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Exhibit 10.4
EXECUTION COPY
DEBT AGREEMENT
This DEBT AGREEMENT, dated as of December 1, 1997, (this "Agreement"), by
and between CPC International Inc., a Delaware corporation ("CPC"), and Corn
Products International, Inc., a Delaware corporation ("Corn Products").
WHEREAS, as contemplated in the Distribution Agreement, the parties have
entered into this Agreement regarding the indebtedness to be borne by Corn
Products and the Corn Products Consolidated Subsidiaries; and
WHEREAS, CPC intends to reduce the indebtedness of CPC and the CPC
Consolidated Subsidiaries by the proceeds of New Debt, and any proceeds of New
Assumed Debt, mutually agreed to be incurred or assumed by Corn Products and
the Corn Products Consolidated Subsidiaries;
NOW, THEREFORE, in consideration of the mutual agreements, provisions and
covenants contained in this Agreement and the Distribution Agreement, the
parties hereto agree as follows:
SECTION 1. Certain Definitions. All capitalized terms not otherwise
defined shall have the meanings set forth below (such meanings to be equally
applicable to both the singular and the plural forms of the terms defined).
Any reference by name to any entity owned directly or indirectly by CPC shall
be deemed to include any successor entity thereto.
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"Agreement" shall have the meaning ascribed thereto in the preamble.
"Brazilian Distribution" shall mean the distribution by Refinacoes de
Milho, Brasil Ltda. (a wholly owned subsidiary of CPC organized and operating
under the laws of Brazil) to CPC of all of the outstanding equity of Brazilian
Newco.
"Brazilian Newco" shall mean the Brazilian entity engaged solely in the
corn refining business which will result from the transfer of all of the assets
and liabilities of the corn refining business of Refinacoes de Milho, Brasil
Ltda. to said Brazilian entity.
"Canadian Distribution" shall mean the distribution by Canada Starch
Operating Company, Inc. (a wholly owned subsidiary of CPC organized and
operating under the laws of Canada) to CPC of all of the outstanding stock of
Canadian Newco.
"Canadian Newco" shall mean the Canadian entity engaged solely in the corn
refining business which will result from the transfer of all of the assets and
liabilities of the corn refining business of Canada Starch Operating Company,
Inc. to said Canadian entity.
"Chilean Distribution" shall mean the distribution by Industrias de Maiz y
Alimentos S.A. (a wholly owned subsidiary of CPC organized and operating under
the laws of Chile) to CPC of all of the outstanding stock of Chilean Newco.
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"Chilean Newco" shall mean the Chilean entity engaged solely in the corn
refining business which will result from the transfer of all of the assets and
liabilities of the corn refining business of Industrias de Maiz y Alimentos
S.A. to said Chilean entity.
"Corn Products" shall have the meaning ascribed thereto in the preamble.
"Corn Products Consolidated Existing Debt" shall have the meaning ascribed
thereto in Section 2(a).
"Corn Products Consolidated New Debt Amount" shall have the meaning
ascribed thereto in Section 2(a).
"Corn Products Consolidated Subsidiaries" shall mean all entities,
wherever organized, that, in accordance with GAAP, are included in the
consolidated financial statements of Corn Products as of the Distribution Time.
"Corn Products Tax Balance Sheet" shall mean the Final Corn Products
Balance Sheet, as adjusted to reflect United States federal income tax
differences determined by CPC in accordance with past practices consistently
applied (which such determination shall be final and binding upon the parties).
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"Corn Products Total Consolidated Debt Amount" shall have the meaning
ascribed thereto in Section 2(a).
"CPC" shall have the meaning ascribed thereto in the preamble.
"CPC Adjustment Date" shall have the meaning ascribed thereto in Section
4(a).
"CPC Base Amount" shall mean the aggregate amount of CPC's unrecovered
investment for United States federal income tax purposes in all of the assets
(including the stock of domestic and foreign corporations), net of liabilities
(including liabilities to which said assets are subject, but excluding
contingent and unknown liabilities), contributed by CPC directly to Corn
Products in contemplation of the Distribution and reflected on the Corn
Products Tax Balance Sheet, which amount shall be determined by CPC, in
accordance with past practices consistently applied (which such determination
shall be final and binding upon the parties), as of the date of the
contribution of each such asset to Corn Products.
"CPC Consolidated Subsidiaries" shall mean all entities, wherever
organized, that, in accordance with GAAP, are included in the consolidated
financial statements of CPC as of the Distribution Time.
"CPC Foreign Distributing Company" shall mean each of (i) Canada Starch
Operating Company, Inc., (ii) Refinacoes de Milho, Brasil Ltda. and (iii)
Industrias de Maiz y Alimentos S.A.
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"CPC Foreign Distributing Company Base Amount" shall mean the aggregate
amount of the unrecovered investment for United States federal income tax
purposes of (i) Canada Starch Operating Company, Inc. in all of the assets, net
of all liabilities (including liabilities to which said assets are
subject, but excluding contingent and unknown liabilities) other than New
Assumed Debt, transferred to Canadian Newco in contemplation of the Canadian
Distribution, (ii) Refinacoes de Milho, Brasil Ltda. in all of the assets, net
of all liabilities (including liabilities to which said assets are subject, but
excluding contingent and unknown liabilities) other than New Assumed Debt,
transferred to Brazilian Newco in contemplation of the Brazilian Distribution,
and (iii) Industrias de Maiz y Alimentos S.A. in all of the assets, net of all
liabilities (including liabilities to which said assets are subject, but
excluding contingent and unknown liabilities) other than New Assumed Debt,
transferred to Chilean Newco in contemplation of the Chilean Distribution,
determined in each case by CPC, in accordance with past practices consistently
applied (which such determination shall be final and binding upon the parties),
as of the date of each of the respective contributions, and reflected on the
respective Foreign Newco Tax Balance Sheet.
"Distribution" shall have the meaning ascribed thereto in the
Distribution Agreement.
"Distribution Agreement" shall mean that certain Distribution Agreement
dated as of December 1, 1997, by and between CPC and Corn Products, and to
which this Agreement is an Ancillary Agreement (as defined in the Distribution
Agreement).
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"Distribution Time" shall mean the close of business on the Distribution
Date, immediately after the Distribution. For this purpose, "Distribution
Date" shall mean such date as may be determined by the board of directors of
CPC as the date on which the Distribution shall occur.
"Final Corn Products Balance Sheet" shall have the meaning ascribed
thereto in Section 4(a).
"Final Foreign Newco Balance Sheet" shall have the meaning ascribed
thereto in Section 4(b).
"Foreign Adjustment Date" shall have the meaning ascribed thereto in
section 4(b).
"Foreign Distribution" shall mean each of the Brazilian Distribution, the
Canadian Distribution and the Chilean Distribution.
"Foreign Distribution Time" shall mean with respect to each Foreign
Distribution, the close of business on the Foreign Distribution Date,
immediately after the Foreign Distribution. For this purpose, "Foreign
Distribution Date" shall mean with respect to each Foreign Distribution, such
date as may be determined by the board of directors (or equivalent governing
body) of the respective CPC Foreign Distributing Company as the date on which
such Foreign Distribution shall occur.
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"Foreign Newco" shall mean each of Brazilian Newco, Canadian Newco and
Chilean Newco.
"Foreign Newco Tax Balance Sheet" shall mean the respective Final Foreign
Newco Balance Sheet, as adjusted for United States federal income tax
differences determined by CPC in accordance with past practices consistently
applied (which such determination shall be final and binding upon the parties).
"GAAP" means United States generally accepted accounting principles and
practices, as in effect on the date of this Agreement, as promulgated by the
Financial Accounting Standards Board and its predecessors.
"Indebtedness" shall mean all interest bearing debt for money borrowed
whether or not evidenced by securities, without regard to whether such debt is
accounted for as a current or long-term liability on the balance sheet of the
borrower, except that Indebtedness shall not include (i) any debt to CPC, any
CPC Consolidated Subsidiary, Corn Products or any Corn Products Consolidated
Subsidiary, (ii) any trade or non-trade accounts payable or similar liabilities
or (iii) any leases (whether accounted for as a capital lease or an operating
lease).
"New Assumed Debt" shall mean Indebtedness incurred by CPC or a CPC
Consolidated Subsidiary, with respect to which the lender agrees that (i) such
Indebtedness will be transferred
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to Corn Products or a Corn Products Consolidated Subsidiary on or prior to
the Distribution Date, (ii) such Indebtedness will, upon such transfer, become
the liability of Corn Products or a Corn Products Consolidated Subsidiary, and
(iii) CPC and the CPC Consolidated Subsidiaries will be discharged from any
liability related thereto. All Indebtedness of a CPC Foreign Distributing
Company that is to be transferred to a Foreign Newco as part of a Foreign
Distribution shall also be regarded as New Assumed Debt.
"New Debt" shall mean Indebtedness, other than Corn Products Consolidated
Existing Debt or New Assumed Debt, for money borrowed from banks, financial
institutions or other similar lenders, but shall not include any debt to CPC,
any CPC Consolidated Subsidiary, Corn Products or any Corn Products
Consolidated Subsidiary.
"Notice" shall have the meaning ascribed thereto in Section 6(h).
"Section" shall mean a section of this Agreement.
SECTION 2. Debt Undertaking.
(a) Corn Products Total Consolidated Debt. The parties agree that at the
Distribution Time, (i) the Corn Products Total Consolidated Debt Amount shall
be an amount equal to $350 million, and (ii) the Corn Products Consolidated New
Debt Amount shall be the excess of the Corn Products Total Consolidated Debt
Amount over the Corn Products Consolidated Existing
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Debt. For purposes hereof, the Corn Products Consolidated Existing Debt
shall be the total amount of Indebtedness, as of September 30, 1997 (or such
other date as the parties may mutually agree), of all Corn Products
Consolidated Subsidiaries. The amount of Corn Products Consolidated Existing
Debt held by each of the relevant Corn Products Consolidated Subsidiaries is
set forth in the Schedule A.
(b) Corn Products Consolidated New Debt Amount. After September 30, 1997
(or such other date as the parties may mutually agree), but not later than
December 31, 1997, (i) Corn Products shall incur New Debt and pay the proceeds
of such New Debt to CPC; and (ii) each Corn Products Consolidated Subsidiary
designated by Corn Products and agreed to by CPC shall assume New Assumed Debt
from CPC or a CPC Consolidated Subsidiary. The total of said New Debt to be
incurred by CPC and New Assumed Debt to be assumed by Corn Products
Consolidated Subsidiaries shall be equal to the Corn Products Consolidated New
Debt Amount. The allocation of the Corn Products Consolidated New Debt Amount
among Corn Products and each of the Corn Products Consolidated Subsidiaries
designated by Corn Products and agreed to by CPC, for the purpose of
determining the amount of New Debt or New Assumed Debt to be incurred or
assumed by each, shall be as set forth in Schedule A. Such allocation shall
take into account the agreements set forth in Sections 2(c) and 2(d). The
parties may agree that, in lieu of incurring New Debt, Corn Products will
assume New Assumed Debt in respect of all or any portion of the amount of the
Corn Products Consolidated New Debt Amount allocable to Corn Products. All
proceeds of New Debt, and the proceeds, if any, of all New Assumed Debt
referred
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to herein shall be used exclusively to retire Indebtedness of CPC and
the CPC Consolidated Subsidiaries.
(c) Corn Products Debt. The parties agree that the portion of the Corn
Products Consolidated New Debt Amount to be allocated to Corn Products shall
not exceed the CPC Base Amount.
(d) Foreign Newco Debt. The parties agree that the portion of the Corn
Products Consolidated New Debt Amount to be allocated to any Foreign Newco
shall not exceed the CPC Foreign Distributing Company Base Amount.
SECTION 3. Preliminary Balance Sheets. [Intentionally left blank.]
SECTION 4. Final Balance Sheets.
(a) As soon as practicable after the Distribution Time, but in any event
within sixty (60) days following the Distribution Time (the "CPC Adjustment
Date"), CPC shall deliver to Corn Products (i) a book balance sheet prepared by
CPC in cooperation with Corn Products reflecting the final determination of the
assets, liabilities and net equity as of the Distribution Time of Corn Products
on a stand-alone basis (the "Final Corn Products Balance Sheet") and (ii) the
Corn Products Tax Balance Sheet, computed from the Final Corn Products Balance
Sheet.
(b) As soon as practicable after each Foreign Distribution Time, but in
any event within sixty (60) days following the respective Foreign Distribution
Time (each, a "Foreign Adjustment Date"), CPC shall deliver to Corn Products
(i) book balance sheets prepared by CPC in
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cooperation with Corn Products reflecting the final determination of the
assets, liabilities and net equity as of the respective Foreign Distribution
Time of each Foreign Newco ("Final Foreign Newco Balance Sheets") and (ii) the
corresponding final Foreign Newco Tax Balance Sheets, computed from the Final
Foreign Newco Balance Sheets.
(c) Each of the book balance sheets described in Sections 4(a) and 4(b)
are or shall be prepared in accordance with GAAP applied in a manner consistent
with CPC's past practices.
SECTION 5. Adjustments.
(a) If the portion of the Corn Products Consolidated New Debt Amount
allocated directly to Corn Products exceeds the CPC Base Amount indicated by
the Corn Products Tax Balance Sheet computed from the Final Corn Products
Balance Sheet, CPC shall pay to Corn Products an amount of cash equal to such
excess. In such an event, Corn Products will cause a Corn Products
Consolidated Subsidiary to (i) assume New Assumed Debt in the amount of such
excess, or if agreed to by the parties, (ii) incur New Debt in the amount of
such excess and pay to CPC or the relevant CPC Foreign Distributing Company the
proceeds of such New Debt.
(b) If the portion of the Corn Products Consolidated New Debt Amount
allocated to any Foreign Newco exceeds the corresponding CPC Foreign
Distributing Company Base Amount indicated by the Foreign Newco Tax Balance
Sheet computed from the respective Final Foreign Newco Balance Sheet, the
respective CPC Foreign Distributing Company shall pay to the
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applicable Foreign Newco an amount of cash equal to such excess. In such
an event, Corn Products will, or will cause a Corn Products Consolidated
Subsidiary to, (i) assume New Assumed Debt in the amount of such excess or, if
agreed to by the parties, (ii) incur New Debt in the amount of such excess and
pay to CPC or the relevant CPC Foreign Distributing Company the proceeds of
such New Debt.
SECTION 6. Miscellaneous Provisions.
(a) Termination. This Agreement may not be terminated except by an
agreement in writing signed by all of the parties hereto.
(b) Further Actions. If at any time after the Distribution Time any
further action is necessary or desirable to carry out the purposes of this
Agreement, either of the parties shall, on the written request of the other,
take all such reasonably necessary or desirable action.
(c) Cooperation. The parties hereto agree to use their reasonable best
efforts to cooperate with respect to the various matters contemplated by this
Agreement.
(d) Successors and Assigns. Except as otherwise expressly provided
herein, no party hereto may assign or delegate, whether by operation of law or
otherwise, any of such party's rights or obligations under or in connection
with this Agreement without the written consent of the other party hereto, and
any attempt to so assign or delegate any of said rights or obligations without
such consent shall be void. Except as otherwise expressly provided herein,
all
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covenants and agreements contained in this Agreement by or on behalf of any
of the parties hereto will be binding upon and enforceable against the
respective successors and assigns of such party and will be enforceable by and
will inure to the benefit of the respective successors and permitted assigns of
such party.
(e) Modification; Waiver; Severability. This Agreement may be amended,
supplemented or waived only by a subsequent writing signed by all of the
parties hereto. The failure of any party hereto to require strict performance
by any other party of any provision of this Agreement will not waive or
diminish that party's right to demand strict performance thereafter of that or
any other provision hereof. If any provision of this Agreement or the
application thereof is determined by a court of competent jurisdiction to be
invalid, void or unenforceable, the remaining provisions hereof, or the
application of such provision in circumstances other than those as to which it
has been held invalid or unenforceable, shall remain in full force and effect
and in no way be affected, impaired or invalidated thereby, so long as the
economic or legal substance of the transaction contemplated hereby is not
affected in any manner adverse to any party.
(f) Counterparts. This Agreement may be executed with counterpart
signature pages or in one or more counterparts, all of which shall be one and
the same Agreement, and shall become effective when one or more counterparts
have been signed by each of the parties and delivered to all the parties
hereto.
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(g) Descriptive Headings. The descriptive headings of the Agreement are
inserted for the convenience of reference only and are not intended to be a
part of or to affect the meaning or interpretation of this Agreement.
(h) Notices. All notices, consents, requests, waivers or other
communications required or permitted under this Agreement (each a "Notice")
shall be in writing and shall be sufficiently given if (a) hand
delivered or sent by telecopy or any means of electronic transmission with
delivery confirmed (by voice or otherwise), (b) sent by nationally recognized
overnight courier, or (c) sent by registered or certified mail, postage
prepaid, return receipt requested, and in each case addressed as follows:
If to CPC at: P.O. Box 8000
International Plaza
Englewood Cliffs, NJ 07632
Telecopy: 1-201-894-2210
Attn: Vice President-Taxes
with a copy to: General Counsel
If to Corn Products at: P.O. Box 345
6500 Archer Road
Argo, Illinois 60501
Telecopy: 1-708-563-6561
Attn: Chief Financial Officer
with a copy to: General Counsel
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or such other address as shall be furnished by any of the parties in a Notice.
Any Notice shall be deemed given upon receipt.
(i) Survival. Except as otherwise expressly provided herein, all
covenants and agreements of the parties contained in this Agreement shall
survive the Distribution Time.
(j) Binding Effect. This Agreement shall be executed by CPC and Corn
Products on their own behalf and on behalf of their respective affiliates,
which in the case of CPC shall mean the CPC Consolidated Subsidiaries, and in
the case of Corn Products shall mean the Corn Products Consolidated
Subsidiaries, including each Foreign Newco. Each of CPC and Corn Products
agrees to cause its respective affiliates to perform, and hereby guarantees the
performance of, each and every one of the obligations hereunder to be performed
by such affiliates.
(k) No Third Party Beneficiaries. This Agreement is solely for the
benefit of the parties hereto and their respective affiliates, and shall not be
deemed to confer upon third parties any remedy, claim, liability, right of
reimbursement, action or other right in excess of those existing without
reference to this Agreement.
(l) Dispute Resolution. Article VI of the Distribution Agreement shall
apply hereto and shall be deemed incorporated herein by reference with respect
to any dispute arising out of the interpretation, implementation or compliance
with the provisions of this Agreement.
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(m) Governing Law and Consent to Jurisdiction. This Agreement shall be
governed by, and construed and enforced in accordance with, the law of the
State of New York without regard to the principles of conflicts of laws
thereunder. Without limiting Article VI of the Distribution Agreement, each of
the parties irrevocably submits to the exclusive jurisdiction of the Superior
Court of the State of New Jersey, Bergen County, or the United States District
Court for the District of New Jersey, for purposes of any suit, action or other
proceeding arising out of this Agreement. Each of the parties agrees to
commence any action, suit or proceeding relating hereto that is not required to
be submitted to arbitration pursuant to Article VI of the Distribution
Agreement either in the United States District Court for the District of New
Jersey or if such suit, action or other proceeding may not be brought in such
court for jurisdictional reasons, in the Superior Court of the State of New
Jersey, Bergen County. Each of the parties further agrees that service of any
process, summons, notice or document by United States registered mail to such
party's respective address set forth above shall be effective service of
process for any such action, suit or proceeding in New Jersey with respect to
any matters to which it has submitted to jurisdiction. Each of the parties
irrevocably and unconditionally waives any objection to the laying of venue of
any action, suit or proceeding arising out of this Agreement in the Superior
Court of the State of New Jersey, Bergen County, or the United States District
Court for the District of New Jersey, and hereby further irrevocably and
unconditionally waives and agrees not to plead or claim in any such court that
any such action, suit or proceeding brought in any such court has been brought
in an inconvenient forum.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
CPC INTERNATIONAL INC. CORN PRODUCTS INTERNATIONAL, INC.
By By
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Name: Name:
Title: Title:
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