FORM OF
TAX INDEMNIFICATION AGREEMENT
This TAX INDEMNIFICATION AGREEMENT ("Agreement") is made
and entered into as of the _______ day 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 within the meaning of Code Section 1504 which
includes CORN (all capitalized terms not otherwise defined shall
be as defined in Section 5.07 hereof); and
WHEREAS, CPC intends to transfer to CORN its corn refining
business, including all stock owned by it in domestic and foreign
corporations engaged in the corn refining business, in exchange
for stock of CORN, and distribute to its shareholders stock
constituting control of CORN, within the meaning of Code Section
368(c) (the "Spinoff"); and
WHEREAS, in connection therewith, it will be necessary for
certain foreign corporations owned by CPC to engage in Foreign
Spinoffs; and
WHEREAS, the IRS has issued the IRS Rulings which state the
United States federal income tax treatment of the Spinoff and the
Foreign Spinoffs, which tax treatment also shall be relied upon
and reported by CPC for all applicable United States state and
local Tax purposes
(such United States federal income tax and state and local
Tax treatment to be referred to hereinafter as the "Tax
Treatment"); and
WHEREAS, the parties hereto are entering into this
Agreement to indemnify CPC as hereinafter provided in the event
the Spinoff or any of the Foreign Spinoffs shall fail to qualify
for the Tax Treatment due to actions by CORN or its Affiliates.
NOW, THEREFORE, in consideration of the mutual agreements,
provisions and covenants contained in this Agreement, the parties
hereby agree as follows:
ARTICLE 1
REPRESENTATIONS AND COVENANTS
SECTION 1.01. Representations.
(a) CORN hereby makes the following representations to CPC:
(i) CORN has reviewed the submissions to the IRS in connection
with the IRS Rulings and, to the best of CORN's knowledge, all
statements and representations therein concerning CORN, its
business, operations, capital structure or organization, are
complete and accurate in all material respects; (ii) CORN shall,
and shall cause each of its Affiliates to, comply with each
statement concerning CORN and its Affiliates that is designated
as a "representation" in the submissions or the IRS Rulings;
(iii) CORN concurs with all representations and statements made
in the submissions. All of the above
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representations shall survive the Spinoff Date until the
expiration of all statute of limitations (inclusive of
extensions) in respect of taxable periods for which Taxes might
be imposed or otherwise assessed in respect of the Spinoff and
all of the Foreign Spinoffs.
(b) CORN hereby represents and warrants to CPC that neither
CORN nor any Foreign Spinco nor any of their respective
Affiliates has any present intention to cease to engage in its
Active Business (as defined in Section 1.02(a)(i)), undertake, or
permit to be undertaken, any action that would result in a
violation of any of CORN's covenants in Section 1.02(a)(ii), or
undertake, authorize, approve, recommend, permit, facilitate,
enter into any contract with respect to, or consummate, any
transaction described in Section 1.02(a)(iii).
SECTION 1.02. Covenants.
(a) CORN covenants and agrees with CPC that during the Restricted
Period:
(i) CORN and each Foreign Spinco will continue to engage in
the active conduct, within the meaning of section 1.355-3(b) of
the Regulations, of the corn refining business, as described in
the Ruling Request, which business, as actively conducted, shall
be referred to hereinafter as such corporation's Active Business.
(ii) CORN and each Foreign Spinco will (A) continue to
manage and to own directly assets which represent at least fifty
percent (50%) of the Gross Assets which such corporation
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managed and owned directly immediately after the Spinoff or the
applicable Foreign Spinoff, as the case may be; (B) continue to
manage and own (directly and indirectly through one or more
entities) assets which represent at least 50% of the Gross Assets
which such corporation managed and owned (directly and indirectly
through one or more entities) immediately after the Spinoff or
the applicable Foreign Spinoff, as the case may be; and (C) not
take any action (including the acquisition or entering into of
businesses other than extensions of its Active Business) which
would cause the fair market value of its Active Business to be
less than five percent (5%) of its total Gross Assets.
(iii) Neither CORN, nor any Foreign Spinco, nor any of
their respective directors, officers or other representatives,
will undertake, authorize, approve, recommend, permit,
facilitate, enter into any contract with respect to, or
consummate, any of the following transactions:
(A) the issuance of Common Stock (whether or not subject to
restrictions), or the issuance of any options, warrants, rights
or securities exercisable for, or convertible into, Common Stock
(collectively, the "New Stock"), whether in a single transaction
or in a series of related or unrelated transactions or otherwise,
which in the aggregate if issued (and in the case of options,
warrants, rights or securities, exercised or converted)
immediately prior to the Spinoff or the applicable Foreign
Spinoff, as the case may be, would exceed twenty percent (20%) of
the outstanding shares of Common Stock (including the New Stock)
immediately following the Spinoff or the applicable Foreign
Spinoff, as the case may be;
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(B) the issuance of any class or series of capital stock or
any other instrument (other than Common Stock (whether or not
subject to restrictions) or options, warrants, rights or
securities exercisable for, or convertible into, Common Stock)
that would constitute equity of CORN or any Foreign Spinco for
United States federal income tax purposes (such classes or series
of capital stock and other instruments being referred to herein
as "Disqualified Stock") other than pursuant to the CORN Rights
Plan;
(C) the issuance of any options, rights, warrants,
securities or similar arrangements exercisable for, or
convertible into, Disqualified Stock other than pursuant to the
CORN Rights Plan;
(D) any redemptions, purchases or other acquisitions from
shareholders of greater than 20% of the outstanding capital stock
or other equity interests in CORN or any Foreign Spinco in a
single transaction or a series of related or unrelated
transactions, except redemptions, purchases or other acquisitions
by CORN, any Foreign Spinco or any of their respective
Affiliates, of the capital stock or other equity interests of
CORN or any Foreign Spinco that satisfy all of the following
requirements: (1) there is a "sufficient business purpose"
(within the meaning of section 4.05(1)(b) of Revenue Procedure
96-30) for the transaction, (2) the stock to be redeemed,
purchased or otherwise acquired is widely held, (3) the stock
redemptions, purchases or other acquisitions will be made on the
open market, and (4) the amount of stock redemptions, purchases
or other acquisitions in a single transaction or in a series of
related or unrelated
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transactions will not exceed an amount of stock representing
twenty percent (20%) of the outstanding stock of CORN or the
applicable Foreign Spinco immediately following the Spinoff;
(E) the dissolution, merger, or complete or partial
liquidation of CORN or any Foreign Spinco or any announcement of
such action; or
(F) the waiver, amendment, termination or modification of
any provision of the CORN Rights Plan, or redemption of Preferred
Stock Purchase Rights, in connection with, or in order to permit
or facilitate, any acquisition or proposed acquisition of
Beneficial Ownership of capital stock or other equity interest in
CORN.
(b) In addition to the other representations, warranties,
covenants and agreements set forth in this Agreement, CORN and
its Affiliates will take, or refrain from taking, as the case may
be, such actions as CPC may reasonably request during the Ruling
Period as necessary to ensure that the Spinoff and the Foreign
Spinoffs qualify for the Tax Treatment, including, without
limitation, such actions as CPC determines may be necessary to
obtain and preserve the IRS Rulings or any subsequent IRS ruling
relating to the tax treatment of the Spinoff or any of the
Foreign Spinoffs on which the parties can rely. For purposes
hereof, the "Ruling Period" shall mean the period commencing on
the Spinoff Date and ending on the first anniversary of the date
on which there shall have expired all statutes of limitations
(inclusive of extensions) in respect of taxable periods for which
Taxes might be imposed or otherwise assessed in respect of the
Spinoff and all of the Foreign Spinoffs, but in no event ending
sooner than the third anniversary of the
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close of the taxable year of CPC in which the Spinoff
occurs. Without limiting the generality of the foregoing, CORN
and its Affiliates shall cooperate with CPC if CPC determines to
obtain additional IRS rulings pertaining to whether any actual or
proposed change in facts and circumstances affects the United
States federal income tax status of the Spinoff or any of the
Foreign Spinoffs. This Section 1.02(b) shall not apply after the
termination of the Restricted Period with respect to any of the
actions described in Section 1.02(a), unless (i) at the
termination of the Restricted Period, the federal income tax year
of CPC that includes the Spinoff is under examination by the
Internal Revenue Service or any successor federal income tax
authority or, at or prior to the termination of the Restricted
Period, CPC has received notice that such an examination is to
commence and (ii) CPC delivers to CORN concurrent with any
request after the termination of the Restricted Period pertaining
to an action described in Section 1.02(a), an opinion of
independent tax counsel of recognized national standing who is
experienced in the issues to be addressed and otherwise is
reasonably acceptable to CORN, that such request is reasonable;
provided that this Section 1.02(b) will not apply if the
possible adverse effect on CORN and its business from the actions
requested by CPC pursuant to this Section 1.02(b) is greater
than the possible adverse effect on CPC and its business from not
taking such actions.
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ARTICLE 2
CORN INDEMNITY OBLIGATIONS
SECTION 2.01. Tax Indemnities.
(a) Except as otherwise provided in Section 2.01(b), if
CORN, any Foreign Spinco, or any of their respective Affiliates
(collectively the "Indemnifying Party"), whether through any of
their respective directors, officers, other representatives or
otherwise, shall violate, or cause or permit to be violated, any
representation or covenant contained in Article 1, and as a
result thereof (singly or in combination with other actions of
the Indemnifying Party), the Spinoff or any of the Foreign
Spinoffs shall fail to qualify for the Tax Treatment, the
Indemnifying Party shall (jointly and severally) indemnify and
hold harmless CPC and each member of the CPC Group (collectively
the "Indemnified Party") against any and all Indemnified
Liabilities (as defined in Section 3.01(a) arising therefrom.
(b) If, following the six-month anniversary of the Spinoff
Date, CORN, any Foreign Spinco or any of their respective
Affiliates takes any action or engages in conduct prohibited by,
or resulting in the violation of any covenant in, Section 1.02(a)
(other than any action or conduct that results in an event
described in Section 2.01(c)), and prior to such action or
conduct, CORN delivers to CPC (i) a ruling from the IRS in form
and substance reasonably satisfactory to CPC, and upon which CPC
can rely, to the effect that the proposed action or conduct will
not cause the Spinoff or any of the Foreign Spinoffs to fail to
qualify for the tax treatment stated in the IRS
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Ruling or otherwise to be taxable for federal income tax
purposes, or (ii) an Opinion of Counsel, Section 2.01(a) will not
apply with respect to such action or conduct.
(c) Notwithstanding anything to the contrary set forth in
this Agreement, if, during the Restricted Period, any Person or
Group acquires Beneficial Ownership of fifty percent (50%) or
more of the Common Stock (or any other class of capital stock or
other equity interest) of CORN or any Foreign Spinco or commences
a tender or other purchase offer for the capital stock or other
equity interest of CORN or any Foreign Spinco, upon consummation
of which such Person or Group would acquire Beneficial Ownership
of fifty percent (50%) or more of the Common Stock (or any other
class of stock or other equity interest) of CORN or any Foreign
Spinco, and, as a result thereof, the Spinoff or any of the
Foreign Spinoffs shall fail to qualify for the Tax Treatment, the
Indemnifying Party shall indemnify and hold harmless the
Indemnified Party against any and all Indemnified Liabilities (as
defined in Section 3.01(a)) arising therefrom. The Indemnified
Party shall be so indemnified and held harmless under this
Section 2.01(c) without regard to whether the Indemnified Party
has received or delivered to CPC a supplemental ruling from the
IRS or an Opinion of Counsel, and without regard to whether an
acquisition of Beneficial Ownership results from a transaction
which is not prohibited under Article 1.
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ARTICLE 3
INDEMNIFIED LIABILITIES
SECTION 3.01. Definition and Calculation of Indemnified
Liabilities. For purposes of this Agreement, "Indemnified
Liabilities" shall mean any and all demands, claims, actions or
causes of action, assessments, losses, damages, liabilities,
costs and expenses, including, without limitation, interest,
penalties and reasonable attorneys' fees and expenses, imposed or
incurred, directly or indirectly on an Indemnified Party, by
reason of or resulting from the failure of the Spinoff or any of
the Foreign Spinoffs to qualify for the Tax Treatment, including
(i) any and all Taxes imposed upon or incurred by the Indemnified
Party as a result of said failure, (ii) any liability of the
Indemnified Party arising from Taxes imposed on shareholders of
CPC to the extent any shareholder or shareholders of CPC
successfully seek recourse against the Indemnified Party on
account of said failure, and (iii) any and all costs, fees and
expenses incurred in regard to any Indemnified Liability
(including, subject to Section 4.02(e), costs relating to the
contest of any Indemnified Liability). The amount of any
Indemnified Liability for a tax based on or determined with
reference to income ("Income Tax") shall be deemed to be the
amount of the tax on the gain or income of the Indemnified Party
which is subject to tax and indemnified against under Article 2,
computed at the taxing jurisdiction's highest marginal tax rate
applicable to taxable income of corporations such as the
Indemnified Party on income of the character subject to tax and
indemnified against under Article 2 for the taxable period in
which the Spinoff or the affected Foreign Spinoff, as the case
may be, occurs. If an Indemnified Party should be subject to an
Income Tax on the Indemnified Liability, the amount payable by the
Indemnifying Party to the
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Indemnified Party shall be increased by (and the
Indemnified Liability shall be deemed to include) such additional
amount necessary to place the Indemnified Party in the same cash
position it would have been in had the Indemnified Liability not
occurred, taking into account for this purpose all Income Taxes
paid or payable by the Indemnified Party with respect to such
Indemnified Liability (including such additional amount) and any
related Income Tax deductions to the Indemnified Party.
ARTICLE 4
PROCEDURAL MATTERS
SECTION 4.01. General. The parties hereto undertake and
agree that from and after such time as either shall obtain
knowledge that any representative of a taxing authority has begun
to investigate or inquire into the Spinoff or any of the Foreign
Spinoffs (whether or not such investigation or inquiry is a
formal or an informal investigation or inquiry), the party
obtaining such knowledge shall (i) notify the other party
thereof, provided that any delay by the Indemnified Party in so
notifying the Indemnifying Party shall not relieve the
Indemnifying Party of any liability hereunder (except to the
extent such delay restricts the ability of the Indemnifying Party
to contest the resulting Indemnified Liability administratively
or in the courts in accordance with Section 4.02 and the
Indemnifying Party is materially and adversely prejudiced by such
delay), (ii) consult with the other party from time to time as to
the conduct of such investigation or inquiry, (iii) provide the
other party with copies of all correspondence with such taxing
authority or any representative thereof pertaining to such
investigation or inquiry, and (iv) arrange for a
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representative of the other party to be present at all
meetings with such taxing authority or any representative thereof
pertaining to such investigation or inquiry.
SECTION 4.02. Contests.
(a) If any taxing authority shall propose in writing an
adjustment (a "Relevant Adjustment") that, if upheld, would
result in an Indemnified Liability, the party receiving such
proposed adjustment shall promptly notify the other party
thereof, provided that any delay by the Indemnified Party in so
notifying the Indemnifying Party shall not relieve the
Indemnifying Party of any liability hereunder (except to the
extent such delay restricts the ability of the Indemnifying Party
to contest the resulting Indemnified Liability administratively
or in the courts in accordance herewith and the Indemnifying
Party is materially and adversely prejudiced by such delay), and
provide the other party with copies of the portions of all
written material between such party and the taxing authority to
the extent relating solely to such Relevant Adjustment. Provided
that the Indemnifying Party shall timely (i) furnish the
Indemnified Party with evidence reasonably satisfactory to the
Indemnified Party and its independent certified public
accountants of the Indemnifying Party's ability to pay the full
amount of the Indemnified Liability on the basis of its financial
position or the provision of a letter of credit for the full
amount of the liability or other similar adequate security and
(ii) acknowledge in writing that the asserted liability is an
Indemnified Liability, the Indemnifying Party shall be entitled,
at its expense, to contest the Relevant Adjustment in its own
name, or if the Indemnifying Party does not have standing to
contest the Relevant Adjustment, in the name of the Indemnified
Party, at the administrative level.
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(b) In the event that the issues giving rise to a Relevant
Adjustment are not resolved at the administrative level and an
Indemnified Liability is imposed by the taxing authority, the
Indemnifying Party shall be entitled to contest the Indemnified
Liability beyond the administrative level, provided that the
Indemnifying Party shall acknowledge in writing that the asserted
liability is an Indemnified Liability and (i) pay the full amount
of the asserted liability to the taxing authority (in which case,
the Indemnifying Party would be entitled to pursue a claim for
refund in the appropriate judicial forum) or (ii) furnish the
Indemnified Party with evidence reasonably satisfactory to the
Indemnified Party of its ability to pay the full amount of the
Indemnified Liability which may result at the conclusion of such
contest. If requested by the Indemnified Party, such evidence
shall consist of a letter of credit in favor of the Indemnified
Party for the amount of the Indemnified Liability (or a lesser
amount agreed to by the Indemnified Party) or another comparable
means of directly providing for the payment of the Indemnified
Liability. The Indemnifying Party shall not be entitled to pursue
a contest beyond the first judicial level unless, in addition to
meeting the above requirements, the Indemnifying Party submits to
the Indemnified Party an opinion of Independent Tax Counsel
(which shall mean an independent tax counsel of recognized
national standing and experienced in the issues to be addressed
and otherwise reasonably acceptable to the Indemnified Party)
upon which the Indemnified Party may rely, to the effect that it
is more likely than not that the Indemnifying Party will prevail
on the merits in such contest, and in no event shall the
Indemnifying Party be permitted to contest the asserted liability
to the United States Supreme Court.
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(c) Subject to Section 4.02(d) and Section 4.02(f) and the
conditions of this Section 4.02(c), the Indemnifying Party shall
control any administrative level contest, but only insofar as it
relates to the Relevant Adjustment, and any contest at the
judicial level relating to an Indemnified Liability, provided
that the Indemnified Party shall be entitled to participate in
said contest and any outside party engaged in connection with
said contest shall be subject to the prior approval of the
Indemnified Party, which approval shall not be unreasonably
withheld. The Indemnifying Party shall (i) consult with the
Indemnified Party regarding the conduct of any said
contest, (ii) keep the Indemnified Party reasonably informed of
the progress of such contest, (iii) permit the Indemnified Party
and its authorized representatives to be present during the
conduct of such contest and (iv) submit to the Indemnified Party
for its approval (which shall not be unreasonably withheld) any
written protests, challenges, pleadings, briefs, memoranda or
other documents prepared prior to or during to course of such
contest by the Indemnifying Party or its counsel, and provide to
the Indemnified Party a copy of any written ruling, order or
other document resulting from said contest.
(d) If at any time during a contest controlled by the
Indemnifying Party pursuant to this Section 4.02 the Indemnifying
Party shall, after a request by the Indemnified Party, fail to
provide evidence reasonably satisfactory to the Indemnified Party
of its continued ability to pay the full amount of the
Indemnified Liability or the Indemnified Party reasonably
determines, after due investigation, that the Indemnifying Party
could not pay the full amount of the Indemnified Liability, then
the Indemnified Party may assume control of the contest upon
seven (7) days written notice.
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(e) The Indemnifying Party shall pay all out-of-pocket
expenses and other costs related to the Indemnified Liability,
including but not limited to fees for attorneys, accountants,
expert witnesses or other consultants retained by the
Indemnifying Party or the Indemnified Party, other than costs and
expenses incurred solely in the discretion of the Indemnified
Party as a participant in a contest that, at the time such costs
and expenses are incurred, is being controlled by the
Indemnifying Party pursuant to Section 4.02(c), and would not
otherwise be incurred by the Indemnifying Party. To the extent
that any such expenses and other costs have been or are paid by
an Indemnified Party, the Indemnifying Party shall promptly
reimburse the Indemnified Party therefor.
(f) The Indemnifying Party shall not pay (unless otherwise
required by a proper notice of levy and after prompt notification
to the Indemnified Party of receipt of notice and demand for
payment), settle, compromise or concede any portion of the
Indemnified Liability without the written consent of the
Indemnified Party, which consent shall not be unreasonably
withheld.
(g) Any contest relating to an Indemnified Liability which
is not controlled or which is no longer controlled by the
Indemnifying Party pursuant to Section 4.02 shall be controlled
and directed exclusively by the Indemnified Party, and any
related out-of-pocket expenses and other costs incurred by the
Indemnified Party, including but not limited to, fees for
attorneys, accountants, expert witnesses or other consultants,
shall be reimbursed by the Indemnifying Party. The Indemnified
Party shall keep the Indemnifying Party reasonably informed of
the progress of
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such contest, including the scheduling and results of
meetings with the tax authorities. The Indemnified Party will not
be required to pursue the claim in a federal district court, the
United States Court of Federal Claims or any state court, if as a
prerequisite to such court's jurisdiction, the Indemnified Party
is required to pay the asserted liability, unless the funds
necessary to invoke such jurisdiction are provided by the
Indemnifying Party.
SECTION 4.03. Time and Manner of Payment. The Indemnifying
Party shall pay to the Indemnified Party the amount of the
Indemnified Liability and any expenses or other costs indemnified
against (less any amount paid directly by the Indemnifying Party
to the taxing authority) not less than (7) business days prior to
the date payment of the Indemnified Liability is to be made by
any party to the taxing authority. Such payment shall be paid by
wire transfer of immediately available funds to an account
designated by the Indemnified Party by written notice to the
Indemnifying Party prior to the due date of such payment. If the
Indemnifying Party delays making payment beyond the due date
hereunder, such party shall pay interest on the amount unpaid at
the IRS Penalty Rate for each day and the actual number of days
for which any amount due hereunder is unpaid.
SECTION 4.04 Refunds. In connection with this Agreement,
should an Indemnified Party receive a refund in respect of
amounts paid by an Indemnifying Party to any taxing authority on
its behalf, or should any such amounts that would otherwise be
refundable to the Indemnifying Party be applied by the taxing
authority to obligations of the Indemnified Party unrelated to an
Indemnified Liability, then such Indemnified Party shall,
promptly following receipt (or
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notification of credit), remit such refund (inclusive
of any interest thereon paid by the taxing authority) to the
Indemnifying Party, net of any tax paid or payable by the
Indemnified Party with respect to the receipt of such amount.
SECTION 4.05. Cooperation. The parties shall cooperate with
one another in a timely manner in any administrative or judicial
proceeding involving any matter that may result in an Indemnified
Liability.
ARTICLE 5
GENERAL PROVISIONS
SECTION 5.01. Notices. All notices, requests, claims 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, by
cable, by telecopy, by telegram, by telex or any means of
electronic transmission with delivery confirmed (by voice or
otherwise) or by registered or certified mail (postage prepaid,
return receipt requested) to the respective parties at the
addresses listed below, or at such other address for a party as
shall be specified in a notice given in accordance with this
Section 5.01:
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To CPC or any Indemnified Party:
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy: ▇-▇▇▇-▇▇▇-▇▇▇▇
Attn: Vice President-Taxes
with a copy to: General Counsel
To CORN or any Indemnifying Party:
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: ▇-▇▇▇-▇▇▇-▇▇▇▇
Attn: Chief Financial Officer
with a copy to: General Counsel
SECTION 5.02. Miscellaneous. This Agreement shall
constitute the entire agreement between the parties hereto with
respect to the subject matter hereof and shall supersede all
prior agreements and undertakings, both written and oral, between
the parties with respect to the subject matter hereof and thereof.
This Agreement may be executed in one or more counterparts, and
by the different parties hereto in separate counterparts, each of
which when executed shall be
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deemed to be an original but all of which taken together shall
constitute one and the same agreement. This Agreement may not be
amended, or modified except by an instrument in writing signed
by, or on behalf of, the parties or by a waiver in accordance
with Section 5.03. This Agreement shall be binding upon and inure
solely to the benefit of the parties hereto and their respective
subsidiaries, and nothing herein, expressed or implied, is
intended to or shall confer upon any third parties any legal or
equitable right, benefit or remedy of any nature whatsoever under
or by reason of this Agreement.
SECTION 5.03. Waiver. The parties to this Agreement may
extend the time for the performance of any of the obligations
hereunder, and either party may waive any inaccuracies in the
representations and warranties of the other party contained
herein or in any document delivered by the other party pursuant
hereto or waive compliance with any of the agreements or
conditions of the other party contained herein. Any such
extension or waiver shall be valid only if set forth in an
instrument in writing signed by the party or parties to be bound
thereby. The waiver of any term or condition shall not be
construed as a waiver of any subsequent breach or a subsequent
waiver of the same term or condition, or a waiver of any other
term or condition, of this Agreement. The failure of any party to
assert any of its rights hereunder shall not constitute a waiver
of any such rights.
SECTION 5.04. Successors and Assigns. The provisions of
this Agreement shall be binding upon, inure to the benefit of and
be enforceable by the parties and their respective successors and
permitted assigns. Notwithstanding the previous sentence, CORN
shall not assign
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this Agreement or any rights, interests or obligations
hereunder, or delegate performance of any of its obligations
hereunder, without the prior written consent of CPC.
SECTION 5.05. Specific Performance. The parties hereto
agree that irreparable damage would occur in the event any
provision of this Agreement was not performed in accordance with
the terms hereof and that the parties shall be entitled to
specific performance of the terms hereof, in addition to any
other remedy at law or equity.
SECTION 5.06. Dispute Resolution. Article VI of the
Distribution Agreement shall apply hereto and shall be deemed
incorporated herein by reference with respect to any dispute
arising out of the interpretation, implementation or compliance
with the provisions of this Agreement.
SECTION 5.07. Governing Law and Severability.
(a) This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York, other than
its conflicts of laws. Without limiting Section 5.06, each of the
parties irrevocably submits to the exclusive jurisdiction of (a)
the Superior Court of the State of New Jersey for the purposes of
any suit, action or other proceeding arising out of this
Agreement. Each of the parties agrees to commence any action,
suit or proceeding relating hereto that is not required to be
submitted to arbitration pursuant to Section 5.06 either in the
United States District Court for the District of New Jersey or if
such suit, action or other proceeding may not be brought in such
court for jurisdictional reasons, in the Superior Court of
the State of New Jersey,
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Bergen County. Each of the parties further agrees that
service of any process, summons, notice or document by United
States registered mail to such party's respective address set
forth above shall be effective service of process for any such
action, suit or proceeding in New Jersey with respect to any
matters to which it has submitted to jurisdiction pursuant to
this Section 5.07. 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, or (ii) the United States
District Court for the District of New Jersey, and hereby further
irrevocably and unconditionally waives and agrees not to plead or
claim in any such court that any such action, suit or proceeding
brought in any such court has been brought in an inconvenient
forum.
(b) If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any law or
public policy, all other terms and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated
hereby is not affected in any manner materially adverse to any
party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so
as to effect the original intent of the parties as closely as
possible in an acceptable manner in order that the transactions
contemplated hereby are consummated as originally contemplated to
the greatest extent possible.
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SECTION 5.08. Affiliates. Each party 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 of its Affiliates.
SECTION 5.09. Definitions. Capitalized terms not otherwise
defined shall have the meanings set forth below, and such
meanings shall be equally applicable to 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, Controls, is Controlled by or
is under common Control with such Person.
"Beneficial Owner" (including, with its correlative
meanings, "Beneficially Own" and "Beneficial Ownership"), with
respect to any securities, shall mean any Person who has, or any
of whose Affiliates or Associates has (a) directly or indirectly,
the right to acquire, vote or dispose of, such securities
(whether such right is exercisable immediately or only after the
passage of time), whether pursuant to any agreement, arrangement
or understanding (whether or not in writing), upon the exercise
of conversion rights, exchange rights, warrants or options, or
otherwise, (b) "beneficial ownership" of such securities (as
determined pursuant to Rule 13d-3 under the Securities Exchange
Act of 1934, as in effect on the date hereof, but including all
such securities which a Person has the right to acquire
beneficial ownership of, whether or not such
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right is exercisable within the 60-day period specified therein),
including pursuant to any agreement, arrangement or understanding
(whether or not in writing), or (c) any agreement, arrangement or
understanding (whether or not in writing) for the purpose of
acquiring, holding, voting or disposing of any securities which
are Beneficially Owned, directly or indirectly, by any other
Person (or any Affiliate or Associate thereof). For this purpose,
"Associate" shall mean, when used to indicate a relationship with
any Person, (a) any corporation or organization of which such
Person is an officer or partner or is, directly or indirectly,
the Beneficial Owner of 10 percent or more of any class of
capital stock or other equity interest; (b) any trust or other
estate in which such Person has a substantial beneficial interest
or as to which such Person serves as trustee or in a similar
fiduciary capacity; and (c) any relative or spouse of such
Person, or any relative of such spouse, who has the same home as
such Person.
"Code" shall mean the Internal Revenue Code of 1986, as
amended, including any comparable successor legislation.
"Code Section" shall mean a section of the Code.
"Common Stock" shall mean, with respect to (a) CORN, common
stock thereof having a par value of $__ per share and including the
Preferred Stock Purchase Rights ("CORN Common Stock"), (b) New
Canada Cornco, common stock thereof, (c) BrazilCo Corn, quotas
thereof and (d) ChilCo Corn, common stock thereof.
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"Control" (including its correlative meanings, "Controlled
by" and "under common Control with") shall mean, with respect to
a Person, possession by such Person of the power, directly or
indirectly through one or more intermediaries, to (a) elect a
majority of the board of directors (or the equivalent governing
body) of another Person, or (b) direct or cause the direction of
the management and policies of or with respect to another Person,
whether through ownership of securities, by contract or
otherwise.
"CORN Rights Plan" shall mean the Preferred Stock Purchase
Rights Plan of CORN as governed by the Rights Agreement, dated as
of ___________, 1997, between CORN and ___________________, as
Rights Agent.
"CPC Group" shall mean the affiliated group of corporations
as defined in Code Section 1504(a) of which CPC (or any successor
thereto) is the common parent, excluding for tax periods of the
CPC Group commencing subsequent to the Spinoff Date, CORN and the
other members of the CORN Group. For purposes hereof, the "CORN
Group" shall mean affiliated group of corporations as defined in
Code Section 1504(a) of which CORN (or any successor thereto) is
the common parent.
"Foreign Spinco" shall mean each of New Canada Cornco,
BrazilCo Corn and ChilCo Corn, as described and defined in the
Ruling Request.
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"Foreign Spinoffs" shall mean, collectively, the
distributions to CPC by Canada Amalco of Canada Cornco, by
Refinacoes de Milho, Brasil Ltda. of BrazilCo Corn and by
Industrias de Maiz y Alimentos S.A. of ChilCo Corn, all as
described in the Ruling Request. All capitalized terms not
defined herein shall have the meanings ascribed thereto in the
Ruling Request.
"Gross Assets" shall mean, when used with respect to a
specified Person, the fair market value of such Person's assets
unencumbered by any liabilities.
"Group" shall mean two or more Persons acting as a
partnership, limited partnership, syndicate, or otherwise acting
in concert for the purpose of acquiring, holding or disposing of
securities of any Person.
"IRS" shall mean the United States 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 Rulings" shall mean the private letter rulings
(together with any supplements) issued by the IRS in respect of
the Ruling Request.
"Opinion of Counsel" shall mean an Unqualified Tax Opinion
addressed to CPC, in form and substance satisfactory to CPC and
upon which CPC can rely. In no event shall CPC be
25
required to conclude that an opinion is satisfactory if there is
any risk, however remote, that the action or conduct which is the
subject of the opinion will cause the Spinoff or any of the
Foreign Spinoffs to be taxable to any extent under the Code. For
this purpose, an "Unqualified Tax Opinion" shall mean an
unqualified "will" opinion of independent tax counsel of
recognized national standing who is experienced in the issues to
be addressed and otherwise is reasonably acceptable to CPC, to
the effect that the action or conduct which is the subject
thereof does not disqualify the Spinoff or any of the Foreign
Spinoffs for tax-free treatment for the Indemnified Party and the
shareholders of CPC under Code Sections 355, 368(a)(1)(D) and any
other applicable Code Sections, assuming that the Spinoff and the
Foreign Spinoffs would have qualified for such tax-free treatment
if the subject action or conduct had not occurred. An Unqualified
Tax Opinion may rely upon, and assume the accuracy of, any
representations contained in the Ruling Request.
"Person" shall mean any natural person, corporation,
business trust, joint venture, association, company, partnership
or government, or any agency or political subdivision thereof.
"Preferred Stock Purchase Rights" shall mean the rights to
purchase preferred stock of CORN specified in the CORN Rights
Plan.
"Regulations" shall mean the income tax regulations issued,
published or promulgated under the Code.
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"Restricted Period" shall mean the period beginning on the
date of the first to occur of the Spinoff or any of the Foreign
Spinoffs and ending on the second anniversary of the Spinoff
Date.
"Ruling Request" shall mean the request for rulings under
Code Sections 355 and 368(a)(1)(D) filed in respect of the
Spinoff and the Foreign Spinoffs on behalf of CPC on April 11,
1997, and all amendments and supplements thereto filed subsequent
to such date.
"Section" shall refer to a section of this Agreement.
"Spinoff Date" shall mean the date determined by CPC's
Board of Directors as the date on which the Spinoff shall occur.
"Taxes" shall mean all United States federal, state or
local gross or net income, gross receipts, withholding,
franchise, transfer, estimated or other taxes or similar charges
and assessments, including all interest, penalties and additions
imposed with respect to such amounts.
IN WITNESS WHEREOF, the parties have caused this Agreement
to be executed as of the date first written above.
CPC INTERNATIONAL INC. CORN PRODUCTS INTERNATIONAL, INC.
By________________________ By ______________________________
Name: Name:
Title: Title:
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