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<SEC-DOCUMENT>0000950137-98-001383.txt : 19980401
<SEC-HEADER>0000950137-98-001383.hdr.sgml : 19980401
ACCESSION NUMBER: 0000950137-98-001383
CONFORMED SUBMISSION TYPE: 10-K
PUBLIC DOCUMENT COUNT: 26
CONFORMED PERIOD OF REPORT: 19971231
FILED AS OF DATE: 19980331
SROS: NONE
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: CORN PRODUCTS INTERNATIONAL INC
CENTRAL INDEX KEY: 0001046257
STANDARD INDUSTRIAL CLASSIFICATION: CANNED, FROZEN & PRESERVED FRUIT, VEG & FOOD SPECIALTIES [2030]
IRS NUMBER: 223514823
STATE OF INCORPORATION: DE
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: 10-K
SEC ACT:
SEC FILE NUMBER: 001-13397
FILM NUMBER: 98583675
BUSINESS ADDRESS:
STREET 1: PO BOX 345
STREET 2: 6500 ARCHER RD
CITY: SUMMIT
STATE: IL
ZIP: 60501
BUSINESS PHONE: 7085636500
MAIL ADDRESS:
STREET 1: CORN PRODUCTS INTERNATIONAL INC
STREET 2: PO BOX 345 6500 ARCHER RD
CITY: SUMMIT
STATE: IL
ZIP: 60501
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-K
<SEQUENCE>1
<DESCRIPTION>FORM 10-K
<TEXT>
<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997
Commission file number 1-13397
CORN PRODUCTS INTERNATIONAL, INC.
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 22-3514823
- --------------------------------- ---------------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
6500 SOUTH ARCHER ROAD, BEDFORD PARK, ILLINOIS 60501-1933
- ---------------------------------------------- ---------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (708) 563-2400
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on Which Registered
Common Stock, $.01 par value per share New York Stock Exchange
Preferred Stock Purchase Rights New York Stock Exchange
(currently traded with Common Stock)
Securities registered pursuant to Section 12(g) of the Act:
NONE
- --------------------------------------------------------------------------------
Indicate by check mark whether the registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III or this Form 10-K or any
amendment to this Form 10-K [ ]
<PAGE> 2
The aggregate market value of the registrant's voting stock held by
nonaffiliates of the registrant (based upon the per share closing price of
$32.125 on March 23, 1998, and, for the purpose of this calculation only, the
assumption that all registrant's directors and executive officers are
affiliates) was approximately $1,130,018,013.
The number of shares outstanding of the registrant's Common Stock, par
value $.01 per share, as of March 23, 1998, was 35,652,134.
Documents Incorporated by Reference:
Information required by Part II (Items 6, 7 and 8) and Part IV (Item 14(a)(1))
of this document is incorporated by reference to certain portions of the
registrant's 1997 Annual Report to Stockholders.
Information required by Part III (Items 10, 11, 12 and 13) of this document is
incorporated by reference to certain portions of the registrant's definitive
Proxy Statement distributed in connection with its 1998 Annual Meeting of
Stockholders.
<PAGE> 3
PART I.
ITEM 1. BUSINESS
THE COMPANY
Corn Products International, Inc. was formed in March 1997 to assume
the operations of the corn refining business (the "Corn Refining Business") of
Bestfoods, Inc., formerly CPC International Inc. ("Bestfoods") and to effect
the distribution of 100% of the outstanding shares of the Company to the
Bestfoods common stockholders. On December 31, 1997, Bestfoods transferred the
assets and related liabilities of its Corn Refining Business to the Company.
Effective at 11:59:59 p.m. on December 31, 1997, Bestfoods distributed all of
the common stock of the Company to holders of common stock of Bestfoods. Since
that time, the Company has operated as an independent company whose common stock
is traded on the New York Stock Exchange. Unless the context indicates
otherwise, references to the "Company" and "Corn Products" refer to the Corn
Refining Business of Bestfoods for periods prior to January 1, 1998 and to Corn
Products International, Inc. and its subsidiaries for the periods on or after
such date.
OVERVIEW
The Corn Refining Business dates back to the original formation of
Bestfoods' predecessor over 90 years ago. In 1906, Corn Products Refining
Company was formed through an amalgamation of virtually all the corn syrup and
starch companies in the United States. International expansion followed soon
thereafter. In 1928, the Corn Refining Business commenced Latin American
operations in Brazil, followed quickly by expansions into Argentina and Mexico.
Corn Products International, Inc., together with its subsidiaries,
produces a large variety of food ingredients and industrial products derived
from the wet milling of corn and other starch-based materials (such as tapioca
and yucca). The Company is one of the largest corn refiners in the world and the
leading corn refiner in Latin America. In addition, it is the world's leading
producer of dextrose and has strong regional leadership in corn starch. The
Company's consolidated operations are located in ten countries with 19 plants
and, in 1997, the Company had consolidated net sales of approximately $1.4
billion. The Company also holds interests in 11 other countries through
unconsolidated joint ventures and allied operations, which operate an additional
19 plants. Approximately 60% of the Company's revenues are generated in North
America with the remainder coming from Latin America, Asia and Africa.
Corn refining is a capital-intensive two-step process that involves the
wet milling and processing of corn. During the front end process, corn is
steeped in water and separated into starch and co-products such as animal feed
and germ, The starch is then either dried for sale or further modified or
refined through various processes to make sweeteners and other starch-based
products designed to serve the particular needs of various industries. The
Company's sweetener
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<PAGE> 4
products include high fructose corn syrups ("HFCS"), glucose corn syrups, high
maltose, corn syrups, dextrose, maltodextrins, and glucose and corn syrup
solids. The Company's starch-based products include both industrial and food
grade starches.
The Company supplies a broad range of customers in over 60 industries.
The Company's most important customers are in the food and beverage,
pharmaceuticals, paper products, corrugated and laminated paper, textiles and
brewing industries and in the animal feed markets worldwide. The Company
believes its customers value its local approach to service.
BUSINESS STRATEGY
Corn Products' business strategy is to focus its management, technical
and financial resources on its areas of strength. Specifically, the Company
intends to: (i) maintain and grow its leading market positions; (ii) drive for
delivered cost leadership; (iii) provide high quality products and superior
service valued by customers; and (iv) expand in existing markets and enter new
markets.
Maintain and Grow Leading Market Positions. The Company intends to
continue to leverage its worldwide expertise and seek to grow its position as a
leading corn refiner in markets where it currently has a strong leadership
position by, among other things, expanding capacity to meet current and
anticipated customer needs.
Drive for Delivered Cost Leadership. The Company has implemented and
intends to continue to implement productivity enhancing and cost-saving
programs. This effort includes improving facility reliability by further
developing successful preventative maintenance programs, as well as striving
for consistent logistical excellence.
Provide High Quality Products and Superior Service. The Company
believes that it delivers high quality products and provides superior customer
service. The Company plans to continue to improve its service levels and focus
on customer needs to gain additional preferred supplier relationships.
Expand in Existing Markets and Enter New Markets. The Company believes
it is well positioned through its global alliances and joint ventures to seize
opportunities for expansion in existing markets and entrance into new markets.
The Company also intends to form additional strategic alliances with local corn
refiners as a cost-effective method of expanding into emerging markets.
PRODUCTS
The Company sells sweetener products that account for approximately
55% of the net sales of the Corn Refining Business, starch products that account
for approximately 20% of net sales, and co-products that account for
approximately 25% of net sales.
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<PAGE> 5
Sweetener Products.
High Fructose Corn Syrup: The Company produces two types of high
fructose corn syrup: (i) HFCS-55, which is primarily used as a sweetener in
soft drinks made in the United States, Canada, Mexico and Japan, and (ii)
HFCS-42, which is used as a sweetener in various consumer products such as
fruit-flavored beverages, yeast-raised breads, rolls, doughs, ready-to-eat
cakes, yogurt and ice cream.
Glucose Corn Syrups: Corn syrups are fundamental ingredients in
many industrial products and are widely used in food products such as baked
goods, snack foods, beverages, canned fruits, condiments, candy and other
sweets, dairy products, ice cream, jams and jellies, prepared mixes and
table syrups. Corn Products offers corn syrups that are manufactured
through an ion-exchange process, a method that creates the highest quality,
purest corn syrups.
High Maltose Corn Syrup: This special type of glucose syrup has
a unique carbohydrate profile, making it ideal for use as a source of
fermentable sugars in brewing beers. High maltose syrups are also used in
the production of confections, canning and some other food processing
applications.
Dextrose: The Company was granted the first U.S. patent for
dextrose in 1923. The Company currently produces dextrose products that are
grouped in three different categories-monohydrate, anhydrous and specialty.
Monohydrate dextrose is used across the food industry in many of the same
products as glucose corn syrups, especially in confectionery applications.
Anhydrous dextrose is used to make solutions for intravenous injection and
other pharmaceutical applications, as well as some specialty food
applications. Specialty dextrose products are used in a wide range of
applications, from confectionery tableting to dry mixes to carriers for
high intensity sweeteners. Dextrose also has a wide range of industrial
applications, including use in wall board and production of biodegradable
surfactants (surface agents), humectants (moisture agents), and as the base
for fermentation products including vitamins, organic acids, amino acids
and alcohols.
Maltodextrins and Glucose and Corn Syrup Solids: These products
have a multitude of food applications, including formulations where liquid
corn syrups cannot be used. Maltodextrins are resistant to browning,
provide excellent solubility, have a low hydroscopicity (do not retain
moisture), and are ideal for their carrier/bulking properties. Corn syrup
solids have a bland flavor, remain clear in solution, are easy to handle
and also provide bluing properties.
Starch Products. Starches are an important component in a wide range of
processed foods, used particularly as a thickener and binder. Corn starch is
also sold to corn starch packers for sale to consumers. Starches are also used
in paper production to produce a smooth surface
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for printed communications and to improve strength in today's recycled papers.
In the corrugating industry, starches are used to produce high quality adhesives
for the production of shipping containers, display board and other corrugated
applications. The textile industry has successfully used starches for over a
century to provide size and finishes for manufactured products. Industrial
starches are used in the production of construction materials, adhesives,
pharmaceuticals and cosmetics, as well as in mining, water filtration and oil
and gas drilling.
Enzymes. Enzymes are produced and marketed for a variety of food and
industrial applications.
Co-Products. Refined corn oil is sold to packers of cooking oil and to
producers of margarine, salad dressings, shortening, mayonnaise and other foods.
Corn gluten feed is sold as animal feed. Corn gluten meal and steepwater are
sold as additives for animal feed.
OPERATIONS
The Company's North American operations, which include the U.S., Canada and
Mexico, operate 11 plants (including four owned by unconsolidated joint
ventures), producing regular and modified starches, dextrose, high fructose and
high maltose corn syrups and corn syrup solids, dextrins and maltodextrins,
caramel color and sorbitol. The Company's plant in Bedford Park, Illinois is a
major supplier of starch and dextrose products for the Company's U.S. and export
customers. A 100 million pound dextrose expansion was completed at the Bedford
Park plant in January of 1996. The Company's other U.S. plants in Winston-Salem,
North Carolina and Stockton, California enjoy strong market shares in their
local areas, as do the Company's Canadian plants in Cardinal, London and Port
Colborne, Ontario. In Mexico, the Company's joint venture with Arancia
Industrial S. A. de C. V. is that country's largest corn refiner. The venture
was the first in Mexico to produce HFCS-55 for sale to the soft drink bottling
industry.
The Company is the largest corn refiner in Latin America, with leading
market shares in Chile, Brazil and Colombia and a strong position in Argentina.
Its Latin American consolidated operations have 9 plants that produce regular,
modified, waxy and tapioca starches, high maltose and corn syrups, dextrins and
maltodextrins, dextrose, caramel color, sorbitol and vegetable adhesives.
The Company has additional subsidiaries in Kenya, Malaysia and Pakistan,
which operate three additional plants. These operations produce modified,
regular, waxy and tapioca starches, dextrins, glucose, dextrose and caramel
color.
In addition to the operations in which it engages directly and through
joint ventures, the Company also has numerous strategic alliances through
technical license agreements with companies in Australia, India, Japan, New
Zealand, Thailand, South Africa, Zimbabwe, Serbia and Venezuela. As a group, the
Company's strategic alliance partners operate 15 plants and produce high
fructose, glucose and high maltose syrups (both corn and tapioca), regular,
modified, waxy
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<PAGE> 7
and tapioca starches, dextrose and dextrins, maltodextrins and caramel color.
These products have leading market positions in many of their target markets.
COMPETITION
The corn refining industry is highly competitive. Most of the Company's
products compete with virtually identical products and derivatives manufactured
by other companies in the industry. The U.S. market is the most competitive,
with participation by eleven corn refiners, including ADM Corn Processing
Division ("ADM") (a division of Archer Daniels Midland Company), Cargill, A.E.
Staley Manufacturing Co. ("Staley") (a subsidiary of Tate & Lyle, PLC) and
National Starch and Chemical Company ("National Starch") (a subsidiary of
Imperial Chemicals Industries plc). In Latin America, Cargill has corn refining
operations in Brazil, National Starch has operations in Brazil and Mexico, and
ALMEX a joint venture between ADM and Staley, has operations in Mexico. Several
local corn refiners also operate in Latin America. Competition within markets is
largely based on price, quality and product availability.
Several of the Company's products also compete with products made from raw
materials other than corn. High fructose corn syrup and monohydrate dextrose
compete principally with cane and beet sugar products. Co-products such as corn
oil and gluten meal compete with products of the corn dry milling industry and
with soybean oil and soybean meal. Fluctuations in prices of these competing
products may affect prices of, and profits derived from, the Company's products.
CUSTOMERS
The Company supplies a broad range of customers in over 60 industries.
Historically, Bestfoods' worldwide branded foods business has been one of the
Company's largest customers, accounting for approximately 12.5% of total sales
in 1997. In addition, approximately 15% of the Company's worldwide sales in 1997
represented sales of HFCS to international, regional and local companies engaged
in the soft drink industry, primarily in North America.
RAW MATERIALS
The basic raw material of the corn refining industry is yellow dent
corn. In the United States, the corn refining industry processes about 10% to
15% of the annual U.S. corn crop. The supply of corn in the United States has
been, and is anticipated to continue to be, adequate for the Company's domestic
needs. The price of corn, which is determined by reference to prices on the
Chicago Board of Trade, fluctuates as a result of three primary supply factors
- -- farmer planting decisions, climate and government policies -- and three major
market demand factors -- livestock feeding, shortages or surpluses of world
grain supplies and domestic and foreign government policies and trade
agreements.
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<PAGE> 8
Corn is also grown in other areas of the world, including Canada, South
Africa, Argentina, Brazil, China and Australia. The Company's affiliates outside
the United States utilize both local supplies of corn and corn imported from
other geographic areas, including the United States. The supply of corn for
these affiliates is also generally expected to be adequate for the Company's
needs. Corn prices for the Company's non-U.S. affiliates generally fluctuate as
a result of the same factors that affect U.S. corn prices.
Due to the competitive nature of the corn refining industry and the
availability of substitute products not produced from corn, such as sugar from
cane or beets, end product prices may not necessarily fluctuate in relation to
raw material costs of corn.
Over 55% of the Company's starch and refinery products are sold at prices
established in supply contracts lasting for periods of up to one year. The
remainder of the Company's starch and refinery products are not sold under firm
pricing arrangements and actual pricing for those products is affected by the
cost of corn at the time of production and sale.
The Company follows a policy of hedging its exposure to commodities
fluctuations with commodities futures contracts for certain of its North
American corn purchases. All firm priced business is hedged when contracted.
Other business may or may not be hedged at any given time based on management's
judgment as to the need to fix the costs of its raw materials to protect the
Company's profitability. Realized gains and losses arising from such hedging
transactions are considered an integral part of the cost of those commodities
and are included in the cost when purchased. See "Risk Factors -- Potential
Losses from Commodities Hedging Activities.
GEOGRAPHIC SCOPE
The Company engages in business in over 20 countries, operating directly
and through affiliates in nine countries with 19 plants and indirectly through
joint ventures and technical licensing agreements elsewhere in Latin America,
Asia, Africa, Australia and New Zealand. The Company has wholly owned operations
in North America, Latin America and Africa, a 49% interest in a joint venture in
Mexico, and other joint venture interests and licensing and technical agreements
in Latin America, Asia and Africa. In 1997, approximately 60% of the Company's
net sales was derived from its operations in North America and 40% from
operations in other geographic areas, primarily Latin America (representing
over 80% of sales and operating income of other geographic areas). See Note 14
of Notes to Consolidated Financial Statements for certain financial information
with respect to geographic areas.
RESEARCH AND DEVELOPMENT
The Company's product development activity is focused on developing product
applications for identified customer and market needs. Through this approach,
the Company has developed value-added products for use in the corrugated paper,
food, textile, baking and confectionery industries. The Company usually
collaborates with customers to develop the
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<PAGE> 9
desired product application either in the customers' facilities, the Company's
technical service laboratories or on a contract basis. The Company's marketing,
product technology and technology support staffs devote a substantial portion of
their time to these efforts. Product development is enhanced through technology
transfers pursuant to existing licensing arrangements.
SALES AND DISTRIBUTION
The Company's products are sold directly to manufacturers and distributors
by salaried sales personnel, who are generally dedicated to customers in a
geographic region. In addition, the Company has a staff that provides technical
support to the sales personnel on an industry basis. The Company generally
utilizes contract truckers to deliver bulk products to customer destinations but
also has some of its own trucks for product delivery. In North America, the
trucks generally ship to nearby customers. For those customers located
considerable distances from Company plants, a combination of railcars and trucks
is used to deliver product. Railcars are generally leased for terms of five to
fifteen years.
PATENTS AND TRADEMARKS
The Company owns a number of patents which relate to a variety of products
and processes and a number of established trademarks under which the Company
markets such products. The Company also has the right to use certain other
patents and trademarks pursuant to patent and trademark licenses. The Company
does not believe that any individual patent or trademark is material. There is
not currently any pending challenge to the use or registration of any of the
Company's significant patents or trademarks that would have a material adverse
impact on the Company or its results of operations.
EMPLOYEES
As of December 31, 1997, the Corn Refining Business had approximately 4,300
employees, of which approximately 950 were located in the U.S. Approximately 30%
of U.S. and 22% of non-U.S. employees are unionized. The Company believes its
union and non-union employee relations are good.
GOVERNMENT REGULATION AND ENVIRONMENTAL MATTERS
As a manufacturer and maker of food items and items for use in the
pharmaceutical industry, the Company's operations and the use of many Company
products are subject to various U.S., state, foreign and local statutes and
regulations, including the Federal Food, Drug and Cosmetic Act and the
Occupational Safety and Health Act, and to regulation by various government
agencies, including the United States Food and Drug Administration, which
prescribe requirements and establish standards for product quality, purity and
labeling. The finding of a failure to comply with one or more regulatory
requirements can result in a variety of sanctions,
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including monetary fines. The Company may also be required to comply with U.S.,
state, foreign and local laws regulating food handling and storage. The Company
believes its competitive position has not been negatively affected by these laws
and regulations.
The operations of the Company are also subject to various U.S., state,
foreign and local laws and regulations with respect to environmental matters,
including air and water quality and underground fuel storage tanks, and other
regulations intended to protect public health and the environment. The Company
believes it is in material compliance with all such applicable laws and
regulations. Based upon current laws and regulations and the interpretations
thereof, the Company does not expect that the costs of future environmental
compliance will be a material expense, although there can be no assurance that
the Company will remain in compliance or that the costs of remaining in
compliance will not have a material adverse effect on the Company's financial
condition and results of operations.
The Company currently anticipates that it will spend approximately $4.9
million in fiscal 1998 for environmental control equipment to be incorporated
into existing facilities and in planned construction projects. This equipment is
intended to enable the Company to continue its policy of compliance with
existing known environmental laws and regulations. Under the U.S. Clean Air Act
Amendments of 1990, air toxics regulations will be promulgated for a number of
industry source categories. The U.S. Environmental Protection Agency's
regulatory timetable specifies the promulgation of standards for vegetable oil
production and for industrial boilers by the year 2000. At that time, additional
pollution control devices may be required at the Company's U.S. facilities to
meet these standards. The ultimate financial impact of the standards cannot be
accurately estimated at this time.
RELATIONSHIP BETWEEN THE COMPANY AND BESTFOODS
In connection with the spin-off of the Company from Bestfoods at the end of
1997, the Company entered into various agreements with Bestfoods for the purpose
of governing certain of the ongoing relationships between Bestfoods and the
Company in the future.
The Company entered into a tax indemnification agreement that requires the
Company to indemnify Bestfoods against tax liabilities arising from the loss of
the tax-free reorganization status of the spin-off. This agreement could
restrict the Company, for a two year period, from entering into certain
transactions, including limitations on the liquidation, merger or consolidation
with another company, certain issuances and redemptions of common stock and the
distributions or sale of certain assets.
Prior to the spin-off, the Company assumed from Bestfoods and borrowed from
third parties an aggregate of $350 million of debt. The Company transferred the
proceeds of these borrowings to Bestfoods as part of the spin-off.
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The Company and Bestfoods also entered into a Master Supply Agreement,
under which the Company and its affiliates will continue to supply Bestfoods and
its affiliates with certain corn refining products at prices based generally
upon prevailing market prices. Sales of products by the Corn Refining Business
to Bestfoods prior to the spin-off, which are reflected in the financial
statements of the Company for the periods prior to January 1, 1998, were
generally made at prevailing market prices and were otherwise generally
consistent with the terms of the Master Supply Agreement. Pursuant to the Master
Supply Agreement, Bestfoods will purchase certain products exclusively from the
Company and the Company is restricted from engaging in certain activities that
are competitive with Bestfoods. The Master Supply Agreement has a two year term
and is renewable in whole or in part thereafter upon mutual agreement of the
parties. At this time, neither Bestfoods nor the Company has expressed an
intention not to renew the Master Supply Agreement upon its expiration.
EXECUTIVE OFFICERS OF THE COMPANY
Set forth below are the names and ages of all executive officers of the
Company, indicating their positions and offices with the Company.
<TABLE>
<CAPTION>
Name Age All positions and offices with the Company
<S> <C> <C>
Konrad Schlatter 62 Chairman and Chief Executive Officer of Corn
Products. Mr. Schlatter served as Senior Vice
President of Bestfoods from 1990 to 1997 and
Chief Financial Officer of Bestfoods from 1993
to February 1997.
Samuel C. Scott 53 President and Chief Operating Officer of Corn
Products. Mr. Scott has been President of
Bestfoods' worldwide Corn Refining Business
since 1995 and has been President of Bestfoods'
North American Corn Refining Business since
1989. He was elected a Vice President of
Bestfoods in 1991. Mr. Scott is a director of
Motorola, Inc. and Reynolds Metal Company.
Marcia E. Doane 56 Vice President, General Counsel and Corporate
Secretary of Corn Products. Ms. Doane has
served as Vice President, Legal and Regulatory
Affairs of the Corn Products Division of
Bestfoods since 1996. Prior thereto, she served
as Counsel to the Corn Products Division from
1994 to 1996. Ms. Doane joined Bestfoods'
legal department in 1989 as Operations Attorney
for the Corn Products Division.
</TABLE>
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<PAGE> 12
<TABLE>
<S> <C> <C>
Frank J. Kocun 55 Vice President and President, Cooperative
Management Group. Mr. Kocun served as
President of the Cooperative Management Group
of the Corn Products Division of Bestfoods since
1991 and as Vice President of the Cooperative
Management Group since 1985. Mr. Kocun
joined Bestfoods in 1968 and has served in
various executive positions in the Corn Products
Division and in Penick Corporation, a Bestfoods
subsidiary.
Eugene J. Northacker 56 Vice President and President, Latin American
Division. Mr. Northacker was appointed
President of Bestfoods' Latin America Corn
Refining Division and elected a Vice President of
Bestfoods in 1992. Prior to that, he served as
Business Director of Bestfoods' Latin America
Corn Refining Division from 1989 to 1992, as
Corn Refining General Manager of Bestfoods'
then Mexican subsidiary from 1984 to 1986. Mr.
Northacker joined Bestfoods in 1968 in the
financial group of Bestfoods' North American
consumer foods division, and has held executive
assignments in several Bestfoods subsidiaries.
Michael R. Pyatt 50 Vice President and Executive Vice President,
North American Division. Mr. Pyatt has served
as Chairman, President and Chief Executive
Officer of Canada Starch Co., Inc., a Bestfoods
subsidiary, since 1994 and as President of the
Canadian business of Bestfoods' Corn Products
Division, Vice Chairman of Canada Starch and
as a Vice President of the Corn Products
Division since 1992. Mr. Pyatt joined Bestfoods
in 1982 and has served in various sales and
marketing positions in the Casco business.
</TABLE>
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<PAGE> 13
<TABLE>
<S> <C> <C>
James W. Ripley 54 Vice President - Finance and Chief Financial
Officer. Mr. Ripley has served as Comptroller of
Bestfoods since 1995. Prior thereto, he served
as Vice President of Finance for Bestfoods'
North American Corn Refining Division from
1984 to 1995. Mr. Ripley joined Bestfoods in
1968 as chief international accountant, and has
subsequently served as Bestfoods' Assistant
Corporate Comptroller, Corporate General Audit
Coordinator and Assistant Comptroller for
Bestfoods' European Consumer Foods Division.
Richard M. Vandervoort 54 Vice President - Business Development and
Procurement, North American Division. Mr,
Vandervoort has served as Vice President -
Business Management and Marketing for
Bestfoods' Corn Products Division since 1989.
Mr. Vandervoort joined Bestfoods in 1971 and
has served in various executive sales positions in
Bestfoods' Corn Products Division and in
Peterson/Puritan Inc., a Bestfoods subsidiary.
Cheryl K. Beebe 42 Treasurer. Ms. Beebe has served as Director of
Finance and Planning for the Corn Refining
Business worldwide from 1995 to 1997, and as
Director of Financial Analysis and Planning for
Corn Products North America from 1993. Ms.
Beebe joined Bestfoods in 1980 and has served
in various financial positions in Bestfoods.
James J. Hirchak 43 Vice President - Human Resources. Mr. Hirchak
joined Bestfoods in 1976 and held various
Human Resources positions in Bestfoods until
1984, when he joined Bestfoods' Corn Products
Division. In 1987, Mr. Hirchak was appointed
Director, Human Resources for Corn Products
North American operation and has served as
Vice President, Human Resources for the
Corn Products Division since 1992.
</TABLE>
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<PAGE> 14
<TABLE>
<S> <C> <C>
Jack C. Fortnum 41 Comptroller. Mr. Fortnum has served as the
Vice President of Finance for Refinerias de
Maize, Bestfoods, Argentine subsidiary from
1995 to 1997, as the Director of Finance and
Planning for Latin America Corn Refining
Division from 1993 to 1995, and as the Vice
President and Comptroller of Canada Starch Co.,
Inc., the Canadian subsidiary of Bestfoods and
Vice President of Finance of the Canadian Corn
Refining Business from 1989.
</TABLE>
ITEM 2. PROPERTIES
The Company operates, directly and through its subsidiaries, 19
manufacturing facilities, 18 of which are owned and one of which is leased
(Jundiai, Brazil). In addition, the Company owns its corporate headquarters in
Bedford Park, Illinois. The following list details the location of the Company's
manufacturing facilities:
U.S. Latin America
Stockton, California Baradero, Argentina
Bedford Park, Illinois Balsa Nova, Brazil
Winston-Salem, North Carolina Cabo, Brazil
Beloit, Wisconsin Jundiai, Brazil
Mogi-Guacu, Brazil
Canada Llay-Llay, Chile
Barranquilla, Colombia
Cardinal, Ontario Cali, Columbia
London, Ontario Medellin, Colombia
Port Colborne, Ontario
Asia
Africa
Petaling Jaya, Malaysia
Eldoret, Kenya Faisalabad, Pakistan
In addition to the foregoing, the Company has interests in an additional 19
plants through its interests in unconsolidated joint ventures and allied
operations.
While the Company has achieved high capacity utilization, the Company
believes its manufacturing facilities are sufficient to meet its current
production needs. The Company has preventive maintenance and de-bottlenecking
programs designed to further improve grind capacity and facility reliability.
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<PAGE> 15
The Company has electricity co-generation facilities at all of its U.S. and
Canadian plants, as well as its plants in Argentina and Pakistan, that provide
electricity at a lower cost than is available from third parties. The Company
generally owns and operates such co-generation facilities itself, but has two
large facilities at its Stockton, California and Cardinal, Ontario locations
that are owned by, and operated pursuant to co-generation agreements with, third
parties.
The Company believes it has competitive, up-to-date and cost-effective
facilities. In recent years, significant capital expenditures have been made to
update, expand and improve the Company's facilities, averaging in excess of $150
million per year for the last five years. Capital investments have included the
rebuilding of the Company's plant in Cali, Colombia; an expansion of both grind
capacity and dextrose production capacity at the Company's Argo facility in
Bedford Park, Illinois; entry into the high maltose corn syrup business in
Brazil, Colombia and Argentina; and the installation of energy co-generation
facilities in Canada. The Company believes these capital expenditures will allow
the Company to operate highly efficient facilities for the foreseeable future
with further annual capital expenditures that are significantly below historical
averages. In recent years, steps have also been taken to reduce costs by closing
facilities which could not economically be made efficient, including plants in
Argentina and Honduras.
ITEM 3. LEGAL PROCEEDINGS
Under the terms of the agreements relating to the spin-off of the Company
from Bestfoods, the Company agreed to indemnify Bestfoods for certain
liabilities relating to the operation of the Corn Refining Business prior to the
spin-off, including liabilities relating to the proceedings described below.
In July 1995, Bestfoods received a federal grand jury subpoena in
connection with an investigation by the Antitrust Division of the U.S.
Department of Justice of U.S. corn refiners regarding the marketing of high
fructose corn syrup and other "food additives" (the investigation of Bestfoods
relates only to high fructose corn syrup). Bestfoods has produced the documents
sought by the Justice Department. Bestfoods, as a high fructose corn syrup
producer, was also named as one of the defendants in a number of private treble
damage class actions, by direct and indirect customers, and one individual
action, alleging violations of federal and state antitrust laws. Following the
certification of the consolidated federal class actions, Bestfoods entered into
a settlement of the federal claims for $7 million. Bestfoods also settled the
one individual action (Gray and Company v. Archer Daniels Midland et. al. Civ.
No. 97-69-AS) in the United States District Court for the District of Oregon
(subsequently transferred to the United States District Court for the Central
District of Illinois, Peoria Division for consolidation in MDL, Docket No. 1087
and Matter File No. 95-1477). A stipulated joint dismissal of Bestfoods from the
Gray and Company litigation was received by the court on January 28, 1998.
Bestfoods remains a party to the state law actions filed in Alabama, California,
the District of Columbia, West Virginia, and
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<PAGE> 16
Kansas, each of which was filed in 1995 or 1996. A state law action filed in
Michigan was dismissed on February 4, 1998 for lack of progress after
plaintiffs' motion to certify a class was denied.
The Company is currently subject to claims and suits arising in the
ordinary course of business, including environmental proceedings. The Company
does not believe that the results of such legal proceedings, even if unfavorable
to the Company, will be material to the Company. There can be no assurance,
however, that any claims or suits arising in the future, taken individually or
in the aggregate, will not have a material adverse effect on the Company's
financial condition or results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITYHOLDERS
There were no matters submitted to a vote of securityholders, through the
solicitation of proxies or otherwise, during the fourth quarter ended December
31, 1997.
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<PAGE> 17
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
The Company's Common Stock trades on the New York Stock Exchange under the
symbol "CPO." The following table sets forth, for the periods indicated, the
range of the high and low sales prices of the Company Common Stock as reported
by the Wall Street Journal. At the close of business on March 23, 1998 there
were approximately 23,400 holders of record of the outstanding shares of the
Company's Common Stock. Although the Company's Common Stock is traded on the
New York Stock Exchange, no assurance can be given as to the future price of
or the markets for the Company's Common Stock.
The Company's
Common Stock
High Low
1997
December 11, 1997 through December 31, 1997* 32 28 7/8
1998
January 1, 1998 through March 23, 1998 35 1/8 26 5/16
- --------------
*Prices represent when-issued trading on the New York Stock Exchange. The
Company's Common Stock began regular way trading on January 2, 1998.
To date, the Company has paid no dividends.
ITEM 6. SELECTED FINANCIAL DATA
Incorporated by reference from the Annual Report, page 32, section
entitled "Selected Financial Information."
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<PAGE> 18
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Incorporated by reference from the Annual Report, pages 8-12, section
entitled "Management's Discussion and Analysis."
RISK FACTORS
UNCERTAIN ABILITY TO REVERSE RECENT DISAPPOINTING FINANCIAL PERFORMANCE.
The Company's ability to generate operating income and to increase profitability
depends to a large extent upon its ability to price finished products at a level
that will cover manufacturing and raw material costs and provide a profit
margin. The Company's ability to maintain appropriate price levels is determined
by a number of factors largely beyond the Company's control, such as aggregate
industry supply and market demand, which may vary from time to time and by the
geographic region of the Company's operations. For example, the Company's
profits sharply declined in 1996 and 1997. The primary reason for the profit
decline in 1997 was a significant expansion of high fructose corn syrup industry
capacity in North America ahead of demand. The sharp and unusual increase in the
cost of corn during 1996, which could not be fully passed on in increased
prices, was the primary cause of the profit decline in 1996. Other factors also
affect the Company's profitability, including the economic conditions in various
geographic regions and countries in which the Company manufactures and sells its
finished products. Accordingly, there can be no assurance that the Company will
successfully reverse these declines in profit.
UNCERTAIN ABILITY TO CONTAIN COSTS OR TO FUND CAPITAL EXPENDITURES. The
Company's future profitability and growth also depends on the Company's ability
to reduce operating costs and per-unit product costs, to maintain and/or
implement effective cost control programs and to develop successful value-added
products and new product applications, while at the same time maintaining
competitive pricing and superior quality products, customer service and support.
The Company's ability to maintain a competitive cost structure depends on
continued containment of manufacturing, delivery and administrative costs as
well as the implementation of cost-effective purchasing programs for raw
materials, energy and related manufacturing requirements. The Company expects to
spend approximately $70 to $100 million per year for worldwide capital
expenditures from 1998 through 2000, primarily to implement productivity
improvements and, if supported by customer demand, expand the production
capacity of its facilities. Additional funds may be needed for working capital
as the Company grows and expands its operations. To the extent possible, these
capital expenditures and other expenses are expected to be funded from
operations. If the Company's cash flow is insufficient to fund such expenses,
the Company may either reduce its capital expenditures or utilize certain
general credit facilities. The Company may also seek to generate additional
liquidity through the sale of debt or equity securities in private or public
markets or through the sale of non-productive assets. The Company cannot provide
any assurance that cash flow from operations will be sufficient to fund
anticipated capital expenditures and working capital requirements or that
additional funds can be obtained from the financial markets or the sale of
assets at terms favorable to the Company. If the Company is unable to generate
sufficient cash flows or raise sufficient additional funds to fund capital
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<PAGE> 19
expenditures, it may not be able to achieve its desired operating efficiencies
and expansion plans, which may adversely impact the Company's competitiveness
and, therefore, its results of operations.
COMPETITION; EXPANDING INDUSTRY CAPACITY. The Company operates in a highly
competitive environment. Almost all of the Company's products compete with
virtually identical or similar products manufactured by other companies in the
corn refining industry. In the United States, there are ten other corn refiners,
several of which are divisions of larger enterprises that have greater financial
resources and some of which, unlike the Company, have vertically integrated
their corn refining and other operations. Many of the Company's products also
compete with products made from raw materials other than corn. Fluctuation in
prices of these competing products may affect prices of, and profits derived
from, the Company's products. Competition within markets is largely based on
price, quality and product availability and the Company experiences price
pressures in certain of its markets as a result of competitors' pricing
practices.
PRICE VOLATILITY AND UNCERTAIN AVAILABILITY OF CORN. Corn purchasing costs,
which include the price of the corn plus delivery cost vary between 40% and 65%
of the Company's product costs. The price and availability of corn are
influenced by economic and industry conditions, including supply and demand
factors such as crop disease and severe weather conditions such as drought,
floods or frost that are difficult to anticipate and cannot be controlled by the
Company. In 1996, profitability was adversely impacted by an exceptional
increase in corn costs which the Company was not able to offset with an increase
in the price of its products. In addition, the price of corn sweeteners,
especially high fructose corn syrup, is indirectly impacted by government
programs supporting sugar prices. There can be no assurance that the Company
will be able to purchase corn at prices that can be adequately passed on to
customers or in quantities sufficient to sustain or increase its profitability.
POTENTIAL LOSSES FROM COMMODITIES HEDGING ACTIVITIES. The Company enters
into corn futures contracts, or takes hedging positions in the corn futures
markets, in an attempt to minimize the effects of the volatility of corn costs
on operating profits. The effectiveness of such hedging activities is dependent
upon, among other things, the cost of corn and the ability of the Company to
sell sufficient products to utilize all of the corn with respect to which it has
futures contracts. Occasionally, such hedging activities can themselves result
in losses, some of which may be material. During the fourth quarter of 1996, the
Company recognized a loss of $40 million in connection with the liquidation of
certain corn futures contracts, No assurance can be given that such
hedging-related losses will not recur. See Note 10 of Notes to Consolidated
Financial Statements for information with respect to the Company's hedging
position at December 31, 1997.
UNAVAILABILITY OF BESTFOODS' FINANCIAL AND OTHER RESOURCES. Prior January
1, 1998, the Company was operated as an unincorporated division of Bestfoods.
Thus, the Company does not have an operating history as a separate company. As
an independent public company, Corn Products is no longer able to rely on
Bestfoods for financial support or to benefit from its relationship with
Bestfoods to obtain credit.
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<PAGE> 20
ABSENCE OF PRIOR TRADING MARKET FOR CORN PRODUCTS COMMON STOCK. Prior to
December 11, 1997, there was no trading for Corn Products Common Stock. The Corn
Products Common Stock is listed on the NYSE under the symbol "CPO". There can be
no assurance as to the prices at which Corn Products Common Stock will trade in
the future. The prices at which such shares trade may fluctuate significantly
and may be lower or higher than the price that would be expected. Prices for
shares of Corn Products Common Stock may be influenced by many factors,
including the depth and liquidity of the market for the shares, investor
perception of the Company, changes in economic conditions in the corn refining
industry and general economic and market conditions. In addition, the stock
market often experiences significant price fluctuations that are unrelated to
the operating performance of the specific companies whose stock is traded.
Market fluctuations, as well as economic conditions, could have a materially
adverse impact on the market price of the shares of Corn Products Common Stock.
UNCERTAINTY OF DIVIDENDS. The payment of dividends is at the discretion of
the Corn Products Board and will be subject to the Company's financial results
and the availability of surplus funds to pay dividends. No assurance can be
given that the Company will pay any dividends.
INTERNATIONAL OPERATIONS RISKS. The Company operates a multinational
business and, accordingly, is subject to risks that are inherent in operating in
foreign countries. Approximately 56% of the Company's 1997 revenues were
generated by non-U.S. operations. Due to the significant amount of non-U.S.
revenues, fluctuations in the value of foreign currencies relative to the U. S.
dollar could increase the volatility of the Company's U.S. dollar-demoninated
operating results. The Company's non-U.S. operations are also subject to
political, economic and other risks inherent in operating in countries outside
the United States, including possible nationalization, expropriation, adverse
government regulation, imposition of import and export duties and quotas,
currency restrictions, price controls, potentially burdensome taxation and/or
other restrictive government actions.
CERTAIN ANTI-TAKEOVER EFFECTS. Certain provisions of the Company's Amended
and Restated Certificate of Incorporation (the "Corn Products Charter") and the
Company's By-Laws (the "Corn Products By-Laws") and of the Delaware General
Corporation Law (the "DGCL") may have the effect of delaying, deterring or
preventing a change in control of the Company not approved by the Corn Products
Board. These provisions include (i) a classified Board of Directors, (ii) a
requirement of the unanimous consent of all stockholders for action to be taken
without a meeting, (iii) a requirement that special meetings of stockholders be
called only by the Chairman of the Board or the Board of Directors, (iv) advance
notice requirements for stockholder proposals and nominations, (v) limitations
on the ability of stockholders to amend, alter or repeal the Corn Products
By-Laws and certain provisions of the Corn Products Charter, (vi) authorization
for the Corn Products Board to issue without stockholder approval preferred
stock with such terms as the Board of Directors may determine and (vii)
authorization for the Corn Products Board to consider the interests of
creditors, customers, employees and other constituencies of the Corporation and
its subsidiaries and the effect upon communities in which the Corporation and
its subsidiaries do business, in evaluating proposed corporate transactions.
With certain exceptions, Section 203 of the
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<PAGE> 21
DGCL ("Section 203") imposes certain restrictions on mergers and other business
combinations between the Company and any holder of 15% or more of the Corn
Products Common Stock. In addition, the Company has adopted a stockholder rights
plan (the "Rights Plan"). The Rights Plan is designed to protect stockholders in
the event of an unsolicited offer and other takeover tactics which, in the
opinion of the Corn Products Board, could impair the Company's ability to
represent stockholder interests. The provisions of the Rights Plan may render an
unsolicited takeover of the Company more difficult or less likely to occur or
might prevent such a takeover.
These provisions of the Corn Products Charter and Corn Products By-Laws,
the DGCL and the Rights Plan could discourage potential acquisition proposals
and could delay or prevent a change in control of the Company, although such
proposals, if made, might be considered desirable by a majority of the Company's
stockholders. Such provisions could also make it more difficult for third
parties to remove and replace the members of the Corn Products Board. Moreover,
these provisions could diminish the opportunities for a stockholder to
participate in certain tender offers, including tender offers at prices above
the then-current market value of Corn Products Common Stock, and may also
inhibit increases in the market price of Corn Products Common Stock that could
result from takeover attempts or speculation.
LIMITED RELEVANCE OF HISTORICAL FINANCIAL INFORMATION. The Company's
historical financial information may not necessarily reflect the results of
operations, financial position and cash flows of the Company in the future or
the results of operations, financial position and cash flows had the Company
operated as a separate stand-alone entity during the periods presented.
RELIANCE ON MAJOR CUSTOMERS. Historically, Bestfoods' worldwide branded
foods business has been one of the Company's largest customers, accounting for
approximately 12.5% of total sales in 1997. The Company and Bestfoods have
entered into a two-year Master Supply Agreement, which sets forth the terms
under which the Company will sell its products to Bestfoods. In addition,
approximately 15% of the worldwide sales of the Corn Refining Business in 1997
represented sales of high fructose corn syrup to international, regional and
local companies engaged in the soft drink industry, primarily in North America.
If Bestfoods were not to continue to purchase products from the Company or the
Company's soft drink customers were to substantially decrease their purchases,
the business of the Company might be materially adversely affected.
INDEBTEDNESS. The Company is party to a $340 million credit facility with a
number of financial institutions (the "Credit Facility"). In addition, the
Company may incur additional indebtedness from time to time to meet working
capital requirements and for capital expenditures. In addition to creating debt
service obligations for the Company, the terms of the Credit Facility will
contain customary affirmative and negative covenants that will, among other
things, require the Company to satisfy certain financial tests and maintain
certain financial ratios.
The Company's ability to service this anticipated indebtedness will depend
on future operating performance, which will be affected by prevailing economic
conditions and financial and other factors, certain of which are beyond the
Company's control. If the Company were unable to service its
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<PAGE> 22
indebtedness, it would be forced to pursue one or more alternative strategies
such as reducing its capital expenditures, selling assets, restructuring or
refinancing its indebtedness or seeking additional equity capital (which may
substantially dilute the ownership interest of existing holders of Corn Products
common stock). There can be no assurance that any of these strategies could be
effected on satisfactory terms, if at all.
FORWARD-LOOKING STATEMENTS
This Form 10-K includes or may include certain forward-looking statements
that involve risks and uncertainties. This Form 10-K contains certain
forward-looking statements concerning the Company's financial position, business
strategy, budgets, projected costs and plans and objectives of management for
future operations as well as other statements including words such as
"anticipate," "believe," "plan," "estimate," "expect," "intend," and other
similar expressions. Although the Company believes its expectations reflected in
such forward-looking statements are based on reasonable assumptions,
stockholders are cautioned that no assurance can be given that such expectations
will prove correct and that actual results and developments may differ
materially from those conveyed in such forward-looking statements. Important
factors that could cause actual results to differ materially from the
expectations reflected in the forward-looking statements herein include
fluctuations in worldwide commodities markets and the associated risks of
hedging against such fluctuations; fluctuations in aggregate industry supply and
market demand; general economic, business and market conditions in the various
geographic regions and countries in which the Company manufactures and sells its
products, including fluctuations in the value of local currencies; costs or
difficulties related to the establishment of the Company as an independent
entity; and increased competitive and/or customer pressure in the corn refining
industry. Such forward-looking statements speak only as of the date on which
they are made and the Company does not undertake any obligation to update any
forward-looking statement to reflect events or circumstances after the date of
this Form 10-K. If the Company does update or correct one or more
forward-looking statements, investors and others should not conclude that the
Company will make additional updates or corrections with respect thereto or with
respect to other forward-looking statements. See "Risk Factors" above.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Incorporated by reference from Annual Report, pages 14-31, sections
entitled "Independent Auditors' Report," and "Financial Statements."
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
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<PAGE> 23
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information contained under the headings "Board of Directors," "Matters
To Be Acted Upon - Election of Directors" and "Section 16(a) Beneficial
Ownership Reporting Compliance" in the Company's definitive proxy statement for
the Company's 1998 Annual Meeting of Stockholders (the "Proxy Statement") and
the information contained under the heading "Executive Officers of the
Registrant" in Item 1 hereof is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
The information contained under the heading "Executive Compensation" in the
Proxy Statement is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information contained under the heading "Security Ownership of Certain
Beneficial Owners and Management" in the Proxy Statement is incorporated herein
by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information contained under the heading "Certain Relationships and
Related Transactions" in the Proxy Statement is incorporated herein by
reference.
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<PAGE> 24
PART IV.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K
Item 14(a)(1) Consolidated Financial Statements and Schedules
Incorporated by reference from Annual Report, pages 14-31, sections
entitled "Independent Auditors' Report," and "Financial Statements."
Item 14(a)(2) Financial Statement Schedules
All financial statement schedules have been omitted either because the
information is not required or is otherwise included in the financial statements
and notes thereto.
Item 14(a)(3) Exhibits
The Exhibits set forth in the accompanying Exhibit Index are filed as a
part of this report. The following is a list of each management contract or
compensatory plan or arrangement required to be filed as an Exhibit to this
report:
Exhibit Number
10.9
10.10
10.11
10.12
10.13
10.14
10.15
10.16
10.17
10.18
Item 14(b) Reports on Form 8-K
There were no reports on Form 8-K filed during the quarter ended December
31, 1997.
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<PAGE> 25
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities and
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, on the 30th day of
March, 1998.
CORN PRODUCTS INTERNATIONAL, INC.
By: * Konrad Schlatter
------------------------------------
Konrad Schlatter
Chairman and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
Registrant, in the capacities indicated and on the 30th of March, 1998.
Signature Title
* Konrad Schlatter Chairman and Chief Executive Officer
- ---------------------------------
Konrad Schlatter
/s/ James W. Ripley Chief Financial Officer
- ---------------------------------
James W. Ripley
/s/ Jack Fortnum Comptroller
- ---------------------------------
Jack Fortnum
* William C. Ferguson Director
- ---------------------------------
William C. Ferguson
* Bernard H. Kastory Director
- ---------------------------------
Bernard H. Kastory
* Samuel C. Scott Director
- ---------------------------------
Samuel C. Scott
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<PAGE> 26
* Alfred C. DeCrane, Jr. Director
- ---------------------------------
Alfred C. DeCrane, Jr.
* Richard G. Holder Director
- ---------------------------------
Richard G. Holder
* Ignacio Aranguren-Castiello Director
- ---------------------------------
Ignacio Aranguren-Castiello
* William S. Norman Director
- ---------------------------------
William S. Norman
* Clifford B. Storms Director
- ---------------------------------
Clifford B. Storms
*By: /s/ Marcia E. Doane
-----------------------------
Marcia E. Doane
Attorney-in-fact
(Being the principal executive officers, the principal financial and accounting
officers and a majority of the directors of Corn Products International, Inc.)
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<PAGE> 27
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
<S> <C>
2.1 Distribution Agreement dated December 1, 1997, between the Company
and Bestfoods
3.1* Amended and Restated Certificate of Incorporation of the Company,
filed as Exhibit 3.1 to the Company's Registration Statement on Form
10, File No. 1-13397
3.2* Amended By-Laws of the Company, filed as Exhibit 3.2 to the
Company's Registration Statement on Form 10, File No. 1-13397
4.1* Rights Agreement dated November 19, 1997 between the Company and
First Chicago Trust Company of New York, filed as Exhibit 1 to the
Company's Registration Statement on Form 8-A12B, File No. 001-
13397
4.2* Certificate of Designation for the Company's Series A Junior
Participating Preferred Stock, filed as Exhibit 1 to the Company's
Registration Statement on Form 8-A12B, File No. 001-13397
4.3 5-Year Revolving Credit Agreement dated December 17, 1997 among
the Company and the agents and banks named therein
10.1 Master Supply Agreement dated January 1, 1998 between the Company
and Bestfoods
10.2 Tax Sharing Agreement dated December 1, 1997 between the Company
and Bestfoods
10.3 Tax Indemnification Agreement dated December 1, 1997 between the
Company and Bestfoods
10.4 Debt Agreement dated December 1, 1997 between the Company and
Bestfoods
10.5 Transition Services Agreement dated December 1, 1997 between the
Company and Bestfoods
10.6 Master License Agreement dated January 1, 1998 between the Company
and Bestfoods
</TABLE>
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<PAGE> 28
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
<S> <C>
10.7* Employee Benefits Agreement dated December 1, 1997 between the
Company and Bestfoods, filed as Exhibit 4.E to the Company's
Registration Statement on Form S-8, File No. 333-43525
10.8 Access Agreement dated January 1, 1998 between the Company and
Bestfoods
10.9* Stock Incentive Plan of the Company, filed as Exhibit 4.E to the
Company's Registration Statement on Form S-8, File No. 333-43525
10.10 Deferred Stock Unit Plan of the Company
10.11 Form of Severance Agreement entered into by each of K. Schlatter, S.C.
Scott, E.J. Northacker, J.W. Ripley and F.J. Kocun (the "Named
Executive Officers")
10.12 Letter Agreement dated December 12, 1997 between the Company and
E.J. Northacker
10.13 Letter Agreement dated December 12, 1997 between the Company and
F.J. Kocun
10.14 Form of Indemnification Agreement entered into by each
of the members of the Company's Board of Directors and
the Named Executive Officers
10.15 Deferred Compensation Plan for Outside Directors of the Company
10.16 Supplemental Executive Retirement Plan
10.17 Executive Life Insurance Plan
10.18 Deferred Compensation Plan
13.1 1997 Annual Report
21.1 Subsidiaries of the Company
23.1 Consent of KPMG Peat Marwick LLP
24.1 Powers of Attorney
27.1 Financial Data Schedule
27.2 Financial Data Schedule
27.3 Financial Data Schedule
</TABLE>
- --------------
* Incorporated herein by reference.
Page 26
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-2.1
<SEQUENCE>2
<DESCRIPTION>DISTRIBUTION AGREEMENT
<TEXT>
<PAGE> 1
Exhibit 2.1
EXECUTION COPY
DISTRIBUTION AGREEMENT
This DISTRIBUTION AGREEMENT is dated as of December 1, 1997, between CPC
International Inc., a Delaware corporation ("CPC"), and Corn Products
International, Inc., a Delaware corporation and wholly owned subsidiary of CPC
("Corn Products").
WHEREAS, CPC, directly and acting through its direct and indirect
subsidiaries and affiliates, currently engages in two principal businesses: (1)
a branded foods business, producing chiefly soups, sauces, bouillons, and
related products; dressings; fresh baked products; starches; desserts; spreads;
and other products marketed through the retail, clubstore, mass merchandising
and foodservice trades (the "Branded Foods Business"); and (2) a corn refining
business, producing a large variety of food ingredients and industrial products
derived from the wet milling of corn and other farinaceous materials for use in
more than 60 industries, and including the entire business of Enzyme
Bio-Systems Ltd. (the "Corn Refining Business");
WHEREAS, the Board of Directors of CPC has determined that it is
appropriate, desirable and in the best interests of CPC, Corn Products, the
holders of shares of common stock, par value $0.25 per share, of CPC (the "CPC
Common Stock") and the respective businesses, to separate from CPC the
worldwide assets relating to the Corn Refining Business, and to cause such
assets to be owned and such business to be conducted, directly or indirectly,
by an independent, publicly-traded company;
WHEREAS, in order to effect such separation, the Board of Directors of CPC
has determined that it is appropriate, desirable and in the best interests of
CPC, Corn Products, the holders of CPC Common Stock and the respective
businesses to transfer the worldwide assets relating to the Corn Refining
Business to Corn Products and then to distribute to the holders of the CPC
Common Stock, without consideration being paid by such holders, all the
outstanding shares of common stock, par value $0.01 per share, of Corn
Products, together with the appurtenant preferred stock purchase rights (the
"Corn Products Common Stock"), in a transaction that qualifies under Section
355 and Section 368(a)(1)(D) of the Internal Revenue Code of 1986, as amended;
WHEREAS, CPC and Corn Products desire to allocate and transfer such
assets, and to allocate and assign responsibility for certain liabilities
relating to the Corn Refining Business, between the parties based upon their
needs and activities; and
WHEREAS, CPC and Corn Products desire to set forth the principal corporate
transactions required to effect such Distribution (as defined herein) and to
set forth other agreements that will govern certain other matters following the
Distribution.
NOW, THEREFORE, in consideration of the mutual agreements, provisions and
covenants contained in this Agreement, the parties hereby agree as follows:
<PAGE> 2
ARTICLE I. DISTRIBUTION TRANSACTIONS AND RELATED AGREEMENTS
SECTION 1.1. Certain Distribution Transactions.
(a) Asset Transfers. On or prior to the Distribution Date, or
thereafter as specifically stated on Schedule 1.1(a)(1):
(i) CPC shall, on behalf of itself and its Subsidiaries, transfer or
cause to be transferred to Corn Products or another member
of the Corn Products Group effective prior to or as of the
Effective Time all of CPC's and its Subsidiaries' right, title
and interest in the Corn Products Assets (except for (A) such
Assets to be transferred at a later time as specified on Schedule
1.1(a)(1), which may be updated by mutual agreement of the
parties at any time prior to the Distribution Date, and (B) those
Assets listed or described on Schedule 1.1(a)(2)).
(ii) Corn Products shall, on behalf of itself and its Subsidiaries,
transfer or cause to be transferred to CPC or another member of
the CPC Group effective prior to or as of the Effective Time all
of Corn Products' and its Subsidiaries' right, title and
interest, if any, in the CPC Assets.
(b) Charter; By-laws; Rights Plan. The Certificate of Incorporation
and By-laws and the Rights Agreement filed by Corn Products with the SEC as
exhibits to the Form 10 shall be the Certificate of Incorporation and By-laws
and the Rights Agreement in effect on the Distribution Date.
(c) Directors. The individuals identified in the Information
Statement as directors of Corn Products shall be the directors of Corn
Products on the Distribution Date.
(d) Certain Licenses and Permits. Without limiting the generality
of the obligations set forth in Section 1.1(a), on or prior to the
Distribution Date or as soon as reasonably practicable thereafter (except as
specified on Schedule 1.1(a)(1)):
(i) All licenses, permits, approvals, emission reduction credits and
authorizations issued by any Governmental Entity set forth on
Schedule 1.1(d) (collectively, the "Corn Products Permits") shall
be duly and validly transferred or caused to be transferred by
CPC to the appropriate member of the Corn Products Group. To the
extent any Corn Products Permit is not transferable, CPC shall
obtain new licenses, permits or authorizations in the name of an
appropriate member of the Corn Products Group prior to the
Distribution Date or as soon as reasonably practicable
thereafter.
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(ii) Any transferable licenses, permits and authorizations issued by
Governmental Authorities which relate primarily to the CPC
Business but which are held in the name of any member of the Corn
Products Group, or in the name of any employee, officer,
director, stockholder, or agent of any such member, or otherwise,
on behalf of a member of the CPC Group shall be duly and validly
transferred or caused to be transferred by Corn Products to the
appropriate member of the CPC Group.
(e) Transfer of Agreements. Without limiting the generality of the
obligations set forth in Section 1.1(a):
(i) CPC hereby agrees that on or prior to the Distribution Date or
as soon as reasonably practicable thereafter, subject to the
limitations set forth in this Section 1.1(e), it will, and it
will cause each member of the CPC Group to, assign, transfer and
convey to the appropriate member of the Corn Products Group all
of CPC's or such member of the CPC Group's respective right,
title and interest in and to any and all Corn Products Contracts
(except for such Corn Products Contracts to be transferred at a
later time as specified on Schedule 1.1(a)(1)).
(ii) Corn Products hereby agrees that on or prior to the Distribution
Date or as soon as reasonably practicable thereafter,
subject to the limitations set forth in this Section 1.1(e), it
will, and it will cause each member of the Corn Products Group
to, assign, transfer and convey to the appropriate member of the
CPC Group all of Corn Products' or such member of the Corn
Products Group's respective right, title and interest in and to
any and all CPC Contracts.
(iii) Subject to the provisions of this Section 1.1(e), any agreement
to which any of the parties hereto or any of their
Subsidiaries is a party that inures to the benefit of both the
CPC Business and Corn Products Business shall, to the extent
possible, be assigned in part so that each party shall be
entitled to the rights and benefits inuring to its business
under such agreement.
(iv) The assignee of any agreement assigned, in whole or in part,
hereunder (an "Assignee") shall assume and agree to pay,
perform, and fully discharge all obligations of the assignor
under such agreement or, in the case of a partial assignment
under paragraph (e) (iii), such Assignee's related portion of
such obligations as determined in accordance with the terms of
the relevant agreement, where determinable on the face thereof,
and otherwise as determined
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in accordance with the practice of the parties prior to the
Distribution.
(v) Notwithstanding anything in this Agreement to the contrary, this
Agreement shall not constitute an agreement to assign any
agreement, in whole or in part, or any rights thereunder if the
agreement to assign or attempt to assign, without the consent of
a third party, would constitute a breach thereof or in any way
adversely affect the rights of the assignor or Assignee thereof.
Until such consent is obtained, or if an attempted assignment
thereof would be ineffective or would adversely affect the rights
of any party hereto so that the intended Assignee would not, in
fact, receive all such rights, the parties will cooperate with
each other in any arrangement designed to provide for the
intended Assignee the benefits of (or in the case of any
agreement subject to clause (iii) above, the portion of such
benefits), and to permit the intended Assignee to assume the
Liabilities (or the appropriate portion thereof) under, any such
agreement.
(f) Consents. The parties hereto shall use their commercially
reasonable efforts to obtain required consents for transfer and/or
assignment of licenses, permits and authorizations of Governmental Authorities
and of agreements hereunder.
(g) Other Transactions. Except as specified on Schedule 1.1(a)(1),
on or prior to the Distribution Date, each of CPC and Corn Products shall
have consummated (i) the transactions specified on the list of pre-Distribution
reorganization steps set forth in Schedule 1.1(g) and (ii) those other
transactions in connection with the Distribution that are described in or
contemplated by the Information Statement and the ruling (the "Ruling") granted
by the Internal Revenue Service in connection with the Distribution, as well as
the transactions described in the ruling request submissions by CPC to the
Internal Revenue Service insofar as the Ruling is premised on the completion of
such transactions, and not specifically referred to in subparagraphs (a) - (f)
above.
(h) Pollution Control Bonds; Industrial Revenue Bonds. Pursuant to the
terms of the Lease Assumption, CPC will assign its leasehold interests in
certain real and personal property located in Summit/Argo, Illinois which are
subject to the terms of the Pollution Control Bonds set forth on Schedule
1.1(h)(1). Corn Products shall comply with the terms and conditions of, and
covenants and agreements set forth in, the Lease Assumption. With respect to
the Corn Products Assets that are subject to the Industrial Revenue Bonds and
related documents set forth on Schedule 1.1(h)(2) hereto, Corn Products agrees
that upon transfer of the Projects (as defined in the applicable documents) to
Corn Products, it will comply with the terms and conditions of the documents
described in Schedule 1.1(h)(2); and acknowledges that the interest on the
Industrial Revenue Bonds is intended to be tax-exempt to the bondholders for
purposes of U.S. federal income taxation. In addition, Corn Products covenants
that (i) so long as the applicable Industrial Revenue Bonds are outstanding,
Corn Products will use and operate each
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Project as a "project" within the meaning of the applicable law identified in
the documents described in Schedule 1.1(h)(2), including any amendments and
supplements to such laws, and (ii) Corn Products will not cause the use of the
Project to be changed to a use, or take or authorize or permit any action, that
would result in any interest paid on such bonds to be included in the gross
income of any holder thereof for purposes of U.S. federal income taxation.
Corn Products shall notify CPC 90 days prior to the disposition or change in
ownership of any Project, or the occurrence of any circumstances which may
result in a change in the use of any Project that would cause any interest paid
on such bonds to be included in the gross income of any holder for purposes of
U.S. federal income taxation.
SECTION 1.2. Treatment of Intercompany Accounts. All intercompany
receivables, payables and loans (other than receivables, payables and loans
otherwise specifically provided for hereunder or under any Ancillary Agreement,
including payables created or required hereby or by any Ancillary Agreement),
including, without limitation, in respect of any cash balances, any cash
balances representing deposited checks or drafts for which only a provisional
credit has been allowed or any cash held in any centralized cash management
system, between any member of the Corn Products Group, on the one hand, and any
member of the CPC Group, on the other hand, which exist and are reflected in
the accounting records of the parties shall, to the extent practicable, be paid
or settled prior to the Distribution Date, and otherwise thereafter, in the
ordinary course of business in a manner consistent with the payment or
settlement of similar accounts arising from transactions with third parties.
SECTION 1.3. Liabilities.
(a) Assumptions and Satisfaction of Liabilities. Except as otherwise
specifically set forth in any Ancillary Agreement, from and after the Effective
Time, (i) CPC shall cause an appropriate member of the CPC Group to assume,
pay, perform and discharge each CPC Liability and (ii) Corn Products shall
cause an appropriate member of the Corn Products Group to assume, pay, perform
and discharge each Corn Products Liability. To the extent reasonably requested
to do so by the other party hereto, each party hereto agrees to sign, or to
cause the appropriate member of the CPC Group or the Corn Products Group to
sign, such documents, in a form reasonably satisfactory to the other party, as
may be reasonably necessary to evidence the assumption of any Liabilities
hereunder.
(b) Transaction Liabilities. For purposes of this Agreement, including
Article III hereof, CPC agrees with Corn Products that (i) any and all
Liabilities arising from or based upon misstatements in or omissions from the
Form 10 or the Information Statement and (ii) except as otherwise provided in
any Ancillary Agreement, any and all Liabilities otherwise arising out of the
transactions contemplated by this Agreement (including any stock transfer taxes
or real estate transfer taxes relating to the pre-Distribution separation of
the Corn Refining Business from the CPC Business) in order to effectuate the
Distribution, including the worldwide separation of the Corn Products Business
from the CPC Business (except for any liabilities with respect to any other
Tax, the treatment of which shall be governed by the Tax Indemnification
Agreement and the Tax Sharing Agreement), shall be deemed to be CPC Liabilities
and not Corn Products Liabilities.
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SECTION 1.4. Resignations. Except as described in the Information
Statement or as otherwise agreed between the parties, CPC shall cause all of
its employees to resign, effective as of the Effective Time, from all positions
as officers or directors of any member of the Corn Products Group in which they
serve, and Corn Products shall cause all of its employees to resign, effective
as of the Effective Time, from all positions as officers or directors of any
member of the CPC Group in which they serve.
SECTION 1.5. Further Assurances. In case at any time after the Effective
Time any further action is reasonably necessary or desirable to carry out the
purposes of this Agreement and the Ancillary Agreements, the proper officers of
each party to this Agreement shall take all such necessary action. Without
limiting the foregoing, CPC and Corn Products shall use their commercially
reasonable efforts promptly to obtain all consents and approvals, to enter into
all amendatory agreements and to make all filings and applications that may be
required for the consummation of the transactions contemplated by this
Agreement and the Ancillary Agreements, including, without limitation, all
applicable governmental and regulatory filings.
SECTION 1.6. Limitation on Representations and Warranties. Each of the
parties hereto agrees that no party hereto is, in this Agreement or in any
other agreement or document contemplated by this Agreement or otherwise, making
any representation or warranty whatsoever, as to title or value of Assets being
transferred. It is also agreed that, notwithstanding anything to the contrary
otherwise expressly provided in a relevant Conveyancing and Assumption
Instrument, all Assets either transferred to or retained by the parties, as the
case may be, shall be "as is, where is" and that (subject to Section 1.5) the
party to which such Assets are to be transferred hereunder shall bear the
economic and legal risk that such party's or any of the Subsidiaries' title to
any such Assets shall be other than good and marketable and free from
encumbrances. Similarly, each party hereto agrees that, except as otherwise
expressly provided in the relevant Conveyancing and Assumption Instrument, no
party hereto is representing or warranting in any way that the obtaining of any
consents or approvals, the execution and delivery of any amendatory agreements
and the making of any filings or applications contemplated by this Agreement
will satisfy the provisions of any or all applicable agreements or the
requirements of any or all applicable laws or judgments, it being agreed that
the party to which any Assets are transferred shall bear the economic and legal
risk that any necessary consents or approvals are not obtained or that any
requirements of laws or judgments are not complied with.
SECTION 1.7. Guarantees; Security Interests.
(a) Except as otherwise specified in any Ancillary Agreement, CPC and
Corn Products shall use their commercially reasonable efforts to have, on or
prior to the Distribution Date, or as soon as practicable thereafter, any
member of the CPC Group removed as guarantor of or obligor for any Corn
Products Liability, including, without limitation, in respect of those
guarantees set forth on Schedule 1.7(a). CPC and Corn Products shall use
commercially reasonable efforts to remove, or cause the removal of, any liens
on, or other security interests in, CPC Assets, which security interests arise
primarily from Corn Products Liabilities.
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(b) Except as otherwise specified in any Ancillary Agreement, CPC and
Corn Products shall use their commercially reasonable efforts to have, on or
prior to the Distribution Date, or as soon as practicable thereafter, any
member of the Corn Products Group removed as guarantor of or obligor for any
CPC Liability. Corn Products and CPC shall use commercially reasonable efforts
to remove, or cause the removal of, any liens on, or other security interests
in, Corn Products Assets, which security interests arise primarily from CPC
Liabilities.
(c) If CPC or Corn Products is unable to obtain, or to cause to be
obtained, any such required removal as set forth in clauses (a) and (b) of this
Section 1.7, the applicable guarantor or obligor shall continue to be bound as
such and, unless not permitted by law or the terms thereof, the relevant
beneficiary shall or shall cause one of its Subsidiaries, as agent or
subcontractor for such guarantor or obligor to pay, perform and discharge fully
all the obligations or other liabilities of such guarantor or obligor
thereunder from and after the date hereof. To the extent any member of the CPC
Group or any member of the Corn Products Group is required to pay or expend any
amount which it would not have been required to pay or expend if the parties
hereto had been able to obtain such required removal as set forth in clauses
(a) and (b) of this Section 1.7, (i) Corn Products shall cause the appropriate
member of the Corn Products Group or (ii) CPC shall cause the appropriate
member of the CPC Group to reimburse the applicable member of the CPC Group or
the Corn Products Group, as the case may be, for such amount.
SECTION 1.8. Witness Services. At all times from and after the
Distribution Date, CPC and Corn Products shall use their commercially
reasonable efforts to make available to the other, upon reasonable written
request, its and its Subsidiaries' then current officers, directors, employees
and agents as witnesses to the extent that (i) such persons may reasonably be
required in connection with the prosecution or defense of any Action in which
the requesting party may from time to time be involved and (ii) there is no
conflict in the Action between the requesting party and CPC or Corn Products,
as applicable. A party providing witness services to the other party under
this Section shall be entitled to receive from the recipient of such services,
upon the presentation of invoices therefor, payments for such amounts, relating
to disbursements and other out-of-pocket expenses (which shall be deemed to
exclude the costs of salaries and benefits of employees who are witnesses), as
may be reasonably incurred in providing such witness services.
SECTION 1.9. Transfers Not Effected Prior to the Distribution; Transfers
Deemed Effective as of the Distribution Date. To the extent that any transfers
discussed in this Article I shall not have been consummated on or prior to the
Distribution Date, the parties shall cooperate to effect such transfers as
promptly following the Distribution Date as shall be practicable. Nothing
herein shall be deemed to require the transfer of any Assets or the assumption
of any Liabilities which by their terms, operation of law or agreement of the
parties cannot or will not be transferred on or prior to the Distribution Date;
provided, however, that the parties hereto and their respective Subsidiaries
shall cooperate to obtain any necessary consents or approvals for the transfer
of all Assets and Liabilities contemplated to be transferred pursuant to this
Article I. In the event that any such transfer of Assets or Liabilities has
not been
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consummated, from and after the Distribution Date, the party retaining such
Asset or Liability shall hold such Asset in trust for the use and benefit of
the party entitled thereto (at the expense and under the management and
direction of the party entitled thereto) or retain such Liability for the
account of the party by whom such Liability is to be assumed pursuant hereto,
as the case may be, and take such other action as may be reasonably requested
by the party to whom such Asset is to be transferred, or by whom such Liability
is to be assumed, as the case may be, in order to place such party, insofar as
is reasonably possible, in the same position as would have existed had such
Asset or Liability been transferred as contemplated hereby. As and when any
such Asset or Liability becomes transferable, such transfer shall be effected
forthwith. The parties agree that, as of the Distribution Date, each party
hereto shall be deemed to have acquired complete and sole beneficial ownership
over all of the Assets, together with all rights, powers and privileges
incident thereto, and shall be deemed to have assumed in accordance with the
terms of this Agreement all of the Liabilities, and all duties, obligations and
responsibilities incident thereto, which such party is entitled to acquire or
required to assume pursuant to the terms of this Agreement.
SECTION 1.10. Conveyancing and Assumption Instruments. In connection
with the transfers of Assets and the assumptions of Liabilities contemplated by
this Agreement, the parties shall execute or cause to be executed by the
appropriate entities Conveyancing and Assumption Instruments in such form as
the parties shall reasonably agree, including the transfer of real property
with deeds as may be appropriate. The transfer of capital stock shall be
effected by means of delivery of stock certificates and executed stock powers
and notation on the stock record books of the corporation or other legal
entities involved, or by such other means as may be required or permitted in
any jurisdiction to transfer title to stock and, to the extent required by
applicable law, by notation on public registries.
SECTION 1.11. Ancillary Agreements. Prior to the Distribution Date, CPC
and Corn Products shall enter into, and/or (where applicable) shall cause
members of their respective Groups to enter into, the Ancillary Agreements and
any other agreements in respect of the Distribution reasonably necessary or
appropriate in connection with the transactions contemplated hereby and
thereby.
SECTION 1.12. Corporate Names.
(a) Except as otherwise specifically provided in any Ancillary
Agreement:
(i) as soon as reasonably practicable after the Distribution Date
but in any event within one year thereafter, Corn Products
will, at its own expense, remove (or, if necessary, on an interim
basis, cover up) any and all exterior signs and other identifiers
located on any of Corn Products' property or premises or on the
property or premises used by Corn Products or its Subsidiaries
(except property or premises to be shared with CPC or its
Subsidiaries after the Distribution) which refer or pertain to
CPC or which include the CPC name, logo or any
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other trademark or the name of any member of the CPC Group or
any other CPC intellectual property; and
(ii) as soon as is reasonably practicable after the Distribution Date
but in any event within one year thereafter, Corn Products
will, and will cause its Subsidiaries to, remove from all
packaging materials, letterhead, envelopes, invoices and other
communications media of any kind, all references to CPC,
including the CPC name, logo and any other trademark or name of
any member of the CPC Group or any other CPC intellectual
property (except that Corn Products shall not be required to take
any such action with respect to materials in the possession of
customers and Corn Products may, until the first anniversary of
the Distribution Date, continue to use existing stock and
supplies), and neither Corn Products nor any of its Subsidiaries
shall use or display the CPC name, logo or other trademarks or
name of any member of the CPC Group or any other CPC intellectual
property without the prior written consent of CPC.
(b) Except as otherwise specifically provided in any Ancillary
Agreement:
(i) as soon as reasonably practicable after the Distribution Date
but in any event within one year thereafter, CPC will, at
its own expense, remove (or, if necessary, on an interim basis,
cover up) any and all exterior signs and other identifiers
located on any of CPC's property or premises or on the property
or premises used by CPC or its Subsidiaries (except property or
premises to be shared with Corn Products or its Subsidiaries
after the Distribution) which refer or pertain to Corn Products
or which include the Corn Products name, logo or any other
trademark or the name of any member of the Corn Products Group or
any other Corn Products intellectual property; and
(ii) as soon as is reasonably practicable after the Distribution Date
but in any event within one year thereafter, CPC will, and
will cause its Subsidiaries to, remove from all packaging
materials, letterhead, envelopes, invoices and other
communications media of any kind, all references to Corn
Products, including the Corn Products name, logo and any other
trademark or name of any member of the Corn Products Group or any
other Corn Products intellectual property (except that CPC shall
not be required to take any such action with respect to materials
in the possession of customers and CPC may, until the first
anniversary of the Distribution Date, continue to use existing
stock and supplies), and neither CPC nor any of its Subsidiaries
shall use or display the Corn Products name, logo or other
trademarks or name of any member of the Corn Products
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Group or any other Corn Products intellectual property without
the prior written consent of Corn Products.
(c) Corn Products shall use its reasonable best efforts to cause
Arancia to (i) change its name to delete reference to CPC; (ii) remove (or, if
necessary, on an interim basis, cover up) any and all exterior signs and other
identifiers located on any of Arancia's property or premises or on the property
or premises used by Arancia or its Subsidiaries (except property or premises to
be shared with CPC or its Subsidiaries after the Distribution) which refer or
pertain to CPC or which include the CPC name, logo or any other trademark or
the name of any member of the CPC Group or any other CPC intellectual property
and (iii) remove from all letterhead, envelopes, invoices and other
communications media of any kind, all references to CPC, including the CPC
name, logo and any other trademark or name of any member of the CPC Group or
any other CPC intellectual property.
(d) Each party acknowledges that it has no interest in nor any right
to use or display the name or any trademark or intellectual property of
the other party in any way, except to the extent specifically provided herein
or in any Ancillary Agreement.
SECTION 1.13. Insurance.
(a) Effective as of the Effective Time, Corn Products shall be
responsible for having in place and maintaining an insurance program for the
Corn Products Group.
(b) To the extent any Insurance Proceeds are actually received by
CPC or any member of the CPC Group after the Effective Time with respect to a
loss of, or damage to, Corn Products Assets prior to the Effective Time
(including any Insurance Proceeds with respect to continuing business
interruption experienced by the Corn Products Business after the Effective
Time), CPC shall, or shall cause the appropriate member of the CPC Group to,
remit such Insurance Proceeds (less any Taxes on the excess of the Insurance
Proceeds over the Tax deduction, if any, in respect of the loss or damage
resulting in the receipt of such Insurance Proceeds and less any expenses
incurred by CPC or any member of the CPC Group to obtain such Insurance
Proceeds, to the extent not reimbursed by the appropriate insurance carrier) to
Corn Products or the member of the Corn Products Group designated by Corn
Products; provided, however, that CPC shall not be required to remit any
Insurance Proceeds to any member of the Corn Products Group with respect to
business interruption to the Corn Products Business prior to the Effective
Time. To the extent CPC receives Insurance Proceeds with respect to loss of,
or damage to, both Corn Products Assets and CPC Assets prior to the Effective
Time and the allocation thereof is not identified by the insurance carrier, CPC
and Corn Products shall share such Insurance Proceeds in proportion to the
relative value of the lost or damaged Assets (taking into account the business
interruption resulting from such loss or damage). CPC shall, or shall cause an
appropriate member of the CPC Group to, take commercially reasonable steps to
recover any Insurance Proceeds payable with respect to loss of, or damage to,
Corn Products Assets.
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ARTICLE II. THE DISTRIBUTION
SECTION 2.1. Issuance of Shares to CPC. Corn Products shall, in
consideration for the contribution by CPC of the assets of the Corn Refining
Business to the Company pursuant hereto, issue to CPC, for further distribution
to the stockholders of CPC, a number of shares of Corn Products Common Stock
equal to (A) the quotient of (x) the number of shares of CPC Common Stock
outstanding on the Distribution Record Date minus the sum of (i) the number of
restricted shares of CPC Common Stock outstanding on the Distribution Record
Date and (ii) the number of shares of CPC Common Stock held by the Rabbi Trusts
on the Distribution Record Date divided by (y) four (4), minus (B) one hundred
(100).
SECTION 2.2. Record Date and Distribution Date. Subject to the
satisfaction of the conditions set forth in this Agreement, the Board of
Directors of CPC, in its sole discretion and consistent with this Agreement,
shall establish the Distribution Record Date and the Distribution Date and any
appropriate procedures in connection with the Distribution.
SECTION 2.3. The Agent. Prior to the Distribution Date, CPC shall enter
into an agreement with the Agent providing for, among other things, the payment
of the Distribution to the holders of CPC Common Stock in accordance with this
Article II.
SECTION 2.4. Delivery of Share Certificates to the Agent. Prior to the
Distribution Date, CPC shall inform the Agent of the number of shares of Corn
Products Common Stock to be distributed in connection with the payment of the
Distribution and, at or prior to the Effective Time, CPC shall deliver to the
Agent a share certificate representing all of the then outstanding shares of
Corn Products Common Stock owned by CPC. Corn Products shall provide the Agent
with all share certificates and any information that the Agent shall require in
order to effect the Distribution. All shares of Corn Products Common Stock
issued in the Distribution shall be duly authorized, validly issued, fully paid
and nonassessable.
SECTION 2.5. The Distribution.
(a) Subject to Sections 2.5(b) and 2.5(c) and to the other terms and
conditions of this Agreement, CPC shall instruct the Agent to distribute, as of
the Distribution Date, one share of Corn Products Common Stock in respect of
every four shares of CPC Common Stock held by holders of record of CPC Common
Stock on the Distribution Record Date.
(b) No distribution of Corn Products Common Stock shall be made with
respect to shares of restricted CPC Common Stock issued pursuant to the Stock
Plans. As permitted by the Stock Plans, in lieu of such distribution, the
number of shares of restricted CPC Common Stock held by each person who is an
employee of the CPC Group on the day following the Effective Date shall be
adjusted by multiplying the number of shares held by such employee on the
Distribution Record Date by a fraction, the numerator of which is the average
of the high and low prices of CPC Common Stock on the NYSE for each of the ten
trading days immediately prior to the first day on which there is trading in
CPC Common Stock on a post-Distribution basis and the denominator of which is
the average of the high and low prices of CPC Common Stock on the NYSE for each
of the ten trading days beginning on the first day on which there is trading in
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CPC Common Stock on a post-Distribution basis; provided, however, that no
adjustment shall be made if the foregoing fraction yields a result which is
less than one (1). Shares of restricted CPC Common Stock held by each person
who is an employee of the Corn Products Group on the day after the Effective
Date shall be converted into restricted shares of Corn Products Common Stock
pursuant to the Employee Benefits Agreement.
(c) No distribution of Corn Products Common Stock shall be made with
respect to shares of CPC Common Stock owned by the Rabbi Trusts if the Rabbi
Trusts shall have waived the right to receive such distribution. In lieu of
such distribution, and in consideration for such waiver, CPC shall issue and
deliver additional shares of CPC Common Stock to the extent necessary such that
the number of shares of CPC Common Stock held by the Rabbi Trusts after the
Distribution shall be equal to the number obtained by multiplying the number of
shares held by the Rabbi Trusts on the Distribution Record Date by a fraction,
the numerator of which is the average of the high and low prices of CPC Common
Stock on the NYSE for each of the ten trading days immediately prior to the
first day on which there is trading in CPC Common Stock on a post-Distribution
basis and the denominator of which is the average of the high and low prices of
CPC Common Stock on the NYSE for each of the ten trading days beginning on the
first day on which there is trading in CPC Common Stock on a post-Distribution
basis; provided, however, that no adjustment shall be made if the foregoing
fraction yields a result which is less than one (1).
SECTION 2.6. Fractional Shares.
(a) Notwithstanding anything in this Agreement to the contrary, no
fractional shares of Corn Products Common Stock shall be issued in connection
with the Distribution, and any such fractional share interests to which a
holder of CPC Common Stock would otherwise be entitled will not entitle such
stockholder to vote or to any rights of a stockholder of Corn Products. In
lieu of any such fractional shares, each stockholder who, but for the
provisions of this Section, would be entitled to receive a fractional share
interest of Corn Products Common Stock shall be paid cash, without any interest
thereon, as hereinafter provided. CPC shall instruct the Agent to determine
the number of whole shares and fractional interests of Corn Products Common
Stock allocable to each holder of CPC Common Stock (a) to determine the number
of whole shares and fractional shares of Corn Products Common Stock allocable
to each holder of record of CPC Common Stock outstanding on the Distribution
Record Date; (b) to aggregate all such fractional shares into whole shares and
sell on a when issued basis the whole shares obtained thereby in the open
market as soon as practicable following the Distribution Record Date and (c) as
soon as practicable following the Distribution Date, to distribute to each
holder of CPC Common Stock to which fractional shares of Corn Products Common
Stock have been allocated such holder's ratable share of the net proceeds from
such sale, after making appropriate deductions of the amount required, if any,
for federal income tax withholding purposes and after deducting any applicable
transfer taxes. All brokers' fees and commissions incurred in connection with
such sales shall be paid by CPC.
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(b) Solely for purposes of computing fractional share interests pursuant
to this Section 2.6, the beneficial owner of shares of CPC Common Stock held of
record in the name of a nominee will be treated as the holder of record of such
shares.
ARTICLE III. INDEMNIFICATION AND RELEASE OF PRE-CLOSING CLAIMS
SECTION 3.1. Indemnification by CPC. Except as otherwise specifically
set forth in any provision of this Agreement or of any Ancillary Agreement, CPC
shall cause the appropriate member of the CPC Group to indemnify, defend and
hold harmless the Corn Products Indemnitees from and against any and all
Indemnifiable Losses of the Corn Products Indemnitees arising out of, by reason
of or otherwise in connection with the CPC Liabilities or alleged CPC
Liabilities, including any breach by CPC of any provision of this Agreement or
any Ancillary Agreement (less any Insurance Proceeds received by the Corn
Products Indemnitees in respect thereof).
SECTION 3.2. Indemnification by Corn Products. Except as otherwise
specifically set forth in any provision of this Agreement or of any Ancillary
Agreement, Corn Products shall cause the appropriate member of the Corn
Products Group to indemnify, defend and hold harmless the CPC Indemnitees from
and against any and all Indemnifiable Losses of the CPC Indemnitees arising out
of, by reason of or otherwise in connection with the Corn Products Liabilities
or alleged Corn Products Liabilities, including any breach by Corn Products of
any provision of this Agreement or any Ancillary Agreement (less any Insurance
Proceeds received by the CPC Indemnitees in respect thereof).
SECTION 3.3. Procedures for Indemnification.
(a) Third Party Claims. If a claim or demand is made against a CPC
Indemnitee or a Corn Products Indemnitee (each, an "Indemnitee") by any person
who is not a party to this Agreement or any Subsidiary of such person (a "Third
Party Claim") as to which such Indemnitee may be entitled to indemnification
pursuant to this Agreement, such Indemnitee shall notify the party which is or
may be required pursuant to Section 3.1 or Section 3.2 hereof to make such
indemnification (the "Indemnifying Party") in writing, and in reasonable
detail, of the Third Party Claim promptly (and in any event within 15 business
days) after receipt by such Indemnitee 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 in which the Indemnitee failed to give such
notice). Thereafter, the Indemnitee shall deliver to the Indemnifying Party,
promptly (and in any event within five business days) after the Indemnitee's
receipt thereof, copies of all notices and documents (including court papers)
received by the Indemnitee relating to the Third Party Claim.
If a Third Party Claim is made against an Indemnitee, the Indemnifying
Party shall be entitled to participate in the defense thereof and, if it so
chooses and acknowledges
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in writing its obligation to indemnify the Indemnitee therefor, to assume the
defense thereof with counsel selected by the Indemnifying Party and reasonably
acceptable to the Indemnitee. Should the Indemnifying Party so elect to assume
the defense of a Third Party Claim, the Indemnifying Party shall, within 30
days (or sooner if the nature of the Third Party Claim so requires), notify the
Indemnitee of its intent to do so, and the Indemnifying Party shall thereafter
not be liable to the Indemnitee for legal or other expenses subsequently
incurred by the Indemnitee in connection with the defense thereof; provided,
that the Indemnitee shall have the right to employ separate counsel if, in the
Indemnitee's reasonable judgment, a conflict of interest between the Indemnitee
and the Indemnifying Party exists in respect of such claim which would make
representation of both parties by one counsel inappropriate, and in such event
the fees and expenses of such separate counsel shall be paid by the
Indemnifying Party. If the Indemnifying Party assumes such defense, the
Indemnitee shall have the right to participate in the defense thereof and to
employ counsel, subject to the proviso of the preceding sentence, at its own
expense, separate from the counsel employed by the Indemnifying Party, it being
understood that the Indemnifying Party shall control such defense. The
Indemnifying Party shall be liable for the fees and expenses of counsel
employed by the Indemnitee for any period during which the Indemnifying Party
has failed to assume the defense thereof (other than during the period prior to
the time the Indemnitee shall have given notice of the Third Party Claim as
provided above). If the Indemnifying Party so elects to assume the defense of
any Third Party Claim, all of the Indemnitees shall cooperate with the
Indemnifying Party in the defense or prosecution thereof, including by
providing or causing to be provided, Records and witnesses as soon as
reasonably practicable after receiving any request therefor from or on behalf
of the Indemnifying Party.
If the Indemnifying Party acknowledges in writing its obligation to
indemnify the Indemnitee with respect to a Third Party Claim, then in no event
will the Indemnitee admit any liability with respect to, or settle, compromise
or discharge, any such Third Party Claim without the Indemnifying Party's prior
written consent; provided, however, that the Indemnitee shall have the right to
settle, compromise or discharge such Third Party Claim without the consent of
the Indemnifying Party if the Indemnitee releases the Indemnifying Party from
its indemnification obligation hereunder with respect to such Third Party Claim
and such settlement, compromise or discharge would not otherwise adversely
affect the Indemnifying Party. If the Indemnifying Party acknowledges in
writing its obligation to indemnify the Indemnitee with respect to a Third
Party Claim, the Indemnitee will agree to any settlement, compromise or
discharge of a Third Party Claim that the Indemnifying Party may recommend and
that by its terms obligates the Indemnifying Party to pay the full amount of
the liability in connection with such Third Party Claim and releases the
Indemnitee completely in connection with such Third Party Claim and that would
not otherwise adversely affect the Indemnitee; provided, however, that the
Indemnitee may refuse to agree to any such settlement, compromise or discharge
if the Indemnitee agrees that the Indemnifying Party's indemnification
obligation with respect to such Third Party Claim shall not exceed the amount
that would be required to be paid by or on behalf of the Indemnifying Party in
connection with such settlement, compromise or discharge. If an Indemnifying
Party elects not to assume the defense of a Third Party Claim, or fails to
notify an Indemnitee of its election to do so as provided herein, such
Indemnitee may compromise, settle or defend such Third Party Claim.
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Notwithstanding the foregoing, the Indemnifying Party shall not be
entitled to assume the defense of any Third Party Claim (and shall be liable
for the reasonable fees and expenses of counsel incurred by the Indemnitee in
defending such Third Party Claim) if the Third Party Claim seeks an order,
injunction or other equitable relief or relief for other than money damages
against the Indemnitee which the Indemnitee reasonably determines, after
conferring with its counsel, cannot be separated from any related claim for
money damages. If such equitable relief or other relief portion of the Third
Party Claim can be so separated from that for money damages, the Indemnifying
Party shall be entitled to assume the defense of the portion relating to money
damages.
(b) In the event of payment by an Indemnifying Party to any
Indemnitee in connection with any Third Party Claim, such Indemnifying Party
shall be subrogated to and shall stand in the place of such Indemnitee as to
any events or circumstances in respect of which such Indemnitee may have any
right or claim relating to such Third-Party Claim against any claimant or
plaintiff asserting such Third Party Claim. Such Indemnitee shall cooperate
with such Indemnifying Party in a reasonable manner, and at the cost and
expense of such Indemnifying Party, in prosecuting any subrogated right or
claim.
(c) The remedies provided in this Article III shall be cumulative and
shall not preclude assertion by any Indemnitee of any other rights or the
seeking of any and all other remedies against any Indemnifying Party.
SECTION 3.4. Indemnification Payments. Indemnification required by this
Article III shall be made by periodic payments of the amount thereof during the
course of the investigation or defense, as and when bills are received or loss,
liability, claim, damage or expense is incurred.
ARTICLE IV. ACCESS TO INFORMATION
SECTION 4.1. Provision of Corporate Records.
(a) Other than in circumstances in which indemnification is sought
pursuant to Article III (in which event the provisions of such Article will
govern), after the Distribution Date, upon the prior written request by Corn
Products for specific and identified agreements, documents, books, records,
data, files or other information (collectively, "Records") which relate to (x)
Corn Products or the conduct of the Corn Products Business, as the case may be,
prior to the Effective Time, or (y) any Ancillary Agreement to which CPC and
Corn Products are parties, as applicable, CPC shall arrange, as soon as
reasonably practicable following the receipt of such request, for the provision
of appropriate copies of such Records (or the originals thereof if Corn
Products has a reasonable need for such originals) in the possession or control
of CPC or any of its Subsidiaries, but only to the extent such items are not
already in the possession or control of Corn Products.
(b) Other than in circumstances in which indemnification is sought
pursuant to Article III (in which event the provisions of such Article will
govern), after the Distribution Date, upon the prior written request by CPC for
specific and identified Records
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which relate to (x) CPC or the conduct of the CPC Business, as the case may be,
prior to the Effective Time, or (y) any Ancillary Agreement to which Corn
Products and CPC are parties, as applicable, Corn Products shall arrange, as
soon as reasonably practicable following the receipt of such request, for the
provision of appropriate copies of such Records (or the originals thereof if
CPC has a reasonable need for such originals) in the possession or control of
Corn Products or any of its Subsidiaries, but only to the extent such items are
not already in the possession or control of CPC.
SECTION 4.2. Access to Information by CPC and Corn Products. Other than
in circumstances in which indemnification is sought pursuant to Article III (in
which event the provisions of such Article will govern), from and after the
Distribution Date, each of CPC and Corn Products shall afford to the other and
its authorized accountants, counsel and other designated representatives
reasonable access during normal business hours, subject to appropriate
restrictions for classified, privileged or confidential information, to the
personnel, properties, books and records of such party and its Subsidiaries
insofar as such access is reasonably required by the other party and relates to
(x) such other party or the conduct of its business prior to the Effective Date
or (y) any Ancillary Agreement to which each of the party requesting such
access and the party requested to grant such access are parties.
SECTION 4.3. Reimbursement; Other Matters. Except to the extent
otherwise contemplated by any Ancillary Agreement, a party providing Records or
access to information to the other party under this Article IV shall be
entitled to receive from the recipient, upon the presentation of invoices
therefor, payments for such amounts, relating to supplies, disbursements and
other out-of-pocket expenses, as may be reasonably incurred in providing such
Records or access to information.
SECTION 4.4. Confidentiality. Except as required in connection with the
Information Statement and Corn Products' Registration Statement on Form 10,
each of (i) CPC and its Subsidiaries and (ii) Corn Products and its
Subsidiaries, shall not, for seven years following the Distribution Date, use
or permit the use of (without the prior written consent of the other) and shall
keep, and shall cause its consultants and advisors to keep, confidential all
information concerning the other parties in its possession, its custody or
under its control (except to the extent that (A) such information has been in
the public domain through no fault of such party or (B) such information has
been later lawfully acquired from other sources by such party or (C) this
Agreement or any other Ancillary Agreement or any other agreement entered into
pursuant hereto permits the use or disclosure of such information) to the
extent such information (w) relates to or was acquired during the period prior
to the Effective Time, (x) relates to any Ancillary Agreement, (y) is obtained
in the course of performing services for the other party pursuant to any
Ancillary Agreement, or (z) is based upon or is derived from information
described in the preceding clauses (w), (x) or (y) and each party shall not
(without the prior written consent of the other) otherwise release or disclose
such information to any other person, except such party's auditors and
attorneys. In the event any member of the CPC Group or any member of the Corn
Products Group is requested or required (by oral questions, interrogatories,
requests for information or documents, subpoena, or judicial, administrative or
similar process) to disclose any confidential information, CPC or Corn
Products, as the case may be, will, or will
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cause such member to, provide Corn Products or CPC, as applicable, with prompt
notice of such request(s) so that it may seek an appropriate protective order
or other appropriate remedy and/or waive compliance with the provisions of this
Section 4.4. In the event that such protective order or other remedy is not
obtained, or a waiver is granted hereunder, the party required to provide
confidential information shall disclose that information (and only that
information) which, in the written opinion of counsel, it is legally compelled
to disclose and will exercise its reasonable best efforts to obtain reliable
assurance that confidential treatment will be accorded the information so
furnished.
SECTION 4.5. Privileged Matters. The parties hereto recognize that legal
and other professional services that have been and will be provided prior to
the Distribution Date have been and will be rendered for the benefit of each of
the members of the CPC Group and of the Corn Products Group, and that each of
the members of the CPC Group and of the Corn Products Group should be deemed to
be the client for the purposes of asserting all privileges which may be
asserted under applicable law. To allocate the interests of each party in the
information as to which any party is entitled to assert a privilege, the
parties agree as follows:
(a) CPC shall be entitled, in perpetuity, to control the assertion or
waiver of all privileges in connection with privileged information which
relates solely to the CPC Business, whether or not the privileged information
is in the possession of or under the control of CPC or Corn Products. CPC
shall also be entitled, in perpetuity, to control the assertion or waiver of
all privileges in connection with privileged information that relates solely to
the subject matter of any claims constituting CPC Liabilities, now pending or
which may be asserted in the future, in any lawsuits or other proceedings
initiated against or by CPC, whether or not the privileged information is in
the possession of or under the control of CPC or Corn Products.
(b) Corn Products shall be entitled, in perpetuity, to control the
assertion or waiver of all privileges in connection with privileged information
which relates solely to the Corn Products Business, whether or not the
privileged information is in the possession of or under the control of Corn
Products or CPC. Corn Products shall also be entitled, in perpetuity, to
control the assertion or waiver of all privileges in connection with privileged
information which relates solely to the subject matter of any claims
constituting Corn Products Liabilities, now pending or which may be asserted in
the future, in any lawsuits or other proceedings initiated against or by Corn
Products, whether or not the privileged information is in the possession of or
under the control of Corn Products or CPC.
(c) The parties hereto agree that they shall have a shared privilege,
with equal right to assert, subject to the restrictions in this Section 4.5,
with respect to all privileges not allocated pursuant to the terms of Sections
4.5(a) and (b); provided, that the written consent of both parties is required
to waive any privilege deemed to be a shared privilege hereunder. All
privileges relating to any claims, proceedings, litigation, disputes, or other
matters which involve both CPC and Corn Products in respect of which both
parties retain any responsibility or liability under this Agreement, shall be
subject to a shared privilege among them.
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(d) No party hereto may waive any privilege which could be asserted
under any applicable law, and in which any other party hereto has a shared
privilege, without the consent of the other party, except to the extent
reasonably required in connection with any litigation with third parties or as
provided in subsection (e) below. Consent shall be in writing, or shall be
deemed to be granted unless written objection is made within twenty (20) days
after notice from the party requesting such consent.
(e) In the event of any litigation or dispute exclusively between or
among the parties hereto, any party and a Subsidiary of the other party hereto,
or a Subsidiary of one party hereto and a Subsidiary of the other party hereto,
either such party may waive a privilege in which the other party has a shared
privilege, without obtaining the consent of the other party, provided that such
waiver of a shared privilege shall be effective only as to the use of
information with respect to the litigation or dispute between the relevant
parties and/or their Subsidiaries, and shall not operate as a waiver of the
shared privilege with respect to third parties.
(f) If a dispute arises between or among the parties hereto or their
respective Subsidiaries regarding whether a privilege should be waived to
protect or advance the interest of any party, each party agrees that it shall
negotiate in good faith, shall endeavor to minimize any prejudice to the rights
of the other parties, and shall not unreasonably withhold consent to any
request for waiver by another party. Each party hereto specifically agrees
that it will not withhold consent to waiver for any purpose except to protect
its own legitimate interests.
(g) Upon receipt by any party hereto or by any Subsidiary thereof of
any subpoena, discovery or other request which arguably calls for the
production or disclosure of information subject to a shared privilege or as to
which another party has the sole right hereunder to assert a privilege, or if
any party obtains knowledge that any of its or any of its Subsidiaries' current
or former directors, officers, agents or employees has received any subpoena,
discovery or other requests which arguably calls for the production or
disclosure of such privileged information, such party shall promptly notify the
other party or parties of the existence of the request and shall provide the
other party or parties a reasonable opportunity to review the information and
to assert any rights it or they may have under this Section 4.5 or otherwise to
prevent the production or disclosure of such privileged information.
(h) The transfer of all Records and other information pursuant to this
Agreement is made in reliance on the agreement of CPC and Corn Products, as set
forth in Sections 4.4 and 4.5, to maintain the confidentiality of confidential
or privileged information and to assert and maintain all applicable privileges.
The access to information being granted pursuant to Sections 4.1 and 4.2
hereof, the agreement to provide witnesses and individuals pursuant to Sections
1.8 and 3.3 hereof, the furnishing of notices and documents and other
cooperative efforts contemplated by Section 3.3 hereof, and the transfer of
privileged information between and among the parties and their respective
Subsidiaries pursuant to this Agreement shall not be deemed a waiver of any
privilege that has been or may be asserted under this Agreement or otherwise.
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SECTION 4.6. Ownership of Information. Any information owned by one
party or any of its Subsidiaries that is provided to a requesting party
pursuant to Article III or this Article IV shall be deemed to remain the
property of the providing party. Unless specifically set forth herein, nothing
contained in this Agreement shall be construed as granting or conferring rights
of license or otherwise in any such information.
SECTION 4.7. Limitation of Liability.
(a) Except as specifically provided elsewhere in this Agreement or
in an Ancillary Agreement, no party shall have any liability to any other
party in the event that any information exchanged or provided pursuant to this
Agreement which is an estimate or forecast, or which is based on an estimate or
forecast, is found to be inaccurate.
(b) No party or any Subsidiary thereof shall have any liability or
claim against any other party or any Subsidiary of any other party based
upon, arising out of or resulting from any agreement, arrangement, course of
dealing or understanding existing on or prior to the Distribution Date (other
than this Agreement or any Ancillary Agreement) and any such liability or
claim, whether or not in writing, is hereby irrevocably canceled, released and
waived.
SECTION 4.8. Other Agreements Providing for Exchange of Information. The
rights and obligations granted under this Article IV are subject to any
specific limitations, qualifications or additional provisions on the sharing,
exchange or confidential treatment of information set forth in any Ancillary
Agreement.
SECTION 4.9. Retention of Records.
(a) CPC shall deliver to Corn Products all Records known, after
reasonable inquiry, to be in its control or possession relating to the assets,
liabilities or operations of the Corn Products Group and the
Minority-Investment Companies. Except as otherwise provided in any Ancillary
Agreement or when a longer retention period is otherwise required by law, each
party hereto agrees to retain for a period consistent with the records
retention policy heretofore applicable as described in Schedule 4.9 hereto, all
Records in its control or possession relating to the assets, liabilities or
operations of the other party hereto or its Subsidiaries; provided, however,
that in the case of any Records relating to Taxes or to environmental
liabilities, such retention period shall be extended to the expiration of the
applicable statute of limitations (giving effect to any extensions thereof (and
the parties shall notify each other of any such extensions)). After the
expiration of the period during which retention is required, each party may
destroy any such Records.
(b) Notwithstanding the foregoing, in lieu of retaining any specific
Records, CPC or Corn Products may offer in writing to deliver such Records to
the other and, if such offer is not accepted within 90 days, the offered
Records may be destroyed or otherwise disposed of at any time. If a recipient
of such offer shall request in writing prior to the scheduled date for such
destruction or disposal that any of the Records proposed to be destroyed or
disposed of be delivered to the requesting party, the party proposing the
destruction or disposal
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shall promptly arrange for the delivery of such of the Records as was requested
(at the cost of the requesting party).
ARTICLE V. ADMINISTRATIVE SERVICES
SECTION 5.1. Performance of Services. Beginning on the Distribution
Date, each party will provide, or cause one or more of its Subsidiaries to
provide, to the other party and its Subsidiaries such services on such terms as
may be set forth in the Transition Services Agreement. Except as otherwise set
forth in the Transition Services Agreement or any Schedule thereto, the party
that is to provide the services (the "Provider") will use (and will cause its
Subsidiaries to use) commercially reasonable efforts to provide such services
to the other party (the "Recipient") and its Subsidiaries in a satisfactory and
timely manner and as further specified in such Transition Services Agreement.
SECTION 5.2. Independence. Unless otherwise agreed in writing, none of
the individuals providing the scheduled services to the Recipient will be
deemed to be employees of the Recipient for any purpose.
SECTION 5.3. Non-Exclusivity. Nothing in this Agreement precludes any
party from obtaining, in whole or in part, services of any nature that may be
obtainable from the other party from its own employees or from providers other
than the other party.
ARTICLE VI. DISPUTE RESOLUTION
SECTION 6.1. Negotiation.
(a) The parties shall attempt in good faith to resolve any Agreement
Dispute by negotiation between Samuel C. Scott (or his successor) on behalf of
Corn Products and an executive vice-president or senior vice-president on
behalf of CPC; provided such negotiations shall not, unless otherwise agreed by
the parties in writing, exceed 45 days from the date on which the relevant
party gave notice of such Agreement Dispute; provided further that in the event
of any mediation or arbitration in accordance with Section 6.2 hereof, the
relevant parties shall not assert the defenses of statute of limitations and
laches arising for the period beginning after the date the relevant party gave
notice of such Agreement Dispute, and any contractual time period or deadline
under this Agreement or any Ancillary Agreement to which such Agreement Dispute
relates shall not be deemed to have passed until such Agreement Dispute has
been resolved.
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SECTION 6.2. Mediation and Arbitration.
(a) If an Agreement Dispute involves an amount in controversy up to $1
million and has not been resolved within 45 days of the date on which notice
thereof was first given (or such longer period as agreed pursuant to Section
6.1), the parties shall select a neutral third party to resolve such Agreement
Dispute, whose decision shall be binding; provided, that if the parties cannot
agree on a neutral third party, the parties agree to submit the Agreement
Dispute to a neutral third party designated by the president of the CPR
Institute for Dispute Resolution from the CPR Panels of Neutrals, whose
decision shall be binding. Either party may declare, in good faith, that the
amount in controversy is in excess of $1 million and such declaration shall
govern regardless of whether the amount is ultimately so determined.
(b) If an Agreement Dispute involves an amount in controversy in excess
of $1 million and has not been resolved within 45 days of the date on which
notice thereof was first given (or such longer period as agreed pursuant to
Section 6.1), the parties shall endeavor to settle the Agreement Dispute by
mediation under the then current CPR Model Mediation Procedure for Business
Disputes. Unless otherwise agreed, the parties will select a mediator from the
CPR Panels of Neutrals and shall notify CPR to initiate the selection process.
Any Agreement Dispute involving an amount in controversy in excess of $1
million which has not been resolved by mediation as provided herein within 45
days of the initiation of such mediation, shall be settled by arbitration in
accordance with the then current CPR Non-Administered Arbitration Rules (the
"Rules") by three independent and impartial arbitrators, of whom each party
shall appoint one. The arbitration shall be governed by the United States
Arbitration Act, Title 9 U.S.C., and judgment upon the award rendered by the
arbitrators may be entered by any court having jurisdiction thereof. In the
event the arbitration is initiated by CPC, the place of arbitration shall be
Cook County, Illinois. In the event the arbitration is initiated by Corn
Products, the place of arbitration shall be in Bergen County in the State of
New Jersey.
In resolving any dispute, the parties intend that the arbitrators apply
the substantive laws of the State of New York, without regard to the choice of
law principles thereof. The parties intend that the provisions to arbitrate
set forth herein be valid, enforceable and irrevocable. The undersigned agree
to comply with any award made in any such arbitration proceedings that has
become final in accordance with the Rules and agree to enforcement of or entry
of judgment upon such award, in accordance with Section 7.17 hereof, by (i) the
United States District Court for the District of New Jersey (Newark) or if
entry of judgment may not be made in such court for jurisdictional reasons, in
the Superior Court of the State of New Jersey, Bergen County, in the event the
arbitration was initiated by Corn Products or (ii) the United States District
Court for the Northern District of Illinois or if entry of judgment may not be
made in such court for jurisdictional reasons, in the Illinois Circuit Court,
Cook County Judicial Circuit (Chicago), in the event the arbitration was
initiated by CPC. The arbitrators shall be entitled, if appropriate, to award
any remedy in such proceedings, including, without limitation, monetary
damages, specific performance and all other forms of legal and equitable
relief; provided, however, the arbitrators shall not be entitled to award
non-compensatory damages, including punitive or exemplary damages and the
parties hereto irrevocably waive entitlement to any such damages. Without
limiting the provisions of the Rules, unless otherwise agreed in writing by or
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among the relevant parties or permitted by this Agreement, the undersigned
shall keep confidential all matters relating to the arbitration or the award,
provided such matters may be disclosed (i) to the extent reasonably necessary
in any proceeding brought to enforce the award or for entry of a judgment upon
the award and (ii) to the extent otherwise required by law. Notwithstanding
Section 15.3 of the Rules, the party other than the prevailing party (as
determined by the arbitrators) in the arbitration shall be responsible for all
of the costs of the arbitration, including legal fees and other costs specified
by Rule 15. Nothing contained herein is intended to or shall be construed to
prevent any party, in accordance with Rule 12 or otherwise, from applying to
any court of competent jurisdiction solely for a temporary restraining order or
preliminary injunction ("Injunctive Relief") in connection with the subject
matter of any Agreement Disputes; provided, however, that no party may couple
any request, to a court or otherwise, for Injunctive Relief with a request for
non-injunctive, permanent or non-provisional relief.
SECTION 6.3. Continuity of Service and Performance. Unless otherwise
agreed in writing, the parties will continue to provide service and honor all
other commitments under this Agreement and each Ancillary Agreement during the
course of dispute resolution pursuant to the provisions of this Article VI with
respect to all matters not subject to such dispute, controversy or claim.
ARTICLE VII. MISCELLANEOUS
SECTION 7.1. Complete Agreement; Construction. This Agreement, including
the Exhibits and Schedules, the agreements and arrangements listed on Schedule
1.1(g) and the Ancillary Agreements constitute the entire agreement between the
parties with respect to the subject matter hereof and supersede all previous
negotiations, commitments and writings with respect to such subject matter. In
the event of any inconsistency between this Agreement and any Schedule hereto,
the Schedule shall prevail. Other than Section 1.6, Section 4.5 and Article
VI, which shall prevail over any inconsistent or conflicting provisions in any
Ancillary Agreement notwithstanding any other provisions in this Agreement to
the contrary, in the event and to the extent that there shall be a conflict
between the provisions of this Agreement and the provisions of any Ancillary
Agreement, such Ancillary Agreement shall control.
SECTION 7.2. Ancillary Agreements. Subject to the last sentence of
Section 7.1, this Agreement is not intended to address, and should not be
interpreted to address, the matters specifically and expressly covered by the
Ancillary Agreements.
SECTION 7.3. 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.
SECTION 7.4. Survival of Agreements. Except as otherwise contemplated by
this Agreement, all covenants and agreements of the parties contained in this
Agreement shall survive the Distribution Date.
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SECTION 7.5. Expenses. Except as otherwise set forth in this Agreement
or any Ancillary Agreement, all costs and expenses incurred on or prior to the
Distribution Date (whether or not paid on or prior to the Distribution Date) in
connection with the preparation, execution, delivery and implementation of this
Agreement and any Ancillary Agreement, the Information Statement (including any
Registration Statement on Form 10 of which such Information Statement may be a
part) and the Distribution and the consummation of the transactions
contemplated thereby shall be charged to and paid by CPC. Except as otherwise
set forth in this Agreement or any Ancillary Agreement, each party shall bear
its own costs and expenses incurred after the Distribution Date. Any amount or
expense to be paid or reimbursed by any party hereto to any other party hereto
shall be so paid or reimbursed promptly after the existence and amount of such
obligation is determined and demand therefor is made.
SECTION 7.6. Notices. All notices and other communications hereunder
shall be in writing and hand delivered or mailed by registered or certified
mail (return receipt requested) or sent by any means of electronic message
transmission with delivery confirmed (by voice or otherwise) to the parties at
the following addresses (or at such other addresses for a party as shall be
specified by like notice) and will be deemed given on the date on which such
notice is received:
If to CPC:
CPC International Inc.
International Plaza, P.O. Box 8000
Englewood Cliffs, NJ 07632-9076
Facsimile: (201) 894-2193
Attention: Hanes A. Heller, General Counsel
If to Corn Products:
Corn Products International, Inc.
P.O. Box 345
6500 South Archer Road
Bedford Park, IL 60501-1933
Facsimile: (708) 563-6592
Attention: Marcia E. Doane, General Counsel
SECTION 7.7. Waivers. The failure of any party to require strict
performance by any other party of any provision in this Agreement will not
waive or diminish that party's right to demand strict performance thereafter of
that or any other provision hereof.
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SECTION 7.8. Amendments. Subject to the terms of Section 7.11 hereof,
this Agreement may not be modified or amended except by an agreement in writing
signed by each of the parties hereto.
SECTION 7.9. Assignment.
(a) This Agreement shall not be assignable, in whole or in part,
directly or indirectly, by any party hereto without the prior written
consent of the other parties hereto, and any attempt to assign any rights or
obligations arising under this Agreement without such consent shall be void.
(b) Corn Products will not distribute to its stockholders any
interest in any Corn Products Business Entity, by way of a spin-off
distribution, split-off or other exchange of interests in a Corn Products
Business Entity for any interest in Corn Products held by Corn Products
stockholders, or any similar transaction or transactions, unless the
distributed Corn Products Business Entity undertakes to CPC to be jointly and
severally liable for all Corn Products Liabilities hereunder.
SECTION 7.10. Successors and Assigns. The provisions to this Agreement
shall be binding upon, inure to the benefit of and be enforceable by the
parties and their respective successors and permitted assigns.
SECTION 7.11. Termination. This Agreement (including, without
limitation, Article III hereof) may be terminated and the Distribution may be
amended, modified or abandoned at any time prior to the Effective Time by and
in the sole discretion of CPC without the approval of Corn Products or the
stockholders of CPC. In the event of such termination, no party shall have any
liability of any kind to any other party or any other person. After the
Distribution, this Agreement may not be terminated except by an agreement in
writing signed by the parties; provided, however, that Article III shall not be
terminated or amended after the Distribution in respect of the third party
beneficiaries thereto without the consent of such persons.
SECTION 7.12. Subsidiaries. Each of the parties hereto shall cause to be
performed, and hereby guarantees the performance of, all actions, agreements
and obligations set forth herein to be performed by any Subsidiary of such
party or by any entity that is contemplated to be a Subsidiary of such party on
and after the Distribution Date.
SECTION 7.13. Third Party Beneficiaries. Except as provided in Article
III relating to Indemnitees, this Agreement is solely for the benefit of the
parties hereto and their respective Subsidiaries and Affiliates and should not
be deemed to confer upon third parties any remedy, claim, liability,
reimbursement, claim of action or other right in excess of those existing
without reference to this Agreement.
SECTION 7.14. Title and Headings. Titles and headings to sections herein
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.
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SECTION 7.15. Exhibits and Schedules. The Exhibits and Schedules shall
be construed with and as an integral part of this Agreement to the same extent
as if the same had been set forth verbatim herein.
SECTION 7.16. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED IN THE STATE OF NEW YORK.
SECTION 7.17. Consent to Jurisdiction. Without limiting the provisions
of Article VI hereof, each of the parties irrevocably submits to the exclusive
jurisdiction of (a) the United States District Court for the District of New
Jersey (Newark) or the Superior Court of the State of New Jersey, Bergen
County, for the purposes of any suit, action or other proceeding brought by
Corn Products and arising out of this Agreement or any transaction contemplated
hereby or (b) the United States District Court for the Northern District of
Illinois or the Illinois Circuit Court, Cook County Judicial Circuit (Chicago)
for the purposes of any suit, action or other proceeding brought by CPC and
arising out of this Agreement or any transaction contemplated hereby. Corn
Products agrees to commence any action, suit or proceeding relating hereto that
is not required to be submitted to arbitration pursuant to Article VI hereof
either in the United States District Court for the District of New Jersey
(Newark) 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. CPC agrees to commence any action, suit or proceeding
relating hereto that is not required to be submitted to arbitration pursuant to
Article VI hereof either in the United States District Court for the Northern
District of Illinois or if such suit, action or other proceeding may not be
brought in such court for jurisdictional reasons, in the Illinois Circuit
Court, Cook County Judicial Circuit (Chicago). Each of the parties further
agrees that service of any process, summons, notice or document by U.S.
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 or Illinois with respect to any matters to which it has submitted to
jurisdiction in this Section 7.17. 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 or the transactions contemplated
hereby in (i) the Superior Court of the State of New Jersey, Bergen County,
(ii) the United States District Court for the District of New Jersey (Newark),
(iii) the Illinois Circuit Court, Cook County Judicial Circuit (Chicago) or
(iv) the United States District Court for the Northern District of Illinois 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.
SECTION 7.18. Severability. In the event any one or more of the
provisions contained in this Agreement should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein and therein shall not in any way be
affected or impaired thereby. The parties shall endeavor in good-faith
negotiations to replace the invalid, illegal or unenforceable provisions with
valid provisions the economic effect of which comes as close as possible to
that of the invalid, illegal or unenforceable provisions.
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SECTION 7.19. Specific Performance. In the event of any actual or
threatened default in, or breach of, any of the terms, conditions and
provisions of this Agreement or any Ancillary Agreement, the party or parties
who are or are to be thereby aggrieved shall have the right to specific
performance and injunctive or other equitable relief of its rights under this
Agreement or such Ancillary Agreement, in addition to any and all other rights
and remedies at law or in equity, and all such rights and remedies shall be
cumulative. The parties agree that the remedies at law for any breach or
threatened breach, including monetary damages, are inadequate compensation for
any loss and that any defense in any action for specific performance that a
remedy at law would be adequate is waived. Any requirements for the securing
or posting of any bond with such remedy are waived.
SECTION 7.20. Definitions. As used in this Agreement, the following
terms shall have the following meanings:
"Action" shall mean any action, suit, arbitration, inquiry,
proceeding or investigation by or before any court, any Governmental Authority
or any arbitration tribunal.
"Affiliate" shall mean, when used with respect to a specified Person,
another Person that controls, is controlled by, or is under common control with
the Person specified. As used herein, "control" means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of such Person, whether through the ownership of voting securities
or other interests, by contract or otherwise.
"Agent" shall mean the distribution agent, which may be CPC's stock
transfer agent, to be appointed by CPC to distribute the shares of Corn
Products Common Stock in the Distribution.
"Agreement Dispute" shall mean any controversy, dispute or claim
arising out of, in connection with, or in relation to the interpretation,
performance, nonperformance, validity or breach of this Agreement or any
Ancillary Agreement or otherwise arising out of, or in any way related to this
Agreement, any Ancillary Agreement or the transactions contemplated hereby or
thereby, including, without limitation, any claim based on contract, tort or
statute (but excluding any controversy, dispute or claim if any third party is
a party to such controversy, dispute or claim).
"Ancillary Agreements" shall mean all of the written agreements,
instruments, assignments or other arrangements (other than this Agreement)
entered into in connection with the transactions contemplated hereby,
including, without limitation, the Argo Access Agreement, the Conveyancing and
Assumption Instruments, the Debt Agreement, the Employee Benefits Agreement,
the Lease Assumption, the Master Supply Agreement, the Master License
Agreement, the Tax Indemnification Agreement, the Tax Sharing Agreement, the
Transition Services Agreement and any other agreements executed by both CPC and
Corn Products which provide that they shall be considered "Ancillary
Agreements" pursuant to the provisions of this Agreement.
"Arancia" means Arancia-CPC S.A. de C.V.
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"Argo Access Agreement" shall mean the Argo Access Agreement between
CPC and Corn Products relating to the Distribution.
"Assets" shall mean assets, properties and rights (including goodwill),
wherever located (including in the possession of vendors or other third parties
or elsewhere), whether real, personal, mixed, immovable, tangible, intangible
or contingent, in each case whether or not recorded or reflected or required to
be recorded or reflected on the books and records or financial statements of
any person, including, without limitation, the following:
(i) all accounting and other books, records and files whether in
paper, microfilm, microfiche, computer tape or disc, magnetic
tape or any other form;
(ii) all apparatus, computers and other electronic data processing
equipment, fixtures, machinery, equipment, furniture, office
equipment, automobiles, trucks, aircraft and other
transportation equipment, special and general tools, test
devices, prototypes and models and other tangible personal
property;
(iii) all inventories of materials, parts, raw or packaging materials,
supplies, work-in-process and finished goods and products;
(iv) all interests in real property of whatever nature, including
easements, whether as owner, mortgagee or holder of a
Security Interest in real property, lessor, sublessor, lessee,
sublessee or otherwise;
(v) all interests in any capital stock or other equity interests of
any Subsidiary or any other Person, all bonds, notes,
debentures or other securities issued by any Subsidiary or any
other Person, all loans, advances or other extensions of credit
or capital contributions to any Subsidiary or any other Person
and all other investments in securities of any Person;
(vi) all license agreements, leases of personal property, open
purchase orders for raw or packaging materials, supplies,
parts or services, unfilled orders for the manufacture and sale
of products and other contracts, agreements or commitments;
(vii) all deposits, letters of credit and performance and surety
bonds;
(viii) all written technical information, data, specifications,
research and development information, engineering drawings,
operating and maintenance manuals, and materials and analyses
prepared by consultants and other third parties;
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(ix) all domestic and foreign patents, copyrights, trade names,
trademarks, service marks and registrations and applications
for any of the foregoing, knowhow, formulae, recipes,
formulations, trade secrets, inventions, data bases, other
proprietary information and licenses from third persons
granting the right to use any of the foregoing;
(x) all computer applications, programs and other software;
(xi) all cost information, sales and pricing data, customer
prospect lists, supplier records, customer and supplier
lists, customer and vendor data, correspondence and lists,
product literature, artwork, design, development and
manufacturing files, vendor and customer drawings, formulations
and specifications, quality records and reports and other
books, records, studies, surveys, reports, plans and documents;
(xii) all prepaid expenses, trade accounts and other accounts and
notes receivables;
(xiii) all rights under contracts or agreements, all claims or rights
against any Person arising from the ownership of any asset,
all rights in connection with any bids or offers and all
claims, choses in action or similar rights, whether accrued or
contingent;
(xiv) all rights under insurance policies and all rights in the
nature of insurance, indemnification or contribution;
(xv) all licenses, permits, approvals, emission reduction credits
and authorizations which have been issued by any Governmental
Authority;
(xvi) cash or cash equivalents, bank accounts, lock boxes and other
deposit arrangements; and
(xvii) interest rate, currency, commodity or other swap, collar, cap
or other hedging or similar agreements or arrangements.
"Assignee" shall have the meaning set forth in Section 1.1(e).
"Branded Foods Business" shall have the meaning set forth in the
recitals hereto.
"Business Entity" shall mean any corporation, partnership, limited
liability company, company or other entity, foreign or domestic, which may
legally hold title to Assets.
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"Code" shall mean the Internal Revenue Code of 1986, as amended, and
the Treasury regulations promulgated thereunder, including any successor
legislation.
"Conveyancing and Assumption Instruments" shall mean, collectively, the
various agreements, instruments and other documents heretofore entered into and
to be entered into to effect the transfer of Assets and the assumption of
Liabilities in the manner contemplated by this Agreement, or otherwise arising
out of or relating to the transactions contemplated by this Agreement in such
form or forms as the parties agree and as may be required by the laws of the
appropriate jurisdictions.
"Corn Products" shall mean Corn Products International, Inc., a
Delaware corporation.
"Corn Products Assets" shall mean:
(i) any and all Assets that have been or are expressly contemplated
to be transferred to Corn Products or any other member of
the Corn Products Group in connection with the Distribution
pursuant to the terms of this Agreement, any Ancillary Agreement
or the list of pre-Distribution reorganization steps set forth
in Schedule 1.1(g) hereto (including any Assets set forth on
Schedule 7.20(A) or on any other Schedule hereto or to an
Ancillary Agreement); or
(ii) the ownership interests in (x) those Business Entities listed
on Schedule 7.20(B) (which shall describe the direct and
indirect ownership interests held by CPC in each such Business
Entity) and (y) the Minority-Investment Companies;
(iii) any Corn Products Contracts or Corn Products Permits, any rights
or claims arising thereunder, and any other rights or
claims or contingent rights or claims primarily relating to or
arising from any Corn Products Asset or the Corn Products
Business;
(iv) any Assets reflected on the Corn Products Balance Sheet or the
accounting records supporting such balance sheet and any
Assets acquired by or for any member of the Corn Products Group
subsequent to the date of such balance sheet which, had they
been so acquired on or before such date and owned as of such
date, would have been reflected on such balance sheet if
prepared on a consistent basis, subject to any dispositions of
any of such Assets subsequent to the date of such balance sheet;
(v) any rights to licensing fees arising under or related to any
Corn Products Permits;
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(vi) the Corn Products patents and trademarks set forth on Schedule
7.20(C); and
(vii) any and all Assets owned or held immediately prior to the
Distribution Date by CPC or any of its Subsidiaries primarily
relating to the Corn Products Business. The intention of this
clause (vii) is only to rectify any inadvertent omission of
transfer or conveyance of any Asset that, had the parties given
specific consideration to such Asset as of the date hereof,
would have otherwise been classified as a Corn Products Asset.
No Asset shall be deemed to be a Corn Products Asset solely as a
result of this clause (vii) if such Asset is within the category
or type of Asset expressly covered by an Ancillary Agreement.
In addition, no Asset shall be deemed a Corn Products Asset
solely as a result of this clause (vii) unless a claim with
respect thereto is made by Corn Products on or prior to the
third anniversary of the Distribution Date.
Notwithstanding the foregoing, the Corn Products Assets
shall not in any event include:
(x) the Assets listed or described on Schedule 1.1(a)(2); or
(y) any Assets primarily relating to or used in any terminated
or divested Business Entity, business or operation formerly
owned or managed by or associated with Corn Products or any
Corn Products Business, except for those Assets primarily
relating to or used exclusively in those Business Entities,
businesses or operations listed on Schedule 7.20(B); or
(z) any and all Assets that are expressly contemplated by this
Agreement or any Ancillary Agreement (or the Schedules
hereto or thereto) as Assets to be retained by any member
of the CPC Group.
In the event of any inconsistency or conflict which may arise
in the application or interpretation of any of the foregoing
provisions, for the purpose of determining what is and is not a
Corn Products Asset, any item explicitly included on a Schedule
referred to in this definition of "Corn Products Assets" shall
take priority over any provision of the text hereof.
"Corn Products Balance Sheet" shall mean the combined balance sheet
of the Corn Products Group, including the notes thereto, as of September 30,
1997 included in the Information Statement.
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"Corn Products Business" shall mean (i) the Corn Refining Business,
(ii) the businesses of the members of the Corn Products Group and the
portion of the business of the Minority-Investment Companies primarily related
to the Corn Refining Business, (iii) any other business conducted primarily
through the use of the Corn Products Assets, and (iv) the businesses of
Business Entities acquired or established by or for Corn Products or any of its
Subsidiaries after the date of this Agreement.
"Corn Products Common Stock" shall have the meaning set forth in the
recitals hereto.
"Corn Products Contracts" shall mean the following contracts and
agreements to which CPC or any of its Subsidiaries is a party or by which it or
any of its Subsidiaries or any of their respective Assets is bound, whether or
not in writing, except for any such contract or agreement that is expressly
contemplated not to be transferred or assigned by any member of the CPC Group
pursuant to any provision of this Agreement or any Ancillary Agreement:
(i) any contracts or agreements with a value in excess of $1 million
or with a term of greater than one year and technical
licensing agreements listed or described on Schedule 7.20(D);
(ii) any contract or agreement entered into in the name of, or
expressly on behalf of, any division, business unit or
member of the Corn Products Group;
(iii) any contract or agreement that relates primarily to the Corn
Products Business;
(iv) federal, state and local government and other contracts and
agreements that relate primarily to the Corn Products Business;
(v) any contract or agreement representing capital or operating
equipment lease obligations reflected on the Corn Products
Balance Sheet;
(vi) any contract or agreement that is otherwise expressly
contemplated pursuant to this Agreement or any of the
Ancillary Agreements to be assigned to Corn Products or any
member of the Corn Products Group; and
(vii) any guarantee, indemnity, representation or warranty of any
member of the Corn Products Group.
"Corn Products Group" shall mean Corn Products and each Business Entity
which is contemplated to become a Subsidiary of Corn Products hereunder,
including those identified on Schedule 7.20(B) hereto. "Corn Products Group"
shall not be deemed to
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include the Minority-Investment Companies, unless the relevant provision
explicitly includes such entities.
"Corn Products Indemnitees" shall mean Corn Products, each member of
the Corn Products Group, each of their respective present, former or future
directors, officers, employees and agents, as such, and each of the heirs,
executors, successors and assigns of any of the foregoing.
"Corn Products Insured Claim" shall mean any claim, asserted against
(x) CPC or any of its Subsidiaries with respect to the Corn Products Assets
or the Corn Products Business (including, without limitation, where CPC or its
Subsidiaries are joint defendants with other Persons) or (y) Corn Products or
any of its Subsidiaries (including, without limitation, where Corn Products or
its Subsidiaries are joint defendants with other Persons), in each case with
respect to any claim, suit, action, proceeding, injury, loss, liability, damage
or expense incurred or claimed to have been incurred (i) prior to the Effective
Time or (ii) in connection with the conduct of the Corn Products Business prior
to the Effective Time, which claim, suit, action, proceeding, injury, loss,
liability, damage or expense arises out of an insured occurrence under one or
more Policies, except that if such occurrence is also covered under any
insurance policies issued to Corn Products or its Subsidiaries it shall be
deemed a Corn Products Uninsured Claim.
"Corn Products Liabilities" shall mean:
(i) any and all Liabilities that are expressly contemplated by this
Agreement or any Ancillary Agreement (or the Schedules hereto or
thereto, including Schedule 7.20(E) hereto) as Liabilities to be
assumed by Corn Products or any member of the Corn Products
Group, and all agreements, obligations and Liabilities of any
member of the Corn Products Group under this Agreement or any of
the Ancillary Agreements;
(ii) all Liabilities (other than Taxes and any employee-related
Liabilities), primarily relating to, arising out of or resulting
from:
(A) the operation of the Corn Products Business, as
conducted at any time (i) prior to the Effective Time (but
excluding any Liability relating to, arising out of or resulting
from any act or failure to act by any director, officer,
employee, agent or representative (whether or not such act or
failure to act is or was within such person's authority)) or (ii)
after the Effective Time (including any Liability relating to,
arising out of or resulting from any act or failure to act by any
director, officer, employee, agent or representative (whether or
not such act or failure to act is or was within such person's
authority));
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(B) the operation of any business conducted by Corn
Products or any Subsidiary of Corn Products at any time
after the Effective Time (including any Liability relating to,
arising out of or resulting from any act or failure to act by any
director, officer, employee, agent or representative (whether or
not such act or failure to act is or was within such person's
authority)); or
(C) any Corn Products Assets;
whether arising before, on or after the Distribution Date; and
(iii) all Liabilities reflected as liabilities or obligations on the
Corn Products Balance Sheet or the accounting records
supporting such balance sheet, and all Liabilities arising or
assumed by or for any member of the Corn Products Group
subsequent to the date of such balance sheet which, had they
arisen or been assumed on or before such date and been retained
as of such date, would have been reflected on such balance
sheet, subject to any discharge of such Liabilities subsequent
to the date of the Corn Products Balance Sheet.
Notwithstanding the foregoing, the Corn Products Liabilities shall not
include:
(x) any Liabilities that are expressly contemplated by this
Agreement or any Ancillary Agreement (or the Schedules
hereto or thereto) as Liabilities to be retained or assumed
by CPC or any member of the CPC Group, including those
listed on Schedule 7.20(F);
(y) any Liabilities primarily relating to, arising out of or
resulting from any terminated or divested Business Entity,
business or operation formerly owned or managed by or
associated with Corn Products or any Corn Products
Business; any Liabilities which are excluded by this clause
(y) from the definition of Corn Products Liabilities shall
be deemed to be CPC Liabilities; or
(z) all agreements and obligations of any member of the CPC
Group under this Agreement or any of the Ancillary
Agreements.
Notwithstanding any provision of this Agreement to the contrary, the
"Corn Products Liabilities" shall (i) specifically include any Corn Products
Uninsured Claims and (ii) specifically exclude any Corn Products Insured
Claims, any deductible payable by CPC under any Policy in connection with a
Corn Products Insured Claim and any liability in excess of
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the applicable coverage limits of the applicable Policies with respect to any
Corn Products Insured Claim.
"Corn Products Permits" shall have the meaning set forth in Section
1.1(d) hereof.
"Corn Products Uninsured Claim" shall mean any claim asserted against
CPC, Corn Products or any of their respective Subsidiaries (including, without
limitation, where CPC, Corn Products or any of their respective Subsidiaries
are joint defendants with other Persons) with respect to any claim, suit,
action, proceeding, injury, loss, liability, damage or expense incurred or
claimed to have been incurred in connection with the conduct of the Corn
Products Business prior to the Effective Time, which claim, suit, action,
proceeding, injury, loss, liability, damage or expense arises out of an
occurrence (i) of a type for which insurance is not available under any Policy
(without giving effect to coverage limits or deductibles of any such Policy) or
(ii) that is expressly deemed to be a Corn Products Uninsured Claim under this
Agreement.
"Corn Refining Business" shall have the meaning set forth in the
recitals hereto.
"CPC" shall mean CPC International Inc., a Delaware corporation, or any
successor thereto other than Corn Products or any Subsidiary of Corn Products.
"CPC Assets" shall mean, collectively, all the rights and Assets
owned or held by CPC or any Subsidiary of CPC, except the Corn Products Assets.
"CPC Business" shall mean each and every business conducted at any
time by CPC or any Subsidiary of CPC except a Corn Products Business.
"CPC Common Stock" shall have the meaning set forth in the recitals
hereto.
"CPC Contracts" shall mean all the contracts and agreements to which
CPC or any of its Subsidiaries or Affiliates is a party or by which it or any of
its Subsidiaries or Affiliates is bound, except the Corn Products Contracts.
"CPC Group" shall mean CPC and each person (other than any member of
the Corn Products Group) that is a Subsidiary of CPC.
"CPC Indemnitees" shall mean CPC, each member of the CPC Group, each of
their respective present, former or future directors, officers, employees and
agents as such, and each of the heirs, executors, successors and assigns of any
of the foregoing, except the Corn Products Indemnitees.
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"CPC Liabilities" shall mean collectively, all obligations and
Liabilities of CPC or any Subsidiary of CPC, except the Corn Products
Liabilities. Notwithstanding any provision of this Agreement to the contrary,
the "CPC Liabilities" shall (i) specifically include any Corn Products Insured
Claims, any deductible borne by any member of the CPC Group (but not by any
member of the Corn Products Group) under any Policy in connection with a Corn
Products Insured Claim and any liability in excess of the applicable coverage
limits of the applicable Policies with respect to any Corn Products Insured
Claim and (ii) specifically exclude any Corn Products Uninsured Claim;
provided, however, that nothing in this clause shall be deemed to constitute
(or to reflect) an assignment of any Policy to Corn Products or any member of
the Corn Products Group.
"Debt Agreement" shall mean the Debt Agreement between CPC and Corn
Products relating to the Distribution.
"Distribution" shall mean the distribution on the Distribution Date to
holders of record of shares of CPC Common Stock as of the Distribution Record
Date of the Corn Products Common Stock owned by CPC on the basis of one share
of Corn Products Common Stock for every four shares of CPC Common Stock
outstanding on the Distribution Record Date.
"Distribution Date" shall mean the date determined by CPC's Board of
Directors as the date as of which the Distribution shall be effected.
"Distribution Record Date" shall mean the date determined by CPC's
Board of Directors as the record date for the Distribution.
"Effective Time" shall mean 11:59:59 p.m. New York City Time on the
Distribution Date.
"Employee Benefits Agreement" shall mean the Employee Benefits
Agreement between CPC and Corn Products relating to the Distribution.
"Form 10" shall mean the Registration Statement on Form 10 filed by
Corn Products with the SEC.
"Governmental Authority" shall mean any federal, state, local,
foreign or international court, government, department, commission, board,
bureau, agency, official or other regulatory, administrative or governmental
authority.
"Indemnifiable Losses" shall mean any and all losses, liabilities,
claims, damages, demands, costs or expenses (including, without limitation,
reasonable attorneys' fees and any and all out-of-pocket expenses) reasonably
incurred in investigating, preparing for or defending against any Actions or
potential Actions or in settling any Action or potential Action or in
satisfying any judgment, fine or penalty rendered in or resulting from any
Action.
"Indemnifying Party" shall have the meaning set forth in Section 3.3.
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"Indemnitee" shall have the meaning set forth in Section 3.3.
"Information Statement" shall mean the Information Statement sent to
the holders of shares of CPC Common Stock and filed as an exhibit to Corn
Products' Form 10 in connection with the Distribution, including any amendment
or supplement thereto.
"Injunctive Relief" shall have the meaning set forth in Section 6.2.
"Insurance Proceeds" shall mean those monies (i) received by an insured
from an insurance carrier or (ii) paid by an insurance carrier on behalf of any
insured, in either case net of any applicable premium adjustment,
retrospectively-rated premium, deductible, retention, or cost of reserve paid
or held by or for the benefit of such insured.
"Lease Assumption" shall mean the Assignment and Assumption of
Portion of Lessee's Interest in Lease between CPC and Corn Products
relating to the Distribution.
"Liabilities" shall mean any and all losses, claims, charges, debts,
demands, actions, causes of action, suits, damages, obligations, payments,
costs and expenses, accounts, reckonings, bonds, specialties, indemnities and
similar obligations, exonerations, covenants, contracts, controversies,
agreements, promises, omissions, variances, guarantees, make whole agreements
and similar obligations, and other liabilities, including all contractual
obligations, whether absolute or contingent, matured or unmatured, liquidated
or unliquidated, accrued or unaccrued, known or unknown, whenever arising, and
including those arising under any law, rule, regulation, Action, threatened or
contemplated Action (including the costs and expenses of demands, assessments,
judgments, settlements and compromises relating thereto and attorneys' fees and
any and all costs and expenses, whatsoever reasonably incurred in
investigating, preparing or defending against any such Actions or threatened or
contemplated Actions), order or consent decree of any Governmental Authority or
any award of any arbitrator or mediator of any kind, and those arising under
any contract, commitment or undertaking, including those arising under this
Agreement or any Ancillary Agreement, in each case, whether or not recorded or
reflected or required to be recorded or reflected on the books and records or
financial statements of any Person.
"Master Supply Agreement" shall mean the Master Supply Agreement
entered into between CPC and Corn Products relating to the Distribution.
"Master License Agreement" shall mean the Master License Agreement
entered into between CPC and Corn Products relating to the Distribution.
"Minority-Investment Companies" or "Minority-Investment Company" shall
mean those Business Entities set forth on Schedule 7.20(G).
"NYSE" shall mean the New York Stock Exchange, Inc.
36
<PAGE> 37
"Person" shall mean any natural person, corporation, business trust,
joint venture, limited liability company, association, company, partnership or
government, or any agency or political subdivision thereof.
"Policies" shall mean insurance policies and insurance contracts of any
kind (other than life and benefits policies or contracts) issued to CPC or any
of its Subsidiaries (other than Subsidiaries that become Subsidiaries of Corn
Products after the Effective Time), including, without limitation, primary,
excess and umbrella policies, comprehensive general liability policies,
director and officer liability, fiduciary liability, automobile, aircraft,
property and casualty, workers' compensation and employee dishonesty insurance
policies, bonds and self-insurance and captive insurance company arrangements,
together with the rights, benefits and privileges thereunder.
"Provider" shall have the meaning set forth in Section 5.1.
"Rabbi Trusts" shall mean the trusts established pursuant to the CPC
International Inc. Latin America Pension Plan Trust Agreement, dated as of June
1, 1988, by and between CPC and The Northern Trust Company, as amended; the CPC
International Inc. Pension Plan for International Employees Trust Agreement,
dated as of June 1, 1988, as amended; the CPC International Inc. Management
Incentive Plan Trust Agreement, dated as of June 1, 1988, by and between CPC
and The Northern Trust Company, as amended; the CPC International Inc. Deferred
Compensation Plan for Outside Directors Trust Agreement, dated as of June 1,
1988, by and between CPC and The Northern Trust Company, as amended; and the
CPC International Inc. Special Retirement Benefits Trust Agreement, dated as of
June 1, 1988, by and between CPC and The Northern Trust Company, as amended.
"Recipient" shall have the meaning set forth in Section 5.1.
"Records" shall have the meaning set forth in Section 4.1.
"Rules" shall have the meaning set forth in Section 6.2.
"Ruling" shall have the meaning set forth in Section 1.1(g).
"SEC" shall mean the United States Securities and Exchange Commission.
"Security Interest" shall mean any mortgage, security interest, pledge,
lien, charge, claim, option, right to acquire, voting or other restriction,
right-of-way, covenant, condition, easement, encroachment, restriction on
transfer, or other encumbrance of any nature whatsoever.
"Stock Plans" shall mean the CPC International Inc. 1984 Stock and
Performance Plan and the CPC International Inc. 1993 Stock and Performance
Plan.
"Subsidiary" of any entity shall mean any corporation, partnership or
other entity of which such entity (i) owns, directly or indirectly, or has
beneficial ownership of,
37
<PAGE> 38
ownership interests sufficient to elect a majority of the Board of Directors
(or persons performing similar functions) (irrespective of whether at the time
any other class or classes of ownership interests of such corporation,
partnership or other entity shall or might have such voting power upon the
occurrence of any contingency) or (ii) is a general partner or an entity
performing similar functions.
"Tax" shall have the meaning set forth in the Tax Sharing Agreement.
"Tax Indemnification Agreement" shall mean the Tax Indemnification
Agreement between CPC and Corn Products relating to the Distribution.
"Tax Sharing Agreement" shall mean the Tax Sharing Agreement between
CPC and Corn Products relating to the Distribution.
"Third Party Claim" shall have the meaning set forth in Section 3.3.
"Transition Services Agreement" shall mean the Transition Services
Agreement between CPC and Corn Products relating to the Distribution.
SECTION 7.21. References; Interpretation. References in this Agreement
to any gender include references to all genders, and references to the singular
include references to the plural and vice versa. The words "include",
"includes" and "including" when used in this Agreement shall be deemed to be
followed by the phrase "without limitation". Unless the context otherwise
requires, references in this Agreement to Articles, Sections, Exhibits and
Schedules shall be deemed references to Articles and Sections of, and Exhibits
and Schedules to, such Agreement. Unless the context otherwise requires, the
words "hereof", "hereby" and "herein" and words of similar meaning when used in
this Agreement refer to this Agreement in its entirety and not to any
particular Article, Section or provision of this Agreement. The term
"commercially reasonable efforts" shall not be deemed to require any party to
take any action that would require it to pay, in the aggregate with respect to
a specific circumstance, an amount in excess of $5,000 (after subtracting from
such aggregate expenditures any amounts reimbursed by the other party).
* * *
38
<PAGE> 39
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the day and year first above written.
CPC INTERNATIONAL INC.
By:
----------------------------------------
Name:
Title:
CORN PRODUCTS INTERNATIONAL, INC.
By:
----------------------------------------
Name:
Title:
39
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.3
<SEQUENCE>3
<DESCRIPTION>CREDIT AGREEMENT
<TEXT>
<PAGE> 1
EXHIBIT 4.3
EXECUTION COPY
U.S. $340,000,000
5-YEAR REVOLVING CREDIT AGREEMENT
Dated as of December 17, 1997
Among
CORN PRODUCTS INTERNATIONAL, INC.
as Borrower,
THE LENDERS NAMED HEREIN
as Lenders,
CITIBANK, N.A.
as Administrative Agent,
CITICORP SECURITIES, INC.
as Arranger,
THE FIRST NATIONAL BANK OF CHICAGO
as Documentation Agent
THE CHASE MANHATTAN BANK
as Co-Agent
and
CPC INTERNATIONAL INC.
as Interim Guarantor,
<PAGE> 2
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. Certain Defined Terms ...................................... 1
SECTION 1.02. Computation of Time Periods ................................ 19
SECTION 1.03. Accounting Terms ........................................... 19
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
SECTION 2.01. The A Advances ............................................. 19
SECTION 2.02. Making the A Advances ...................................... 20
SECTION 2.03. The B Advances ............................................. 21
SECTION 2.04. Fees ....................................................... 26
SECTION 2.05. Termination or Reduction of the Commitments ................ 26
SECTION 2.06. Repayment of A Advances .................................... 26
SECTION 2.07. Interest on A Advances ..................................... 26
SECTION 2.08. Interest Rate Determination ................................ 27
SECTION 2.09. Optional Conversion of A Advances .......................... 29
SECTION 2.10. Prepayments of A Advances .................................. 29
SECTION 2.11. Increased Costs and Increased Capital ...................... 30
SECTION 2.13. Payments and Computations .................................. 32
SECTION 2.14. Taxes ...................................................... 34
SECTION 2.15. Sharing of Payments, Etc ................................... 36
SECTION 2.16. Use of Proceeds ............................................ 37
SECTION 2.17. Extension of Termination Date .............................. 37
SECTION 2.18. Increase in the Aggregate Commitments ...................... 40
ARTICLE III
CONDITIONS OF LENDING
SECTION 3.01. Conditions Precedent to Initial Advances ................... 42
SECTION 3.02. Conditions Precedent to Each A Borrowing ................... 43
SECTION 3.03. Conditions Precedent to Each B Borrowing ................... 44
SECTION 3.04. Conditions Precedent to Release of Interim Guaranty ........ 45
<PAGE> 3
ii
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the Borrower .............. 45
SECTION 4.02. Representations and Warranties of the Interim Guarantor ..... 47
ARTICLE V
COVENANTS
SECTION 5.01. Affirmative Covenants ...................................... 50
SECTION 5.02. Negative Covenants ......................................... 54
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.01. Events of Default .......................................... 56
ARTICLE VII
THE AGENTS
SECTION 7.01. Authorization and Action ................................... 59
SECTION 7.02. Administrative Agent's Reliance, Etc ....................... 60
SECTION 7.03. Citibank, First Chicago, Chase Manhattan and Affiliates .... 60
SECTION 7.04. Lender Credit Decision ..................................... 61
SECTION 7.05. Indemnification ............................................ 61
SECTION 7.06. Successor Administrative Agent ............................. 62
SECTION 7.07. Documentation Agent, Co-Agent and Arranger ................. 62
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Amendments, Etc ............................................ 62
SECTION 8.02. Notices, Etc ............................................... 63
SECTION 8.03. No Waiver; Remedies ........................................ 63
SECTION 8.04. Costs and Expenses .......................................... 64
<PAGE> 4
iii
SECTION 8.05. Right of Set-off ........................................... 65
SECTION 8.06. Binding Effect ............................................. 66
SECTION 8.07. Assignments, Designations and Participations ............... 66
SECTION 8.08. Acknowledgements ........................................... 70
SECTION 8.09. Consent to Jurisdiction .................................... 70
SECTION 8.10. GOVERNING LAW .............................................. 71
SECTION 8.11. Execution in Counterparts .................................. 71
SECTION 8.12. Waiver of Jury Trial ....................................... 71
SECTION 8.13. Certain Actions ............................................ 72
ARTICLE IX
INTERIM GUARANTY
SECTION 9.01. Interim Guaranty ........................................... 72
Schedule I List of Applicable Lending Offices
Schedule 5.02(a) Existing Liens
Exhibit A-1 Form of A Note
Exhibit A-2 Form of B Note
Exhibit B-1 Form of Notice of A Borrowing
Exhibit B-2 Form of Notice of B Borrowing
Exhibit C Form of Assignment and Acceptance
Exhibit D Form of Designation Agreement
Exhibit E Form of Confidentiality Agreement
Exhibit F-1 Form of Opinion of In-House Counsel for the
Borrower
Exhibit F-2 Form of Opinion of New York Counsel for
the Borrower
Exhibit F-3 Form of Opinion of In-House Counsel for the
Interim Guarantor
Exhibit G Form of Opinion of Special New York
Counsel to the Administrative Agent
<PAGE> 5
REVOLVING CREDIT AGREEMENT
REVOLVING CREDIT AGREEMENT dated as of December 17, 1997 (this
"Agreement") among CORN PRODUCTS INTERNATIONAL, INC., a Delaware corporation
(the "Borrower"), the banks (the "Banks") listed on the signature pages hereof,
CITIBANK, N.A. ("Citibank"), as administrative agent (the "Administrative
Agent"), CITICORP SECURITIES, INC., as arranger (the "Arranger"), THE FIRST
NATIONAL BANK OF CHICAGO ("First Chicago"), as documentation agent (the
"Documentation Agent"), The Chase Manhattan Bank ("Chase Manhattan"), as
co-agent ("Co-Agent") for the Lenders hereunder and CPC INTERNATIONAL INC., a
Delaware corporation (the "Interim Guarantor").
PRELIMINARY STATEMENTS:
1. The Borrower was formed in March 1997 for the purpose of
effecting the Distribution (as defined in the Form 10 defined below) and
assuming the operations of the corn refining business of the Interim Guarantor
as more fully described in the Form 10.
2. The Borrower has requested, and the Lenders have agreed, to
enter into this Agreement to provide financing to the Borrower for general
corporate purposes.
3. The Interim Guarantor has agreed to enter into this
Agreement and to guaranty the Borrower's Obligations (as defined below) until
the Interim Guaranty Release Date only on the terms and subject to the
conditions and limitations set forth in Section 9.01 below.
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants and agreements contained herein, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. Certain Defined Terms. As used in this
Agreement, the following terms shall have the following meanings (such meanings
to be equally applicable to both the singular and plural forms of the terms
defined):
"A Advance" means an advance by a Lender to the Borrower as
part of an A Borrowing and refers to a Base Rate Advance or a
Eurodollar Rate Advance, each of which shall be a "Type" of A Advance.
"A Borrowing" means a borrowing consisting of simultaneous A
Advances of the same Type made by each of the Lenders pursuant to
Section 2.01.
<PAGE> 6
2
"A Note" means a promissory note of the Borrower payable to
the order of any Lender, in substantially the form of Exhibit A-1
hereto, evidencing the aggregate indebtedness of the Borrower to such
Lender resulting from the A Advances made by such Lender.
"Advance" means an A Advance or a B Advance.
"Administrative Agent" has the meaning specified in the
recital of parties to this Agreement.
"Affiliate" means, as to any Person, any other Person that,
directly or indirectly, controls, is controlled by or is under common
control with such Person or is a director or officer of such Person.
For purposes of this definition, the term "control" (including the
terms "controlling," "controlled by" and "under common control with")
of a Person means the possession, direct or indirect, of the power to
vote 5% or more of the Voting Stock of such Person or to direct or
cause the direction of the management and policies of such Person,
whether through the ownership of Voting Stock, by contract or
otherwise.
"Anniversary Date" means December 17, 1998 and December 17 in
each succeeding calendar year occurring during the term of this
Agreement.
"Applicable Facility Fee" means, for each day, the rate of
interest per annum (expressed in basis points, i.e., 1/100 of 1%) set
forth below opposite the Applicable Performance Level in effect on the
immediately preceding last day of May, August, November or February, as
the case may be.
APPLICABLE PERFORMANCE APPLICABLE FACILITY
LEVEL FEE
1 6.50
2 7.00
3 8.00
4 10.00
5 12.50
6 17.50
"Applicable Lending Office" means, with respect to each
Lender, such Lender's Domestic Lending Office in the case of a Base
Rate Advance, such Lender's Eurodollar Lending Office in the case of a
Eurodollar Rate Advance and, in the case of a B Advance,
<PAGE> 7
3
the office of such Lender notified by such Lender to the Administrative
Agent as its Applicable Lending Office with respect to such B Advance.
"Applicable Margin" means, at any time, the rate of interest
per annum (expressed in basis points, i.e., 1/100 of 1%) set forth
below opposite the Applicable Performance Level in effect on the first
day of the Interest Period therefor, in the case of a Eurodollar Rate
Advance or in effect, from time to time, in the case of a Base Rate
Advance.
APPLICABLE
PERFORMANCE APPLICABLE MARGIN
LEVEL
Eurodollar
Base Rate Rate
1 0.00 13.50
2 0.00 15.00
3 0.00 17.00
4 0.00 20.00
5 0.00 25.00
6 0.00 30.00
"Applicable Performance Level" shall mean the applicable level
for adjusting the Applicable Facility Fee and Applicable Margin before
and after the Public Debt Rating Date as follows:
<PAGE> 8
4
APPLICABLE PRIOR TO PUBLIC DEBT RATING
PERFORMANCE PUBLIC DEBT FROM AND AFTER
LEVEL RATING DATE PUBLIC DEBT RATING DATE
- -----------------------------------------------------------------------------
1 Interest Coverage Ratio greater Higher than or equal to A from
than or equal to 8.0 and Debt to S&P or higher than or equal
Capitalization Ratio less than or to A2 from Moody's
equal to 30.0%
2 Interest Coverage Ratio greater Higher than or equal to A-
than or equal to 6.9 but less (but lower than A) from S&P or
than 8.0 and Debt to higher than or equal to A3
Capitalization Ratio greater than (but lower than A2) from
30.0% but less than or equal to Moody's
33.0%
3 Interest Coverage Ratio greater Higher than or equal to BBB+
than or equal to 6.0 but less (but lower than A-) from S&P
than 6.9 and Debt to or higher than or equal to
Capitalization Ratio greater than Baa1 (but lower than A3) from
33.0% but less than or equal to Moody's
36.0%
4 Interest Coverage Ratio greater Higher than or equal to BBB
than or equal to 5.0 but less (but lower than BBB+) from S&P
than 6.0 and Debt to or higher than or equal to
Capitalization Ratio greater than Baa2 (but lower than Baa1)
36.0% but less than or equal to from Moody's
39.0%
5 Interest Coverage Ratio greater Higher than or equal to BBB-
than or equal to 4.4 but less (but lower than BBB) from S&P
than 5.0 and Debt to or higher than or equal to
Capitalization Ratio greater than Baa3 (but lower than Baa2)
39.0% but less than or equal to from Moody's
41.0%
6 Interest Coverage Ratio less Lower than BBB- from S&P and
than 4.4 and Debt to lower than Baa3 from Moody's,
Capitalization Ratio greater or Unrated
than 41.0%
provided that (A) the Applicable Facility Fee and Applicable Margin
shall be set in accordance with Applicable Performance Level 4 until
the earlier of the delivery of financial statements for the fiscal
quarter ended June 30, 1998 pursuant to Section 5.01(d)(i)(B) or the
Public Debt Rating Date, (B) prior to the
<PAGE> 9
5
Public Debt Rating Date, no change in the Applicable
Facility Fee or the Applicable Margin shall be effective until three
Business Days after the date on which the Administrative Agent receives
financial statements pursuant to Section 5.01(d)(i)(B) or (ii)(B) and a
certificate of an Authorized Financial Officer of the Borrower
demonstrating the Borrower's Debt to Capitalization Ratio and Interest
Coverage Ratio and (C) if the Borrower has not submitted to the
Administrative Agent the information described in clause (B) of this
proviso as and when required under Section 5.01(d)(i)(B) or (ii)(B), as
the case may be, the Applicable Facility Fee and Applicable Margin
shall be at Applicable Performance Level 6 for so long as such
information has not been received by the Administrative Agent. Solely
with respect to the Applicable Performance Level determined by
reference to the Public Debt Rating, if at any time the ratings from
Moody's and S&P are in Applicable Performance Levels which are more
than one Applicable Performance Level apart, the Applicable Performance
Level shall be that level which is determined by the average of the two
ratings (and if the average of such ratings falls between two
Applicable Performance Levels, the higher of such two Applicable
Performance Levels will apply). Moreover, for purposes of this
definition if following the Public Debt Rating Date either S&P or
Moody's (or any Substitute Rating Agency) ceases to have in effect a
Public Debt Rating, the Applicable Margin and the Applicable Facility
Fee will be determined by reference to Applicable Performance Level 6.
"Arranger" has the meaning specified in the recital of parties to this
Agreement.
"Assignment and Acceptance" means an assignment and acceptance entered
into by a Lender (other than a Designated Bidder) and an Eligible Assignee,
acknowledged and consented to by the Borrower and accepted by the Administrative
Agent, in accordance with Section 8.07 and in substantially the form of Exhibit
C hereto.
"Assuming Lender" has the meaning specified in Section 2.17(c).
"Assumption Agreement" has the meaning specified in Section 2.17(c).
"Authorized Financial Officer" means any one of the Vice President and
Treasurer of the Borrower or any other duly authorized corporate officer of the
Borrower who is responsible for and familiar with the financial affairs of the
Borrower.
"B Advance" means an advance by a Lender to the Borrower as part of a B
Borrowing resulting from the auction bidding procedure described in Section
2.03.
"B Borrowing" means a borrowing consisting of simultaneous B Advances
from each of the Lenders whose offer to make one or more B Advances as part of
such
<PAGE> 10
6
borrowing has been accepted by the Borrower under the auction bidding
procedure described in Section 2.03.
"B Note" means a promissory note of the Borrower payable to the order
of any Lender, in substantially the form of Exhibit A-2 hereto, evidencing the
indebtedness of the Borrower to such Lender resulting from a B Advance made by
such Lender.
"B Reduction" has the meaning specified in Section 2.01.
"Bank" has the meaning specified in the recital of parties to
this Agreement.
"Base Rate" means a fluctuating interest rate per annum as shall be in
effect from time to time which rate per annum shall at all times be equal to the
highest of:
(a) the rate of interest announced publicly by Citibank in
New York, New York, from time to time, as Citibank's base rate;
(b) the sum (adjusted to the nearest 1/16 of 1% or, if there
is no nearest 1/16 of 1%, to the next higher 1/16 of 1%) of (i) 1/2 of
1% per annum, plus (ii) the rate obtained by dividing (A) the latest
three-week moving average of secondary market morning offering rates
in the United States for three-month certificates of deposit of major
United States money market banks, such three-week moving average
(adjusted to the basis of a year of 360 days) being determined weekly
on each Monday (or, if such day is not a Business Day, on the next
succeeding Business Day) for the three-week period ending on the
previous Friday by Citibank on the basis of such rates reported by
certificate of deposit dealers to and published by the Federal Reserve
Bank of New York or, if such publication shall be suspended or
terminated, on the basis of quotations for such rates received by
Citibank from three New York certificate of deposit dealers of
recognized standing selected by Citibank, by (B) a percentage equal to
100% minus the average of the daily percentages specified during such
three-week period by the Board of Governors of the Federal Reserve
System (or any successor) for determining the maximum reserve
requirement (including, but not limited to, any emergency, supplemental
or other marginal reserve requirement) for Citibank with respect to
liabilities consisting of or including (among other liabilities)
three-month U.S. dollar non-personal time deposits in the United
States, plus (iii) the average during such three-week period of the
annual assessment rates estimated by Citibank for determining the then
current annual assessment payable by Citibank to the Federal Deposit
Insurance Corporation (or any successor) for insuring U.S. dollar
deposits of Citibank in the United States; and
<PAGE> 11
7
(c) 1/2 of one percent per annum above the Federal Funds Rate.
"Base Rate Advance" means an A Advance which bears interest at a rate
per annum determined on the basis of the Base Rate, as provided in Section
2.07(a)(i).
"Borrowed Debt" means all indebtedness for borrowed money and
obligations evidenced by bonds, debentures, notes or other similar instruments.
"Borrower's Obligations" has the meaning specified in Section 9.01(a).
"Borrowing" means an A Borrowing or a B Borrowing.
"Business Day" means a day of the year on which banks are not required
or authorized to close in New York City and, if the applicable Business Day
relates to any Eurodollar Rate Advances, on which dealings are carried on in the
London interbank market.
"Co-Agent" has the meaning specified in the recital of parties to this
Agreement.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and the regulations promulgated and rulings issued thereunder.
"Commitment" has the meaning specified in Section 2.01.
"Commitment Date" has the meaning specified in Section 2.18(b).
"Commitment Increase" has the meaning specified in Section 2.18(a).
"Consenting Lender" has the meaning specified in Section 2.17(b).
"Consolidated" refers to the consolidation of the accounts of the
Borrower and its Subsidiaries in accordance with generally accepted accounting
principles, including principles of consolidation, consistent with those applied
in the preparation of the Consolidated financial statements referred to in
Section 4.01(e).
"Convert", "Conversion" and "Converted" each refers to a conversion of
A Advances of one Type into A Advances of the other Type pursuant to
Section 2.08 or 2.09.
"Corn Refining Business" has the meaning specified in the Form 10.
<PAGE> 12
8
"Debt" means (i) indebtedness for borrowed money, (ii) obligations
evidenced by bonds, debentures, notes or other similar instruments, (iii)
obligations to pay the deferred purchase price of property or services, (iv)
obligations as lessee under leases which shall have been or should be, in
accordance with generally accepted accounting principles, recorded as capital
leases, (v) obligations under direct or indirect guaranties in respect of, and
obligations (contingent or otherwise) to purchase or otherwise acquire, or
otherwise to assure a creditor against loss in respect of, indebtedness or
obligations of others of the kinds referred to in clauses (i) through (iv)
above, (vi) liabilities of the Borrower or any ERISA Affiliate in respect of any
Insufficiency, (vii) withdrawal liability within the meaning of Section 4201 of
ERISA incurred by the Borrower or any ERISA Affiliate to any Multiemployer Plan,
(viii) liabilities incurred by the Borrower or any ERISA Affiliate to the PBGC
upon the termination under Section 4041 or Section 4042 of ERISA of any Plan and
(ix) any increase in the amount of contributions required to be made by the
Borrower and its ERISA Affiliates in each fiscal year of the Borrower to
Multiemployer Plans over the amount of such contributions required to be made on
the date hereof due to the reorganization or termination of any such
Multiemployer Plan within the meaning of Title IV of ERISA.
"Debt to Capitalization Ratio" means, at any time, the amount of
Consolidated Borrowed Debt of the Borrower expressed as a percentage of the sum
of Consolidated Borrowed Debt of the Borrower plus minority stockholders' equity
interests, deferred taxes on income and total stockholders' equity, in each
case, as determined in accordance with GAAP by reference to the Consolidated
balance sheets of the Borrower required to be delivered pursuant to Section
5.01(d)(i)(B) or (ii)(B).
"Designated Bidder" means (a) an Affiliate of a Lender or (b) a special
purpose corporation that is engaged in making, purchasing or otherwise investing
in commercial loans in the ordinary course of its business that issues (or the
parent of which issues) commercial paper rated at least "Prime-1" by Moody's or
"A-1" by S&P or a comparable rating from the successor of either of them, that,
in either case, (x) is organized under the laws of the United States or any
State thereof, (y) shall have become a party hereto pursuant to Section 8.07(e),
(f) and (g), and (z) is not otherwise a Lender. Notwithstanding the foregoing,
other than in the case of an Affiliate of a Lender, each Designated Bidder shall
be subject to the prior written consent of the Borrower and the Administrative
Agent, such consent not to be unreasonably withheld or delayed.
"Designation Agreement" means a designation agreement entered into by a
Lender (other than a Designated Bidder) and a Designated Bidder, and accepted by
the Administrative Agent, in substantially the form of Exhibit D hereto.
<PAGE> 13
9
"Distribution Agreement" means that certain Distribution Agreement
dated as of December 1, 1997 between the Interim Guarantor and the Borrower
relating to the Spin-off.
"Documentation Agent" has the meaning specified in the recital of
parties to this Agreement.
"Domestic Lending Office" means, with respect to any Lender, the office
of such Lender specified as its "Domestic Lending Office" opposite its name on
Schedule I hereto or in the Assignment and Acceptance pursuant to which it
became a Lender, or such other office of such Lender as such Lender may from
time to time specify to the Borrower and the Administrative Agent.
"EBITDA" means, for any period, an amount equal to Consolidated net
income (or net loss) of the Borrower plus the sum of (a) interest expense (b)
income tax expense, (c) depreciation expense and (d) amortization expense, in
each case determined in accordance with GAAP by reference to the Consolidated
balance sheets of the Borrower required to be delivered pursuant to Section
5.01(d)(i)(B) or (ii)(B).
"Eligible Assignee" means (i) a commercial bank organized under the
laws of the United States, or any State thereof, having total assets of not less
than $5,000,000,000; (ii) a commercial bank having total assets of not less than
$5,000,000,000 (or its equivalent in another currency), and organized under the
laws of any other country which is a member of the Organization for Economic
Cooperation and Development ("OECD") or has concluded special lending
arrangements with the International Monetary Fund associated with its General
Arrangements to Borrow, or a political subdivision of any such country, provided
that such bank is acting through a branch or agency located in the United
States; (iii) the central bank of any country which is a member of the OECD;
(iv) such other financial institutions as the Administrative Agent and the
Borrower may agree on from time to time; and (v) an Affiliate of a Lender.
"Environmental Law" means any federal, state, local or foreign statute,
law, ordinance, rule, regulation, code, order, judgment, decree or judicial or
agency interpretation, policy or guidance relating to the environment, health,
safety or Hazardous Materials.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated and rulings issued
thereunder.
"ERISA Affiliate" means any Person that for purposes of Title IV of
ERISA is a member of the Borrower's or, prior to the Interim Guaranty Release
Date, the Interim
<PAGE> 14
10
Guarantor's, controlled group or under common control with such Person, as
the case may be, within the meaning of Section 414 of the Internal Revenue
Code.
"ERISA Default" means
(a) that either
(i) any Termination Event with respect to a Plan
shall have occurred and be continuing, or
(ii) either the Borrower or any of its ERISA
Affiliates or, prior to the Interim Guaranty Release Date, the
Interim Guarantor or any of its ERISA Affiliates, shall have
been notified by the sponsor of a Multiemployer Plan that such
Person or such ERISA Affiliate, as the case may be, has
incurred Withdrawal Liability to such Multiemployer Plan or
that such Multiemployer Plan is in reorganization or is being
terminated, within the meaning of Title IV of ERISA, and
(b) that at the time of such occurrence or notice the
sum of
(i) the Insufficiency of such Plan for which a
Termination Event has occurred together with the Insufficiency
of any and all other Plans with respect to which a Termination
Event shall have occurred and then exist (or, in the case of a
Plan with respect to which a Termination Event described in
clause (ii) of the definition of Termination Event shall have
occurred and then exist, the liability related thereto), plus
(ii) the Withdrawal Liability to such Multiemployer
Plan, determined as of the notification date referred to in
clause (a)(ii) above, together with the aggregate amount then
outstanding and required to be paid to all other Multiemployer
Plans for which there is then a Withdrawal Liability, plus
(iii) the excess of (A) aggregate annual
contributions of the Borrower and its ERISA Affiliates, or
prior to the Interim Guaranty Release Date, the Interim
Guarantor and its ERISA Affiliates, to all Multiemployer Plans
for the plan years in which such notice of reorganization has
been received over (B) the aggregate annual contributions of
such Person and its ERISA Affiliates to such Multiemployer
Plans for the plan year which includes the date hereof,
<PAGE> 15
11
shall equal or exceed $5,000,000.
"Eurocurrency Liabilities" has the meaning assigned to that term in
Regulation D of the Board of Governors of the Federal Reserve System, as in
effect from time to time.
"Eurodollar Lending Office" means, with respect to any Lender, the
office of such Lender specified as its "Eurodollar Lending Office" opposite its
name on Schedule I hereto or in the Assignment and Acceptance pursuant to which
it became a Lender (or, if no such office is specified, its Domestic Lending
Office), or such other office of such Lender as such Lender may from time to
time specify to the Borrower and the Administrative Agent.
"Eurodollar Rate" means, for the Interest Period for each Eurodollar
Rate Advance comprising part of the same A Borrowing or the same B Borrowing, as
the case may be, an interest rate per annum equal to the rate per annum obtained
by dividing (a) the average (rounded upward to the nearest whole multiple of
1/16 of 1% per annum, if such average is not such a multiple) of the rate per
annum at which deposits in U.S. dollars are offered by the principal office of
each of the Reference Banks in London, England to prime banks in the London
interbank market at 11:00 A.M. (London time) two Business Days before the first
day of such Interest Period in an amount substantially equal to such Reference
Bank's Eurodollar Rate Advance comprising part of such Borrowing (or in the case
of a B Borrowing, equal to $10,000,000) and for a period equal to such Interest
Period by (b) a percentage equal to 100% minus the Eurodollar Rate Reserve
Percentage for such Interest Period. The Eurodollar Rate for the Interest Period
for each Eurodollar Rate Advance comprising part of the same Borrowing shall be
determined by the Administrative Agent on the basis of applicable rates
furnished to and received by the Administrative Agent from the Reference Banks
two Business Days before the first day of such Interest Period, subject,
however, to the provisions of Section 2.08.
"Eurodollar Rate Advance" means an A Advance which bears interest at a
rate per annum determined on the basis of the Eurodollar Rate, as provided in
Section 2.07(a)(ii), or a B Advance which bears interest at a rate per annum
determined on the basis of the Eurodollar Rate, as provided in Section 2.03(a).
"Eurodollar Rate Reserve Percentage" of any Lender for any Interest
Period for all Eurodollar Rate Advances comprising part of the same Borrowing
means the reserve percentage applicable two Business Days before the first day
of such Interest Period under regulations issued from time to time by the Board
of Governors of the Federal Reserve System (or any successor) for determining
the
<PAGE> 16
12
maximum reserve requirement (including, without limitation, any emergency,
supplemental or other marginal reserve requirement) for a member bank of the
Federal Reserve System in New York City with respect to liabilities or assets
consisting of or including Eurocurrency Liabilities (or with respect to any
other category of liabilities that includes deposits by reference to which the
interest rate on Eurodollar Rate Advances is determined) having a term equal to
such Interest Period.
"Events of Default" has the meaning specified in Section 6.01.
"Extension Date" has the meaning specified in Section 2.17(b).
"Federal Funds Rate" means, for any period, a fluctuating interest rate
per annum equal for each day during such period to the weighted average of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day which is a Business Day, the average of the quotations for such day on such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.
"Fixed Rate" means, for the period for each Fixed Rate Advance
comprising part of the same B Borrowing, the fixed interest rate per annum
determined for such Advance, as provided in Section 2.03.
"Fixed Rate Advance" means a B Advance which bears interest at a fixed
rate per annum determined as provided in Section 2.03(a).
"Form 10" means the Registration Statement on Form 10 first filed by
the Borrower with the Securities and Exchange Commission on September 19, 1997,
in the form declared effective on December 4, 1997.
"Hazardous Materials" means petroleum and petroleum products,
byproducts or breakdown products, radioactive materials, asbestos-containing
materials, radon gas and any other chemicals, materials or substances
designated, classified or regulated as being "hazardous" or "toxic," or words of
similar import, under any federal, state, local or foreign statute, law,
ordinance, rule, regulation, code, order, judgment, decree or judicial or agency
interpretation, policy or guidance.
"Increase Date" has the meaning specified in Section 2.18(a).
<PAGE> 17
13
"Increasing Lender" has the meaning specified in Section 2.18(b).
"Insufficiency" means, with respect to any Plan, the amount, if any, of
its unfunded benefit liabilities within the meaning of Section 4001(a)(18) of
ERISA.
"Interest Coverage Ratio" means for any Measurement Period, the ratio
of Consolidated EBITDA of the Borrower and its Subsidiaries during such
Measurement Period to interest payable on, and amortization of debt discount in
respect of, all Debt during such Measurement Period by the Borrower and its
Subsidiaries.
"Interest Period" means, (a) for each Eurodollar Rate Advance
comprising part of the same A Borrowing, the period commencing on the date of
such Eurodollar Rate Advance or the date of Conversion of any Base Rate Advance
into such Eurodollar Rate Advance and ending on the last day of the period
selected by the Borrower pursuant to the provisions below and, thereafter, each
subsequent period commencing on the last day of the immediately preceding
Interest Period and ending on the last day of the period selected by the
Borrower pursuant to the provisions below, and (b) for each B Advance which is a
Eurodollar Rate Advance, the period commencing on the date of such B Advance and
ending on the maturity date for repayment of such B Advance as determined
pursuant to Section 2.03(a). The duration of each such Interest Period referred
to in subsection (a) above shall be one, two, three or six months, and if
available to all Lenders, nine or twelve months, in each case as the Borrower
may, upon notice received by the Administrative Agent not later than 11:00 A.M.
(New York City time) on the third Business Day prior to the first day of such
Interest Period, select; provided, however, that:
(w) the duration of any Interest Period which commences before
the Termination Date and would otherwise end after the Termination Date
shall end on the Termination Date (subject to Section 8.04(b));
(x) Interest Periods commencing on the same date for
Eurodollar Rate Advances comprising part of the same A Borrowing shall
be of the same duration;
(y) whenever the last day of any Interest Period would
otherwise occur on a day other than a Business Day, the last day of
such Interest Period shall be extended to occur on the next succeeding
Business Day, provided, however, that, if such extension would cause
the last day of such Interest Period to occur in the next following
calendar month, the last
<PAGE> 18
14
day of such Interest Period shall occur on the next preceding Business
Day; and
(z) whenever the first day of any Interest Period occurs on a
day of an initial calendar month for which there is no numerically
corresponding day in the calendar month that succeeds such initial
calendar month by the number of months equal to the number of months in
such Interest Period, such Interest Period shall end on the last
Business Day of such succeeding calendar month.
"Interim Guarantor" has the meaning specified in the recital
of parties to this Agreement.
"Interim Guaranty Release Date" has the meaning specified in
Section 3.04.
"Lenders" means the Banks, each Assuming Lender that shall
become a party hereto pursuant to Section 2.17 or 2.18 and each
Eligible Assignee that shall become a party hereto pursuant to Section
8.07 and, except when used in reference to an A Advance, an A
Borrowing, an A Note, a Commitment or a term related to any of the
foregoing, each Designated Bidder.
"Lien" shall have the meaning specified in Section 4.01(l).
"Loan Documents" means this Agreement and the Notes.
"Majority Lenders" means at any time Lenders having at least
51% of the outstanding A Advances at such time, or, if no such
principal amount is then outstanding, Lenders having at least 51% of
the Commitments; provided, that if at any time the Commitments have
been terminated pursuant to Section 6.01 and no A Advances are then
outstanding, "Majority Lenders" will mean Lenders having at least 51%
of outstanding B Advances.
"Margin Stock" has the meaning given that term in Regulation U
of the Board of Governors of the Federal Reserve System, as in effect
from time to time.
"Material Adverse Effect" means a material adverse effect on
(a) the business, condition (financial or otherwise), operations,
performance, properties or prospects of the Borrower and its
Subsidiaries, or prior to the Interim Guaranty Release Date, the
Interim Guarantor and its Subsidiaries, in each case taken as a whole,
(b) the rights and remedies of the Administrative Agent or any Lender
under this Agreement or any Note or (c) the ability of the Borrower or,
prior to the
<PAGE> 19
15
Interim Guaranty Release Date, the Interim Guarantor, to
perform its obligations under this Agreement or, in the case of the
Borrower, under any Note.
"Measurement Period" means, as of any date of determination,
the most recently completed four consecutive fiscal quarters of the
Borrower ending on or immediately prior to such date.
"Moody's" means Moody's Investor Services, Inc.
"Multiemployer Plan" means a "multiemployer plan", as defined
in Section 4001(a)(3) of ERISA, to which the Borrower or any of its
ERISA Affiliates, or prior to the Interim Guaranty Release Date, the
Interim Guarantor or any of its ERISA Affiliates, is making or accruing
an obligation to make contributions, or has within any of the preceding
five plan years made or accrued an obligation to make contributions.
"Multiple Employer Plan" means a single employer plan, as
defined in Section 4001(a)(15) of ERISA, that (a) is maintained for
employees of the Borrower or any of its ERISA Affiliates or, prior to
the Interim Guaranty Release Date, the Interim Guarantor or any of its
ERISA Affiliates, and at least one Person other than such Person and
its ERISA Affiliates or (b) was so maintained and in respect of which
such Person or any of its ERISA Affiliates could have liability under
Section 4064 or 4069 of ERISA in the event such plan has been or were
to be terminated.
"Non-Consenting Lender" has the meaning specified in Section
2.17(b).
"Note" means an A Note or a B Note.
"Notice of A Borrowing" has the meaning specified in Section
2.02(a).
"Notice of B Borrowing" has the meaning specified in Section
2.03(a).
"Obligation" means, with respect to any Person, any obligation
of such Person of any kind, including, without limitation, any
liability of such Person on any claim, whether or not the right of any
creditor to payment in respect of such claim is reduced to judgment,
liquidated, unliquidated, fixed, contingent, matured, disputed,
undisputed, legal, equitable, secured or unsecured, and whether or not
such obligation is discharged, stayed or otherwise affected by any
proceeding referred to in Section 6.01(e). Without limiting the
generality of the foregoing, the Obligations of the Borrower under the
Loan Documents include (a) all principal, interest, charges, expenses,
fees, attorneys' fees and disbursements,
<PAGE> 20
16
indemnities and any other amounts payable by the Borrower
under any Loan Document and (b) any amount in respect of any of the
foregoing payable by the Borrower under or in respect of any Loan
Document, that any Lender, in its sole discretion and upon five
Business Days' notice to the Borrower may elect to pay or advance on
behalf the Borrower.
"Other Taxes" has the meaning specified in Section 2.14(b).
"PBGC" means the Pension Benefit Guaranty Corporation.
"Person" means an individual, partnership, corporation
(including a business trust), limited liability company, joint stock
company, trust, unincorporated association, joint venture or other
entity, or a government or any political subdivision or agency thereof.
"Plan" means a Single Employer Plan or a Multiple Employer
Plan.
"Public Debt Rating" means, as of any date, the better of (a)
the lowest rating of any class of long-term public unsecured senior
debt issued by the Borrower as most recently announced by Moody's and
(b) the lowest rating of the Borrower's long-term public unsecured
senior debt as most recently announced by S&P, as the case may be, or,
if either Moody's or S&P is no longer in existence on such date, a
Substitute Rating Agency, provided, however, that (i) if any rating
established by S&P or Moody's (or any Substitute Rating Agency) shall
be changed, such change shall be effective as of the date on which such
change is first announced publicly by the rating agency making such
change; and (ii) if S&P or Moody's (or any Substitute Rating Agency)
shall change the basis on which ratings are established, each reference
to the Public Debt Rating announced by S&P or Moody's (or any
Substitute Rating Agency), as the case may be, shall refer to the then
equivalent rating by S&P or Moody's (or any Substitute Rating Agency),
as the case may be.
"Public Debt Rating Date" means the first date as of which
Public Date Ratings have been issued by each of Moody's and S&P, or, if
either Moody's or S&P is no longer in existence on such date, a
Substitute Rating Agency.
"Reference Banks" means Citibank, First Chicago and Chase
Manhattan or, in the event that less than two such Lenders furnish
timely information to the Administrative Agent for determining the
Eurodollar Rate for Eurodollar Rate Advances comprising any requested A
Borrowing or B Borrowing, any other Lender which is selected by the
Administrative Agent and which furnishes such information.
<PAGE> 21
17
"Register" has the meaning specified in Section 8.07(c).
"S&P" means Standard & Poor's Ratings Group, a division of
McGraw-Hill, Inc.
"Single Employer Plan" means a single employer plan, as
defined in Section 4001(a)(15) of ERISA, that (i) is maintained for
employees of the Borrower or any of its ERISA Affiliates, or prior to
the Interim Guaranty Release Date, the Interim Guarantor or any of its
ERISA Affiliates, and no Person other than such Person and its ERISA
Affiliates, or (ii) was so maintained and in respect of which the
Borrower or its ERISA Affiliates or, prior to the Interim Guaranty
Release Date, the Interim Guarantor or its ERISA Affiliates, as the
case may be, could have liability under Section 4069 of ERISA in the
event such plan has been or were to be terminated.
"Spin-off" means the distribution by the Interim Guarantor to
its shareholders of the common stock of the Borrower, as contemplated
by the Form 10.
"Subsidiary" of any Person means any corporation, partnership,
joint venture, limited liability company, trust or estate of which (or
in which) more than 50% of (a) the issued and outstanding capital stock
having ordinary voting power to elect a majority of the Board of
Directors of such corporation (irrespective of whether at the time
capital stock of any other class or classes of such corporation shall
or might have voting power upon the occurrence of any contingency), (b)
the interest in the capital or profits of such partnership, joint
venture or limited liability company or (c) the beneficial interest in
such trust or estate is at the time directly or indirectly owned or
controlled by such Person, by such Person and one or more of its other
Subsidiaries or by one or more of such Person's other Subsidiaries.
"Substitute Rating Agency" means a nationally recognized
credit rating organization designated by the Borrower and approved by
the Administrative Agent.
"Taxes" has the meaning specified in Section 2.14(a).
"Termination Date" means the earlier of (a) December 17, 2002,
subject to the extension thereof pursuant to Section 2.17, and (b) the
date of termination in whole of the aggregate Commitments pursuant to
Section 2.05 or 6.01, provided, however, that the Termination Date of
any Lender that is a Non-Consenting Lender to any requested extension
pursuant to Section 2.17 shall be the
<PAGE> 22
18
Termination Date in effect immediately prior to the applicable
Extension Date for all purposes of this Agreement.
"Termination Event" means (i) the occurrence of a "reportable
event", as such term is described in Section 4043 of ERISA, with
respect to any Plan (other than a "reportable event" not subject to the
provision for 30-day notice to the PBGC), or an event described in
Section 4062(e) of ERISA, or (ii) the withdrawal of the Borrower or any
of its ERISA Affiliates, or prior to the Interim Guaranty Release Date,
the Interim Guarantor or any of its ERISA Affiliates, from a Multiple
Employer Plan during a plan year in which it was a "substantial
employer", as such term is defined in Section 4001(a)(2) of ERISA, or
the incurrence of liability by any such Person or any ERISA Affiliate
under Section 4064 of ERISA upon the termination of a Multiple Employer
Plan, or (iii) the distribution of a notice of intent to terminate a
Plan pursuant to Section 4041(a)(2) of ERISA or the treatment of a Plan
amendment as a termination under Section 4041 of ERISA, or (iv) the
conditions set forth in Section 302(f)(l)(A) and (B) of ERISA to the
creation of a lien upon property or rights to property of such Person
or any ERISA Affiliate for failure to make a required payment to a Plan
are satisfied, or (v) the adoption of an amendment to a Plan requiring
the provision of security to such Plan, pursuant to Section 307 of
ERISA, or (vi) the institution of proceedings to terminate a Plan by
the PBGC under Section 4042 of ERISA, or (vii) any other event or
condition which might constitute grounds under Section 4042 of ERISA
for the termination of, or the appointment of a trustee to administer,
any Plan.
"Unrated" means, as of any date, that either Moody's or S&P on
such date has not announced a rating, or has terminated a prior rating,
for each class of long-term public unsecured senior debt issued by the
Borrower or that the Borrower does not have outstanding any long-term
public unsecured senior debt issued by it.
"Voting Stock" means capital stock issued by a corporation, or
equivalent interests in any other Person, the holders of which are
ordinarily, in the absence of contingencies, entitled to vote for the
election of directors (or persons performing similar functions) of such
Person, even though the right so to vote has been suspended by the
happening of such a contingency.
"Withdrawal Liability" shall have the meaning given such term
under Part 1 of Subtitle E of Title IV of ERISA.
SECTION 1.02. Computation of Time Periods. In this Agreement
in the computation of periods of time from a specified date to a later specified
date, the word
<PAGE> 23
19
"from" means "from and including" and the words "to" and "until" each means "to
but excluding".
SECTION 1.03. Accounting Terms. All accounting terms not
specifically defined herein shall be construed in accordance with generally
accepted accounting principles consistent with those applied in the preparation
of the financial statements referred to in Section 4.01(e) ("GAAP").
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
SECTION 2.01. The A Advances. Each Lender severally agrees, on
the terms and conditions hereinafter set forth, to make A Advances to the
Borrower from time to time on any Business Day during the period from the date
hereof until the Termination Date in an aggregate amount not to exceed at any
time outstanding the amount set opposite such Lender's name on the signature
pages hereof under the caption "Commitments" or, if such Lender has entered into
an Assignment and Acceptance in accordance with Section 8.07, set forth for such
Lender in the Register maintained by the Administrative Agent pursuant to
Section 8.07(c), as such amount may be reduced pursuant to Section 2.05 or
increased pursuant to Section 2.18 (such Lender's "Commitment"), provided that
the aggregate amount of the Commitments of the Lenders shall be deemed used from
time to time to the extent of the aggregate amount of the B Advances then
outstanding and such deemed use of the aggregate amount of the Commitments shall
be applied to the Lenders ratably according to their respective Commitments to
reduce the amount of Advances available from each Lender (such deemed use of the
aggregate amount of the Commitments being a "B Reduction"). Each A Borrowing
shall be in an aggregate amount not less than $10,000,000 or an integral
multiple of $1,000,000 in excess thereof and shall consist of A Advances of the
same Type made on the same day by the Lenders ratably according to their
respective Commitments. Within the limits of each Lender's Commitment, the
Borrower may borrow under this Section 2.01, prepay pursuant to Section 2.10(b),
and reborrow under this Section 2.01.
SECTION 2.02. Making the A Advances. (a) Each A Borrowing
shall be made on notice, given not later than (A) 11:00 A.M. (New York City
time) on the third Business Day prior to the date of the proposed A Borrowing if
the Borrower selects a Eurodollar Rate Advance or (B) 11:00 A.M. (New York City
time) on the date of the proposed A Borrowing (which shall be a Business Day) if
the Borrower selects a Base Rate Advance, by the Borrower to the Administrative
Agent, which shall give to each Lender prompt notice thereof by telex or
telecopier. Each such notice of an A Borrowing
<PAGE> 24
20
(a "Notice of A Borrowing") shall be by telex or telecopier, confirmed
immediately in writing, in substantially the form of Exhibit B-1 hereto,
specifying therein the requested (i) date of such A Borrowing, (ii) Type of A
Advances comprising such A Borrowing, (iii) aggregate amount of such A Borrowing
and (iv) in the case of an A Borrowing consisting of Eurodollar Rate Advances,
the initial Interest Period for each such A Advance. In the case of a proposed A
Borrowing comprised of Eurodollar Rate Advances, the Administrative Agent shall
promptly notify each Lender of the applicable interest rate under Section
2.07(a)(ii). Each Lender shall, before 1:00 P.M. (New York City time), (x) on
the date of such A Borrowing if the Borrower selects a Eurodollar Rate Advance
or (y) on the date of such A Borrowing if the Borrower selects a Base Rate
Advance, make available for the account of its Applicable Lending Office to the
Administrative Agent at its address referred to in Section 8.02, in same day
funds, such Lender's ratable portion of such A Borrowing. After the
Administrative Agent's receipt of such funds and upon fulfillment of the
applicable conditions set forth in Article III, the Administrative Agent will
make such funds available to the Borrower at the Administrative Agent's
aforesaid address.
(b) Anything in subsection (a) above to the contrary
notwithstanding, the Borrower may not select Eurodollar Rate Advances for any A
Borrowing if the obligations of the Lenders to make Eurodollar Rate Advances
shall then be suspended pursuant to Section 2.08 or 2.12.
(c) Each Notice of A Borrowing shall be irrevocable and
binding on the Borrower. In the case of any A Borrowing which the related Notice
of A Borrowing specifies is to be comprised of Eurodollar Rate Advances, the
Borrower shall indemnify each Lender against any loss, cost or expense incurred
by such Lender as a result of any failure to fulfill, on or before the date
specified in such Notice of A Borrowing for such A Borrowing, the applicable
conditions set forth in Article III, including, without limitation, any loss
(including loss of anticipated profits), cost or expense incurred by reason of
the liquidation or reemployment of deposits or other funds acquired by such
Lender to fund the A Advance to be made by such Lender as part of such A
Borrowing when such A Advance, as a result of such failure, is not made on such
date.
(d) Unless the Administrative Agent shall have received notice
from a Lender prior to the date of any A Borrowing that such Lender will not
make available to the Administrative Agent such Lender's ratable portion of such
A Borrowing, the Administrative Agent may assume that such Lender has made such
portion available to the Administrative Agent on the date of such A Borrowing in
accordance with subsection (a) of this Section 2.02 and the Administrative Agent
may, in reliance upon such assumption, make available to the Borrower on such
date a corresponding amount. If and to the extent that such Lender shall not
have so made such ratable portion available to the Administrative Agent, such
Lender and the Borrower severally agree to repay to the
<PAGE> 25
21
Administrative Agent on demand such corresponding amount together with interest
thereon, for each day from the date such amount is made available to the
Borrower until the date such amount is repaid to the Administrative Agent, at
(i) in the case of the Borrower, the interest rate applicable at the time to the
A Advances comprising such A Borrowing and (ii) in the case of such Lender, the
Federal Funds Rate. The Administrative Agent will demand such repayment from
such Lender prior to demanding such repayment from the Borrower. If such Lender
shall repay to the Administrative Agent such corresponding amount, such amount
so repaid shall constitute such Lender's A Advance as part of such A Borrowing
for purposes of this Agreement.
(e) The failure of any Lender to make the A Advance to be made
by it as part of any A Borrowing shall not relieve any other Lender of its
obligation, if any, hereunder to make its A Advance on the date of such A
Borrowing, but no Lender shall be responsible for the failure of any other
Lender to make the A Advance to be made by such other Lender on the date of any
A Borrowing.
SECTION 2.03. The B Advances. (a) Each Lender severally agrees
that the Borrower may make B Borrowings under this Section 2.03 from time to
time on any Business Day during the period from the date hereof until the date
occurring 30 days prior to the Termination Date, in the case of B Advances
consisting of Fixed Rate Advances, or one month prior to the Termination Date,
in the case of B Advances consisting of Eurodollar Rate Advances, in the manner
set forth below; provided that, following the making of each B Borrowing, the
aggregate amount of all Advances then outstanding shall not exceed the aggregate
amount of the Commitments of the Lenders (computed without regard to any B
Reduction).
(i) The Borrower may request a B Borrowing under this Section
2.03 by delivering to the Administrative Agent, by telex or telecopier,
confirmed immediately in writing, not later than 10:00 A.M. (New York
City time) (A) at least two Business Days prior to the date of the
proposed B Borrowing if the Borrower selects a Fixed Rate Advance or
(B) at least four Business Days prior to the date of the proposed B
Borrowing if the Borrower selects a Eurodollar Rate Advance, a notice
of a B Borrowing (a "Notice of B Borrowing"), in substantially the form
of Exhibit B-2 hereto, specifying the date and aggregate amount of the
proposed B Borrowing, the maturity date for repayment of each B Advance
to be made as part of such B Borrowing (which maturity date (I) may not
be earlier than the date occurring 1 month after the date of such B
Borrowing or later than the earlier of (x) 6 months after the date of
such B Borrowing if the Borrower selects a Fixed Rate Advance and
(y) the Termination Date or (II) may not be earlier than the date
occurring 30 days after the date of such B Borrowing or later than the
earlier of (x) 180 days after the date of such B Borrowing if the
Borrower selects a Eurodollar Rate Advance and (y) the Termination
Date), the interest payment date
<PAGE> 26
22
or dates relating thereto, and any other terms to be
applicable to such B Borrowing (including, without limitation, the
basis to be used by the Lenders in determining the rate or
rates of interest to be offered by them as provided in paragraph (ii)
below). A Notice of B Borrowing shall not specify more than three such
maturity dates or more than one such maturity date for each B Advance.
The Administrative Agent shall in turn promptly notify each Lender of
each request for a B Borrowing received by it from the Borrower by
sending such Lender a copy of the related Notice of B Borrowing.
(ii) Each Lender may, if, in its sole discretion, it elects to
do so, irrevocably offer to make one or more B Advances to the Borrower
as part of such proposed B Borrowing at a Fixed Rate or Rates or a
margin or margins relative to the Eurodollar Rate, as requested by the
Borrower. Each Lender electing to make such an offer shall do so by
notifying the Administrative Agent via telecopier (which shall give
prompt notice thereof to the Borrower), after 9:00 A.M. but before
10:00 A.M. (New York City time) (A) at least one Business Day before
the date of such proposed B Borrowing specified in the Notice of B
Borrowing delivered with respect thereto pursuant to clause (A) of
paragraph (i) above or (B) at least three Business Days before the date
of such proposed B Borrowing specified in the Notice of B Borrowing
delivered with respect thereto pursuant to clause (B) of paragraph (i)
above, of the minimum amount and maximum amount of each B Advance which
such Lender would be willing to make as part of such proposed B
Borrowing (which amounts may, subject to the proviso to the first
sentence of this Section 2.03(a), exceed such Lender's Commitment), the
Fixed Rate or Rates or a margin or margins relative to the Eurodollar
Rate, as requested by the Borrower, which such Lender would be willing
to accept for such B Advance and such Lender's Applicable Lending
Office with respect to such B Advance; provided that if the
Administrative Agent in its capacity as a Lender shall, in its sole
discretion, elect to make any such offer, it shall notify the Borrower
of such offer before 9:00 A.M. (New York City time) on the date on
which notice of such election is to be given to the Administrative
Agent by the other Lenders. If any Lender shall elect not to make such
an offer, such Lender shall so notify the Administrative Agent, after
9:00 A.M. but before 10:00 A.M. (New York City time) (x) at least one
Business Day before the date of such proposed B Borrowing specified in
the Notice of B Borrowing delivered with respect thereto pursuant to
clause (A) of paragraph (i) above or (y) at least three Business Days
before the date of such proposed B Borrowing specified in the Notice of
B Borrowing delivered with respect thereto pursuant to clause (B) of
paragraph (i) above, and such Lender shall not be obligated to, and
shall not, make any B Advance as part of such B Borrowing; provided
that the failure by any Lender to give such notice shall not cause such
Lender to be obligated to make any B Advance as part of such proposed B
Borrowing.
<PAGE> 27
23
(iii) The Borrower shall, in turn, before 11:30 A.M. (New York
City time) (A) at least one Business Day before the date of such
proposed B Borrowing specified in the Notice of B Borrowing delivered
with respect thereto pursuant to clause (A) of paragraph (i) above or
(B) at least three Business Days before the date of such proposed B
Borrowing specified in the Notice of B Borrowing delivered with respect
thereto pursuant to clause (B) of paragraph (i) above, either
(1) cancel such B Borrowing by giving the
Administrative Agent notice to that effect, or
(2) accept one or more of the offers made by any
Lender or Lenders pursuant to paragraph (ii) above, in its
sole discretion, by giving notice to the Administrative Agent
of the amount of each B Advance (which amount shall be equal
to or greater than the minimum amount, and equal to or less
than the maximum amount, notified to the Borrower by the
Administrative Agent on behalf of such Lender for such B
Advance pursuant to paragraph (ii) above) to be made by each
Lender as part of such B Borrowing, and reject any remaining
offers made by Lenders pursuant to paragraph (ii) above by
giving the Administrative Agent notice to that effect.
The acceptance of offers by the Borrower pursuant to clause (2) of this
paragraph (iii) shall be on the basis of ascending rates of interest
contained in the offers made by the Lenders pursuant to paragraph (ii)
above; provided that, in the event that two or more such offers contain
the same rate of interest for a greater aggregate principal amount than
the amount specified in such Notice of B Borrowing less the aggregate
principal amount of all such offers containing lower rates of interest
that have been accepted by the Borrower pursuant to clause (2) of this
paragraph (iii), the amount to be borrowed from such Lenders as part of
such B Borrowing shall be allocated among such Lenders pro rata on the
basis of the maximum amount offered by such Lenders at such rate of
interest in connection with such B Borrowing.
(iv) If the Borrower notifies the Administrative Agent that
such B Borrowing is cancelled pursuant to clause (1) of paragraph (iii)
above, the Administrative Agent shall give prompt notice thereof to the
Lenders and such B Borrowing shall not be made.
(v) If the Borrower accepts one or more of the offers made by
any Lender or Lenders pursuant to clause (2) of paragraph (iii) above,
the Administrative Agent shall in turn promptly notify (A) each Lender
that has made an offer as described in paragraph (ii) above, of the
date and aggregate amount of
<PAGE> 28
24
such B Borrowing and whether or not any offer or offers made
by such Lender pursuant to paragraph (ii) above have been accepted by
the Borrower, (B) each Lender that is to make a B Advance as part of
such B Borrowing, of the amount of each B Advance to be made by such
Lender as part of such B Borrowing, and (C) each Lender that is to make
a B Advance as part of such B Borrowing, upon receipt, that the
Administrative Agent has received forms of documents appearing to
fulfill the applicable conditions set forth in Article III.
(vi) Each Lender that is to make a B Advance as part of such B
Borrowing shall, before 12:00 noon (New York City time) on the date of
such B Borrowing specified in the notice received from the
Administrative Agent pursuant to clause (A) of the preceding subsection
(v) or any later time when such Lender shall have received notice from
the Administrative Agent pursuant to clause (C) of the preceding
subsection (v), make available for the account of its Applicable
Lending Office to the Administrative Agent at its address referred to
in Section 8.02, in same day funds, such Lender's ratable portion of
such B Borrowing. Upon fulfillment of the applicable conditions set
forth in Article III and after receipt by the Administrative Agent of
such funds, the Administrative Agent will make such funds available to
the Borrower at the Administrative Agent's aforesaid address. Promptly
after each B Borrowing, the Administrative Agent will notify each
Lender of the amount of the B Borrowing, the consequent B Reduction and
the dates upon which such B Reduction commenced and will terminate.
(b) Each B Borrowing shall be in an aggregate amount of not
less than $10,000,000 or an integral multiple of $1,000,000 in excess thereof.
Following the making of each B Borrowing, the Borrower shall be in compliance
with the limitations set forth in the proviso to the first sentence of
subsection (a) above.
(c) Within the limits and on the conditions set forth in this
Section 2.03, the Borrower may from time to time borrow under this Section 2.03,
repay pursuant to subsection (d) below, and reborrow under this Section 2.03,
provided that a B Borrowing shall not be made within four Business Days of the
date of any other B Borrowing.
(d) The Borrower shall repay to the Administrative Agent for
the account of each Lender which has made, or holds the right of repayment of, a
B Advance on the maturity date of each B Advance (such maturity date being that
specified by the Borrower for repayment of such B Advance in the related Notice
of B Borrowing delivered pursuant to subsection (a)(i) above and provided in the
B Note evidencing such B Advance) the then unpaid principal amount of such B
Advance. The Borrower shall have no right to prepay any principal amount of any
B Advance unless, and then only on
<PAGE> 29
25
the terms, specified by the Borrower for such B Advance in the related Notice of
B Borrowing delivered pursuant to subsection (a)(i) above.
(e) The Borrower shall pay interest on the unpaid principal
amount of each B Advance from the date of such B Advance to the date the
principal amount of such B Advance is repaid in full, at the rate of interest
for such B Advance specified by the Lender making such B Advance in its notice
with respect thereto delivered pursuant to subsection (a)(ii) above, payable on
the interest payment date or dates specified by the Borrower for such B Advance
in the related Notice of B Borrowing delivered pursuant to subsection (a)(i)
above, as provided in the B Note evidencing such B Advance.
(f) The indebtedness of the Borrower resulting from each B
Advance made to the Borrower as part of a B Borrowing shall be evidenced by a
separate B Note of the Borrower payable to the order of the Lender making such B
Advance.
(g) Upon the request of any Lender that has made an offer to
make a B Advance as part of the most recent B Borrowing, the Administrative
Agent shall, as soon as practicable, provide telephonic notification to such
Lender of (A) the highest rate offered for the B Advance accepted by the
Borrower as part of such B Borrowing, and (B) the lowest rate offered for the B
Advance accepted by the Borrower as part of such B Borrowing.
SECTION 2.04. Fees. (a) Facility Fee. The Borrower agrees to
pay each Lender (other than a Designated Bidder) a facility fee on the aggregate
amount of such Lender's Commitment (whether used or unused and without giving
effect to any B Reduction), from the date hereof until the Termination Date,
payable in arrears on the last day of each March, June, September and December,
during the term of such Lender's Commitment, commencing on March 31, 1998, and
on the Termination Date, at a rate for each day during such period equal to the
Applicable Facility Fee for such day.
(b) Agency Fees. The Borrower agrees to pay to the
Administrative Agent for its own account such fees as may from time to time be
agreed upon by the Borrower and the Administrative Agent.
SECTION 2.05. Termination or Reduction of the Commitments. The
Borrower shall have the right, upon at least three Business Days' notice to the
Administrative Agent, to terminate in whole or reduce ratably in part, in each
case permanently, the unused portions of the respective Commitments of the
Lenders, provided that the aggregate amount of the Commitments of the Lenders
shall not be reduced to an amount which is less than the aggregate amount of the
A Advances and the B Advances then outstanding and provided further that each
partial reduction shall be in
<PAGE> 30
26
the aggregate amount of $10,000,000 or an integral multiple of $1,000,000 in
excess thereof.
SECTION 2.06. Repayment of A Advances. The Borrower shall
repay to each Lender on the Termination Date the aggregate principal amount of
the A Advances owing to such Lender on such date.
SECTION 2.07. Interest on A Advances. (a) Scheduled Interest.
The Borrower shall pay interest on the unpaid principal amount of each A Advance
made by each Lender from the date of such A Advance until such principal amount
shall be paid in full, at the following rates per annum:
(i) Base Rate Advances. During such periods as such A Advance
is a Base Rate Advance, a rate per annum equal at all times to the sum
of (x) the Base Rate in effect from time to time plus (y) the
Applicable Margin in effect from time to time, payable monthly in
arrears on the last day of each month during such periods and on the
date such Base Rate Advance shall be Converted or paid in full.
(ii) Eurodollar Rate Advances. During such periods as such A
Advance is a Eurodollar Rate Advance, a rate per annum equal at all
times during each Interest Period for such A Advance to the sum of
(x) the Eurodollar Rate for such Interest Period for such Advance plus
(y) the Applicable Margin in effect from time to time, payable in
arrears on the last day of such Interest Period and, if such Interest
Period has a duration of more than three months, on each day that
occurs during such Interest Period every three months from the first
day of such Interest Period and on the date such Eurodollar Rate
Advance shall be Converted or paid in full.
(b) Default Interest. Upon the occurrence and during the
continuance of an Event of Default under Section 6.01(a), the Borrower shall pay
interest on (i) the unpaid principal amount of each Advance owing to each
Lender, payable in arrears on the dates referred to in clause (a)(i) or (a)(ii)
above, at a rate per annum equal at all times to 2% per annum above the rate per
annum required to be paid on such Advance pursuant to clause (a)(i) or (a)(ii)
above, and (ii) the amount of any interest, fee or other amount payable
hereunder that is not paid when due, from the date such amount shall be due
until such amount shall be paid in full, payable in arrears on the date such
amount shall be paid in full and on demand, at a rate per annum equal at all
times to 2% per annum above the rate per annum required to be paid on Base Rate
Advances pursuant to clause (a)(i) above.
<PAGE> 31
27
SECTION 2.08. Interest Rate Determination. (a) Each Reference
Bank agrees to furnish to the Administrative Agent timely information for the
purpose of determining each Eurodollar Rate. If any one or more of the Reference
Banks shall not furnish such timely information to the Administrative Agent for
the purpose of determining any such interest rate, the Administrative Agent
shall determine such interest rate on the basis of timely information furnished
by the remaining Reference Banks.
(b) The Administrative Agent shall give prompt notice to the
Borrower and the Lenders of the applicable interest rate determined by the
Administrative Agent for purposes of Section 2.07(a)(i) or (ii), and the
applicable rate, if any, furnished by each Reference Bank for the purpose of
determining the applicable interest rate under Section 2.07(a)(ii).
(c) If fewer than two Reference Banks furnish timely
information to the Administrative Agent for determining the Eurodollar Rate for
any Eurodollar Rate Advances,
(i) the Administrative Agent shall forthwith notify the
Borrower and the Lenders that the interest rate cannot be determined
for such Eurodollar Rate Advances,
(ii) each such A Advance will automatically, on the last day
of the then existing Interest Period therefor, Convert into a Base Rate
Advance (or if such A Advance is then a Base Rate Advance, will
continue as a Base Rate Advance), and
(iii) the obligation of the Lenders to make, or to Convert A
Advances into, Eurodollar Rate Advances shall be suspended until the
Administrative Agent shall notify the Borrower and the Lenders that the
circumstances causing such suspension no longer exist.
(d) If, with respect to any Eurodollar Rate Advances, the
Majority Lenders notify the Administrative Agent that the Eurodollar Rate for
any Interest Period for such Advances will not adequately reflect the cost to
such Majority Lenders for making, funding or maintaining their respective
Eurodollar Rate Advances for such Interest Period, the Administrative Agent
shall forthwith so notify the Borrower and the Lenders, whereupon
(i) each Eurodollar Rate Advance will automatically, on the
last day of the then existing Interest Period therefor, Convert into a
Base Rate Advance, and
<PAGE> 32
28
(ii) the obligation of the Lenders to make, or to Convert
Advances into, Eurodollar Rate Advances shall be suspended until the
Administrative Agent shall notify the Borrower and the Lenders that the
circumstances causing such suspension no longer exist.
(e) If the Borrower shall fail to select the duration of any
Interest Period for any Eurodollar Rate Advances in accordance with the
provisions contained in the definition of "Interest Period" in Section 1.01, the
Administrative Agent will forthwith so notify the Borrower and the Lenders and
such Advances will automatically, on the last day of the then existing Interest
Period therefor, Convert into Base Rate Advances.
(f) On the date on which the aggregate unpaid principal amount
of Eurodollar Rate Advances comprising any A Borrowing shall be reduced, by
payment or prepayment or otherwise, to less than $10,000,000 such Advances shall
automatically Convert into Base Rate Advances, and on and after such date the
right of the Borrower to Convert such A Advances into Eurodollar Rate Advances
shall terminate.
(g) Upon the occurrence and during the continuance of any
Event of Default under Section 6.01(a), (i) each Eurodollar Rate Advance will
automatically, on the last day of the then existing Interest Period therefor,
Convert into a Base Rate Advance and (ii) the obligation of the Lenders to make,
or to Convert Advances into, Eurodollar Rate Advances shall be suspended.
SECTION 2.09. Optional Conversion of A Advances. The Borrower
may on any Business Day, upon notice given to the Administrative Agent not later
than 11:00 A.M. (New York City time) on the third Business Day prior to the date
of the proposed Conversion and subject to the provisions of Sections 2.08, 2.12
and 2.13, Convert all A Advances of one Type comprising the same Borrowing into
A Advances of the other Type; provided, however, that any Conversion of
Eurodollar Rate Advances into Base Rate Advances shall be made only on the last
day of an Interest Period for such Eurodollar Rate Advances. Each such notice of
a Conversion shall, within the restrictions specified above, specify (i) the
date of such Conversion, (ii) the A Advances to be Converted, and (iii) if such
Conversion is into Eurodollar Rate Advances, the duration of the Interest Period
for each such A Advance. Each notice of Conversion shall be irrevocable and
binding on the Borrower.
SECTION 2.10. Prepayments of A Advances. (a) The Borrower
shall have no right to prepay any principal amount of any A Advance other than
as provided in (b) below.
<PAGE> 33
29
(b) The Borrower may (i) upon at least three days after the
date of Borrowing and upon notice given to the Administrative Agent not later
than 11:00 A.M. (New York City time) on the date of the proposed prepayment
(which date shall be a Business Day), stating the proposed date and aggregate
principal amount of the prepayment in the case of Base Rate Advances or (ii)
upon at least two Business Days' notice given to the Administrative Agent
stating the proposed date and aggregate principal amount of the prepayment in
the case of Eurodollar Rate Advances, and if such notice is given the Borrower
shall, prepay the outstanding principal amounts of the A Advances comprising
part of the same A Borrowing in whole or ratably in part, together with accrued
interest to the date of such prepayment on the principal amount prepaid and, in
the case of Eurodollar Rate Advances, any additional losses, costs or expenses,
if any, required to be paid by the Borrower pursuant to Section 8.04(b);
provided, however, that each partial prepayment shall be in an aggregate
principal amount of not less than $10,000,000 or an integral multiple of
$1,000,000 in excess thereof.
SECTION 2.11. Increased Costs and Increased Capital. (a) If,
due to either (i) the introduction of or any change in or in the interpretation
of any law or regulation or (ii) the compliance with any guideline or request
from any central bank or other governmental authority (whether or not having the
force of law), there shall be any increase in the cost to any Lender of agreeing
to make or making, funding or maintaining Eurodollar Rate Advances, then the
Borrower shall from time to time, upon demand by such Lender (with a copy of
such demand to the Administrative Agent), pay to the Administrative Agent for
the account of such Lender additional amounts sufficient to compensate such
Lender for such increased cost; provided that, before making any such demand,
each Lender agrees to use its best efforts (consistent with its internal policy
and legal and regulatory restrictions) to designate a different Applicable
Lending Office if the making of such a designation would avoid the need for, or
reduce the amount of, such increased costs and would not be disadvantageous to
such Lender. A certificate as to the amount of such increased cost, submitted to
the Borrower and the Administrative Agent by such Lender, shall be conclusive
and binding for all purposes, absent manifest error.
(b) If any Lender (other than a Designated Bidder) determines
that compliance with any law or regulation or any guideline or request from any
central bank or other governmental authority (whether or not having the force of
law) affects or would affect the amount of capital required or expected to be
maintained by such Lender or any corporation controlling such Lender and that
the amount of such capital is increased by or based upon the existence of such
Lender's commitment to lend hereunder and other commitments of this type, then,
upon demand by such Lender (with a copy of such demand to the Administrative
Agent), the Borrower shall immediately pay to the Administrative Agent for the
account of such Lender, from time to time as specified by such Lender,
additional amounts sufficient to compensate such Lender or such corporation in
the light of such circumstances, to the extent that such Lender reasonably
<PAGE> 34
30
determines such increase in capital to be allocable to the existence of such
Lender's commitment to lend hereunder. A certificate as to such amounts
submitted to the Borrower and the Administrative Agent by such Lender shall be
conclusive and binding for all purposes, absent manifest error.
(c) Within 20 days following the date of a demand by a Lender
pursuant to Section 2.11(a) or (b), as the case may be, such Lender and the
Borrower shall enter into negotiations in good faith with a view to agreeing to
an adjustment to the amounts payable by the Borrower sufficient to compensate
such Lender as contemplated in such Section. If, at the expiration of 45 days
from the giving of such demand, such Lender and the Borrower shall not have
agreed to any such adjustment, the Borrower shall within five days elect (and
shall notify such Lender and the Administrative Agent of such election) to
either:
(i) pay such Lender, from time to time commencing on the date
of such demand by such Lender and as specified by such Lender, the
additional amounts so demanded,
(ii) terminate in whole such Lender's Commitment on a date
specified in the notice sent by the Borrower, and such Lender's
Commitment shall terminate on such date, or
(iii) require that such Lender assign to the Borrower's
designated assignee or assignees in accordance with Section 8.07 all
Advances then owing to such Lender and all rights and obligations
provided that (A) each such assignment shall be either an assignment of
all of the rights and obligations of the assigning Lender under this
Agreement or an assignment of a portion of
such rights and obligations made concurrently with another such
assignment or assignments which together cover all of the rights and
obligations of the assigning Lender under this Agreement, (B) no Lender
shall be obligated to make any such assignment as a result of a demand
by the Borrower pursuant to this Section 2.11(c) unless and until such
Lender shall have received one or more payments from either the
Borrower or one or more assignees in an aggregate amount at least equal
to the aggregate outstanding principal amount of the Advances owing to
such Lender, together with accrued interest thereon to the date of
payment of such principal amount, all commitment fees and other fees
payable to such Lender and all other amounts payable to such Lender
under this Agreement (including, but not limited to, any increased
costs or other additional amounts as so demanded (computed in
accordance with this Section 2.11), and any Taxes, incurred by such
Lender prior to the effective date of such assignment and amounts
payable under Section 8.04(a)), (C) each such assignment shall be made
pursuant to an Assignment and Acceptance and (D) in connection with
each such assignment to
<PAGE> 35
31
any Person that immediately prior to such assignment was not a Lender,
the Borrower shall pay to the Administrative Agent the processing and
recordation fee of $3000 referred to in Section 8.07;
provided, however, that a termination under clause (ii) above shall not be
effective, and an assignment under clause (iii) above shall not be effective,
if, after giving effect thereto, the aggregate amount of the Commitments so
terminated and assigned during the term of this Agreement would exceed 20% of
the amount of the Commitments as of the date hereof or such terminations and
assignments would have become effective for more than three Lenders during the
term of this Agreement, and provided further that no such termination may be
made, and no such assignment may be required, if an Event of Default, or event
which with the giving of notice or lapse of time or both would be an Event of
Default, has occurred and is continuing either on the date the Borrower notifies
such Lender and the Administrative Agent of such termination or requested
assignment, or on the date on which such termination or assignment is scheduled
to become effective. Upon termination of a Lender's Commitment under Section
2.11(c)(ii), the Borrower shall on the date such termination becomes effective
pay, prepay or cause to be prepaid the aggregate principal amount of the
Advances owing to such Lender, together with accrued interest thereon to the
date of payment of such principal amount, all commitment fees and other fees
payable to such Lender and all other amounts payable to such Lender under this
Agreement (including, but not limited to, any increased costs or other
additional amounts as so demanded (computed in accordance with this Section
2.11), and any Taxes, incurred by such Lender prior to the effective date of
such assignment and amounts payable under Section 8.04(a)). Upon such payments
and prepayments, the obligations of such Lender hereunder, by the provisions
hereof, shall be released and discharged. Such Lender's rights under Sections
2.11 and 8.04(b), and its obligations under Section 7.05, shall survive such
release and discharge as to matters occurring prior to the date of such
termination.
SECTION 2.12. Illegality. Notwithstanding any other provision
of this Agreement, if any Lender shall notify the Administrative Agent that the
introduction of or any change in or in the interpretation of any law or
regulation makes it unlawful, or any central bank or other governmental
authority asserts that it is unlawful, for any Lender or its Eurodollar Lending
Office to perform its obligations hereunder to make Eurodollar Rate Advances or
to fund or maintain Eurodollar Rate Advances hereunder, (i) the obligation of
the Lenders to make, or to Convert A Advances into, Eurodollar Rate Advances
shall be suspended until the Administrative Agent shall notify the Borrower and
the Lenders that the circumstances causing such suspension no longer exist and
(ii) the Borrower shall forthwith prepay in full all Eurodollar Rate Advances of
all Lenders then outstanding, together with interest accrued thereon, unless the
Borrower, within five Business Days of notice from the Administrative Agent,
Converts all
<PAGE> 36
32
Eurodollar Rate Advances of all Lenders then outstanding into Base Rate Advances
in accordance with Section 2.09.
SECTION 2.13. Payments and Computations. (a) The Borrower shall make
each payment hereunder not later than 11:00 A.M. (New York City time) on the day
when due in U.S. dollars to the Administrative Agent at the Administrative
Agent's Account in same day funds. The Administrative Agent will promptly
thereafter cause to be distributed like funds relating to the payment of
principal or interest or fees ratably (other than amounts payable pursuant to
Section 2.03, 2.04(b), 2.11, 2.14 or 8.04(b)) to the appropriate Lenders for the
account of their respective Applicable Lending Offices, and like funds relating
to the payment of any other amount payable to any Lender to such Lender for the
account of its Applicable Lending Office, in each case to be applied in
accordance with the terms of this Agreement. Upon any Assuming Lender becoming a
Lender hereunder as a result of a Commitment Increase pursuant to Section 2.18
or an extension of the Termination Date pursuant to Section 2.17, and upon the
Administrative Agent's receipt of such Lender's Assumption Agreement and
recording of the information contained therein in the Register, from and after
the applicable Increase Date or Extension Date, as the case may be, the
Administrative Agent shall make all payments hereunder and under any Notes
issued in connection therewith in respect of the interest assumed thereby to the
Assuming Lender. Upon its acceptance of an Assignment and Acceptance and
recording of the information contained therein in the Register pursuant to
Section 8.07(c), from and after the date of such Assignment and Acceptance, the
Administrative Agent shall make all payments hereunder in respect of the
interest assigned thereby to the Lender assignee thereunder, and the parties to
such Assignment and Acceptance shall make all appropriate adjustments in such
payments for periods prior to such effective date directly between themselves.
(b) The Borrower hereby authorizes each Lender, if and to the
extent payment owed to such Lender is not made when due hereunder, to charge
from time to time against any or all of the Borrower's accounts with such Lender
any amount so due.
(c) All computations of interest based on the Base Rate shall
be made by the Administrative Agent on the basis of a year of 365 or 366 days,
as the case may be, and all computations of interest based on the Fixed Rate,
the Eurodollar Rate or the Federal Funds Rate and of fees shall be made by the
Administrative Agent on the basis of a year of 360 days, in each case for the
actual number of days (including the first day but excluding the last day)
occurring in the period for which such interest is payable. Each determination
by the Administrative Agent of an interest rate hereunder shall be conclusive
and binding for all purposes, absent manifest error.
(d) Whenever any payment hereunder shall be stated to be due
on a day other than a Business Day, such payment shall be made on the next
succeeding
<PAGE> 37
33
Business Day, and such extension of time shall in such case be included in the
computation of payment of interest or fees, as the case may be; provided,
however, if such extension would cause payment of interest on or principal of
Eurodollar Rate Advances to be made in the next following calendar month, such
payment shall be made on the next preceding Business Day.
(e) Unless the Administrative Agent shall have received notice
from the Borrower prior to the date on which any payment is due to any Lender
hereunder that the Borrower will not make such payment in full, the
Administrative Agent may assume that the Borrower has made such payment in full
to the Administrative Agent on such date and the Administrative Agent may, in
reliance upon such assumption, cause to be distributed to each such Lender on
such due date an amount equal to the amount then due such Lender. If and to the
extent the Borrower shall not have so made such payment in full to the
Administrative Agent, each such Lender shall repay to the Administrative Agent
forthwith on demand such amount distributed to such Lender together with
interest thereon, for each day from the date such amount is distributed to such
Lender until the date such Lender repays such amount to the Administrative
Agent, at the Federal Funds Rate.
SECTION 2.14. Taxes. (a) Any and all payments by the Borrower
or, prior to the Interim Guaranty Release Date, the Interim Guarantor, hereunder
or under the Notes shall be made, in accordance with Section 2.13, free and
clear of and without deduction for any and all present or future taxes, levies,
imposts, deductions, charges or withholdings, and all liabilities with respect
thereto, excluding, in the case of each Lender and the Administrative Agent,
taxes imposed on its income, and franchise taxes imposed on it in lieu of income
taxes, by the jurisdiction under the laws of which such Lender or the
Administrative Agent (as the case may be) is organized or any political
subdivision thereof and, in the case of each Lender, taxes imposed on its income
and franchise taxes imposed on it, by the jurisdiction of such Lender's
Applicable Lending Office or any political subdivision thereof (all such
non-excluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as "Taxes"). If either the Borrower
or, prior to the Interim Guaranty Release Date, the Interim Guarantor, shall be
required by law to deduct any Taxes from or in respect of any sum payable by
such party hereunder or under any Note to any Lender or the Administrative
Agent, (i) the sum payable shall be increased as may be necessary so that after
making all required deductions (including deductions applicable to additional
sums payable under this Section 2.14) such Lender or the Administrative Agent
(as the case may be) receives an amount equal to the sum it would have received
had no such deductions been made, (ii) the Borrower or, prior to the Interim
Guaranty Release Date, the Interim Guarantor, as the case may be, shall make
such deductions and (iii) the Borrower or, prior to the Interim Guaranty Release
Date, the Interim Guarantor, as the case may be, shall pay the full
<PAGE> 38
34
amount deducted to the relevant taxation authority or other authority in
accordance with applicable law.
(b) In addition, each of the Borrower and, prior to the
Interim Guaranty Release Date, the Interim Guarantor, agrees to pay any present
or future stamp or documentary taxes or any other excise or property taxes,
charges or similar levies that arise from any payment made hereunder or under
the Notes or from the execution, delivery or registration of, or otherwise with
respect to, this Agreement or the Notes (hereinafter referred to as "Other
Taxes").
(c) The Borrower and, prior to the Interim Guaranty Release
Date, the Interim Guarantor, will indemnify each Lender and the Administrative
Agent for the full amount of Taxes or Other Taxes (including, without
limitation, any Taxes or Other Taxes imposed by any jurisdiction on amounts
payable under this Section 2.14) paid by such Lender or the Administrative Agent
(as the case may be) and any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto, whether or not such Taxes
or Other Taxes were correctly or legally asserted. This indemnification shall be
made within 30 days from the date such Lender or the Administrative Agent (as
the case may be) makes written demand therefor.
(d) Within 30 days after the date of any payment of Taxes by
the Borrower or the Interim Guarantor, as the case may be, such Person will
furnish to the Administrative Agent, at its address referred to in Section 8.02,
the original or a certified copy of a receipt evidencing payment thereof. In the
case of any payment hereunder or under the Notes by or on behalf of the Borrower
or the Interim Guarantor, as the case may be, through an account or branch
outside the United States or on behalf of the Borrower or the Interim Guarantor,
as the case may be, by a payor that is not a United States person, if the
Borrower or the Interim Guarantor, as the case may be, determines that no Taxes
are payable in respect thereof, the Borrower or the Interim Guarantor, as the
case may be, shall furnish, or shall cause such payor to furnish, to the
Administrative Agent, at such address, a certificate from each appropriate
taxing authority, or an opinion of counsel acceptable to the Administrative
Agent, in either case stating that such payment is exempt from or not subject to
Taxes. For purposes of this subsection (d), the terms "United States" and
"United States person" shall have the meaning specified in Section 7701 of the
Code.
(e) Each Lender organized under the laws of a jurisdiction
outside the United States shall, on or prior to the date of its execution and
delivery of this Agreement in the case of each Bank, and each such Lender that
is not a party hereto on the date hereof shall on or prior to the date on which
such Lender becomes a Lender pursuant to Sections 2.17, 2.18 or 8.07 (as the
case may be), and from time to time thereafter if requested in writing by the
Borrower or the Administrative Agent (but only so long
<PAGE> 39
35
thereafter as such Lender remains lawfully able to do so), provide the
Administrative Agent and the Borrower with Internal Revenue Service form 1001 or
4224, as appropriate, or any successor or other form prescribed by the Internal
Revenue Service, certifying that such Lender is exempt from or entitled to a
reduced rate of United States withholding tax on payments of interest pursuant
to this Agreement or the Notes. If the form provided by a Lender at the time
such Lender first becomes a party to this Agreement indicates a United States
interest withholding tax rate in excess of zero, in the case of each Bank, or in
excess of the rate applicable to the Lender assignor on the date of the
Assignment and Acceptance pursuant to which it became a Lender or as of the date
such party becomes a Lender pursuant to Sections 2.17 and 2.18, in the case of
each other Lender, withholding tax at such rate shall be considered excluded
from Taxes as defined in Section 2.14(a). If any form or document referred to in
this subsection (e) requires the disclosure of information, other than
information necessary to compute the tax payable and information required on the
date hereof by Internal Revenue service form 1001 or 4224, that the Lender
reasonably considers to be confidential, the Lender shall give notice thereof to
the Borrower and shall not be obligated to include in such form or document such
confidential information.
(f) For any period with respect to which a Lender has failed
to provide the Borrower with the appropriate form described in subsection (e)
(other than if such failure is due to a change in law occurring after the date
on which a form originally was required to be provided or if such form otherwise
is not required under the first sentence of subsection (e) above), such Lender
shall not be entitled to indemnification under subsection (a) with respect to
Taxes imposed by the United States; provided, however, that should a Lender
become subject to Taxes because of its failure to deliver a form required
hereunder, the Borrower or the Interim Guarantor, as the case may be, shall take
such steps as such Lender shall reasonably request to assist such Lender to
recover such Taxes.
(g) Any Lender claiming any additional amounts payable
pursuant to this Section 2.14 shall use reasonable efforts (consistent with its
internal policy and legal and regulatory restrictions) to change the
jurisdiction of its Eurodollar Lending Office if the making of such a change
would avoid the need for, or reduce the amount of, any such additional amounts
that may thereafter accrue and would not, in the reasonable judgment of such
Lender, be otherwise disadvantageous to such Lender.
(h) Without prejudice to the survival of any other agreement
of the Borrower and the Interim Guarantor hereunder, the agreements and
obligations of the Borrower and the Interim Guarantor contained in this Section
2.14 shall survive the payment in full of principal and interest hereunder and
under the Notes; provided that the Obligations of the Interim Guarantor shall be
limited to payments made by the Interim Guarantor under the Interim Guaranty.
<PAGE> 40
36
SECTION 2.15. Sharing of Payments, Etc. If any Lender shall
obtain any payment (whether voluntary, involuntary, through the exercise of any
right of set-off, or otherwise) on account of the A Advances owing to it (other
than pursuant to Section 2.11, 2.14 or 8.04(b)) in excess of its ratable share
of payments on account of the A Advances obtained by all the Lenders, such
Lender shall forthwith purchase from the other Lenders such participations in
the A Advances made by them as shall be necessary to cause such purchasing
Lender to share the excess payment ratably with each of them; provided, however,
that if all or any portion of such excess payment is thereafter recovered from
such purchasing Lender, such purchase from each Lender shall be rescinded and
such Lender shall repay to the purchasing Lender the purchase price to the
extent of such recovery together with an amount equal to such Lender's ratable
share (according to the proportion of (i) the amount of such Lender's required
repayment to (ii) the total amount so recovered from the purchasing Lender) of
any interest or other amount paid or payable by the purchasing Lender in respect
of the total amount so recovered. The Borrower agrees that any Lender so
purchasing a participation from another Lender pursuant to this Section 2.15
may, to the fullest extent permitted by law, exercise all its rights of payment
(including the right of set-off) with respect to such participation as fully as
if such Lender were the direct creditor of the Borrower in the amount of such
participation.
SECTION 2.16. Use of Proceeds. The proceeds of the Advances
shall be available (and the Borrower agrees that it shall use such proceeds) for
general corporate purposes, including commercial paper backstop and including
payments or dividends to the Interim Guarantor as described in the Form 10.
SECTION 2.17. Extension of Termination Date. (a) At least 30
days but not more than 60 days prior to any Anniversary Date, the Borrower, by
written notice to the Administrative Agent, may request an extension of the
Termination Date in effect at such time by one calendar year from the then
scheduled Termination Date. The Administrative Agent shall promptly notify each
Lender of such request, and each Lender shall in turn, in its sole discretion,
not later than 15 days after the date of such extension request, notify the
Borrower and the Administrative Agent in writing as to whether such Lender will
consent to such extension. If any Lender shall fail to notify the Administrative
Agent and the Borrower in writing of its consent to any such request for
extension of the Termination Date within 15 days after the date of such
extension request, such Lender shall be deemed to be a Non-Consenting Lender
with respect to such request. The Administrative Agent shall notify the Borrower
not later than 15 days prior to such Anniversary Date of the decision of the
Lenders regarding the Borrower's request for an extension of the Termination
Date.
(b) If all of the Lenders consent in writing to any such
request in accordance with subsection (a) of this Section 2.17, the Termination
Date shall, effective as at such next Anniversary Date (the "Extension Date"),
be extended for one calendar
<PAGE> 41
37
year from the then scheduled Termination Date; provided that on each Extension
Date, no Event of Default, or event that with the giving of notice or passage of
time or both would constitute an Event of Default, shall have occurred and be
continuing, or shall occur as a consequence thereof. If Lenders holding at least
a majority in interest of the aggregate Commitments at such time consent in
writing to any such request in accordance with subsection (a) of this Section
2.17, the Termination Date in effect at such time shall, effective as at the
applicable Extension Date, be extended as to those Lenders that so have
consented (each a "Consenting Lender") but shall not be extended as to any other
Lender (each a "Non-Consenting Lender"). To the extent that the Termination Date
is not extended as to any Lender pursuant to this Section 2.17 and the
Commitment of such Lender is not assumed in accordance with subsection (c) of
this Section 2.17 on or prior to the applicable Extension Date, the Commitment
of such Non-Consenting Lender shall automatically terminate in whole on such
unextended Termination Date without any further notice or other action by the
Borrower, such Lender or any other Person; provided that such Non-Consenting
Lender's rights under Sections 2.11, 2.14, 8.04 and 8.09, and its obligations
under Section 7.05, shall survive the Termination Date for such Lender as to
matters occurring prior to such date. It is understood and agreed that no Lender
shall have any obligation whatsoever to agree to any request made by the
Borrower for any requested extension of the Termination Date.
(c) If Lenders holding at least 51% of the aggregate
Commitments at any time consent to any such request pursuant to subsection (a)
of this Section 2.17, the Borrower may arrange for one or more Consenting
Lenders or, to the extent that the Consenting Lenders decline to assume any
Non-Consenting Lender's Commitment, other Eligible Assignees (each such Eligible
Assignee that accepts an offer to assume a Non-Consenting Lender's Commitment as
of the applicable Extension Date and each Eligible Assignee that accepts an
offer to participate in a requested Commitment Increase in accordance with
Section 2.18(c) being an "Assuming Lender") to assume, effective as of the
Extension Date, any Non-Consenting Lender's Commitment and all of the
obligations of such Non-Consenting Lender under this Agreement thereafter
arising, without recourse to or warranty by, or expense to, such Non-Consenting
Lender; provided, however, that if the Borrower makes an offer to any Consenting
Lender to assume any Non-Consenting Lender's Commitment, it shall make such
offer to all Consenting Lenders on a pro rata basis based on their respective
Commitments and such Non-Consenting Lender's Commitment shall be allocated among
those Consenting Lenders which accept such offer on a pro rata basis based on
their respective Commitments, provided further however, that the amount of the
Commitment of any such Assuming Lender as a result of such substitution shall in
no event be less than $10,000,000 unless the amount of the Commitment of such
Non-Consenting Lender is less than $10,000,000, in which case such Assuming
Lender shall assume all of such lesser amount; and provided further that:
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38
(i) any such Consenting Lender or Assuming Lender shall have
paid to such Non-Consenting Lender (A) the aggregate principal amount
of, and any interest accrued and unpaid to the effective date of the
assignment on, the outstanding Advances, if any, of such Non-Consenting
Lender plus (B) any accrued but unpaid facility fees owing to such
Non-Consenting Lender as of the effective date of such assignment;
(ii) all additional costs reimbursements, expense
reimbursements and indemnities payable to such Non-Consenting Lender,
and all other accrued and unpaid amounts owing to such Non-Consenting
Lender hereunder, as of the effective date of such assignment shall
have been paid to such Non-Consenting Lender; and
(iii) with respect to any such Assuming Lender, the applicable
processing and recordation fee required under Section 8.07(a) for such
assignment shall have been paid;
provided further that such Non-Consenting Lender's rights under Sections 2.11,
2.14, 8.04 and 8.09, and its obligations under Section 7.05, shall survive such
substitution as to matters occurring prior to the date of substitution. At least
three Business Days prior to any Extension Date, (A) each such Assuming Lender,
if any, shall have delivered to the Borrower and the Administrative Agent an
assumption agreement, in form and substance satisfactory to the Borrower and the
Administrative Agent (an "Assumption Agreement"), duly executed by such Assuming
Lender, such Non-Consenting Lender, the Borrower and the Administrative Agent,
(B) any such Consenting Lender shall have delivered confirmation in writing
satisfactory to the Borrower and the Administrative Agent as to the increase in
the amount of its Commitment, (C) each Non-Consenting Lender being replaced
pursuant to this Section 2.17 shall have delivered to the Administrative Agent
any Note or Notes held by such Non-Consenting Lender and (D) the Borrower shall
have delivered to the Administrative Agent a new A Note payable to the order of
each Assuming Lender in a principal amount equal to the amount of Commitment
assumed by such Assuming Lender. Upon the payment or prepayment of all amounts
referred to in clauses (i), (ii) and (iii) of the immediately preceding
sentence, each such Consenting Lender or Assuming Lender, as of the Extension
Date, will be substituted for such Non-Consenting Lender under this Agreement
and shall be a Lender for all purposes of this Agreement, without any further
acknowledgment by or the consent of the other Lenders, and the obligations of
each such Non-Consenting Lender hereunder shall, by the provisions hereof, be
released and discharged.
(d) If all of the Lenders (after giving effect to any
assignments pursuant to subsection (b) of this Section 2.17) consent in writing
to a requested extension (whether by execution or delivery of an Assumption
Agreement or otherwise)
<PAGE> 43
39
not later than one Business Day prior to such Extension Date, the Administrative
Agent shall so notify the Borrower, and, so long as no Event of Default, or
event that with the giving of notice or passage of time or both would constitute
an Event of Default, shall have occurred and be continuing as of such Extension
Date, or shall occur as a consequence thereof, the Termination Date then in
effect shall be extended for the additional one year period described in
subsection (a) of this Section 2.17, and all references in this Agreement, and
in the Notes, if any, to the "Termination Date" shall, with respect to each
Consenting Lender and each Assuming Lender for such Extension Date, refer to the
Termination Date as so extended. Promptly following each Extension Date, the
Administrative Agent shall notify the Lenders (including, without limitation,
each Assuming Lender) of the extension of the scheduled Termination Date in
effect immediately prior thereto and shall thereupon record in the Register the
relevant information with respect to each such Consenting Lender and each such
Assuming Lender.
SECTION 2.18. Increase in the Aggregate Commitments. (a) The
Borrower may, at any time after the Interim Guaranty Release Date or upon the
consent of the Interim Guarantor prior thereto, but in any event not more than
once in any calendar year prior to the Termination Date and provided that the
Borrower has not elected to reduce the Commitments during such calendar year
pursuant to Section 2.05, by notice to the Administrative Agent, request that
the aggregate amount of the Commitments be increased by an amount of $50,000,000
or an integral multiple of $5,000,000 in excess thereof (each a "Commitment
Increase") to be effective as of a date that is at least 90 days prior to the
scheduled Termination Date then in effect (the "Increase Date") as specified in
the related notice to the Administrative Agent; provided, however, that (i) in
no event shall the aggregate amount of the Commitments at any time exceed
$500,000,000, (ii) on the date of any request by the Borrower for a Commitment
Increase and at all times thereafter to and including the related Increase Date,
the Applicable Performance Level shall be at level 4 or better and (iii) no
Event of Default, or event that with the giving of notice or passage of time or
both would constitute an Event of Default, shall have occurred and be continuing
as of the date of such request or as of the applicable Increase Date, or shall
occur as a result of such Commitment Increase.
(b) The Administrative Agent shall promptly notify the Lenders
of a request by the Borrower for a Commitment Increase, which notice shall
include (i) the proposed amount of such requested Commitment Increase, (ii) the
proposed Increase Date and (iii) the date by which Lenders wishing to
participate in the Commitment Increase must commit to an increase in the amount
of their respective Commitments (the "Commitment Date"). Each Lender that is
willing to participate in such requested Commitment Increase (each an
"Increasing Lender") shall give written notice to the Administrative Agent on or
prior to the Commitment Date of the amount by which it is willing to increase
its Commitment. If the Lenders notify the Administrative Agent that
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40
they are willing to increase the amount of their respective Commitments by an
aggregate amount that exceeds the amount of the requested Commitment Increase,
the requested Commitment Increase shall be allocated among the Lenders willing
to participate therein based on a ratio of each existing Lender's proposed
Commitment increase, if any, to the aggregate of all of the existing Lenders'
proposed Commitment increases.
(c) Promptly following each Commitment Date, the
Administrative Agent shall notify the Borrower as to the amount, if any, by
which the Lenders are willing to participate in the requested Commitment
Increase. If the aggregate amount by which the Lenders are willing to
participate in any requested Commitment Increase on any such Commitment Date is
less than the requested Commitment Increase, then the Borrower may extend offers
to one or more Eligible Assignees to participate in any portion of the requested
Commitment Increase that has not been committed to by the Lenders as of the
applicable Commitment Date.
(d) On each Increase Date, each Eligible Assignee that accepts
an offer to participate in a requested Commitment Increase in accordance with
Section 2.18(c) as an Assuming Lender shall become a Lender party to this
Agreement as of such Increase Date and the Commitment of each Increasing Lender
for such requested Commitment Increase shall be so increased by such amount (or
by the amount allocated to such Lender pursuant to the last sentence of Section
2.18(b)) as of such Increase Date; provided, however, that the Administrative
Agent shall have received on or before such Increase Date the following, each
dated such date:
(i) (A) certified copies of an Authorized Financial Officer of
the Borrower and, prior to the Interim Guaranty Release Date, the
Interim Guarantor, approving the Commitment Increase and the
corresponding modifications to this Agreement and (B) an opinion of
counsel for the Borrower and, if applicable, the Interim Guarantor
(which may be in-house counsel), in substantially the form of Exhibit
F-1 hereto;
(ii) an Assumption Agreement from each Assuming Lender, if
any, in form and substance satisfactory to the Borrower and the
Administrative Agent, duly executed by such Eligible Assignee, the
Administrative Agent and the Borrower; and
(iii) confirmation from each Increasing Lender of the increase
in the amount of its Commitment in a writing satisfactory to the
Borrower and the Administrative Agent.
On each Increase Date, upon fulfillment of the conditions set forth in the
immediately preceding sentence of this Section 2.18(d), the Administrative Agent
shall notify the
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41
Lenders (including, without limitation, each Assuming Lender)
and the Borrower, on or before 1:00 P.M. (New York City time), by telecopier or
telex, of the occurrence of the Commitment Increase to be effected on such
Increase Date and shall record in the Register the relevant information with
respect to each Increasing Lender and each Assuming Lender on such date.
ARTICLE III
CONDITIONS OF LENDING
SECTION 3.01. Conditions Precedent to Initial Advances. The
obligation of each Lender to make an Advance on the occasion of the initial
Borrowing (which shall be an A Borrowing) is subject to the conditions precedent
that (a) the Administrative Agent shall have received on or before the day of
such initial Borrowing the following, each dated such day, in form and substance
satisfactory to the Administrative Agent and (except for the Notes) in
sufficient copies for each Lender:
(i) The Notes to the order of the Lenders, respectively;
(ii) Certified copies of the resolutions of the Board of
Directors of each of the Borrower and the Interim Guarantor approving
the Spin-off and related transactions contemplated by the Form 10 and
duly authorizing each of the Borrower and the Interim Guarantor to
execute and deliver, and perform its obligations under, this Agreement
and the Notes and to make Borrowings or guaranty Obligations, as the
case may be, and of all documents evidencing other necessary corporate
action and governmental approvals, if any, with respect to this
Agreement and the Notes;
(iii) A certificate of the Secretary or an Assistant Secretary
of each of the Borrower and the Interim Guarantor certifying the names
and true signatures of the officers of the Borrower or the Interim
Guarantor, as the case may be, authorized to sign this Agreement, the
Notes and the other documents to be delivered hereunder;
(iv) A favorable opinion of Marcia E. Doane, Vice President
and General Counsel for the Borrower, substantially in the form of
Exhibit F-1 hereto and as to such other matters as any Lender through
the Administrative Agent may reasonably request;
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(v) A favorable opinion of Sidley & Austin, New York counsel
for the Borrower, substantially in the form of Exhibit F-2 hereto and
as to such other matters as any Lender through the Administrative Agent
may reasonably request;
(vi) A favorable opinion of Hanes A. Heller, Vice President
and General Counsel for the Interim Guarantor, substantially in the
form of Exhibit F-3 hereto and as to such other matters as any Lender
through the Administrative Agent may reasonably request, provided that
such Vice President and General Counsel of the Interim Guarantor is
qualified under New York State law;
(vii) A favorable opinion of Shearman & Sterling, counsel for
the Administrative Agent, substantially in the form of Exhibit G
hereto;
and (b) the Borrower shall have paid all accrued fees and expenses of the
Administrative Agent and the Arranger (including the accrued fees and expenses
of counsel to Administrative Agent and the Arranger then due and payable).
SECTION 3.02. Conditions Precedent to Each A Borrowing. The
obligation of each Lender to make an A Advance on the occasion of each A
Borrowing (including the initial Borrowing) shall be subject to the further
conditions precedent that on the date of such Borrowing (a) the following
statements shall be true (and the Administrative Agent shall have received for
the account of such Lender a certificate signed by an Authorized Financial
Officer of the Borrower, dated the date of such Borrowing, stating that):
(i) The representations and warranties contained in Article IV
(excluding, except in the case of the initial Borrowing, those
contained in Section 4.01(e)(ii) and Section 4.02(e)(ii)) are correct
on and as of the date of such A Borrowing, before and after giving
effect to such A Borrowing and to the application of the proceeds
therefrom, as though made on and as of such date; provided that after
the Interim Guaranty Release Date, this paragraph (i) shall not apply
to any representation or warranty of the Interim Guarantor, and
(ii) No event has occurred and is continuing, or would result
from such A Borrowing or from the application of the proceeds
therefrom, which constitutes an Event of Default or would constitute an
Event of Default but for the requirement that notice be given or time
elapse or both;
and (b) the Administrative Agent shall have received such other approvals,
opinions or documents as any Lender (other than a Designated Bidder) through the
Administrative Agent may reasonably request.
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SECTION 3.03. Conditions Precedent to Each B Borrowing. The
obligation of each Lender which is to make a B Advance on the occasion of a B
Borrowing (including the initial B Borrowing) to make such B Advance is subject
to the conditions precedent that (a) at least (A) two Business Days before the
date of such B Borrowing if the Borrower selects a Fixed Rate Advance or (B) at
least four Business Days before the date of such B Borrowing if the Borrower
selects a Eurodollar Rate Advance, the Administrative Agent shall have received
the written confirmatory Notice of B Borrowing with respect thereto, (b) on or
before the date of such B Borrowing but prior to such B Borrowing, the
Administrative Agent shall have received a B Note payable to the order of such
Lender for each of the one or more B Advances to be made by such Lender as part
of such B Borrowing, in a principal amount equal to the principal amount of the
B Advance to be evidenced thereby and otherwise on such terms as were agreed to
for such B Advance in accordance with Section 2.03, (c) on the date of such B
Borrowing, the following statements shall be true (and each of the giving of the
applicable Notice of B Borrowing and the acceptance by the Borrower of the
proceeds of such B Borrowing shall constitute a representation and warranty by
the Borrower that on the date of such B Borrowing such statements are true):
(i) The representations and warranties contained in Article IV
(excluding those contained in Section 4.01(e)(ii) and Section
4.02(e)(ii) thereof) are correct on and as of the date of such B
Borrowing, before and after giving effect to such B Borrowing and to
the application of the proceeds therefrom, as though made on and as of
such date; provided that after the Interim Guaranty Release Date, this
paragraph (i) shall not apply to any representation or warranty of the
Interim Guarantor,
(ii) No event has occurred and is continuing, or would result
from such B Borrowing or from the application of the proceeds
therefrom, which constitutes an Event of Default or which would
constitute an Event of Default but for the requirement that notice be
given or time elapse or both, and
(iii) No event has occurred and no circumstances exist as a
result of which information concerning the Borrower that has been
provided to the Administrative Agent and each Lender by the Borrower in
connection herewith would include an untrue statement of a material
fact or omit to state any material fact or any fact necessary to make
the statements contained therein, in light of the circumstances under
which they were made, not misleading;
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and (d) the Administrative Agent shall have received such other approvals,
opinions or documents as any Lender through the Administrative Agent may
reasonably request.
SECTION 3.04. Conditions Precedent to Release of Interim
Guaranty. The Interim Guarantor's Obligations under this Agreement will remain
in full force and effect until the date (the "Interim Guaranty Release Date")
that the Spin-off shall have been consummated in accordance with the Form 10,
and the Interim Guarantor shall have transferred all assets constituting the
Corn Refining Business to the Borrower except for those assets to be transferred
at a later time as contemplated by the Distribution Agreement and except to the
extent that failure to transfer any asset or comply with any statement in the
Form 10 would not, individually or in the aggregate, have a Material Adverse
Effect. Immediately following completion of the Spin-off, the Interim Guarantor
shall provide written notice thereof to the Administrative Agent.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the Borrower.
The Borrower represents and warrants as follows:
(a) The Borrower and each of its Subsidiaries is a corporation
duly organized, validly existing and in good standing under the laws of
the jurisdiction of its incorporation.
(b) The execution, delivery and performance by the Borrower of
this Agreement and the Notes, and the consummation of the transactions
contemplated hereby, are within the Borrower's corporate powers, have
been duly authorized by all necessary corporate action, and do not
contravene (i) the Borrower's charter or by-laws or (ii) any law or
contractual restriction binding on or affecting the Borrower.
(c) No authorization or approval or other action by, and no
notice to or filing with, any governmental authority or regulatory body
is required for the due execution, delivery and performance by the
Borrower of this Agreement or the Notes.
(d) This Agreement is, and each of the Notes when delivered
hereunder will be, the legal, valid and binding obligations of the
Borrower enforceable against the Borrower in accordance with their
respective terms.
<PAGE> 49
45
(e) (i) The pro forma combined balance sheets of the Borrower
and its Subsidiaries as at September 30, 1997 and the related pro forma
combined statements of income and retained earnings of the Borrower and
its Subsidiaries for the nine months then ended reflecting the
historical actions of the Corn Refining Business as set forth in Item
15 of the Form 10, copies of which have been furnished to each Lender,
fairly present the financial condition of the Borrower and its
Subsidiaries as at such date and the results of the operations of the
Borrower and its Subsidiaries for the period ended on such date, in
each case as described in the Form 10, all in accordance with generally
accepted accounting principles consistently applied. The historical
actions of the Corn Refining Business, including the Interim
Guarantor's accounting policies, are attributable to the Borrower. The
financial results in these financial statements are not necessarily
indicative of the results that would have occurred if the Borrower had
been an independent public company during the periods presented. The
Borrower has previously delivered to the Administrative Agent copies of
the Borrower's pro forma combined balance sheets and the related
combined statements of income and retained earnings for the nine months
ended September 30, 1997 as reflected in the Form 10.
(ii) Since September 30, 1997 there has been no material
adverse change in such financial condition or operations or the
Borrower's prospects except as reflected in the Form 10.
(f) There is no pending or threatened action or proceeding
affecting the Borrower or any of its Subsidiaries before any court,
governmental agency or arbitrator, which may materially adversely
affect the financial condition or operations of the Borrower or the
Borrower and its Subsidiaries, taken as a whole, or which purports to
affect the legality, validity, binding effect or enforceability of this
Agreement or any Note.
(g) No Termination Event has occurred or, to the knowledge of
the Borrower, is reasonably expected to occur with respect to any Plan
that has resulted or, to the knowledge of the Borrower, is reasonably
likely to result in a liability of the Borrower that exceeds
$5,000,000.
(h) Neither the Borrower nor any ERISA Affiliate of the
Borrower has incurred or, to the knowledge of the Borrower, is
reasonably expected to incur any Withdrawal Liability exceeding
$5,000,000 to any Multiemployer Plan.
(i) Neither the Borrower nor any ERISA Affiliate of the
Borrower has been notified by the sponsor of a Multiemployer Plan that
such Multiemployer Plan is in reorganization or has been terminated,
within the meaning of Title IV of
<PAGE> 50
46
ERISA, and, to the knowledge of the Borrower, no Multiemployer Plan is
reasonably expected to be in reorganization or to be terminated, within
the meaning of Title IV of ERISA.
(j) No single lien, security interest or other charge or
encumbrance (including liens or retained security titles of conditional
vendors) of any nature whatsoever on any properties of the Borrower or
any of its Subsidiaries (a "Lien") as of the date hereof secured any
Debt in excess of $25,000,000 and that the aggregate of such Liens did
not secure any Debt in excess of $100,000,000.
(k) Following application of the proceeds of each Advance, not
more than 25 percent of the value of the assets (either of the Borrower
only or of the Borrower and its Subsidiaries on a consolidated basis)
which are subject to the provisions of Sections 5.02(a) or 5.02(e) or
subject to any restriction contained in any agreement or instrument
between the Borrower and any Lender or any Affiliate of any Lender
relating to Debt of the Borrower and its Subsidiaries which is
outstanding in a principal amount of at least $25,000,000 will be
Margin Stock.
(l) Neither the Borrower nor any of its Subsidiaries is an
"investment company," or an "affiliated person" of, or a "promoter" or
"Principal underwriter" for, an "investment company," as such terms are
defined in the Investment Company Act of 1940, as amended.
(m) Except as publicly disclosed prior to the date of this
Agreement, the operations and properties of the Borrower and each of
its Subsidiaries do not violate any Environmental Laws in a manner that
will cause a Material Adverse Effect.
SECTION 4.02. Representations and Warranties of the Interim
Guarantor. The Interim Guarantor, until the Interim Guaranty Release Date,
represents and warrants as follows:
(a) The Interim Guarantor and each of its Subsidiaries is a
corporation duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation.
(b) The execution, delivery and performance by the Interim
Guarantor of this Agreement, and the consummation of the transactions
contemplated hereby, are within the Interim Guarantor's corporate
powers, have been duly authorized by all necessary corporate action,
and do not contravene (i) the Interim
<PAGE> 51
47
Guarantor's charter or by-laws or (ii) any law or contractual
restriction binding on or affecting the Interim Guarantor.
(c) No authorization or approval or other action by, and no
notice to or filing with, any governmental authority or regulatory body
is required for the due execution, delivery and performance by the
Interim Guarantor of this Agreement.
(d) This Agreement is the legal, valid and binding obligation
of the Interim Guarantor enforceable against the Interim Guarantor in
accordance with its terms.
(e) (i) The Consolidated balance sheets of the Interim
Guarantor and its Subsidiaries as at December 31, 1996 and the related
Consolidated statements of income and retained earnings of the Interim
Guarantor and its Subsidiaries for the fiscal year then ended, fairly
present the financial condition of the Interim Guarantor and its
Subsidiaries as at such date and the results of the operations of the
Interim Guarantor and its Subsidiaries for the period ended on such
date, all in accordance with generally accepted accounting principles
consistently applied. The Interim Guarantor has previously delivered to
the Administrative Agent (who will send a copy to each Lender) copies
of the Interim Guarantor's report on Form 10-K for the fiscal year
ended December 31, 1996.
(ii) Since December 31, 1996 there has been no material
adverse change in such financial condition or operations or the Interim
Guarantor's prospects except as publicly disclosed prior to this
Agreement.
(f) There is no pending or threatened action or proceeding
affecting the Interim Guarantor or any of its Subsidiaries before any
court, governmental agency or arbitrator, which may materially
adversely affect the financial condition or operations of the Interim
Guarantor or the Interim Guarantor and its Subsidiaries, taken as a
whole, or which purports to affect the legality, validity, binding
effect or enforceability of this Agreement.
(g) No Termination Event has occurred or, to the knowledge of
the Interim Guarantor, is reasonably expected to occur with respect to
any Plan that has resulted or, to the knowledge of the Interim
Guarantor, is reasonably likely to result in a liability of the Interim
Guarantor that exceeds $10,000,000.
(h) Neither the Interim Guarantor nor any ERISA Affiliate of
the Interim Guarantor has incurred or, to the knowledge of the Interim
Guarantor, is reasonably expected to incur any Withdrawal Liability
exceeding $5,000,000 to any Multiemployer Plan.
<PAGE> 52
48
(i) Neither the Interim Guarantor nor any ERISA Affiliate of
the Interim Guarantor has been notified by the sponsor of a
Multiemployer Plan that such Multiemployer Plan is in reorganization or
has been terminated, within the meaning of Title IV of ERISA, and, to
the knowledge of the Interim Guarantor, no Multiemployer Plan is
reasonably expected to be in reorganization or to be terminated, within
the meaning of Title IV of ERISA.
(j) No single lien, security interest or other charge or
encumbrance (including liens or retained security titles of conditional
vendors) of any nature whatsoever on any properties of the Interim
Guarantor or any of its Subsidiaries (a "Lien") as of the date hereof
secured any Debt in excess of $50,000,000 and that the aggregate of
such Liens did not secure any Debt in excess of $200,000,000.
(k) Not more than 25 percent of the value of the assets
(either of the Interim Guarantor only or of the Interim Guarantor and
its Subsidiaries on a consolidated basis) which are subject to the
provisions of Sections 5.02(a) or 5.02(e) or subject to any restriction
contained in any agreement or instrument between the Interim Guarantor
and any Lender or any Affiliate of any Lender relating to Debt of the
Interim Guarantor and its Subsidiaries which is outstanding in a
principal amount of at least $50,000,000 will be Margin Stock.
(l) Neither the Interim Guarantor nor any of its Subsidiaries
is an "investment company," or an "affiliated person" of, or a
"promoter" or "Principal underwriter" for, an "investment company," as
such terms are defined in the Investment Company Act of 1940, as
amended.
(m) Except as publicly disclosed prior to the date of this
Agreement, the operations and properties of the Interim Guarantor and
each of its Subsidiaries do not violate any Environmental Laws in a
manner that will cause a Material Adverse Effect.
<PAGE> 53
49
ARTICLE V
COVENANTS
SECTION 5.01. Affirmative Covenants. So long as any Advance
shall remain unpaid or any Lender shall have any Commitment hereunder, the
Borrower, with respect to itself, and, prior to the Interim Guaranty Release
Date, the Interim Guarantor, with respect to itself, unless the Majority Lenders
shall otherwise consent in writing, will, subject to Section 8.13, each:
(a) Compliance with Laws, Payment of Taxes, Etc. Comply, and
cause each of its Subsidiaries to comply, in all material respects with
all applicable laws, rules, regulations and orders, such compliance to
include, without limitation, compliance with ERISA, and paying before
the same become delinquent (i) all taxes, assessments and governmental
charges imposed upon it or upon its property and (ii) all lawful claims
that, if unpaid, might by law become a Lien upon its property except to
the extent otherwise permitted under Section 5.02(a) or to the extent
contested in good faith, and to comply, and cause each of its
Subsidiaries to comply, with all applicable Environmental Laws in a
manner so that the violation of such laws does not have a Material
Adverse Effect on such Person.
(b) Maintenance of Books and Records. Maintain proper
Consolidated books of record and account, in which full and correct
entries shall be made of all financial transactions and the
Consolidated assets and business of such Person and its Subsidiaries in
accordance with generally accepted accounting principles consistently
applied.
(c) Preservation of Corporate Existence, Etc. Preserve and
maintain, and cause each of its Subsidiaries to preserve and maintain,
its corporate existence, rights (charter and statutory) and franchises,
except to the extent otherwise permitted under Section 5.02(e)
provided, however, that each such Person and its Subsidiaries may
consummate any merger or consolidation permitted under Section 5.02(b)
and may wind up, liquidate or dissolve any of their respective inactive
Subsidiaries, and provided further, that neither such Person nor any of
its Subsidiaries shall be required to preserve any right or franchise
if the Board of Directors of such Person or such Subsidiary shall
determine that the preservation thereof is no longer desirable in the
conduct of the business of such Person or such Subsidiary, as the case
may be, and that the loss thereof is not disadvantageous in any
material respect to such Person, such Subsidiary or the Lenders.
<PAGE> 54
50
(d) Reporting Requirements. Furnish to the Administrative
Agent (who promptly will send a copy to each Lender); provided,
however, that the Interim Guarantor shall not be required to comply
with this Section 5.02(d) unless the Interim Guaranty Release Date
shall not have occurred prior to January 1, 1998:
(i) (A) Prior to the Interim Guaranty Release Date,
as soon as available and in any event within 45 days after the
end of each of the first three quarters of each fiscal year of
the Interim Guarantor, the Consolidated balance sheet of the
Interim Guarantor and its Subsidiaries as of the end of such
quarter and the Consolidated statement of income and retained
earnings of the Interim Guarantor and its Subsidiaries for the
period commencing at the end of the previous fiscal year and
ending with the end of such quarter, certified in its
customary manner by an Authorized Financial Officer;
(B) From and after the Interim Guaranty
Release Date, as soon as available and in any event
within 45 days after the end of each of the first
three quarters of each fiscal year of the Borrower,
the Consolidated balance sheet of the Borrower and
its Subsidiaries as of the end of such quarter and
the Consolidated statement of income and retained
earnings of the Borrower and its Subsidiaries for the
period commencing at the end of the previous fiscal
year and ending with the end of such quarter,
certified in its customary manner by an Authorized
Financial Officer, and
(C) At the time of delivery of the financial
statements referred to in clause (A) or (B) above,
for each quarter in which an Advance shall at any
time be outstanding, a certificate signed by an
Authorized Financial Officer of the Borrower or, if
applicable, the Interim Guarantor, stating that no
event has occurred and is continuing which
constitutes an Event of Default or would constitute
an Event of Default but for the requirement that
notice be given or time elapse or both; and
(ii) (A) Prior to the Interim Guaranty Release Date,
as soon as available and in any event within 90 days after the
end of each fiscal year of the Interim Guarantor, a copy of
the annual report for such year for the Interim Guarantor and
its Subsidiaries, containing financial statements for such
year certified in a manner acceptable to the Majority Lenders
by KPMG Peat Marwick & Co., LLP or other independent public
accountants
<PAGE> 55
51
acceptable to the Majority Lenders, such acceptance
not to be unreasonably withheld,
(B) From and after the Interim Guaranty
Release Date, as soon as available and in any event
within 90 days after the end of each fiscal year of
the Borrower, a copy of the annual report for such
year for the Borrower and its Subsidiaries,
containing financial statements for such year
certified in a manner acceptable to the Majority
Lenders by KPMG Peat Marwick & Co., LLP or other
independent public accountants acceptable to the
Majority Lenders, such acceptance not to be
unreasonably withheld, and
(C) At the time of delivery of the financial
statements referred to in clause (A) or (B) above, a
certificate signed by an Authorized Financial Officer
of the Borrower or, if applicable, the Interim
Guarantor, stating that no event has occurred and is
continuing which constitutes an Event of Default or
would constitute an Event of Default but for the
requirement that notice be given or time elapse or
both; and
(iii) as soon as possible and in any event within
five days after the occurrence of each Event of Default and
each event which, with the giving of notice or lapse of time,
or both, would constitute an Event of Default, continuing on
the date of such statement, a statement of an Authorized
Financial Officer setting forth details of such Event of
Default or event and the action which the Borrower has taken
and proposes to take with respect thereto;
(iv) promptly after the sending or filing thereof,
copies of all reports which the Borrower or, prior to the
Interim Guaranty Release Date, the Interim Guarantor, sends to
any of its security holders, and copies of all reports and
registration statements which such Person or any Subsidiary
files with the Securities and Exchange Commission or any
national securities exchange;
(v) as soon as the Borrower knows, and in any event
immediately upon the occurrence, of a change in a Public Debt
Rating, a statement of an Authorized Financial Officer setting
forth the new Public Debt Rating and the date of such change
in the Public Debt Rating;
(vi) promptly after the commencement thereof, notice
of all actions and proceedings before any court, governmental
agency or
<PAGE> 56
52
arbitrator affecting the Borrower or, prior to the
Interim Guaranty Release Date, the Interim Guarantor, or any
of its Subsidiaries of the type described in Section 4.01(f);
(vii) as soon as possible and in any event (A) within
15 days after the Borrower or, prior to the Interim Guaranty
Release Date, the Interim Guarantor, or any ERISA Affiliate
knows or has reason to know that any Termination Event
described in clause (i) of the definition of Termination Event
with respect to any Plan of the Borrower or, prior to the
Interim Guaranty Release Date, the Interim Guarantor, or any
ERISA Affiliate has occurred, and (B) within 10 days after the
Borrower or, prior to the Interim Guaranty Release Date, the
Interim Guarantor,or any ERISA Affiliate knows or has reason
to know that any other Termination Event with respect to any
Plan of the Borrower, or, prior to the Interim Guaranty
Release Date, the Interim Guarantor, or any ERISA Affiliate
has occurred, a statement of an Authorized Financial Officer
describing such Termination Event and the action, if any,
which the Borrower or, prior to the Interim Guaranty Release
Date, the Interim Guarantor, or such ERISA Affiliate proposes
to take with respect thereto;
(viii) promptly and in any event within five Business
Days after receipt thereof by the Borrower or, prior to the
Interim Guaranty Release Date, the Interim Guarantor, or any
ERISA Affiliate, copies of each notice received by the
Borrower or, prior to the Interim Guaranty Release Date, the
Interim Guarantor, or such ERISA Affiliate from the PBGC
stating its intention to terminate any Plan of the Borrower
or, prior to the Interim Guaranty Release Date, the Interim
Guarantor or such ERISA Affiliate or to have a trustee
appointed to administer any such Plan;
(ix) promptly and in any event within 30 days after
the filing thereof with the Internal Revenue Service, copies
of each Schedule B (Actuarial Information) to the annual
report (Form 5500 Series) with respect to each Plan of the
Borrower or, prior to the Interim Guaranty Release Date, the
Interim Guarantor, or any ERISA Affiliate;
(x) promptly and in any event within five Business
Days after receipt thereof by the Borrower or, prior to the
Interim Guaranty Release Date, the Interim Guarantor, or any
ERISA Affiliate from the sponsor of a Multiemployer Plan, a
copy of each notice received by the Borrower or, prior to the
Interim Guaranty Release Date, the Interim Guarantor, or such
ERISA Affiliate concerning (A) the imposition of Withdrawal
Liability by a Multiemployer Plan, (B) the determination that
a Multiemployer Plan is,
<PAGE> 57
53
or is expected to be, in reorganization within the
meaning of Title IV of ERISA, (C) the termination of a
Multiemployer Plan within the meaning of Title IV of ERISA, or
(D) the amount of liability incurred, or expected to be
incurred, by such Person or such ERISA Affiliate in connection
with any event described in clause (A), (B) or (C) above; and
(xi) such other information respecting the condition
or operations, financial or otherwise, of such Person or any
of its Subsidiaries as any Lender through the Administrative
Agent may from time to time reasonably request.
(e) Maintenance of Insurance. Maintain, and cause each of its
Subsidiaries to maintain, insurance (including, without limitation,
liability insurance) with responsible and reputable insurance companies
or associations in such amounts and covering such risks as is usually
carried by companies engaged in similar businesses and owning similar
properties in the same general areas in which such Person or such
Subsidiary operates.
(f) Visitation Rights. In the case of the Borrower, at any
reasonable time and from time to time, at the request of the Majority
Lenders, permit the Administrative Agent and any of the Lenders or any
agents or representatives thereof, to examine and make copies of and
abstracts from the records and books of account of, and visit the
properties of, the Borrower and any of its Subsidiaries, and to discuss
the affairs, finances and accounts of the Borrower and any of its
Subsidiaries with any of their officers or directors and with their
independent certified public accountants.
SECTION 5.02. Negative Covenants. So long as any Advance shall
remain unpaid or any Lender shall have any Commitment hereunder, the Borrower
and, prior to the Interim Guaranty Release Date, the Interim Guarantor, without
the written consent of the Majority Lenders, will not, subject to Section 8.13:
(a) Liens, Etc. Create or suffer to exist, or permit any of
its Subsidiaries to create or suffer to exist, any lien, security
interest or other charge or encumbrance, or any other type of
preferential arrangement, upon or with respect to its properties,
whether now owned or hereafter acquired, or assign, or permit any of
its Subsidiaries to assign, any right to receive income, in each case
to secure or provide for the payment of any Debt of any Person, other
than (i) liens or security interests existing on the date hereof and,
in the case of the Borrower, set forth on Schedule 5.02(a), (ii)
purchase money liens or purchase money security interests upon or in
any property acquired or held by such Person or any Subsidiary in the
ordinary course of business to secure the purchase price of such
<PAGE> 58
54
property or to secure indebtedness incurred solely for the purpose of
financing the acquisition of such property, (iii) liens or security
interests existing on such property at the time of its acquisition
(other than any such lien or security interest created in contemplation
of such acquisition), or (iv) liens, security interests or other
charges or encumbrances (other than those referred to in clauses (i),
(ii) and (iii) above) at any time outstanding securing an aggregate
principal amount of Debt not exceeding in the case of the Interim
Guarantor prior to the Interim Guaranty Release Date, $200,000,000, and
in the case of the Borrower at all times, $100,000,000, (or, in each
case, its equivalent in another currency), provided that the aggregate
principal amount of the Debt secured by the liens or security interests
referred to in clauses (ii) and (iii) above shall not exceed in the
case of the Interim Guarantor prior to the Interim Guaranty Release
Date, $150,000,000, and in the case of the Borrower at all times,
$75,000,000, (or in each case its equivalent in another currency) at
any time outstanding.
(b) Mergers, Etc. Merge or consolidate with or into, or
convey, transfer, lease or otherwise dispose of (whether in one
transaction or in a series of transactions) all or substantially all of
its assets, (whether now owned or hereafter acquired) to, any Person,
or permit any of its Subsidiaries to do so, except that any Subsidiary
of such Person may merge or consolidate with or into, or transfer
assets to, or acquire assets of, any other Subsidiary of such Person
and except that any Subsidiary of such Person may merge into or
transfer assets to such Person and such Person may merge or
consolidate, and any Subsidiary of such Person may merge or
consolidate, with or into any other Person, provided in each case that,
immediately after giving effect to such proposed transaction, no Event
of Default or event which, with the giving of notice or lapse of time,
or both, would constitute an Event of Default would exist and in the
case of any such merger or consolidation to which such Person is a
party, the Person into which such Person shall be merged or formed by
any such consolidation shall first or simultaneously assume such
Person's obligations hereunder and, in the case of the Borrower, under
the Notes, in each case, in an agreement or instrument satisfactory in
form and substance to the Majority Lenders.
(c) Financial Covenants. From and after the Interim Guaranty
Release Date, (i) permit the Debt to Capitalization Ratio of the
Borrower to exceed 45 percent or (ii) permit the Interest Coverage
Ratio to be less than 3.50.
(d) Change in Nature of Business. Make, or permit one or more
of its Subsidiaries to make, any material change in the nature of the
business of such Person and its Subsidiaries taken as a whole as
carried on at the date hereof.
<PAGE> 59
55
(e) Disposition of Assets. Lease, sell, transfer or otherwise
dispose of, and cause its Subsidiaries to lease, sell, transfer or
otherwise dispose of, voluntarily or involuntarily, any assets except
for consideration in an amount not less than the fair market value of
such asset as determined in good faith by such Person's Board of
Directors and only if such Person promptly notifies the Administrative
Agent of such lease, sale, transfer, or other disposition, excluding,
however, (i) sales of inventory in the ordinary course of business,
(ii) sales, transfers and other dispositions of equipment determined to
be obsolete or no longer useful, (iii) sales, transfers or other
dispositions of Margin Stock and (iv) sales, transfers or other
dispositions of other assets of such Person and its Subsidiaries to the
extent that the aggregate fair market value of all such other assets so
leased, sold (including, without limitation, sale and leaseback
transactions), transferred and disposed after the date hereof shall not
exceed $50,000,000 (or its equivalent in another currency); provided
that the Borrower may transfer the proceeds of the initial Borrowing to
the Interim Guarantor pursuant to the Debt Agreement described in the
Form 10, the Interim Guarantor may transfer the Corn Refining Business
to the Borrower and the Interim Guarantor may distribute the capital
stock of the Borrower to its shareholders, in each case as contemplated
by the Spin-off and the Form 10.
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.01. Events of Default. If any of the following
events ("Events of Default") shall occur and be continuing:
(a) (i) The Borrower shall fail to pay any principal of any
Advance when it becomes due and payable, (ii) the Borrower shall fail
to pay any interest on any Advance within three Business Days of when
it becomes due and payable or (iii) either the Borrower or, prior to
the Interim Guaranty Release Date, the Interim Guarantor, shall fail to
make any other payment under this Agreement or, in the case of the
Borrower, under any other Loan Document if such failure shall remain
unremedied for five days after a demand for payment is given to such
Person by the Administrative Agent or any Lender; or
(b) Any representation or warranty made herein by either the
Borrower or any of its officers, or prior to the Interim Guaranty
Release Date, the Interim Guarantor or any of its officers, in each
case in connection with this Agreement shall prove to have been
incorrect in any material respect when made; or
<PAGE> 60
56
(c) Either the Borrower, or prior to the Interim Guaranty
Release Date, the Interim Guarantor, shall fail to perform or observe
(i) any term, covenant or agreement required to be performed or
observed by it contained in Section 5.01(c), 5.01(d)(iii), 5.01(f) or
5.02, or (ii) any other term, covenant or agreement contained in this
Agreement on its part to be performed or observed if such failure shall
remain unremedied for 10 days after written notice thereof shall have
been given to such Person by the Administrative Agent or any Lender; or
(d) (i) The Borrower or any of its Subsidiaries shall fail to
pay any principal of or premium or interest on any Debt which is
outstanding in a principal amount of at least $25,000,000 (or its
equivalent in another currency) in the aggregate or (ii) prior to the
Interim Guaranty Release Date, the Interim Guarantor or any of its
Subsidiaries shall fail to pay any principal of or premium or interest
on any Debt which is outstanding in a principal amount of at least
$50,000,000 in the aggregate, (but, in each case excluding Debt
evidenced by the Notes or otherwise arising under this Agreement), in
each case when the same becomes due and payable (whether by scheduled
maturity, required prepayment, acceleration, demand or otherwise), and
such failure shall continue after the applicable grace period, if any,
specified in the agreement or instrument relating to such Debt; or any
other event shall occur or condition shall exist under any agreement or
instrument relating to any such Debt and shall continue after the
applicable grace period, if any, specified in such agreement or
instrument, if the effect of such event or condition is to accelerate,
or to permit the acceleration of, the maturity of such Debt; or any
such Debt shall be declared to be due and payable, or required to be
prepaid (other than by a regularly scheduled required prepayment),
redeemed, purchased or defeased, or an offer to prepay, redeem,
purchase or defease such Debt shall be required to be made, in each
case prior to the stated maturity thereof; or
(e) Either the Borrower or any of its Subsidiaries or, prior
to the Interim Guaranty Release Date, the Interim Guarantor or any of
its Subsidiaries, shall generally not pay its debts as such debts
become due, or shall admit in writing its inability to pay its debts
generally, or shall make a general assignment for the benefit of
creditors; or any proceeding shall be instituted by or against such
Person or any of its Subsidiaries seeking to adjudicate it a bankrupt
or insolvent, or seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief, or composition of it or
its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of an order
for relief or the appointment of a receiver, trustee, custodian or
other similar official for it or for any substantial part of its
property; or such Person or any of its Subsidiaries shall take any
corporate action to authorize any of the actions set forth above in
this subsection (e); or
<PAGE> 61
57
(f) Any judgment or order for the payment of money in excess
of in the case of the Borrower, $25,000,000, or, in the case of the
Interim Guarantor and prior to the Interim Guaranty Release Date,
$50,000,000 (or in each case, its equivalent in another currency) shall
be rendered against such Person or any of its Subsidiaries and either
(i) enforcement proceedings shall have been commenced by any creditor
upon such judgment or order or (ii) there shall be any period of 10
consecutive days during which a stay of enforcement of such judgment or
order, by reason of a pending appeal or otherwise, shall not be in
effect; or
(g) (i) Any Person, other than the Interim Guarantor prior to
the Interim Guaranty Release Date, or two or more Persons acting in
concert shall have acquired beneficial ownership (within the meaning of
Rule 13d-3 of the Securities and Exchange Commission under the
Securities Exchange Act of 1934), directly or indirectly, of Voting
Stock of the Borrower (or other securities convertible into such Voting
Stock) representing 20% or more of the combined voting power of all
Voting Stock of the Borrower; or (ii) during any period of up to 24
consecutive months, commencing after the date of this Agreement,
individuals who at the beginning of such 24-month period were directors
of the Borrower shall cease for any reason (other than due to death or
disability) to constitute a majority of the board of directors of the
Borrower (except to the extent that individuals who at the beginning of
such 24-month period were replaced by individuals (x) elected by
66-2/3% of the remaining members of the board of directors of the
Borrower or (y) nominated for election by a majority of the remaining
members of the board of directors of the Borrower and thereafter
elected as directors by the shareholders of the Borrower); or (iii)
any Person or two or more Persons acting in concert shall have
acquired by contract or otherwise, or shall have entered into a
contract or arrangement that, upon consummation, will result in its or
their acquisition of, the power to exercise, directly or indirectly, a
controlling influence over the management or policies of the Borrower;
or
(h) An ERISA Default shall occur and be continuing or a lien
under Section 4068 of ERISA shall be imposed against the assets of the
Borrower or any of its Subsidiaries;
then, and in any such event, the Administrative Agent (i) shall at the request,
or may with the consent, of the Majority Lenders, by notice to the Borrower,
declare the obligation of each Lender to make Advances to be terminated,
whereupon the same shall forthwith terminate, and (ii) shall at the request, or
may with the consent, of the Majority Lenders, by notice to the Borrower,
declare the Notes and all A Advances and B Advances then outstanding, all
interest thereon and all other amounts payable under this Agreement to be
forthwith due and payable, whereupon the Notes and all A Advances and B Advances
then outstanding, all such interest and all such amounts shall become and be
forthwith
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due and payable, without presentment, demand, protest or further notice of any
kind, all of which are hereby expressly waived by the Borrower; provided,
however, that in the event of an actual or deemed entry of an order for relief
with respect to the Borrower or any of its Subsidiaries, or prior to the Interim
Guaranty Release Date, the Interim Guarantor or any of its Subsidiaries, in each
case under the Federal Bankruptcy Code, (A) the obligation of each Lender to
make Advances shall automatically be terminated and (B) the Notes and all such
Advances then outstanding, all such interest and all such amounts shall
automatically become and be due and payable, without presentment, demand,
protest or any notice of any kind, all of which are hereby expressly waived by
each of the Borrower and the Interim Guarantor.
ARTICLE VII
THE AGENTS
SECTION 7.01. Authorization and Action. Each Lender hereby
appoints and authorizes the Administrative Agent to take such action as agent on
its behalf and to exercise such powers and discretion under this Agreement as
are delegated to the Administrative Agent by the terms hereof, together with
such powers and discretion as are reasonably incidental thereto. As to any
matters not expressly provided for by this Agreement (including, without
limitation, enforcement or collection of the Debt resulting from the Advances),
the Administrative Agent shall not be required to exercise any discretion or
take any action, but shall be required to act or to refrain from acting (and
shall be fully protected in so acting or refraining from acting) upon the
instructions of the Majority Lenders, and such instructions shall be binding
upon all Lenders and all holders of the Notes; provided, however, that the
Administrative Agent shall not be required to take any action which exposes the
Administrative Agent to personal liability or which is contrary to this
Agreement or applicable law. The Administrative Agent agrees to give to each
Lender prompt notice of each notice given to it by the Borrower or the Interim
Guarantor pursuant to the terms of this Agreement.
SECTION 7.02. Administrative Agent's Reliance, Etc. Neither
the Administrative Agent nor any of its directors, officers, agents or employees
shall be liable for any action taken or omitted to be taken by it or them under
or in connection with this Agreement, except for its or their own gross
negligence or willful misconduct. Without limitation of the generality of the
foregoing, the Administrative Agent: (i) may treat the Lender that made any
Advance as the holder of the Debt resulting therefrom until the Administrative
Agent receives and accepts an Assumption Agreement entered into by an Assuming
Lender as provided in Sections 2.17 and 2.18 or an Assignment and Acceptance
entered into by such Lender, as assignor, and an Eligible Assignee, as assignee
as provided in Section 8.07; (ii) may consult with legal counsel (including
counsel for the Borrower and counsel for the Interim Guarantor), independent
public accountants and other experts selected by it and shall not be liable for
any
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action taken or omitted to be taken in good faith by it in accordance with the
advice of such counsel, accountants or experts; (iii) makes no warranty or
representation to any Lender and shall not be responsible to any Lender for any
statements, warranties or representations (whether written or oral) made in or
in connection with this Agreement; (iv) shall not have any duty to ascertain or
to inquire as to the performance or observance of any of the terms, covenants or
conditions of this Agreement on the part of the Borrower or the Interim
Guarantor or to inspect the property (including the books and records) of the
Borrower or the Interim Guarantor; (v) shall not be responsible to any Lender
for the due execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other instrument or document
furnished pursuant hereto; and (vi) shall incur no liability under or in respect
of this Agreement by acting upon any notice, consent, certificate or other
instrument or writing (which may be by telecopier, telegram, cable or telex)
believed by it to be genuine and signed or sent by the proper party or parties.
SECTION 7.03. Citibank, First Chicago, Chase Manhattan and
Affiliates. With respect to their Commitments, the Advances made by them and the
Notes issued to them, Citibank, First Chicago and Chase Manhattan shall have the
same rights and powers under this Agreement as any other Lender and may exercise
the same as though they were not the Administrative Agent, Documentation Agent
and Co-Agent respectively; and the term "Lender" or "Lenders" shall, unless
otherwise expressly indicated, include Citibank, First Chicago or Chase
Manhattan in its individual capacity. Citibank, First Chicago, Chase Manhattan
and their respective Affiliates may accept deposits from, lend money to, act as
trustee under indentures of, and generally engage in any kind of business with,
the Borrower or the Interim Guarantor, any of their respective Subsidiaries and
any Person who may do business with or own securities of the Borrower or the
Interim Guarantor or any such Subsidiary, all as if Citibank were not the
Administrative Agent, Citicorp Securities, Inc. were not the Arranger, First
Chicago were not the Documentation Agent and Chase Manhattan were not the
Co-Agent and without any duty to account therefor to the Lenders.
SECTION 7.04. Lender Credit Decision. Each Lender acknowledges
that it has, independently and without reliance upon the Administrative Agent or
any other Lender and based on the financial statements referred to in Section
4.01 and such other documents and information as it has deemed appropriate, made
its own credit analysis and decision to enter into this Agreement. Each Lender
also acknowledges that it will, independently and without reliance upon the
Administrative Agent or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement.
SECTION 7.05. Indemnification. The Lenders (other than the
Designated Bidders) agree to indemnify the Administrative Agent (to the extent
not reimbursed by the Borrower), ratably according to the respective principal
amounts of the A Advances then owing to each of them (or if no such A Advances
are at the time outstanding or if any such A Advances
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are then owing to Persons which are not Lenders, ratably according to the
respective amounts of their Commitments), from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever which
may be imposed on, incurred by, or asserted against the Administrative Agent in
any way relating to or arising out of this Agreement or any action taken
or omitted by the Administrative Agent under this Agreement, provided that no
Lender shall be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from the Administrative Agent's gross negligence or
willful misconduct. Without limitation of the foregoing, each Lender (other
than the Designated Bidders) agrees to reimburse the Administrative Agent
promptly upon demand for its ratable share of any out-of-pocket expenses
(including counsel fees) incurred by the Administrative Agent in connection
with the preparation, execution, delivery, administration, modification,
amendment or enforcement (whether through negotiations, legal proceedings or
otherwise) of, or legal advice in respect of rights or responsibilities under,
this Agreement, to the extent that the Administrative Agent is not reimbursed
for such expenses by the Borrower.
SECTION 7.06. Successor Administrative Agent. The
Administrative Agent may resign at any time by giving written notice thereof to
the Lenders and the Borrower and may be removed at any time with or without
cause by the Majority Lenders. Upon any such resignation or removal, the
Majority Lenders shall have the right to appoint a successor Administrative
Agent. If no successor Administrative Agent shall have been so appointed by the
Majority Lenders, and shall have accepted such appointment, within 30 days after
the retiring Administrative Agent's giving of notice of resignation or the
Majority Lenders' removal of the retiring Administrative Agent, then the
retiring Administrative Agent may, on behalf of the Lenders, appoint a successor
Administrative Agent, which shall be a commercial bank organized under the laws
of the United States of America or of any State thereof and having a combined
capital and surplus of at least $1,000,000,000. Upon the acceptance of any
appointment as Administrative Agent hereunder by a successor Administrative
Agent, such successor Administrative Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring
Administrative Agent, and the retiring Administrative Agent shall be discharged
from its duties and obligations under this Agreement. After any retiring
Administrative Agent's resignation or removal hereunder as Administrative Agent,
the provisions of this Article VII shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Administrative Agent under this
Agreement.
SECTION 7.07. Documentation Agent, Co-Agent and Arranger. The
Documentation Agent, Co-Agent and Arranger shall have no duties or obligations
under this Agreement or the other Loan Documents in their respective capacities
as Documentation Agent, Co-Agent and Arranger.
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ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Amendments, Etc. No amendment or waiver of any
provision of this Agreement or the A Notes, nor consent to any departure by
either of the Borrower or, prior to the Interim Guaranty Release Date, the
Interim Guarantor, therefrom, shall in any event be effective unless the same
shall be in writing and signed by the Majority Lenders, and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given; provided, however, that no amendment, waiver or consent
shall, unless in writing and signed by all the Lenders (other than the
Designated Bidders), do any of the following: (a) waive any of the conditions
specified in Section 3.01 or 3.02, (b) increase the Commitments of the Lenders
(other than as provided in Section 2.18) or subject the Lenders to any
additional obligations, (c) reduce the principal of, or interest on, the A Notes
or any fees or other amounts payable hereunder, (d) postpone any date fixed for
any payment of principal of, or interest on, the A Notes or any fees or other
amounts payable hereunder, (e) change the percentage of the Commitments or of
the aggregate unpaid principal amount of the A Notes, or the number of Lenders,
which shall be required for the Lenders or any of them to take any action
hereunder, (f) amend this Section 8.01 or (g) reduce or limit the obligations of
the Interim Guarantor under Section 9.01(a) prior to the Interim Guaranty
Release Date; provided further that no amendment, waiver or consent shall,
unless in writing and signed by all the Lenders, waive any of the conditions
specified in Section 3.03, provided further, that no amendment, waiver or
consent shall, unless in writing and signed by all of the holders of B Notes at
such time (a) reduce the principal of, or interest on, the B Notes, (b) postpone
any date fixed for any payment of principal of, or interest on, the B Notes of
(c) change the aggregate unpaid principal amount of the B Notes, and provided
further that no amendment, waiver or consent shall, unless in writing and signed
by the Administrative Agent in addition to the Lenders required above to take
such action, affect the rights or duties of the Administrative Agent under this
Agreement or any Note.
SECTION 8.02. Notices, Etc. All notices and other
communications provided for hereunder shall be in writing (including
telegraphic, telecopy or telex) and mailed (postage prepaid, return receipt
requested), telegraphed, telecopied, telexed or delivered, if to the Borrower,
at its address at Corn Products International, Inc., 6500 South Archer Road,
Bedford Park, Illinois 60501-1933, Attention: Treasurer; if to the Interim
Guarantor, at its address at CPC International Inc., P.O. Box 8000, Englewood
Cliffs, NJ 07632, Attn: Vice President and Treasurer; if to any Bank, at its
Domestic Lending Office specified opposite its name on Schedule I hereto; if to
any other Lender, at its Domestic Lending Office specified in the Assignment and
Acceptance or Designation Agreement pursuant to which it became a Lender; and if
to the Administrative Agent, at its address at Two Penns Way, Suite 200, New
Castle, DE 19720, Fax No. (302) 894-6032, Attention: Mr. Tim White; or, as to
each party, at such other address as shall be designated by such party in a
written notice to the other parties. All such notices and communications shall,
when mailed, telegraphed, telecopied or telexed, be effective
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when deposited in the mails, telecopied, delivered to the telegraph company or
confirmed by telex answerback, respectively, except that notices and
communications to the Administrative Agent pursuant to Article II, III or VII
shall not be effective until received by the Administrative Agent, notices to
the Borrower pursuant to Article VI shall not be effective until received by the
Borrower and notices to the Interim Guarantor under Article IX shall not be
effective until received by the Interim Guarantor.
SECTION 8.03. No Waiver; Remedies. No failure on the part of
any Lender or the Administrative Agent to exercise, and no delay in exercising,
any right hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any such right preclude any other or further exercise
thereof or the exercise of any other right. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.
SECTION 8.04. Costs and Expenses. (a) The Borrower agrees to
pay on demand all reasonable costs and expenses of both the Administrative Agent
and the Arranger in connection with the preparation, execution, delivery,
administration, modification and amendment of this Agreement, the Notes and the
other documents to be delivered hereunder, including, without limitation, (A)
all due diligence, syndication (including printing, distribution and bank
meetings), transportation, computer, duplication, appraisal, consultant, and
audit expenses and (B) the reasonable fees and out-of-pocket expenses of counsel
for the Administrative Agent and the Arranger with respect thereto and with
respect to advising the Administrative Agent and the Arranger as to each such
party's respective rights and responsibilities under this Agreement. The
Borrower further agrees to pay on demand all costs and expenses of the
Administrative Agent and the Lenders, if any (including, without limitation,
reasonable counsel fees and expenses of the Administrative Agent and each
Lender), in connection with the enforcement (whether through negotiations, legal
proceedings or otherwise) of this Agreement, the Notes and the other documents
to be delivered hereunder including, without limitation, reasonable counsel fees
and expenses for the Administrative Agent and each Lender in connection with the
enforcement of rights under this Section 8.04(a).
(b) If any payment of principal of, or Conversion of, any
Eurodollar Rate Advance is made by the Borrower to or for the account of a
Lender other than on the last day of the Interest Period for such Advance or the
maturity date for such Advance as specified in accordance with Section 2.03(d),
as a result of a payment or Conversion pursuant to Section 2.08(f), 2.09, 2.10
or 2.12 or acceleration of the maturity of the Notes pursuant to Section 6.01 or
for any other reason, the Borrower shall, upon demand by any Lender (with a copy
of such demand to the Administrative Agent), pay to the Administrative Agent for
the account of such Lender any amounts required to compensate such Lender for
any additional losses, costs or expenses which it may reasonably incur as a
result of such payment or Conversion, including, without limitation, any loss
(including loss of anticipated profits), cost or expense incurred by reason of
the liquidation or reemployment of deposits or other funds acquired by any
Lender to fund or maintain such Advance. A certificate setting forth with
reasonable specificity the basis
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for and amount of such losses, costs or expenses shall be submitted to the
Borrower and the Administrative Agent by such Lender and shall be conclusive and
binding for all purposes, absent manifest error.
(c) Without prejudice to any other rights which the Lenders
may have hereunder or under applicable law, the Borrower agrees to indemnify and
hold harmless the Administrative Agent, the Arranger, each Lender, any of their
Affiliates and each of their respective directors, officers, employees, advisors
and agents (each, an "Indemnified Party") from and against any and all claims,
damages, losses, liabilities and expenses (including, without limitation, fees
and disbursements of counsel), that may be incurred by or asserted against the
Administrative Agent, the Arranger, such Lender or any of their Affiliates or
any such director, officer, employee, advisor or agent which would not have been
incurred by or asserted or awarded against any Indemnified Party but for the
Administrative Agent or such Lender being a party to this Agreement, in each
case arising out of or in connection with or by reason of, or in connection with
the preparation for a defense of, any investigation, litigation, or proceeding
arising out of, related to or in connection with (i) the Notes or this
Agreement, or related to any transaction or proposed transaction (whether or not
consummated) in which any proceeds of any Borrowing are applied or proposed to
be applied, directly or indirectly, by the Borrower (including, without
limitation, any such application or proposed application by the Borrower related
to any acquisition or proposed acquisition by the Borrower or any Subsidiary or
affiliate of the Borrower of all or any portion of the stock or substantially
all of the assets of any Person), or the actual or proposed use of the proceeds
of the Advances, whether or not the Administrative Agent, the Arranger, such
Lender or any of their Affiliates or any such director, officer, employee,
advisor or agent is a party to such transaction or (ii) the Borrower's entering
into this Agreement or the Notes, or to any actions or omissions of the
Borrower, any of its respective Subsidiaries or affiliates or any of its or
their respective directors, officers, employees, advisors, affiliates or agents
in connection therewith, in each case whether or not such investigation,
litigation or proceeding is brought by the Borrower, its directors, shareholders
or creditors or an Indemnified Party or any other Person or any Indemnified
Party is otherwise a party thereto and whether or not the transactions
contemplated hereby are consummated, except to the extent such claim, damage,
loss, liability or expense (A) is found in a final, non-appealed judgment by a
court of competent jurisdiction to have resulted from such Indemnified Party's
gross negligence or willful misconduct or (B) arising from disputes among two or
more Lenders (but not including any such dispute that involves a Lender to the
extent that such Lender is acting in any different capacity (such as an
Administrative Agent or Arranger)). The Borrower also agrees not to assert any
claim against the Administrative Agent, the Arranger, any Lender, any of their
Affiliates, or any of their respective directors, officers, employees, advisors
and agents, on any theory of liability, for consequential or punitive damages
arising out of or otherwise relating to the Notes, this Agreement, any of the
transactions contemplated herein or the actual or proposed use of the proceeds
of the Advances. The obligations of the Borrower under this subsection (c) shall
survive the Termination Date, provided that this subsection (c) shall not apply
to derivative
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claims of the stockholders of any Lender against such Lender if such claims are
based upon occurrences subsequent to the Termination Date.
(d) Without prejudice to the survival of any other agreement
of the Borrower hereunder, the agreements and obligations of the Borrower
contained in Sections 2.14, 7.05 and 8.04 shall survive the payment in full of
principal, interest and all other amounts payable hereunder and under the Notes.
SECTION 8.05. Right of Set-off. Upon (a) the occurrence and
during the continuance of any Event of Default and (b) the making of the request
or the granting of the consent specified by Section 6.01 to authorize the
Administrative Agent to declare the Notes due and payable pursuant to the
provisions of Section 6.01, each Lender and each of its Affiliates is hereby
authorized at any time and from time to time, to the fullest extent permitted by
law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other indebtedness at any
time owing by such Lender or such Affiliate to or for the credit or the account
of the Borrower against any and all of the obligations of the Borrower now or
hereafter existing under this Agreement and the Notes, whether or not such
Lender shall have made any demand under this Agreement or such Note and although
such obligations may be unmatured. Each Lender agrees promptly to notify the
Borrower after any such set-off and application, provided that the failure to
give such notice shall not affect the validity of such set-off and application.
The rights of each Lender and each of its Affiliates under this Section are in
addition to other rights and remedies (including, without limitation, other
rights of set-off) which such Lender and each of its Affiliates may have.
SECTION 8.06. Binding Effect. This Agreement shall become
effective (other than Sections 2.01 and 2.03 which shall only become effective
upon satisfaction of the conditions precedent set forth in Section 3.01, 3.02
and 3.03) when it shall have been executed by the Borrower and the
Administrative Agent and when the Administrative Agent shall have been notified
by each Lender, the Documentation Agent, the Co-Agent and the Arranger that such
Lender, Documentation Agent, Co-Agent or Arranger, as the case may be, has
executed it and thereafter shall be binding upon and inure to the benefit of the
Borrower, the Administrative Agent, each Lender and their respective successors
and assigns, provided that the Borrower shall not have the right to assign its
rights hereunder or any interest herein without the prior written consent of the
Lenders except as a result of a merger or consolidation permitted by Section
5.02(e).
SECTION 8.07. Assignments, Designations and Participations.
(a) Each Lender (other than a Designated Bidder) may (and shall if requested to
do so by the Borrower pursuant to Section 2.11(c)) assign to any Person, all or
a portion of its rights and obligations under this Agreement and the Notes
(including, without limitation, all of its Commitment, the A Advances (other
than any B Advances or B Notes) owing to it and the A Note or Notes held by it);
provided, however, that (i) other than in the case of an assignment to a Person,
that immediately
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prior to such assignment was a Lender, or an Affiliate of a Lender (whereupon
notice thereof shall promptly be given to the Borrower and the Administrative
Agent), each such assignment shall be to an Eligible Assignee to which the
Borrower and the Administrative Agent have consented (with respect to an
assignment of all of such Lender's rights and obligations hereunder, such
consents may not be unreasonably withheld), and (ii) the parties to each such
assignment shall execute and deliver to the Administrative Agent, for its
acceptance and recording in the Register, an Assignment and Acceptance, together
with any A Note or Notes subject to such assignment and a processing and
recordation fee of $3,000 if the assignee is not already a Lender. Upon such
execution, delivery, acceptance and recording, from and after the effective date
specified in each Assignment and Acceptance, which effective date shall be at
least five Business Days after the execution and delivery thereof to the
Administrative Agent, (x) the assignee thereunder shall be a party hereto and,
to the extent that rights and obligations hereunder have been assigned to it
pursuant to such Assignment and Acceptance, have the rights and obligations of a
Lender hereunder and (y) the Lender assignor thereunder shall, to the extent
that rights and obligations hereunder have been assigned by it pursuant to such
Assignment and Acceptance, relinquish its rights and be released from its
obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender's rights
and obligations under this Agreement, such Lender shall cease to be a party
hereto).
(b) By executing and delivering an Assignment and Acceptance,
the Lender assignor thereunder and the assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (i) other than as
provided in such Assignment and Acceptance, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in, or in connection with, this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other instrument or document
furnished pursuant hereto; (ii) such assigning Lender makes no representation or
warranty and assumes no responsibility with respect to the financial condition
of the Borrower or the performance or observance by the Borrower of any of its
obligations under this Agreement or any other instrument or document furnished
pursuant hereto; (iii) such assignee confirms that it has received a copy of
this Agreement, together with copies of the financial statements referred to in
Section 4.01 and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance; (iv) such assignee will, independently and without
reliance upon the Administrative Agent, such assigning Lender or any other
Lender and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit decisions in taking or not taking
action under this Agreement; (v) such assignee confirms that it is an Eligible
Assignee; (vi) such assignee appoints and authorizes the Administrative Agent to
take such action as agent on its behalf and to exercise such powers under this
Agreement as are delegated to the Administrative Agent by the terms hereof,
together with such powers as are reasonably incidental thereto; and (vii) such
assignee agrees that it will perform in accordance with their terms all of the
obligations which by the terms of this Agreement are required to be performed by
it as a Lender.
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(c) The Administrative Agent shall maintain at its address
referred to in Section 8.02 a copy of each Assignment and Acceptance and each
Designation Agreement delivered to and accepted by it and a register for the
recordation of the names and addresses of each of the Lenders and, with respect
to Lenders other than Designated Bidders, the Commitment of, and principal
amount of the A Advances owing to, each Lender from time to time (the
"Register"). The entries in the Register shall be conclusive and binding for all
purposes, absent manifest error, and the Borrower, the Administrative Agent and
the Lenders shall treat each Person whose name is recorded in the Register as a
Lender hereunder for all purposes of this Agreement. The Register shall be
available for inspection by the Borrower or any Lender at any reasonable time
and from time to time upon reasonable prior notice.
(d) Upon its receipt of an Assignment and Acceptance executed
by an assigning Lender and an assignee representing that it is an Eligible
Assignee the Administrative Agent shall, if such Assignment and Acceptance has
been completed and is in substantially the form of Exhibit C hereto, (i) accept
such Assignment and Acceptance, (ii) record the information contained therein in
the Register and (iii) give prompt notice thereof to the Borrower. Within five
Business Days after its receipt of such notice, the Borrower shall execute and
deliver to the Administrative Agent in exchange for the surrendered A Note or
Notes a new A Note to the order of such Eligible Assignee in an amount equal to
the Commitment assumed by it pursuant to such Assignment and Acceptance and, if
the assigning Lender has retained a Commitment hereunder, a new A Note to the
order of the assigning Lender in an amount equal to the Commitment retained by
it hereunder. Such new A Note or Notes shall be in an aggregate principal amount
equal to the aggregate principal amount of such surrendered A Note or Notes,
shall be dated the effective date of such Assignment and Acceptance and shall
otherwise be in substantially the form of Exhibit A-1 hereto.
(e) Each Lender may assign to one or more banks or other
entities any B Note or Notes held by it, and each Lender (other than a
Designated Bidder) may designate one or more banks or other entities to have a
right to make B Advances as a Lender pursuant to Section 2.03; provided that
(i) other than in the case of a designation by a Lender of an Affiliate of such
Lender, such Lender shall have obtained the prior written consent of the
Administrative Agent and the Borrower, such consent not to be unreasonably
withheld or delayed, (ii) no such Lender shall be entitled to make more than two
such designations, (iii) each such Lender making one or more of such
designations shall retain the right to make B Advances as a Lender pursuant to
Section 2.03, (iv) each such designation shall be to a Designated Bidder and
(v) the parties to each such designation shall execute and deliver to the
Administrative Agent, for its acceptance and recording in the Register, a
Designation Agreement. Upon such execution, delivery, acceptance and recording,
from and after the effective date specified in each Designation Agreement, the
designee thereunder shall be a party hereto with a right to make B Advances as a
Lender pursuant to Section 2.03 and the obligations related thereto.
<PAGE> 71
67
(f) By executing and delivering a Designation Agreement, the
Lender making the designation thereunder and its designee thereunder confirm and
agree with each other and the other parties hereto as follows: (i) such Lender
makes no representation or warranty and assumes no responsibility with respect
to any statements, warranties or representations made in or in connection with
this Agreement or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Agreement or any other instrument or
document furnished pursuant hereto; (ii) such Lender makes no representations or
warranty and assumes no responsibility with respect to the financial condition
of the Borrower or the performance or observance by the Borrower of any of its
obligations under this Agreement or any other instrument or document furnished
pursuant hereto; (iii) such designee confirms that it has received a copy of
this Agreement, together with copies of the financial statements referred to in
Section 4.01 and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into the
Designation Agreement; (iv) such designee will, independently and without
reliance upon the Administrative Agent, such designating Lender or any other
Lender and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit decisions in taking or not taking
action under this Agreement; (v) such designee confirms that it is a Designated
Bidder; (vi) such designee appoints and authorizes the Administrative Agent to
take such action as agent on its behalf and to exercise such powers under this
Agreement as are delegated to the Administrative Agent by the terms hereof,
together with such powers as are reasonably incidental thereto; and (vii) such
designee agrees that it will perform in accordance with their terms all of the
obligations which by the terms of this Agreement are required to be performed by
it as a Lender.
(g) Upon its receipt of a Designation Agreement executed by a
designating Lender and a designee representing that it is a Designated Bidder,
the Administrative Agent shall, if such Designation Agreement has been completed
and is substantially in the form of Exhibit D hereto, (i) accept such
Designation Agreement, (ii) record the information contained therein in the
Register and (iii) give prompt notice thereof to the Borrower.
(h) Each Lender (other than a Designated Bidder) may sell
participations to one or more banks or other entities in or to all or a portion
of its rights and obligations under this Agreement (including, without
limitation, all or a portion of its Commitment, the Advances owing to it and the
A Note or Notes held by it); provided, however, that (i) such Lender's
obligations under this Agreement (including, without limitation, its Commitment
to the Borrower hereunder) shall remain unchanged, (ii) such Lender shall remain
solely responsible to the other parties hereto for the performance of such
obligations, (iii) such Lender shall remain the holder of any such A Note or
Notes for all purposes of this Agreement, (iv) the Borrower, the Administrative
Agent and the other Lenders shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under this
Agreement, and (v) no participant under any such participation shall have any
right to approve any amendment or waiver of any provision of this Agreement or
any Note, or any consent to any departure by the Borrower therefrom, except to
the extent that such amendment, waiver or consent would reduce the
<PAGE> 72
68
principal of, or interest on, the Notes or any fees or other amounts payable
hereunder, in each case to the extent subject to such participation, or postpone
any date fixed for any payment of principal of, or interest on, the Notes or any
fees or other amounts payable hereunder, in each case to the extent subject to
such participation. If the Administrative Agent or such Lender shall request the
written consent of such participant to any of the actions set forth in this
paragraph (h), and shall not receive either the consent thereto or denial
thereof in writing within five Business Days of making such request, such
participant shall be deemed to have given its consent.
(i) Any Lender may, in connection with any assignment,
designation or participation or proposed assignment, designation or
participation pursuant to this Section 8.07, disclose to the assignee, designee
or participant or proposed assignee, designee or participant, any information
relating to the Borrower furnished to such Lender by or on behalf of the
Borrower; provided that, prior to any such disclosure, the assignee, designee or
participant or proposed assignee, designee or participant shall agree to
preserve the confidentiality of any confidential information relating to the
Borrower received by it from such Lender by executing and delivering to the
Administrative Agent in the case of an assignment or designation, and to such
Lender in the case of a participation, a letter in substantially the form of
Exhibit E hereto.
(j) Notwithstanding any other provision set forth in this
Agreement, any Lender may at any time create a security interest in all or any
portion of its rights under this Agreement (including, without limitation, the
Advances owing to it and the Notes held by it) in favor of any Federal Reserve
Bank in accordance with Regulation A of the Board of Governors of the Federal
Reserve System.
SECTION 8.08. Acknowledgements. Each of the Borrower and the
Interim Guarantor hereby acknowledges that: (a) it has been advised by counsel
in the negotiation, execution and delivery of this Agreement and, in the case of
the Borrower, the other Loan Documents; (b) neither the Administrative Agent nor
any Lender has any fiduciary relationship with or fiduciary duty to the Borrower
or the Interim Guarantor arising out of or in connection with this Agreement or,
in the case of the Borrower, any of the other Loan Documents, and the
relationship between the Administrative Agent and the Lenders, on the one hand,
and the Borrower or the Interim Guarantor, on the other hand, in connection
herewith or therewith is solely that of debtor and creditor; and (c) no joint
venture is created hereby or, in the case of the Borrower, by the other Loan
Documents or otherwise exists by virtue of the transactions contemplated hereby
among the Lenders or among the Borrower and the Lenders or among the Borrower,
the Interim Guarantor and the Administrative Agent.
SECTION 8.09. Consent to Jurisdiction. (a) The Borrower and,
prior to the Interim Guaranty Release Date, the Interim Guarantor each hereby
irrevocably submits to the jurisdiction of any New York State or Federal court
sitting in New York City and any appellate court from any thereof in any action
or proceeding arising out of or relating to this Agreement, and the Borrower
and, prior to the Interim Guaranty Release Date, the Interim Guarantor each
<PAGE> 73
69
hereby irrevocably agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or in such Federal
court. The Borrower and, prior to the Interim Guaranty Release Date, the Interim
Guarantor each hereby irrevocably waives, to the fullest extent that it may
effectively do so, the defense of an inconvenient forum to the maintenance of
any such action or proceeding. The Borrower and, prior to the Interim Guaranty
Release Date, the Interim Guarantor each hereby irrevocably appoints CT
Corporation System (the "Process Agent"), with an office on the date hereof at
1633 Broadway, New York, New York 10019, as its agent to receive on behalf of
the Borrower and, prior to the Interim Guaranty Release Date, the Interim
Guarantor and their respective property, service of copies of the summons and
complaint, and any other process which may be served in any such action or
proceeding. Such service may be made by mailing or delivering a copy of such
process to the Borrower or, prior to the Interim Guaranty Release Date, the
Interim Guarantor in care of the Process Agent at the Process Agent's above
address with a copy to the Borrower or, prior to the Interim Guaranty Release
Date, the Interim Guarantor at its address referred to in Section 8.02, and the
Borrower and, prior to the Interim Guaranty Release Date, the Interim Guarantor
each hereby irrevocably authorizes and directs the Process Agent to accept such
service on its behalf. As an alternative method of service, the Borrower and,
prior to the Interim Guaranty Release Date, the Interim Guarantor each also
irrevocably consents to the service of any and all process in any such action or
proceeding by the mailing of copies of such process to the Borrower or, prior to
the Interim Guaranty Release Date, the Interim Guarantor at its address
specified in Section 8.02. The Borrower and, prior to the Interim Guaranty
Release Date, the Interim Guarantor each agrees that a final judgment in any
such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
(b) Nothing in this Section 8.09 shall affect the right of the
Administrative Agent or any Lender to serve legal process in any other manner
permitted by law or affect the right of the Administrative Agent or any Lender
to bring any action or proceeding against the Borrower or, prior to the Interim
Guaranty Release Date, the Interim Guarantor or their respective property in the
courts of any other jurisdictions including the Federal and State courts sitting
in the State of Illinois or the State of New Jersey, respectively.
SECTION 8.10. GOVERNING LAW. THIS AGREEMENT AND THE
NOTES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK.
SECTION 8.11. Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of this Agreement by telecopier
shall be effective as delivery of a manually executed counterpart.
<PAGE> 74
70
SECTION 8.12. Waiver of Jury Trial. Each of the Borrower, the
Interim Guarantor, the Administrative Agent and the Lenders hereby irrevocably
waives all right to trial by jury in any action, proceeding or counterclaim
(whether based on contract, tort or otherwise) arising out of or relating to
this Agreement, the Notes or the actions of the Administrative Agent, the
Arranger or any Lender in the negotiation, administration, performance or
enforcement thereof.
SECTION 8.13. Certain Actions. No action taken by the Interim
Guarantor or the Borrower in connection with the Spin-off or any transaction
contemplated by the Form 10, the Distribution Agreement or any Ancillary
Agreement (as defined in the Distribution Agreement) and no action taken by the
Interim Guarantor with respect to the merger of the Interim Guarantor with a
wholly-owned subsidiary of the Interim Guarantor for the sole purpose of
changing the Interim Guarantor's name to "Bestfoods" shall be deemed to violate
any of the representations, warranties, covenants or other provisions contained
in this Agreement, including, without limitation, the provisions of Article IV,
Article V, and Article VI hereof.
ARTICLE IX
INTERIM GUARANTY
SECTION 9.01. Interim Guaranty. (a) In consideration of
Advances made to the Borrower prior to the Interim Guaranty Release Date, the
Interim Guarantor, as a guarantor and not as principal debtor, hereby guarantees
to the Administrative Agent and each Lender the punctual repayment when due
(subject to the last sentence of this clause (a)) of all Obligations owed by the
Borrower under this Agreement and under the Notes (the "Borrower's Obligations")
until the Interim Guaranty Release Date less any prior payments made by the
Borrower or the Interim Guarantor on the Borrower's Obligations prior to the
Interim Guaranty Release Date. In no event will the liability of the Interim
Guarantor exceed the aggregate amount of the Borrower's Obligations, together
with any and all expenses incurred by the Administrative Agent and the Lenders
in enforcing their rights under this Agreement. Subject to the limitations
above, the Interim Guarantor agrees that if the Borrower does not pay the
Borrower's Obligations under this Agreement or under the Notes when due, Interim
Guarantor shall, within five Business Days after demand by and receipt of
written notice from the Administrative Agent as set forth in clause (h) of this
Section 9.01 below, pay the same to the Administrative Agent for the benefit of
the Lenders.
(b) Any and all payments by the Interim Guarantor prior to the
Interim Guaranty Release Date hereunder shall be made in accordance with the
provisions of Section 2.14.
<PAGE> 75
71
(c) In the event that the Interim Guarantor is called upon to
make a payment of any Borrower's Obligation under this Section 9.01 pursuant to
the last sentence of clause (a) above, the Interim Guarantor will make such
payment to the Administrative Agent for the benefit of the Lenders in United
States dollars at the Administrative Agent's Account.
(d) Subject to the provisions of the last sentence of clause
(a) above, the Interim Guarantor guarantees that the Borrower's Obligations will
be paid to the Administrative Agent for the benefit of the Lenders in accordance
with the terms of this Agreement or any Loan Document, express or implied, with
the Borrower, regardless of any law, regulation or order of any jurisdiction
affecting any term of any Borrower's Obligation or the Lender's rights with
respect thereto (including, without limitation, any sovereign act or
circumstance which might otherwise constitute a defense to, or a legal or
equitable discharge of, the Borrower). Subject to the provisions of the last
sentence of clause (a) above, the obligations of the Interim Guarantor under
this Section 9.01 are independent of the Borrower's Obligations, and, prior to
the Interim Guaranty Release Date, a separate action or actions may be brought
and prosecuted against the Interim Guarantor to enforce this Section 9.01,
irrespective of whether any action is brought against the Borrower or whether
the Borrower is joined in any such action or actions.
(e) Subject to the provisions of the last sentence of clause
(a) above, the Interim Guarantor hereby waives promptness, diligence, notice of
acceptance, presentment, demand, protest and notice of dishonor with respect to
any Borrower's Obligation and this Section 9.01 and any requirement that the
Administrative Agent or any of the Lenders exhaust any right or take any action
against the Borrower, other than the requirement that the relevant party first
demands payment (pursuant to notice as permitted by the terms of this Agreement)
by the Borrower under the terms of this Agreement. The guaranty under this
Section 9.01 shall, prior to the Interim Guaranty Release Date, continue to be
effective, or reinstated, as the case may be, if at any time prior to the
Interim Guaranty Release Date any payment of any Borrower's Obligation is
rescinded or must otherwise be returned by the Administrative Agent or any
Lender upon the insolvency, bankruptcy or reorganization of the Borrower or
otherwise, all as though such payment had not been made.
(f) The Interim Guarantor's liability under this Section 9.01
shall until the Interim Release Guaranty Date be unconditional irrespective of
(i) any amendment or waiver or consent to departure from the terms of any
Borrower's Obligation including any extension of the time or change in the
manner or place of payment only if agreed in writing by the Borrower or the
Interim Guarantor, and (ii) any other circumstance which might otherwise
constitute a defense available to, or discharge of, the Borrower, provided,
however, that the relevant party first demands payment by the Borrower in
accordance with the last sentence of clause (a) above.
(g) Upon payment to the Administrative Agent for the benefit
of the Lenders in full in cash of all the Borrower's Obligations under the Loan
Documents pursuant to the terms of this Section 9.01, Interim Guarantor shall be
subrogated to any and all rights the
<PAGE> 76
72
Administrative Agent or any Lender may have against Borrower in connection with
such Borrower's Obligations, and the Administrative Agent and each Lender shall
execute all documents reasonably requested by the Interim Guarantor to evidence
or confirm such subrogation. Prior to the Interim Guaranty Release Date the
guaranty under this Section 9.01 shall continue to be effective or be
reinstated, as the case may be, if at any time any payment in respect of any
Borrower's Obligation made by the Borrower is rescinded or must otherwise be
returned by the Administrative Agent or any of the Lenders prior to the Interim
Guaranty Release Date upon the insolvency, bankruptcy or reorganization of the
Borrower or otherwise, all as though such payment had not been made.
(h) All notices to the Interim Guarantor required hereunder
shall be sent to it at the address specified in Section 8.02 in the manner
specified therein.
(i) All obligations, covenants, agreements and amendments of
the Interim Guarantor hereunder shall terminate at the Interim Guaranty Release
Date and, at such time the Interim Guarantor shall have no further obligations
hereunder (except as set forth in Section 2.14(h)), and under no circumstances
shall the obligations of the Interim Guarantor under this Agreement be
reinstated after the Interim Guaranty Release Date.
(j) Each of the Lenders acknowledges that this interim
guarantee is provided solely on an interim basis and for the sole purpose of
enabling the Borrower to borrow hereunder prior to the Spin-off. By execution of
this Agreement or the acceptance of an assignment or participation as
contemplated by Section 8.07 of this Agreement, each Lender hereby acknowledges
and agrees that the Obligations of the Interim Guarantor are limited as set
forth in this Section 9.01.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly authorized,
as of the date first above written.
CORN PRODUCTS INTERNATIONAL, INC., as
Borrower
By__________________________
Title:
By__________________________
Title:
<PAGE> 77
73
CITIBANK, N.A.,
as Administrative Agent
By__________________________
Title:
THE FIRST NATIONAL BANK OF CHICAGO,
as Documentation Agent
By__________________________
Title:
THE CHASE MANHATTAN BANK,
as Co-Agent
By__________________________
Title:
<PAGE> 78
74
COMMITMENTS BANKS
$75,000,000 CITIBANK, N.A.
By____________________________
Title:
$75,000,000 THE FIRST NATIONAL BANK OF CHICAGO
By___________________________
Title:
$50,000,000 THE CHASE MANHATTAN BANK
By___________________________
Title:
$25,000,000 THE BANK OF NEW YORK
By___________________________
Title:
$25,000,000 CREDIT AGRICOLE INDOSUEZ
By___________________________
Title:
By___________________________
Title:
<PAGE> 79
75
COMMITMENTS BANKS
$25,000,000 FIRST UNION NATIONAL BANK
By___________________________
Title:
$25,000,000 THE NORTHERN TRUST COMPANY
By___________________________
Title:
$25,000,000 SUNTRUST BANK, ATLANTA
By___________________________
Title:
$15,000,000 THE FUJI BANK, LIMITED
By___________________________
Title:
$340,000,000 Total of the Commitments
<PAGE> 80
76
CPC INTERNATIONAL, INC.,
as Interim Guarantor
By__________________________
Title:
By__________________________
Title:
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>4
<DESCRIPTION>MASTER SUPPLY AGREEMENT
<TEXT>
<PAGE> 1
Exhibit 10.1
EXECUTION COPY
MASTER SUPPLY AGREEMENT
This MASTER SUPPLY AGREEMENT dated as of January 1, 1998 by and between
CPC INTERNATIONAL INC., a Delaware corporation ("CPC") and CORN PRODUCTS
INTERNATIONAL, INC., a Delaware corporation ("CPI").
WHEREAS, prior to the date hereof, the business of CPI was a division of
CPC;
WHEREAS, prior to the date hereof, CPC (and its Affiliates in the
Territories) purchased the Products listed in the Schedules hereto from CPI
(and its Affiliates in the Territories) on an intercompany basis;
WHEREAS, on December 31, 1997 CPI was spun-off from CPC and is now an
independent corporation, and the Affiliates of CPI are no longer under common
ownership with the Affiliates of CPC; and
WHEREAS, CPC and CPI desire to formalize the supply relationships set
forth in the Schedules hereto.
NOW, THEREFORE, the parties agree as follows:
1. DEFINITIONS.
As used herein, the following terms shall have the meanings set forth
below:
(a) "Affiliate" shall mean any entity which is controlled by, in
control of, or under common control with, the party to which the
reference is made.
(b) "Applicable Law" shall mean any law, rule, regulation, statute,
ordinance, decree, treaty or directive applicable to any of the
Purchasers or Suppliers.
(c) "Commodity Consumer Products" shall mean corn starch, corn oil,
corn syrup and dextrose which are branded and packaged for
sale to the retail trade, club stores, mass merchandisers and the
foodservice sector. Each Schedule identifies the Commodity
Consumer Products sold in each Territory.
(d) "Commodity Industrial Products" shall mean bulk corn starch,
corn oil (crude or refined), corn syrup (glucose), and
dextrose purchased solely for the production of Commodity Consumer
Products. Each Schedule identifies the Commodity Industrial
Products sold to the purchaser in each Territory.
<PAGE> 2
(e) "Consumer Products" shall mean all branded and
packaged products (including Commodity Consumer Products)
produced by the Purchasers for sale to the retail trade, club
stores and mass merchandisers utilizing any Products as
ingredients.
(f) "Purchaser" shall mean any of the Purchasers.
(g) "Purchasers" shall mean collectively CPC and all of
its Affiliates who purchase under this Agreement.
(h) "Products" shall mean all products sold by the
Suppliers to the Purchasers (including the Commodity Industrial
Products) set forth in the Schedules hereto for each Territory.
(i) "Supplier" shall mean any of the Suppliers.
(j) "Suppliers" shall mean collectively CPI and all of
its Affiliates who supply under this Agreement.
(k) "Territories" shall mean all of the countries for
which there is a Schedule.
(l) "Territory" shall mean any country for which there is
a Schedule.
2. SCOPE.
2.1. This Agreement shall apply to all purchases by
Purchasers from Suppliers of the Products listed in the
Schedules in the corresponding Territories. The provisions of
Section 5 shall apply to Commodity Consumer Products and
Commodity Industrial Products and the provisions of Sections 6.1
and 6.2 shall only apply to Commodity Industrial Products.
2.2. This Agreement does not constitute a purchase order.
Purchases under this Agreement shall be made by purchase orders
issued by Purchasers as provided in Section 7 hereof.
3. TERM.
3.1. This Agreement shall have an initial term of two
years from the date hereof (the "Initial Term"), unless
terminated earlier in accordance with Section 3.4 below.
3.2. Six (6) months prior to the end of the Initial Term,
the Purchasers and Suppliers from each Territory shall review
the terms of their respective Schedules. If any of the
Purchasers and Suppliers are
2
<PAGE> 3
unable to agree upon future terms for their respective
Schedules, this Agreement shall terminate as to those
Territories at the end of the Initial Term. For those
Purchasers and Suppliers that are able toagree upon future
terms for their respective Schedules, this Agreement shall
automatically be renewed, as modified, as to those Territories
for successive renewal terms of one year each, unless notice of
termination is given by either party in writing, not later than
six (6) months prior to the end of the one year term then in
effect.
3.3 After the Initial Term, any Supplier or Purchaser may
terminate this Agreement in accordance with Section 3.2 or 3.4
hereof as to some of the Products in the corresponding
Territories. In the event of such a partial termination, this
Agreement shall remain in full force and effect as to those
Products in the corresponding Territories for which this
Agreement has not been terminated.
3.4. This Agreement may be terminated automatically at any
time in the event of the following:
(a) In the event of a breach or failure to perform this
Agreement by one party, the non-breaching party may
terminate this Agreement for those Products in
corresponding Territories where the breach or failure
occurred, if the breach or failure has continued for a
period of sixty days after written notice thereof has been
received by the breaching party.
(b) In the event of a change in control of either party, the
other party shall have the right to terminate this
Agreement in whole as to (i) or in part as to (ii)
immediately after giving written notice upon the
occurrence of such change in control. For purposes of
this Agreement:
(i) change in control of CPC or CPI shall mean: (y) the
acquisition by any person (as such term is
defined in the Securities Act of 1933, as amended)
(excluding the party to which the change in control
relates or any of its Affiliates or a fiduciary
holding its securities in any type of benefit plan),
directly or indirectly, of beneficial ownership of
20% or more of the combined voting power of the then
outstanding voting securities entitled to vote
generally at the election of directors, or (z) the
merger, consolidation, reorganization, liquidation,
involving the sale or transfer of substantially all
of the assets of the party; and
3
<PAGE> 4
(ii) change in control of any Affiliate of CPC or CPI
shall mean any change in the ownership of any
Affiliate of CPC or CPI such that CPC or CPI
ceases to hold voting control of its respective
Affiliate(s).
3.5. In the event that this Agreement is terminated in
whole or in part in accordance with Section 3.2, 3.3 or 3.4
above, the obligations of CPI and its Affiliates contained in
Section 5 shall nevertheless continue to remain in full force
and effect for a period of six months from the date of such
termination as to all Commodity Industrial Products in
corresponding Territories for which this Agreement has been
terminated.
4. PRICING.
Products shall be sold hereunder at prices to be determined in accordance
with the pricing mechanism currently utilized by the relevant Purchasers and
Suppliers. All pricing mechanisms to be used for purposes of this Agreement are
described in the Schedules hereto.
5. NON-COMPETITION.
5.1. For so long as this Agreement remains in force and
effect with respect to any Commodity Industrial Products in any
Territory, and for a period of six months after any termination
hereof, CPI agrees that it will not, nor will its Affiliates:
(i) sell Commodity Consumer Products in the Territories for
which this Agreement is in effect as to the
corresponding Commodity Industrial Products;
(ii) sell, manufacture or package Commodity Consumer Products
to or for third parties if, to the knowledge of CPI or
its Affiliates after reasonable inquiry of such third
parties, such Commodity Consumer Products are intended
for sale in Territories for which this Agreement is in
effect as to the corresponding Commodity Industrial
Products; or
(iii) acquire a controlling interest in any person or entity
which engages in (i) or (ii) above (an "Acquired
Business") unless, if a portion of the Acquired Business
consists of (i) or (ii) above, CPI or its Affiliates
offers to sell the portion of the Acquired Business that
engages in (i) or (ii) above to CPC or its Affiliates on
reasonable terms and conditions; provided, however, that
if CPI and CPC (or their respective Affiliates) cannot
agree on such terms and conditions and CPI (or its
Affiliate) proceeds to
4
<PAGE> 5
acquire the Acquired Business then CPC (or its Affiliate)
shall have the automatic right to terminate this Agreement
as to such Commodity Industrial Products in the
corresponding Territory upon written notice.
5.2. Nothing in this Section 5 shall be deemed to prohibit
CPI from performing any toll packaging agreement with CPC or its
Affiliates or from selling any Products (including Commodity
Industrial Products) to third parties in any Territory that may
sell, manufacture or package Commodity Consumer Products in any
Territory.
6. EXCLUSIVITY AND PRODUCT VOLUME.
6.1. For so long as this Agreement is in effect, Suppliers shall be
the sole and exclusive suppliers to Purchasers and Purchasers
shall purchase 100% of their requirements for Commodity
Industrial Products from Suppliers in the Territories for which
this Agreement is in effect, except as provided in Sections 6.2
and 8.2(b).
6.2 Notwithstanding Section 6.1, if at any time during
the term of this Agreement a Purchaser requires Commodity
Industrial Product in excess of a Supplier's production capacity
at the relevant supply location, the Supplier shall notify the
Purchaser that it is unable to fill the entire purchase order
within five business days of Supplier's receipt of the purchase
order, and such Purchaser shall be permitted to purchase
Commodity Industrial Product from a third party only for so long
as such Purchaser's requirements exceed such Supplier's
production capacity, and thereafter the Supplier shall promptly
notify the Purchaser when it becomes able to fulfill the
Purchaser's requirements. Nothing in this Section 6 shall be
deemed to require any Supplier to increase its production
capacity. In the event of such purchases from third parties,
Suppliers shall not be liable for the costs of such purchases,
including but not limited to the differential in the price of
such purchases.
6.3. Purchasers will provide as much forecasting information as
possible to assist Suppliers. Two months prior to the start of
the fiscal year of each Purchaser for each year that this
Agreement will be in effect for the following year, Purchasers
shall provide Suppliers with estimates of their volume
requirements for the following year.
6.4. Nothing in this Section 6 shall be deemed to require
Purchasers to purchase all of their requirements for Products,
other than Commodity Industrial Products, from Suppliers and
nothing in this Section 6 shall prohibit Purchasers from
purchasing test quantities of
5
<PAGE> 6
Commodity Industrial Products from third parties as long as
Purchasers neither sell such test quantities nor sell Commodity
Consumer Products containing such test quantities.
7. PURCHASE ORDERS AND INVOICES.
7.1. Purchases hereunder will be made on the basis of
purchase orders issued by Purchasers. Purchase orders will
contain the following information:
(a) location for delivery;
(b) shipment date;
(c) volume; and
(d) Product specifications.
7.2. Invoices will be submitted by Suppliers to Purchasers
which will contain the following information:
(a) payment terms;
(b) title and risk of loss; and
(c) responsibility for insurance, freight and taxes.
7.3. Suppliers and Purchasers shall agree upon a form of
purchase order and invoice to be used in their Territory.
7.4. In the event of any conflict between a purchase order
or an invoice and this Agreement, the terms of this Agreement
shall prevail.
8. WARRANTIES.
8.1 Suppliers warrant that all Products sold hereunder
shall: (a) comply with the specifications agreed to by the
parties, (b) be produced in accordance with the quality
assurance standards described in Section 10 hereof, and (c):
(i) for Products sold within the U.S.A.: (I) shall not be
adulterated or misbranded within the meaning of the
U.S. Federal Food, Drug and Cosmetic Act and regulations
thereunder, and (II) shall be produced in accordance with
good manufacturing practices, as such term is defined in
21 U.S.C. Part 110 ("GMPs"); and
(ii) for Products sold outside the U.S.A.: (I) shall be in
compliance with all Applicable Laws, and (II) shall be
produced in accordance with Applicable Law governing
manufacturing practices.
6
<PAGE> 7
Suppliers make no other warranties, either express or implied,
including but not limited to fitness for a particular purpose,
except those set forth above.
8.2 (a) In the event that any Products sold hereunder do not
comply with the warranties set forth in this Section 8 or
in Section 10, Purchaser shall notify Supplier of such
breach and of its timing requirements for such Products
within five business days of Purchaser's discovery of the
breach.
(b) If Supplier is unable to replace the
non-complying Product in sufficient time to meet
Purchaser's timing requirements for such Products pursuant
to the notice given under Section 8.2(a) above, Supplier
shall refund to Purchaser the purchase price of the
non-complying Product and Purchaser shall have the right
to purchase replacement Product from a third party,
notwith-standing Section 6.1.
(c) Supplier's liability under this Section 8
and under Section 10 shall be limited to: (i) replacement
of the Products or a refund in the amount of the purchase
price of the Products in accordance with Section 8.2(b),
(ii) the cost of manufacturing and packaging the Consumer
Products (less the purchase price of the Products), (iii)
the reasonable costs of processing customer complaints as
to Consumer Products rendered unusable, and (iv) the
reasonable costs of recalling and disposing of any
defective Consumer Products.
9. INDEMNIFICATION AND INSURANCE.
9.1 Each party (the "Indemnifying Party") shall defend,
indemnify and hold harmless the other party (the "Indemnified
Party") and its respective employees and representatives from
and against all liability, loss, damage and expense, (including
reasonable attorney's fees) actions and claims for injury and/or
death to persons and damage to property arising out of the
negligent or wrongful acts or omissions of the Indemnifying
Party, but only to the extent that such injury or damage is
attributable to the Indemnifying Party's negligent or wrongful
acts or omissions.
9.2 In the event that an Indemnified Party is subject to
any indemnifiable action or claim in accordance with Section
9.1, the procedures for indemnification in Article VI of the
Distribution Agreement dated December 1, 1997 between CPC and
CPI (the "Distribution Agreement") shall apply.
7
<PAGE> 8
9.3 Suppliers and Purchasers shall procure and maintain, at their
respective costs and expenses, for so long as this Agreement is
in effect, occurrence based commercial general liability
insurance and automobile liability insurance coverage. The
policies, including excess policies, shall have limits of not
less than $25,000,000 per occurrence and $25,000,000 in the
aggregate (combined single limit) for each policy year and
shall be obtained from insurers rated A- or better by A.M. Best
Company, and with a financial size category of VIII or larger.
The policies shall be endorsed to name the Indemnified Party as
an additional insured with respect to liabilities arising out
of the foregoing indemnification agreements and shall provide
that the insurance of the Indemnifying Party will be primary to
any other insurance of the additional insured. Purchasers and
Suppliers agree that their respective insurers shall not be
subrogated to the rights of the Indemnified Party against the
Indemnifying Party with respect to any claim arising under this
Agreement and neither party shall assign any such right of
subrogation to their insurers. In addition to the foregoing
insurance, Suppliers and Purchasers shall procure and maintain,
at their respective cost and expense, any additional insurance
as may be required by Applicable Laws. Each party shall
deliver to the other Certificates of Insurance and endorsements
evidencing the issuance of the required coverage and stating
that the policies are in effect and that such policies will not
be canceled or non-renewed without 30 days' prior written
notice to the additional insured. In the event of a claim,
copies of the policies shall be supplied to the party claiming
indemnification upon request.
10. QUALITY ASSURANCE AND CONTROL.
10.1. All Products supplied under this Agreement shall be produced
in accordance with Supplier's quality assurance standards and
program in effect as of the date hereof. Suppliers reserve the
right to reasonably modify their quality assurance standards
from time to time; provided, however, that any significant
changes shall be implemented by Suppliers only after full and
open discussion with Purchasers with regard to their impact on
manufacturing of the Products.
10.2. From time to time, upon prior notice to Suppliers, Purchasers
shall have the right to examine Suppliers' facilities used for
the manufacture of the Products hereunder.
8
<PAGE> 9
11. CONFIDENTIALITY.
11.1. The process, formulations, data and information (collectively
"Information") which has been or may be furnished by one
party to the other in order to perform this Agreement, is the
property of the providing party and has been or will be
furnished solely to enable the receiving party to perform this
Agreement, with the understanding that:
(a) the receiving party will not use or reproduce such
Information for any other purpose;
(b) the receiving party will take all reasonable care to
ensure that such Information is not disclosed to other
parties; and
(c) upon request by the providing party, the receiving party
will promptly return all such Information at any time
during the term of this Agreement or thereafter, except
that either party may continue to use such Information of
the other party as it may require in order to perform this
Agreement.
11.2. The foregoing restrictions will not apply to any
information and data which is:
(a) already in possession of the receiving party at the time
of first receipt from the providing party;
(b) independently developed by employees of the receiving
party who did not have access to the Information;
(c) becomes part of the public domain without breach of this
Agreement by the receiving party; or
(d) rightfully obtained by the receiving party from third
persons without restriction or breach by this Agreement
by any receiving party.
12. DISPUTE RESOLUTION.
Any dispute, controversy or claim in connection with this Agreement
shall be resolved in accordance with Article VI of the Distribution
Agreement. The parties acknowledge that disputes arising under Section 9.2 (or
the applicability thereof) may raise difficult factual questions relating to
proportional responsibility, proximate cause and duties to mitigate damages;
such questions and similar issues as to allocating responsibility and damages
shall be considered in the resolution of disputes.
9
<PAGE> 10
13. REMOVAL OF EQUIPMENT.
In the event that any Purchaser removes packaging equipment owned by
it from the plant of a Supplier either during the term of this Agreement or
following termination hereof, the Purchaser shall, at its own expense, restore
the area of the plant where the equipment was located, to reasonable working
condition.
14. INDEPENDENT CONTRACTOR.
Suppliers shall act under this Agreement solely as independent
contractors. Nothing herein shall constitute any Supplier or Purchaser as an
agent of the other, nor shall it constitute any member of one party's staff as
an agent or employee of the other party.
15. ASSIGNMENT.
None of the rights or obligations of either party hereunder is
assignable either by voluntary act or operation of law, nor transferable
by it without the prior written consent of the other party, which consent shall
not be unreasonably withheld.
16. FORCE MAJEURE.
If performance by either party of any of its duties or obligations
under or pursuant to this Agreement is prevented, hindered, delayed or
otherwise made impracticable by reason of any strike, flood, riot, fire,
explosion, war or any other casualty which cannot be overcome by reasonable
diligence and without unusual expense, such party shall be excused from such
performance to the extent that it is so prevented, hindered or delayed thereby
during the continuance of any such happening or event and for so long as such
event shall continue to prevent, hinder or delay such performance.
17. NOTICES.
Any notice to be given hereunder by either party shall be in writing
and shall be deemed given when: (i) sent by registered mail, return receipt
requested upon receipt by the sender of confirmation of receipt; (ii) sent by
telecopy upon receipt by the sender of confirmation of transmittal; or (iii)
delivered to the addressee as follows:
In the case of Purchaser to: CPC International Inc.
P.O. Box 8000, International Plaza
Englewood Cliffs, New Jersey 07632
Attn: Corporate Secretary
Telephone: (201) 894-2381
Facsimile: (201) 894-2192
10
<PAGE> 11
In the case of Supplier to: Corn Products International, Inc.
P.O. Box 345, 6500 Archer Road
Argo, Illinois 60501-0345
Attn: Corporate Secretary
Telephone: (708) 563-6958
Facsimile: (708) 563-6851
Any party may from time to time designate by written notice to the other
revised address or telecopy information.
18. SEVERABILITY.
The invalidity or unenforceability of any particular provision of this
Agreement shall not affect any other provisions hereof, and this Agreement
shall be construed in all respects as if such invalid or unenforceable
provision were omitted.
19. HEADINGS.
The headings of this Agreement are for the convenience of the parties,
and shall not be construed as having any legal or binding meaning or effect.
20. ENTIRE AGREEMENT AND AMENDMENT.
This Agreement constitutes the entire understanding and agreement
between the parties hereto with respect to the subject matter hereof, and
cancels and supersedes any prior negotiations, and merges all understandings,
and agreements, whether verbal or written, with respect thereto. This
Agreement can be amended only by a written instrument executed by the parties
hereto.
21. BINDING EFFECT.
This Agreement shall be executed by CPC and CPI on their own behalf
and on behalf of their respective Affiliates. Each of CPC and CPI agrees to
cause their respective Affiliates to perform each and every one of the
obligations hereunder to be performed by such Affiliates.
22. NO WAIVER.
The failure by either party to insist upon strict performance of any
covenant or condition of this Agreement, in any one or more instances, shall
not be construed as a waiver or relinquishment of any such covenant or
condition in the future, but the same shall be and remain in full force and
effect.
11
<PAGE> 12
23. SURVIVAL.
Notwithstanding any termination of this Agreement the provisions of
Section 5 shall survive such termination for the period stated therein.
24. CHOICE OF LAW.
THIS AGREEMENT SHALL, IN ALL RESPECTS, BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY, EFFECT AND PERFORMANCE, EXCEPT FOR SUCH LAWS OF THE
STATE OF NEW YORK WHICH REQUIRE THE APPLICATION OF THE LAWS OF ANY OTHER
JURISDICTION.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
CPC INTERNATIONAL INC.
By:
---------------------------------------
Title:
------------------------------------
CORN PRODUCTS INTERNATIONAL, INC.
By:
---------------------------------------
Title:
------------------------------------
12
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.2
<SEQUENCE>5
<DESCRIPTION>TAX SHARING AGREEMENT
<TEXT>
<PAGE> 1
Exhibit 10.2
TAX SHARING AGREEMENT
BETWEEN
CPC INTERNATIONAL INC.
AND
CORN PRODUCTS INTERNATIONAL, INC.
DATED DECEMBER 1, 1997
<PAGE> 2
<TABLE>
<S> <C>
ARTICLE 1 - DEFINITIONS..................................................... 2
SECTION 1.01. GENERAL...................................................... 2
ARTICLE 2 - TAX RETURN FILING............................................... 7
SECTION 2.01. CPC CONSOLIDATED RETURNS..................................... 7
SECTION 2.02. CORN F.I.T. RETURNS.......................................... 8
SECTION 2.03. CPC STATE OR LOCAL RETURNS................................... 8
SECTION 2.04. CORN STATE OR LOCAL RETURNS.................................. 9
SECTION 2.05. CPC SALARIED EMPLOYEE RETURNS................................ 9
SECTION 2.06. CPC HOURLY EMPLOYEE RETURNS.................................. 10
SECTION 2.07. CORN EMPLOYEE RETURNS........................................ 10
SECTION 2.08. CPC SALES, USE AND PROPERTY TAX RETURNS...................... 11
SECTION 2.09. CORN SALES, USE AND PROPERTY TAX RETURNS..................... 12
SECTION 2.10. OTHER CPC RETURNS............................................ 12
SECTION 2.11. OTHER CORN RETURNS........................................... 13
SECTION 2.12. FOREIGN DISTRIBUTING ENTITY RETURNS.......................... 13
SECTION 2.13. CORN FOREIGN RETURNS......................................... 14
SECTION 2.14. DESIGNATION OF AGENT......................................... 14
SECTION 2.15. POST-DISTRIBUTION DATE RETURNS AND
POSITION--NO INCONSISTENT POSITIONS.......................... 15
ARTICLE 3 - TAX LIABILITY................................................... 16
SECTION 3.01. CPC LIABILITY................................................ 16
SECTION 3.02. CORN LIABILITY............................................... 16
ARTICLE 4 - POST-DISTRIBUTION CARRYBACKS OF TAX BENEFITS.................... 17
SECTION 4.01. CARRYBACK PROVISIONS......................................... 17
ARTICLE 5 - POST-DISTRIBUTION CARRYOVERS OF TAX BENEFITS AND ATTRIBUTES..... 18
SECTION 5.01. CPC GROUP ITEMS.............................................. 18
SECTION 5.02. EARNINGS AND PROFITS......................................... 19
ARTICLE 6 - ADJUSTMENTS..................................................... 19
SECTION 6.01. CPC RETURNS AND FOREIGN DISTRIBUTING ENTITY RETURNS.......... 19
SECTION 6.02. CORN RETURNS................................................. 21
SECTION 6.03. EXPENSES..................................................... 21
ARTICLE 7 - CONTESTS........................................................ 22
SECTION 7.01. CPC, CPC COMPANY, AND FOREIGN DISTRIBUTING ENTITY CONTESTS;
NOTIFICATION AND COMMUNICATION............................... 22
SECTION 7.02. GROUP CONTESTS; CONTROL AND MANAGEMENT OF CLAIMS............. 22
ARTICLE 8 - INFORMATION AND COOPERATION; BOOKS AND RECORDS.................. 24
SECTION 8.01. GENERAL...................................................... 24
ARTICLE 9 - GENERAL PROVISIONS.............................................. 26
SECTION 9.01. EFFECTIVENESS................................................ 26
SECTION 9.02. NOTICES...................................................... 26
SECTION 9.03. COMPLETE AGREEMENT; CONSTRUCTION............................. 27
SECTION 9.04. COUNTERPARTS................................................. 27
SECTION 9.05. WAIVER....................................................... 27
SECTION 9.06. AMENDMENTS................................................... 28
SECTION 9.07. SUCCESSORS AND ASSIGNS....................................... 28
SECTION 9.08. SUBSIDIARIES................................................. 28
SECTION 9.09. THIRD PARTY BENEFICIARIES.................................... 28
SECTION 9.10. HEADINGS..................................................... 29
SECTION 9.11. SPECIFIC PERFORMANCE......................................... 29
SECTION 9.12. GOVERNING LAW................................................ 29
SECTION 9.13. ARBITRATION.................................................. 30
SECTION 9.14. SEVERABILITY................................................. 30
</TABLE>
i
<PAGE> 3
TAX SHARING AGREEMENT
This TAX SHARING AGREEMENT (this "Agreement") is dated as of ________,
1997, by and between CPC INTERNATIONAL INC., a Delaware corporation ("CPC") and
CORN PRODUCTS INTERNATIONAL, INC., a Delaware corporation ("Corn").
WITNESSETH
WHEREAS, CPC is the common parent of an affiliated group of corporations
which includes Corn and which group and the members thereof file U.S.
consolidated federal income tax returns;
WHEREAS, CPC, as well as its foreign and domestic subsidiaries file
certain other Tax returns relating to U.S. and foreign Taxes;
WHEREAS, the Board of Directors of CPC has determined that it is
appropriate and desirable to effect the Distribution as described in the
Distribution Agreement between CPC and Corn dated, , 1997 (the
"Distribution Agreement"), subject to the satisfaction or waiver of the
conditions set forth therein;
WHEREAS, the Board of Directors of CPC has determined that it is
appropriate and desirable to take all corporate action and to cause its
subsidiaries to take all corporate action necessary to effect the division of
certain foreign direct and indirect subsidiaries of CPC as of specified dates
to be determined (each such date shall sometimes hereinafter be referred to as
the "Applicable Foreign Distribution Date"); and
<PAGE> 4
WHEREAS, the parties hereto desire to set forth their agreements with
regard to their respective liabilities for federal, state, local and foreign
Taxes herein (and with respect to Taxes of certain Pakistani entities, in the
Annex to this Agreement) for Tax periods before and after the Distribution Date
and the Applicable Foreign Distribution Dates, and to provide for certain other
Tax matters.
NOW, THEREFORE, in consideration of the mutual agreements, provisions and
covenants contained in this Agreement, the parties hereby agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.01. General. As used in this Agreement, the following terms
shall have the following meanings (such meanings to be equally applicable to
both the singular and plural forms of the terms defined):
"Affiliate" shall mean, when used with respect to a specified Person,
another Person that directly, or indirectly through one or more intermediaries,
will control, or will be controlled by or will be under common control with the
Person specified immediately following the Distribution Date.
"Agreement" shall have the meaning described in the above preamble.
"Annex" shall mean that certain document attached to this Agreement
executed by the parties on even date herewith setting forth the agreements of
the parties with respect to Taxes of certain Pakistani entities.
2
<PAGE> 5
"Applicable Foreign Distribution Date" shall have the meaning described in
the above preamble.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Corn" shall have the meaning described in the above preamble.
"Corn Companies" shall mean, collectively, Corn and each subsidiary of
Corn, including without limitation any entity owned directly or beneficially by
Corn after the Distribution Date (or, if later, the Applicable Foreign
Distribution Date).
"Corn Division" shall mean the division of CPC that operates CPC's U.S.
corn refining business before the Distribution Date.
"Corn Domestic Companies" shall mean, collectively, each Corn Company
incorporated or organized under the laws of one of the respective States of the
United States.
"Corn Employee Returns" shall have the meaning described in Section 2.07
below.
"Corn F.I.T. Return" shall mean any federal income tax return or amendment
thereof of Corn or any member of the Corn Group, including any consolidated
federal income tax return or amendment thereof of the Corn Group.
"Corn Foreign Returns" shall have the meaning set forth in Section 2.13
below.
"Corn Group" shall mean the affiliated group of corporations as defined in
Section 1504(a) of the Code of which Corn is the common parent.
3
<PAGE> 6
"Corn Return" shall mean any of a Corn F.I.T. Return, any of the Corn
State or Local Returns, a Corn Employee Return, any Corn Foreign Return, any of
the Corn Sales, Use and Property Tax Returns, and any Other Corn Return.
"Corn Sales, Use and Property Tax Returns" shall have the meaning
described in Section 2.09 below.
"Corn State or Local Returns" shall have the meaning described in Section
2.04 below.
"CPC" shall have the meaning described in the above preamble.
"CPC Companies" shall mean, collectively, CPC and each subsidiary of CPC.
"CPC Consolidated Return" shall mean any consolidated federal income tax
return or amendment thereof of the CPC Group which includes one or more of the
Corn Domestic Companies.
"CPC Consolidated Return Period" shall mean a tax period for which a CPC
Consolidated Return is filed.
"CPC Group" shall mean the affiliated group of corporations as defined in
Section 1504(a) of the Code of which CPC is the common parent.
"CPC Hourly Employee Returns" shall have the meaning described in Section
2.06 below.
"CPC Return" shall mean any of a CPC Consolidated Return, any of the CPC
State or Local Returns, a CPC Salaried Employee Return, a CPC Hourly Employee
Return, any of the CPC Sales, Use and Property Tax Returns, or any Other CPC
Return.
4
<PAGE> 7
"CPC Salaried Employee Returns" shall have the meaning described in
Section 2.05 below.
"CPC Sales, Use and Property Tax Returns" shall have the meaning described
in Section 2.08 below.
"CPC State or Local Returns" shall have the meaning described in Section
2.03 below.
"CPC Subsidiary" shall mean any subsidiary of CPC other than any of the
Corn Companies.
"Distribution" shall mean the distribution by CPC to its public
shareholders of the stock of Corn as more particularly described in the
Distribution Agreement and any transactions relating thereto.
"Distribution Agreement" shall have the meaning described in the above
preamble.
"Distribution Date" shall be the date on which the Distribution occurs.
"Foreign Distributed Entity" shall mean a newly created foreign company
that will conduct corn refining business operations after the Applicable
Foreign Distribution Date, and that will be owned by Corn after the later of
the Distribution Date or the Applicable Foreign Distribution Date.
"Foreign Distributing Entities" shall mean the foreign CPC Subsidiaries
that prior to the Applicable Foreign Distribution Date conduct both corn
refining business operations and consumer foods business operations in a single
entity.
5
<PAGE> 8
"Foreign Distributing Entity Return" shall mean any foreign Tax return or
amendment thereof of a Foreign Distributing Entity.
"IRS" shall mean the Internal Revenue Service.
"IRS Penalty Rate" shall mean the rate of interest imposed from time to
time on underpayments of income Tax pursuant to Code section 6621.
"IRS Ruling" shall mean the ruling issued by the IRS which states the tax
treatment of the Distribution and related transactions.
"Other Corn Returns" shall have the meaning described in Section 2.11
below.
"Other CPC Returns" shall have the meaning described in Section 2.10
below.
"Person" shall mean any natural person, corporation, business trust, joint
venture, association, company, partnership or government, or any agency or
political subdivision thereof.
"Tax" shall mean all federal, state, local and foreign gross or net
income, gross receipts, sales, use, ad valorem, VAT, GST, franchise, profits,
license, withholding, payroll, employment, excise, transfer, recording,
severance, stamp, occupation, premium, property, environmental, custom duty, or
other tax, governmental fee or other like assessment or charge of any kind
whatsoever, together with any interest and any penalty, addition to tax or
additional amount imposed by any governmental authority responsible for the
imposition of any tax.
"Tax Indemnification Agreement" shall mean the Tax Indemnification
Agreement dated of even date herewith between CPC and Corn.
"Taxing Authority" shall mean any governmental authority responsible for
the imposition of any Tax.
6
<PAGE> 9
"Temporary Differences" attributable to any entity shall mean (a) any
single item of income or deduction in a CPC Return or any Foreign Distributing
Entity Return in respect of any Tax period that should reverse in one or more
subsequent Tax periods assuming proper Tax treatment and no change in law or in
the Tax accounting policies of such entity (each an "Originating Temporary
Difference") or (b) the partial or complete reversal of an Originating
Temporary Difference.
ARTICLE 2
TAX RETURN FILING
SECTION 2.01. CPC Consolidated Returns. CPC shall prepare and file with
the IRS all CPC Consolidated Returns required to be filed by CPC after the
Distribution Date. CPC shall make all decisions relating to the preparation
and filing of such returns (including, without limitation, the manner in which
any item of income, gain, loss, deduction or credit shall be reported) and
shall inform Corn of any such decisions that might materially affect a Corn
Return. CPC shall have the sole right to determine the elections that will be
made pursuant to the Code on behalf of any member of CPC Group and shall inform
Corn of any such elections that may materially affect a Corn Return. Corn
further agrees that it will, and will compel the Corn Domestic Companies to,
file or join in the filing of such authorizations, elections, consents and
other documents, and take such other actions as may be necessary or
appropriate, in the opinion of CPC, to carry out the purposes and intent of
this Section 2.01, provided that such actions are not inconsistent with this
Agreement or the Tax Indemnification Agreement. Corn shall furnish CPC at
least thirty (30) days before the due date (excluding extensions) of any such
CPC Consolidated Return all information necessary for CPC to complete the CPC
Consolidated
7
<PAGE> 10
Return. Any such information requested by CPC shall be consistent with current
practices and applicable law and regulations. Corn shall also furnish CPC work
papers and other such information and documentation as may be reasonably
requested by CPC with respect to the Corn Companies.
SECTION 2.02. Corn F.I.T. Returns. Corn shall prepare and file with the
IRS all Corn F.I.T. Returns required to be filed by Corn or any member of the
Corn Group (whether said returns are filed on a consolidated basis or
otherwise) for all Tax periods beginning on or after the Distribution Date
(including any short-period returns). Subject to the provisions of Section
2.15 hereof, Corn shall make all decisions relating to the preparation and
filing of such returns (including, without limitation, the manner in which any
item of income, gain, loss, deduction or credit shall be reported). Subject to
the provisions of Section 2.15 hereof, Corn shall have the right to determine
the elections that will be made pursuant to the Code on behalf of any member of
Corn Group.
SECTION 2.03. CPC State or Local Returns. CPC will prepare and file all
state and local income or franchise Tax returns and any amendments thereto
which are required to be filed by CPC after the Distribution Date and which
include the Corn Division (together with such returns filed prior to the
Distribution Date, "CPC State or Local Returns"). CPC shall make all decisions
relating to the preparation and filing of such returns, and shall inform Corn
of any such decisions that may materially affect a Corn Return. Corn shall
furnish CPC at least thirty (30) days before the due date (excluding
extensions) of any such CPC State or Local Return with a final copy of the
information necessary for CPC to complete such CPC State or Local Return.
8
<PAGE> 11
Corn shall also furnish CPC work papers and other such information and
documentation as may be reasonably requested by CPC.
SECTION 2.04. Corn State or Local Returns. Each Corn Domestic Company
will prepare and file all respective state and local income or franchise Tax
returns and any amendments thereto which are required to be filed by such party
after the Distribution Date, and not otherwise described in Section 2.03 above
(herein, together with such returns filed prior to the Distribution Date, "Corn
State or Local Returns"), except that CPC shall prepare all such Corn State or
Local Returns required to be filed after the Distribution Date for Tax periods
ending on or before, or beginning before and ending after, the Distribution
Date. Subject to the provisions of Section 2.15 hereof, each Corn Domestic
Company shall make all decisions relating to the preparation and filing of such
returns.
SECTION 2.05. CPC Salaried Employee Returns. CPC shall prepare and file
all employment Tax returns required to be filed by CPC after the Distribution
Date, and any amendments thereto, relating to salaried employees of CPC who
provided services directly to the Corn Division on or prior to the Distribution
Date, for all Tax periods ending on or before, or beginning before and ending
after, the Distribution Date (herein, together with such returns filed prior to
the Distribution Date, the "CPC Salaried Employee Returns"). CPC shall make
all decisions relating to the preparation and filing of such returns, and shall
inform Corn of any such decisions that may materially affect a Corn Return.
Corn shall furnish CPC at least thirty (30) days before the due date (excluding
extensions) of any such CPC Salaried Employee Return all information necessary
for CPC to complete the CPC Salaried Employee Return. Corn shall also furnish
CPC work papers and other such information and documentation as may be
reasonably
9
<PAGE> 12
requested by CPC with respect to the completion of any CPC Salaried Employee
Return for any Tax period or portion thereof preceding the Distribution Date.
SECTION 2.06. CPC Hourly Employee Returns. Corn, subject to the
provisions of Section 2.15 hereof, shall prepare and CPC shall file all
employment Tax returns and any amendments thereto that are required to be filed
by CPC after the Distribution Date for Tax periods ending on or before, or
beginning before and ending after, the Distribution Date relating to hourly
employees of CPC who provided services directly to the Corn Division on or
prior to the Distribution Date (herein, together with such returns filed prior
to the Distribution Date, the "CPC Hourly Employee Returns"). CPC shall have
ultimate authority to make all decisions relating to the preparation and filing
of such returns, and Corn shall comply with all such decisions of CPC relating
to the preparation of such returns. CPC shall inform Corn of any such decision
that may materially affect a Corn Return. Corn shall furnish CPC at least
thirty (30) days before the due date (including extensions) completed copies of
any such CPC Hourly Employee Returns. Corn shall also furnish CPC work papers
and other such information and documentation as may be reasonably requested by
CPC with respect to the completion of any CPC Hourly Employee Returns for any
such Tax period.
SECTION 2.07. Corn Employee Returns. Each Corn Domestic Company will
prepare and file all respective employment Tax returns and any amendments
thereto that are required to be filed by such entities after the Distribution
Date, (herein, together with such returns filed prior to the Distribution Date,
"Corn Employee Returns"), except that with respect to any Corn Employee Returns
which were prepared by CPC for periods prior to the Distribution Date. CPC
shall prepare such Corn Employee Returns due after the Distribution Date for
Tax
10
<PAGE> 13
periods ending on or before, or beginning before and ending after, the
Distribution Date. Subject to the provisions of Section 2.15 hereof, each Corn
Domestic Company shall make all decisions relating to the preparation and
filing of its returns.
SECTION 2.08. CPC Sales, Use and Property Tax Returns. Corn, subject to
the provisions of Section 2.15 hereof, shall prepare and CPC shall file all
sales, use and property Tax returns and any amendments thereto that are
required to be filed by CPC after the Distribution Date for all Tax periods
ending on or before, or beginning before and ending after, the Distribution
Date relating to sales, use and property Taxes levied upon property or
transactions of the Corn Division (herein, together with such returns filed
prior to the Distribution Date, the "CPC Sales, Use and Property Tax Returns").
CPC shall have ultimate authority to make all decisions relating to the
preparation and filing of such returns, and Corn shall comply with all such
decisions of CPC relating to the preparation of such returns. CPC shall inform
Corn of any such decisions that may materially affect a Corn Return. Corn
shall furnish CPC at least thirty (30) days before the due date (including
extensions) completed copies of any such CPC Sales, Use and Property Tax
Returns. Corn shall also furnish CPC work papers and other such information
and documentation as may be reasonably requested by CPC with respect to the
completion of any CPC Sales, Use and Property Tax Returns for any Tax period
preceding or including the Distribution Date.
SECTION 2.09. Corn Sales, Use and Property Tax Returns. Each Corn
Domestic Company will prepare and file all respective sales, use and property
Tax returns and any amendments thereto that are required to be filed by such
party after the Distribution Date relating to sales, use and property Taxes
levied upon such entity's property or transactions involving such
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entity's property (herein, together with such returns filed prior to the
Distribution Date, "Corn Sales, Use and Property Tax Returns"). Subject to the
provisions of Section 2.15 hereof, each Corn Domestic Company shall make all
decisions relating to the preparation and filing of its returns.
SECTION 2.10. Other CPC Returns. CPC shall prepare and file with the
applicable Taxing Authorities all other Tax returns and any amendments thereto
required to be filed by CPC after the Distribution Date with respect to the
business and operations of the Corn Division for all Tax periods ending on or
before, or beginning before and ending after, the Distribution Date and that
are not otherwise described in this Article 2 (herein, together with all such
returns filed prior to the Distribution Date, the "Other CPC Returns"), except
that Corn shall prepare, and CPC shall file, any Other CPC Return required to
be filed by CPC after the Distribution Date with respect to such Tax periods,
that, prior to the Distribution Date, had been prepared by the Corn Division.
CPC shall make all decisions relating to the preparation and filing of all such
returns, and Corn shall comply with all such decisions of CPC relating to the
preparation of such returns. CPC shall inform Corn of any such decision that
may materially affect a Corn Return. Corn shall furnish CPC at least thirty
(30) days before the due date (excluding extensions) of any such Other CPC
Return all information necessary for CPC to complete any Other CPC Returns.
Additionally, Corn will furnish completed copies of any Other CPC Return
prepared by Corn. Corn shall also furnish CPC work papers and other such
information and documentation as may be reasonably requested by CPC with
respect to the completion of any Other CPC Return for any Tax period or portion
thereof preceding the Distribution Date.
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SECTION 2.11. Other Corn Returns. Each Corn Domestic Company will
prepare and file all other Tax returns and any amendments thereto that are
required to be filed by such party after the Distribution Date that are not
otherwise described in this Article 2 (herein, together with such returns filed
prior to the Distribution Date, "Other Corn Returns"). Subject to the
provisions of Section 2.15 hereof, each Corn Domestic Company shall make all
decisions relating to the preparation and filing of such returns.
SECTION 2.12. Foreign Distributing Entity Returns. Except as otherwise
provided in an agreement between a Foreign Distributing Entity and a Foreign
Distributed Entity, the Foreign Distributing Entity will prepare and file all
foreign Tax returns and any amendments thereto which are required to be filed
by the Foreign Distributing Entity after the Applicable Foreign Distribution
Date for all Tax periods which include the operations conducted before or as of
the Applicable Foreign Distribution Date of the corn refining division of the
Foreign Distributing Entity (herein, together with such returns filed prior to
the Applicable Foreign Distribution Date, "Foreign Distributing Entity
Returns"). The Foreign Distributing Entity shall make all decisions relating
to the preparation and filing of such returns and shall inform the Foreign
Distributed Entity of any such decision that may materially affect a return
filed by such entity after the Applicable Foreign Distribution Date. The
Foreign Distributed Entity shall furnish the Foreign Distributing Entity at
least thirty (30) days before the due date (excluding extensions) of any such
Foreign Distributing Entity Return with a final copy of the information
necessary for the Foreign Distributing Entity to complete such Foreign
Distributing Entity Return. The Foreign Distributed Entity shall also furnish
the Foreign Distributing Entity
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work papers and other such information and documentation as may be reasonably
requested by the Foreign Distributing Entity.
SECTION 2.13. Corn Foreign Returns. Each foreign Corn Company will
prepare and file all respective foreign Tax returns and any amendments thereto
which are (i) not otherwise described in Section 2.12 above and (ii) with
respect to each Foreign Distributed Entity, required to be filed by such party
for all Tax periods beginning on or after the Applicable Foreign Distribution
Date or, with respect to every other foreign Corn Company, required to be filed
by such party for all Tax periods ending before, on or after the Distribution
Date ("Corn Foreign Returns"). A foreign Corn Company (other than a Foreign
Distributed Entity) may request a foreign CPC Company, if such foreign CPC
Company is better suited, to prepare the foreign Tax returns due after the
Distribution Date for any Tax periods of the foreign Corn Company that end on
or before, or begin before and end after, the Distribution Date. Subject to
the provisions of Section 2.15 hereof, the foreign Corn Company shall make all
decisions relating to the preparation and filing of all Corn Foreign Returns.
SECTION 2.14. Designation of Agent. Corn hereby irrevocably designates
CPC, and will cause each applicable Corn Company to irrevocably designate, CPC,
or, as applicable, the respective Foreign Distributing Entity, as its agent,
coordinator, and administrator for the purpose of taking any and all actions
(including the execution of waivers of applicable statutes of limitation)
necessary or incidental to the filing of (i) a CPC Return, or a Foreign
Distributing Entity Return or (ii) an amended CPC Return or Foreign
Distributing Entity Return or (iii) an amended Corn Return, filed with respect
to a Corn Return (other than a Corn Foreign Return), filed prior to the
Distribution Date, in order to make any claim for refund (even though an item
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or Tax attribute giving rise to an amended return or refund claim arises after
the Distribution Date or, as appropriate, the Applicable Foreign Distribution
Date), credit or offset of Tax or any other proceedings relating to any Tax
period or portion thereof ending prior to the Distribution Date or as
appropriate, the Applicable Foreign Distribution Date. Notwithstanding the
previous sentence, Corn shall not designate CPC as its agent with respect to
any amended CPC Return, or claim for refund, relating to any assessment of
property taxes on real property of the Corn Division for any period prior to
the Distribution Date. CPC, as agent, or when applicable, the Foreign
Distributing Entity, as agent, shall be responsible to see that all such
administrative matters relating thereto shall be handled promptly and
appropriately. CPC, or, when applicable, the Foreign Distributing Entity shall
inform and consult with Corn or the Foreign Distributed Entity prior to taking
any action on behalf of, or which will have any material impact on, any of the
Corn Companies, including, without limitation, strategies relating to waivers
of any statute of limitations.
SECTION 2.15. Post-Distribution Date Returns and Position--No
Inconsistent Positions. No Corn Company will knowingly treat any item in a
Corn Return filed by a Corn Company, or CPC Return prepared by a Corn Company
after the Distribution Date, in a manner inconsistent with the treatment of the
same item in a CPC Return, a Foreign Distributing Entity Return or any Tax
return filed by a CPC Company (including a CPC Company that will become solely
a Corn Company after the Distribution Date). CPC will inform Corn of any
changes or amendments after the Distribution Date to any CPC Return or any
Foreign Distributing Entity Return or other Tax return filed by a CPC Company
that would affect any item in a Corn Return. CPC will, or if applicable, cause
a CPC Company to, provide any assistance reasonably
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requested by a Corn Company in satisfying its obligations under this Section
2.15. If requested by Corn, CPC will review any Corn F.I.T. Return prepared by
a Corn Company with respect to its first Tax period ending after the
Distribution Date; provided that said review shall be a desk review on CPC's
premises consistent in manner and scope with the review that CPC's senior Tax
Department management performs in respect of CPC Returns. It is understood
that any such review of a Corn F.I.T. Return pursuant to this Section 2.15
would be undertaken strictly as a courtesy to Corn, and CPC shall have no
liability to Corn or any Corn Company as a result of any such review. No such
review of any Corn F.I.T. Return will waive any obligations or liabilities of
any Corn Company to CPC under this Agreement.
ARTICLE 3
TAX LIABILITY
SECTION 3.01. CPC Liability. Except to the extent otherwise provided
herein and in the Tax Indemnification Agreement, the CPC Companies shall be
liable for and indemnify Corn and each Corn Company against all costs, Taxes
and other liabilities incurred in respect of (i) all CPC Returns, (ii) all
Foreign Distributing Entity Returns, (iii) each Corn Return for which Corn or a
Corn Company, pursuant to Section 2.14, has designated CPC, as its agent in
filing an amended Corn Return, (iv) any other Tax return (other than a Corn
Return) required to be filed by CPC, a Foreign Distributing Entity or any other
CPC Company (provided that such company would not be a Corn Company following
the Distribution Date), with respect to any Tax period beginning before, on or
after the Distribution Date.
SECTION 3.02. Corn Liability. Except to the extent otherwise provided
herein and in the Tax Indemnification Agreement, the Corn Companies shall be
liable for and
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indemnify CPC and each CPC Company against (i) all costs, Taxes and other
liabilities incurred in respect of all Corn Returns other than Corn Returns for
which Corn or a Corn Company, pursuant to Section 2.14, has designated CPC as
its agent in filing an amended Corn Return (ii) notwithstanding any other
provision hereof, all costs, Taxes and other liabilities incurred by CPC or any
CPC Company as a result of a violation by Corn or any Corn Company of Section
2.15 and (iii) notwithstanding any other provision hereof, all costs, Taxes and
other liabilities incurred by CPC, Corn, any CPC Company or any Corn Company,
after the Distribution Date in respect of any assessment of property tax
referred to in Section 7.02(c)(ii) or any refund thereof referred to in Section
6.01(b).
ARTICLE 4
POST-DISTRIBUTION CARRYBACKS OF TAX BENEFITS
SECTION 4.01. Carryback Provisions. Corn shall be entitled to any refund
for any Tax obtained by CPC (or any member of the CPC Group) as a result of the
carryback of losses or credits of any member of the Corn Group from any Tax
period beginning on or after the Distribution Date to a CPC Consolidated Return
for any CPC Consolidated Return Period, provided that CPC approves in writing
such carryback. Such refund is limited to the net amount received (by refund,
offset against other Taxes or otherwise), net of any net Tax cost incurred by
CPC or a CPC Company resulting from such refund, and shall be paid whenever
payment is received from a Taxing Authority. If such approval is not granted
by CPC, Corn may elect to carryback such losses or credit in which event CPC
shall pay Corn the amount to which it would be entitled under the preceding
sentence reduced by an amount equal to any CPC Tax detriment which may be
incurred in any Tax period resulting from such carryback; provided that CPC
will
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not be obligated to make any payment to Corn in respect of any carryback that,
in the aggregate, is less than $50,000. When and if any CPC Tax detriment is
reduced, CPC shall pay the amount of such reduction to Corn. If CPC shall have
paid a refund to Corn in respect of a carryback permitted hereunder, and in a
subsequent Tax period, CPC shall suffer a Tax detriment by reason of such
carryback (that was not contemplated in the computation of the amount refunded
to Corn), Corn shall compensate CPC, on demand, for the full amount of such Tax
detriment. The application of any such carrybacks by Corn and/or any other
current or former member of the CPC Group shall be in accordance with the Code
and the consolidated return regulations promulgated thereunder. Corn shall
indemnify CPC for any costs and liabilities including interest and penalties
arising out of an audit by the IRS of the carryback of any item under this
paragraph. Upon request by Corn, CPC shall advise Corn of any estimate of the
Tax detriment it projects will be associated with any carryback of losses or
credits of a member of the Corn Group. Notwithstanding this Section 4.01, Corn
and any member of the Corn Group shall have the right, in its sole discretion,
to make any election, including the election under Section 172(b)(3) of the
Code, which would eliminate or limit the carryback of any loss or credit to any
Tax period ending before or including the Distribution Date.
ARTICLE 5
POST-DISTRIBUTION CARRYOVERS OF TAX BENEFITS AND ATTRIBUTES
SECTION 5.01. CPC Group Items. CPC shall notify Corn as soon as
practicable after the Distribution Date of any carryover item which may be
partially or totally attributed to and carried over by a Corn Company and will
notify Corn of subsequent adjustments which may affect such carryover item.
CPC and Corn each agree to compute their respective Tax liabilities,
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and the Tax liabilities of their Affiliates, for Tax years after the
Distribution Date consistent with these determinations.
SECTION 5.02. Earnings and Profits. Based on CPC's determination, CPC
shall notify Corn as soon as practicable after the Distribution Date of the
amount of earnings and profits and associated Tax attributes, if any, which are
allocated to a Corn Company and will notify Corn of subsequent adjustments
which may affect the amount of earnings and profits and associated Tax
attributes, if any, of a Corn Company. CPC and Corn each agree to compute
their respective Tax liabilities, and the Tax liabilities of their Affiliates,
for Tax years after the Distribution Date consistent with this determination.
ARTICLE 6
ADJUSTMENTS
SECTION 6.01. CPC Returns and Foreign Distributing Entity Returns. (a)
Except as provided in the Tax Indemnification Agreement, if any Tax liability
or refund in respect of any CPC Company (or a Corn Company that prior to the
Distribution Date was a CPC Company) arises as a result of an amended filing, a
protest, an audit by the IRS or other Taxing Authority, or for any other
reason, and such Tax liability or refund relates to (i) a CPC Return filed in
respect of any Tax period commencing before or including the Distribution Date,
(ii) a Foreign Distributing Entity Return in respect of any Tax period
commencing before or including the Applicable Foreign Distribution Date, or
(iii) a Corn Return for which Corn or a Corn Company, pursuant to Section 2.14,
has designated CPC as its agent in filing an amended Corn Return, and such
liability:
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(x) does not relate to Temporary Differences attributable to a Corn
Company, then CPC or a Foreign Distributing Entity, as applicable, shall be
liable for and shall pay any Tax liabilities and any interest and penalties
associated therewith and CPC or a Foreign Distributing Entity, as applicable,
shall receive any Tax refunds and any interest associated therewith.
(y) does relate to Temporary Differences attributable to a Corn Company
and such Taxing Authority:
(i) acknowledges directly or indirectly to the satisfaction of
CPC or, as applicable, the Foreign Distributing Entity that CPC or,
as applicable, the Foreign Distributing Entity may solely utilize such
Temporary Differences in computing Tax liability, benefit or refunds in
respect of post-Distribution Date (or Applicable Foreign Distribution Date)
Tax periods, CPC or the Foreign Distributing Entity, as applicable, shall
be liable for and shall pay any such Tax liability and any interest and
penalties associated with such Tax liability and shall receive any such
benefit or refunds and any interest associated therewith; or
(ii) does not acknowledge directly or indirectly to the
satisfaction of CPC or, as applicable, the Foreign Distributing Entity
that CPC or as applicable, the Foreign Distributing Entity may solely
utilize such Temporary Differences in computing Tax liability, benefit or
refunds in respect of post-Distribution Date (or Applicable Foreign
Distribution Date) Tax periods, the party hereto against which the issue
giving rise to such Tax liability is directed shall be liable for and shall
pay any such Tax liability and any interest and penalties associated with
such Tax
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liability and shall receive any such benefit or refunds and any interest
associated therewith;
(b) Notwithstanding any other provision hereof, Corn shall be entitled
to, and shall receive, all refunds of property tax assessed on real property of
the Corn Division, provided that Corn shall be liable for and shall indemnify
and hold CPC harmless against any Tax in respect of such refunds.
SECTION 6.02. Corn Returns. Except as described in the Tax
Indemnification Agreement, if any Tax liability or refunds in respect of any
Corn Company arises as a result of an amended filing, a protest, an audit by
the IRS or other Taxing Authority, or for any other reason, and such Tax
liability or refund relates to a Corn Return other than for a Corn Return for
which Corn or a Corn Company, pursuant to Section 2.14, has designated CPC as
its agent in filing an amended Corn Return, Corn or a Corn Company shall be
liable for and shall pay any Tax liabilities and any interest and penalties
associated therewith and Corn or a Corn Company shall receive any such Tax
refunds and any interest associated therewith.
SECTION 6.03. Expenses. Any out-of-pocket expenses (e.g., travel
expenses, accountants' fees, attorneys' fees, experts' fees, etc.) incurred by
a CPC Company in connection with proposed or actual liabilities or refunds of
the type contemplated in this Article 6 shall be paid by the entities to which
such liabilities or refunds are allocated hereunder. In cases where such
expenses relate to more than one CPC Company or more than one party hereto, the
parties affected shall allocate such expenses in proportion to the amount of
proposed liabilities or refunds allocable to each, or by some other reasonable
method which results in an equitable allocation of such expenses.
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ARTICLE 7
CONTESTS
SECTION 7.01. CPC, CPC Company, and Foreign Distributing Entity Contests;
Notification and Communication. If either party, or an Affiliate of either
party, receives a notice of audit by any Taxing Authority with respect to (i)
the Corn Division with regard to any CPC Return, (ii) a Corn Company with
regard to a CPC Consolidated Return or any Corn Return for which CPC is
designated as agent, (iii) a foreign Corn Company with regard to any Foreign
Distributing Entity Return, or (iv) a Corn Foreign Return, other than a Corn
Foreign Return which is filed after the Distribution Date and in respect of
which the matter under audit would not affect a Corn Foreign Return filed prior
to the Distribution Date, such party shall promptly notify the other party of
such event. Thereafter, CPC or Corn, as the case may be, shall keep the
others, on a timely basis, informed of all material developments in connection
with audits, administrative proceedings, litigation and other similar matters
that may affect their respective Tax liabilities. Failure or delay in
providing notification hereunder shall not relieve any party hereto of any
obligation hereunder in respect of any particular Tax liability, except to the
extent that such failure or delay restricts the ability of such party to
contest such liability administratively or in the courts and otherwise
materially and adversely prejudices such party.
SECTION 7.02. Group Contests; Control and Management of Claims. (a) As
among the parties hereto, CPC shall control the prosecution of any audits and
any contests in respect of any claim made by a Taxing Authority on audit or in
a related administrative or judicial proceeding or in respect of any refund or
credit of Taxes, and shall make and prosecute other claims for refunds with
respect to any Tax liability, that relates to a CPC Return (other than
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in respect of an assessment of property taxes referred to in Section
7.02(c)(ii) or a Foreign Distributing Entity Return or any Corn Return for
which CPC is designated as an agent). Corn may participate in such audits or
contests to the extent that CPC in its sole discretion shall deem appropriate,
provided, however, that CPC shall have the sole right to control, at CPC's
expense, the prosecution of any audit, refund claim or related administrative
or judicial proceeding with respect to those matters which could affect the CPC
Group's Tax liability. CPC shall be entitled to participate in any audit not
described in this section 7.02(a) (and related contests) for which it is
entitled to receive notice under Section 7.01, including without limitation any
matter referred to in Section 7.02(c)(ii).
(b) With respect to a Tax liability or refund that, pursuant to the
provisions hereof, may be attributable to (i) the Corn Division with regard to
any CPC Return, (ii) a Corn Company with regard to a CPC Consolidated Return,
or a Corn Return for which CPC is designated as an agent, or (iii) a foreign
Corn Company with respect to any Foreign Distributing Entity Return, if CPC
elects not to exercise its rights of control under subsection (a) hereof, and
if Corn so requests, CPC shall contest, control and allow Corn to participate
to the extent that CPC in its sole discretion shall deem appropriate, all at
Corn's expense, or in the alternative shall permit Corn at its own expense to
contest and control a claim made by a Taxing Authority on audit or in a related
administrative or judicial proceeding or by appropriate claim for refund or
credit of Taxes (or to make and prosecute other claims for refund). Corn shall
pay all out-of-pocket and other costs relating to such contests, including but
not limited to fees for attorneys, accountants, expert witnesses or other
consultants.
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(c) With respect to a Tax liability or refund that, pursuant to the
provisions hereof, may be attributable to (i) Corn or a Corn Company with
regard to a Corn Return, other than a Corn Return with respect to which CPC is
designated as an agent, (ii) the Corn Division with respect to an assessment of
property tax on real property of the Corn Division for any period prior to the
Distribution Date, or (iii) a foreign Corn Company with respect to any Corn
Foreign Return, Corn, a Corn Company or a foreign Corn Company shall control at
its own expense the prosecution of any audits and any contests in respect of
any claim made by a Taxing Authority on audit or in a related administrative or
judicial proceeding or by appropriate claim for refund or credit of Taxes (or
to make and prosecute other claims for refund).
(d) If asserted liabilities unrelated to the matters contemplated
herein become grouped with contests arising hereunder, the parties shall use
their respective best efforts to cause the contest arising hereunder to be the
subject of a separate proceeding.
(e) With respect to matters arising hereunder controlled by CPC, and
where deemed necessary by CPC, Corn shall compel the relevant Corn Company to
authorize by appropriate powers of attorney such Persons as CPC shall designate
to represent such Corn Company with respect to such matters. The parties
hereto shall reasonably cooperate with one another in a timely manner with
respect to any matter arising hereunder.
ARTICLE 8
INFORMATION AND COOPERATION; BOOKS AND RECORDS
SECTION 8.01. General. (a) Corn shall deliver to CPC, as soon as
practicable after CPC's request, and CPC shall deliver to Corn as soon as
practicable after Corn's request such information and data concerning the
operations conducted by the Corn Companies or the
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CPC Companies, respectively and make available such knowledgeable employees of
the Corn Companies or the CPC Companies respectively as CPC or Corn, as the
case may be, may reasonably request, including providing the information and
data required by CPC's or Corn's customary internal Tax and accounting
procedures, in order to enable each of CPC or Corn, as the case may be, to
complete and file all Tax forms or reports that it may be required to file with
respect to the activities of the Corn Companies for Tax periods ending on,
prior to or including the Distribution Date, to respond to audits by any Taxing
Authorities with respect to such activities, to prosecute or defend any
administrative or judicial proceeding, and to otherwise enable CPC or Corn, as
the case may be, to satisfy its accounting and Tax requirements. Corn shall
provide office space to IRS and other Tax Authorities when they are conducting
on-site audits, and to employees and representatives of CPC or Corn, as the
case may be, for so long as the Tax period for which a CPC Return, a Foreign
Distributing Entity Return or a Corn Return for which CPC has been designated
as an agent, is open to assessment of additional Taxes or an assessment with
respect to such period is being contested. CPC shall deliver to Corn as soon
as practical after Corn's request, such information and data concerning any Tax
attributes which were allocated to a Corn Company that is reasonably necessary
in order to enable Corn to complete and file all Tax forms or reports that it
may be required to file with respect to such activities of the Corn Companies
from and after the Distribution Date, to respond to audits by any Tax
Authorities with respect to such activities, to prosecute or defend claims for
Taxes in any administrative or judicial proceeding, and to otherwise enable
Corn to satisfy its accounting and Tax requirements. In addition, CPC shall
make available to Corn, and Corn shall make available to CPC, its knowledgeable
employees for such purpose.
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(b) Until the expiration of the applicable statute of limitations
(including any extension or waiver thereof), each Corn Company shall retain all
books, records, documentation or other information in its possession relating
to any CPC Return, any Foreign Distributing Entity Return, and any Corn Return,
and each CPC Company shall retain all books, records, documentation or other
information in its possession relating to any Corn Return. Upon the expiration
of any statute of limitations, the foregoing information may be destroyed or
disposed of provided that (i) the party in possession of such books, records,
documentation or other information has provided sixty (60) days' prior written
notice to the other party, describing in reasonable detail the documentation to
be destroyed or disposed of and (ii) such other party has not removed or made
arrangements for removing of such materials.
ARTICLE 9
GENERAL PROVISIONS
SECTION 9.01. Effectiveness. The effectiveness of this Agreement and the
obligations and rights created hereunder are subject and conditioned upon the
completion of the Distributions.
SECTION 9.02. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given or made (and
shall be deemed to have been duly given or made upon receipt) by delivery in
person, by courier service (including overnight delivery), by cable, by
telecopy confirmed by return telecopy, by telegram, by telex or by registered
or certified mail (postage prepaid, return receipt requested) to the respective
parties at the addresses (or at such other address for a party as shall be
specified in a notice given in accordance with this Section 9.02) listed below:
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(a) To CPC:
P.O. Box 8000
International Plaza
Englewood Cliffs, NJ 07632
Telecopy: (201) 894-2210
Attn: Vice President-Taxes
with a copy to: General Counsel
(b) To Corn:
P.O. Box 345
6500 Archer Road
Argo, Illinois 60501
Telecopy: (708) 563-6561
Attn: Chief Financial Officer
with a copy to: General Counsel
SECTION 9.03. Complete Agreement; Construction. This Agreement is
intended to provide rights, obligations and covenants in respect of Taxes and,
toget