beyond those resources then assigned to the Account Team who
are able to provide reasonable assistance of a



                                 Page 29 of 49


routine nature in connection with such audit, such resources will be provided at
Del Monte's expense. EDS will retain records that support EDS' performance of
the Services and other matters relevant to this Agreement in accordance with
EDS' retention guidelines. Notwithstanding anything to the contrary in this
Agreement, EDS will not be required to provide access to the proprietary data of
EDS or other EDS customers. All information learned or exchanged in connection
with the conduct of an audit, as well as the results of any audit, is
confidential and will be subject to Section 11.03.

        (c) Results. Following an audit, Del Monte will conduct an exit
conference with EDS to discuss issues identified in the audit that pertain to
EDS, and Del Monte will give EDS a copy of any portion of the audit report
pertaining to EDS. The Parties will review each EDS audit issue and will
determine (i) what, if any, actions will be taken in response to such audit
issues, when and by whom and (ii) which Party will be responsible for the cost
of taking the actions necessary to resolve such issues. Any such determination
will be based on the following criteria: (A) the Party that owns the original
deficiency; and (B) the Party that has contractual responsibility for the
improvement of internal controls. EDS will not be responsible for the cost of an
audit, except to the extent the audit expenses are incurred in connection with a
material deficiency in EDS's delivery of Services, or otherwise agreed to in
writing by the Parties.

                             ARTICLE XII. PAYMENTS

12.01 Charges for EDS Services.

        In consideration for the performance of the Services, Del Monte will pay
to EDS the charges set forth in Schedule E (the "SERVICES FEES") plus Del Monte
responsible taxes. EDS will invoice Del Monte for such Services Fees on a
monthly basis on the 15th day of each month, with each invoice setting forth the
charges related to that month. To the extent actual information is not
available, EDS shall utilize a reasonable estimate and adjust the estimate to
actual on the next monthly invoice.

12.02 Out-of-Pocket Expenses.

        Del Monte will pay, or reimburse EDS for, the reasonable, out-of-pocket
expenses, including travel and travel-related expenses incurred by EDS in
connection with EDS' activities requested by Del Monte and not within the
general scope of the Services, plus Del Monte responsible taxes, provided that
Del Monte approved such out-of-pocket expenses in writing. EDS will invoice for
all such out-of-pocket expenses, on the EDS monthly invoice with appropriate
details.

12.03 Time of Payment.

        Except as otherwise expressly provided in this Agreement, any amount due
to EDS under this Agreement and not disputed in good faith by Del Monte (as
provided below) will be due and payable on the 30th day following date of the
invoice from EDS therefor. All amounts will be payable to EDS in accordance with
payment instructions provided by EDS from time to time, so as in each case to
constitute immediately available funds by 12 noon, Plano, Texas time, on the
payment date no matter what the method of payment. Any amount not paid when due
will bear interest until paid at a rate of interest equal to the lesser of (a)
the prime rate established from time to time by Citibank of New



                                 Page 30 of 49


York plus one and one-half percent or (b) the maximum rate of interest allowed
by applicable law.

12.04 Disputed Amounts.

        If any portion of an amount due to EDS under this Agreement is subject
to a bona fide dispute between the Parties, Del Monte will pay to EDS on the
date such amount is due all amounts not disputed in good faith by Del Monte.
Within thirty (30) days of Del Monte's receipt of the invoice on which a
disputed amount appears, Del Monte will notify EDS in writing of the specific
items in dispute, will describe in detail Del Monte's reason for disputing each
such item and will deposit such disputed amount into a mutually agreed escrow
account. Within ten (10) days of EDS' receipt of such notice, the Parties will
negotiate in good faith pursuant to the provisions of Article XIII to reach
settlement on any items that are the subject of such dispute.

12.05 Taxes.

        (a) Each Party will be responsible for any personal property taxes on
property it owns or leases, for franchise and privilege taxes on its business,
and for taxes based on its net income or non-transaction based gross receipts.

        (b) The Services Fees, all out-of-pocket expenses, and all termination
fees, (collectively, "FEES") paid to EDS are inclusive of, and EDS will be
responsible for, any applicable sales, use, gross receipts, excise, value-added,
services, consumption, withholding or other taxes attributable to periods on or
after the Effective Date based upon or measured by EDS's cost in acquiring
equipment, materials, supplies or services used by EDS in performing the
Services, including all personal property and sales or use taxes, if any, due on
the EDS machines. In the event that a sales, use, excise, gross receipts or
services tax is imposed, levied, or assessed on the provision of the Services by
EDS to Del Monte or on EDS' charges to Del Monte under this Agreement, however
levied or assessed, EDS shall add all such taxes to EDS's Fees and Del Monte
shall pay or reimburse EDS. To the extent that any sales, use, gross receipts,
excise, value-added or services tax is required by Law to be separately
identified in EDS's billings to Del Monte, EDS will separately identify the tax.

        (c) Any taxes assessed, as determined by Del Monte, including a gross-up
thereon, on the provision of the Services for a particular site resulting from
EDS's relocating or rerouting the delivery of Services for EDS's convenience to,
from or through a location other than the Service Location used to provide the
Services as of the Effective Date will be EDS' responsibility; provided that,
Del Monte may pay such taxes and Del Monte will receive a credit with respect to
the Fees invoiced under this Agreement equal to such payments made pursuant to
this subsection, provided, however, that such credit shall be net of other
benefits received by Del Monte as reasonably agreed to by the Parties.

        (d) Del Monte and EDS will cooperate to segregate the Fees into the
following separate payment streams: (i) those for taxable Services; (ii) those
for non-taxable Services; and (iii) those for which EDS functions merely as a
paying agent for Del Monte in receiving goods, supplies or services (including
leasing and licensing arrangements)



                                 Page 31 of 49


that otherwise are nontaxable or have previously been subject to tax. In
addition, each of Del Monte and EDS will reasonably cooperate with the other to
more accurately determine a Party's tax liability and to minimize such
liability, to the extent legally permissible. Each of Del Monte and EDS will
provide and make available to the other any resale certificates, information
regarding out-of-state sales or use of equipment, materials or services, and any
other exemption certificates or information requested by a Party.

12.06 Cost and Quality Benchmarking.

        (a) Benchmarking. At Del Monte's request, the Parties may from time to
time but not more frequently than once in any two (2) year period during the
Term measure the quality and cost-effectiveness of the Services through the use
of independent third party benchmarking services (each, a "BENCHMARK").
Comparisons will be to determine whether, the Services being delivered are
comparable to similar price and service offerings of other information
technology service providers, taking into account financial and operational
risks, volume, term and any minimum commitments, similar geographies,
complexities, services and service levels. The party used to perform the
benchmarking services (the "BENCHMARKER") will be reasonably acceptable to both
Parties, and will exclude any entity that is a competitor of either party, or
that would be conflicted by its status as a corporate auditor of either Party.
Agreement upon a Benchmarker shall be contingent upon such Benchmarker's
agreement to such non-disclosure obligations as may be reasonably required by
either Party. The fees and services charged by the Benchmarker shall be borne by
Del Monte. EDS shall fully cooperate with such efforts, investigate unfavorable
variances, and take corrective action as necessary.

        (b) Corrective Action for Quality. If the Benchmark shows that any
individual Service quality is not in a mutually agreed position in the top half
of the peer group used in the Benchmark, EDS shall take such corrective action
as necessary to promptly bring the particular Service into a mutually agreed
position in the top half within thirty (30) days from receipt of the Benchmark
or such other time period as may otherwise be mutually agreed upon by the
Parties. If the cost of EDS performing Services within a mutually agreed
position in the top half of the Benchmark would exceed the then-current costs of
providing such services , then the costs of such corrective action shall be the
subject of good faith negotiations between the Parties.

        (c) Corrective Action for Charges. If the Benchmark shows that the
charges paid by Del Monte to EDS for the Services are not in a mutually agreed
position in the lowest half of the costs paid for Services by the peer group
used in the Benchmark and the Parties in good faith agree that the Benchmark has
fairly compared the EDS pricing to the peer group, then the Parties will
negotiate in good faith an adjustment to the EDS charges so that Del Monte is
placed within the mutually agreed position in the lowest 50% of the costs paid
for Services by the peer group.

          ARTICLE XIII. DISPUTE ESCALATION, MEDIATION AND ARBITRATION

13.01 Dispute Escalation.



                                 Page 32 of 49


        Subject to Section 13.02 below, in the event of any dispute, controversy
or claim of any kind or nature arising under or in connection with this
Agreement, including without limitation disputes as to the creation, validity,
interpretation, breach or termination of this Agreement (a "DISPUTE"), then upon
the written request of either Party, each of the Parties will comply with the
following procedures:

        (a) Meetings. Each Party will appoint a designate(s) whose task it will
be to meet for the purpose of endeavoring to resolve the Dispute. The designated
executives will meet as often as the Parties reasonably deem necessary in order
to gather and furnish to the other all information with respect to the matter in
issue that the Parties believe to be appropriate and germane in connection with
its resolution. Such executives will discuss the Dispute and will negotiate in
good faith in an effort to resolve the Dispute without the necessity of any
formal proceeding relating thereto. The specific format for such discussions
will be left to the discretion of the designated executives but may include the
preparation of agreed upon statements of fact or written statements of position
furnished to the other Party. No formal proceedings for the resolution of the
Dispute under Section 13.01(b) or (c) may be commenced until the earlier to
occur of (i) a good faith mutual conclusion by the designated executives that
amicable resolution through continued negotiation of the matter in issue does
not appear likely or (ii) the 10th day after the initial request to negotiate
the Dispute.

        (b) Mediation. Any Dispute that the Parties are unable to resolve
through informal discussions or negotiations pursuant to Section 13.01(a) will
be submitted to non-binding mediation, which will be held in San Francisco,
California. The Parties will mutually determine who the mediator will be from a
list of mediators obtained from the American Arbitration Association office
located in the city in which the proceeding will take place, determined as set
forth above (the "AAA"). If the Parties are unable to agree on the mediator
within ten (10) days of the demand of either party for mediation, the AAA will
select the mediator. Each Party will bear its own costs and expenses with
respect to the mediation, including one-half of the fees and expenses of the
mediator.

        (c) Arbitration. Any Dispute that the Parties are unable to resolve
through mediation pursuant to Section 13.01(b) will be submitted to arbitration
in accordance with the following procedures:

            (i) Demand for Arbitration; Location. Either Party may demand
arbitration by giving the other Party written notice to such effect, which
notice will describe, in reasonable detail, the facts and legal grounds forming
the basis for the filing Party's request for relief and will include a statement
of the total amount of damages claimed, if any, and any other remedy sought by
that Party. The arbitration will be held before one neutral arbitrator in San
Francisco, California.

            (ii) Identification of Arbitrator. Within ten (10) days after the
other Party's receipt of such demand, the Parties will mutually determine who
the arbitrator will be. If the Parties are unable to agree on the arbitrator
within that time period, the AAA will select the arbitrator. In any event, the
arbitrator will have a background in, and knowledge of, the information
technology services industry and will be an appropriate person based on the
nature of the Dispute. If a person with such industry experience is not
available,



                                 Page 33 of 49


the arbitrator will be chosen from the large and complex case panel or, if an
appropriate person is not available from such panel, the retired federal judges
pool.

            (iii) Conduct of Arbitration. The Commercial Arbitration Rules of
the AAA will govern the arbitration, except as expressly provided in this
Section 13.01(c). However, the arbitration will be administered by any
organization mutually agreed to in writing by the Parties. If the Parties are
unable to agree on the organization to administer the arbitration, it will be
administered by the AAA under its procedures for large and complex cases.

            (iv) Scope of Discovery. Discovery will be limited to the request
for and production of documents, depositions and interrogatories.
Interrogatories will be allowed only as follows: a Party may request the other
Party to identify by name, last known address and telephone number (A) all
persons having knowledge of facts relevant to the Dispute and a brief
description of that person's knowledge, (B) any experts who may be called as an
expert witness, the subject matter about which the expert is expected to
testify, the mental impressions and opinions held by the expert and the facts
known by the expert (regardless of when the factual information was acquired)
that relate to or form the basis for the mental impressions and opinions held by
the expert and (C) any experts who have been used for consultation, but who are
not expected to be called as an expert witness, if such consulting expert's
opinions or impressions have been reviewed by an expert witness. All discovery
will be guided by the Federal Rules of Civil Procedure. All issues concerning
discovery upon which the Parties cannot agree will be submitted to the
arbitrator for determination.

            (v) Authority of Arbitrator. The arbitrator will determine the
rights and obligations of the Parties according to the laws of the State of
California. The arbitrator will not have authority to award damages in excess of
the amount or other than the types allowed by Section 15.02 and may not, in any
event, make any ruling, finding or award that does not conform to the terms and
conditions of this Agreement.

            (vi) Joinder of Parties. Each of EDS and Del Monte agree that it
will use commercially reasonable efforts to join (and will allow the other Party
to join) any third party that the Parties have agreed is indispensable to the
arbitration. If any such third party does not agree to be joined, the
arbitration will proceed nonetheless.

            (vii) Award. The decision of, and award rendered by, the arbitrator
will be final and binding on the Parties. Upon the request of a Party, the
arbitrator's award will include written findings of fact and conclusions of law.
Judgment on the award may be entered in and enforced by any court of competent
jurisdiction. Each Party will bear its own costs and expenses (including filing
fees) with respect to the arbitration, including one-half of the fees and
expenses of the arbitrator.

13.02 Exclusive Remedy.

        Other than those matters involving injunctive or other extraordinary
relief or any action necessary to enforce the award of the arbitrator, the
Parties agree that the provisions of this Article XIII are a complete defense to
any suit, action or other proceeding instituted in any court or before any
administrative tribunal with respect to any



                                 Page 34 of 49


Dispute or the provision of the Services by EDS. Nothing in this Article XIII
prevents the Parties from exercising their rights to terminate this Agreement in
accordance with Article XIV.

                            ARTICLE XIV. TERMINATION

14.01 Material Default.

        If either Party materially defaults in the performance of any of its
duties or obligations under this Agreement (except for a default in payments to
EDS hereunder, which will be governed by Section 14.02), which default is not
substantially cured within thirty (30) days after written notice is given to the
defaulting Party specifying such default or, with respect to those defaults that
cannot reasonably be cured within thirty (30) days, should the defaulting Party
fail to proceed within thirty (30) days to commence curing the default and
thereafter to either cure the default or proceed with reasonable diligence to
substantially cure the default within sixty (60) days, the Party not in default
may, by giving written notice thereof to the defaulting Party, terminate this
Agreement as of the date of receipt by the defaulting Party of such notice or as
of a future date specified in such notice of termination. In the event of a
termination for cause under this Section 14.01, the sole rights and obligations
of the respective Parties shall be those set forth in Section 14.06.

14.02 Termination for Nonpayment.

        If Del Monte defaults in the payment when due of any amount due to EDS
pursuant to this Agreement and does not cure such default within thirty (30)
days after being given written notice of such default or otherwise does not
comply with Section 12.04, EDS may, by giving written notice thereof to Del
Monte, terminate this Agreement as of the date of receipt by Del Monte of such
notice or as of a future date specified in such notice of termination. In the
event EDS terminates this Agreement for nonpayment, EDS in its sole discretion
may require prepayment for any requested services under Section 14.06.

14.03 Termination for Bankruptcy and Related Events.

        Subject to Title 11, United States Code, if either Party becomes or is
declared insolvent or bankrupt, is the subject of any proceedings relating to
its liquidation, insolvency or for the appointment of a receiver or similar
officer for it, makes an assignment for the benefit of all or substantially all
of its creditors or enters into an agreement for the composition, extension or
readjustment of all or substantially all of its obligations, then the other
Party may, by giving written notice thereof to such Party, terminate this
Agreement as of a date specified in such notice of termination.

14.04 Termination upon Material Change in Del Monte Business.

        Del Monte may terminate this Agreement upon at least six (6) months
prior written notice to EDS in the event Del Monte (or the controlling
shareholders of Del Monte) (a) enters into a transaction to sell all or
substantially all of the assets of Del Monte, (b) enters into a transaction to
sell one or more business units of Del Monte accounting for 40% or more of Del
Monte's annual net sales, (c) enters into a transaction to merge Del



                                 Page 35 of 49


Monte into another entity, (d) is acquired by another entity or (e) makes an
acquisition that increases Del Monte' annual net sales by 50% or more. Del
Monte's announced merger into the H. J. Heinz business is excluded as a material
change for purposes of this section 14.04.

14.05 Termination for Convenience.

        Del Monte may provide notice of termination at any time after the first
anniversary of the Effective Date by providing at least six (6) months prior
written notice to EDS. Termination fees in addition to any due under Section
14.06 (b) are as follows:

        Termination effective in Year 2:                     [XXX]

        Termination effective in Year 3 through 10:          [XXX]

14.06 Effect of Expiration or Termination.

        (a) Termination Assistance Services.

            (i) Commencing up to six (6) months before the expiration or earlier
termination of this Agreement, upon the request of and as specified by Del
Monte, and continuing through the effective date of expiration or termination of
the Agreement, EDS will provide, at no additional charge to Del Monte to the
extent that such assistance can be provided through resources included in the
Services Fees, all information and assistance reasonably necessary to provide
for the smooth transition of the Services (and other functions being performed
by EDS and EDS' subcontractors and agents at the time of such expiration or
termination) to Del Monte or another service provider of Del Monte's choosing,
which such assistance will include capacity planning, consulting services,
facilities planning, telecommunications planning, Software configuration,
reviewing all system Software with a new service provider or its agents,
generating machine readable listings of source code, uploading production
databases, providing parallel processing, testing and providing Equipment where
practical (individually and collectively, the "TERMINATION SERVICES").

            (ii) Del Monte may also require EDS, upon the request of and as
specified by Del Monte, to provide Services and the Termination Services for an
extension period of up to six (6) months following the effective date of
expiration or termination of the Agreement (collectively, the period of
Termination Services prior to the effective date of expiration or termination of
the Agreement together with any extension period hereinafter referred to as the
"TERMINATION ASSISTANCE PERIOD").

            (iii) During the Termination Assistance Period, EDS will continue to
provide the Services in addition to the Termination Services until Del Monte, in
its sole discretion, provides EDS notice that the Services have been
satisfactorily transferred to Del Monte or another service provider, at which
time EDS will cease providing any Services or Termination Services.

            (iv) The quality and level of Termination Services and other Service
performed during the Termination Assistance Period will not be degraded from the
Service Levels provided by EDS and EDS' subcontractors and agents for similar
Services prior to such termination.


[XXX] OMITTED PURSUANT TO REQUEST FOR CONFIDENTIAL TREATMENT. FULL TEXT
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.



                                 Page 36 of 49


            (v) After the expiration of the Termination Assistance Period, EDS
will (A) answer questions from Del Monte regarding the Services on an "as
needed" basis at EDS's then-standard billing rates and (B) deliver to Del Monte
any remaining Del Monte-owned reports and documentation still in EDS's
possession.

            (vi) Del Monte will have the right to extend offers of employment to
all EDS personnel who have been or are assigned to or have or are performing any
Services or other work on behalf of EDS with respect to Del Monte. EDS will
provide reasonable access to such personnel and will not interfere in any way
with any such solicitation by Del Monte.

            (vii) EDS will provide such training and documentation as Del Monte
may reasonably require for Del Monte to understand, operate, maintain and
enhance the information technology systems and understand and provide the
Services.

        (b) Termination Services Fees.

            (i) With respect to Termination Services that were Services
performed under the Agreement prior to the Termination Assistance Period:

                  (A) During the Termination Assistance Period prior to the
expiration or termination of the Agreement, EDS will provide Termination
Services at no additional charge to Del Monte to the extent that such assistance
can be provided through resources included in the Service Fees. To the extent
that any Termination Services cannot be provided through resources included in
the Service Fees, Del Monte will pay EDS at the rates then applicable under the
Agreement for such Services.

                  (B) During the Termination Assistance Period after the
expiration or termination of the Agreement, if applicable, Del Monte will pay
EDS at EDS's then standard commercial billing rates for such Services.

            (ii) With respect to Termination Services that were not Services
performed under the Agreement prior to the Termination Assistance Period, Del
Monte will pay EDS the rates specified in this Agreement.

            (iii) The fees paid for Termination Services (the "TERMINATION
SERVICES FEES") are to be paid in accordance with the payment terms for Services
Fees set forth in Article XII.

        (c) Exit Duties and Exit Rights. Upon the later of the expiration or
termination of this Agreement and the last day of the Termination Assistance
Period (the "END DATE"), EDS will perform the following:

            (i) Wind-Down. EDS will cease to perform the Services, and Del Monte
will pay to EDS all amounts due to EDS for all Services provided and expenses
incurred through the End Date.

            (ii) Transition Plan. EDS and Del Monte will work together to
develop a transition plan (the "TRANSITION PLAN") setting forth the respective
tasks to be



                                 Page 37 of 49


accomplished by each Party in connection with the Termination Services and a
schedule pursuant to which such tasks are to be completed.

            (iii) Specifications. EDS will, upon Del Monte's request, provide
Del Monte with reasonably detailed specifications for the hardware and software
needed by Del Monte (or a third party provider) to properly provide the Services
then being performed by EDS.

            (iv) Acquisition of Equipment. Del Monte will have the option to
purchase from EDS at its remaining book value any equipment owned by EDS and to
assume the leases (provided such leases are assumable) for any equipment leased
by EDS, in each case only to the extent that such equipment is dedicated solely
to providing the Services to Del Monte as of the effective date of termination
or expiration or End Date, whichever is applicable. Such equipment will be
provided on an "as is, where is" basis.

            (v) Vendor Software. EDS will reasonably assist Del Monte in Del
Monte's acquisition of any necessary rights to access any EDS-Vendor Software
and existing documentation then being used by EDS in performing the Services.

            (vi) Training. EDS will provide appropriate training for the
employees of Del Monte (or the third party provider) who will be assuming
responsibility following the Termination Assistance Period for operation of the
software then being used by EDS in performing the Services.

            (vii) Disclosure of Information. Notwithstanding anything to the
contrary in this Agreement, EDS will not be required to disclose any of its
proprietary information, whether in the nature of a trade secret, software or
otherwise, to the third party provider except to the extent that Del Monte is
entitled to such information under this Agreement. Prior to providing any
termination assistance to the third party provider, Del Monte will cause the
third party provider to provide EDS with written assurances, in form and
substance reasonably satisfactory to EDS, that the third party provider (i) will
maintain at all times the confidentiality of any EDS proprietary information
disclosed or provided to, or learned by, the third party provider in connection
therewith and (ii) will use such information exclusively for the purposes for
which Del Monte is authorized to use such information pursuant to this
Agreement.

                     ARTICLE XV. INDEMNITIES AND LIABILITY

15.01 Indemnities.

        (a) Indemnity by Del Monte. Del Monte will indemnify EDS from, and
defend and hold EDS harmless from and against, any losses suffered, incurred or
sustained by EDS or to which EDS becomes subject, resulting from, arising out of
or relating to any third-party claim:

            (i) that the (1) Del Monte Software, Del Monte Vendor Software, any
other item provided by Del Monte, its subcontractors or agents, or that Del
Monte, its



                                 Page 38 of 49


subcontractors or agents instructs EDS to use, infringes or constitutes a
misappropriation of the intellectual property rights of any third party or (2)
EDS infringes or has misappropriated the intellectual property rights of any
third party where such infringement or misappropriation arises due to
instructions provided by Del Monte, PROVIDED, that Del Monte shall have no
liability if (1) the claim of infringement or misappropriation is based upon the
use of the software or items by EDS in combination with equipment, devices, or
software not intended for use therewith by Del Monte or used in a manner for
which the software or items were not designed, (2) EDS modifies any software or
items without the consent of Del Monte, and such infringement would not have
occurred but for such modification or (3) the claim of infringement or
misappropriation arises from the use of the software or items in a manner
outside of the scope of the terms set forth in this Agreement;

            (ii) relating to the inaccuracy, untruthfulness or breach of any
representation or warranty made by Del Monte under this Agreement;

            (iii) relating to (A) a violation by Del Monte of any law for the
protection of persons or members of a protected class or category of persons,
including unlawful discrimination and (B) work-related injury (except as may be
covered by Del Monte's workers' compensation plan) or death caused by Del Monte;

            (iv) relating to any amount, including taxes, interest and
penalties, assessed against EDS that are the obligation of Del Monte pursuant to
Section 12.05;

            (v) relating to bodily injury (including death) or property loss or
damage resulting from Del Monte's acts or omissions;

            (vi) relating to a breach of Section 11.03 (Confidentiality); and

            (vii) relating to a breach of any of the covenants in Section 9.02
(Covenants).

Del Monte will reimburse EDS for any reasonable costs and expenses incurred in
connection with the enforcement of this Section.

        (b) Indemnity by EDS. EDS will indemnify Del Monte from, and defend and
hold Del Monte harmless from and against, any losses suffered, incurred or
sustained by Del Monte or to which Del Monte becomes subject resulting from,
arising out of or relating to any third party claim:

            (i) that the Developed Software, EDS Software, Other Deliverables,
EDS machines, any enhancements or modifications to the Del Monte Software or Del
Monte Vendor Software performed by EDS or EDS' subcontractors or agents or any
other items provided to Del Monte by EDS, but excluding any EDS-Vendor Software
provided to Del Monte by EDS or EDS' subcontractors or agents, infringe or
constitutes a misappropriation of the intellectual property rights of any third
party PROVIDED, that EDS shall have no liability if (1) the claim of
infringement or misappropriation is based upon the use of the software or items
by Del Monte in combination with equipment, devices, or software not intended
for use therewith or not provided by EDS or used in a



                                 Page 39 of 49


manner for which the software or items were not designed, or (2) Del Monte
modifies any software or items, and such infringement would not have occurred
but for such modification, (3) the claim of infringement arises out of EDS'
compliance with specifications provided by Del Monte and such infringement would
not have occurred but for such compliance (unless EDS knew, or reasonably should
have known, of such infringement), (4) the claim of infringement or
misappropriation is based upon the continued infringement or misappropriation by
Del Monte after modifications provided by EDS or written instructions to modify
have been provided to Del Monte that would have avoided the alleged
infringement, or (5) the claim of infringement or misappropriation is based upon
the use of the software or items in a manner outside of the scope of the terms
set forth in this Agreement;

            (ii) relating to any duties or obligations of EDS in respect of a
third party or any subcontractor of EDS;

            (iii) by a third party arising from services or systems provided by
EDS from a Service Location that is shared with other customers of EDS;

            (iv) relating to the inaccuracy, untruthfulness or breach of any
representation or warranty made by EDS under this Agreement;

            (v) relating to EDS's failure to obtain, maintain or comply with the
Governmental Consents;

            (vi) relating to (A) a violation by EDS of any law for the
protection of persons or members of a protected class or category of persons,
including unlawful discrimination and (B) work-related injury (except as may be
covered by EDS's workers' compensation plan) or death caused by EDS;

            (vii) relating to any amounts, including taxes, interest and
penalties, assessed against Del Monte that are the obligation of EDS pursuant to
Section 12.05 (Taxes);

            (viii) relating to bodily injury (including death) or property loss
or damage resulting from EDS' acts or omissions;

            (ix) relating to a breach of EDS obligations with respect to Del
Monte Data;

            (x) relating to a breach of Section 11.03 (Confidentiality); and

            (xi) Relating to a breach of any of the covenants in Section 9.02
(Covenants).

EDS will reimburse Del Monte Entities for any reasonable costs and expenses
incurred in connection with the enforcement of this Section.

        (c) Indemnification Procedures. If any third party claim is commenced
against a person or entity entitled to indemnification under this Section 15
(the "INDEMNIFIED



                                 Page 40 of 49


PARTY"), notice thereof will be given to the Party that is obligated to provide
indemnification (the "INDEMNIFYING PARTY") as promptly as practicable. If, after
such notice, the Indemnifying Party will acknowledge that this Agreement applies
with respect to such claim, then the Indemnifying Party will be entitled, if it
so elects, in a notice promptly delivered to the Indemnified Party, but in no
event less than ten (10) days prior to the date on which a response to such
claim is due, to immediately take control of the defense and investigation of
such claim and to employ and engage attorneys reasonably acceptable to the
Indemnified Party to handle and defend the same, at the Indemnifying Party's
sole cost and expense. The Indemnified Party will cooperate, at the cost of the
Indemnifying Party, in all reasonable respects with the Indemnifying Party and
its attorneys in the investigation, trial and defense of such claim and any
appeal arising therefrom; provided, however, that the Indemnified Party may, at
its own cost and expense, participate, through its attorneys or otherwise, in
such investigation, trial and defense of such claim and any appeal arising
therefrom. No settlement of a claim that involves a remedy other than the
payment of money by the Indemnifying Party will be entered into without the
consent of the Indemnified Party. After notice by the Indemnifying Party to the
Indemnified Party of its election to assume full control of the defense of any
such claim, the Indemnifying Party will not be liable to the Indemnified Party
for any legal expenses incurred thereafter by such Indemnified Party in
connection with the defense of that claim. If the Indemnifying Party does not
assume full control over the defense of a claim subject to such defense as
provided in this Section, the Indemnifying Party may participate in such
defense, at its sole cost and expense, and the Indemnified Party will have the
right to defend the claim in such manner as it may deem appropriate, at the cost
and expense of the Indemnifying Party.

        (d) Additional Remedy. If software or other items provided by EDS become
the subject of an infringement claim, or in the opinion of EDS are likely to
become the subject of such a claim, then, in addition to its obligations
hereunder, EDS will (i) replace or modify the software or items to make them
non-infringing or cure any claimed misuse of another's trade secret, or (ii) if
such alternative is not reasonably available, procure for Del Monte the right to
continue using the software or items pursuant to this Agreement, or (iii) if
none of the foregoing are commercially reasonable, cease using, or instruct Del
Monte to cease using, the infringing software or items. Any costs associated
with implementing any of the above alternatives will be borne by EDS.


15.02 Liability.

        (a) General Limitation. The liability of each Party to the other for all
damages arising out of or related to this Agreement, regardless of the form of
action that imposes liability, whether in contract, equity, negligence, intended
conduct, tort or otherwise, will be limited to and will not exceed, in the
aggregate for all claims, actions and causes of action of every kind and nature,
the lesser of the sum of $10,000,000 or the total fees paid by Del Monte to EDS
for the prior 12 months.

        (b) Limitation on Other Damages. In no event will the measure of damages
payable by either Party include, nor will either Party be liable for, any
amounts for loss of income, profit or savings or indirect, incidental,
consequential, exemplary, punitive or special damages of any party, including
third parties, even if such Party has been



                                 Page 41 of 49


advised of the possibility of such damages in advance, and all such damages are
expressly disclaimed.

        (c) Exceptions to Limitations. The limitations set forth in Sections
15.02(a) and 15.02(b) will not apply to (i) the liability of either Party to the
extent such liability results from (A) that Party's acts of intentional tortious
conduct or gross negligence in the performance or nonperformance of its
obligations under this Agreement or (B) that Party's nonperformance of its
payment obligations to the other expressly set forth in this Agreement
(including, with respect to Del Monte, Del Monte's obligation to make payments
to EDS during the term of this Agreement as required hereby, whether in the form
of charges for Services performed hereunder or for payment or reimbursement of
taxes, out-of-pocket expenses or pass-through expenses.

        (d) Duty to Mitigate. Each Party has a duty to mitigate the damages that
would otherwise be recoverable from the other pursuant to this Agreement by
taking appropriate and reasonable actions to reduce or limit the amount of such
damages.

        (e) Contractual Statute of Limitations. No claim and demand for
mediation or arbitration or cause of action that arose out of an event or events
that occurred more than two years prior to the filing of a demand for mediation
or arbitration or suit alleging a claim or cause of action may be asserted by
either Party against the other.

        (f) Acknowledgment. The Parties expressly acknowledge that the
limitations and exclusions set forth in this Section 15.02 have been the subject
of active and complete negotiation between the Parties and represent the
Parties' agreement taking into account each Party's level of risk associated
with the performance or nonperformance of its obligations under this Agreement
and the payments and other benefits to be derived by each Party pursuant to this
Agreement. The provisions of this Section 15.02 will survive the expiration or
termination of this Agreement for any reason.

                           ARTICLE XVI. MISCELLANEOUS

16.01 Accounting Terms.

        All accounting terms that are not specifically defined herein, and all
accounting obligations, duties, procedures and practices that are undertaken
pursuant to this Agreement, shall be construed, interpreted and undertaken in
accordance with generally accepted accounting principles that exist in the
United States of America from time to time.

16.02 Amendments; Waiver.

        Changes or modifications to this Agreement may not be made orally or
through a course of dealing, but only by a written amendment or revision signed
by the Parties. Any terms and conditions varying from this Agreement on any
order, invoice or other notification from either Party are not binding on the
other unless specifically accepted by the other. Unless otherwise expressly
provided in this Agreement, neither a delay nor omission by either Party to
exercise, nor a course of dealing with respect to any right or power under this
Agreement will be construed to be a waiver thereof. No waiver of any



                                 Page 42 of 49


breach of any provision of this Agreement will constitute a waiver of any prior,
concurrent or subsequent breach of the same or any other provision hereof.

16.03 Approvals and Similar Actions.

        Except as otherwise expressly provided in this Agreement, where
agreement, approval, acceptance, consent or similar action is required of either
Party by any provision of this Agreement, such action will not be unreasonably
withheld or delayed. An approval or consent given by a Party under this
Agreement will not relieve the other Party from responsibility for complying
with the requirements of this Agreement, nor will it be construed as a waiver of
any rights under this Agreement, except as and to the extent otherwise expressly
provided in such approval or consent.

16.04 Binding Nature; Assignment.

        This Agreement will be binding on the Parties and their successors and
permitted assigns (it being understood and agreed that nothing contained in this
Agreement is intended to confer upon any party other than EDS and Del Monte any
rights, benefits or remedies of any kind or character whatsoever under or by
reason of this Agreement). Except as otherwise expressly provided in Article II
and except as noted below, neither Party may, nor will it have the power to,
assign this Agreement, or any part hereof, without the consent of the other. EDS
may assign its rights to Del Monte's payments hereunder, including any
termination amount payable pursuant to Article XIV, to a financial institution
or other third party in connection with any transaction entered into to provide
financing related to this Agreement or the obligations of EDS hereunder, and any
such assignee may further assign its rights hereunder in connection with such
financing. The Parties acknowledge that either of them may become a party to one
or more transactions in the form of a merger (including a re-incorporation
merger), consolidation, reorganization, stock sale or exchange, sale of all or
substantially all of such Party's assets or some similar or related transaction,
with the result being that the affected Party is the surviving entity and by
operation of law the surviving entity assumes the rights and obligations under
this Agreement or, if the affected Party is not the surviving entity, the
surviving entity continues to conduct the business conducted by the affected
Party prior to consummation of the transaction, including the assumption of the
rights and obligations under this Agreement. No such transaction involving
either Party will be deemed to be an assignment of this Agreement requiring the
consent of the other, unless (a) in the case of EDS being involved in such a
transaction, the transaction materially and adversely affects EDS' ability to
continue to perform the Services in accordance with this Agreement or (b) in the
case of Del Monte being involved in such a transaction, the transaction
materially changes the scope of Services as described in this Agreement, or
materially changes EDS's costs to provide Services.

16.05 Construction Rules.

        The Article and Section headings and table of contents used in this
Agreement are for convenience of reference only and will not enter into the
interpretation hereof. As used in this Agreement, unless otherwise expressly
provided to the contrary, (a) any reference to a "Section", "Exhibit" or
"Schedule" is a reference to a Section of this Agreement or an Exhibit or
Schedule attached to this Agreement, and (b) all references to days, months or
years are references to calendar days, months or years. To the extent that the
provisions of this Agreement and the Schedules are inconsistent, to the extent




                                 Page 43 of 49


possible such provisions will be interpreted so as to make them consistent, and
if that is not possible, the provisions of the Schedules will prevail. If any
provision of this Agreement is held to be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions will not in
any way be affected or impaired, and such provision will be deemed to be
restated to reflect the original intentions of the Parties as nearly as possible
in accordance with applicable law. The Parties agree that this Agreement is an
executory contract as contemplated by 11 U.S.C. Section 365. In performing its
obligations under this Agreement, neither Party will be required to undertake
any activity that would conflict with the requirements of any applicable law,
rule, regulation, interpretation, judgment, order or injunction of any
governmental authority. This Agreement may be executed in multiple counterparts,
each of which will be deemed an original and all of which taken together will
constitute one instrument. The Parties acknowledge and agree that each has been
represented by legal counsel of its choice throughout the negotiation and
drafting of this Agreement, that each has participated in the drafting hereof
and that this Agreement will not be construed in favor of or against either
Party solely on the basis of a Party's drafting or participation in the drafting
of any portion of this Agreement.

16.06 Entire Agreement; Survival.

        This Agreement (including the Schedules attached hereto, each of which
is incorporated into this Agreement by this reference) constitutes the full and
complete statement of the agreement of the Parties with respect to the subject
matter hereof and supersedes any previous or contemporaneous agreements,
understandings or communications, whether written or oral, relating to such
subject matter. The expiration or termination of this Agreement for any reason
will not release either Party from any liabilities or obligations set forth
herein that (a) the Parties have expressly agreed will survive any such
expiration or termination or (b) remain to be performed or by their nature would
be intended to be applicable following any such expiration or termination.

16.07 Excused Performance.

        Neither Party will be deemed to be in default hereunder, or will be
liable to the other, for failure to perform any of its non-monetary obligations
under this Agreement for any period and to the extent that such failure results
from any event or circumstance beyond that Party's reasonable control (each, a
"FORCE MAJEURE EVENT"), including acts or omissions of the other Party or third
parties, natural disasters, riots, war, terrorism, civil disorder, court orders,
acts or regulations of governmental bodies, labor disputes or failures, and that
it could not have prevented by reasonable precautions or could not have remedied
by the exercise of reasonable efforts, provided that the exercise of such
reasonable precautions or reasonable efforts will not require the incurrence of
any additional cost or expense. To the extent that disaster recovery services
are included in the Services, the foregoing will not limit EDS' obligation to
provide such services unless they also are affected by the Force Majeure Event.

16.08 Export Regulations.

        This Agreement is expressly made subject to any United States government
laws, regulations, orders or other restrictions regarding export from the United
States of computer hardware, software, technical data or derivatives of such
hardware, software or technical data. Notwithstanding anything to the contrary
in this Agreement, Del Monte will



                                 Page 44 of 49


not directly or indirectly export (or re-export) any computer hardware,
software, technical data or derivatives of such hardware, software or technical
data, or permit the shipment of same: (a) into (or to a national or resident of)
Cuba, North Korea, Iran, Iraq, Libya, Syria or any other country to which the
United States has embargoed goods; (b) to anyone on the U.S. Treasury
Department's List of Specially Designated Nationals, List of Specially
Designated Terrorists or List of Specially Designated Narcotics Traffickers, or
the U.S. Commerce Department's Denied Parties List; or (c) to any country or
destination for which the United States government or a United States
governmental agency requires an export license or other approval for export
without first having obtained such license or other approval. Each Party will
reasonably cooperate with the other and will provide to the other promptly upon
request any end-user certificates, affidavits regarding re-export or other
certificates or documents as are reasonably requested to obtain approvals,
consents, licenses and/or permits required for any payment or any export or
import of products or services under this Agreement. The provisions of this
Section 16.08 will survive the expiration or termination of this Agreement for
any reason.

16.09 Governing Law.

        This Agreement will be governed by and construed in accordance with the
substantive laws of the State of California, without giving effect to any
choice-of-law rules that may require the application of the laws of another
jurisdiction.

16.10 Independent Contractors.

        The Parties are independent contractors, and this Agreement will not be
construed as constituting either Party as partner, joint venturer or fiduciary
of the other, as creating any other form of legal association that would impose
liability on one Party for the act or failure to act of the other or as
providing either Party with the right, power or authority (express or implied)
to create any duty or obligation of the other. Except as otherwise expressly
provided in this Agreement, each Party has the sole right and obligation to
supervise, manage, contract, direct, procure, perform or cause to be performed
all work to be performed by it pursuant to this Agreement.

16.11 Notices.

        Except as otherwise expressly provided in this Agreement, all notices
under this Agreement will be in writing and will be deemed to have been duly
given if delivered personally or by a nationally recognized courier service,
faxed or mailed by registered or certified mail, return receipt requested,
postage prepaid, to the Parties at the addresses set forth in Schedule F. All
notices under this Agreement that are addressed as provided in this Section
16.11, (a) if delivered personally or by a nationally recognized courier
service, will be deemed given upon delivery, (b) if delivered by facsimile, will
be deemed given when confirmed and (c) if delivered by mail in the manner
described above, will be deemed given on the fifth business day after the day it
is deposited in a regular depository of the United States mail. Either Party
from time to time may change its address or designee for notification purposes
by giving the other Party notice of the new address or designee and the date
upon which such change will become effective.

16.12 Public Relations and Marketing References.

        Each Party will coordinate with the other regarding any media release,
public announcement or similar disclosure relating to this Agreement or its
subject matter and



                                 Page 45 of 49


receive written approval from the other party prior to its release. This
provision does not alter the restrictions on the disclosure of confidential
information set forth in Section 11.03 and, subject to Section 11.03, will not
be construed so as to delay or restrict either Party from disclosing any
information required to be disclosed in order to comply with any applicable
laws, rules or regulations. Notwithstanding the foregoing but subject to any
applicable laws, rules or regulations, each Party will have the right to list
the name of the other Party, to make general references to the basic nature of
the relationship between the Parties under this Agreement and to describe
generally the type of services being provided by EDS to Del Monte under this
Agreement in such Party's promotional and marketing materials, in such Party's
oral or visual presentations to third parties, in interviews conducted by the
news media or securities analysts and in or through any other available media
channels, including print, Internet, radio, cable and broadcast mediums.

16.13 Right to Engage in Other Activities.

        Subject to the terms set forth in this Agreement, Del Monte acknowledges
and agrees that EDS may provide information technology services for third
parties at any EDS facility that EDS may utilize from time to time for
performing the Services. Subject to the restrictions on the use of data and the
disclosure of confidential information set forth in Section 11.03, nothing in
this Agreement will impair EDS' right to acquire, license, market, distribute,
develop for itself or others or have others develop for EDS similar technology
performing the same or similar functions as the technology and Services
contemplated by this Agreement.



                                 Page 46 of 49



        In Witness Whereof, the Parties have duly executed and delivered this
Agreement by their duly authorized representatives as of the date set forth
below each signature.

   DEL MONTE CORPORATION                     ELECTRONIC DATA SYSTEMS CORPORATION

   Signature:                                Signature
              -------------------------                ------------------------
   Printed Name:  David L Meyers             Printed Name: Timothy C. Ryan
                 ----------------------                    --------------------
   Title:  Executive V.P. & CFO              Title: Client Executive
          -----------------------------             ---------------------------
   Date: June 30, 2002                       Date: June 30, 2002
         ------------------------------            ----------------------------


                                             EDS Information Services L.L.C.

                                             Signature
                                                       ------------------------
                                             Printed Name: Timothy C. Ryan
                                                           --------------------
                                             Title: Client Representative
                                                    ---------------------------
                                             Date: June 30, 2002
                                                   ----------------------------


                                 Page 47 of 49



                             SCHEDULE OF DEFINITIONS



Defined Term                                      Location of Definition
- ------------                                      ----------------------
                                               
AAA...............................................Section 13.01(b)
Access............................................Section 7.03
Account Team......................................Section 2.01(a)
Agreement.........................................Introduction
Benchmark/Benchmarker.............................Section 12.06
Data Safeguard....................................Section 6.03
Del Monte Data....................................Section 11.01(a)
Del Monte Equipment ..............................Section 7.03
Del Monte Representative..........................Section 1.02
Del Monte Service Locations.......................Section 6.01
Del Monte Software................................Section 10.01(c)
Del Monte Vendor Software ........................Section 10.01(d)
Del Monte.........................................Introduction
Developed Software................................Section 10.01(e)
Dispute...........................................Section 13.01
EDS Account Executive.............................Section 1.01
EDS Development Tools.............................Section 10.01(g)
EDS Service Locations.............................Section 6.01
EDS Software .....................................Section 10.01(a)
EDS...............................................Introduction
EDS-Vendor Software...............................Section 10.01(b)
Effective Date....................................Introduction
EIS ..............................................Introduction
End Date..........................................Section 14.06(c)
Extension Period..................................Section 3.02(b)
Fees..............................................Section 12.05(b)
Force Majeure Event...............................Section 16.07
Governmental Consents.............................Section 4.03(g)



                                 Page 48 of 49


                                               
Indemnified/Indemnifying Party....................Section 15.01(c)
Initial Term Expiration Date......................Section 3.01
Initial Term......................................Section 3.01
Key Positions.....................................Section 2.01(b)
Licensed Programs.................................Section 10.2
Maintenance Contract .............................Section 8.01
Nonconformance....................................Section 9.01(a)(v)
Other Deliverables ...............................Section 10.01(f)
Party/Parties.....................................Introduction
Privacy Laws......................................Section 11.02
Procedures Manual.................................Section 1.03
Renewal Term......................................Section 3.02(a)
Residual Technology...............................Section 10.01(h)
Service Fees......................................Section 12.01
Service Levels ...................................Section 4.01, 4.03
Services..........................................Sections 4.01, 4.03
Software .........................................Section 10.01(i)
Software Changes..................................Section 10.01 (i)
Term..............................................Section 4.01
Termination Assistance Period.....................Section 14.06(a)(ii)
Termination Service Fee...........................Section 14.06(b)(iii)
Termination Services..............................Section 14.06(a)(i)
Transition Plan...................................Section 14.06(c)(ii)



                                    SCHEDULES

Schedule A - Key Positions
Schedule B - Statement of Work
Schedule C - Service Level
Schedule D - Locations
Schedule E - Fees
Schedule F - Addresses for Notice



                                 Page 49 of 49

EX-10.24

                                                                  EXHIBIT 10.24


                          CONSULTING SERVICES AGREEMENT


This Agreement ("Agreement") is effective as of June 5, 2000 by and between
Andersen Consulting LLP, an Illinois general partnership registered as a limited
liability partnership with an office at 161 North Clark St., Chicago, Illinois
("Andersen Consulting") and Del Monte Corporation, a New York corporation with
an office at One Market, San Francisco, California 94105 ("Client").

WHEREAS, Client desires to obtain certain services from Andersen Consulting from
time to time;

WHEREAS, Andersen Consulting desires to provide such services to Client on the
terms let forth below; and

WHEREAS, Andersen Consulting and Client are simultaneously with this Agreement
entering into an Arrangement Letter, dated as of June 14, 2000, ("June 14
Arrangement Letter") further defining the relationship between them relating to
Client's business capabilities improvement project, a copy of which is attached
as an Appendix to this Agreement.

FOR AND IN CONSIDERATION OF the premises and mutual agreements herein, Andersen
Consulting and Client agree as follows:

1. SERVICES.

1.1 Andersen Consulting shall perform for Client the consulting services (the
"Services") specified in one or more Appendices to this Agreement signed by both
parties, each of which will be attached hereto and made a part hereof. In the
event of a conflict between any term of this Agreement and an Appendix, the
terms of the Appendix shall prevail.

1.2 Unless otherwise specified in an Appendix, changes to the scope of the
Services shall be made only in a writing executed by authorized representatives
of both parties. Andersen Consulting shall have no obligation to commence work
in connection with any change until the fee and/or schedule impact of the change
is agreed upon by the parties in writing.

1.3 If any Appendix requires the provision of third party products, including
hardware and software, Andersen Consulting's affiliated entity, Proquire LLC,
may, at Client's request and approval, provide such products subject to mutually
agreeable terms and conditions to be set forth on an attachment to the
applicable Appendix. Andersen Consulting, as agent for Proquire, may invoice,
collect, and receive from Client all sums that are or become due to Proquire,
including taxes and shipping charges, as applicable.

1.4 Subject to Section 3 of this Agreement, Andersen Consulting will use
commercially reasonable efforts to perform the Services according to our
estimates and time schedules.




2. PAYMENT FOR SERVICES AND EXPENSES.

2.1 Client shall pay Andersen Consulting for the Services on the terms defined
in the applicable Appendix.

2.2 Client shall pay the amounts payable to Andersen Consulting hereunder
subject to the payment timeframe as outlined in the applicable Appendix. If not
specifically defined in an Appendix, the following payment terms will apply:
Andersen Consulting will invoice Client for professional fees to be performed in
a given month in advance of that month. Any required adjustments to actual will
be made in subsequent invoice(s). Expenses will be invoiced per actual expenses
incurred. Payment terms will follow Client's standard terms of Net 45 days.
Should any invoice remain unpaid for more than sixty days, interest shall be
paid at a rate of 1.5 percent per month or the highest rate allowed by law. In
the event of any good faith dispute with regard to a portion of an invoice, the
undisputed portion shall be paid as provided herein. Upon resolution of the
disputed portion, any amounts owed to Andersen Consulting shall be paid within
thirty (30) days of the resolution of the dispute.

2.3 Unless provided otherwise in an Appendix, Andersen Consulting shall be
reimbursed by Client for all reasonable expenses incurred by Andersen Consulting
in the performance of the Services, including, but not necessarily limited to,
travel and lodging expenses, communications charges and supplies, provided,
however, that total charges for other than travel (including airfare, taxi or
other transportation, parking, per-diems and mileage reimbursements) and lodging
expenses costing greater than $1000 per month shall not be reimbursed unless
Client approved such charges in writing before they were incurred. In addition,
Client shall approve in writing, in advance, the travel and lodging expense
estimated for the Project. Andersen Consulting shall use commercially reasonable
efforts to manage to the approved estimate and shall advise Client promptly of
potential material deviations, and the parties will mutually determine the
appropriate action to be taken regarding any material deviations.

2.4 Client shall pay for all taxes, including any interest and penalties from
any related deficiency, in connection with this Agreement including any sales,
use, excise, value-added, services, consumption and other taxes and duties
(except taxes based on or measured by Andersen Consulting's net income or
associated with Andersen Consulting's employment of personnel, including payroll
and FICA taxes and Social Security and Medicare assessments) assessed on the
provision of Services by Andersen Consulting to Client or on Andersen
Consulting's charges to Client under this Agreement.

3. CLIENT RESPONSIBILITIES.

3.1 In connection with Andersen Consulting's provision of the Services, Client
and its other third-party contractors shall provide the professional resources
identified, perform those tasks and fulfill those responsibilities specified in
the applicable Appendix ("Client Responsibilities"). In addition, the June 14,
2000 Arrangement Letter contains, and subsequent Appendices may also contain,
certain business and other estimating assumptions related to the Services.
Client



                                       2

understands that Andersen Consulting's performance is partially dependent on
Client's timely and effective delivery of Client Responsibilities hereunder and
timely decisions and approvals by Client. Client recognizes that timely approval
of deliverables is fundamental towards meeting any applicable project
timeframes, budgets and milestones and shall not unreasonably withhold
acceptance of a deliverable. Except to the extent an Appendix contains specific
acceptance provisions, all work product provided to the Client for approval
shall be deemed accepted if within thirty (30) days after delivery, Client has
not provided to Andersen Consulting written notice identifying specifically any
basis for not approving the work product. Following receipt of notification of
non-acceptance by Client, Andersen Consulting shall correct promptly the work
product identified by Client in such notice of nonacceptance and shall resubmit
the work product for acceptance by the Client. Failure by the Client to provide
written notice of non-acceptance within ten (10) days after delivery shall
constitute acceptance by the Client. Andersen Consulting shall be entitled to
rely on all decisions and approvals of the Client in connection with the
Services. Changes in decisions and approvals are subject to Section 1.2.

3.2 In addition to any particular items specified in the Appendix, Client shall
supply on-site Andersen Consulting personnel with suitable office space, desks,
storage, furniture, and other normal office equipment support, adequate computer
resources (including necessary third party rights to use software), telephone
and facsimile service, postage, copying, secretarial support, word processing,
and general office supplies which may be necessary in connection with Andersen
Consulting's performance of the Services.

3.3 Neither party shall use the name of the other party outside the other's
organization in connection with its use of the Deliverables or otherwise without
the other party's express written consent, which may be withheld in the sole
discretion of each party.

3.4 Each party shall retain responsibility for its compliance with all
applicable federal, state and local laws and regulations.

4. WORK PRODUCT.

4.1 Upon final payment, Client shall have a perpetual, irrevocable,
nontransferable, non-exclusive, worldwide paid-up right and license to use,
copy, reproduce, distribute (subject to section 4.3), modify and prepare
derivative works of the deliverables originally developed in the course of the
Services, whether developed individually by Andersen Consulting or jointly with
Client ("Deliverables"). Client's rights in the Deliverables shall be for any of
Client's internal business related purposes and, to the extent any Deliverable
contains Andersen Consulting Confidential Information, shall be subject to
Section 6 below. All other intellectual property rights in the Deliverables
remain in and/or are assigned to Andersen Consulting, excluding, however, (i)
any third party intellectual property rights (including, but not limited to,
products, materials and methodologies) in the Deliverables which are proprietary
to third party vendors and which Client lacks the requisite power to grant,
convey or assign ownership (including, but not limited to, intellectual property
rights in the Deliverables owned by i2 Technologies, Inc., J.D. Edwards or
Electronic Data Systems ("EDS")) and (ii) any pre-existing works of authorship
and inventions of Client, and any enhancements or modifications to such
developed in the course of the performance of this Agreement ("Client
Proprietary Items"). Andersen Consulting hereby


                                       3


expressly grants, assigns and conveys to Client all of Andersen Consulting's
right, title and interest, if any, in the Client Proprietary Items. The parties
will cooperate with each other and execute such other documents as may be
reasonably deemed necessary to achieve the objectives of this Section.

4.2 In no event shall Andersen Consulting be precluded from developing for
itself, or for others, materials which are competitive with the Deliverables,
irrespective of their similarity to the Deliverables. In addition, each party
shall be free to use its general knowledge, skills and experience, and any
ideas, concepts, know-how, and techniques that are used or developed in the
course of providing the Services.

4.3 Andersen Consulting agrees that Client may allow its customers, vendors,
agents, outsourcing providers or other entities in a similar relationship to
Client to access the Deliverables, subject to the provisions of Section 4.1,
Section 5 and Section 6 herein.

5. PROPRIETARY ITEMS.

In the course of performance hereunder, Andersen Consulting may use products,
materials, tools and methodologies that are proprietary to Andersen Consulting
or to third parties (collectively "Proprietary Items"). As between Client and
Andersen Consulting, Proprietary Items will be deemed Confidential Information
of Andersen Consulting for purposes of Section 6. Included among the Proprietary
Items of Andersen Consulting are tools that Andersen Consulting identifies as
Solution Construction Aids ("SCAs"), which Andersen Consulting makes available
to clients under separate licensing terms. Client shall have or obtain no rights
in such Proprietary Items (or in any modifications or enhancements to them)
other than (i) to use them as authorized by Andersen Consulting in writing from
time to time solely for purposes of performing Client Responsibilities, (ii) to
the extent the Proprietary Items are incorporated into a Deliverable, to use
them as part of the Deliverable for purposes of Client's internal business only,
or (iii) pursuant to Andersen Consulting's standard license for such Proprietary
Items or, in the case of Proprietary Items owned by third parties, pursuant to
terms acceptable to the applicable third party. If Proprietary Items are made
available to Client under (i) or (ii) above, they will be made available in an
"AS IS" condition without express or implied warranties of any kind; those
Proprietary Items made available under (iii) above shall be subject only to
applicable terms of the applicable license.

6. CONFIDENTIAL INFORMATION.

During the course of Andersen Consulting performing Services for Client, each
party shall protect confidential information of the parties in accordance with
the provisions of the Confidentiality Agreement, dated as of September 27, 1999,
between Andersen Consulting and Client.

7. WARRANTY.

7.1 Andersen Consulting warrants that its Services will be performed in a good
and workmanlike manner, by qualified personnel, in accordance with the
specifications set forth in



                                        4


an applicable Appendix to this Agreement. Andersen Consulting agrees to
reperform, at no additional cost to client, any work not in compliance with this
warranty brought to its attention within a reasonable time (or such specific
period, if any, provided in the Appendix) after that work is performed.

7.2 Andersen Consulting warrants that it will use its commercially reasonable
efforts to complete the Services so as to meet the time frames and milestone
dates, within the budget contained in the Appendix to this Agreement, subject to
conditions within Andersen Consulting's reasonable control.

7.3 THE PRECEDING IS ANDERSEN CONSULTING'S ONLY WARRANTY CONCERNING THE
SERVICES, ANY DELIVERABLES AND ANY WORK PRODUCT, AND IS MADE EXPRESSLY IN LIEU
OF ALL OTHER WARRANTIES AND REPRESENTATIONS, EXPRESS OR IMPLIED, INCLUDING ANY
IMPLIED WARRANTIES OF FITNESS FOR A PARTICULAR PURPOSE, MERCHANTABILITY OR
OTHERWISE.

8. INDEMNIFICATION.

8.1 Each party shall indemnify, defend and hold harmless the other, its
employees, principals (partners, shareholders or holders of an ownership
interest, as the case may be) and agents, from and against any third party
claims, demands, loss, damage or expense (including reasonable attorneys' fees)
relating to bodily injury or death of any person or damage to real and/or
tangible personal property directly caused by the negligent acts, omissions or
willful misconduct of the indemnifying party, its personnel or agents in
connection with the performance of the Services hereunder.

8.2 Subject to the notification provisions contained in Section 8.4 below,
Andersen Consulting will indemnify, defend and hold harmless the Client, its
employees, and principals (partners, shareholders or holders of an ownership
interest, as the case may be) from and against any third party claim, demand,
loss, damage or expense (including reasonable attorneys' fees) relating to any
claim that any Deliverable or the services provided or performed by Andersen
Consulting infringe any United States patent existing at the time of the
applicable Deliverable, copyright, trademark or trade name or other intellectual
property right of the third party. Andersen Consulting will not indemnify
Client, its employees, and principals, however, if the claim of infringement is
caused by (1) Client's misuse or modification of the Deliverable (not including
those uses or modifications of the Deliverable authorized, approved or
participated in by Andersen Consulting); (2) Client's failure to use corrections
or enhancements made available to Client by Andersen Consulting; (3) Client's
use of the Deliverable in combination with any product or information not owned,
developed or authorized by Andersen Consulting; (4) Client's distribution,
marketing or use for the benefit of third parties of the Deliverable; (5)
Client's use of the Deliverable in a manner not permitted hereunder; (6)
information, direction, specification or materials provided by Client; or (7)
information provided by any third party where Andersen Consulting had no
knowledge that such information provided by the third party potentially
infringed any copyright or trade secret of a third party. If any Deliverable is,
or in Andersen Consulting's opinion is likely to be, held to be infringing,
Andersen Consulting shall at its expense and option either (a) procure the right
for Client to continue using it, (b) replace it with a



                                       5


noninfringing equivalent, (c) modify it to make it noninfringing while yielding
equivalent performance results or (d) direct the return of the Deliverable and
refund to Client the fees paid for such Deliverable less a reasonable amount for
Client's use of the Deliverable up to the time of return. The foregoing remedies
constitute Client's sole and exclusive remedies and Andersen Consulting's entire
liability with respect to infringement.

8.3 To receive the foregoing indemnities, the party seeking indemnification (the
"Indemnified Party") must promptly notify the other in writing of a claim or
suit once such claim or suit becomes known to the Indemnified Party and provide
reasonable cooperation (at the indemnifying party's expense) and full authority
to defend or settle the claim or suit. Notwithstanding the preceding sentence,
the failure by either party to promptly deliver notice of any claim or notice
shall not be deemed a waiver of the Indemnified Party's right to indemnification
hereunder. The indemnifying party shall have no obligation to indemnify the
Indemnified Party under any settlement made without the indemnifying party's
written consent.

8.4 Each party will determine the types and amounts of insurance coverage it
requires in connection with this Agreement. Neither party is required to obtain
insurance for the benefit of the other party. Each party shall pay all costs and
receive all benefits under policies arranged by it. Each party waives rights of
subrogation it may otherwise have regarding the other party's insurance
policies, including but not limited to property insurance, business interruption
insurance, and other first-party insurance.

9. EMPLOYEES.

9.1 Except as otherwise set forth in an Appendix, Andersen Consulting reserves
the right to determine which of its personnel shall be assigned to perform
Services, and to replace or reassign such personnel during the term hereof;
provided, however, that it will, subject to scheduling and staffing
considerations, attempt to honor Client's request for specific individuals. If
Client reasonably objects to any Andersen Consulting personnel, Client and
Andersen Consulting agree to discuss appropriate action to be taken. Andersen
Consulting has the sole right and obligation to supervise, manage, contract,
direct, procure, perform or cause to be performed all work to be performed by
personnel of Andersen Consulting, except as otherwise provided in this Agreement
or an applicable Appendix, and under no circumstances are such personnel to be
considered employees or agents of Client. Andersen Consulting shall pay all
wages, salaries and other amounts due its personnel relative to this Agreement
and shall be responsible for all obligations respecting them relating to income
tax withholdings, unemployment insurance premiums and pension plan
contributions.

9.2 Client may request at any time the removal of any Andersen Consulting
personnel assigned to a project covered by this Agreement if Client
(i) reasonably believes that such personnel is not qualified to perform services
required by this Agreement or does not meet appropriate professional standards
and (ii) previously provided Andersen Consulting with written notice of the
problem and a reasonable opportunity to remedy the situation, considering the
gravity and nature of the problem. Andersen Consulting will utilize commercially
reasonable efforts to accommodate the Client request. Replacement personnel, if
any, must have sufficient qualifications.



                                       6


9.3 Andersen Consulting will comply with all reasonable workplace standards and
policies provided to Andersen Consulting in advance, in writing by Client,
applicable to Client's employees, while Andersen Consulting personnel are
physically located at Client's premises.

9.4 Except as the other party expressly authorizes in writing in advance,
neither party shall solicit for employment, directly or indirectly, any of the
other party's Personnel during their participation in the Services or during
the twelve (12) months thereafter. For purposes of this Section 9.4, "Personnel"
includes partners or employees of each party who are involved in the performance
of either party's obligations under this Agreement. However, either party shall
have the night to hire any partner or employee employed by the other party who,
without other solicitation, responds to any employment advertising in
newspapers, trade publications or other public commercial media or any
unsolicited walk-in candidates not related to the Project.

9.5 Neither party shall be deemed a joint employer of the other's employees,
each party being responsible for any and all claims by its employees, subject to
Section 8.1. Neither party's employees shall be deemed "leased" employees of the
other for any purpose.

10. INDEPENDENT CONTRACTOR.

In connection with this Agreement, each party is an independent contractor and
as such will not have any authority to bind or cost the other. Nothing herein
shall be deemed or construed to create a joint venture, partnership, fiduciary
or agency relationship between the parties for any purpose.

11. LIMITATION OF LIABILITY.

11.1 Except for the indemnity obligations set forth in Section 8 above, the
limit of each party's liability hereunder (whether in contract, tort,
negligence, strict liability in tort or by statute or otherwise) to the other
concerning performance or non-performance, or in any manner related to this
Agreement, for any and all claims, shall not in the aggregate exceed: (i) with
respect to Andersen Consulting's limitation of liability, the total fees and
expenses payable to Andersen Consulting by Client; and (ii) with respect to
Client's limitation of liability, the total fees and expenses payable to
Andersen Consulting by Client hereunder with respect to the work involved under
the applicable Appendix. Client's exclusive remedy for any claim arising out of
these arrangements shall be for Andersen Consulting, upon receipt of written
notice pursuant to Section 12.2, to use commercially reasonable efforts to cure
the breach at its expense, and failing that, the return of fees paid to Andersen
Consulting for the work related to the breach.

11.2 In no event shall either party be liable to the other for consequential,
incidental or punitive loss, damage or expenses (including but not limited to
business interruption, lost profits, or lost savings) even if it has been
advised of their possible existence. Any action by either party must be brought
within two (2) years after the cause of action arose.

11.3 The allocations of liability in this Section 11 represent the agreed and
bargained-for understanding of the parties and Andersen Consulting's
compensation for the Services reflects such allocations. The parties agree
further that they will look only to the assets of the other party in connection
with any liabilities hereunder and in no event shall they have any claim against
any



                                       7


shareholder, partner or holder of an ownership interest in the other party in
connection with this Agreement.

12. TERMINATION.

12.1 Client may at any time and without cause terminate this Agreement by giving
thirty (30) days' written notice of termination to Andersen Consulting.
Termination of this Agreement shall not affect any Appendices then in effect.
Except as otherwise set forth in an Appendix, Client may at any time and without
cause terminate an Appendix by giving Andersen Consulting thirty (30) days'
written notice of termination. Except as otherwise set forth in an Appendix,
Andersen Consulting shall have the right to terminate an Appendix by giving
Client thirty (30) days' prior written notice only if: (i) Client has completely
suspended (for any reason other than Andersen Consulting's default) Andersen
Consulting's performance of the Services under such Appendix and such suspension
has lasted for ninety (90) days or more; (ii) Client merges with a third party
(where Client is the surviving entity) or acquires all or substantially all of
the business assets of a third party and Andersen Consulting can reasonably
demonstrate that there is a substantial likelihood that such surviving entity or
acquired entity, as a result of such merger or acquisition, will directly
compete with Andersen Consulting with respect to the type of work which is being
provided by Andersen Consulting under this Agreement. Termination of an Appendix
shall have no impact upon this Agreement or any other Appendix. Upon such
termination, Client shall pay Andersen Consulting for all Services rendered and
expenses incurred by Andersen Consulting in accordance with the terms and
conditions of this Agreement and the applicable Appendix prior to the date of
termination. In the event of any termination by Client without cause pursuant to
this Section 12.1, Client shall also pay Andersen Consulting for Andersen
Consulting's actual out-of-pocket demobilization costs resulting from such early
termination.

12.2 Either party may, upon giving thirty (30) days' written notice identifying
specifically the basis for such notice, terminate the applicable Appendix (and
not any other Appendix) for breach of a material term or condition of the
applicable Appendix unless the party receiving the notice cures such breach
within the thirty (30) day period. Upon such termination, Client shall pay
Andersen Consulting for all Services rendered and expenses incurred by Andersen
Consulting in accordance with the terms and conditions of this Agreement and the
applicable Appendix prior to the date of termination. In addition, if Andersen
Consulting terminates an Appendix under this Section 12.2 for Client's breach,
Client shall also pay Andersen Consulting's actual out of pocket demobilization
costs resulting from such early termination.

12.3 The parties agree that, in the event of a dispute or alleged breach subject
to Section 12.2, they will work together in good faith first, to resolve the
matter internally by escalating it to higher levels of management and, then if
necessary, to use a mutually agreed alternative dispute resolution technique
prior to resorting to litigation. This provision shall not apply to disputes
involving confidentiality or infringement of intellectual property rights (in
which case either party shall be free to seek available remedies in any forum).

12.4 The terms of Sections 2, 3.3, 4, 5, 6, 7, 8, 10, 11, 12.3 and 17 shall
survive termination of this Agreement or completion of any Appendix.



                                       8


13. SEVERABILITY.

    If any term or provision of this Agreement is found by a court of competent
jurisdiction to be invalid, illegal or otherwise unenforceable, the same shall
not affect the other terms or provisions hereof or the whole of this Agreement,
but such term or provision shall be deemed modified to the extent necessary in
the court's opinion to render such term or provision enforceable, and the rights
and obligations of the parties shall be construed and enforced accordingly,
preserving to the fullest permissible extent the intent and agreements of the
parties herein set forth.

14. NOTICES.

    Any notice or other communication given pursuant to this Agreement shall be
in writing and shall be effective either when delivered personally to the party
for whom intended, or five (5) days following deposit of the same into the
United States mail (certified mail, return receipt requested, or first class
postage prepaid), facsimile (with confirmation of delivery) or overnight
delivery services (with confirmation of delivery), addressed to such party at
the address set forth on the initial page of this Agreement. Either party may
designate a different address by notice to the other given in accordance
herewith.

15. FORCE MAJEURE.

    Neither party shall be liable for any delays or failures in performance
(other than payment obligations hereunder) due to circumstances beyond its
reasonable control.

16. COMPLETE AGREEMENT; MISCELLANEOUS.

16.1 This Agreement sets forth the entire understanding between the parties
hereto and supersedes all prior agreements, arrangements and communications,
whether oral or written, with respect to the subject matter hereof. Any purchase
order issued by the Client shall be for its administrative purposes only and
none of its terms and conditions shall be of any force or effect against
Andersen Consulting. Each Appendix, except as its terms otherwise expressly
provide, shall be a complete statement of its subject matter and shall
supplement and modify the terms and conditions of this Agreement for the
purposes of that engagement only. No other agreements, representations,
warranties or other matters, whether oral or written, shall be deemed to bind
the parties hereto with respect to the subject matter hereof. The parties
acknowledge that they are entering into this Agreement solely on the basis of
the agreements and representations contained herein, and for their own purposes
and not for the benefit of any third party.

16.2 Neither this Agreement nor any Appendix may be modified or amended except
by the mutual written agreement of the parties. No waiver of any provision of
this Agreement shall be effective unless it is in writing and signed by the
party against which it is sought to be enforced.

16.3 The delay or failure by either party to exercise or enforce any of its
rights under this Agreement shall not constitute or be deemed a waiver of that
party's right thereafter to enforce those rights, nor shall any single or
partial exercise of any such right preclude any other or further exercise
thereof or the exercise of any other right.



                                       9


17. GOVERNING LAW.

    This Agreement shall be governed by and construed in accordance with the
laws of the Southern District of the State of New York, without giving effect to
conflict of law rules

18. ASSIGNMENT.

Except as provided in this subsection, this Agreement may not be assigned by
either party and any attempted assignment shall be void. However, either party's
rights hereunder may be transferred to a successor of all or substantially all
of the business and assets of the party regardless of how the transaction or
series of related transactions is structured and either party may, upon written
notice to the other party, assign this Agreement to any affiliate. Any
obligations of payment created pursuant to the terms of this Agreement or an
Appendix will survive such assignment, and shall transfer to an affiliate or
successor that is assigned this Agreement under this Section.

19. COUNTERPARTS.

This Agreement may be executed in counterparts.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first written above.

ANDERSEN CONSULTING LLP                      DEL MONTE CORPORATION ("CLIENT")


By /s/  JEFFREY S. HARTIGAN                  By /s/ ROBERT O. RUECKERT
   ----------------------------------           -------------------------------

Name JEFFREY S. HARTIGAN                     Name ROBERT O. RUECKERT
    ---------------------------------             -----------------------------

Title PARTNER                                Title VICE PRESIDENT AND
      -------------------------------              CHIEF INFORMATION OFFICER
                                                   ----------------------------

DATE  11/3/00                                DATE  11/3/00
      -------------------------------              ----------------------------



                                       10

EX-10.26

                                                                   EXHIBIT 10.26

                         AMENDMENT TO SUPPLY AGREEMENT

      THIS AMENDMENT TO SUPPLY AGREEMENT (this "Amendment") is made and entered
into as of December 21, 1993 by and between DEL MONTE CORPORATION, a New York
corporation ("DM"), and SILGAN CONTAINERS CORPORATION, a Delaware corporation
("Seller").

                              B A C K G R O U N D

      DM and Seller are parties to that Supply Agreement made and entered into
as of September 3, 1993 (the "Supply Agreement"). DM and Seller desire to amend
the Supply Agreement as set forth in this Amendment. Accordingly, the parties
agree as follows:


                                   ARTICLE I

                                  DEFINITIONS

      Any terms used in this Amendment without definition shall have the
meanings set forth in the Supply Agreement.


                                   ARTICLE II

                               MEXICAN FACILITIES

      Schedule 2.1 to the Supply Agreement is hereby amended to clarify that
the Mexican Facility referred to in such Schedule 2.1(a) is the DM cannery
located in Irapuato, Mexico.

                                  ARTICLE III

                                SCHEDULE 2.1(e)

      Schedule 2.1(e) to the Supply Agreement is hereby amended by deleting
such Schedule 2.1(e) in its entirety and replacing it with Schedule 2.1(e) set
forth in Exhibit 2 hereto.

      By January 15, 1994, Seller shall revise and reissue to DM Schedule 2.1(e)
to the Supply Agreement (which shall replace the Schedule 2.1(e) attached
hereto). Such revised Schedule 2.1(e) shall affect the following: (i) the Metal
Cost component of selling price and the Labor Cost component of selling price
for each Container will be reduced by the amount of margin contained in those
components, and (ii) the Other Cost component of selling price of each Container
will be increased by such amount of price reduction in the Metal Cost and Labor
Cost components. The result, therefore, will be no change in the individual or
aggregate selling price for all Containers as set forth in Schedule 2.1(e)
attached hereto.


                                   ARTICLE IV

                            AMENDMENT TO SECTION 2.3

      The phrase "the last sentence in Section 2.1" that is contained in the
third sentence of Section 2.3 of the Supply Agreement is hereby amended by
deleting such phrase in its entirety and inserting in place therefor "the
second sentence in Section 2.1."


                                      -2-

                                   ARTICLE V

         CONTAINER REQUIREMENTS PLAN; SUPPLY SCHEDULE; WORKING CAPITAL

          1.   Sections 3.1 and 3.2 of the Supply Agreement are hereby amended
by deleting such Sections 3.1 and 3.2 in their entirety and inserting in place
therefor the following:

          3.1  Container Requirements Plan. On the date of effectiveness of
     this Agreement (for the 1994 Supply Year) and prior to November 15 before
     each subsequent Supply Year thereafter, DM shall furnish Seller with a
     "Container Requirements Plan" for such Supply Year, which Container
     Requirements Plan shall set forth DM's good faith written estimate, by
     type of Container and delivery location, of the quantity of Cans estimated
     to be needed for such Supply Year and the quantity of Ends to be affixed
     to such Cans. "Supply Year" shall mean a calendar year during the Term of
     this Agreement (based on DM's accounting month). The Container
     Requirements Plan for a Supply Year shall be adjusted by DM as follows: no
     later than the 20th calendar day of each month during such Supply Year, DM
     shall furnish Seller with DM's good faith written estimate of the revised
     Container Requirements Plan, by type of Container and delivery location,
     for the remaining months of such Supply Year, provided that during the
     packing season (which is the period from July 1 to October 31 of each
     year) DM shall revise such Container Requirements Plan

                                      -3-


     as soon as practical but at least no later than the 20th calendar day of
     each such month.

          3.2  Supply Schedule. On the date of effectiveness of this Agreement
     (for the 1994 Supply Year) and prior to December 15 before each subsequent
     Supply Year thereafter, Seller shall furnish DM with a "Supply Schedule"
     for such Supply Year, which Supply Schedule shall indicate the estimated
     quantity and type of Cans and Ends to be supplied by Seller by DM
     accounting month for each DM Facility and which shall satisfy the
     Container Requirements Plan for such Supply Year. Such Supply Schedule
     shall be revised monthly on or before the 30th calendar day of each month
     in which Seller receives a revised Container Requirements Plan and shall
     serve as the basis for DM's arrangement of shipments and space planning.
     In any Supply Year, DM shall be obligated to purchase no less than, and
     Seller shall be obligated to sell no more than, that number and type of
     Containers as shall equal the sum of the periodic monthly estimates set
     forth in the Supply Schedule (as revised in accordance with this Section)
     for each type of Container for that Supply Year. The parties agree to
     cooperate and use their reasonable best efforts to resell any excess Cans
     or Ends which DM has purchased. Seller will notify DM immediately if
     Seller anticipates that it will be unable to provide Containers to DM in
     accordance with DM's most recent

                                      -4-

        Container Requirements Plan. Seller shall advise DM's transportation
        department of transit requirements from Seller's location to the DM
        delivery location for Containers supplied by Seller as required by this
        Section 3.2 and the most recent Supply Schedule for the current Supply
        Year. DM's transportation department will arrange for transportation of
        such Containers.

                2. Section 3.4 of the Supply Agreement is hereby amended by
deleting such Section 3.4 in its entirety and inserting in place therefor the
following:

                On the date of effectiveness of this Agreement (for the 1994
        Supply Year) and prior to December 15 before each subsequent Supply Year
        thereafter, Seller shall formulate and deliver to DM a Working Capital
        Plan for such Supply Year (a sample of which is attached hereto as
        Schedule 3.4(a)) which shall be based on the Containers Requirements
        Plan and Supply Schedule for such Supply Year and shall indicate the
        estimated Container Costs for Cans and Ends to be supplied by Seller and
        purchased by DM (resulting in inventory of DM) in accordance with this
        Agreement for all Container Requirements Plan requirements for each
        month of such Supply Year. Such amount of inventory for each such month
        (revised as provided below), less the estimated amount of accrued and
        unpaid payables owing to Seller for such Cans and Ends at the end of
        each such month (as set forth in the Working Capital


                                      -5-


        Plan), shall equal DM's working capital for each such month. The monthly
        average of such amount of inventory for such Supply Year less the
        monthly average of such payables for such Supply Year (excluding the
        average amount of Payables Extension Memos outstanding at each such
        month end) shall equal DM's "Average Working Capital" for such Supply
        Year. If DM's Average Working Capital for such Supply Year exceeds the
        "Cap" for such Supply Year, then Seller shall issue to DM a Payables
        Extension Memo in such amount, which Payables Extension Memo shall
        entitle DM to maintain (beyond the terms provided in Section 3.3 hereof)
        an outstanding payable to Seller in such amount. Each month (within ten
        days after DM's month end (the "Delivery Date")) the Container
        Requirements Plan, Supply Schedule and Working Capital Plan for the
        current Supply Year shall be updated and adjusted by the parties,
        respectively, for actual information for the prior month (which actual
        information shall include Container Costs for Containers filled, ending
        DM Inventory (as hereinafter defined), ending inventory of unfilled
        Containers supplied by Seller, purchases of Cans and Ends from Seller,
        and ending payables balance of DM) and, if necessary, as the Container
        Requirements Plan and Supply Schedule for such Supply Year are adjusted.
        Each time the Working Capital Plan for a Supply Year is adjusted as
        provided above: (i) if DM's Average Working


                                      -6-


Capital for such Supply Year (calculated as provided above) is increased from
the amount last calculated for such Supply Year, then, one business day after
the Delivery Date, Seller shall issue a new Payables Extension Memo which shall
replace the Payables Extension Memo last previously issued for such Supply Year
and DM shall be entitled to maintain (beyond the terms provided in Section 3.3
hereof) an outstanding payable to Seller in such new amount or (ii) if DM's
Average Working Capital for such Supply Year (calculated as provided above) is
decreased from the amount last calculated for such Supply Year, then, one
business day after the Delivery Date, Seller shall issue a new Payables
Extension Memo which shall replace the Payables Extension Memo last previously
issued for such Supply Year and DM (A) shall pay to Seller (such payment to be
made with the next payment by DM of payables to Seller in accordance with
Section 3.3 hereof) an amount equal to such decrease and (B) shall be entitled
to maintain (beyond the terms provided in Section 3.3 hereof) an outstanding
payable to Seller in the amount set forth in such new Payables Extension Memo.
Examples of adjustments to the sample Working Capital Plan attached hereto as
Schedule 3.4(a) and, accordingly, adjustments to DM's Average Working Capital
are attached hereto as Schedule 3.4(b).


                                      -7-

     At the end of the Term of this Agreement, the aggregate amount of all
outstanding Payable Extension Memos shall be paid by DM to Seller.

     At the end of each Supply Year during the Term of this Agreement, (i)
Seller shall pay to DM an interest charge in an amount equal to the Interest
Factor multiplied by the amount by which DM's actual Average Net Working Capital
for such Supply Year exceeded the Cap for such Supply Year, or (ii) if DM's
actual Average Working Capital for such Supply Year exceeded the Cap and DM's
Average Net Working Capital for such Supply Year was less than the Cap, then DM
shall pay to Seller an interest charge in an amount equal to the Interest Factor
multiplied by the amount by which DM's actual Average Net Working Capital for
such Supply Year was less than the Cap for such Supply Year. For purposes
hereof, the term "Average Net Working Capital" for a Supply Year shall mean the
Average Working Capital for such Supply Year less the average amount of Payables
Extension Memos outstanding for such Supply Year and the term "Interest Factor"
shall mean LIBOR (or any successor interest rate) at December 31 of the
applicable Supply Year plus 2-1/2%.

     For the 1994 Supply Year, the "Cap" shall be $18,000,000.

     The Working Capital Plan for the 1994 Supply Year is attached hereto as
Schedule 3.4(c). For the 1994 Supply Year, the parties acknowledge that DM will
have an inventory of cans not supplied by Seller. DM shall


                                      -8-

provide Seller with an estimate (to be adjusted for actual and updated monthly)
of such inventory as soon as possible (such cans being the "DM Inventory"). For
purposes of calculating DM's Average Working Capital, DM Inventory shall not be
used in the inventory of Cans used to calculate DM's Average Working Capital.
However, the Working Capital Plan shall assume that DM Inventory by Container
specification will be used to meet fill requirements before any such Container
specification supplied by Seller is used. For all Supply Years other than the
1994 Supply Year, the Working Capital Plan shall assume the following: if all
containers purchased by DM other than from Seller (as provided for herein) are
expected to be used for a certain percent of the total fill requirements for
such Supply Year, then each month's fill requirements for such Supply Year will
be assumed to be met using such certain percent of such containers and the
remaining percent using Cans supplied by Seller, unless DM can account for such
container usage (excluding any containers purchased from PCP which shall be
accounted for as provided above) to the reasonable satisfaction of Seller, in
which case each month's fill requirements for such Supply Year will be assumed
to be met in accordance with such accounting method.

                                      -9-

     For purposes of this Section 3, "month" shall mean DM's accounting month,
which in any calendar quarter shall be four, four and five weeks, respectively.

     The Cap for the second and succeeding Supply Years will be calculated on
the last business day of January of each Supply Year by DM (as reasonably agreed
to by Seller) by multiplying the Cap for the most recently completed Supply Year
by a fraction, the numerator of which will be DM's estimated Container Costs
from Seller for such Supply Year as set forth on Schedule 2.1 as of the
commencement of such Supply Year and the denominator of which will be Container
Costs actually incurred by DM from Seller for the most recently completed Supply
Year plus the DM Inventory used in such recently completed Supply Year. Until
the Cap for each of the second and succeeding Supply Years is calculated as
provided above, the parties shall use a Cap for each such Supply for purposes
hereof which is DM's good faith estimate of the Cap for such Supply Year. The
term Container Costs shall mean the aggregate of the selling price for each
Container as set forth in Schedule 2.1 multiplied by the number of units of such
Container supplied by Seller to DM plus applicable freight for the applicable
Supply Year.

                                      -10-

                                   ARTICLE VI

                                  METAL COSTS

          Subparagraph (a) of Section 5.1 of the Supply Agreement (which
subparagraph begins "The metal cost component of selling price . . .") is hereby
amended by deleting such subparagraph in its entirety and inserting in place
therefor the following:

          At July 1, 1994, the metal cost component of selling price for each
     Container as set forth in Schedule 2.1 shall be adjusted (increased or
     decreased) to Seller's actual cost of metal as of that date from the "Base
     Cost" (as set forth in the letter dated December 16, 1993 from James Beam
     of Seller to Kevin McKee of DM). Thereafter, the metal cost component of
     selling price for each Container as set froth in Schedule 2.1 shall be
     adjusted (increased or decreased) to reflect changes in costs of metal
     actually incurred by Seller. Such metal price adjustment (increase or
     decrease) referred to in the immediately preceding sentence shall take
     place thirty (30) days after the date Seller actually incurs a price change
     in the cost of metal. Metal prices shall not be increased prior to July 1,
     1994.


                                      -11-


                                  ARTICLE VII

                                PROCTER & GAMBLE

          The Supply Agreement is hereby amended by adding the following new
Section to the Supply Agreement immediately following Section 2.7 and
immediately before Article III:

          2.8 Procter & Gamble. DM hereby agrees that it will not cancel or
     terminate that certain Containers Purchase Agreement dated as of March 2,
     1990 (the "Container Purchase Agreement") between DM and The Procter &
     Gamble Company ("P & G") prior to March 2, 1995 and that it will purchase
     from Seller in accordance with this Agreement all Containers (as defined in
     such Containers Purchase Agreement) that it is required to sell to P & G
     under the Containers Purchase Agreement.

                                  ARTICLE VIII

                                  COST SAVINGS

          The Supply Agreement is hereby amended by adding the following to
Section 5.2 immediately before the penultimate sentence of Section 5.2:

          Attached hereto as Schedule 5.2 is a list of cost savings items (from
     which DM and Seller agree to reasonably cooperate to achieve and to work
     together to test and approve as quickly as possible), it being understood
     that the cost savings associated with all such items which accrue to Seller
     are included in the


                                      -12-

        selling prices for Containers set forth in Schedule 2.1(e) and shall not
        be shared or allocated pursuant to this Section 5.2 or Article VII.

                                   ARTICLE IX

                                 REAFFIRMATION

        The parties hereby reaffirm all of the other terms and conditions of the
Supply Agreement. This Amendment amends the Supply Agreement only to the extent
specified herein and shall not constitute an amendment to any other provision of
the Supply Agreement. From and after the date hereof, all references to the
Supply Agreement in the Supply Agreement and other documents referred to therein
shall be references to the Supply Agreement as amended hereby.

        IN WITNESS WHEREOF, the parties have caused this Amendment to be duly
signed and delivered as of the date that appears in the first paragraph of this
Amendment.

                                        DEL MONTH CORPORATION

                                        By /s/ THOMAS E. GIBBONS
                                          --------------------------------------

                                        Its Vice President
                                            ------------------------------------

                                        SILGAN CONTAINERS CORPORATION

                                        By
                                          --------------------------------------

                                        Its Vice President
                                            ------------------------------------


                                      -13-

EX-10.27

                                                                   EXHIBIT 10.27

                      SECOND AMENDMENT TO SUPPLY AGREEMENT

      THIS SECOND AMENDMENT TO SUPPLY AGREEMENT (the "Amendment") is made and
entered into as of this 12th day of May, 1994, by and between DEL MONTE
CORPORATION, a New York corporation ("DM"), and SILGAN CONTAINERS CORPORATION, a
Delaware corporation ("Seller").

                               B A C K G R 0 U N D

      A. DM and Seller are parties to a Supply Agreement made and entered into
as of September 3, 1993, as amended by an amendment made and entered into as of
December 21, 1993 (as amended, the "Supply Agreement").

      B. Subject to the terms and conditions of this Amendment, the parties
desire to further amend the Supply Agreement.

      THE PARTIES AGREE AS FOLLOWS:

                                    ARTICLE I

                                   DEFINITIONS

      Any terms used in this Amendment without definition shall have the
meanings set forth in the Supply Agreement.

                                   ARTICLE II

                                CONSIGNMENT ENDS

      The Supply Agreement is hereby amended by adding the following ARTICLE XX
to the Supply Agreement immediately following ARTICLE XIX thereof:




                                   ARTICLE XX

                                CONSIGNMENT ENDS

      In order to alleviate Seller's shortage of storage space during each
Supply Year hereunder, the parties agree that Seller may ship Ends on
consignment (the "Consignment Ends") to the DM Facilities during the period and
up to the amounts set forth in the schedule attached as Exhibit 20 hereto.
Exhibit 20 may be amended from time to time by the mutual agreement of the
parties to add or delete Facilities and to change quantities or shipment
periods. Seller will send DM a bill of lading marked "Consignment Bill of
Lading" for all Consignment Ends shipped to a Facility at the time of shipment.
DM shall store such Consignment Ends at the Facilities in a commercially
reasonable manner mutually agreed to by the parties in order to protect such
Consignment Ends from deterioration or damage. DM shall also store such
Consignment Ends separate and segregated from DM's assets and inventory. Upon
receipt by DM of the Consignment Ends DM shall promptly inspect the Consignment
Ends to determine compliance with specifications (including diameter), condition
and quantity and thereafter DM shall promptly provide Seller with an
acknowledgement of receipt of the Consignment Ends. Risk of loss for Consignment
Ends that conform to specification shall pass from Seller to DM upon delivery by
DM of such acknowledgement to Seller. Title to Consignment Ends shall remain
with


                                      -2-


Seller until, and shall pass to DM upon, the date of usage by DM of such
Consignment Ends. DM shall notify Seller of the commencement of packing at any
Facility (the "Pack Notice"). After receipt of the Pack Notice, Seller shall
send a Payment Invoice for 20% of the Consignment Ends at such Facility on the
Monday after the first full week of packing at such Facility as determined by
the Pack Notice and for 20% of such Consignment Ends at such Facility on each of
the four succeeding Mondays. The parties hereto agree that DM shall first use
all Consignment Ends at a Facility (including all Consignment Ends held from a
prior packing season as provided below) prior to using any other Ends of the
same specification at such Facility. DM shall notify Seller of the conclusion of
the packing season at each Facility, and Seller shall promptly thereafter
inspect such Facility to determine the amount, if any, of unused Ends at such
Facility. Seller shall issue a credit against amounts owed by DM to Seller
pursuant to the Agreement for the amount of any full pallets of unused Ends that
have not been damaged, and DM shall hold such unused Ends on consignment in
accordance with the terms of this paragraph and pay for such Ends when used in
the subsequent packing season. DM hereby agrees to execute and deliver to Seller
any financing statements or other documents as shall be reasonably requested by
Seller to


                                      -3-


evidence the consignment contemplated by this paragraph.

                                   ARTICLE III

                                  REAFFIRMATION

      The parties hereby reaffirm all of the other terms and conditions of the
Supply Agreement, including without limitation Sections 3.4 (Working Capital)
and 3.7 (Return of Nonconforming Containers). This Amendment amends the Supply
Agreement only to the extent specified herein and shall not constitute an
amendment to any other provision of the Supply Agreement. From and after the
date hereof, all references to the Supply Agreement in the Supply Agreement and
other documents referred to therein shall be references to the Supply Agreement
as amended hereby.

      IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly signed and delivered as of the date that appears in the first paragraph of
this Amendment.

                                        DEL MONTE CORPORATION


                                        By /s/ THOMAS E. GIBBONS
                                           -------------------------------------

                                        Its VICE PRESIDENT & TREASURER
                                            ------------------------------------


                                        SILGAN CONTAINERS CORPORATION

                                        By /s/ GEORGE S. HARTLEY
                                           -------------------------------------

                                        Its VICE PRESIDENT
                                            ------------------------------------


                                      -4-

EX-10.28

                                                                   EXHIBIT 10.28

                      THIRD AMENDMENT TO SUPPLY AGREEMENT

      THIS THIRD AMENDMENT TO SUPPLY AGREEMENT (the "Amendment") is made and
entered into as of this 28th day of April, 1995, by and between DEL MONTE
CORPORATION, a New York corporation ("DM"),and SILGAN CONTAINERS CORPORATION, a
Delaware corporation ("Seller").

                             B A C K G R O U N D

      A. DM and Seller are parties to a Supply Agreement made and entered into
as of September 3, 1993, as amended by an amendment made and entered into as of
December 21, 1993 and a Second Amendment made and entered into as of May 10,
1994 (the "Second Amendment") (as amended, the "Supply Agreement").

      B. Subject to the terms and conditions of this Amendment, the parties
desire to further amend the Supply Agreement.

      THE PARTIES AGREE AS FOLLOWS:

                                    ARTICLE I

                                  DEFINITIONS

      Any terms used in this Amendment without definition shall have the
meanings set forth in the Supply Agreement.

                                   ARTICLE II

                                CONSIGNMENT ENDS




      The Supply Agreement is hereby amended by adding the following as ARTICLE
XX to the Supply Agreement immediately following ARTICLE XIX thereof in full
substitution of Article XX as added by the Second Amendment:

                                   ARTICLE XX

                                CONSIGNMENT ENDS

            In order to alleviate Seller's shortage of storage space during each
      Supply Year hereunder, the parties agree that Seller may ship Ends on
      consignment (the "Consignment Ends") to the DM Facilities (other than
      Modesto, Plymouth, Crystal City and Mexico) during the period and up to
      the amounts set forth in the schedule attached as Exhibit 20 hereto.
      Exhibit 20 will be amended monthly by Seller and DM to reflect actual and
      projected quantities of Consignment Ends for each Facility, and DM may
      refuse to store additional Consignment Ends at any Facility. Seller will
      send DM a bill of lading marked "Consignment Bill of Lading" for all
      Consignment Ends shipped to a Facility at the time of shipment. DM shall
      store such Consignment Ends at the Facilities in a commercially reasonable
      manner mutually agreed to by the parties in order to protect such
      Consignment Ends from deterioration or damage. DM shall also store such
      Consignment Ends separate and segregated from DM's assets and inventory.
      Upon receipt by DM of the Consignment Ends DM shall promptly inspect the
      Consignment Ends to determine compliance



                                      -2-


      with specifications (including diameter), condition and quantity and
      thereafter DM shall promptly provide Seller with an acknowledgement of
      receipt of the Consignment Ends. Risk of loss for Consignment Ends that
      conform to specification shall pass from Seller to DM upon delivery by DM
      of such acknowledgement to Seller. Title to Consignment Ends shall remain
      with Seller until, and shall pass to DM upon, the date of usage by DM of
      such Consignment Ends. DM shall notify Seller of the commencement of
      packing at any Facility of the primary product produced at such Facility
      (the "Primary Pack Notice"). After receipt of the Primary Pack Notice,
      Seller shall send a Payment Invoice for 10% of the Consignment Ends at
      such Facility on the Monday after the first full week of packing at such
      Facility as determined by the Pack Notice and for 10% of such Consignment
      Ends at such Facility on each of the nine succeeding Mondays. DM shall
      notify Seller of any change in the primary product produced at any
      Facility. The parties hereto agree that DM shall first use all Consignment
      Ends at a Facility (including all Consignment Ends held from a prior
      packing season as provided below) prior to using any other Ends of the
      same specification at such Facility. DM shall notify Seller of the
      conclusion of the packing season at each Facility, and Seller shall
      promptly thereafter inspect such Facility to determine the amount, if any,
      of unused Ends at such Facility. Seller shall issue a




                                      -3-


      credit against amounts owed by DM to Seller pursuant to the Agreement for
      the amount of any full pallets of unused Ends that have not been damaged,
      and DM shall hold such unused Ends on consignment in accordance with the
      terms of this paragraph and pay for such Ends when used in the subsequent
      packing season. DM hereby agrees to execute and deliver to Seller any
      financing statements or other documents as shall be reasonably requested
      by Seller to evidence the consignment contemplated by this paragraph.

                                   ARTICLE III

                                  REAFFIRMATION


      The parties hereby reaffirm all of the other terms and conditions of the
Supply Agreement, including without limitation Sections 3.4 (Working Capital)
and 3.7 (Return of Nonconforming Containers. This Amendment amends the Supply
Agreement only to the extent specified herein and shall not constitute an
amendment to any other provision of the Supply Agreement. From and after the
date hereof, all references to the Supply Agreement in the Supply Agreement and
other documents referred to therein shall be references to the Supply Agreement
as amended hereby.




                                      -4-


      IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly signed and delivered as of the date that appears in the first paragraph of
this Amendment.


                                       DEL MONTE CORPORATION


                                       By: /s/ THOMAS E. GIBBONS
                                          --------------------------------------
                                       Its: Sr. VP & Treasurer
                                           -------------------------------------

                                       SILGAN CONTAINERS CORPORATION


                                       By:
                                          --------------------------------------
                                       Its: V.P. Sales/Mkt.
                                           -------------------------------------


                                      -5-

EX-10.29

                                                                   EXHIBIT 10.29

                              [SILGAN LETTERHEAD]

November 5, 1998

Del Monte Corporation
One Market Street
P.O. Box 193575
San Francisco, CA 94119-3575

Attention: Wes Smith

Re: Fifth Amendment to Supply Agreement dated as of September 3, 1993 as amended

Dear Wes:

        This letter shall serve to amend the Supply Agreement dated as of
September 3, 1993, as amended through the date hereof (the "Supply Agreement"),
by and between Del Monte Corporation ("DM") and Silgan Containers Corporation
("Seller"). Capitalized terms used and not defined herein shall have the
meanings assigned to them in the Supply Agreement.

        Seller and DM hereby agree that the Supply Agreement shall be amended as
follows:

        1. Notwithstanding anything in the Supply Agreement to the contrary, and
after taking into consideration discounts or allowances due to DM, and in order
to provide competitive relief to DM, Seller shall make a payment to DM of [XXX]
on January 4, 1999.

        This letter amends the Supply Agreement only to the extent expressly
provided herein and shall not constitute an amendment to or modification of any
other provision of the Supply Agreement. Seller and DM hereby reaffirm all of
the other provisions of the Supply Agreement, and confirm that the Supply
Agreement as amended hereby continues in full force and effect. From and after
the date hereof, all reference to the Supply Agreement in the Supply Agreement
and other documents referred to therein shall be references to the Supply
Agreement as amended hereby.


[XXX] OMITTED PURSUANT TO REQUEST FOR CONFIDENTIAL TREATMENT. FULL TEXT
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.






                                                                November 5, 1998
                                                                     Page 2 of 4

requirements, Seller may substitute and supply to DM, and DM shall accept from
Seller, Cans using the two-piece method of manufacturing in place of Cans using
the three-piece method of manufacturing, at the same selling prices in the then
current Schedule 2.1(e) for such substituted three-piece Cans. DM and Seller
acknowledge and agree that the provisions of Article VII of the Supply Agreement
shall not be applicable to the particular substitution described in the
preceding sentence.

        3. Notwithstanding DM's obligation with respect to the purchase of
Containers from Seller as set forth in the Supply Agreement, with regard to U.S.
domestic businesses acquired by DM from third parties after the date hereof (an
"Acquired Business") DM and Seller hereby agree that, within 60 days after the
date of consummation of the acquisition of such Acquired Business or, if
applicable, the expiration or termination date of an existing written agreement
requiring such Acquired Business to purchase containers thereunder from a third
party, DM may receive a bona fide written proposal from an Offeror having the
capability to manufacture and sell containers to DM of a type and quality
similar to the Containers that Seller is required to furnish DM under the Supply
Agreement for the remainder of the Term for the Acquired Business, which written
proposal provides selling prices and terms that are in DM's good faith opinion
more favorable than the selling prices and terms for the Containers to be
supplied by Seller for the Acquired Business pursuant to the terms of the Supply
Agreement and is based on not less than (i) 100% of the annual volume of all
Containers for the Acquired Business for the remainder of the Term or (ii) 100%
of the annual volume of all Containers for one or more facilities of the
Acquired Business for the remainder of the Term. DM shall notify Seller of any
such proposal and shall furnish Seller with a summary of all terms of such
proposal with reasonable specificity, including the identity of the Offeror. At
Seller's request, such summary shall be reviewed and confirmed by DM's
independent certified public accountants as an accurate summary of the terms of
such proposal. Seller shall have 30 days from the date of receipt of DM's notice
within which to submit a counterproposal to such bona fide competitive proposal.
If Seller's counterproposal would result in DM paying the same net selling price
for Containers for the Acquired Business that would be paid if the competitive
proposal were accepted and if Seller meets all the other terms and conditions,
including warranties but excluding any provisions providing for meeting
competitive bidding, of the competitive proposal, then DM shall accept Seller's
counterproposal. Upon consummation of the acquisition of an Acquired Business
(and following the expiration of the 60-day period referenced in the first
sentence of this paragraph), the terms of Article VI of the Supply Agreement
shall apply to the Containers supplied to the Acquired Business. If Seller
declines to meet the competitive proposal, DM shall be free to purchase
Containers for the Acquired




                                                                November 5, 1998
                                                                     Page 3 of 4

Business from the Offeror pursuant to the competitive proposal commencing (i) 60
days after the expiration of the 30-day period or (ii) in those cases where
Seller is the sole supplier of containers to the Acquired Business prior to the
acquisition thereof by DM, if later, the date after which DM shall have
purchased from Seller pursuant to the terms of the Supply Agreement at a price
no greater than Seller's price to the Acquired Business all of Seller's then
existing inventory (not to exceed a reasonable and appropriate amount of such
inventory, considering the historic amounts of inventory typically maintained by
Seller for the Acquired Business at the relevant time and current orders and
estimates for containers provided by the Acquired Business to Seller) of
Containers for the Acquired Business (including Containers to be made from raw
materials then on hand or ordered by Seller for Containers for the Acquired
Business and including Containers to be made from work-in-progress for the
Acquired Business); provided that, if prior to acceptance of the competitive
proposal in the aggregate the terms and conditions of the competitive proposal
are changed to be less favorable to DM, DM shall resubmit such changed proposal
to Seller for Seller's counterproposal in accordance with this paragraph.
Notwithstanding anything herein to the contrary, the Containers purchased from
all Offerors shall not exceed, in any Supply Year, one-half of the aggregate
number of Containers to be furnished to DM during that Supply Year from Seller
and all Offerors. Subject to the preceding sentence, any Containers purchased
from the Offerors shall reduce accordingly the minimum requirements which DM
must purchase from Seller under the Supply Agreement.

        4. DM and Seller hereby acknowledge that the Cap shall be appropriately
adjusted to take into account the acquisition by DM of an Acquired Business or
Acquired Entity, with any such adjustment to be effective as of the month the
Container requirements of such Acquired Business or Acquired Entity become
subject to the Supply Agreement.

        5. DM and Seller hereby agree to extend the Term and that, accordingly,
the Term shall continue through December 21, 2006.

        This letter amends the Supply Agreement only to the extent expressly
provided herein and shall not constitute an amendment to or modification of any
other provision of the Supply Agreement. Seller and DM hereby reaffirm all of
the other provisions of the Supply Agreement, and confirm that the Supply
Agreement as amended hereby continues in full force and effect. From and after
the date hereof, all reference to the Supply Agreement in the Supply Agreement
and other documents referred to therein shall be references to the Supply
Agreement as amended hereby.




                                                                 November 5,1998
                                                                     Page 4 of 4

        If you are in agreement with the foregoing, please execute a copy of
this letter in the space provided below.

                                            Very truly yours,

                                            SILGAN CONTAINERS CORPORATION

                                            By: /s/ JAMES D. BEAM
                                               ---------------------------------
                                               James D. Beam
                                               President

Agreed to as of the date above:

DEL MONTE CORPORATION

By: /s/ WESLEY J. SMITH
   ----------------------------
   Name: W J Smith
   Title: Chief Operating Officer


Schedules
     Schedule 2.1(e)

EX-10.30

                                                                   EXHIBIT 10.30

                                            [SILGAN CONTAINERS CORPORATION LOGO]


                                                       21800 Oxnard Street
JAMES D. BEAM                                          Suite 600
President                                              Woodland Hills, CA 91367

                                                       Telephone: (818) 348-3700
                                                       Fax: (818) 593-2255

November 5,1998

Del Monte Corporation
One Market Street
P.O. Box 193575
San Francisco, CA 94119-3575

Attention: Wes Smith

Re: Fourth Amendment to Supply Agreement dated as of September 3,1993, as
    amended

Dear Wes:

      This letter shall serve to amend the Supply Agreement dated as of
September 3, 1993, as amended through the date hereof (the "Supply Agreement"),
by and between Del Monte Corporation ("DM") and Silgan Containers Corporation
("Seller"). Capitalized terms used and not defined herein shall have the
meanings assigned to them in the Supply Agreement.

      Seller and DM hereby agree that the Supply Agreement shall be amended as
follows:

      1. Effective January 1, 1999, Schedule 2.1(e) to the Supply Agreement is
hereby amended and replaced in its entirety by Schedule 2.1(e) hereto. Based
upon the estimated volumes of Containers that DM will require for 1998 as set
forth in Schedule 2.1(e) hereto, the selling prices reflected in Schedule 2.1(e)
hereto would result in an aggregate decrease of approximately [XXX] from the
selling prices reflected in the Schedule 2.1(e) dated as of July 1, 1998.

      2. Subject to Article XI of the Supply Agreement and the providing of
adequate notice to DM for labeling and packaging adjustments, with respect to
any and all Containers to be filled with tomato and tomato based Products, DM
and Seller hereby agree that, notwithstanding a specification requirements set
forth in any applicable Schedule 2.1 for such Containers or any warranty of
Seller regarding conformity with such specification.


[XXX] OMITTED PURSUANT TO REQUEST FOR CONFIDENTIAL TREATMENT. FULL TEXT
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.





                                                                 November 5,1998
                                                                     Page 2 of 2

      If you are agreement with the foregoing, please execute a copy of this
letter in the space provided below.

                                       Very truly yours,

                                       SILGAN CONTAINERS CORPORATION

                                       By: /s/ JAMES D. BEAM
                                          --------------------------------------
                                           James D. Beam
                                           President

Agreed to as of the date above:

DEL MONTE CORPORATION

By: /s/ WESLEY J. SMITH
   ------------------------------------
   Name: W J Smith
   Title: Chief Operating Officer

EX-10.31

                                                                   EXHIBIT 10.31

Del Monte Foods                                         Wesley J. Smith
One Market                                              Chief Operating Officer
P.O. Box 193575, San Francisco, CA 94119-3575
Telephone: (415) 247-3750
      Fax: (415) 247-3503

                                                        June 7, 2002
                                                        VIA FACSIMILE AND
                                                        OVERNIGHT COURIER

Silgan Containers Corporation
21800 Oxnard Street
Suite 600
Woodland Hills, CA 91367

Attention: Mr. James D. Beam

Re: S&W/COMPETITIVE PRICING ADJUSTMENT

Dear Jim:

        This letter sets forth the understanding we have reached with respect to
the pricing adjustment in connection with (i) Del Monte Corporation's
acquisition of the S&W processed foods business from Tri Valley Growers, and
(ii) the 2001 competitive proposal made to Del Monte and matched by Silgan
Containers Corporation. This letter shall be deemed to amend the Supply
Agreement dated as of September 3, 1993, as amended (the "Supply Agreement"),
between Del Monte Corporation ("DM") and Silgan Containers Corporation
("Seller"). Capitalized terms used and not defined herein shall have the meaning
assigned to them in the Supply Agreement.

A.      Interim Adjustment (For the time period 7/1/01 - 6/30/02)

1.      S&W Products

        (a)     Items Produced in DM Facilities: On or about June 30, 2002, DM
                shall provide Seller a listing (by DM internal product code) of
                all S&W items and volumes produced by DM at each of its
                facilities, by SKU and by can size, during the period July 1,
                2001 through June 30, 2002. Based on such items and volumes, DM
                shall receive a price adjustment from Seller equal to [XXX]



[XXX] OMITTED PURSUANT TO REQUEST FOR CONFIDENTIAL TREATMENT. FULL TEXT
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.




Silgan Containers Corporation
June 7, 2002
Page 2

        (b)     Items Produced by Co-Packer: DM shall provide Seller a listing
                (by SKU and by Container size) of all S&W items and volumes
                shipped into the DM distribution network by Chiquita Processed
                Foods ("CPF") during the period July 1, 2001 through June 30,
                2002 utilizing Containers supplied by Seller. Based on such
                items and volumes, DM shall receive a price adjustment from
                Seller equal to [XXX]


2.      Del Monte California Fruit and Tomato Products

        DM shall receive a price adjustment from Seller for Containers purchased
        by DM for its California production facilities during the period October
        1, 2001 through June 30, 2002 for its non-S&W fruit and tomato products.
        The price adjustment shall be determined by multiplying the rate set
        forth on Exhibit C ("F'02 CA ADJ") by the volume of the corresponding
        Container purchased by DM during this time period.

3.      Payment Mechanism

        On or before June 1, 2002, DM shall provide Seller with a good faith
        estimate of the anticipated Container volumes and price adjustments
        under items A.l and A.2 above. Based on such good faith estimate,
        Seller shall issue to DM a credit memo or rebate check in the amount of
        the estimated price adjustment. Seller shall reasonably cooperate with
        DM (by issuing a rebate check in lieu of a credit memo if necessary) so
        that DM receives the financial benefits of the price adjustment for its
        fiscal year ending June 30, 2002. To the extent actual Container volumes
        provided to DM differ from DM's good faith estimate, Seller shall adjust
        subsequent invoices to address such difference.

B.      Ongoing Price Adjustment (Effective as of July 1, 2002)

1.      S&W Products Produced by Co-Packer

        Beginning July 1, 2002 and continuing through the termination of the
        Supply Agreement, at the conclusion of each calendar quarter, DM shall
        provide Seller a listing (by SKU and by Container size) of all S&W dry
        bean items and volumes shipped into the DM distribution network by CPF
        (or its successor co-packer) utilizing Containers supplied by Seller.
        DM shall be entitled to a price adjustment calculated as [XXX]



[XXX] OMITTED PURSUANT TO REQUEST FOR CONFIDENTIAL TREATMENT. FULL TEXT
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.



Silgan Containers Corporation
June 7, 2002
Page 3

        [XXX] The price adjustment shall be accomplished through a credit memo
        issued to DM by Seller within thirty (30) days of receipt of quarterly
        item and volume information by Seller. In the event that DM decides to
        internalize production of these presently co-packed dry bean items, DM
        shall notify Seller in writing and the parties shall meet within fifteen
        (15) days of such notice to determine a mechanism to provide DM with the
        same aggregate price benefits as set forth in this Section B.1. New
        Containers not identified on Exhibit B shall be entitled to receive the
        same pricing adjustments as set forth in this paragraph, with the
        adjustment determined by looking at the most nearly comparable
        Container already being supplied to DM by Seller.

2.      Products Produced by DM

Prices to be in effect commencing July 1, 2002 (the "7/02 Prices") for
Containers purchased by DM from Seller (but excluding any Containers covered
under Section B.l above) shall be adjusted by subtracting the amounts set forth
on Exhibit D ("Post 7/1/02 Total Business Adjustment Methodology Not Including
S&W Beans") from the then current price of the corresponding Container
($/thousand), not taking into effect any other pricing adjustments provided by
this letter amendment. The 7/02 Prices, adjusted thereafter as permitted by the
Supply Agreement, shall continue through the termination of the Supply
Agreement. New Containers not identified on Exhibit D shall be entitled to
receive the same pricing adjustments as set forth in this paragraph, with the
adjustment determined by looking at the most nearly comparable Container already
being supplied to DM by Seller.

C.      Meeting Competition Clause

        DM acknowledges that the pricing adjustments referenced herein were in
response to a bona fide written proposal from an independent commercial can
manufacturer which was matched by Seller and accepted by DM. DM and Seller agree
that the pricing referenced under Section B above shall, unless DM and Seller
otherwise agree, remain effective during the remaining term of the Supply
Agreement (subject to adjustment as provided in the Supply Agreement) and the
provisions of Article VI of the Supply Agreement ("Meeting Competition") shall
no longer be available to DM excepting with respect to products manufactured by
businesses acquired by DM subsequent to the date of this letter agreement.
Seller and DM agree that if the term of the Supply Agreement is extended beyond
December 21, 2006, the provisions



[XXX] OMITTED PURSUANT TO REQUEST FOR CONFIDENTIAL TREATMENT. FULL TEXT
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.




Silgan Containers Corporation
June 7, 2002
Page 4

of Article VI of the Supply Agreement shall be deemed in full force and effect
for purposes of such extension.

        This letter amends the Supply Agreement only to the extent expressly
provided herein and shall not constitute an amendment to or modification of any
other provision of the Supply Agreement. Seller and DM hereby reaffirm all of
the other provisions of the Supply Agreement as amended hereby continue in full
force and effect. From and after the date hereof, all references to the Supply
Agreement in the Supply Agreement and other documents referred to therein shall
be references to the Supply Agreement as amended hereby.

        If you are in agreement with the foregoing, please execute a copy of
this letter in the space provide below and return one copy to me.

                                            Very truly yours,


                                            /s/ WESLEY J. SMITH

                                            Wesley J. Smith
                                            Chief Operating Officer

Agreed to as of the date above:

SILGAN CONTAINERS CORPORATION

By:
   --------------------------------
   James D. Beam
   President

Exhibits A, B, C and D

EX-10.32

                                                                   EXHIBIT 10.32

                   DEL MONTE FOODS RETAIL BROKERAGE AGREEMENT

          THIS AGREEMENT, effective July 1, 2001 between DEL MONTE CORPORATION,
a corporation with its main business office at San Francisco, California,
hereinafter called "Client," and ADVANTAGE SALES AND MARKETING, a limited
liability company with its main business office at Irvine, CA, hereinafter
called "Broker."

          WHEREAS, Client manufactures and distributes food and beverage
products under various brands including DEL MONTE, S&W and CONTADINA;

          WHEREAS, Client desires that Broker act as a broker in connection with
the servicing, promotion, and sale of those food and beverage products listed on
Attachment A ("Products"), which attachment Client may modify in writing from
time to time, and Broker desires to so act;

          NOW, THEREFORE, Client, in consideration of certain agreements
hereinafter set forth and to be performed by Broker, hereby appoints Broker to
act as broker in connection with the servicing, promotion, and sale of the
Products at the applicable brokerage rates and to the classes of trade listed on
Attachment B for direct buying accounts located within Broker's assigned
territory listed on Attachment C, and Broker, in consideration of the
commissions specified herein, agrees to so act.

          The parties mutually agree as follows:

          1. All Sales Subject to Client's Terms and Conditions. All Products
     represented by Broker shall be sold subject to Client's prices, terms,
     conditions, and confirmation by Client at its main office, and in amounts
     and assortments authorized by, and to customers approved by Client. Broker
     shall so advise the trade in receiving orders. Broker shall not solicit nor
     accept orders from buyers located outside Broker's assigned territory and
     no commissions will be paid on any such orders whether confirmed or not.
     Broker agrees to assist Client in the collection of all due invoices. All
     remittances due to Client shall be made by customers directly to Client,
     unless otherwise instructed by Client. Broker understands that a customer's
     order shall be subject to credit approval by Client and that Client shall
     be the sole judge of a customer's credit-worthiness. If for any reason a
     customer does not accept delivery or if Client does not effect delivery to
     a customer because in Client's judgment customer's credit standing is
     impaired, Client shall be entitled to sell or otherwise dispose of Products
     and in such event Broker shall be entitled to no commission thereon. All
     orders shall be booked and transmitted in the name of the actual customer.

          2. Commission; Full Compensation. For Products sold by Broker to
     direct accounts located within Broker's territory and confirmed by the main
     office of Client, and subject to the terms and conditions set forth in this
     Agreement, Broker shall be entitled to commissions computed as indicated on
     Attachment B. Such commissions shall be based on Client's base delivered
     price less: performance allowances, swell allowance, cash discounts and all
     performance funds/accruals. Commissions shall become payable only after
     Products are shipped and fully paid for in immediately available funds or,
     if funds are not immediately available, then commissions shall become
     payable only to the extent that Client's bank has finally collected such
     funds and, in either case, customer has not asserted any right of set off
     or other claim with respect to such funds. Client shall not be liable for
     any costs or expenses of Broker in connection with any services performed
     hereunder or the operation or maintenance of Broker's places of business.
     The commissions specified herein shall constitute full compensation to
     Broker for all services hereunder.

          3. Promotional Programs and Trade Spending. Broker shall accurately
     and completely convey to customers Client's terms and conditions of sale
     and all terms and conditions of promotional programs in which the customer
     is eligible to participate. Broker shall accurately and completely convey
     terms and conditions of any promotional program. Broker shall use best
     efforts to ensure that trade spending by Broker's customers does not exceed
     amounts established by the Client. In the event that trade spending by
     Broker's customers exceeds such amounts per SBU on a per market basis
     ("Overspends") and such Overspends are the direct result of the gross
     negligence or willful misconduct of Broker's or Broker's employees, Client
     shall have the right to set-off the amount of such Overspends against
     commissions earned and to be earned by the Broker. Broker shall be
     responsible for managing customer deductions and program performance
     (including Overspends and unauthorized performance) but shall have no
     financial obligation to Client for such Overspends and/or unauthorized
     performance other than if such event is a direct result of the gross
     negligence or willful misconduct of Broker or Broker's employees. Broker's
     commissions shall be adjusted only as provided for herein and in accordance
     with Client's Deduction Management Policy set forth on Attachment D.

          4. Compliance with Law. Broker agrees to act in accordance with
     applicable federal, state and local laws. Broker agrees not to pay or
     transfer any part of commissions received from Client to anyone other than





     employees of Broker other than as required by law. Broker warrants and
     represents that no customer or account or representative thereof, or
     governmental employee, has any ownership or financial interest, direct or
     indirect, in Broker. Broker agrees to indemnify Client for expenses and
     losses incurred by Client and caused by Broker's negligence or actions in
     violation of the terms of this Agreement, or in violation of any laws,
     regulations, or policies of Client, or without written authorization of
     Client.

          5. Fair and Equitable. Client's policy is to treat all competitive
     customers on a fair, equal, and proportionate basis. Broker agrees to
     follow such policy in representing the Products under this Agreement.

          6. Ownership of Records. Files and records maintained by Broker and
     directly relating to transactions between Client and Client's customers are
     the property of Client and shall be delivered to Client promptly following
     the written request by Client for such records. Broker acknowledges that
     failure to promptly release records to Client may cause irreparable harm to
     Client, and that Client shall be entitled to immediate injunctive relief to
     obtain such records in addition to other remedies available at law. During
     the term of this Agreement Broker shall maintain custody of such Client
     records and shall permit Client or its agent(s), upon reasonable notice, to
     inspect and copy such records at any time deemed appropriate by Client .
     Broker may make copies of such records for its internal use.

          7. (a) Services. Client shall establish quarterly and annual
                 performance objectives in consultation with Broker and Broker
                 shall accomplish the objectives so established and agreed upon
                 by Client and Broker. Broker agrees to provide services as
                 customary in the marketplace in connection with the servicing,
                 promotion and sale of products comparable to the Products.
                 Services shall include but not be limited to (a) retail store
                 coverage at the frequency and depth of coverage as agreed to
                 with Client; (b) retail services to assure the availability for
                 sale of Products to the consumer on the selling floor of all
                 retail stores; (c) promptly providing at Client's request
                 consumer marketing information which shall include but not be
                 limited to the areas of competitive activity, customer
                 coverage, product distribution, national marketing information,
                 and other reasonable information as requested by Client; (d)
                 activities designed to achieve all retail objectives of Client
                 regarding distribution, shelf placement, pricing, and
                 promotional merchandising support; (e) removing from sale
                 Products not meeting Client's standards or policies, (f)
                 reporting retail conditions as requested by Client, (g)
                 management and recovery of unauthorized deductions and customer
                 Overspends (subject to Section 3 and Exhibit D hereof), and (h)
                 conveying to Client information concerning customers'
                 credit-worthiness or changes in financial condition. Services
                 provided hereunder shall not include services provided by
                 divisions of Broker which are not customarily included as part
                 of the principal/broker relationship, including services
                 provided by Broker's Integrated Marketing Solutions and CPG3
                 divisions and/or any retail specific coverage service options,
                 not specifically set forth in this Agreement. Services not
                 covered by this Agreement shall be provided by Broker pursuant
                 to a separate written contract.

             (b) Personnel. In performing services hereunder, Broker agrees to
                 dedicate a sufficient number of personnel to effectively
                 accomplish Client's business objectives within the time frames
                 set by Client. Client and Broker agree to meet annually (and
                 more often as deemed necessary by Client) to establish
                 necessary staffing levels, expertise, objectives and goals.
                 Broker shall retain responsibility for supervising Broker
                 personnel.

             (c) Training. Broker acknowledges that training is essential to the
                 successful and consistent achievement of Client's sales
                 development objectives. Broker agrees to provide transitional
                 and ongoing training as directed by Client to its personnel
                 servicing Client's account to the extent necessary or
                 appropriate to accomplish Broker's obligations under this
                 Agreement. Broker shall designate and shall identify to Client
                 regional training supervisors to provide ongoing training to
                 Broker personnel. Broker acknowledges that ongoing training
                 among Broker's personnel shall be Broker's responsibility and
                 that Client's responsibility shall be limited to providing
                 training guidance and direction to Broker's regional training
                 supervisors.

             (d) Retailer Services. Client acknowledges that pursuant to this
                 Agreement, Broker shall act as an exclusive broker to Client in
                 connection with the servicing, promotion and sale of the
                 Products for the classes of trade listed on Attachment B for
                 the assigned territory listed on Attachment C. If a retailer
                 performs similar services as those contemplated by Broker under
                 this Agreement ("Retailer Services") and the Retailer charges
                 Client (or deducts amounts due to Client) for the Retailer
                 Services, Client shall not deduct any amounts from Broker's
                 commissions related to such charges.





          8. Confidential Information. Broker and Client each acknowledges that
     from time to time each party to this Agreement will have access to certain
     confidential and proprietary information and systems of the other party
     (the "Disclosing Party") which is generally not available to or known by
     the public, in which the Disclosing Party has a legitimate protectable
     interest and which has particular value to the Disclosing Party, the
     disclosure of which could be harmful to the Disclosing Party's interests
     (the "Confidential Information"). Broker and Client each agree that it
     shall not directly or indirectly disclose such Confidential Information to
     any third party except as required by law or regulation or use any
     Confidential Information for any purposes not expressly authorized in
     writing by the Disclosing Party. Confidential Information means any and all
     information, whether disclosed in writing or orally, identified as
     confidential by the Disclosing Party. For purposes of this Agreement,
     Client information relating to Client business strategies, deal rates,
     promotional rates, marketing plans, new item introductions and business
     development opportunities shall be considered Confidential Information.
     Confidential Information may also include, but is not limited to: business
     models and plans, proprietary computer software and sales planning and
     execution processes, information and/or knowledge regarding products,
     processes, techniques, trade secrets, strategies and programs, financial
     data, vendor and customer relationships, methods of operation and other
     information or materials in any form proprietary to a party. For purposes
     of this Agreement, Confidential Information shall not include the
     following:

               (a)  Information available in the public domain, not as a result
                    of the violation of any undertaking herein;

               (b)  Information available to either party on a non-confidential
                    basis prior to disclosure of it by the other party;

               (c)  Information that is available from a third party, provided
                    that such source is not violating any duty or agreement of
                    confidentiality;

               (d)  Information that is independently developed by a party and
                    such independent development can be reasonably
                    substantiated; or

               (e)  Information that is required to be disclosed by law or legal
                    process.

          9. Non-Solicitation. During the term of this Agreement and for a
     period of six (6) months following its termination, the parties agree not
     to solicit or induce any employee of the other, either directly or
     indirectly, to leave such employment and/or become an employee of the other
     or any company affiliated with or related to such party. Notwithstanding
     the foregoing, a general solicitation, such as through a newspaper, website
     or trade journal, and any hiring related thereto, shall not be prohibited
     by this section.

          10. No Diversion. Broker agrees not to divert Products to markets
     outside the United States, and agrees not to divert Products between
     markets within its assigned United States territory.

          11. Insurance. Broker agrees to purchase and maintain general
     liability and employee theft (crime) insurance naming Client as an
     additional insured as respects its handling of the Client's account with
     minimum liability limits of $1,000,000.00 per occurrence. Client shall
     maintain general liability and product liability insurance coverage in such
     amounts as deemed reasonable in the normal course of Client's operations.
     Each of Broker and Client shall have the other named as an additional
     insured under one another's liability insurance policy and shall provide
     the other with a certificate of insurance evidencing such coverage. Such
     certificate of insurance shall provide, without limitation, that such
     insurance is not subject to modification or termination without at least
     thirty (30) days' prior written notice to the other party.

          12. Software. Any software provided by Client ("Software") is provided
     pursuant to a license which shall terminate upon the termination of this
     Agreement. Usage of such Software shall be subject to the following
     conditions: (a) it is licensed for installation on a single computer only,
     (b) it may not be copied except for reasonable backup and archival purposes
     only, (c) it may not be sold, rented, leased, or transferred to any other
     party except in connection with a permitted assignment pursuant to Section
     17 hereof, (d) use shall be limited to Client's business only and it may
     not be used for any other purpose, and (e) it may not be
     reverse-engineered, decompiled, disassembled or modified. Broker shall not
     create any derivatives of Software and shall not remove any product
     identification, copyright notices or other indicia or ownership. Upon the
     termination of this Agreement, Broker shall remove all Software from the
     computer on which it resides and return to Client or destroy any media or
     materials holding, describing or otherwise related to such Software.

          13. (a) Term. This Agreement shall have a term of two years
                  beginning on July 1, 2001 and ending on June 30, 2003.
                  Thereafter, the Agreement shall be automatically renewed for
                  up to three (3) additional one (1)-year terms (running from
                  July 1 - June 30) unless Client or Broker provides written
                  notice of non-renewal at least thirty (30) days prior to the
                  expiration of the then current



                  term. Notwithstanding the foregoing, either party may
                  terminate this Agreement at any time, effective immediately
                  upon written notice if it has good cause for termination.
                  Without limiting the applicable law, the following
                  circumstances shall constitute good cause for termination:

                  (i)   the other party shall be in material breach of any of
                        its obligations under this Agreement and, where the
                        breach involves an ongoing obligation that is capable of
                        cure, such party shall have failed to cure such breach
                        within thirty (30) days after receiving written notice
                        from the other party of the existence of such breach.
                        For purposes of this section, "material breach" shall
                        include, without limitation, any failure by Broker to
                        substantially achieve quarterly or annual qualitative
                        and/or quantitative performance objectives; comply with
                        Client's Deduction Management Policy (Attachment D); and
                        comply with Client's Sales Policy and Procedures, Manual
                        and such other policies and procedures as Client may
                        issue from time to time that are agreed to in writing by
                        Client and Broker; "material breach" shall also include
                        Client's failure to compensate Broker in accordance with
                        the terms of this Agreement; or

                  (ii)  the other party shall have become insolvent or filed a
                        petition in bankruptcy, or entered into a composition
                        with its creditors, or had a receiver appointed for its
                        assets, or become the subject of any winding up of its
                        business or any judicial proceeding relating to or
                        arising out of its financial condition; or

                  (iii) a merger, consolidation or sale of the other party which
                        transaction would place the other party in breach of its
                        obligations under this Agreement.

               (b)  Liquidated Damages. Broker acknowledges that early
                    termination of this Agreement by Broker without good cause
                    will result in significant damages to the business of
                    Client. Accordingly, Broker agrees to pay to Client the sum
                    of Two Million Dollars ($2,000,000) as liquidated damages in
                    the event Broker terminates this Agreement prior to the
                    expiration of the term of this Agreement and other than in
                    accordance with subsection 13(a) or 13(e). Broker
                    acknowledges and agrees that such amount represents a fair
                    and reasonable estimate of the damages Client would suffer
                    in the event of such termination.

               (c)  Orders after Termination. Immediately upon notice of
                    termination being served by either party, Client shall have
                    the right to obtain orders through another broker or sales
                    office and Broker shall have the right to offer its services
                    to third parties, subject to the confidentiality provisions
                    set forth herein. Since Broker will not be obtaining such
                    Client orders, Broker shall have no right to a commission on
                    said orders. However, Broker shall continue to receive the
                    commission and bonus amounts as applicable provided in this
                    Agreement for any orders, which are obtained by Broker and
                    are actually shipped prior to the termination date. Client
                    is not obligated to accept orders from Broker for shipment
                    after the termination date.

               (d)  Coverage/Commission Adjustments. Notwithstanding any other
                    provision of this Agreement, Client shall have the option to
                    modify this Agreement to implement changes in coverage or
                    services (i.e., converting coverage to retail-only coverage
                    and/or converting services to services payable on a
                    fee-for-service basis). In the event Client exercises this
                    option, commissions payable hereunder shall be adjusted to
                    reflect modified Broker responsibilities, as agreed to by
                    Client and Broker.

               (e)  Termination Upon Coverage/Commission Adjustment. In the
                    event that the parties are unable to agree on amounts
                    payable for such modified Broker responsibilities as set
                    forth in Section 13(d), either party shall have the option
                    to terminate this Agreement upon thirty (30) days' written
                    notice to the other party, in which case Section 13(b)
                    hereof shall not be applicable.

          14. Audit. Client shall have the right to inspect and copy Broker's
     books and records to the extent such books and records directly relate to
     Client's business. Such inspection shall be conducted by Client or Client's
     authorized accountants during regular business hours upon at least
     forty-eight (48) hours' written notice to Broker at a time mutually agreed
     upon by Broker and Client (but in any event within five (5) days of
     Client's demand for an inspection). Broker agrees to maintain its records
     in accordance with generally accepted accounting principles and to conform
     its accounting practices (to the extent they relate to Client's business
     and to the extent consistent with generally accepted accounting principles)
     to reasonable recommendations made by Client's accountants. This provision
     shall survive the termination or expiration of this Agreement for a period
     of two (2) years.

          15. Conflicts. Broker shall not interview to represent competitive
     products within the fruit, vegetable, tomato and specialty bean categories
     without Client's prior written consent, which consent shall not be withheld


     if Broker can reasonably demonstrate to Client that the proposed
     representation will not negatively impact Client's business. For purposes
     of this Agreement, if Broker obtains Client's consent to interview to
     represent competitive products within the aforementioned categories, such
     consent shall also act as Client's consent and approval for Broker to act
     as a broker for such competitive product(s).

          16. No Agent. Except as Broker may be specifically authorized in
     writing by Client, nothing herein contained shall be construed as
     authorizing Broker to bind Client in any way nor as constituting Broker an
     agent or representative of Client. Broker shall have no authority to make
     any expenditure on behalf of Client without Client's prior written consent.

          17. Entire Agreement. This Agreement sets forth the entire
     understanding of the parties with respect to the subject matter hereof, and
     supercedes all prior or contemporaneous agreements and understandings,
     whether oral or written, with respect to the same subject matter. In the
     event any provision of this Agreement is found void or unenforceable, the
     remainder of this Agreement shall remain in full force and effect. This
     Agreement may not be altered or amended except in a writing executed by
     both parties. This Agreement may not be assigned without the prior written
     consent of the other party. This Agreement is subject to attached
     Attachments, which are incorporated fully herein.

          18. Governing Law; Arbitration. This Agreement shall be governed by
     California law, without reference to the conflicts of laws principles
     thereof. Except for breaches of Section 6 and Section 8, any dispute
     arising out of or related to this Agreement, including the termination
     thereof, shall be resolved through binding arbitration in accordance with
     the Commercial Arbitration Rules of the American Arbitration Association
     ("AAA"). The arbitration shall take place before a single arbitrator
     mutually selected by the parties in San Francisco, California. The
     prevailing party in such dispute shall be awarded its attorneys' fees and
     costs, in addition to any other relief deemed appropriate, and such award
     may be entered in any court of competent jurisdiction. In the event the
     parties are unable to agree to a single arbitrator within fifteen (15) days
     of the demand by either party for arbitration, the arbitrator shall be
     appointed by the AAA upon application by either party. Where Broker has
     breached Section 6 by failing to promptly release records to Client or
     where either party has breached Section 8 by improperly disclosing or using
     Confidential Information, the non-breaching party shall be entitled to
     immediate injunctive relief without a showing of harm upon application to
     any court of competent jurisdiction.

          19. Notices. Any and all notices or other communications required or
     permitted by this Agreement or by law to be served on or given to the other
     party hereto shall be in writing, addressed to a senior officer of the
     other party at its principal business address, and shall be deemed duly
     served (a) when personally delivered, (b) three days after deposit in the
     United States mail, first class delivery, return receipt requested, or (c)
     two days after deposit with a nationally recognized overnight courier
     service.

     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first set forth above.


DEL MONTE CORPORATION                              ADVANTAGE SALES AND MARKETING

By  /s/ ROBERT P. MAGRANN                          By
    --------------------------------                  --------------------------
    Robert P. Magrann
    Senior VP Sales                                Name:
                                                         -----------------------
                                                   Title:
                                                         -----------------------

EX-10.43

                                                                   EXHIBIT 10.43


                     FIRST AMENDMENT TO RETENTION AGREEMENT

        This First Amendment to Retention Agreement (the "First Amendment") is
entered into as of March 28, 2002, by and between DEL MONTE FOODS COMPANY, a
Delaware corporation, with its principal place of business in San Francisco,
California (the "Company"), and David L. Meyers, an individual residing in the
State of California ("Executive"), to amend the Retention Agreement, dated
November 1, 1991, among Del Monte Corporation, a New York corporation, and
Executive (the "Agreement"), as follows:

        1. In the first paragraph on page 1, "Del Monte Foods Company" is
substituted for "Del Monte Corporation".

        2. In the first paragraph on page 1, "a Delaware corporation" is
substituted for "a New York corporation".

        3. A new Section 1(a) is added to the Agreement in the following form:

               (a) Executive shall receive for his services rendered hereunder
an annual base salary of Three Hundred Eighty Thousand Dollars ($380,000), as
adjusted from time to time, payable in equal installments on the Company's
regular pay schedule, subject to standard withholdings for taxes and social
security and the like. Executive's base salary shall be reviewed annually by the
Compensation Committee of the Board.

        4. A new Section 1(b) is added to the Agreement in the following form:

               (b) While a full-time employee of the Company, Executive shall be
entitled to participate in the Company's Annual Incentive Award Plan ("AIAP")
pursuant to the terms of which Executive shall be eligible to receive an annual
bonus targeted at sixty percent (60%) of Executive's base salary, as adjusted
from time to time in accordance with the AIAP or applicable successor plan.
Actual payment of the bonus is based on Company performance and Executive's
individual achievements.

        5. A new Section 1(c) is added to the Agreement in the following form:

               (c) In the event of a Change of Control (as defined in the
Retention Plan referred to herein), if Executive has been designated a "Key
Employee" by the Nomination and Compensation Committee of the Board of
Directors, Executive shall be eligible to participate in, and entitled to a
percentage of, the Company's incentive compensation pool pursuant to the terms
of the Retention Plan adopted by the Nominating and Compensation Committee on
October 24, 2000.

        6. A new Section 1(d) is added to the Agreement in the following form:



               (d) Executive shall serve in an executive capacity and shall
perform such duties as are consistent with his position as Executive Vice
President, Administration and Chief Financial Officer. Pursuant to policies,
goals and objectives established by the Chief Executive Officer and the Board of
Directors, the Executive shall: (i) plan, direct and control the organization's
overall financial plans and policies, accounting practices, and relationships
with leading institutions, shareholders and the financial community; (ii) direct
treasury, budgeting, tax accounting, information systems, real estate and
insurance activities; (iii) provide direction and decisions relating to
strategic planning of the company; (iv) direct legal activities; (v) plan,
direct and control various administration functions as it relates to Human
Resources, labor relations and corporate affairs.

        7. Section 2(c) is amended to add a new subsection (iv) in the following
form:

               ; or (iv) the failure of the Company to obtain a satisfactory
agreement from any successor to assume and agree to perform this Agreement."

        8. In Section 2(c), the phrase "described in clauses (i) through (iii)"
is replaced by "described in clauses (i) through (iv)".

        9. A new Section 3(h) is added to the Agreement in the following form:

               (h) Termination Upon Change of Control. In the event of
Executive's Termination Upon Change of Control (as defined below), Executive
shall receive the benefits detailed in Section 3(a) through Section 3(g) on the
terms and conditions set forth therein, provided, however, that the payment of
the Severance Amount set forth in Section 3(a) shall be made in a lump sum, to
be paid within thirty (30) days of Executive's termination date, and not in
installments over a three (3) year period, as provided in Section 3(a). No other
compensation of any kind or severance or other payment of any kind shall be
payable by the Company to Executive after the termination date except as
provided in Section 3(a) through Section 3(g). Any amounts due Executive under
this Section 3(h) are in the nature of severance payments, or liquidated damages
which contemplate both direct damages and consequential damages that may be
suffered as a result of Executive's termination, and are not in the nature of a
penalty. For purposes of this Section 3(h) "Termination Upon Change of Control"
means (i) the termination of Executive's employment by the Company without cause
during the period commencing on the date the "Change of Control" (as defined in
the Company's 1998 Stock Incentive Plan, as amended through November 15, 2000)
occurs and ending on the date which is eighteen (18) months after the Change of
Control; or (ii) termination by Executive for Good Reason within eighteen (18)
months after the occurrence of a Change of Control; but (iii) "Termination Upon
Change of Control" shall not include any termination of Executive's employment
by the Company for cause, as a result of the death or disability of Executive,
or as a result of the voluntary termination of Executive's employment for
reasons other than Good Reason.


                                       2



        10. Revise Section 6(a)(i) and 6(a)(ii) so that "Del Monte Foods
Company" is substituted for "Del Monte Corporation".


        11. Revise Section 6(a)(i) to delete:

                               Henry C. Blackiston, III
                               Shearman & Sterling
                               599 Lexington Avenue
                               New York, NY  10022

                               and to insert:
                               Gibson, Dunn & Crutcher LLP
                               One Montgomery Street, 31st Floor
                               San Francisco, CA 94104
                               Attn: Douglas D. Smith

        12. Revise Section 6(g) so that "laws of the State of New York" is
replaced by "laws of the State of Delaware".

        13. A new Section 7 is added to the Agreement in the following form:

               7.  Indemnification.

               In the event Executive is made, or threatened to be made, a party
to any legal action or proceeding, whether civil or criminal, by reason of the
fact that Executive is or was a director or officer of the Company or serves or
served any other corporation fifty percent (50%) or more owned or controlled by
the Company in any capacity at the Company's request, Executive shall be
indemnified by the Company, and the Company shall pay Executive's related
expenses when and as incurred, all to the fullest extent permitted by the laws
of the State of Delaware, and the Company's Certificate of Incorporation and
Bylaws.

        Except as expressly provided in this First Amendment, all other
provisions of the Agreement are hereby assumed by the Company and remain in full
force and effect.

        IN WITNESS WHEREOF, the parties have executed this First Amendment as of
the date first written above.

                                 DEL MONTE FOODS COMPANY

                                 By:    /s/ Richard G. Wolford
                                     ------------------------------------------

                                 Name:  Richard G. Wolford
                                        ---------------------------------------
                                 Title: President and Chief Executive Officer,
                                        ---------------------------------------
                                        Director and Chairman of the Board
                                        ---------------------------------------

                                       3



                                            /s/ David L. Meyers
                                   ---------------------------------------------
                                              David L. Meyers


                                       4

EX-10.45

                                                                   EXHIBIT 10.45

                     First Amendment to Employment Agreement

        First Amendment, dated as of July 1, 1999, to the Employment Agreement,
dated March 16, 1998, among Del Monte Foods Company and Richard G. Wolford (the
"Agreement"). The Agreement is hereby amended as follows:

        1.      The amount "$700,000" is substituted for the amount "$500,000"
                in the first sentence of Section 2(a).

        2.      The percentage "100%" is substituted for the percentage "50%" in
                Section 2(b).

All other provisions of the Agreement remain in full force and effect.

        IN WITNESS WHEREOF, the parties have executed this First Amendment as of
the date first written above.

                                   DEL MONTE FOODS COMPANY

                                   By: /s/ MARK J. BUXTON
                                      ---------------------------------
                                   Name:   Mark J. Buxton
                                   Title:  Vice President, Corporate HR


                                   /s/ RICHARD G. WOLFORD
                                   ------------------------------------
                                   Richard G. Wolford

EX-10.46

                                                                   EXHIBIT 10.46

                    SECOND AMENDMENT TO EMPLOYMENT AGREEMENT

        This Second Amendment to Employment Agreement (the "Second Amendment")
is entered into as of March 26, 2002, by and between DEL MONTE FOODS COMPANY, a
Delaware corporation, with its principal place of business in San Francisco,
California (the "Company"), and Richard G. Wolford, an individual residing in
the State of California ("Employee"), to amend the Employment Agreement, dated
March 16, 1998, among the Company and Employee (the "Agreement"), as follows:

        1. In the first paragraph on page 1, "a Delaware corporation" is
substituted for "a Maryland corporation."

        2. In the first sentence of Section 2(a), the amount "$738,500" is
substituted for the amount "$500,000".

        3. In Section 2(b), the percentage "100%" is substituted for the
percentage "50%".

        4. A new Section 2(d) is added to the Agreement in the following form:

               (d) In the event of a Change of Control (as defined in the
Retention Plan referred to herein), if Employee has been designated a "Key
Employee" by the Nomination and Compensation Committee of the Board of
Directors, Employee shall be eligible to participate in, and entitled to a
percentage of, the Company's incentive compensation pool pursuant to the terms
of the Retention Plan adopted by the Nominating and Compensation Committee on
October 24, 2000 (the "Retention Bonus").

        5. Section 3(a)(ii), Section 3(b)(y), Section 3(c)(ii), and Section
3(d)((i)(2) are amended as follows: the phrase "any earned but unpaid Bonus to
which the Employee is entitled pursuant to the AIAP as of the Termination Date"
is replaced with the phrase "a pro rata portion of Employee's target Bonus for
the year in which Employee's termination occurs, prorated for Employee's actual
employment period during such year."

        6. A new Section 3(g) is added to the Agreement in the following form:

               (g) Termination Upon Change of Control. In the event of
Employee's Termination Upon Change of Control (as defined below), Employee shall
receive the benefits detailed in Section 3(d) on the terms and conditions set
forth therein, provided, however, that the payment set forth in Section 3(d)(ii)
shall be made in a lump sum, to be paid within thirty (30) days of Employee's
termination date, and not in installments until the earlier of (x) the second
anniversary of the Termination Date or (y) the Employee's engagement in any
aspect of the Company's Business, as provided in Section 3(d)(ii). No other
compensation of any kind or severance or other payment of any kind shall be
payable by the Company to Employee after the termination date




except as provided in Section 3(d). Any amounts due Employee under this Section
3(g) are in the nature of severance payments, or liquidated damages which
contemplate both direct damages and consequential damages that may be suffered
as a result of Employee's termination, and are not in the nature of a penalty.
For purposes of this Section 3(g) "Termination Upon Change of Control" means (i)
the termination of Employee's employment by the Company without cause during the
period commencing on the date the "Change of Control" (as defined in the
Company's 1998 Stock Incentive Plan, as amended through November 15, 2000)
occurs and ending on the date which is eighteen (18) months after the Change of
Control; or (ii) termination by Employee of the Employment Period within
eighteen (18) months after the occurrence of a Change of Control; but (iii)
"Termination Upon Change of Control" shall not include any termination of
Employee's employment by the Company for cause, or as a result of the death or
disability of Employee.

        7. Revise Section 6(a) to delete:

                               Arthur H. Kohn, Esq.
                               Cleary, Gottlieb, Stern & Hamilton
                               One Liberty Plaza
                               New York, NY  10006

                               and to insert:

                               Gibson, Dunn & Crutcher LLP
                               One Montgomery Street, 31st Floor
                               San Francisco, CA 94104
                               Attn: Douglas D. Smith

        8. A new Section 7 is added to the Agreement in the following form:

               7.  Indemnification.

               In the event Employee is made, or threatened to be made, a party
to any legal action or proceeding, whether civil or criminal, by reason of the
fact that Employee is or was a director or officer of the Company or serves or
served any other corporation fifty percent (50%) or more owned or controlled by
the Company in any capacity at the Company's request, Employee shall be
indemnified by the Company, and the Company shall pay Employee's related
expenses when and as incurred, all to the fullest extent permitted by the laws
of the State of Delaware, and the Company's Certificate of Incorporation and
Bylaws.

        This Second Amendment supersedes and replaces the First Amendment to
Employment Agreement, dated July 1, 1999, which is hereby null and void.


                                       2




        Except as expressly provided in this Second Amendment, all other
provisions of the Agreement remain in full force and effect.

        IN WITNESS WHEREOF, the parties have executed this Second Amendment as
of the date first written above.

                                 DEL MONTE FOODS COMPANY

                                 By:   /s/ David L. Meyers
                                     -----------------------------
                                 Name:  David L. Meyers
                                       ------------------------------
                                 Title: Executive Vice President, Administration
                                        and Chief Financial Officer
                                        ----------------------------------------


                                          /s/ Richard G. Wolford
                                  ----------------------------------------------
                                             Richard G. Wolford


                                       3

EX-10.48

                                                                   EXHIBIT 10.48

                     First Amendment to Employment Agreement

        First Amendment, dated as of July 1, 1999, to the Employment Agreement,
dated March 16, 1998, among Del Monte Foods Company and Wesley J. Smith (the
"Agreement"). The Agreement is hereby amended as follows:

        1.      The amount "$425,000" is substituted for the amount "$400,000"
                in the first sentence of Section 2(a).

        2.      The percentage "60%" is substituted for the percentage "50%" in
                Section 2(b).

All other provisions of the Agreement remain in full force and effect.

        IN WITNESS WHEREOF, the parties have executed this First Amendment as of
the date first written above.

                                   DEL MONTE FOODS COMPANY

                                   By: /s/ MARK J. BUXTON
                                      --------------------------------
                                   Name:  Mark J. Buxton
                                   Title: Vice President, Corporate Human
                                          Resources

                                   /s/ WESLEY J. SMITH
                                   --------------------------------
                                   Wesley J. Smith

EX-10.49

                                                                   EXHIBIT 10.49

                    SECOND AMENDMENT TO EMPLOYMENT AGREEMENT

        This Second Amendment to Employment Agreement (the "Second Amendment")
is entered into as of March 26, 2002, by and between DEL MONTE FOODS COMPANY, a
Delaware corporation, with its principal place of business in San Francisco,
California (the "Company"), and Wesley J. Smith, an individual residing in the
State of California ("Employee"), to amend the Employment Agreement, dated March
16, 1998, among the Company and Employee (the "Agreement"), as follows:

        1. In the first paragraph on page 1, "a Delaware corporation" is
substituted for "a Maryland corporation."

        2. In the first sentence of Section 2(a), the amount "$440,000" is
substituted for the amount "$400,000".

        3. In Section 2(b), the percentage "60%" is substituted for the
percentage "50%".

        4. A new Section 2(d) is added to the Agreement in the following form:

               (d) In the event of a Change of Control (as defined in the
Retention Plan referred to herein), if Employee has been designated a "Key
Employee" by the Nomination and Compensation Committee of the Board of
Directors, Employee shall be eligible to participate in, and entitled to a
percentage of, the Company's incentive compensation pool pursuant to the terms
of the Retention Plan adopted by the Nominating and Compensation Committee on
October 24, 2000 (the "Retention Bonus").

        5. Section 3(a)(ii), Section 3(b)(y), Section 3(c)(ii), and Section
3(d)((i)(2) are amended as follows: the phrase "any earned but unpaid Bonus to
which the Employee is entitled pursuant to the AIAP as of the Termination Date"
is replaced with the phrase "a pro rata portion of Employee's target Bonus for
the year in which Employee's termination occurs, prorated for Employee's actual
employment period during such year."

        6. A new Section 3(g) is added to the Agreement in the following form:

               (g) Termination Upon Change of Control. In the event of
Employee's Termination Upon Change of Control (as defined below), Employee shall
receive the benefits detailed in Section 3(d) on the terms and conditions set
forth therein, provided, however, that the payment set forth in Section 3(d)(ii)
shall be made in a lump sum, to be paid within thirty (30) days of Employee's
termination date, and not in installments until the earlier of (x) the second
anniversary of the Termination Date or (y) the Employee's engagement in any
aspect of the Company's Business, as provided in Section 3(d)(ii). No other
compensation of any kind or severance or other payment of any kind shall be
payable by the Company to Employee after the termination date




except as provided in Section 3(d). Any amounts due Employee under this Section
3(g) are in the nature of severance payments, or liquidated damages which
contemplate both direct damages and consequential damages that may be suffered
as a result of Employee's termination, and are not in the nature of a penalty.
For purposes of this Section 3(g) "Termination Upon Change of Control" means (i)
the termination of Employee's employment by the Company without cause during the
period commencing on the date the "Change of Control" (as defined in the
Company's 1998 Stock Incentive Plan, as amended through November 15, 2000)
occurs and ending on the date which is eighteen (18) months after the Change of
Control; or (ii) termination by Employee of the Employment Period within
eighteen (18) months after the occurrence of a Change of Control; but (iii)
"Termination Upon Change of Control" shall not include any termination of
Employee's employment by the Company for cause, or as a result of the death or
disability of Employee.

        7. Revise Section 6(a) to delete:

                               Arthur H. Kohn, Esq.
                               Cleary, Gottlieb, Stern & Hamilton
                               One Liberty Plaza
                               New York, NY  10006

                               and to insert:

                               Gibson, Dunn & Crutcher LLP
                               One Montgomery Street, 31st Floor
                               San Francisco, CA 94104
                               Attn: Douglas D. Smith

        8. A new Section 7 is added to the Agreement in the following form:

               7.  Indemnification.

               In the event Employee is made, or threatened to be made, a party
to any legal action or proceeding, whether civil or criminal, by reason of the
fact that Employee is or was a director or officer of the Company or serves or
served any other corporation fifty percent (50%) or more owned or controlled by
the Company in any capacity at the Company's request, Employee shall be
indemnified by the Company, and the Company shall pay Employee's related
expenses when and as incurred, all to the fullest extent permitted by the laws
of the State of Delaware, and the Company's Certificate of Incorporation and
Bylaws.

        This Second Amendment supersedes and replaces the First Amendment to
Employment Agreement, dated July 1, 1999, which is hereby null and void.


                                       2



        Except as expressly provided in this Second Amendment, all other
provisions of the Agreement remain in full force and effect.

        IN WITNESS WHEREOF, the parties have executed this Second Amendment as
of the date first written above.

                                 DEL MONTE FOODS COMPANY

                                 By:    /s/ David L. Meyers
                                     -------------------------------------------
                                 Name:  David L. Meyers
                                       -----------------------------------------
                                 Title: Executive Vice President, Administration
                                        and Chief Financial Officer
                                        ----------------------------------------


                                               /s/ Wesley J. Smith
                                 -----------------------------------------------
                                                 Wesley J. Smith


                                       3

EX-10.50

                                                                   EXHIBIT 10.50


                              EMPLOYMENT AGREEMENT

               This Employment Agreement (the "Agreement") is entered into as of
April 2, 2002, by and between DEL MONTE FOODS COMPANY, a Delaware corporation,
with its principal place of business in San Francisco, California (the
"Company"), and ROBERT P. MAGRANN, an individual residing in the State of
California ("Executive").

                                    RECITALS

               WHEREAS, Executive has been the Senior Vice President, Sales of
the Company and has made numerous and invaluable contributions to the leadership
and management of the Company;

               WHEREAS, the Company and Executive desire to reaffirm their
employment relationship on the terms and conditions set forth herein;

               NOW, THEREFORE, in consideration of the foregoing recitals, the
mutual promises of the parties and the mutual benefits they will gain by the
performance thereof, and other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties do hereby agree as
follows:

        1. EMPLOYMENT BY THE COMPANY AND TERM.

               (a) Term of Employment. The Company agrees to employ Executive as
its Senior Vice President, Sales, and Executive hereby accepts such employment,
subject to the terms and conditions set forth herein. The term of employment of
Executive under this Agreement shall begin as of the date hereof and continue
until terminated pursuant to Section 4 hereof. Notwithstanding the foregoing,
the provisions of Sections 4(i) (Ongoing Obligations), 5 (Indemnification), 6
(Proprietary Information Obligations), 7 (Noninterference), 8 (Injunctive
Relief), and 10 (Miscellaneous) shall survive the termination of this Agreement.

               (b) Duties. Executive shall serve in an executive capacity and
shall perform such duties as are consistent with his position as Senior Vice
President, Sales and as may be reasonably required by the Company's Board of
Directors (the "Board"). In such position, Executive shall be responsible for
performing such duties as are consistent with his position as Senior Vice
President, Sales. Pursuant to policies, goals and objectives established by the
Chief Executive Officer, the Executive shall: (i) plan, direct and control the
sales force activities to attain maximum sales volume; (ii) plan and develop
maximum potential sales volume from all markets for the company's products.

               (c) Exclusive Performance of Duties. While employed by the
Company, Executive agrees that he shall devote substantially all of his business
time and best efforts solely and exclusively to the performance of his duties
hereunder and




to the business and affairs of the Company, whether such business is operated
directly by the Company or through any affiliate of the Company. Executive
further agrees that while employed by the Company, he will not, directly or
indirectly, provide services on behalf of any competing corporation, limited
liability company, partnership, joint venture, consortium, or other competing
entity or person, whether as an executive, consultant, independent contractor,
agent, sole proprietor, partner, joint venturer, creditor, corporate officer or
director; nor shall Executive acquire by reason of purchase during the term of
his employment with the Company the ownership of more than one percent (1%) of
the outstanding equity interest in any such competitive entity. For purposes of
this Section 1(c) and this Agreement, a "competing" entity is one engaged in the
business of the manufacture and sale of processed fruits and vegetables,
pineapple products and tomato products and each other business in which the
Company is engaged during Executive's employment with the Company. Subject to
the foregoing, Executive may serve on boards of directors of non-competing
unaffiliated corporations, subject to advance approval by the Board, and may
serve on the boards of charitable organizations.

               (d) Company Policies. The employment relationship between the
parties shall be governed by the general employment policies and practices of
the Company, provided, however, that when the terms of this Agreement differ
from or are in conflict with the Company's general employment policies or
practices, this Agreement shall control.

        2. COMPENSATION AND BENEFITS.

               (a) Salary. Executive shall receive for his services rendered
hereunder an annual base salary of Two Hundred Seventy Thousand Dollars
($270,000), as adjusted from time to time in accordance with this Agreement (the
"Base Salary"), payable on a semi-monthly basis in twenty-four (24) equal
installments, subject to standard withholdings for taxes and social security and
the like.

               (b) Annual Bonus. While a full-time employee of the Company,
Executive shall be entitled to participate in the Company's Annual Incentive
Award Plan ("AIAP") pursuant to the terms of which Executive shall be eligible
to receive an annual bonus (the "Bonus") targeted at 50% of Executive's Base
Salary, as adjusted from time to time in accordance with the AIAP or applicable
successor plan. Actual payment of the Bonus is based on Company performance and
Executive's individual achievements.

                (c) Retention Bonus. In the event of a Change of Control (as
defined in the Retention Plan referenced below), if Executive has been
designated a "Key Employee" by the Nomination and Compensation Committee of the
Board of Directors of the Company (the "Nomination and Compensation Committee"),
Executive shall be eligible to participate in, and entitled to a percentage of,
the Company's incentive compensation pool pursuant to the terms of the Retention
Plan adopted by the Nominating and Compensation Committee on October 24, 2000
(the "Retention Bonus").





               (d) Employee Welfare Benefits. During his employment with the
Company, Executive shall be entitled to participate in any group insurance,
hospitalization, medical, dental, health and accident, disability, life or
similar plan or program of the Company now existing or established hereafter to
the extent that he is eligible under the general provisions thereof. The Company
may, in its sole discretion and from time to time, establish additional senior
management benefit programs as it deems appropriate. Executive understands that
any such plans may be modified or eliminated in the discretion of the Company in
accordance with applicable law.

               (e) Pension and Retirement Benefits. During his employment with
the Company, Executive shall be entitled to participate in any pension, 401K and
retirement plans of the Company now existing or established hereafter to the
extent that he is eligible under the general provisions thereof. The Company
may, in its sole discretion and from time to time, establish additional senior
management benefit programs as it deems appropriate. Executive understands that
any such plans may be modified or eliminated in the discretion of the Company in
accordance with applicable law.

               (f) Vacation. Executive shall be entitled to a period of annual
paid vacation time equal to not less than four (4) weeks per year as adjusted
from time to time in accordance with the Company's vacation policy. The days
selected for Executive's vacation shall be mutually agreeable to the Company and
Executive. Executive's eligibility to carryover or to be paid for any portion of
his accrued vacation shall be subject to the Company policy applicable to
employees at a similar level in effect during the term of this Agreement.

               (g) Expenses. Subject to compliance with the Company's normal and
customary policies regarding substantiation and verification of business
expenses, Executive is authorized to incur on behalf of the Company, and the
Company shall directly pay or shall fully reimburse Executive for all customary
and reasonable expenses incurred for promoting, pursuing or otherwise furthering
the business of the Company and its affiliates.

               (h) Perquisites and Supplemental Benefits. During his employment
with the Company, Executive shall be entitled to such perquisites and
supplemental benefits as may be approved from time to time by the Compensation
Committee of the Board.

        3. STOCK OPTIONS.

               (a) During his employment with the Company, Executive shall be
eligible to participate in the applicable stock option plans of the Company. The
terms and conditions of any stock agreement entered into by Executive and the
Company from time to time are hereby incorporated into this Agreement.

               (b) From time to time during Executive's employment with the
Company, the Board (or a committee thereof) shall evaluate the performance of
management of the Company and determine whether it is appropriate to grant any



additional stock options to management, including without limitation, Executive.
The Board (or such committee) shall be under no obligation to grant any such
options to Executive (or any other member of management), but will take into
consideration industry standards for stock option issuances to Senior Vice
President, Sales in similar circumstances.

        4. TERMINATION OF EMPLOYMENT.

               (a) Termination Upon Death. If Executive dies during his
employment with the Company, the Company shall pay to Executive's estate, or
other designated beneficiary(ies) as shown in the records of the Company, any
earned and unpaid Base Salary as of the termination date (which for purposes of
this clause (a) shall be the date of Executive's death); accrued but unused
vacation time as of the end of the month in which Executive dies; the amount of
any unreimbursed expenses described in Section 2(g); and benefits that Executive
is then entitled to receive as of the termination date under benefit plans of
the Company, including if applicable the Retention Plan, less standard
withholdings for tax and social security purposes and the like. Additionally,
the Company shall pay to Executive's estate, or other designated
beneficiary(ies), at the end of the year in which Executive's termination occurs
a pro rata portion of Executive's target Bonus for the year in which Executive's
termination occurs, prorated for Executive's actual employment period during
such year and adjusted for performance. Except for any bonus, the payment of
which would occur after the termination date, the Company shall have no
obligation to make any other payment, including severance or other compensation,
of any kind. All other benefits provided by the Company to Executive under this
Agreement or otherwise shall cease as of the termination date.

               (b) Termination Upon Disability. The Company may terminate
Executive's employment in the event Executive suffers a disability that renders
Executive unable, as determined in good faith by the Board, to perform the
essential functions of his position, even with reasonable accommodation, for six
(6) consecutive months. In the event that Executive's employment is terminated
pursuant to this Section 4(b), Executive shall receive payment for any earned
and unpaid Base Salary, as of the termination date (which for purposes of this
clause (b) shall be the date specified by the Board); accrued but unused
vacation time as of the end of the month in which the termination for disability
occurs; the amount of any unreimbursed expenses described in Section 2(g); and
benefits that Executive is then entitled to receive under applicable benefit
plans of the Company, including if applicable the Retention Plan, less standard
withholdings for tax and social security purposes and the like. In addition,
after the termination date Executive shall receive long term disability benefits
under the applicable benefit plans of the Company to the extent Executive
qualified for such benefits. Except as expressly provided in this Section 4(b),
all benefits provided by the Company to Executive under this Agreement or
otherwise shall cease as of the termination date. In the event that Executive's
employment is terminated as a result of a determination pursuant to this Section
4(b), and provided that Executive has executed a general release in form and
substance satisfactory to the Company and substantially similar to Exhibit A
hereto, the Company also shall provide to Executive as severance




the payment of an amount equal to Executive's highest Base Salary during the
twelve (12) month period prior to the termination date and the target Bonus for
the year in which such termination occurs, less standard withholdings for tax
and social security purposes and the like, payable in equal installments on the
Company's regular pay schedule over a period of twelve (12) months.

               (c) Voluntary Termination. Executive may voluntarily terminate
his employment with the Company at any time. In the event that Executive's
employment is terminated under this clause (c), Executive shall receive payment
for any earned and unpaid Base Salary, as of the date of such termination;
accrued but unused vacation time; the amount of any unreimbursed expenses
described in Section 2(g); and benefits the Executive is then entitled to
receive under applicable benefit plans of the Company, less standard
withholdings for tax and social security purposes and the like, through the
termination date, which for purposes of this Section 4(c) shall be the date upon
which Executive ceases performing his duties hereunder. The Company shall have
no further obligation to pay any compensation of any kind or severance payment
of any kind nor to make any further payment in lieu of notice. All benefits
provided by the Company to Executive under this Agreement or otherwise shall
cease as of the termination date.

               (d) Termination for Cause.

                      (1) Termination; Payment of Salary and Vacation. The Board
may terminate Executive's employment with the Company at any time for "cause"
(as defined below). In the event that Executive's employment is terminated under
this Section 4(d), Executive shall receive payment for all earned but unpaid
Base Salary; accrued but unused vacation time; the amount of any unreimbursed
expenses described in Section 2(g); and benefits the Executive is then entitled
to receive under applicable benefit plans of the Company, less standard
withholdings for tax and social security purposes and the like, through the
termination date, which for purposes of this clause (d) shall be the date upon
which such notice of termination is given. The Company shall have no further
obligation to pay any compensation of any kind nor to make any payment in lieu
of notice. All benefits provided by the Company to Executive under this
Agreement or otherwise shall cease as of the termination date.

                      (2) Definition of Cause. For purposes of this Agreement,
the Company shall have "cause" to terminate Executive's employment upon any of
the following: (a) a material breach by Executive of the terms of this
Agreement; (b) any act of theft, misappropriation, embezzlement, intentional
fraud or similar conduct by Executive involving the Company or any affiliate;
(c) the conviction or the plea of nolo contendere or the equivalent in respect
of a felony involving an act of dishonesty, moral turpitude, deceit or fraud by
Executive; (d) any damage of a material nature to the business or property of
the Company or any affiliate caused by Executive's willful or grossly negligent
conduct; or (e) Executive's failure to act in accordance with any specific
lawful instructions given to Executive in connection with the performance of his
duties for the Company or any affiliate.




               (e) Termination Without Cause. The Company at any time without
prior written notice may terminate Executive without cause. In the event that
Executive's employment is terminated without cause, Executive shall receive
payment for all earned but unpaid Base Salary as of the termination date (which
for purposes of this Section 4(e), shall be the date of Executive's
termination); accrued but unused vacation time; the amount of any unreimbursed
expenses described in Section 2(g); and benefits the Executive is then entitled
to receive under applicable benefit plans of the Company, including if
applicable the Retention Plan, less standard withholdings for tax and social
security purposes and the like, as of the termination date. In such event, and
provided that Executive has executed a general release in form and substance
satisfactory to the Company and substantially similar to Exhibit A hereto, the
Company shall also provide to Executive as severance (i) the payment of an
amount equal to Executive's highest Base Salary during the twelve (12) month
period prior to the termination date, and the target Bonus for the year in which
such termination occurs, less standard withholdings for tax and social security
purposes and the like, payable in equal installments on the Company's regular
pay schedule over a period of twelve (12) months; (ii) continuation of
Executive's participation in the Company's medical benefits until the earlier of
(x) eighteen (18) months following Executive's termination or (y) such time as
Executive is covered by comparable programs of a subsequent employer; (iii)
continuation of Executive's participation in any management perquisites
applicable to Executive until the earlier of (x) twelve (12) months following
Executive's termination or (y) such time as Executive is covered by comparable
perquisites of a subsequent employer; (iv) the payment to Executive, at the end
of the year in which Executive's termination occurs, of a pro rata portion of
Executive's target Bonus for the year in which Executive's termination occurs,
prorated for Executive's actual employment period during such year and adjusted
for performance; and (v) the provision of not less than eighteen (18) months of
executive-level outplacement services at Company expense; provided, however, the
expense for such services in any calendar year shall not exceed eighteen percent
(18%) of the amount equal to Executive's highest Base Salary during the twelve
(12) month period prior to the termination date and the target Bonus for the
year in which such termination occurs. In the event Executive receives
continuation of medical benefits for eighteen (18) months under Section 4(e)(ii)
hereof, Executive shall be eligible for continued coverage after the end of the
eighteen (18) month period to the extent provided by and subject to the terms of
the Consolidated Budget Reconciliation Act of 1985 ("COBRA"). No other
compensation of any kind or severance or other payment of any kind shall be
payable by the Company after such termination date. Except as specifically
provided in this Section 4(e) all benefits provided by the Company to Executive
under this Agreement or otherwise shall cease as of the termination date.

                (f) Termination for Good Reason. Notwithstanding anything in
this Section 4 to the contrary, Executive may voluntarily end his employment
with the Company and receive the benefits detailed in Section 4(e), on the terms
and conditions set forth therein, upon or within ninety (90) days following the
occurrence of an event constituting "Good Reason," which for purposes of this
Section 4(f) shall mean any of the following: (i) a material adverse change in
Executive's position causing it to be of materially less stature,
responsibility, or authority without Executive's written consent,




and such a materially adverse change shall in all events be deemed to occur if
Executive no longer serves as Senior Vice President, Sales, unless Executive
consents in writing to such change; (ii) a reduction, without Executive's
written consent, in Executive's Base Salary or the Bonus Executive is eligible
to earn under the AIAP (or successor plan thereto), or Executive's incentive or
equity opportunity under any material incentive or equity program of the
Company, provided, however, that nothing herein shall be construed to guarantee
Executive's bonus for any year if the applicable performance targets are not
met; and provided further that it shall not constitute Good Reason hereunder if
the Company makes an appropriate pro rata adjustment to the applicable bonus and
targets under the annual cash bonus plan in the event of a change in the
Company's fiscal year; (iii) a material reduction without Executive's consent in
the aggregate welfare benefits provided to Executive pursuant to the welfare
plans, programs and arrangements in which Executive is eligible to participate;
or (iv) the failure of the Company to obtain a satisfactory agreement from any
successor to assume and agree to perform this Agreement. Unless Executive
provides written notification of an event described in clauses (i) through (iv)
above within ninety (90) days after Executive knows or has reason to know of the
occurrence of any such event, Executive shall be deemed to have consented
thereto and such event shall no longer constitute Good Reason for purposes of
this Agreement. If Executive provides such written notice to the Company, the
Company shall have ten (10) business days from the date of receipt of such
notice to effect a cure of the event described therein and, upon cure thereof by
the Company to the reasonable satisfaction of Executive, such event shall no
longer constitute Good Reason for purposes of this Agreement.

               (g) Termination Upon Change of Control. In the event of
Executive's Termination Upon Change of Control (as defined below), Executive
shall receive the benefits detailed in Section 4(e) on the terms and conditions
set forth therein, provided, however, that the payment set forth in Section
4(e)(i) shall be made in a lump sum, to be paid within thirty (30) days of
Executive's termination date, and not in installments over a twelve (12) month
period as provided in Section 4(e)(i). No other compensation of any kind or
severance or other payment of any kind shall be payable by the Company to
Executive after the termination date. Any amounts due Executive under this
Section 4(g) are in the nature of severance payments, or liquidated damages
which contemplate both direct damages and consequential damages that may be
suffered as a result of Executive's termination, and are not in the nature of a
penalty. For purposes of this Section 4(g) "Termination Upon Change of Control"
means (i) the termination of Executive's employment by the Company without cause
during the period commencing on the date the "Change of Control" (as defined in
the Company's 1998 Stock Incentive Plan, as amended through November 15, 2000)
occurs and ending on the date which is eighteen (18) months after the Change of
Control; or (ii) any resignation by Executive for Good Reason within eighteen
(18) months after the occurrence of a Change of Control; but (iii) "Termination
Upon Change of Control" shall not include any termination of Executive's
employment by the Company for cause, as a result of the death or disability of
Executive, or as a result of the voluntary termination of Executive's employment
for reasons other than Good Reason.





               (h) At-Will Employment. Executive understands and agrees that
employment with the Company is at-will, which means that either Executive or the
Company may, subject to the terms of this Agreement, terminate this Agreement at
any time with or without cause as set forth in this Agreement. Any modification
of the at-will nature of this Agreement must be in writing and executed by
Executive and the Company.

               (i) Ongoing Obligations. Executive acknowledges that the Company
and Executive have ongoing rights and obligations relating to intellectual
property and confidential information of the Company, together with fiduciary
rights and obligations, which will survive the termination of Executive's
employment.

        5. INDEMNIFICATION. In the event Executive is made, or threatened to be
made, a party to any legal action or proceeding, whether civil or criminal, by
reason of the fact that Executive is or was a director or officer of the Company
or serves or served any other corporation fifty percent (50%) or more owned or
controlled by the Company in any capacity at the Company's request, Executive
shall be indemnified by the Company, and the Company shall pay Executive's
related expenses when and as incurred, all to the fullest extent permitted by
the laws of the State of Delaware, and the Company's Certificate of
Incorporation and Bylaws.

        6. PROPRIETARY INFORMATION OBLIGATIONS. During Executive's employment by
the Company, Executive will have access to and become acquainted with the
Company's confidential and proprietary information (collectively "Proprietary
Information"), including but not limited to information or plans regarding the
Company's customer relationships; personnel; technology and intellectual
property; sales, marketing and financial operations and methods; and other
compilations of information, records and specifications. Executive shall not
disclose any Proprietary Information of the Company, or of any affiliate,
directly or indirectly, to any person, firm, corporation or other entity for any
reason or purpose whatsoever, nor shall Executive make use of any such
Proprietary Information for his own purposes or for the benefit of any person,
firm, corporation or other entity (except the Company and the affiliate) under
any circumstances, during or after the term of this Agreement, except as
reasonably necessary in the course of his employment for the Company or as
authorized in writing by the Company. All files, records, documents,
computer-recorded or electronic information and similar items relating to the
business of the Company or the affiliate, whether prepared by Executive or
otherwise coming into his possession, shall remain the exclusive property of the
Company or the affiliate, respectively, and Executive agrees to return all
property of the Company or the affiliate in his possession and under his control
immediately upon any termination of Executive's employment, and no copies
thereof shall be kept by Executive.

        7. NONINTERFERENCE.

               (a) While employed by or compensated by the Company pursuant to
this Agreement and for a period of two (2) years thereafter, Executive agrees
not to: (i) directly or indirectly, either on Executive's own account or for any
company, limited




liability company, partnership, joint venture or other entity or person
(including, without limitation, through any existing or future affiliate),
solicit any employee of the Company or any existing or future affiliate to leave
his or her employment or knowingly induce or knowingly attempt to induce any
such employee to terminate or breach his or her employment agreement with the
Company or any existing or future affiliate, if any; or (ii) directly or
indirectly (including, without limitation, through any existing or future
affiliate), solicit, cause in any part or knowingly encourage any current or
future customer of or supplier to the Company or any existing or future
affiliate to modify the business relationship, or cease doing business in whole
or in part, with the Company or any such affiliate.

               (b) In the event a court of competent jurisdiction or other
tribunal or person(s) mutually selected by the parties to resolve any dispute
(collectively a "Court") has determined that Executive has violated the
provisions of this Agreement, the running of the time period of such provisions
so violated shall be automatically suspended as of the date of such violation
and shall be extended for the period of time from the date such violation
commenced through the date that the Court determines that such violation has
permanently ceased.

        8. INJUNCTIVE RELIEF. The parties hereto agree that damages would be an
inadequate remedy for the Company in the event of a breach or threatened breach
of Sections 6 or 7 of this Agreement by Executive, and in the event or any such
breach or threatened breach, the Company may, either with or without pursuing
any potential damage remedies, obtain and enforce an injunction prohibiting
Executive from violating this Agreement and requiring Executive to comply with
the terms of this Agreement.

        9. WARRANTIES AND REPRESENTATIONS. Executive hereby represents and
warrants to the Company that he:

               (a) is not now under any obligation of a contractual or
quasi-contractual nature known to him that is inconsistent or in conflict with
this Agreement or that would prevent, limit or impair the performance by
Executive of his obligations hereunder; and

               (b) has been or has had the opportunity to be represented by
legal counsel in the preparation, negotiation, execution and delivery of this
Agreement and understands fully the terms and provisions hereof.

        10. MISCELLANEOUS.

               (a) Notices. Any notice or communication required or permitted by
this Agreement shall be deemed sufficiently given if in writing and, if
delivered personally, when it is delivered or, if delivered in another manner,
including without limitation, by facsimile (with confirmation of receipt and a
confirmation copy sent by U.S. Mail or overnight delivery), the earlier of when
it is actually received by the party to whom it is directed or when the period
set forth below expires (whether or not it is actually received): (i) if
deposited with the U.S. Postal Service, postage prepaid, and addressed




to the party to receive it as set forth below, forty-eight (48) hours after such
deposit as registered or certified mail; or (ii) if accepted by Federal Express
or a similar delivery service in general usage for delivery to the address of
the party to receive it as set forth next below, twenty-four (24) hours after
the delivery time promised by the delivery service.

               To the Company:

               Del Monte Foods Company
               One Market at The Landmark
               P.O. Box 193575
               San Francisco, CA 94119-3575
               Fax:  415/247-3263
               Attention:  Board of Directors and Secretary

               With a copy to:

               Gibson, Dunn & Crutcher LLP
               One Montgomery Street
               San Francisco, California 94104-4505
               Fax:  415/986-5309
               Attention:  Douglas D. Smith, Esq.

               To Executive:


               --------------------------


               Fax:


               With a copy to:


               Fax:
               Attention:

or to such other address or to the attention of such other person as the
recipient party will have specified by prior written notice to the sending
party.

               (b) Severability. If any term or provision (or any portion
thereof) of this Agreement is determined by a court to be invalid, illegal or
incapable of being enforced by any rule of law or public policy, all other terms
and provisions (or other portions thereof) of this Agreement shall nevertheless
remain in full force and effect. Upon such determination that any term or
provision (or any portion thereof) is invalid, illegal or incapable of being
enforced, this Agreement shall be deemed to be modified so as to effect the
original intent of the parties as closely as possible to the end that the
transactions contemplated hereby and the terms and provisions hereof are
fulfilled to the greatest extent possible.



               (c) Entire Agreement. This Agreement supersedes and replaces in
all respects the Retention Agreement between Executive and Company, dated April
30, 2001 (the "Prior Employment Agreement") and, upon Executive's acceptance of
this Agreement, the Prior Employment Agreement shall be null and void. This
Agreement, including any documents incorporated herein, together with the
applicable terms of the Company's options plans and benefit plans, contains the
Company's entire understanding with Executive related to the subject matter
hereof, and supersedes and preempts any prior or contemporaneous understandings,
agreements, or representations by or between the parties, written or oral.
Without limiting the generality of the foregoing, except as provided in this
Agreement, all understandings and agreements, written or oral, relating to the
employment of Executive by the Company, or the payment of any compensation or
the provision of any benefit in connection therewith or otherwise are hereby
terminated and shall be of no future force and effect.

               (d) Counterparts. This Agreement may be executed on separate
counterparts, any one of which need not contain signatures of more than one
party, but all of which taken together will constitute one and the same
agreement. Signatures may be exchanged by electronic facsimile with machine
evidence of transmission.

               (e) Successors and Assigns. This Agreement is intended to bind
and inure to the benefit of and be enforceable by Executive and the Company, and
their respective successors and assigns, except that Executive may not assign
any of his duties hereunder and he may not assign any of his rights hereunder
without the prior written consent of the Company, which consent will not
unreasonably be withheld. If Executive should die while any amounts would still
be payable to him hereunder if he had continued to live, all amounts payable
hereunder shall be paid in accordance with the terms of this Agreement to
Executive's estate, unless Executive has provided written notice to the Company
specifying a different beneficiary or beneficiaries (which notice(s) may be
changed from time to time at the sole discretion of Executive).

               (f) Attorneys' Fees. If any legal proceeding is necessary to
enforce or interpret the terms of this Agreement, or to recover damages for
breach thereof, the prevailing party shall be entitled to reasonable attorneys'
fees, as well as costs and disbursements, in addition to any other relief to
which he or it may be entitled.

               (g) Amendments. No amendments or other modifications to this
Agreement may be made except by a writing signed by both parties. Except for
Executive's estate under Section 4(a), nothing in this Agreement, express or
implied, is intended to confer upon any third person any rights or remedies
under or by reason of this Agreement.

               (h) Choice of Law. All questions concerning the construction,
validity and interpretation of this Agreement will be governed by the internal
law, and not the law of conflicts, of the State of California except as
otherwise provided in Section 10 above.





               (i) Further Assurances. Each of the parties hereto agrees to use
all reasonable efforts to take or cause to be taken, all appropriate actions,
and to cause to take or to be taken, all things necessary, proper or advisable
under applicable laws to effect the transactions contemplated by this Agreement,
including without limitation, execution and delivery to the Company of such
representations in writing as may be requested by the Company in order for its
to comply with applicable federal and state securities laws.

               (j) Fees and Expenses Relating to Agreement. Each of the parties
hereto shall bear its own fees and expenses incurred in connection with the
preparation of this Agreement and the transactions contemplated hereby.

               IN WITNESS WHEREOF, the parties have executed this Agreement
effective as of the date set forth above.

EXECUTIVE:

        /s/ Robert P. Magrann
- ------------------------------------------------
        Robert P. Magrann

COMPANY:

DEL MONTE FOODS COMPANY

By:     /s/ David L. Meyers
    ---------------------------------------------
Name:   David L. Meyers
    ---------------------------------------------
Title:  Executive Vice President, Administration
    ---------------------------------------------
        and Chief Financial Officer
    ---------------------------------------------

EX-10.51

                                                                   EXHIBIT 10.51


                              EMPLOYMENT AGREEMENT

               This Employment Agreement (the "Agreement") is entered into as of
March 28, 2002, by and between DEL MONTE FOODS COMPANY, a Delaware corporation,
with its principal place of business in San Francisco, California (the
"Company"), and MARC D. HABERMAN, an individual residing in the State of
California ("Executive").

                                    RECITALS

               WHEREAS, Executive has been the Senior Vice President, Marketing
of the Company and has made numerous and invaluable contributions to the
leadership and management of the Company;

               WHEREAS, the Company and Executive desire to reaffirm their
employment relationship on the terms and conditions set forth herein;

               NOW, THEREFORE, in consideration of the foregoing recitals, the
mutual promises of the parties and the mutual benefits they will gain by the
performance thereof, and other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties do hereby agree as
follows:

        1. EMPLOYMENT BY THE COMPANY AND TERM.

               (a) Term of Employment. The Company agrees to employ Executive as
its Senior Vice President, Marketing, and Executive hereby accepts such
employment, subject to the terms and conditions set forth herein. The term of
employment of Executive under this Agreement shall begin as of the date hereof
and continue until terminated pursuant to Section 4 hereof. Notwithstanding the
foregoing, the provisions of Sections 4(i) (Ongoing Obligations), 5
(Indemnification), 6 (Proprietary Information Obligations), 7 (Noninterference),
8 (Injunctive Relief), and 10 (Miscellaneous) shall survive the termination of
this Agreement.

               (b) Duties. Executive shall serve in an executive capacity and
shall perform such duties as are consistent with his position as Senior Vice
President, Marketing and as may be reasonably required by the Company's Board of
Directors (the "Board"). In such position, Executive shall be responsible for
performing such duties as are consistent with his position as Senior Vice
President, Marketing. Pursuant to policies, goals and objectives established by
the Chief Executive Officer, the Executive shall: (i) plan, direct and
coordinate the marketing of the company's products; (ii) evaluate adjustments of
marketing strategies to meet changing and competitive marketing conditions;
(iii) recommend changes in marketing philosophy and policy to serve the best
interest of the company; (iv) provide marketing advice and guidance to various
operating units to ensure overall marketing effectiveness.




               (c) Exclusive Performance of Duties. While employed by the
Company, Executive agrees that he shall devote substantially all of his business
time and best efforts solely and exclusively to the performance of his duties
hereunder and to the business and affairs of the Company, whether such business
is operated directly by the Company or through any affiliate of the Company.
Executive further agrees that while employed by the Company, he will not,
directly or indirectly, provide services on behalf of any competing corporation,
limited liability company, partnership, joint venture, consortium, or other
competing entity or person, whether as an executive, consultant, independent
contractor, agent, sole proprietor, partner, joint venturer, creditor, corporate
officer or director; nor shall Executive acquire by reason of purchase during
the term of his employment with the Company the ownership of more than one
percent (1%) of the outstanding equity interest in any such competitive entity.
For purposes of this Section 1(c) and this Agreement, a "competing" entity is
one engaged in the business of the manufacture and sale of processed fruits and
vegetables, pineapple products and tomato products and each other business in
which the Company is engaged during Executive's employment with the Company.
Subject to the foregoing, Executive may serve on boards of directors of
non-competing unaffiliated corporations, subject to advance approval by the
Board, and may serve on the boards of charitable organizations.

               (d) Company Policies. The employment relationship between the
parties shall be governed by the general employment policies and practices of
the Company, provided, however, that when the terms of this Agreement differ
from or are in conflict with the Company's general employment policies or
practices, this Agreement shall control.

        2. COMPENSATION AND BENEFITS.

               (a) Salary. Executive shall receive for his services rendered
hereunder an annual base salary of Two Hundred Sixty-seven Thousand Five Hundred
Dollars ($267,500), as adjusted from time to time in accordance with this
Agreement (the "Base Salary"), payable on a semi-monthly basis in twenty-four
(24) equal installments, subject to standard withholdings for taxes and social
security and the like.

               (b) Annual Bonus. While a full-time employee of the Company,
Executive shall be entitled to participate in the Company's Annual Incentive
Award Plan ("AIAP") pursuant to the terms of which Executive shall be eligible
to receive an annual bonus (the "Bonus") targeted at 50% of Executive's Base
Salary, as adjusted from time to time in accordance with the AIAP or applicable
successor plan. Actual payment of the Bonus is based on Company performance and
Executive's individual achievements.

                (c) Retention Bonus. In the event of a Change of Control (as
defined in the Retention Plan referenced below), if Executive has been
designated a "Key Employee" by the Nomination and Compensation Committee of the
Board of Directors of the Company (the "Nomination and Compensation Committee"),
Executive shall be eligible to participate in, and entitled to a percentage of,
the Company's incentive compensation pool pursuant to the terms of the Retention
Plan adopted by the




Nominating and Compensation Committee on October 24, 2000 (the "Retention
Bonus").

               (d) Employee Welfare Benefits. During his employment with the
Company, Executive shall be entitled to participate in any group insurance,
hospitalization, medical, dental, health and accident, disability, life or
similar plan or program of the Company now existing or established hereafter to
the extent that he is eligible under the general provisions thereof. The Company
may, in its sole discretion and from time to time, establish additional senior
management benefit programs as it deems appropriate. Executive understands that
any such plans may be modified or eliminated in the discretion of the Company in
accordance with applicable law.

               (e) Pension and Retirement Benefits. During his employment with
the Company, Executive shall be entitled to participate in any pension, 401K and
retirement plans of the Company now existing or established hereafter to the
extent that he is eligible under the general provisions thereof. The Company
may, in its sole discretion and from time to time, establish additional senior
management benefit programs as it deems appropriate. Executive understands that
any such plans may be modified or eliminated in the discretion of the Company in
accordance with applicable law.

               (f) Vacation. Executive shall be entitled to a period of annual
paid vacation time equal to not less than four (4) weeks per year as adjusted
from time to time in accordance with the Company's vacation policy. The days
selected for Executive's vacation shall be mutually agreeable to the Company and
Executive. Executive's eligibility to carryover or to be paid for any portion of
his accrued vacation shall be subject to the Company policy applicable to
employees at a similar level in effect during the term of this Agreement.

               (g) Expenses. Subject to compliance with the Company's normal and
customary policies regarding substantiation and verification of business
expenses, Executive is authorized to incur on behalf of the Company, and the
Company shall directly pay or shall fully reimburse Executive for all customary
and reasonable expenses incurred for promoting, pursuing or otherwise furthering
the business of the Company and its affiliates.

               (h) Perquisites and Supplemental Benefits. During his employment
with the Company, Executive shall be entitled to such perquisites and
supplemental benefits as may be approved from time to time by the Compensation
Committee of the Board.

        3. STOCK OPTIONS.

               (a) During his employment with the Company, Executive shall be
eligible to participate in the applicable stock option plans of the Company. The
terms and conditions of any stock agreement entered into by Executive and the
Company from time to time are hereby incorporated into this Agreement.




               (b) From time to time during Executive's employment with the
Company, the Board (or a committee thereof) shall evaluate the performance of
management of the Company and determine whether it is appropriate to grant any
additional stock options to management, including without limitation, Executive.
The Board (or such committee) shall be under no obligation to grant any such
options to Executive (or any other member of management), but will take into
consideration industry standards for stock option issuances to Senior Vice
President, Marketing in similar circumstances.

        4. TERMINATION OF EMPLOYMENT.

               (a) Termination Upon Death. If Executive dies during his
employment with the Company, the Company shall pay to Executive's estate, or
other designated beneficiary(ies) as shown in the records of the Company, any
earned and unpaid Base Salary as of the termination date (which for purposes of
this clause (a) shall be the date of Executive's death); accrued but unused
vacation time as of the end of the month in which Executive dies; the amount of
any unreimbursed expenses described in Section 2(g); and benefits that Executive
is then entitled to receive as of the termination date under benefit plans of
the Company, including if applicable the Retention Plan, less standard
withholdings for tax and social security purposes and the like. Additionally,
the Company shall pay to Executive's estate, or other designated
beneficiary(ies), at the end of the year in which Executive's termination occurs
a pro rata portion of Executive's target Bonus for the year in which Executive's
termination occurs, prorated for Executive's actual employment period during
such year and adjusted for performance. Except for any bonus, the payment of
which would occur after the termination date, the Company shall have no
obligation to make any other payment, including severance or other compensation,
of any kind. All other benefits provided by the Company to Executive under this
Agreement or otherwise shall cease as of the termination date.

               (b) Termination Upon Disability. The Company may terminate
Executive's employment in the event Executive suffers a disability that renders
Executive unable, as determined in good faith by the Board, to perform the
essential functions of his position, even with reasonable accommodation, for six
(6) consecutive months. In the event that Executive's employment is terminated
pursuant to this Section 4(b), Executive shall receive payment for any earned
and unpaid Base Salary, as of the termination date (which for purposes of this
clause (b) shall be the date specified by the Board); accrued but unused
vacation time as of the end of the month in which the termination for disability
occurs; the amount of any unreimbursed expenses described in Section 2(g); and
benefits that Executive is then entitled to receive under applicable benefit
plans of the Company, including if applicable the Retention Plan, less standard
withholdings for tax and social security purposes and the like. In addition,
after the termination date Executive shall receive long term disability benefits
under the applicable benefit plans of the Company to the extent Executive
qualified for such benefits. Except as expressly provided in this Section 4(b),
all benefits provided by the Company to Executive under this Agreement or
otherwise shall cease as of the termination date. In the event that Executive's
employment is terminated as a result of




a determination pursuant to this Section 4(b), and provided that Executive has
executed a general release in form and substance satisfactory to the Company and
substantially similar to Exhibit A hereto, the Company also shall provide to
Executive as severance the payment of an amount equal to Executive's highest
Base Salary during the twelve (12) month period prior to the termination date
and the target Bonus for the year in which such termination occurs, less
standard withholdings for tax and social security purposes and the like, payable
in equal installments on the Company's regular pay schedule over a period of
twelve (12) months.

               (c) Voluntary Termination. Executive may voluntarily terminate
his employment with the Company at any time. In the event that Executive's
employment is terminated under this clause (c), Executive shall receive payment
for any earned and unpaid Base Salary, as of the date of such termination;
accrued but unused vacation time; the amount of any unreimbursed expenses
described in Section 2(g); and benefits the Executive is then entitled to
receive under applicable benefit plans of the Company, less standard
withholdings for tax and social security purposes and the like, through the
termination date, which for purposes of this Section 4(c) shall be the date upon
which Executive ceases performing his duties hereunder. The Company shall have
no further obligation to pay any compensation of any kind or severance payment
of any kind nor to make any further payment in lieu of notice. All benefits
provided by the Company to Executive under this Agreement or otherwise shall
cease as of the termination date.

               (d) Termination for Cause.

                      (1) Termination; Payment of Salary and Vacation. The Board
may terminate Executive's employment with the Company at any time for "cause"
(as defined below). In the event that Executive's employment is terminated under
this Section 4(d), Executive shall receive payment for all earned but unpaid
Base Salary; accrued but unused vacation time; the amount of any unreimbursed
expenses described in Section 2(g); and benefits the Executive is then entitled
to receive under applicable benefit plans of the Company, less standard
withholdings for tax and social security purposes and the like, through the
termination date, which for purposes of this clause (d) shall be the date upon
which such notice of termination is given. The Company shall have no further
obligation to pay any compensation of any kind nor to make any payment in lieu
of notice. All benefits provided by the Company to Executive under this
Agreement or otherwise shall cease as of the termination date.

                      (2) Definition of Cause. For purposes of this Agreement,
the Company shall have "cause" to terminate Executive's employment upon any of
the following: (a) a material breach by Executive of the terms of this
Agreement; (b) any act of theft, misappropriation, embezzlement, intentional
fraud or similar conduct by Executive involving the Company or any affiliate;
(c) the conviction or the plea of nolo contendere or the equivalent in respect
of a felony involving an act of dishonesty, moral turpitude, deceit or fraud by
Executive; (d) any damage of a material nature to the business or property of
the Company or any affiliate caused by Executive's willful or grossly negligent
conduct; or (e) Executive's failure to act in accordance with any




specific lawful instructions given to Executive in connection with the
performance of his duties for the Company or any affiliate.

               (e) Termination Without Cause. The Company at any time without
prior written notice may terminate Executive without cause. In the event that
Executive's employment is terminated without cause, Executive shall receive
payment for all earned but unpaid Base Salary as of the termination date (which
for purposes of this Section 4(e), shall be the date of Executive's
termination); accrued but unused vacation time; the amount of any unreimbursed
expenses described in Section 2(g); and benefits the Executive is then entitled
to receive under applicable benefit plans of the Company, including if
applicable the Retention Plan, less standard withholdings for tax and social
security purposes and the like, as of the termination date. In such event, and
provided that Executive has executed a general release in form and substance
satisfactory to the Company and substantially similar to Exhibit A hereto, the
Company shall also provide to Executive as severance (i) the payment of an
amount equal to Executive's highest Base Salary during the twelve (12) month
period prior to the termination date, and the target Bonus for the year in which
such termination occurs, less standard withholdings for tax and social security
purposes and the like, payable in equal installments on the Company's regular
pay schedule over a period of twelve (12) months; (ii) continuation of
Executive's participation in the Company's medical benefits until the earlier of
(x) twelve (12) months following Executive's termination or (y) such time as
Executive is covered by comparable programs of a subsequent employer; (iii)
continuation of Executive's participation in any management perquisites
applicable to Executive until the earlier of (x) twelve (12) months following
Executive's termination or (y) such time as Executive is covered by comparable
perquisites of a subsequent employer; (iv) the payment to Executive, at the end
of the year in which Executive's termination occurs, of a pro rata portion of
Executive's target Bonus for the year in which Executive's termination occurs,
prorated for Executive's actual employment period during such year and adjusted
for performance; and (v) the provision of not less than eighteen (18) months of
executive-level outplacement services at Company expense; provided, however, the
expense for such services in any calendar year shall not exceed eighteen percent
(18%) of the amount equal to Executive's highest Base Salary during the twelve
(12) month period prior to the termination date and the target Bonus for the
year in which such termination occurs. In the event Executive receives
continuation of medical benefits for twelve (12) months under Section 4(e)(ii)
hereof, Executive shall be eligible for continued coverage after the end of the
twelve (12) month period to the extent provided by and subject to the terms of
the Consolidated Budget Reconciliation Act of 1985 ("COBRA"). No other
compensation of any kind or severance or other payment of any kind shall be
payable by the Company after such termination date. Except as specifically
provided in this Section 4(e) all benefits provided by the Company to Executive
under this Agreement or otherwise shall cease as of the termination date.

                (f) Termination for Good Reason. Notwithstanding anything in
this Section 4 to the contrary, Executive may voluntarily end his employment
with the Company and receive the benefits detailed in Section 4(e), on the terms
and conditions set forth therein, upon or within ninety (90) days following the
occurrence of an event




constituting "Good Reason," which for purposes of this Section 4(f) shall mean
any of the following: (i) a material adverse change in Executive's position
causing it to be of materially less stature, responsibility, or authority
without Executive's written consent, and such a materially adverse change shall
in all events be deemed to occur if Executive no longer serves as Senior Vice
President, Marketing, unless Executive consents in writing to such change; (ii)
a reduction, without Executive's written consent, in Executive's Base Salary or
the Bonus Executive is eligible to earn under the AIAP (or successor plan
thereto), or Executive's incentive or equity opportunity under any material
incentive or equity program of the Company, provided, however, that nothing
herein shall be construed to guarantee Executive's bonus for any year if the
applicable performance targets are not met; and provided further that it shall
not constitute Good Reason hereunder if the Company makes an appropriate pro
rata adjustment to the applicable bonus and targets under the annual cash bonus
plan in the event of a change in the Company's fiscal year; (iii) a material
reduction without Executive's consent in the aggregate welfare benefits provided
to Executive pursuant to the welfare plans, programs and arrangements in which
Executive is eligible to participate; or (iv) the failure of the Company to
obtain a satisfactory agreement from any successor to assume and agree to
perform this Agreement. Unless Executive provides written notification of an
event described in clauses (i) through (iv) above within ninety (90) days after
Executive knows or has reason to know of the occurrence of any such event,
Executive shall be deemed to have consented thereto and such event shall no
longer constitute Good Reason for purposes of this Agreement. If Executive
provides such written notice to the Company, the Company shall have ten (10)
business days from the date of receipt of such notice to effect a cure of the
event described therein and, upon cure thereof by the Company to the reasonable
satisfaction of Executive, such event shall no longer constitute Good Reason for
purposes of this Agreement.

               (g) Termination Upon Change of Control. In the event of
Executive's Termination Upon Change of Control (as defined below), Executive
shall receive the benefits detailed in Section 4(e) on the terms and conditions
set forth therein, provided, however, that the payment set forth in Section
4(e)(i) shall be made in a lump sum, to be paid within thirty (30) days of
Executive's termination date, and not in installments over a twelve (12) month
period as provided in Section 4(e)(i). No other compensation of any kind or
severance or other payment of any kind shall be payable by the Company to
Executive after the termination date. Any amounts due Executive under this
Section 4(g) are in the nature of severance payments, or liquidated damages
which contemplate both direct damages and consequential damages that may be
suffered as a result of Executive's termination, and are not in the nature of a
penalty. For purposes of this Section 4(g) "Termination Upon Change of Control"
means (i) the termination of Executive's employment by the Company without cause
during the period commencing on the date the "Change of Control" (as defined in
the Company's 1998 Stock Incentive Plan, as amended through November 15, 2000)
occurs and ending on the date which is eighteen (18) months after the Change of
Control; or (ii) any resignation by Executive for Good Reason within eighteen
(18) months after the occurrence of a Change of Control; but (iii) "Termination
Upon Change of Control" shall not include any termination of Executive's
employment by the Company for cause, as a result of the death or




disability of Executive, or as a result of the voluntary termination of
Executive's employment for reasons other than Good Reason.

               (h) At-Will Employment. Executive understands and agrees that
employment with the Company is at-will, which means that either Executive or the
Company may, subject to the terms of this Agreement, terminate this Agreement at
any time with or without cause as set forth in this Agreement. Any modification
of the at-will nature of this Agreement must be in writing and executed by
Executive and the Company.

               (i) Ongoing Obligations. Executive acknowledges that the Company
and Executive have ongoing rights and obligations relating to intellectual
property and confidential information of the Company, together with fiduciary
rights and obligations, which will survive the termination of Executive's
employment.

        5. INDEMNIFICATION. In the event Executive is made, or threatened to be
made, a party to any legal action or proceeding, whether civil or criminal, by
reason of the fact that Executive is or was a director or officer of the Company
or serves or served any other corporation fifty percent (50%) or more owned or
controlled by the Company in any capacity at the Company's request, Executive
shall be indemnified by the Company, and the Company shall pay Executive's
related expenses when and as incurred, all to the fullest extent permitted by
the laws of the State of Delaware, and the Company's Certificate of
Incorporation and Bylaws.

        6. PROPRIETARY INFORMATION OBLIGATIONS. During Executive's employment by
the Company, Executive will have access to and become acquainted with the
Company's confidential and proprietary information (collectively "Proprietary
Information"), including but not limited to information or plans regarding the
Company's customer relationships; personnel; technology and intellectual
property; sales, marketing and financial operations and methods; and other
compilations of information, records and specifications. Executive shall not
disclose any Proprietary Information of the Company, or of any affiliate,
directly or indirectly, to any person, firm, corporation or other entity for any
reason or purpose whatsoever, nor shall Executive make use of any such
Proprietary Information for his own purposes or for the benefit of any person,
firm, corporation or other entity (except the Company and the affiliate) under
any circumstances, during or after the term of this Agreement, except as
reasonably necessary in the course of his employment for the Company or as
authorized in writing by the Company. All files, records, documents,
computer-recorded or electronic information and similar items relating to the
business of the Company or the affiliate, whether prepared by Executive or
otherwise coming into his possession, shall remain the exclusive property of the
Company or the affiliate, respectively, and Executive agrees to return all
property of the Company or the affiliate in his possession and under his control
immediately upon any termination of Executive's employment, and no copies
thereof shall be kept by Executive.





        7. NONINTERFERENCE.

               (a) While employed by or compensated by the Company pursuant to
this Agreement and for a period of two (2) years thereafter, Executive agrees
not to: (i) directly or indirectly, either on Executive's own account or for any
company, limited liability company, partnership, joint venture or other entity
or person (including, without limitation, through any existing or future
affiliate), solicit any employee of the Company or any existing or future
affiliate to leave his or her employment or knowingly induce or knowingly
attempt to induce any such employee to terminate or breach his or her employment
agreement with the Company or any existing or future affiliate, if any; or (ii)
directly or indirectly (including, without limitation, through any existing or
future affiliate), solicit, cause in any part or knowingly encourage any current
or future customer of or supplier to the Company or any existing or future
affiliate to modify the business relationship, or cease doing business in whole
or in part, with the Company or any such affiliate.

               (b) In the event a court of competent jurisdiction or other
tribunal or person(s) mutually selected by the parties to resolve any dispute
(collectively a "Court") has determined that Executive has violated the
provisions of this Agreement, the running of the time period of such provisions
so violated shall be automatically suspended as of the date of such violation
and shall be extended for the period of time from the date such violation
commenced through the date that the Court determines that such violation has
permanently ceased.

        8. INJUNCTIVE RELIEF. The parties hereto agree that damages would be an
inadequate remedy for the Company in the event of a breach or threatened breach
of Sections 6 or 7 of this Agreement by Executive, and in the event or any such
breach or threatened breach, the Company may, either with or without pursuing
any potential damage remedies, obtain and enforce an injunction prohibiting
Executive from violating this Agreement and requiring Executive to comply with
the terms of this Agreement.

        9. WARRANTIES AND REPRESENTATIONS. Executive hereby represents and
warrants to the Company that he:

               (a) is not now under any obligation of a contractual or
quasi-contractual nature known to him that is inconsistent or in conflict with
this Agreement or that would prevent, limit or impair the performance by
Executive of his obligations hereunder; and

               (b) has been or has had the opportunity to be represented by
legal counsel in the preparation, negotiation, execution and delivery of this
Agreement and understands fully the terms and provisions hereof.

        10. MISCELLANEOUS.

               (a) Notices. Any notice or communication required or permitted by
this Agreement shall be deemed sufficiently given if in writing and, if
delivered personally,




when it is delivered or, if delivered in another manner, including without
limitation, by facsimile (with confirmation of receipt and a confirmation copy
sent by U.S. Mail or overnight delivery), the earlier of when it is actually
received by the party to whom it is directed or when the period set forth below
expires (whether or not it is actually received): (i) if deposited with the U.S.
Postal Service, postage prepaid, and addressed to the party to receive it as set
forth below, forty-eight (48) hours after such deposit as registered or
certified mail; or (ii) if accepted by Federal Express or a similar delivery
service in general usage for delivery to the address of the party to receive it
as set forth next below, twenty-four (24) hours after the delivery time promised
by the delivery service.

               To the Company:

               Del Monte Foods Company
               One Market at The Landmark
               P.O. Box 193575
               San Francisco, CA 94119-3575
               Fax:  415/247-3263
               Attention: Board of Directors and Secretary

               With a copy to:

               Gibson, Dunn & Crutcher LLP
               One Montgomery Street
               San Francisco, California 94104-4505
               Fax: 415/986-5309
               Attention: Douglas D. Smith, Esq.

               To Executive:


               --------------------------


               Fax:


               With a copy to:


               Fax:
               Attention:

or to such other address or to the attention of such other person as the
recipient party will have specified by prior written notice to the sending
party.

               (b) Severability. If any term or provision (or any portion
thereof) of this Agreement is determined by a court to be invalid, illegal or
incapable of being enforced by any rule of law or public policy, all other terms
and provisions (or other portions thereof) of this Agreement shall nevertheless
remain in full force and effect. Upon such




determination that any term or provision (or any portion thereof) is invalid,
illegal or incapable of being enforced, this Agreement shall be deemed to be
modified so as to effect the original intent of the parties as closely as
possible to the end that the transactions contemplated hereby and the terms and
provisions hereof are fulfilled to the greatest extent possible.

               (c) Entire Agreement. This Agreement supersedes and replaces in
all respects the Retention Agreement between Executive and Company, dated
September 12, 2001 (the "Prior Employment Agreement") and, upon Executive's
acceptance of this Agreement, the Prior Employment Agreement shall be null and
void. This Agreement, including any documents incorporated herein, together with
the applicable terms of the Company's options plans and benefit plans, contains
the Company's entire understanding with Executive related to the subject matter
hereof, and supersedes and preempts any prior or contemporaneous understandings,
agreements, or representations by or between the parties, written or oral.
Without limiting the generality of the foregoing, except as provided in this
Agreement, all understandings and agreements, written or oral, relating to the
employment of Executive by the Company, or the payment of any compensation or
the provision of any benefit in connection therewith or otherwise are hereby
terminated and shall be of no future force and effect.

               (d) Counterparts. This Agreement may be executed on separate
counterparts, any one of which need not contain signatures of more than one
party, but all of which taken together will constitute one and the same
agreement. Signatures may be exchanged by electronic facsimile with machine
evidence of transmission.

               (e) Successors and Assigns. This Agreement is intended to bind
and inure to the benefit of and be enforceable by Executive and the Company, and
their respective successors and assigns, except that Executive may not assign
any of his duties hereunder and he may not assign any of his rights hereunder
without the prior written consent of the Company, which consent will not
unreasonably be withheld. If Executive should die while any amounts would still
be payable to him hereunder if he had continued to live, all amounts payable
hereunder shall be paid in accordance with the terms of this Agreement to
Executive's estate, unless Executive has provided written notice to the Company
specifying a different beneficiary or beneficiaries (which notice(s) may be
changed from time to time at the sole discretion of Executive).

               (f) Attorneys' Fees. If any legal proceeding is necessary to
enforce or interpret the terms of this Agreement, or to recover damages for
breach thereof, the prevailing party shall be entitled to reasonable attorneys'
fees, as well as costs and disbursements, in addition to any other relief to
which he or it may be entitled.

               (g) Amendments. No amendments or other modifications to this
Agreement may be made except by a writing signed by both parties. Except for
Executive's estate under Section 4(a), nothing in this Agreement, express or
implied, is intended to confer upon any third person any rights or remedies
under or by reason of this Agreement.





               (h) Choice of Law. All questions concerning the construction,
validity and interpretation of this Agreement will be governed by the internal
law, and not the law of conflicts, of the State of California except as
otherwise provided in Section 10 above.

               (i) Further Assurances. Each of the parties hereto agrees to use
all reasonable efforts to take or cause to be taken, all appropriate actions,
and to cause to take or to be taken, all things necessary, proper or advisable
under applicable laws to effect the transactions contemplated by this Agreement,
including without limitation, execution and delivery to the Company of such
representations in writing as may be requested by the Company in order for its
to comply with applicable federal and state securities laws.

               (j) Fees and Expenses Relating to Agreement. Each of the parties
hereto shall bear its own fees and expenses incurred in connection with the
preparation of this Agreement and the transactions contemplated hereby.

               IN WITNESS WHEREOF, the parties have executed this Agreement
effective as of the date set forth above.

EXECUTIVE:

        /s/ Marc D. Haberman
- ------------------------------------------------
        Marc D. Haberman

COMPANY:

DEL MONTE FOODS COMPANY

By:     /s/ David L. Meyers
    --------------------------------------------
Name:   David L. Meyers
    --------------------------------------------
Title:  Executive Vice President, Administration
    --------------------------------------------
        and Chief Financial Officer
    --------------------------------------------

EX-12

                                                                      EXHIBIT 12

DEL MONTE FOODS COMPANY AND SUBSIDIARIES
STATEMENT RE: COMPUTATION OF EARNINGS TO FIXED CHARGES



                                                         YEAR ENDED JUNE 30,
                                        ---------------------------------------------------
                                          2002       2001       2000       1999       1998
                                        --------   --------   --------   --------   -------
                                                      (IN MILLIONS, EXCEPT RATIO)
                                                                     
EARNINGS:
Consolidated pre-tax income .......     $   55.8   $   56.7   $   79.4   $   33.2   $   6.0
Interest expense ..................         57.5       74.6       67.1       77.6      77.5
Interest portion of rent expense(a)          9.9       11.5        9.9        9.8       9.4
                                        --------   --------   --------   --------   -------
              Earnings ............     $  123.2   $  142.8   $  156.4   $  120.6   $  92.9
                                        ========   ========   ========   ========   =======

FIXED CHARGES:
Interest expense ..................     $   57.5   $   74.6   $   67.1   $   77.6   $  77.5
Interest portion of rent expense(a)          9.9       11.5        9.9        9.8       9.4
                                        --------   --------   --------   --------   -------
              Fixed charges .......     $   67.4   $   86.1   $   77.0   $   87.4   $  86.9
                                        ========   ========   ========   ========   =======

FIXED CHARGE RATIO:
Ratio of earnings to fixed charges           1.8x       1.7x       2.0x       1.4x      1.1x
Surplus of earnings available to
    cover fixed charges ...........     $   55.8   $   56.7   $   79.4   $   33.2   $   6.0


(a) Interest portion of rent expense is assumed equal to 33% of operating lease
    and rental expense for the period.

EX-23

                                                                      EXHIBIT 23


                         CONSENT OF INDEPENDENT AUDITORS

The Board of Directors
Del Monte Foods Company:


We consent to the incorporation by reference in the registration statements on
Form S-8 (Nos. 333-40867, 333-52226, 333-38394, 333-34280 and 333-79315) and on
Form S-4 (Nos. 333-64802 and 333-98827) of Del Monte Foods Company of our report
dated July 26, 2002, relating to the consolidated balance sheets of Del Monte
Foods Company and subsidiaries as of June 30, 2002 and 2001, and the related
consolidated statements of income, stockholders' equity (deficit) and
comprehensive income and cash flows for each of the years in the three-year
period ended June 30, 2002, which report appears in the annual report on Form
10-K of Del Monte Foods Company for the year ended June 30, 2002.

                                         /s/ KPMG LLP

San Francisco, California
September 26, 2002

EX-99

                                                                      EXHIBIT 99


                   CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350
                             AS ADOPTED PURSUANT TO
                    SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

        Each of the undersigned, in his capacity as the Chief Executive Officer
and Chief Financial Officer, respectively, of Del Monte Foods Company for
purposes of 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, certifies that to his knowledge:

        1.     The Annual Report of Del Monte Foods Company on Form 10-K for the
               period ended June 30, 2002 fully complies with the requirements
               of Section 13(a) or 15(d) of the Securities Exchange Act of 1934;
               and

        2.     The information contained in such report fairly presents, in all
               material respects, the financial condition and results of
               operations of Del Monte Foods Company.

        Date: September 30, 2002


                                      /s/   RICHARD G. WOLFORD
                                      -----------------------------------------
                                      Richard G. Wolford
                                      President and Chief Executive Officer,
                                      Director and Chairman of the Board

                                      /s/   DAVID L. MEYERS
                                      -----------------------------------------
                                      David L. Meyers
                                      Executive Vice President, Administration
                                      and Chief Financial Officer