STOCK AND ASSET PURCHASE AGREEMENT
by and between
HDPR ACQUISITIONS CORP.,
and
CB ACQUISITIONS CORP.,
as Buyers,
and
SEABOARD CORPORATION,
as Seller
________________________________________
Dated as of November 9, 1998
________________________________________
TABLE OF CONTENTS
Section Page
1. Purchase and Sale of the Assets and the Shares;
Assumption of Assumed Liabilities. . . . . . . . . . .2
2. Closing; Purchase Price Adjustment.. . . . . . . . . 10
3. Conditions to Closing. . . . . . . . . . . . . . . . 13
4. Representations and Warranties of Seller.. . . . . . 17
5. Covenants of Seller. . . . . . . . . . . . . . . . . 20
6. Representations and Warranties of Buyer. . . . . . . 27
7. Mutual Covenants.. . . . . . . . . . . . . . . . . . 28
8. Employee Matters . . . . . . . . . . . . . . . . . . 31
9. Further Assurances.. . . . . . . . . . . . . . . . . 31
10. Indemnification. . . . . . . . . . . . . . . . . . . 32
11. Tax Matters. . . . . . . . . . . . . . . . . . . . . 36
12. Assignment.. . . . . . . . . . . . . . . . . . . . . 41
13. No Third-Party Beneficiaries.. . . . . . . . . . . . 41
14. Termination. . . . . . . . . . . . . . . . . . . . . 41
15. Survival of Representations. . . . . . . . . . . . . 44
16. Expenses.. . . . . . . . . . . . . . . . . . . . . . 45
17. Amendments.. . . . . . . . . . . . . . . . . . . . . 45
18. Notices. . . . . . . . . . . . . . . . . . . . . . . 46
19. Interpretation.. . . . . . . . . . . . . . . . . . . 47
20. Counterparts.. . . . . . . . . . . . . . . . . . . . 47
21. Entire Agreement.. . . . . . . . . . . . . . . . . . 47
22. Fees.. . . . . . . . . . . . . . . . . . . . . . . . 48
23. Severability.. . . . . . . . . . . . . . . . . . . . 48
24. Governing Law; Consent to Jurisdiction.. . . . . . . 48
25. Waiver of Trial by Jury. . . . . . . . . . . . . . . 49
EXHIBITS
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STOCK AND ASSET PURCHASE AGREEMENT
Stock and Asset Purchase Agreement dated as of November 9,
1998, by and between HDPR Acquisitions Corp. ("HDPR") and CB
Acquisitions Corp. ("CB"), Puerto Rico corporations (each, a "Buyer"
and, collectively, "Buyers"), and Seaboard Corporation, a Delaware
corporation ("Seller").
WHEREAS HDPR desires to purchase from Seller and Seller desires
to sell to HDPR all the Holsum Assets (as defined below), and HDPR
desires to assume all the Assumed Liabilities (as defined below)
relating to the Holsum Business (as defined below) on the terms and
subject to the conditions set forth herein; and
WHEREAS CB desires to purchase from Seller and Seller desires
to sell to CB all the issued and outstanding shares of capital stock
(the "Shares") of Seaboard Bakeries, Inc. ("Seaboard Bakeries"), a
Delaware corporation and a wholly owned subsidiary of Seller, and
the Seaboard Bakeries Trademarks (as defined below), to the extent
not owned directly by Seaboard Bakeries;
NOW THEREFORE, in consideration of the mutual covenants and
agreements contained herein, and for other good and valuable con
sideration, the receipt and sufficiency of which is hereby
acknowledged, and intending to be legally bound, the parties hereto
agree as follows:
1. Purchase and Sale of the Assets and the Shares;
Assumption of Assumed Liabilities.
(a) Purchase and Sale of the Assets and the Shares;
Purchase Price Allocation. (i) On the terms and subject to the
conditions of this Agreement, (A) Seller will sell, transfer,
assign, convey and deliver to HDPR, and HDPR will purchase from
Seller, the Holsum Assets, and (B) Seller will sell, transfer,
assign, convey and deliver to CB, and CB will purchase from Seller,
the Shares and the Seaboard Bakeries Trademarks (to the extent not
owned direct directly by Seaboard Bakeries) for an aggregate
purchase price equal to $74,500,000 plus the assumption of the
Assumed Liabilities (the "Purchase Price"), payable as set forth
below in Section 2(a), and subject to adjustment as provided in
Section 2(b).
(ii) Without affecting Seller's obligations
hereunder, Seller shall have the right to transfer the Holsum Assets
and the Assumed Liabilities related to the Holsum Business to a
newly formed wholly owned limited liability company on or prior to
the Closing Date and to cause such limited liability company to
transfer the Holsum Assets and the Assumed Liabilities related to
the Holsum Business pursuant to this Agreement. Seller shall not
use the name Holsum Bakers' in connection with the Business after
the Closing Date and shall change the name no later than six months
after the Closing Date (or earlier if necessary in order to allow
Buyer to use the name). Seller agrees to execute any consent that
may be required in connection with Buyer's use of such name.
(iii) Seller and Buyers agree that the Purchase Price
shall be allocated as follows: $67,500,000 plus the assumption of
the Assumed Liabilities for the Holsum Assets, and $7,000,000 for
the Shares and the Seaboard Bakeries Trademarks. The allocation of
the purchase price among the Holsum Assets will be agreed to between
Seller and HDPR after the date hereof; provided, however, that to
the extent that HDPR requests, and
Seaboard agrees, that any portion of the purchase price be allocated
to the Restrictive Covenant, (as defined below), HDPR shall
indemnify Seller for any Puerto Rico income tax payable by Seller
attributable to such Restrictive Covenant in excess of the amount of
Puerto Rico income tax thereon that would be payable by Seller if no
portion of the purchase price had been allocated to such Restrictive
Covenant, any interest and penalties and for any taxes payable with
respect to this indemnity (gross up). Buyers and Seller agree to
file all income, franchise and other tax returns, and execute such
other documents or instruments as may be required by any
governmental authority in a manner consistent with such allocations.
(b) Holsum Assets. The term "Holsum Assets" shall mean
the right, title and interest of Seller and any affiliate of Seller
in the assets of Seller or such affiliate used or held primarily in
the conduct of the business (the "Holsum Business") of the Holsum
Bakers of Puerto Rico division of Seller ("Holsum Bakers"), wherever
located and whether or not reflected on the books of Seller or such
affiliate, whether tangible or intangible, whether real, personal or
mixed, and whether existing on the date hereof or acquired
hereafter, but excluding prepaid or deferred tax assets. Without
limiting the generality of the foregoing, the Holsum Assets include,
among other things, the following:
(i) Real Property. The real property
described on Schedule 1(b)(i) hereto, together with all buildings,
improvements and fixtures thereon and all rights (including, but
not limited to, any rights that Seller may possess over any other
properties, such as any related rights of way or options), privileges and
easements appurtenant thereto (the "Real Property");
(ii) Equipment. All machinery, equipment,
vehicles, parts, supplies, fixtures, computers, trade fixtures and
furnishings, whether leased or owned, that are located on the Real
Property on the date hereof or otherwise used primarily in
connection with the Holsum Business (the "Equipment"), including
without limitation the Equipment set forth on Schedule 1(b)(ii);
(iii) Contracts. All contracts, leases,
agreements, commitments, purchase orders and other legally binding
arrangements, whether oral or written, to which Seller is a party
or by which Seller is bound which are related to the Holsum Business,
including but not limited to those listed on
Schedule 1(b)(iii) (the "Contracts");
(iv) Inventory. All inventory, goods,
materials and supplies that are used in the Holsum Business (the
"Inventory") and that are owned by Seller on the Closing Date;
(v) Computer Software. To the extent
permitted by the relevant license agreement, all computer software
(including, without limitation, licenses, warranties and
documentation related thereto and related objects and source codes)
primarily utilized in the Holsum Business;
(vi) Records. All information, files, records,
data and plans relating to the operation of the Holsum Business,
including, without limitation, maintenance records and manuals, and as-
built drawings and surveys (provided that Seller shall have the right
to retain copies of any or all such records);
(vii) Licenses, Licensing Agreements and
Permits. To the extent permitted by law and the terms of the
license or permit, all permits, authorizations, licenses, licensing
agreements, privileges and rights related to the Holsum Business,
including all government authorizations, permits and licenses;
(viii) Intellectual Property. Any and all
patents, patent applications (whether filed, unfiled or being
prepared), invention disclosures, trademarks (whether registered or
unregistered), trademark registrations, trademark applications (whether
filed, unfiled or being prepared), trade names, copyrights (registered
or unregistered), copyright applications (whether
filed, unfiled or being prepared), service marks (registered or unregistered),
service mark applications (whether filed, unfiled or being prepared), all
together with the goodwill of the Holsum Business associated with such marks
or names, trade secrets, technology, inventions, know how, processes and
confidential and proprietary information, including any being developed
(including, but not limited to, drawings, designs, manufacturing data, design
data, test data, operational data, engineering drawings, formulae, computer
programs, computer software and manuals), whether or not subject to statutory
registration, and Seller's patent and trademark files (or copies thereof) on
all such intellectual property, and all other intellectual property and all
rights thereunder, or in respect thereof, in each and every case referred to
in this Section 1(b)(viii) relating primarily to the Holsum Business,
including without limitation the trademarks and service marks listed on
Schedule 1(b)(viii); provided that Seller expressly disclaims any warranty,
express or implied, that it owns or has the exclusive right to use the same or
that any of the intellectual property transferred does not violate or infringe
upon the intellectual property rights of any third person;
(ix) Accounts Receivable. All accounts
receivable owed to the Holsum Business and generated from sales of
products of the Holsum Business;
(x) Cash. All cash and investments held by or
for the account of Holsum Bakers on the Closing Date to the extent
that the sum of the Seaboard Bakeries Dividend (as defined below) and the
Holsum Cash Balance (as defined below) exceeds $30,488,851; and
(xi) Other Assets. All other assets of the
Holsum Business not described above reflected on the August 1,
1998, balance sheet set forth as Schedule 1(b)(xi) (the "Balance
Sheet"), to the extent such assets have not been sold in the
ordinary course of business or by persons under the direct or
indirect supervision of Mr. Ramon Calderon.
(c) Seaboard Bakeries Assets. The term "Seaboard
Bakeries Assets" shall mean the right, title and interest of Seller
and any affiliate of Seller, including Seaboard Bakeries, in the
assets of Seller or such affiliate used or held primarily in the
conduct of the business of Seaboard Bakeries (the "Seaboard Bakeries
Business"), wherever located and whether or not reflected on the
books of Seller or such affiliate, whether tangible or intangible,
whether real, personal or mixed, and whether existing on the date
hereof or acquired hereafter. Without limiting the generality of
the foregoing, the Seaboard Bakeries Assets include, among other
things, the types of assets described in Section 1(b) above, but
relating to the Seaboard Bakeries Business instead of the Holsum
Business, and the assets of the Seaboard Bakeries Business listed in
the schedules specified in Section 1(b).
(d) Seaboard Bakeries Trademarks. The term "Seaboard
Bakeries Trademarks" shall mean the trademarks, service marks, trade
names and other intellectual property of the type described in
Section 1(b)(viii) used exclusively by the Business, including that
set forth on Schedule 1(d). Seller makes no warranty, express
or implied, that the Seaboard Bakeries Trademarks do not infringe
upon the intellectual property rights of any other person or that it
owns or has the exclusive right to use the same.
(e) The term "Assets" means, collectively, the Holsum
Assets and the Seaboard Bakeries Assets. The term "Business" means,
collectively, the Holsum Business and the Seaboard Bakeries
Business.
(f) EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED HEREIN,
BUYERS TAKE THE ASSETS "AS IS" AND BUYERS ACKNOWLEDGE THAT, EXCEPT
AS OTHERWISE SPECIFICALLY PROVIDED HEREIN, NEITHER SELLER NOR ANY
PREDECESSOR OR SUCCESSOR IN INTEREST OF SELLER NOR ITS EMPLOYEES,
REPRESENTATIVES, AGENTS OR ASSIGNS HAS MADE, NOR SHALL BE DEEMED TO
HAVE MADE, ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO
VALUE, CONDITION, MERCHANTABILITY, DESIGN, QUALITY, DURABILITY,
OPERATION, OR FITNESS FOR USE OR PURPOSE OF SUCH ASSETS, OR ANY
OTHER REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED,
WITH RESPECT TO SUCH ASSETS, OR ANY COMPONENT THEREOF, IT BEING
AGREED THAT ALL RISKS INCIDENT THERETO ARE TO BE BORNE BY BUYERS IN
THE EVENT OF ANY DEFECT OR DEFICIENCY IN SUCH ASSETS OR ANY
COMPONENT PART THEREOF, OF ANY NATURE, WHETHER PATENT OR LATENT, AND
THAT SELLER SHALL HAVE NO RESPONSIBILITY OR LIABILITY WITH RESPECT
THERETO. This provision is intended as a complete exclusion and
negation of any warranties by Seller, express or implied, with
respect to the Assets or any component thereof, other than the
warranties set forth herein.
(g) Assumed Liabilities. On the Closing Date, HDPR and
CB shall assume, and shall thereafter pay, perform and discharge
when due by their terms or as required by law, all the obligations
and liabilities of Seller related to the Holsum Business and the
Seaboard Bakeries Business, respectively, other than Retained
Liabilities (as defined below), all in accordance with their terms
(the "Assumed Liabilities"), including, but not limited to, (i) all
liabilities included in the balance sheet of Holsum Bakers as of the
Closing Date to be prepared by the parties (the "Closing Date
Balance Sheet"); (ii) all obligations to perform the Contracts;
(iii) all liabilities or claims arising from the operations of the
Holsum Business and the Seaboard Bakeries Business, respectively
(whether accruing prior to or after the Closing Date), other than
Retained Liabilities; (iv) all liabilities arising under all
employee benefit plans of Holsum Bakers and Seaboard Bakeries
relating to all present and former employees of Holsum Bakers and
Seaboard Bakeries (the "Plans"), including all unfunded liabilities
under such Plans relating to such employees, any liability arising
from any "deemed termination" of any such Plan, any liability
arising from prior violations of law with respect to the Plans, any
liability for violations of the minimum funding rules, any liability
for violations of the reporting and disclosure rules, any liability
for any past or present breach of fiduciary rules, any liability for
any violation of rules under the Internal Revenue Code, any
liability for any breach of ERISA, any liability for breach of COBRA
rules, any liability for the failure to file any Form 5500 for prior
years and the responsibility for Form 5500 filings in all subsequent
years, any liability or responsibility with respect to any audit of
the Plans, and all responsibility for any and all reporting
requirements under Section 4043 of ERISA; (v) all claims and
liability arising from the termination or deemed termination of any
contract, whether under Act 75 of the Legislature of Puerto Rico or
otherwise; and (vi) all liabilities as successor employer of the
employees of the Business, including but not limited to any existing
or future claim of wrongful termination, discrimination or any other
claims related to terms and conditions of employment; but excluding
Retained Liabilities, which Retained Liabilities will be retained by
Seller. In
addition, the Assumed Liabilities shall include liability for any
WARN Act, severance, or other labor or employment obligations or
claims under United States law, the law of the Commonwealth of
Puerto Rico, or any local law or ordinance arising from or relating
to the sale of the Assets and the Shares or the operation of the
Business, other than Retained Liabilities.
(h) Retained Liabilities. The term "Retained
Liabilities" shall mean, with respect to both Holsum Bakers and
Seaboard Bakeries, (i) all liability relating to or arising from the
claims identified on Schedule 1(h)(i), except to the extent of any
amount reserved for such claims on the Balance Sheet and indicated
on said schedule; (ii) any liability under any agreement entered
into by Seller or Seaboard Bakeries that (A) is not listed on
Schedule 1(b)(ii) and (B) was entered into on behalf of Seller or
Seaboard Bakeries by officers or employees of Seller or Seaboard
Bakeries not under the direct or indirect supervision of Mr. Ramon
Calderon, but only if any such agreement was not actually or
constructively known to Buyers on the date hereof; and (iii) any
liability arising from any action taken by officers or employees of
Seller or Seaboard Bakeries not under the direct or indirect
supervision of Mr. Ramon Calderon, and which action was not actually
or constructively known to Buyers on the date hereof.
(i) Withholding. All payments relating to the Purchase
Price, including all payments of principal and interest due on the
Note (as defined below) shall be made without any withholding or
deduction of any kind other than (i) those relating to payments on
account of the Restrictive Covenant (as defined below) and
(ii) those required as a result of any change in any applicable law
or regulation adopted after the date hereof. In the event that any
such change in law is adopted prior to the Closing Date, the parties
shall negotiate in good faith the net effect, if any, of such change
in law on the economic benefit to be derived by Seller from the
transactions contemplated herein. If such net effect is, in the
reasonable opinion of Seller, adverse to Seller, Seller may
terminate this Agreement pursuant to Section 14(a)(iv); provided,
however, that Seller shall not have this termination right if Buyers
agree to fully indemnify Seller to the extent of such adverse
effect. Seller shall not have any termination right as a result of
any change in law adopted after the Closing Date.
2. Closing; Purchase Price Adjustment.
(a) Closing. The closing (the "Closing") of the purchase
and sale of the Holsum Assets and the Shares shall be held
simultaneously at the offices of McConnell Vald,s (in the case of
the Holsum Assets) and at the principal offices of Seaboard
Corporation in Shawnee Mission, Kansas (in the case of the Shares),
at 10:00 a.m. on November 30, 1998, or if the conditions to Closing
set forth in Section 3 of this Agreement shall not have been
satisfied by such date, as soon as practicable after such conditions
shall have been satisfied or, if permitted, waived. The parties
agree that title to the Shares shall pass to Buyer in Shawnee
Mission, Kansas, and agree that this agreement was negotiated and
signed by Seller outside Puerto Rico. The date on which the Closing
shall occur is hereinafter referred to as the "Closing Date." At
the Closing, Buyers shall deliver to Seller
(i) immediately available funds in an amount equal to $66,500,000,
by wire transfer to one or more bank accounts designated in writing
by Seller, (ii) a subordinated promissory note substantially in the
form of Exhibit A in a principal amount equal to $8,000,000, duly
executed by HDPR and CB (the "Note"), subordinate only to Buyers'
acquisition financing (including senior and subordinated debt not
exceeding $80,000,000), (iii) an assumption agreement or agreements
in form and substance reasonably satisfactory to Seller, duly
executed by Buyers (the "Assumption Agreement"), (iv) a guaranty
agreement substantially in the form of Exhibit B duly executed by
Mr. Ramon Calderon (the "Guaranty"), and secured by a lien on all
the issued and outstanding Capital Stock of CB and Seaboard
Bakeries, subordinate only to Buyers' acquisition financing
(including senior and subordinated debt not exceeding $80,000,000);
(v) mortgage (in the amount of $9,000,000) and security agreements
in form and substance reasonably satisfactory to Seller on the
Assets and the Shares, subordinate only to Buyers' acquisition
financing (including senior and subordinated debt not exceeding
$80,000,000) securing the Note, Mr. Ramon Calderon's obligations
under the Guaranty and all obligations owing under this Agreement,
the agreement relating to the acquisition of the assets of Harinas
de Puerto Rico, Inc. or under any other documents or instruments
delivered in connection therewith, (vi) if a mortgagee title policy
is required by the banks providing the acquisition financing, a
mortgage title insurance policy to Seller with respect to the
mortgage describe above and (vii) the other documents described in
Section 3(b). Concurrently, Seller shall deliver or cause to be
delivered to Buyers (w) duly executed real property deeds and bills
of sale in form and substance reasonably satisfactory to Buyers, (x)
such other instruments of sale, assignment, transfer or conveyance,
in form and substance reasonably satisfactory to Buyers and their
counsel, as are necessary to convey to Buyers good, and in the case
of real property, recordable, title to the Assets (provided that
title to the Seaboard Bakeries Assets, other than the Seaboard
Bakeries Trademarks, shall be transferred to CB by transfer of the
Shares), (y) to CB, in Shawnee Mission, Kansas, certificates
representing the Shares, duly endorsed in blank or accompanied by
stock powers duly endorsed in blank in proper form for transfer,
with appropriate transfer stamps, if any, affixed, and (z) the other
documents described in Section 3(a).
(b) Purchase Price Adjustment. (i) On the Closing Date,
Seller shall prepare and deliver to Buyers a statement setting forth
the balance of cash and cash equivalents (including short term and
long term investments) held by or for the account of each of Holsum
Bakers and Seaboard Bakeries on the Closing Date (the "Cash
Balance").
(ii) At the Closing, Seaboard Bakeries
may, if determined by Seller, pay a dividend to Seller in an amount
equal
to the lesser of (A) its Cash Balance, and (B) $30,488,851 (the
"Seaboard Bakeries Dividend"). To the extent that the sum of the
Seaboard Bakeries Dividend and the Holsum Bakers Cash Balance is
less than $30,488,851, the Purchase Price payable in immediately
available funds shall be increased by the amount by which such sum
is less than $30,488,851. Seller shall have the right to determine
not to pay the Seaboard Bakeries Dividend or to pay such dividend in
an amount that is less than the amount set forth above (but not in
excess of $30,488,851), in which event, Seaboard Bakeries shall lend
to CB at the time of the Closing the difference between the amount
that it could have paid as the Seaboard Bakeries Dividend and the
amount actually paid.
(iii) The Purchase Price shall also be
increased by an amount equal to the interest from November 1, 1998,
until
such date as Buyers and Seller consummate the Closing, (A) at the
rate of 6% per annum, with respect to $30,488,851, and (B) at the
rate payable by Buyers under their senior acquisition debt, with
respect to $74,500,000. Interest shall be computed on the basis of
a 360-day year and the actual number of days elapsed, provided that
if Buyers' acquisition financing provides for the calculation of
interest on the basis of twelve 30-day months, interest shall be
calculated on that basis.
3. Conditions to Closing.
(a) Buyer's Obligation. The obligation of Buyers to
purchase the Assets and the Shares is subject to the satisfaction
(or waiver by Buyers) as of the Closing of the following
conditions:
(i) The representations and warranties of
Seller made in this Agreement shall be true and correct in all
material respects as of the date hereof and on and as of the Closing, as
though made on and as of the Closing Date, and Seller shall have performed
or complied in all material respects with all obligations and covenants
required by this Agreement to be performed or complied with by Seller by the
time of the Closing; and Seller shall have delivered to Buyers a certificate
dated the Closing Date and signed by an authorized officer of Seller
confirming the foregoing.
(ii) Buyers shall have received an opinion or
opinions dated the Closing Date of Fiddler Gonz lez & Rodriguez,
LLP, Sullivan & Worcester LLP or David Becker, Esq., in form and
substance reasonably satisfactory to Buyers.
(iii) The waiting period under the Hart-Scott-
Rodino Antitrust Improvements Act of 1976 (the "HSR Act") shall have expired or
been terminated.
(iv) Seller shall have delivered to the
relevant Buyer the following documents, certified by the Secretary
or any Assistant Secretary of Seller, as appropriate:
(A) the charter, by-laws and corporate
books of Seaboard Bakeries;
(B) the resolution or resolutions of the
board of directors of Seller authorizing the transactions
contemplated hereby;
(C) a document evidencing the authority
and incumbency of the persons executing documents on
behalf of Seller relating to the transactions
contemplated hereby;
(D) deeds of purchase and sale in form
and substance reasonably satisfactory to Buyers conveying
good and recordable title to the Real Property, free and
clear of all liens other than those set forth on the title
studies or title insurance policies set forth as Schedule
3(a)(iv)(D), easements and restrictions of record which do
not unreasonably interfere with the use of the premises as
presently used, and those created by officers and
employees of Seller or Seaboard Bakeries under the direct
or indirect supervision of Mr. Ramon Calderon
(collectively, "Permitted Encumbrances");
(E) such bills of sale, assignments, and
other instruments of transfer and conveyance as may be
necessary to evidence and effect the sale, assignment,
transfer, conveyance and delivery to Buyers of good title
to the Assets and the Shares, free and clear of all liens
other than Permitted Encumbrances, but which shall contain
no additional warranties (provided that title to the
Seaboard Bakeries Assets that are owned directly by
Seaboard Bakeries shall be transferred to CB by transfer
of the Shares).
(v) Buyers shall have received the financing
necessary to consummate the transactions contemplated hereby.
(vi) There shall not have occurred any material
adverse change in the Business caused by fire, explosion, acts of
God or of the public enemy, natural disasters or events of similar
nature occurring after the date hereof.
(vii) All the conditions to the obligations of
HDPR Acquisitions Corp. to consummate the closing contemplated by
the agreement relating to the acquisition of the assets of Harinas
de Puerto Rico, Inc. (the "Harinas Acquisition") shall have been
satisfied or waived by HDPR Acquisitions Corp. and such closing
shall be consummated simultaneously with the Closing hereunder.
(b) Seller's Obligation. The obligation of Seller to
sell and deliver the Assets and the Shares to Buyers is subject to
the satisfaction (or waiver by Seller) as of the Closing of the
following conditions:
(i) The representations and warranties of
Buyers made in this Agreement shall be true and correct in all
material respects as of the date hereof and on and as of the Closing Date as
though made on and as of the Closing Date, and each Buyer shall have performed
or complied in all material respects with all obligations and covenants
required by this Agreement to be performed or complied with by such Buyer by
the time of the Closing; and each Buyer shall have delivered to Seller a
certificate dated the Closing Date and signed by an authorized officer of such
Buyer confirming the foregoing.
(ii) Seller shall have received an opinion
dated the Closing Date of McConnell Vald,s, counsel to Buyers, in
form and substance reasonably satisfactory to Seller.
(iii) The waiting period under the HSR Act shall
have expired or been terminated.
(iv) Each Buyer shall have delivered to Seller
the following documents, certified by the Secretary or any
Assistant Secretary of such Buyer, as appropriate:
(A) copies of the certificate of
incorporation and by-laws of such Buyer and of the
resolution or resolutions of such Buyer authorizing the
transactions contemplated hereby;
(B) a document evidencing the authority
and incumbency of the persons executing documents on
behalf of such Buyer relating to the transactions
contemplated hereby;
(C) the Note;
(D) the Assumption Agreement; and
(E) the documents referred to in Section
2(a)(iv), (v) and (vi).
(v) Seller shall have received a favorable
ruling in relation with its ruling request to the Puerto Rico
Treasury Department dated October 7, 1998.
(vi) All the conditions to the obligations of
Harinas de Puerto Rico, Inc. to consummate the closing contemplated
by the agreement relating to the acquisition of the assets of
Harinas de Puerto Rico, Inc. shall have been satisfied or waived by
Harinas de Puerto Rico, Inc. and such closing shall be consummated
simultaneously with the Closing hereunder.
4. Representations and Warranties of Seller.
Seller hereby represents and warrants to Buyer as
follows:
(a) Authority. Seller and Seaboard Bakeries are duly
organized, validly existing and in good standing under the laws of
the state of Delaware, and are authorized to do business in the
Commonwealth of Puerto Rico. Seller has all requisite power and
authority to enter into this Agreement and to consummate the
transactions contemplated hereby. All corporate acts and other
proceedings required to be taken by Seller to authorize the
execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby have been duly
and properly taken. This Agreement has been duly executed and
delivered by Seller and constitutes a valid and binding obligation
of Seller, enforceable against Seller in accordance with its terms,
except as such enforceability may be limited by bankruptcy,
insolvency, fraudulent conveyance and similar laws relating to the
protection of debtors and by principles of equity. The execution
and delivery of this Agreement does not, and the consummation of the
transactions contemplated hereby and compliance with the terms
hereof will not, conflict with, or result in any violation of or
default (with or without notice or lapse of time, or both) under, or
give right to a right of termination, cancellation or acceleration
of any material obligation or to loss of a material benefit under,
or result in the creation of any lien, claim, encumbrance, security
interest, option, charge or restriction of any kind upon any of the
properties or assets of Seller or Seaboard Bakeries under, any
provision of (i) the corporation law of the State of Delaware, (ii)
the Certificate of Incorporation or By-laws of Seller or Seaboard
Bakeries, (iii) except as disclosed on the Schedules hereto, any
material note, bond, mortgage, indenture, deed of trust, license,
lease, contract, commitment, agreement or arrangement to which
Seller or Seaboard Bakeries is a party or by which any of their
respective properties or assets are bound which was entered into
without the knowledge of Mr. Ramon Calderon by officers or employees
of Seller or Seaboard Bakeries not under the direct or indirect
supervision of Mr. Ramon Calderon, or (iv) any judgment, order or
decree, or statute, law, ordinance, rule or regulation applicable to
Seller or Seaboard Bakeries or the property or assets of Seller or
Seaboard Bakeries and not to Buyer or the property or assets of
Buyer, other than any such conflicts, violations, defaults, rights
or liens, claims, encumbrances, security interests, options, charges
or restrictions that individually or in the aggregate would not have
a material adverse effect on the business, assets, condition
(financial or otherwise) or results of operations the Business. No
consent, approval, license, permit, order or authorization of, or
registration, declaration or filing with, any court, administrative
agency or commission or other governmental authority or
instrumentality, domestic or foreign, or any other person, is
required to be obtained or made by or with respect to Seller or
Seaboard Bakeries or their respective affiliates in connection with
the execution and delivery of this Agreement or the consummation of
the transactions contemplated hereby, other than (A) those set forth
on Schedule 4(a),
(B) compliance with and filings under the HSR Act, if applicable,
and (C) those that may be required solely by reason of Buyers' and
their lenders (as opposed to any other third party's) participation
in the transactions contemplated hereby.
(b) Title to the Assets and the Shares. Seller has good
and valid title to the Assets and the Shares, directly or through
Seaboard Bakeries, free and clear of any liens or encumbrances other
than Permitted Encumbrances. Upon delivery to CB at the Closing in
Shawnee Mission, Kansas, of certificates representing the Shares,
duly endorsed by Seller for transfer to CB, and upon delivery to
HDPR and CB of the documents described in
Section 3(a)(iv)(D) and (E), good and, in the case of real
properties, recordable, title to the Assets and the Shares will pass
to Buyers, free and clear of any liens or encumbrances other than
Permitted Encumbrances.
(c) Capital Stock of Seaboard Bakeries. The authorized
capital stock of Seaboard Bakeries consists of 1,000 shares of
common stock, no par value, of which 100 shares, constituting the
Shares, are duly authorized and validly issued and outstanding,
fully paid and nonassessable. Seller is the registered and bene
ficial holder of the Shares. The Shares have not been issued in
violation of, and none of the Shares is subject to, any preemptive
or similar rights. Except as set forth above, there are no shares
of capital stock or other equity securities of Seaboard Bakeries
outstanding. There are no outstanding warrants, options, agree
ments, convertible or exchangeable securities or other commitments
(other than this Agreement) pursuant to which Seller is or may
become obligated to issue, sell, purchase, return or redeem any
shares of capital stock or other securities of Seaboard Bakeries,
and there are not any equity securities of Seaboard Bakeries
reserved for issuance for any purpose.
5. Covenants of Seller. Seller covenants and agrees as
follows:
(a) Ordinary Conduct of Business by Seller. Except for
actions taken by Mr. Ramon Calderon and officers or employees of
Seller or Seaboard Bakeries under the direct or indirect supervision
of Mr. Ramon Calderon, and except as permitted by the terms of this
Agreement, from the date hereof to the Closing Date, Seller will
conduct the Business in the ordinary course in substantially the
same manner as presently conducted. Except for actions taken by Mr.
Ramon Calderon and officers or employees of Seller or Seaboard
Bakeries under the direct or indirect supervision of Mr. Ramon
Calderon, and except as set forth on Schedule 5(a) or otherwise
expressly permitted by the terms of this Agreement, from the date
hereof to the Closing Date, Seller, will not, and will not permit
Seaboard Bakeries to, do any of the following without the prior
written consent of Buyers, which consent shall not be unreasonably
withheld or delayed:
(i) amend Seaboard Bakeries' Certificate of
Incorporation or By-laws;
(ii) issue any capital stock of Seaboard
Bakeries or any option, warrant or right relating thereto or any securities
convertible into or exchangeable for any shares of such
capital stock;
(iii) adopt or amend in any material respect any
employee benefit plan or collective bargaining agreement in any way
affecting the employees of the Business;
(iv) approve any compensation or other benefit
increases to employees of the Business;
(v) incur or assume any liabilities, obliga
tions or indebtedness for borrowed money or guarantee any such
liabilities, obligations or indebtedness, other than in the ordinary course of
business consistent with past practice; provided that in no event shall the
Seller or Seaboard Bakeries incur,
assume or guarantee any long-term indebtedness for borrowed money
relating to the Business;
(vi) permit, allow or suffer any of the Assets
or Shares to be subjected to any encumbrance other than Permitted
Encumbrances;
(vii) cancel any material indebtedness
(individually or in the aggregate) or waive any claims or rights of
substantial value;
(viii) make or incur any capital expenditure or
expenditures which, individually, is in excess of $10,000;
(ix) make any material change in the conduct or
character of the Business;
(x) make any sale, assignment, transfer or
other conveyance of any of the Assets, except in the ordinary
course of business;
(xi) acquire or agree to acquire any assets
that will form part of the Assets other than in the ordinary course
of business;
(xii) enter into any material transactions other
than in the ordinary course of business;
(xiii) take any action that would cause or permit
the representations and warranties made herein to be inaccurate at
the Closing Date; or
(xiv) agree, whether in writing or otherwise, to
do any of the foregoing.
None of the actions described above may be taken by Mr. Ramon
Calderon or any person under his direct or indirect supervision
without the express approval of Mr. Robert Steer.
(b) Access. Prior to the Closing, Seller will give each
Buyer and its financing sources, and their respective
representatives, employees, counsel and accountants, access, during
normal business hours and upon reasonable notice, to the personnel,
properties, books and records of Holsum Bakers and Seaboard
Bakeries. Seller will arrange for its directors, officers,
employees and independent public accountants and legal counsel to
cooperate with such examination. Each Buyer and its representatives
shall execute such confidentiality agreements as Seller shall
reasonably require.
(c) Insurance. Seller shall keep, or cause to be kept,
all insurance policies relating to the Business, or suitable
replacements therefor, in full force and effect through the close of
business on the Closing Date.
(d) Resignations. On the Closing Date, Seller shall
cause to be delivered to Buyer duly signed resignations, effective
immediately after the Closing Date, of all directors of Seaboard
Bakeries and shall take such other action as is necessary to
accomplish the foregoing.
(e) Insured Claims. (i) Notwithstanding anything to the
contrary set forth herein, Seller will assume full responsibility as
of the Closing Date for all claims relating to events occurring
before Closing which are covered by the insurance policies set forth
on Schedule 5(e) (such claims being herein called "Insured
Claims," and such policies being herein called "Section 5(e)
Policies").
(ii) Buyers shall bear, or shall reimburse Seller
for, such portion of the amounts payable by Seller following the
Closing under the Section 5(e) Policies and any similar prior
policies as are attributable to liabilities which would be Assumed
Liabilities but for this Section, such amount to be determined by
agreement of Buyers and Seller, including retroactive or
retrospective premium adjustments relating thereto.
(iii) With respect to all Insured Claims, Buyers
shall cooperate in all reasonable respects with Seller (and its
affiliates) in the defense thereof. Such cooperation shall include
the retention and (upon Seller's request) the provision to Seller of
records and information which are reasonably relevant to such
Insured Claims, and making employees available on a mutually
convenient basis to testify and provide additional information and
explanation of any materials provided.
(iv) Any disputes with respect to the coverage of any
claim which would constitute an Assumed Liability but for this
Section under any Section 5(e) Policy shall be prosecuted entirely
at Buyers' expense.
(f) Other Transactions. Prior to the Closing, none of
Seller, nor any affiliate of Seller shall, nor shall they permit any
of their respective officers, directors, stockholders or other
representatives to, directly or indirectly, encourage, solicit or
initiate discussions or negotiations with, any corporation,
partnership, person, or other entity or group (other than Buyers and
their representatives) concerning any merger, sale of securities,
sale of assets or similar transaction involving the Business.
(g) Non-Competition. (i) Seller, on its behalf and on
behalf of its affiliates and subsidiaries, agrees that, for a period
of ten (10) years after the Closing Date, Seller and its affiliates
shall not, directly or indirectly, engage in (1) the production,
marketing or sale of bakery products, or (2) the manufacture,
marketing or sale of flour, in each case in Puerto Rico or with
respect to customers in Puerto Rico (the "Restricted Business"), or
acquire any equity securities of, or make any loan to, or enter into
any joint venture or similar agreement with, any person engaged in
the Restricted Business in Puerto Rico or with respect to customers
in Puerto Rico; provided, however, that this clause (i)(2) shall not
prohibit (A) any minority investment in any entity that is not
engaged in the Restricted Business as a material line of business,
(B) any joint venture for which the Restricted Business is not a
material line of business or (C) any investment representing less
than 5% of the ownership in a publicly traded company in the
management of which Seller does not participate. This covenant (the
"Restrictive Covenant") shall cease to have any effect with respect
to the business described in clause (i)(2) above if Mr. Ramon
Calderon, or his lineal descendants, persons who are members of the
management of the Business on the Closing Date, or any person or
entity acquiring an interest in the Business as a result of a
foreclosure or work-out of the acquisition financing shall at any
time cease to own, directly or indirectly, a controlling interest in
the "Business" (as defined in the Asset Purchase Agreement relating
to the acquisition of Harinas de Puerto Rico, Inc.).
(ii) The parties agree that if any
court of competent jurisdiction determines that the Restrictive
Covenant or
any part thereof is invalid or unenforceable, the remainder of the
Restrictive Covenant shall not thereby be affected and shall be given full
effect, without regard to the invalid portions. Furthermore, if any portion of
the Restrictive Covenant, or the application of any portion of the Restrictive
Covenant to any person or circumstances, shall be held invalid or
unenforceable by any court of competent jurisdiction, the remaining portion of
the Restrictive Covenant, or the application of such portion of the
Restrictive Covenant to persons or circumstances other than those as to which
it is held invalid or unenforceable, shall not be affected thereby. In either
of the foregoing cases, the parties agree that they will amend the terms of
the Restrictive Covenant or portion thereof so determined to be invalid or
unenforceable, but only in the most minimal manner necessary to make such
terms comply with the determination of such court.
(iii) If Seller breaches, or threatens to commit
a breach of, the Restrictive Covenant, Buyers shall have the right
to have the Restrictive Covenant specifically enforced by any court
of competent jurisdiction, it being acknowledged and agreed that any
such breach or threatened breach will cause irreparable injury to
Buyers and that money damages will not provide an adequate remedy to
Buyers. Such right of specific performance shall be independent of,
and in addition to, and not in lieu of, any other rights and
remedies available to Buyer at law or in equity.
(h) Supplemental Disclosure. Seller shall have the
continuing obligation until the Closing promptly to supplement or
amend the Schedules hereto with respect to any matter hereafter
arising or discovered which, if existing or known at the date of
this Agreement, would have been required to be set forth or
described in such Schedules; provided, however, that for the purpose
of the rights and obligations of the parties hereunder, any such
supplemental or amended disclosure shall not be deemed to have been
disclosed as of the date of this Agreement unless so agreed in
writing by Buyer.
(i) Tax Ruling. Seller shall use its best efforts to
obtain the ruling referred to in Section 3(b)(v).
6. Representations and Warranties of Buyers.
(a) Each Buyer hereby jointly and severally represents
and warrants to Seller that it is a corporation duly organized,
validly existing and in good standing under the laws of the
Commonwealth of Puerto Rico. Each Buyer has all requisite power and
authority to enter into this Agreement and to consummate the
transactions contemplated hereby. All corporate acts and other
proceedings required to be taken by each Buyer to authorize the
execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby have been duly
and properly taken. This Agreement has been duly executed and
delivered by each Buyer and constitutes a valid and binding
obligation of each Buyer, enforceable against each Buyer in
accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency, fraudulent conveyance and similar
laws relating to the protection of debtors and by principles of
equity. The execution and delivery of this Agreement by each Buyer
does not, and the consummation of the transactions contemplated
hereby and compliance with the terms hereof will not, conflict with,
or result in any violation of or default (with or without notice or
lapse of time, or both) under, or give right to
a right of termination, cancellation or acceleration of any
obligation or to loss of a material benefit under, or result in the
creation of any lien, claim, encumbrance, security interest, option,
charge or restriction of any kind upon any of its properties or
assets under, any provision of (i) the corporation
law of the Commonwealth of Puerto Rico, (ii) its Certificate of
Incorporation or By-laws, (iii) except as disclosed on the Schedules
hereto, any material note, bond, mortgage, indenture, deed of trust,
license, lease, contract, commitment, agreement or arrangement to
which it is a party or by which any of its properties or assets are
bound, or (iv) any judgment, order or decree, or statute, law,
ordinance, rule or regulation applicable to it or its property or
assets and not to Seller or the property or assets of Seller, other
than any such conflicts, violations, defaults, rights or liens,
claims, encumbrances, security interests, options, charges or
restrictions that individually or in the aggregate would not have a
material adverse effect on the business, assets, condition
(financial or otherwise) or results of operations of the Business.
No consent, approval, license, permit, order or authorization of, or
registration, declaration or filing with, any court, administrative
agency or commission or other governmental authority or
instrumentality, domestic or foreign, is required to be obtained or
made by or with respect to Buyers or their respective affiliates in
connection with the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby, other than (A)
those described on Schedule 6, (B) compliance with and filings under
the HSR Act, if applicable, and (C) those that may be required
solely by reason of Seller's (as opposed to any other third party's)
participation in the transactions contemplated hereby.
7. Mutual Covenants.
(a) Consents. Buyers and Seller shall use their
reasonable best efforts to obtain, prior to the Closing, any
consents of third parties and any authorizations or permits from any
governmental authority required in connection with the consummation
of the transactions contemplated herein; provided, however, that (i)
Buyers shall be solely responsible for obtaining any consent
required in connection with the assignment of particular contracts,
licenses, authorizations or permits that require the consent of a
counterparty or government entity as a condition to such assignment
(including the consent of the Puerto Rico government under Seaboard
Bakeries' grant of tax exemption), as well as for obtaining new
governmental permits and authorizations to replace permits and
authorizations that are not assignable, and (ii) the obtaining of
any consent or new governmental permit or authorization referred to
in clause (i) shall not be a condition to Buyers obligations to
consummate the Closing.
(b) Cooperation. Each Buyer and Seller shall cooperate
with each other and shall cause their officers, employees, agents,
auditors and representatives to cooperate with each other after the
Closing to ensure the orderly transition of the Assets from Seller
to Buyers and to minimize any disruption to the respective
businesses of Seller or Buyers that might result from the
transactions contemplated hereby. Each party shall reimburse the
other for reasonable out-of-pocket costs and expenses incurred in
connection with actions taken at the request of the other party
pursuant to this Section 7(b), provided that the party seeking such
reimbursement shall have notified the other prior to incurring any
such expense that it intends to seek reimbursement for such expense.
(c) Publicity. Seller and Buyers agree that, from the
date hereof through the Closing Date, no public release or
announcement, and no disclosure to any third party, concerning the
transactions contemplated hereby shall be made by either party
without the prior consent of the other party, except as such release
or announcement may be required by law or by the
regulations of the American Stock Exchange, in which case the party
required to make the release or announcement shall allow the other
party reasonable time to comment on such release or announcement in
advance of such issuance to the extent possible. Buyers acknowledge
Seller s Press Release of October 20, 1998.
(d) Reasonable Best Efforts. Subject to the terms and
conditions of this Agreement, each party will use its reasonable
best efforts to cause the Closing to occur as soon as possible.
(e) Records. On the Closing Date, Seller shall deliver
or cause to be delivered to the relevant Buyer all original agree
ments, documents, books, records and files (collectively,
"Records"), in the possession of Seller relating to the Business,
except that Seller may retain all Records prepared in connection
with the sale of the Assets and the Shares. Seller shall have
access to and be authorized to make copies of any Records delivered
to the Buyers. Each Buyer shall keep all Records for six years
after the Closing Date or until the expiration of the applicable
statute of limitations for third party claims, if longer.
(f) Seller Trade Payables. Buyers shall repay in full,
within five days after the Closing Date, all trade payables and all
intercompany payables due by Holsum Bakers or Seaboard Bakeries to
Seller or any affiliate of Seller. On the Closing Date, such trade
and intercompany payables shall be secured by the same collateral
securing the Note. Non-payment of these payables shall be deemed
a default under the Note.
(g) Confidentiality. Each party shall take reasonable
appropriate actions to keep confidential, and cause its affiliates
and instruct its and their officers, directors, employees and
advisors to keep confidential, all nonpublic information relating to
the Business, Seller, Seaboard Bakeries and Buyers, except as
required by law or administrative process or the rules of the
American Stock Exchange and except for information which becomes
public other than as a result of a breach of this Section 7(g), and
provided that this covenant shall not restrict the ability of any
person's and its affiliates' respective officers, directors,
advisors and employees to discuss such information internally.
(h) Cooperation with Respect to Litigation. Buyers shall
cooperate with Seller in all respects, at Seller's expense, in the
defense of all claims which constitute Retained Liabilities.
(i) Liquidation of Seaboard Bakeries. Buyers jointly and
severally agree that Seaboard Bakeries will be liquidated into CB,
and its legal existence dissolved, within 30 days after the Closing
Date.
8. Employee Matters.
(a) HDPR shall offer employment, effective as of the
Closing Date, on the same terms and conditions as provided by Seller
as of the Closing Date, including compensation level and benefits,
to each person employed by Seller in the Holsum Business in Puerto
Rico on the Closing Date. Notwithstanding the above, Buyers intend
to change the existing defined benefit plan of Seller and Seaboard
Bakeries to a defined contribution plan, it being understand that
Buyers shall be responsible for any liability or claim resulting
from such action.
(b) The parties shall take all actions required on
their part to cause Buyers to substitute the sponsors of the Plan
effective as of the Closing Date.
9. Further Assurances.
From time to time, as and when requested by either party
hereto, the other party shall execute and deliver, or cause to be
executed and delivered, all such documents and instruments and shall
take, or cause to be taken, all such further or other actions, as
such other party may reasonably deem necessary or desirable to
consummate the transactions contemplated by, or give effect to the
agreements set forth in, this Agreement.
10. Indemnification.
(a) Indemnification by Seller. Seller shall indemnify
each Buyer and its officers, directors, employees and agents and
hold them harmless from any loss, liability, claim, damage or
expense (including reasonable legal fees and expenses) suffered or
incurred by any such indemnified party (other than any relating to
income taxes, for which indemnification provisions are set forth in
Section 11) to the extent arising from (i) any breach of any
representation or warranty of Seller contained in this Agreement,
(ii) any breach of any covenant of Seller contained in this
Agreement requiring performance after the Closing Date, (iii) the
Retained Liabilities and (iv) Insured Claims, but only to the extent
actually covered by the Section 5(e) Policies; provided, however,
that Seller shall not have any liability under clause (i) above
unless the aggregate of all losses, liabilities, costs and expenses
relating thereto for which Seller would, but for this provision, be
liable exceeds on a cumulative basis an amount equal to $350,000,
and then only to the extent of any such excess up to
a maximum aggregate amount equal to $1,500,000; and provided
further, however, that Seller shall not have any liability hereunder
for any breach of a representation or warranty of Seller contained
in this Agreement if Mr. Ramon Calderon or any officer of Seller or
Seaboard Bakeries directly or indirectly supervised by him had
actual or constructive knowledge of such breach on the Closing Date.
(b) Indemnification by Buyer. Each Buyer shall jointly
and severally indemnify Seller, its affiliates and each of its
officers, directors, employees and agents against and hold them
harmless from any loss, liability, claim, damage or expense
(including reasonable legal fees and expenses) suffered or incurred
by any such indemnified party (other than any relating to income
taxes, for which indemnification provisions are set forth in Section
11) to the extent arising from (i) any breach of any representation
or warranty of any Buyer contained in this Agreement, (ii) any
breach of any covenant of any Buyer contained in this Agreement
requiring performance after the Closing Date, and (iii) the Assumed
Liabilities.
(c) Losses Net of Insurance. The amount of any loss,
liability, claim, damage or expense for which indemnification is
provided under this Section 10 shall be net of any amounts recovered
or recoverable by the indemnified party under insurance policies
with respect to such loss, liability, claim, damage or expense and
net of any tax benefit derived by the indemnified party from such
loss, liability, claim, damage or expense.
(d) Termination of Indemnification. The obligations to
indemnify and hold harmless a party hereto, (i) pursuant to Sections
10(a)(i) and 10(b)(i), shall terminate when the applicable
representation or warranty terminates pursuant to Section 15,
(ii) pursuant to Sections 10(a)(ii) and 10(b)(ii), shall terminate
when the applicable covenant terminates in accordance with its
terms, and (iii) pursuant to Sections 10(a)(iii), 10(a)(iv) and
10(b)(iii), shall not terminate; provided, however, that as to
clause (i) above such obligations to indemnify and hold harmless
shall not terminate with respect to any item as to which the person
to be indemnified or the related party hereto shall have, before the
expiration of the applicable period, previously made a claim by
delivering a notice (stating in reasonable detail the basis of such
claim) to the indemnifying party.
(e) Procedures Relating to Indemnification. In order for
a party (the "indemnified party") to be entitled to any
indemnification provided for under this Agreement, arising out of or
involving a claim or demand made by any person, firm, governmental
authority or corporation against the indemnified party (a "Third
Party Claim"), such indemnified party must notify the indemnifying
party in writing, and in reasonable detail, of the Third Party Claim
within 30 days after receipt by such indemnified party of written
notice of the Third Party Claim; provided, however, that failure to
give such notification shall not affect the indemnification provided
hereunder except to the extent the indemnifying party shall have
been actually prejudiced as a result of such failure (except that
the indemnifying party shall not be liable for any expenses incurred
during the period following the end of such 30-day period referred
to above in which the indemnified party failed to give such notice
and the date on which such notice is given). Thereafter, the
indemnified party shall deliver to the indemnifying party, within
ten (10) business days after the indemnified party's receipt
thereof, copies of all notices and documents (including court
papers) received by the indemnified party relating to the Third
Party Claim.
If a Third Party Claim is made against an indemnified
party, the indemnifying party will be entitled to participate in the
defense thereof and, if it so chooses, to assume the defense thereof
(unless the indemnifying party is also a party to such Third Party
Claim and the indemnified party determines in good faith that joint
representation would be inappropriate due to a potential conflict of
interest) with counsel selected by the indemnifying party and
reasonably satisfactory to the indemnified party. Should the
indemnifying party be entitled under the preceding sentence to
assume the defense of a Third Party Claim and so elect to assume
such defense, the indemnifying party will not be liable to the
indemnified party for legal expenses subsequently incurred by the
indemnified party in connection with the defense thereof. If the
indemnifying party assumes such defense, the indemnified party shall
have the right to participate in the defense thereof and to employ
counsel, at its own expense, separate from the counsel employed by
the indemnifying party, it being understood that the indemnifying
party shall control such defense (except in the circumstances set
forth in the parenthetical to the first sentence of this paragraph).
The indemnifying party shall be liable for the fees and expenses of
counsel employed by the indemnified party for any period during
which the indemnifying party has not assumed the defense thereof
(other than during any period following the 30-day period referred
to in the first sentence of this Section 10(e) in which the
indemnified party shall have failed to give notice of the Third
Party Claim as provided above). If the indemnifying party chooses
to defend or prosecute any Third Party Claim, all of the parties
hereto shall cooperate in the defense or prosecution thereof. Such
cooperation shall include the retention and (upon the indemnifying
party's request) the provision to the indemnifying party of records
and information which are reasonably relevant to such Third Party
Claim, and making employees available on a mutually convenient basis
to provide additional information and explanation of any material
provided hereunder. Whether or not the indemnifying party shall
have assumed the defense of a Third Party Claim, the indemnified
party shall not admit any liability with respect to, or settle,
compromise or discharge, such Third Party Claim without the
indemnifying party's prior written consent (which consent shall not
be unreasonably withheld or delayed).
(f) This Section 10 shall not apply to indemnification
for taxes, which shall be governed by Section 11.
11. Tax Matters.
(a) Income Tax Matters Relating to Seaboard Bakeries
(i) Income Tax Liability. Buyers
shall be responsible and shall indemnify Seller for any federal and
Puerto
Rico income tax liabilities (net of any foreign tax credit) of
Seaboard Bakeries relating to the period from August 2, 1998 to the
Closing Date, provided that Buyers shall not be responsible for any
additional federal income tax incurred during such period which is
attributable to: (i) Seaboard Bakeries' revocation of its election
under Section 936 of the United States Internal Revenue Code (the
"Section 936 revocation"), or (ii) its election under
Section 338(h)(10) of the United States Internal Revenue Code (the
"Section 338(h)(10) election"). Buyers shall agree, at the request
of Seller, to the Section 338(h)(10) election and the Section 936
revocation. Seller shall be responsible and shall indemnify Buyers
for any federal and Puerto Rico income tax liabilities of Seaboard
Bakeries for any period prior to August 2, 1998 (net of any
estimated payments or overpayments refundable to Seller), and for
any federal income tax attributable to: (i) the Section 936
revocation, or (ii) its Section 338(h)(10) election. The income
taxes for the period that includes August 2, 1998 shall be allocated
among the parties based on Seaboard Bakeries' monthly financial
statements as of, and for the year to date period ended on, August
1, 1998, provided that reconciling items between book net income and
net taxable income shall be attributed to the period to which they
are directly allocable and those items not attributable to any
period shall be apportioned based on the net taxable income before
such reconciling items. The marginal income tax rate for both
periods (on and before August 1 and on and after August 2, 1998)
shall be the same.
(ii) United States Income Tax
Liability and Filings. The taxable period of Seaboard Bakeries
that includes the Closing Date shall be reported to the United
States by the Seller. Seller will timely prepare and file with the
appropriate
authorities (after approval by Buyer, which approval shall not be
unreasonably withheld or delayed) all United States income tax
returns, reports and forms required to be filed and will pay all
income taxes due with respect to such returns, reports and forms.
Buyer shall, within thirty (30) days of the later of the filing of
such return or notification by Seller of the amounts owed, pay to
Seller any amounts that are owed in accordance with the allocation
methodology set forth above. Conversely, if amounts are owed to
Buyer, they shall be paid within thirty (30) days of the filing of
such return. For tax periods commencing after the Closing Date,
Buyer shall be responsible for preparing and filing all returns,
reports and forms and for any liability associated with those
filings.
(iii) Puerto Rico Income Tax Liability
and Filings. The taxable period of Seaboard Bakeries that includes
the Closing
Date shall be reported to the Puerto Rico tax authorities by the
Buyer. Buyer will timely prepare and file with the appropriate
authorities (after approval by Seller, which approval shall not be
unreasonably withheld or delayed) all Puerto Rico income tax
returns, reports and forms required to be filed and will pay all
income taxes due with respect to such returns, reports and forms.
Seller shall, within thirty (30) days of the later of the filing of such
return or notification by Buyer of the amounts owed, pay to Seller any
amounts owed in accordance with the allocation methodology set forth
above. Conversely, if amounts are owed to Seller, they shall be paid
within thirty (30) days of the filing of such return.
(iv) Tax Audits and Amended Returns. Any
liability or refund resulting from a tax audit, revenue agent
review or similar proceeding of either taxing jurisdiction shall be
borne or shared by Seller and Buyer in accordance with the
allocation methodology set forth above and paid over to the
appropriate party within thirty (30) days of the finalization of
such proceeding. Seller shall give notice to Buyer of any United
States audits and allow Buyer to participate in the process. Seller
shall not agree to any audit adjustments which would increase Buyer
s income or other tax liability without Buyer s consent, which
consent shall not be unreasonably withheld or delayed. Buyer shall
give notice to Seller of any Puerto Rico audits and allow Seller to
participate in the process. Buyer shall not agree to any audit
adjustments which would increase Seller s income or other tax
liability without Seller s consent, which consent shall not be
unreasonably withheld or delayed. Buyer shall, if Seller so
requests and at Seller s expense, file for and obtain any refunds or
credits to which Seller is entitled under this Section. Buyer shall
permit Seller to control the prosecution of any such refund claim
and, where deemed appropriate by Seller, authorize by appropriate
powers of attorney such persons as Seller shall designate to
represent the Seller or Seaboard Bakeries with respect to such
refund claim. Buyer shall forward to Seller any refund within
thirty (30) days after the refund is received (or reimburse Seller
for any such credit within thirty (30) days after the credit is
allowed and applied against other income tax liability), provided,
however, that such amounts payable to Seller shall be net of any
reasonable expense incurred by Buyer attributable to the receipt of
such refund and/or the payment of such amount to Seller. Seller and
Buyer shall treat any payments under the preceding sentence that
Seller shall receive pursuant to this Section as an adjustment to
the Purchase Price.
(b) Income Tax Matters relating to Holsum Bakers
(i) Income Tax Liability. Buyer
shall be responsible and shall indemnify Seller for any Puerto Rican
income
tax liabilities of Holsum Bakers related to the period from
August 2, 1998 to the Closing Date (net of any estimated payments
made after August 2, 1998 or overpayments attributable to such
payments), but excluding any gains resulting from the sale of the
Holsum Assets and the Shares. Seller shall be responsible and shall
indemnify Buyers for any Puerto Rican income tax liabilities of
Holsum Bakers for any period prior to August 2, 1998 (net of any
estimated payments or overpayments attributable to such payments and
refundable to Seller) and for any tax attributable to any gains
resulting from the sale of the Holsum Assets and the Shares. The
amount of such Puerto Rican income tax liabilities for the taxable
period including the period from January 1, 1998 to the Closing Date
will be allocated among the parties as provided in
Section 11(a) above. The Buyer's income tax liability for the
period that includes August 2, 1998 shall be determined assuming a
marginal tax rate of 39%. In addition, the interest paid by Buyer
to Seller as an increase to the Purchase Price pursuant to
Section 2(b)(iii) shall be treated as interest expense to Buyer and
as interest income to Seller for purposes of calculating the income
tax liability. The apportioning of income tax liabilities as
provided above shall not have any bearing on the Seller's ability to
claim on its U.S. income tax return a foreign tax credit for the
Puerto Rican taxes paid.
(ii) Tax Returns. Seller shall be responsible
for filing the Puerto Rican income tax returns of Holsum Bakers for the
period from January 1, 1998 to the Closing Date. On the Closing Date,
Seller and Buyer shall agree on an estimated amount of income taxes to be
paid by Buyer pursuant to Section 11(b)(i), which amount shall be paid by
Buyer to Seller ten (10) business days after the later of (A) the date
notice requesting payment is given to Buyer by Seller and (B) the date when
the tax is due. Such amount shall be collateralized by the same collateral
securing the Note. If, based on the tax return to be filed, the amount of
income taxes attributable to the Buyer is more or less than the
aforementioned estimated amount, then the excess or the shortage shall be
paid to the Buyer or Seller, as the case may be, on or before thirty (30)
days after the income tax return is filed.
(iii) The aforementioned apportionment of the
Puerto Rican income tax liability shall be made irrespective of
Seller's ability to take as a credit any Puerto Rican income tax
paid.
(iv) Any adjustments to the income tax liability
based on audit shall be borne in accordance with the apportionment
set forth herein within thirty (30) days after the final audit
determination.
(c) General Tax Matters. Seller and Buyers shall
reasonably cooperate, and shall cause their respective affiliates,
officers, employees, agents, auditors and representatives reasonably
to cooperate, in preparing and filing all returns, reports and forms
relating to income taxes, including maintaining and making available
to each other all records necessary in connection with income taxes
and in resolving all disputes and audits with respect to all taxable
periods relating to income taxes. Buyers and Seller recognize that
Seller and its affiliates will need access, from time to time, after
the Closing Date, to certain accounting and tax records and
information of Holsum Bakers and Seaboard Bakeries, and therefore,
each party agrees (1) to use its best efforts to properly retain and
maintain such records until such time as the other party agrees that
such retention and maintenance is no longer necessary; and (2) to
allow the other party and its agents and representative (and agents
or representatives of any of its affiliates), at times and dates
mutually acceptable to the parties, to inspect, review and make
copies of such records as the other party may deem necessary or
appropriate from time to time, such activities to be conducted
during normal business hours and at the other party's expense.
12. Assignment.
This Agreement and the rights and obligations hereunder
shall not be assignable or transferable by any Buyer or Seller
(including by operation of law) without the prior written consent of
the other parties hereto; provided, however, that (i) any Buyer may
assign its right hereunder to a subsidiary or affiliate of such
Buyer which is controlled by Mr. Ramon Calderon without the prior
written consent of Seller and (ii) Seller may assign its rights and
obligations hereunder to any entity wholly owned by Seller; provided
further, however, that no assignment shall limit or affect the
assignor's obligations hereunder.
13. No Third-Party Beneficiaries.
This Agreement is for the sole benefit of the parties
hereto and their permitted assigns and nothing herein expressed or
implied shall give or be construed to give to any person or entity,
other than the parties hereto and such assigns, any legal or
equitable rights hereunder.
14. Termination.
(a) Anything contained herein to the contrary notwith
standing, this Agreement may be terminated and the transactions
contemplated hereby abandoned at any time prior to the Closing Date:
(i) by mutual written consent of Seller and
Buyers;
(ii) by either party hereto, if the Closing does
not occur on or prior to December 31, 1998;
(iii) by Seller, if on or prior to December 4,
1998, Buyers shall not have executed a credit agreement providing
for sufficient financing to consummate the transactions
contemplated herein and containing terms that, to the extent affecting the
rights of Seller or the ability of Buyers to consummate the transactions
contemplated herein, shall be reasonably satisfactory to Seller; or
(iv) by Seller, as provided in Section 1(g), in
the event that Seller and Buyers shall not reach an agreement with
respect to any adverse economic effect arising from any change in
any applicable law or regulation adopted prior to the Closing Date
and requiring any tax withholding with respect to payment of the
Purchase Price;
provided, however, that the party seeking termination pursuant to
clause (ii) or (iii) is not in breach of any of its representations,
warranties, covenants or agreements contained in this Agreement.
Seller shall not be deemed to be in breach of any of its
representations, warranties, covenants or agreements contained in
this Agreement as a result of any act or any failure to take any
required action by Mr. Ramon Calderon and/or officers or employees
of Seller or Seaboard Bakeries under the direct or indirect
supervision of Mr. Ramon Calderon.
(b) In the event of termination by Seller or Buyers
pursuant to this Section 14, written notice thereof shall forthwith
be given to the other party and the transactions contemplated by
this Agreement shall be terminated, without further action by either
party. If the transactions contemplated by this Agreement are
terminated as provided herein:
(i) Buyers shall return all documents and other
material received from Seller relating to the transactions
contemplated hereby, whether so obtained before or after the
execution hereof, to Seller;
(ii) if such termination is pursuant to Sec-
tion 14(a)(ii) under such circumstances that all the conditions to
Closing set forth in Section 3(a) shall have been satisfied or would
have been satisfied but for any action taken or omitted to be taken by
Buyer or any of its affiliates, then such termination shall not result
in any liability to Seller; and
(iii) if such termination is pursuant to
Section 14(a)(ii) under such circumstances that all the conditions
to Closing set forth in Section 3(b) shall have been satisfied or
would have been satisfied but for any action taken or omitted to be
taken by Seller or any of its affiliates, then such termination
shall not result in any liability to Buyer.
(c) If this Agreement is terminated and the transactions
contemplated hereby are abandoned as described in this Section 14,
this Agreement shall become void and of no further force and effect,
except for the provisions of (i) Section 16 hereof relating to
expenses, (ii) Section 7(c) hereof relating to publicity,
(iii) Section 22 hereof relating to finder's fees and broker's fees,
(iv) this Section 14 and (v) Section 7(g) relating to
confidentiality. Nothing in this Section 14 shall be deemed to
release either party from any liability for any breach by such party
of the terms and provisions of this Agreement or to impair the right
of either party to compel specific performance by the other party of
its obligations under this Agreement or to claim damages from the
other party for breach of this Agreement; provided, however, that a
termination of this Agreement based solely on the breach of a
representation, which breach is not intentional and does not involve
fraud or bad faith, shall only entitle the non-breaching party to
recover its out-of-pocket expenses incurred in connection with this
transaction, and not any consequential or other damages.
15. Survival of Representations.
The representations and warranties in this Agreement shall
survive the Closing for a period of one year commencing on the
Closing Date. The representations and warranties in the Note, the
collateral documents securing the Note and the Guaranty shall
survive until the Note is paid in full. The obligations of each
party hereto under the covenants that are required to be performed
after the Closing pursuant to this Agreement and the Assumption
Agreement and the obligations of Mr. Ramon Calderon and Buyers under
the Note, the collateral documents securing the Note and the
Guaranty shall survive until such obligations have been fully
performed.
16. Expenses.
Whether or not the transactions contemplated hereby are
consummated, all costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by
the party incurring such costs or expenses. The relevant Buyer
shall be responsible for the payment of the expenses related to the
preparation and execution of the real property deeds necessary for
the transfer of the Real Property (except for the internal revenue
stamps to be affixed to the original of the real property deeds,
which shall be paid by Seller), and for the payment of the internal
revenue stamps required in the first certified copy of such deeds
and the internal revenue vouchers required for the recordation of
such deeds in the Registry of Property of Puerto Rico. The relevant
Buyer shall also be responsible for the expenses related to the
execution and recordation of any mortgages and security interests
provided herein. If the transactions contemplated hereby are not
consummated within the agreed period, Buyers and Ramon Calderon
shall reimburse Seller for any expenses of Buyers paid for by Seller
or Seaboard Bakeries related to the transaction within ten (10) days
after the termination of this Agreement.
17. Amendments.
No amendment to this Agreement shall be effective unless
it shall be in writing and signed by all parties hereto.
18. Notices.
All notices or other communications required or permitted
to be given hereunder shall be in writing and shall be delivered by
hand or sent by prepaid telex, cable or telecopy, or sent, postage
prepaid, by registered, certified or express mail, or reputable
overnight courier service and shall be deemed given when so
delivered by hand, telexed, cabled or telecopied, or if mailed,
three days after mailing (one business day in the case of express
mail or overnight courier service), as follows:
(a) if to any Buyer,
Mr. Ramon Calderon
Holsum Bakers of Puerto Rico
Call Box 8282
Toa Baja, P.R. 00951
Telecopier: (787) 251-2060
with copies to:
McConnell Valdes
270 Munoz Rivera Avenue
Hato Rey, Puerto Rico 00918
Telecopier: (787) 759-8282
Attention: Julio Pietrantoni, Esq.
(b) if to Seller,
Seaboard Corporation
9000 West 67th Street
PO Box 2972
Shawnee Mission, Kansas 66201
Telecopier: (913) 676-8978
Attention: David M. Becker, Esq.
Department of Legal Affairs
with copies to:
Sullivan & Worcester LLP
One Post Office Square
Boston, MA 02108
Telecopier: (617) 338-2880
Attention: Marshall L. Tutun, Esq.
and
Fiddler Gonzalez & Rodriguez, LLP
254 Munoz Rivera Avenue
Hato Rey, Puerto Rico 00918
Telecopier: (787) 754-7539
Attention: Rafael Cortes Dapena, Esq.
19. Interpretation.
The headings contained in this Agreement, in any Exhibit
or Schedule hereto and in the table of contents to this Agreement,
are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
20. Counterparts.
This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same
agreement, and shall become effective when one or more such
counterparts have been signed by each of the parties and delivered
to the other party.
21. Entire Agreement.
This Agreement, including the Schedules and Exhibits
hereto, contains the entire agreement and understanding between the
parties hereto with respect to the subject matter hereof and super
sedes all prior agreements and understandings relating to such
subject matter.
22. Fees.
Each party hereto hereby represents and warrants that no
brokers or finders have acted for such party in connection with this
Agreement or the transactions contemplated hereby, and agrees to
indemnify the other for any such fees.
23. Severability.
If any provision of this Agreement or the application of
any such provision to any person or circumstance shall be held
invalid, illegal or unenforceable in any respect by a court of
competent jurisdiction, such invalidity, illegality or
unenforceability shall not affect any other provision hereof.
24. Governing Law; Consent to Jurisdiction.
This Agreement shall be governed by and construed in
accordance with the laws of New York, without regard to the
conflicts of law principles thereof, except as to matters relating
to real estate, in which case Puerto Rico law shall apply. Each
party hereto consents to the jurisdiction of the courts of New York
and of the federal courts in New York in connection with any claim
arising hereunder, and waives and expressly agrees not to raise any
claim that it is not personally subject to the jurisdiction of such
court, that the venue of the suit is improper, that this agreement
may not be litigated in such court, and expressly agrees not to
raise forum non conveniens in any such proceeding. With respect to
any action brought by any Buyer against Seller pursuant to
Section 10(a)(i) or (ii), Buyers agree to bring such action in a New
York court so long as such New York court shall have jurisdiction
(including as a result of the consent to jurisdiction contained
herein) over the parties and the subject matter of the action.
Other actions brought by any Buyer and actions brought by Seller may
also be brought in any appropriate forum. Each of the parties
agrees that service of process may be made upon it by certified or
registered mail to the address for notices set forth in this
agreement or as otherwise provided by law.
25. Waiver of Trial by Jury.
Seller and Buyers expressly waive all right to trial by
jury in any action, proceeding or counter claim related to this
Agreement. The parties acknowledge that the provisions of this
paragraph have been bargained for and that they have been
represented by counsel in connection therewith.
26. Schedules. Matters disclosed in any Schedule hereto
shall be deemed to have been disclosed in all Schedules hereto. All
Schedules shall be integral part of this Agreement.
- 52 -
27. Execution by Mr. Ramon Calderon.
Mr. Ramon Calderon is executing this agreement solely for
purposes of confirming his agreement set forth in Sections 5(a) and
16.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed as of the date first written above.
SEABOARD CORPORATION HDPR ACQUISITIONS CORP.
By: /s/ Robert Steer By: /s/ Ramon Calderon
Name: Robert Steer Name: Ramon Calderon
Title: Vice President- Title: President
Chief Financial Officer
CB ACQUISITIONS CORP.
By: /s/ Ramon Calderon By: /s/ Stanley N. Woodworth
Ramon Calderon Name: Stanley N. Woodworth
Title: Attorney in Fact
The following exhibits and schedules have been excluded from
this filing, registrant agrees to furnish supplementally a
copy of any omitted schedule to the SEC upon request:
Exhibit A-Form of Promissory Note
Exhibit B-Form of Guaranty
Schedule 1(b) (i)-Real Property
Schedule 1(b) (ii)-Machinery & Equipment
Schedule 1(b) (iii)-Contracts
Schedule 1(b) (viii)-Trademarks
Schedule 1(b) (xi)-Baking Division Consolidated Balance
Sheet
Schedule 1(h) (i)-Claims, Product Liability and Accident
Complaints
Schedule 3(a) (iv) (D)-Title Studies
Schedule 4(a)-Consents to Transaction (Seller)
Schedule 5(a)-Seaboard Bakeries Ordinary Course of Business
Exceptions
Schedule 5(e)-Holsum Bakers and Harinas De Puerto Rico
insurance policies
Schedule 6-Consents to transaction (buyer)