ASSET PURCHASE AGREEMENT
by and between
HDPR ACQUISITIONS CORP.,
as Buyer,
HARINAS DE PUERTO RICO, INC.,
as Seller
and
SEABOARD CORPORATION
________________________________________
Dated as of November 9, 1998
________________________________________
TABLE OF CONTENTS
Section Page
1. Purchase and Sale of the Assets; Assumption of
Assumed Liabilities. . . . . . . . . . . . . . . . . .1
2. Closing; Purchase Price Adjustment.. . . . . . . . . .6
3. Conditions to Closing. . . . . . . . . . . . . . . . .8
4. Representations and Warranties of Seller.. . . . . . 12
5. Covenants of Seller. . . . . . . . . . . . . . . . . 27
6. Representations and Warranties of Buyer. . . . . . . 32
7. Mutual Covenants.. . . . . . . . . . . . . . . . . . 34
8. Further Assurances.. . . . . . . . . . . . . . . . . 36
9. Indemnification. . . . . . . . . . . . . . . . . . . 37
10. Assignment.. . . . . . . . . . . . . . . . . . . . . 41
11. No Third-Party Beneficiaries.. . . . . . . . . . . . 41
12. Termination. . . . . . . . . . . . . . . . . . . . . 41
13. Survival of Representations. . . . . . . . . . . . . 44
14. Expenses.. . . . . . . . . . . . . . . . . . . . . . 45
15. Amendments.. . . . . . . . . . . . . . . . . . . . . 45
16. Notices. . . . . . . . . . . . . . . . . . . . . . . 46
17. Interpretation.. . . . . . . . . . . . . . . . . . . 47
18. Counterparts.. . . . . . . . . . . . . . . . . . . . 47
19. Entire Agreement.. . . . . . . . . . . . . . . . . . 47
20. Fees.. . . . . . . . . . . . . . . . . . . . . . . . 48
21. Severability.. . . . . . . . . . . . . . . . . . . . 48
23. Governing Law. . . . . . . . . . . . . . . . . . . . 49
24. Waiver of Trial by Jury. . . . . . . . . . . . . . . 49
EXHIBITS
B
C
D
E
F
G
SCHEDULES
ASSET PURCHASE AGREEMENT
Asset Purchase Agreement dated as of November 9, 1998, by and
between HDPR Acquisitions Corp., a Puerto Rico corporation (the
"Buyer"), Harinas de Puerto Rico, Inc. ("Harinas"), a Delaware
corporation (the "Seller") and a wholly owned subsidiary of Seaboard
Corporation, a Delaware corporation ("Seaboard"), and Seaboard.
WHEREAS, Buyer desires to purchase from Seller and Seller
desires to sell to Buyer all the Assets (as defined below), and
Buyer desires to assume all the Assumed Liabilities (as defined
below) relating to the Business (as defined below) on the terms and
subject to the conditions set forth herein; and
NOW THEREFORE, in consideration of the mutual covenants and
agreements contained herein, and for other good and valuable con
sideration, the receipt and sufficiency of which is hereby
acknowledged, and intending to be legally bound, the parties hereto
agree as follows:
1. Purchase and Sale of the Assets; Assumption of Assumed
Liabilities.
(a) Purchase and Sale of the Assets; Purchase Price
Allocation. (i) On the terms and subject to the conditions of this
Agreement, (A) Seller will sell, transfer, assign, convey and
deliver to Buyer, and Buyer will purchase from Seller, the Assets
for an aggregate purchase price equal to $5,500,000 plus the
assumption of the Assumed Liabilities (the "Purchase Price"),
payable as set forth below in Section 2(a), and subject to
adjustment as provided in Section 2(b).
(ii) The allocation of the purchase price among the
Assets will be agreed to between Seller and Buyer on or prior to the
Closing Date. Buyer and Seller agree to file all income, franchise
and other tax returns, and execute such other documents or
instruments as may be required by any governmental authority in a
manner consistent with such allocations.
(b) The Assets. The term "Assets" shall mean the right,
title and interest of Seller and any affiliate of Seller in the
assets of Seller or such affiliate used or held primarily in the
conduct of its business (the "Business"), wherever located and
whether or not reflected on the books of Seller or such affiliate,
whether tangible or intangible, whether real, personal or mixed, and
whether existing on the date hereof or acquired hereafter, but
excluding prepaid or deferred tax assets and the Harinas Trademarks
described in Schedule 1(c)(iii). Without limiting the generality of
the foregoing, the Assets include, among other things, the
following:
(i) Real Property. The ground lease
and the buildings described on Schedule 1(b)(i) hereto, together
with all improvements and fixtures thereon and all rights
(including, but
not limited to, any rights that Seller may possess over any other
properties, such as any related rights of way or options) privileges
and easements appurtenant thereto (the "Real Property");
(ii) Equipment. All machinery,
equipment, vehicles, parts, supplies, fixtures, computers, trade
fixtures and furnishings, whether leased or owned, that are located
on the Real Property on the date hereof or otherwise used primarily
in
connection with the Business (the "Equipment"), including, without
limitation, the Equipment set forth on Schedule 1(b)(ii);
(iii) Contracts. All contracts, leases,
agreements, commitments, purchase orders and other legally binding
arrangements, whether oral or written, to which Seller is a party
or by which Seller is bound which are related to the Business and
which are listed on Schedule 1(b)(iii) (the "Contracts");
(iv) Inventory. All inventory, goods,
materials and supplies that are currently used in the Business (the
"Inventory") and that are owned by Seller on the Closing Date;
(v) Computer Software. To the extent
permitted by the relevant license agreement, all computer software
(including, without limitation, licenses, warranties and
documentation related thereto and related objects and source codes)
primarily utilized in the Business, it being understood by Buyer that
substantially all of the computer software utilized in the Business
belongs to Seaboard Corporation, is used on a shared basis by Seller
and will therefore not form part of the Assets;
(vi) Records. All information, files, records,
data and plans relating to the operation of the Business,
including, without limitation, maintenance records and manuals, and as-
built drawings and surveys, but excluding any files or records
relating to Employees;
(vii) Licenses, Licensing Agreements and
Permits. To the extent permitted by law and the terms of the
license or permit, all permits, authorizations, licenses, licensing
agreements, privileges and rights related to the Business, including
all government authorizations, permits and licenses;
(viii) Intellectual Property. Any and all
patents, patent applications (whether filed, unfiled or being
prepared), invention disclosures, trademarks (whether registered or
unregistered), trademark registrations, trademark applications (whether
filed, unfiled or being prepared), trade names, copyrights (registered
or unregistered), copyright applications (whether
filed, unfiled or being prepared), service marks (registered or
unregistered), service ▇▇▇▇ applications (whether filed, unfiled or being
prepared), all together with the goodwill of the Business associated with
such marks or names, trade secrets, technology, inventions, know how,
processes and confidential and proprietary information, including any being
developed (including, but not limited to, drawings, designs, manufacturing
data, design data, test data, operational data, engineering drawings,
formulae, computer programs, computer software and manuals), whether or not
subject to statutory registration, and Seller's patent and trademark files
(or copies thereof) on all such intellectual property, and all other
intellectual property and all rights thereunder, or in respect thereof, in
each and every case referred to in this Section 1(b)(viii) relating
primarily to the Business, including, without limitation, the trademarks and
service marks listed on Schedule 1(b)(viii) (the "Intellectual Property");
provided that Seller expressly disclaims any warranty, express or implied,
that it owns or has the exclusive right to use the same or that any of the
Intellectual Property does not violate or infringe upon the intellectual
property rights of any third person;
(ix) Accounts Receivable. All accounts
receivable owed to Seller and generated from sales of products of
the Business;
(x) Cash. All cash and investments held by
or for the account of the Seller on the Closing Date in excess of
$4,336,618;
(xi) Other Assets. All other assets
of the Business not described above reflected on the August 1, 1998
(the "Balance Sheet Date") balance sheet set forth as Schedule
1(b)(xi)
(the "Balance Sheet"), other than Inventory sold in the ordinary
course of business and accounts receivable which have been paid.
(c) Assumed Liabilities. On the Closing Date, Buyer
shall assume, and shall thereafter pay, perform and discharge when
due, the following obligations and liabilities of Seller related to
the Business, all in accordance with their terms (the "Assumed
Liabilities"): (i) all liabilities specifically included in the
balance sheet of Seller as of the Closing Date to be prepared by the
parties (the "Closing Date Balance Sheet"), which shall reflect
liabilities identical to the Balance Sheet except for changes in
current liabilities in the ordinary course of business or
attributable to the shutdown caused by Hurricane Georges (but
excluding repairs that Seaboard Corporation has agreed to make
pursuant to section 5(a)(v)); (ii) all obligations to perform the
Contracts after the Closing Date, but not any claims relating to
events prior to the Closing Date (other than claims for delivery of
finished products to the extent the purchase price thereof is
reflected on the Closing Date Balance Sheet); and (iii) the
liabilities identified as Assumed Liabilities on Schedule 1(c)(iii).
Buyer shall give access to Seller to Buyer's offices for purposes of
preparing the Closing Date Balance Sheet.
(d) Retained Liabilities. Except to the extent
constituting Assumed Liabilities, Buyer shall not assume or be
responsible for any liabilities of Seller related to the Business
("Retained Liabilities"), including without limitation
(i) liabilities relating to or arising from the operation of the
Business, or from conditions existing, prior to the Closing Date;
(ii) liabilities under any agreement entered into by Seller or any
affiliate of Seller that is not listed on Schedule 1(b)(iii);
(iii) liabilities arising from the consummation of the transactions
contemplated herein; (iv) liabilities relating to the employees of
Seller or to the termination of their employment; and (v) the
liabilities identified as Retained Liabilities on Schedule 1(c)
(iii). In no event shall the Retained Liabilities include any
amount specifically included in the Closing Date Balance Sheet.
(e) Withholding. All payments of principal and interest
due on the Note (as defined below) shall be made without any
withholding or deduction of any kind other than those required as
a result of any change in any applicable law or regulation adopted
after the date hereof. In the event that any such change in law is
adopted prior to the Closing Date, the parties shall negotiate in
good faith the net effect, if any, of such change in law on the
economic benefit to be derived by Seller from the transactions
contemplated herein. If such net effect is, in the reasonable
opinion of Seller, adverse to Seller, Seller may terminate this
Agreement pursuant to Section 13(a)(iv); provided, however, that
Seller shall not have this termination right if Buyer agrees to
fully indemnify Seller to the extent of such adverse effect. Seller
shall not have any termination right as a result of any change in
law adopted after the Closing Date.
2. Closing; Purchase Price Adjustment.
(a) Closing. The closing (the "Closing") of the purchase
and sale of the Assets shall be held at the offices of ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, at 10:00 a.m. on November 30, 1998, or if the conditions to
Closing set forth in Section 3 of this Agreement shall not have been
satisfied by such date, as soon as practicable after such conditions
shall have been satisfied or, if permitted, waived. The date on
which the Closing shall occur is hereinafter referred to as
the "Closing Date." At the Closing, Buyer shall deliver to Seller
(i) immediately available funds in an amount equal to $5,500,000 by
wire transfer to one or more bank accounts designated in writing by
Seller, (ii) an assumption agreement or agreements in form and
substance reasonably satisfactory to Seller, duly executed by Buyer
(the "Assumption Agreement"), (iii) a guaranty agreement
substantially in the form of Exhibit A duly executed by Mr. ▇▇▇▇▇
▇▇▇▇▇▇▇▇ (the "Guaranty"), (iv) mortgage (in the amount of
$9,000,000) and security agreements in form and substance reasonably
satisfactory to Seller on the Assets, subordinate only to the
acquisition financing (including senior and subordinated debt not
exceeding $80,000,000) (the "Acquisition Financing") relating to the
purchase of the Holsum Bakers division of Seaboard and the shares of
Seaboard Bakeries, Inc. (the "Holsum Acquisition"), securing a note
issued by Buyer relating to the Holsum Acquisition, Mr. ▇▇▇▇▇
▇▇▇▇▇▇▇▇'▇ obligations under the Guaranty and all obligations owing
under this Agreement, the agreement relating to the Holsum
Acquisition or under any other documents or instruments delivered in
connection therewith, (v) if a mortgage title insurance policy is
required by the banks providing the acquisition financing, a
mortgagee title insurance policy with respect to the mortgage
describe above and (vi) the other documents described in Section
3(b). Concurrently, Seller shall deliver or cause to be delivered
to Buyer (x) duly executed real property deeds and bills of sale in
form and substance reasonably satisfactory to Buyer, (y) such other
instruments of sale, assignment, transfer or conveyance, in form and
substance reasonably satisfactory to Buyer and its counsel, as are
necessary to convey to Buyer good and, in the case of Real Property,
recordable title to the Assets and (z) the other documents described
in Section 3(a).
(b) Purchase Price Adjustment. (i) On the Closing Date,
Seller shall prepare and deliver to Buyer a statement setting forth
the balance of cash and cash equivalents (including short term and
long term investments) held by or for the account of Seller on the
Closing Date (the "Cash Balance").
(ii) To the extent that the Cash Balance is less
than $4,336,618, the Purchase Price shall be increased by the
amount by which such sum is less than $4,336,618. Such increase
shall be payable at Closing in immediately available funds.
(iii) The Purchase Price shall also be increased
by an amount equal to the interest from November 1, 1998, until
such date as Buyer and Seller consummate the Closing, (A) at the
rate of 6% per annum, with respect to $4,336,618, and (B) at the
rate payable under the senior portion of the Acquisition Financing,
with respect to $5,500,000. Interest shall be computed on the basis
of a 360-day year and the actual number of days elapsed, provided
that if the acquisition financing relating to the Holsum Acquisition
provides for the calculation of interest on the basis of twelve 30-
day months, interest shall be calculated on that basis.
3. Conditions to Closing.
(a) Buyer's Obligation. The obligation of Buyer to
purchase the Assets is subject to the satisfaction (or waiver by
Buyer) as of the Closing of the following conditions:
(i) The representations and
warranties of Seller made in this Agreement shall be true and
correct in all
material respects as of the date hereof and on and as of the
Closing, as though made on and as of the Closing Date, and Seller
shall have performed or complied in all material respects with all
obligations and covenants required by this Agreement to be performed or
complied with by Seller by the time of the Closing; and Seller shall have
delivered to Buyer a certificate dated the Closing Date and signed by an
authorized officer of Seller confirming the foregoing.
(ii) Buyer shall have received an opinion or
opinions dated the Closing Date of Fiddler ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇,
LLP, ▇▇▇▇▇▇▇▇ & Worcester LLP or ▇▇▇▇▇ ▇▇▇▇▇▇, Esq. in form and
substance reasonably satisfactory to Buyer.
(iii) The waiting period under the ▇▇▇▇-▇▇▇▇▇-
▇▇▇▇▇▇ Antitrust Improvements Act of ▇▇▇▇ (▇▇▇ "▇▇▇ ▇▇▇") shall have expired or
been terminated.
(iv) Seller shall have delivered to the Buyer
the following documents, certified by the Secretary or any
Assistant Secretary of Seller, as appropriate:
(A) the charter and by-laws of Seller;
(B) the resolution or resolutions of the
board of directors of Seller authorizing the transactions
contemplated hereby;
(C) a document evidencing the authority
and incumbency of the persons executing documents on
behalf of Seller relating to the transactions
contemplated hereby;
(D) deeds of purchase and sale in form
and substance reasonably satisfactory to Buyer conveying
good and recordable title to the Real Property, free and
clear of all liens other than those set forth on the title
studies or title insurance policies set forth as Schedule
3(a)(iv)(D), and easements and restrictions of record
which do not unreasonably interfere with the use of the
premises as presently used (collectively, "Permitted
Encumbrances");
(E) such bills of sale, assignments, and
other instruments of transfer and conveyance as Buyer may
reasonable request or as may otherwise be necessary to
evidence and effect the sale, assignment, transfer,
conveyance and delivery to Buyer of good title to the
other Assets, but containing no representations or
warranties other than as set forth herein.
(v) Buyer shall have received the Acquisition
Financing necessary to consummate the Holsum Acquisition;
(vi) There shall not have occurred any material
adverse change in the Business caused by fire, explosion, acts of
God or of the public enemy, natural disasters or events of similar nature
occurring after the date hereof. Buyer understands that the Business has
not operated since Hurricane Georges struck Puerto Rico and that from that
date until October 20, 1998, the Business had no electrical power and that
Seller does not intend to operate the Business prior to the Closing Date.
(vii) All the conditions to the obligations of
HDPR Acquisitions Corp. and CB Acquisitions Corp. to consummate the
closing contemplated by the agreement relating to the Holsum
Acquisition shall have been satisfied or waived by such companies.
(b) Seller's Obligation. The obligation of Seller to
sell and deliver the Assets to Buyer is subject to the satisfaction
(or waiver by Seller) as of the Closing of the following condi-
tions:
(i) The representations and warranties of
Buyer made in this Agreement shall be true and correct in all
material respects as of the date hereof and on and as of the Closing Date as
though made on and as of the Closing Date, and Buyer shall have performed or
complied in all material respects with all obligations and covenants required
by this Agreement to be performed or complied with by Buyer by the time of the
Closing; and Buyer shall have delivered to Seller a certificate dated the
Closing Date and signed by an authorized officer of Buyer confirming the
foregoing.
(ii) Seller shall have received an opinion dated
the Closing Date of ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, counsel to Buyer, in
form and substance reasonably satisfactory to Seller.
(iii) The waiting period under the HSR Act shall
have expired or been terminated.
(iv) Buyer shall have delivered to Seller the
following documents, certified by the Secretary or any Assistant
Secretary of Buyer, as appropriate:
(A) copies of its certificate of
incorporation, by-laws and the resolution or resolutions
of Buyer authorizing the transactions contemplated hereby;
(B) a document evidencing the authority
and incumbency of the persons executing documents on
behalf of Buyer relating to the transactions contemplated
hereby;
(C) the Assumption Agreement; and
(D) the documents referred to in
Section 2(a)(iii), (iv) and (v).
(v) Seller shall have received a favorable
ruling in relation with its ruling request to the Puerto Rico
Treasury Department dated October 7, 1998.
(vi) All the conditions to the obligations of
Seaboard Corporation to consummate the closing contemplated by the agreement
relating to the Holsum Acquisition shall have been
satisfied or waived by Seaboard Corporation and such closing shall
be consummated simultaneously with the Closing hereunder.
4. Representations and Warranties of Seller.
Seller and Seaboard hereby represent and warrant to Buyer
as follows:
(a) Authority. Seller is duly organized, validly
existing and in good standing under the laws of the state of
Delaware, and is authorized to do business in Puerto Rico. Seller
has all requisite power and authority to enter into this Agreement
and to consummate the transactions contemplated hereby. All
corporate acts and other proceedings required to be taken by Seller
to authorize the execution, delivery and performance of this Agree
ment and the consummation of the transactions contemplated hereby
have been duly and properly taken. This Agreement has been duly
executed and delivered by Seller and constitutes a valid and binding
obligation of Seller, enforceable against Seller in
accordance with its terms, except to the extent such enforceability
may be limited by (x) laws affecting the enforcement generally of
the rights and remedies of creditors and secured parties and the
obligations of debtors and (y) general principles of equity. The
execution and delivery of this Agreement does not, and the
consummation of the transactions contemplated hereby and compliance
with the terms hereof will not, conflict with, or result in any
violation of or default (with or without notice or lapse of time, or
both) under, or give right to a right of termination, cancellation
or acceleration of any material obligation or to loss of a material
benefit under, or result in the creation of any lien, claim,
encumbrance, security interest, option, charge or restriction of any
kind upon any of the properties or assets of Seller under, any
provision of (i) the corporation law of the State of Delaware, (ii)
the Certificate of Incorporation or By-laws of Seller, (iii) except
as disclosed on the Schedules hereto, any material note, bond,
mortgage, indenture, deed of trust, license, lease, contract,
commitment, agreement or arrangement to which Seller is a party or
by which any of their respective properties or assets are bound, or
(iv) any judgment, order or decree, or statute, law, ordinance, rule
or regulation applicable to Seller or the property or assets of
Seller and not to Buyer or the property or assets of Buyer, other
than any such conflicts, violations, defaults, rights or liens,
claims, encumbrances, security interests, options, charges or
restrictions that individually or in the aggregate would not have a
material adverse effect on the business, assets, condition
(financial or otherwise) or results of operations of Seller. No
consent, approval, license, permit, order or authorization of, or
registration, declaration or filing with, any court, administrative
agency or commission or other governmental authority or
instrumentality, domestic or foreign, or any other person, is
required to be obtained or made by or with respect to Seller or its
affiliates in connection with the execution and delivery of this
Agreement or the consummation of the transactions contemplated
hereby, other than (A) those set forth on
Schedule 4(a), (B) compliance with and filings under the HSR Act, if
applicable, and (C) those that may be required solely by reason of
Buyer's (as opposed to any other third party's) participation in the
transactions contemplated hereby.
(b) Title to the Assets. Seller has good and valid title
to the Assets, free and clear of any liens or encumbrances other
than Permitted Encumbrances. Upon delivery to Buyer of the
documents described in Section 3(a)(iv)(D) and (E), good and, in the
case of the Real Property, recordable title to the Assets will pass
to Buyer, free and clear of any liens or encumbrances, other than
Permitted Encumbrances.
(c) Power of Seller. Seller has full corporate power and
authority and possesses all required governmental franchises,
licenses, permits, authorizations and approvals which are material
and necessary to entitle it to own, lease or otherwise hold the
Assets and to carry on the Business as presently conducted.
(d) Compliance with Applicable Laws. Except as
disclosed on Schedule 4(d), the Business is being conducted in
material compliance with all applicable laws, orders, ordinances,
rules or regulations of any governmental authority, other than those
where the failure to comply would not have a material adverse
effect.
(e) Real Property. Schedule 1(b)(i) sets forth a list of
all the Real Property owned by Seller. Except as disclosed on
Schedule 4(e), Seller has good and recordable title to the Real
Property, free and clear of any encumbrances, except the Permitted
Encumbrances. Except as disclosed on Schedule 4(e), Seller has
received no written notice of any pending, contemplated or proposed
eminent domain proceeding with respect to any Real Property which
would materially and adversely affect the use, operation or value
thereof.
(f) Contracts. All Contracts are valid and binding
obligations of Seller (or an affiliate of Seller, if applicable) and
are in full force and effect, except as disclosed on
Schedule 4(f). Except as disclosed on Schedule 4(f), Seller (or an
affiliate of Seller, if applicable) has performed all material
obligations required to be performed by it to date under the
Contracts and is not (with or without the lapse of time or the
giving of notice, or both) in breach or default thereunder.
(g) Litigation. Schedule 4(g) sets forth a list of all
material lawsuits and proceedings pending or, to Seller's knowledge,
threatened in a written communication addressed to Seller or to
Seaboard Corporation and of all material claims or investigations to
Seller's knowledge pending or threatened, as of the date of this
Agreement, by or against Seller which affect the Business or relate
to the transactions contemplated by this Agreement.
(h) Intellectual Property. All patents, patent
applications, trademarks and trademark applications included in the
Intellectual Property are listed on Schedule 1(b)(viii). Except as
disclosed on Schedule 4(h), Seller has not received written notice
of any claims that are currently pending or that have been
threatened by any person, in each case with respect to the
ownership, validity, enforceability or use of any Intellectual
Property. Seller and Seaboard expressly disclaim any warranty,
express or implied, that Seller owns or has the exclusive right to
use any Intellectual Property or that any of the Intellectual
Property does not violate or infringe upon the intellectual property
of any third party.
(i) Balance Sheet. Subject to end of period adjustments,
the Balance Sheet fairly presents, in all material respects, the
financial condition of the Business as of August 1, 1998, in
accordance with Generally Accepted Accounting Principles.
(j) Taxes. Except as set forth in Schedule 4(j),
(i) Seller has, in respect of the Business and the Assets, filed all
tax returns which are required to be filed and has paid all taxes
which have become due pursuant to such tax returns or pursuant to
any assessment which has become payable; (ii) all such tax returns
are complete and accurate and disclose all taxes required to be paid
in respect of the Business and the Assets; (iii) there is no action,
suit, investigation, audit, claim or assessment pending or proposed
or threatened with respect to taxes of the Business or the Assets;
(iv) Seller has not waived or been requested to waive any statute of
limitations in respect of taxes associated with the Business or the
Assets; (v) all monies required to be withheld by Seller from
employees for income taxes and social security and other payroll
taxes have been collected or withheld, and all other taxes subject
to withholding under applicable law and regulations have been either
paid to the respective taxing authorities, set aside in accounts for
such purpose, or accrued, reserved against and entered upon the
books of Seller; and
(vi) there are no liens for taxes upon the Assets, except for liens
for taxes not yet due.
(k) Operation Since Balance Sheet Date. (i) Except as
set forth in Schedule 4(k) and Section 1(c), since the Balance Sheet
Date, there has been:
(A) no material adverse change in the
Assets, it being understood that the Business has not
operated since September 21, 1998, and is not expected to
operate prior to the Closing Date; and
(B) no material damage, destruction, loss
or claim, whether or not covered by insurance, or
condemnation or other taking adversely affecting any of
the Assets, other than that caused by Hurricane Georges.
(ii) Except as set forth in Schedule 4(k) or
Section 1(c), since the Balance Sheet Date, Seller has not:
(A) sold, leased (as lessor), transferred
or otherwise disposed of (including any transfers from
Seller to any of its affiliates) or mortgaged or pledged,
or imposed or suffered to be imposed any encumbrance on,
any of the assets reflected on the Balance Sheet or any
assets acquired by Seller after the Balance Sheet Date,
except for inventory and minor amounts of personal
property sold or otherwise disposed of for fair value in
the ordinary course of the Business consistent with past
practice and except for Permitted Encumbrances;
(B) canceled any debts owed to Seller and
reflected on the Balance Sheet other than in the ordinary
course of the Business consistent with past practice;
(C) created, incurred or assumed, or
agreed to create, incur or assume, any indebtedness for
borrowed money or entered into, as lessee, any capitalized
lease obligations;
(D) accelerated or delayed collection of
notes or accounts receivable generated by the Business in
advance of or beyond their regular due dates or the dates
when the same would have been collected in the ordinary
course of the Business consistent with past practice;
(E) delayed or accelerated payment of any
account payable or other liability of the Business beyond
or in advance of its due date or the date when such
liability would have been paid in the ordinary course of
the Business consistent with past practice; or
(F) made any change in the accounting
principles and practices used by Seller from those applied
in the preparation of the Balance Sheets.
(l) Availability of Assets and Legality of Use. Except
as set forth in Schedule 4(l) or otherwise described in
Section 1(b), the Assets constitute all the assets used in the
Business (including, but not limited to, all books and records),
will on the Closing Date be in good working condition (subject to
normal wear and tear) and are suitable for the uses for which
intended.
(m) Governmental Permits. Seller owns, holds or
possesses all material licenses, franchises, permits, privileges,
immunities, approvals and other authorizations which are necessary
to entitle it to own or lease, operate and use the Assets and to
carry on and conduct the Business substantially as currently
conducted (herein collectively called "Governmental Permits").
Schedule 4(m) sets forth a list and brief description of each
Governmental Permit. Complete and correct copies of all of the
Governmental Permits have heretofore been delivered to Buyer by
Seller.
Except as set forth in Schedule 4(m), (i) Seller has
fulfilled and performed its material obligations under each of the
Governmental Permits, and no event has occurred or condition or
state of facts exists which constitutes or, after notice or lapse of
time or both, would constitute a material breach or default under
any such Governmental Permit or which permits or, after notice or
lapse of time or both, would permit revocation or termination of any
such Governmental Permit, or which might materially and adversely
affect the rights of Seller under any such Governmental Permit; (ii)
no notice of cancellation, of default or of any material dispute
concerning any Governmental Permit, or of any event, condition or
state of facts described in the preceding clause, has been received
by, or is known to, Seller; and
(iii) each of the Governmental Permits is valid, subsisting and in
full force and effect.
(n) Accounts Receivable; Inventories. All accounts
receivable of Seller existing on the Closing Date have arisen from
bona fide transactions by Seller in the ordinary course of the
Business.
Except as set forth on Schedule 4(n), the inventories
of Seller (including supplies and other materials) are in good,
merchantable and useable condition. The reserve for inventory
obsolescence contained in the Balance Sheet fairly reflects the
amount of obsolete inventory as of the Balance Sheet Date.
(o) Environmental Matters. For purposes of this
Agreement,
(A) "CERCLA" shall mean the Comprehensive
Environmental Response, Compensation and Liability Act, 42
U.S.C. 9601 et seq., as amended as of the date hereof,
and any federal, state, Commonwealth of Puerto Rico or
local regulations promulgated thereunder;
(B) "Contaminant" shall mean any hazardous
or toxic substance or waste, petroleum, petroleum-based
substance or waste or special waste;
(C) "Environmental Encumbrance" shall mean
an encumbrance in favor of any Governmental Body for (i)
any liability under any Environmental Law, or
(ii) damages arising from, or costs incurred by such
Governmental Body in response to, a Release or threatened
Release of a Contaminant into the environment;
(D) "Environmental Law" shall mean all
federal, state, commonwealth and local laws or regulations
relating to or addressing the environment, including but
not limited to CERCLA, RCRA, the Clean Water Act, the
Clean Air Act, the Safe Drinking Water Act, the Toxic
Substances Control Act, and any state or commonwealth
equivalent thereof;
(E) "Governmental Body" shall mean any
foreign, federal, state, local or other governmental
authority or regulatory body;
(F) "Person" shall mean any individual,
corporation, partnership, joint venture, association,
joint-stock company, trust, unincorporated organization or
Governmental Body;
(G) "RCRA" shall mean the Resource
Conservation and Recovery Act, 42 U.S.C. 6901 et seq.,
and any state or Commonwealth of Puerto Rico regulations
promulgated thereunder;
(H) "Release" shall mean release, spill,
emission, leaking, pumping, injection, deposit, disposal,
discharge, dispersal, leaching or migration of a
Contaminant into the indoor or outdoor environment or into
or out of any Assets, including the movement of
Contaminants through or in the air, soil, surface water,
groundwater or the Assets; and
(I) "Remedial Action" shall mean actions
required under applicable Environmental Law to (i) clean
up, remove, treat or in any other way address Contaminants
in the indoor or outdoor environment;
(ii) prevent the Release or threatened Release or minimize the
further Release of Contaminants; or
(iii) investigate and determine if a remedial response is needed and to
design such a response and post-remedial investigation, monitoring,
operation and maintenance and care.
Except as set forth in Schedule 4(o):
(i) the Assets and the operations of the
Business comply in all material respects with all applicable
Environmental Laws;
(ii) Seller has, in respect of the
Business, obtained all Governmental Permits required under
applicable
Environmental Law necessary for its operation, and all such
Governmental Permits required under applicable Environmental Law are
in good standing and Seller is in compliance with all terms and
conditions of such permits, except where the failure to have or be
in compliance with such permits would not reasonably be expected to
have a material adverse effect on the Business;
(iii) to Seller's knowledge, neither
Seller, with respect to the Business, nor any of the Assets is
currently
subject to any on-going investigation by, agreement with any Person
respecting (A) any Environmental Law, (B) any Remedial Action or (C)
any claim arising from a Release or threatened Release, in each
case, that would reasonably be expected to have a material adverse
effect on the Business;
(iv) Seller has not, with respect
to the Assets or the Business, received written notice of any
judicial or
administrative proceeding, order, judgment, decree or settlement
alleging or addressing a violation of or liability under any
Environmental Law;
(v) to Seller's knowledge, with
respect to the Assets or the Business, Seller has never been
required and is not
currently required by any applicable Environmental Laws to:
(A) report a Release of a hazardous
substance pursuant to Section 103(a) of CERCLA, or any
state equivalent;
(B) file a notice pursuant to
Section 103(c) of CERCLA; or
(C) file any other notice under any
applicable Environmental Law reporting a violation of any
applicable Environmental Law which might reasonably be
expected to have a material adverse effect on the
Business;
Seller, has not, with respect to the Assets or the Business, ever
filed such a report or notice;
(vi) to Seller's knowledge, there is not now,
nor has there ever been, on or in any of the Assets any generation,
transfer, handling treatment, recycling, storage or disposal of any
hazardous waste or substance, as that term is defined under
applicable Environmental Laws, that requires or required a
Governmental Permit pursuant to such Environmental Laws;
(vii) Seller has not received and is not aware
of any written notice or claim to the effect that it is or may be
liable to any Person as a result of a Release or threatened Release at or from
the Assets or concerning the presence of a Contaminant in the Assets;
(viii) to Seller's knowledge, no Environmental
Encumbrance has attached to any of the Assets; and
(ix) to Seller's knowledge, any asbestos-
containing material which is on or part of the Assets is in good repair
according to the current standards and practices governing such material, and
its presence or condition does not violate any currently applicable
Environmental Law.
(p) Disclosure. None of the representations or
warranties of Seller contained herein, none of the information
contained in the Schedules hereto and none of the other information
or documents furnished or to be furnished to Buyer or any of its
representatives by Seller or its representatives pursuant to the
terms of this Agreement, is false or misleading in any material
respect or omits to state a fact herein or therein necessary to make
the statements herein or therein not misleading in any material
respect. To Seller's knowledge there is no fact which adversely
affects or in the future is likely to adversely affect the Assets or
the Business in any material respect which has not been set forth or
referred to in this Agreement or the Schedules hereto.
(q) Employees. Effective at or before the Closing
Seller will have dismissed all its employees (the "Employees") and
will have paid all Employees such sums as may be required to be paid
to the Employees under all applicable laws, regulations, orders and
employment contracts.
5. Covenants of Seller. Seller and Seaboard covenant and
agree as follows:
(a) Ordinary Conduct of Business by Seller. Seller
expects that the Business will not operate prior to the Closing
Date. If the Business is operated, then except as permitted by the
terms of this Agreement, from the date hereof to the Closing Date,
Seller will conduct the Business in the ordinary course in
substantially the same manner as conducted prior to Hurricane
Georges. Except as set forth on Schedule 5(a) or otherwise
expressly permitted by the terms of this Agreement, from the date
hereof to the Closing Date, Seller, will not do any of the following
without the prior written consent of Buyer, which consent shall not
be unreasonably withheld or delayed:
(i) approve any compensation or other benefit
increases to employees of the Business;
(ii) incur or assume any liabilities, obliga-
tions or indebtedness for borrowed money or guarantee any such
liabilities, obligations or indebtedness, other than in the ordinary course of
business consistent with past practice; provided
that in no event shall the Seller, assume or guarantee any long-term
indebtedness for borrowed money relating to the Business;
(iii) permit, allow or suffer any of the Assets
to be subjected to any encumbrance, other than Permitted
Encumbrances;
(iv) cancel any material indebtedness
(individually or in the aggregate) or waive any claims or rights of
substantial value;
(v) make or incur any capital expenditure or
expenditures which, individually, is in excess of $10,000, it being
understood that damages caused by Hurricane Georges shall be
repaired at the expense of Seaboard Corporation, and not of Seller;
(vi) make any material change in the conduct or
character of the Business;
(vii) make any sale, assignment, transfer or
other conveyance of any of the Assets, except in the ordinary
course of business;
(viii) acquire or agree to acquire any assets
that will form part of the Assets other than in the ordinary course
of business;
(ix) pay any dividend or make any other
distribution to its Stockholders;
(x) enter into any material transactions other
than in the ordinary course of business;
(xi) take any action that would cause or permit
the representations and warranties made herein to be inaccurate at
the Closing Date; or
(xii) agree, whether in writing or otherwise, to
do any of the foregoing.
(b) Access. Prior to the Closing, Seller will give
Buyer and its financing sources, and their respective
representatives, employees, counsel and accountants, access, during
normal business hours and upon reasonable notice, to its personnel,
properties, books and records. Seller will arrange for its
directors, officers, employees and independent public accountants
and legal counsel to cooperate with such examination. Buyer and its
representatives shall execute such confidentiality agreements as
Seller shall reasonably require.
(c) Insurance. Seller shall keep, or cause to be kept,
all insurance policies relating to the Business, or suitable
replacements therefor, in full force and effect through the close of
business on the Closing Date.
(d) Other Transactions. Prior to the Closing, none of
Seller, nor any affiliate of Seller shall, nor shall they permit any
of their respective officers, directors, stockholders or other
representatives to, directly or indirectly, encourage, solicit or
initiate discussions or negotiations with, any corporation,
partnership, person, or other entity or group (other than Buyer and
their representatives) concerning any merger, sale of securities,
sale of assets or similar transaction involving the Business.
(e) Non-Competition. (i) Seller, on its behalf and
on behalf of its affiliates and subsidiaries, agrees that, for a
period of ten (10) years after the Closing Date, Seller and its
affiliates shall not, directly or indirectly, engage in (1) the
production, marketing or sale of bakery products, or (2) the
manufacture, marketing or sale of flour, in each case in Puerto Rico
or with respect to customers in Puerto Rico (the "Restricted
Business"), or acquire any equity securities of, or make any loan
to, or enter into any joint venture or similar agreement with, any
person engaged in the Restricted Business in Puerto Rico or with
respect to customers in Puerto Rico; provided, however, that this
clause (i)(2) shall not prohibit (A) any minority investment in any
entity that is not engaged in the Restricted Business as a material
line of business, (B) any joint venture for which the Restricted
Business is not a material line of business or (C) any investment
representing less than 5% of the ownership in a publicly traded
company in the management of which Seller does not participate. This
covenant (the "Restrictive Covenant") shall cease to have any effect
with respect to the business described in clause (i)(2) above if Mr.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, or his lineal descendants, persons who are members
of the management of the Business on the Closing Date, or any person
or entity acquiring an interest in the Business as a result of a
foreclosure or work-out of the Acquisition Financing shall at any
time cease to own, directly or indirectly, a controlling interest in
the Business.
(ii) The parties agree that if any
court of competent jurisdiction determines that the Restrictive
Covenant or
any part thereof is invalid or unenforceable, the remainder of the
Restrictive Covenant shall not thereby be affected and shall be
given full effect, without regard to the invalid portions.
Furthermore, if any portion of the Restrictive Covenant, or the
application of any portion of the Restrictive Covenant to any person
or circumstances, shall be held invalid or unenforceable by any
court of competent jurisdiction, the remaining portion of the
Restrictive Covenant, or the application of such portion of the
Restrictive Covenant to persons or circumstances other than those as
to which it is held invalid or unenforceable, shall not be affected
thereby. In either of the foregoing cases, the parties agree that
they will amend the terms of the Restrictive Covenant or portion
thereof so determined to be invalid or unenforceable, but only in
the most minimal manner necessary to make such terms comply with the
determination of such court.
(iii) If Seller breaches, or threatens to commit
a breach of, the Restrictive Covenant, Buyer shall have the right to
have the Restrictive Covenant specifically enforced by any court of
competent jurisdiction, it being acknowledged and agreed that any
such breach or threatened breach will cause irreparable injury to
Buyer and that money damages will not provide an adequate remedy to
Buyer. Such right of specific performance shall be independent of,
and in addition to, and not in lieu of, any other rights and
remedies available to Buyer at law or in equity.
(f) Supplemental Disclosure. Seller shall have the
continuing obligation until the Closing promptly to supplement or
amend the Schedules hereto with respect to any matter hereafter
arising or discovered which, if existing or known at the date of
this Agreement, would have been required to be set forth or
described in such Schedules; provided, however, that for the purpose
of the rights and obligations of the parties hereunder, any such
supplemental or amended disclosure shall not be deemed to have been
disclosed as of the date of this Agreement unless so agreed in
writing by Buyer.
(g) Tax Ruling. Seller shall use its best efforts to
obtain the ruling referred to in Section 3(b)(v).
6. Representations and Warranties of Buyer.
Buyer hereby represents and warrants to Seller that it is
a corporation duly organized, validly existing and in good standing
under the laws of the Commonwealth of Puerto Rico. Buyer has all
requisite power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby. All corporate acts
and other proceedings required to be taken by Buyer to authorize the
execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby have been duly
and properly taken. This Agreement has been duly executed and
delivered by Buyer and constitutes a valid and binding obligation of
Buyer, enforceable against Buyer in accordance with its terms,
except to the extent such enforceability may be limited by (x) laws
affecting the enforcement generally of the rights and remedies of
creditors and secured parties and the obligations of debtors and (y)
general principles of equity. The execution and delivery of this
Agreement by Buyer does not, and the consummation of the
transactions contemplated hereby and compliance with the terms
hereof will not, conflict with, or result in any violation of or
default (with or without notice or lapse of time, or both) under, or
give right to a right of termination, cancellation or acceleration
of any obligation or to loss of a material benefit under, or result
in the creation of any lien, claim, encumbrance, security interest,
option, charge or restriction of any kind upon any of its properties
or assets under, any provision of (i) the corporation law of the
Commonwealth of Puerto Rico, (ii) its Certificate of Incorporation
or By-laws, (iii) except as disclosed on the Schedules hereto, any
material note, bond, mortgage, indenture, deed of trust, license,
lease, contract, commitment, agreement or arrangement to which it is
a party or by which any of its properties or assets are bound, or
(iv) any judgment, order or decree, or statute, law, ordinance, rule
or regulation applicable to it or its property or assets, other
than, in the case of
clause (iii) above, any such conflicts, violations, defaults, rights
or liens, claims, encumbrances, security interests, options, charges
or restrictions that individually or in the aggregate would not have
a material adverse effect on the business, assets, condition
(financial or otherwise) or results of operations of the Business.
No consent, approval, license, permit, order or authorization of, or
registration, declaration or filing with, any court, administrative
agency or commission or other governmental authority or
instrumentality, domestic or foreign, is required to be obtained or
made by or with respect to Buyer or its respective affiliates in
connection with the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby, other than (A)
those described on Schedule 6, (B) compliance with and filings under
the HSR Act, if applicable, and (C) those that may be required
solely by reason of Seller's (as opposed to any other third party's)
participation in the transactions contemplated hereby.
7. Mutual Covenants.
(a) Consents. Buyer and Seller shall use their
reasonable best efforts to obtain, prior to the Closing, any
consents of third parties and any authorizations or permits from any
governmental authority required in connection with the consummation
of the transactions contemplated herein; provided, however, that (i)
Buyer shall be solely responsible for obtaining any consent required
in connection with the assignment of particular contracts, licenses,
authorizations or permits that
require the consent of a counterparty or government entity as a
condition to such assignment (including the consent of the Puerto
Rico government under Seller's grant of tax exemption), as well as
for obtaining new governmental permits and authorizations to replace
permits and authorizations that are not assignable, and (ii) the
obtaining of any consent or new governmental permit or authorization
referred to in clause (i) (other than those set forth in Schedule
7(a), which shall be a condition to Buyer's obligation to consummate
the Closing) shall not be a condition to Buyer s obligation to
consummate the Closing.
(b) Cooperation. Buyer and Seller shall cooperate with
each other and shall cause their officers, employees, agents,
auditors and representatives to cooperate with each other after the
Closing to ensure the orderly transition of the Assets from Seller
to Buyer and to minimize any disruption to the respective businesses
of Seller or Buyer that might result from the transactions
contemplated hereby. Each party shall reimburse the other for
reasonable out-of-pocket costs and expenses incurred in connection
with actions taken at the request of the other party pursuant to
this Section 7(b), provided that the party seeking such
reimbursement shall have notified the other prior to incurring any
such expense that it intends to seek reimbursement for such expense.
(c) Publicity. Seller and Buyer agree that, from the
date hereof through the Closing Date, no public release or
announcement, and no disclosure to any third party, concerning the
transactions contemplated hereby shall be made by either party
without the prior consent of the other party, except as such release
or announcement may be required by law or by the regulations of the
American Stock Exchange, in which case the party required to make
the release or announcement shall allow the other party reasonable
time to comment on such release or announcement in advance of such
issuance to the extent possible. Buyer acknowledges Seller's Press
Release of October 20, 1998.
(d) Reasonable Best Efforts. Subject to the terms and
conditions of this Agreement, each party will use its reasonable
best efforts to cause the Closing to occur as soon as possible.
(e) Records. On the Closing Date, Seller shall deliver
or cause to be delivered to Buyer copies of all agreements,
documents, books, records and files (collectively, "Records"), in
the possession of Seller relating to the Business, except that
Seller may retain all Records prepared in connection with the sale
of the Assets. Seller shall have access to and be authorized to
make copies of any records delivered to the Buyer. Buyer shall keep
all Records for six years after the Closing Date or until the
expiration of the applicable statute of limitations for third party
claims, if longer.
(f) Seller Trade Payables. Buyer shall repay in full,
within five days after the Closing Date, all trade payables and all
intercompany payables identified on the Closing Date Balance Sheet
due by Seller to Seaboard or any affiliate of Seller. On the
Closing Date, such trade and intercompany payables shall be secured
by the same collateral securing the Note. Non-payment of these
payables shall constitute a default under the Note.
(g) Confidentiality. Each party shall take reasonable
appropriate actions to keep confidential, and cause its affiliates
and instruct its and their officers, directors, employees and
advisors to keep confidential, all non-public information relating
to the Business, Seller and Buyer, except as required by law or
administrative process or the rules of the American Stock Exchange,
and except for information which becomes public other than as a
result of a breach of this Section 7(g), and provided that this
covenant shall not restrict the ability of any person's and its
affiliates' respective officers, directors, advisors and employees
to discuss such information internally.
(h) Cooperation with Respect to Litigation. Buyer shall
cooperate with Seller in all respects, at Seller's expense, in the
defense of all claims which constitute Retained Liabilities.
8. Further Assurances.
From time to time, as and when requested by either party
hereto, the other party shall execute and deliver, or cause to be
executed and delivered, all such documents and instruments and shall
take, or cause to be taken, all such further or other actions, as
such other party may reasonably deem necessary or desirable to
consummate the transactions contemplated by, or give effect to the
agreements set forth in, this Agreement.
9. Indemnification.
(a) Indemnification by Seller and Seaboard. Seller and
Seaboard shall jointly and severally indemnify Buyer and its
officers, directors, employees and agents and hold them harmless
from any loss, liability, claim, damage or expense (including
reasonable legal fees and expenses) suffered or incurred by any such
indemnified party to the extent arising from (i) any breach of any
of their representations or warranties contained in this Agreement,
(ii) any breach of any of their covenants contained in this
Agreement requiring performance after the Closing Date, and (iii)
the Retained Liabilities; provided, however, that neither Seller nor
Seaboard shall have any liability under clause (i) above unless the
aggregate of all losses, liabilities, costs and expenses relating
thereto for which Seller or Seaboard would, but for this provision,
be liable exceeds on a cumulative basis an amount equal to $150,000,
and then only to the extent of any such excess up to
a maximum aggregate amount equal to $500,000; and provided further,
however, that neither Seller nor Seaboard shall have any liability
hereunder for any breach of a representation or warranty of Seller
contained in this Agreement if Mr. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Buyer or any of
its directors or officers had actual or constructive knowledge of
such breach on the Closing Date.
(b) Indemnification by Buyer. Buyer shall indemnify
Seller, its affiliates and each of its officers, directors,
employees and agents against and hold them harmless from any loss,
liability, claim, damage or expense (including reasonable legal fees
and expenses) suffered or incurred by any such indemnified party to
the extent arising from (i) any breach of any representation or
warranty of any Buyer contained in this Agreement, (ii) any breach
of any covenant of any Buyer contained in this Agreement requiring
performance after the Closing Date, and (iii) the Assumed
Liabilities.
(c) Losses Net of Insurance. The amount of any loss,
liability, claim, damage or expense for which indemnification is
provided under this Section 9 shall be net of any amounts recovered
or recoverable by the indemnified party under insurance policies
with respect to such loss, liability, claim, damage or expense and
net of any tax benefit derived by the indemnified party from such
loss, liability, claim, damage or expense.
(d) Termination of Indemnification. The obligations to
indemnify and hold harmless a party hereto, (i) pursuant to Sections
9(a)(i) and 9(b)(i), shall terminate when the applicable
representation or warranty terminates pursuant to Section 13, (ii)
pursuant to Sections 9(a)(ii) and 9(b)(ii), shall terminate when the
applicable covenant terminates in accordance with its
terms, and (iii) pursuant to Sections 9(a)(iii) and 9(b)(iii) shall
not terminate; provided, however, that as to clause (i) above such
obligations to indemnify and hold harmless shall not terminate with
respect to any item as to which the person to be indemnified or the
related party hereto shall have, before the expiration of the
applicable period, previously made a claim by delivering a notice
(stating in reasonable detail the basis of such claim) to the
indemnifying party.
(e) Procedures Relating to Indemnification. In order for
a party (the "indemnified party") to be entitled to any
indemnification provided for under this Agreement, arising out of or
involving a claim or demand made by any person, firm, governmental
authority or corporation against the indemnified party (a "Third
Party Claim"), such indemnified party must notify the indemnifying
party in writing, and in reasonable detail, of the Third Party Claim
within 30 days after receipt by such indemnified party of written
notice of the Third Party Claim; provided, however, that failure to
give such notification shall not affect the indemnification provided
hereunder except to the extent the indemnifying party shall have
been actually prejudiced as a result of such failure (except that
the indemnifying party shall not be liable for any expenses incurred
during the period following the end of such 30-day period referred
to above in which the indemnified party failed to give such notice
and the date on which such notice is given). Thereafter, the
indemnified party shall deliver to the indemnifying party, within
ten (10) business days after the indemnified party's receipt
thereof, copies of all notices and documents (including court
papers) received by the indemnified party relating to the Third
Party Claim.
If a Third Party Claim is made against an indemnified
party, the indemnifying party will be entitled to participate in the
defense thereof and, if it so chooses, to assume the defense thereof
(unless the indemnifying party is also a party to such Third Party
Claim and the indemnified party determines in good faith that joint
representation would be inappropriate due to a potential conflict of
interest) with counsel selected by the indemnifying party and
reasonably satisfactory to the indemnified party. Should the
indemnifying party be entitled under the preceding sentence to
assume the defense of a Third Party Claim and so elect to assume
such defense, the indemnifying party will not be liable to the
indemnified party for legal expenses subsequently incurred by the
indemnified party in connection with the defense thereof. If the
indemnifying party assumes such defense, the indemnified party shall
have the right to participate in the defense thereof and to employ
counsel, at its own expense, separate from the counsel employed by
the indemnifying party, it being understood that the indemnifying
party shall control such defense (except in the circumstances set
forth in the parenthetical to the first sentence of this paragraph).
The indemnifying party shall be liable for the fees and expenses of
counsel employed by the indemnified party for any period during
which the indemnifying party has not assumed the defense thereof
(other than during any period following the 30-day period referred
to in the first sentence of this Section 9(f) in which the
indemnified party shall have failed to give notice of the Third
Party Claim as provided above). If the indemnifying party chooses
to defend or prosecute any Third Party Claim, all of the parties
hereto shall cooperate in the defense or prosecution thereof. Such
cooperation shall include the retention and (upon the indemnifying
party's request) the provision to the indemnifying party of records
and information which are reasonably relevant to such Third Party
Claim, and making
employees available on a mutually convenient basis to provide
additional information and explanation of any material provided
hereunder. Whether or not the indemnifying party shall have assumed
the defense of a Third Party Claim, the indemnified party shall not
admit any liability with respect to, or settle, compromise or
discharge, such Third Party Claim without the indemnifying party's
prior written consent (which consent shall not be unreasonably
withheld or delayed).
(f) This Section 9 shall not apply to indemnification for
taxes, which shall be governed by Section 10.
10. Tax Matters.
(a) Income Tax Liability. Buyer shall be responsible and
shall indemnify Seller for any Puerto Rican and federal income tax
liabilities of Seller related to the period from August 2, 1998 to
the Closing Date (net of any estimated payments made on or after
August 2, 1998 or overpayments attributable to such payments).
Seller and Seaboard shall be responsible and shall jointly and
severally indemnify Buyer for any Puerto Rican and federal income
tax liabilities of Seller for any period prior to August 2, 1998
(net of any estimated payments made prior to August 2, 1998 or
overpayments attributable to such payments and refundable to
Seller). The income taxes for the period that includes August 2,
1998 shall be allocated among the parties based on Seller's monthly
financial statements as of, and for the year to date period ended
on, August 1, 1998, provided that reconciling items between book net
income and net taxable income shall be attributed to the period to
which they are directly allocable and those items not attributable
to any period shall be apportioned based on the net taxable income
before such reconciling items. The marginal income tax rate for
both periods (on and before August 1, 1998 and on and after August
2, 1998) shall be the same.
(b) Tax Returns and Filings. The taxable period
of Seller that includes the Closing Date shall be reported to the
United States and Puerto Rico by the Seller. Seller will timely
prepare and file with the appropriate authorities (after approval by
Buyer, which approval shall not be unreasonably withheld or delayed)
all United States income tax returns, reports and forms required to
be filed and will pay all income taxes due with respect to such
returns, reports and forms. Buyer shall, within thirty (30) days of
the later of the filing of such return or notification by Seller of
the amounts owed, pay to Seller any amounts are owed in accordance
with the allocation methodology set forth above. Conversely, if
amounts are owed to Buyer, they shall be paid by Seller or Seaboard
within thirty (30) days of the filing of such return.
(c) Tax Audits and Amended Returns. Any liability or
refund resulting from a tax audit, revenue agent review or similar
proceeding of either taxing jurisdiction shall be borne or shared by
Seller (or Seaboard) and Buyer in accordance with the allocation
methodology set forth above and paid over to the appropriate party
within thirty (30) days of the finalization of such proceeding.
Seller shall give notice to Buyer of any United States audits and
allow Buyer to participate in the process. Seller shall not agree
to any audit adjustments which would increase Buyer s income or
other tax liability without Buyer s consent, which consent shall not
be unreasonably withheld or delayed. Seller shall, if Buyer so
requests and at Buyer's expense, file for and obtain any refunds or
credits to which Buyer is entitled under this Section. Seller shall
permit Buyer to control the prosecution of any such refund claim
and, where deemed appropriate by Buyer, authorize by appropriate
powers of attorney such persons as Buyer shall
designate to represent the Buyer with respect to such refund claim.
Seller shall forward to Buyer any refund within thirty (30) days
after the refund is received (or reimburse Buyer for any such
credit within thirty (30) days after the credit is allowed and
applied against other income tax liability), provided, however, that
such amounts payable to Buyer shall be net of any reasonable
expense incurred by Seller attributable to the receipt of such
refund and/or the payment of such amount to Buyer. Seller and Buyer
shall treat any payments under the preceding sentence as an
adjustment to the Purchase Price.
(d) Any adjustments to the income tax liability based on
audit shall be borne in accordance with the apportionment set forth
herein within thirty (30) days after the final audit determination.
(e) General Tax Matters. Seller and Buyer shall
reasonably cooperate, and shall cause their respective affiliates,
officers, employees, agents, auditors and representatives reasonably
to cooperate, in preparing and filing all returns, reports and forms
relating to income taxes, including maintaining and making available
to each other all records necessary in connection with income taxes
and in resolving all disputes and audits with respect to all taxable
periods relating to income taxes. Buyer and Seller recognize that
Seller and its affiliates will need access, from time to time, after
the Closing Date, to certain accounting and tax records and
information of Seller, and therefore, each party agrees (1) to use
its best efforts to properly retain and maintain such records until
such time as the other party agrees that such retention and
maintenance is no longer necessary; and (2) to allow the other party
and its agents and representative (and agents or representatives of
any of its affiliates), at times and dates mutually acceptable to
the parties, to inspect, review and make copies of such records as
the other party may deem necessary or appropriate from time to time,
such activities to be conducted during normal business hours and at
the other party's expense.
11. Assignment; Successors.
This Agreement and the rights and obligations hereunder
shall not be assignable or transferable by any Buyer or Seller
(including by operation of law) without the prior written consent of
the other parties hereto; provided, however, that (i) any Buyer may
assign its right hereunder to a subsidiary or affiliate of such
Buyer which is controlled by Mr. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ without the prior
written consent of Seller and (ii) Seller may assign its rights and
obligations hereunder to any entity wholly owned by Seller; provided
further, however, that no assignment shall limit or affect the
assignor's obligations hereunder.
12. No Third-Party Beneficiaries.
This Agreement is for the sole benefit of the parties
hereto and their permitted assigns and nothing herein expressed or
implied shall give or be construed to give to any person or entity,
other than the parties hereto and such assigns, any legal or
equitable rights hereunder.
13. Termination.
(a) Anything contained herein to the contrary notwith
standing, this Agreement may be terminated and the transactions
contemplated hereby abandoned at any time prior to the Closing Date:
(i) by mutual written consent of Seller and
Buyer;
(ii) by either party hereto, if the Closing does
not occur on or prior to December 31, 1998;
(iii) by Seller, if on or prior to December 4,
1998, Buyer shall not have executed a credit agreement providing
for sufficient financing to consummate the Holsum Acquisition and containing
terms that, to the extent affecting the rights of Seller or the ability of
Buyer to consummate the transactions contemplated herein, shall be reasonably
satisfactory to Seller; or
(iv) by Seller, as provided in Section 1(g), in
the event that Seller and Buyer shall not reach an agreement as to
the indemnification, if any, of Seller by Buyer with respect to any
adverse economic effect arising from any change in any applicable
law or regulation adopted prior to the Closing Date and requiring
any tax withholding with respect to payment of the Purchase Price;
provided, however, that the party seeking termination pursuant to
clause (ii) or (iii) is not in breach of any of its representations,
warranties, covenants or agreements contained in this Agreement.
(b) In the event of termination by Seller or Buyer
pursuant to this Section 13, written notice thereof shall forthwith
be given to the other party and the transactions contemplated by
this Agreement shall be terminated, without further action by either
party. If the transactions contemplated by this Agreement are
terminated as provided herein:
(i) Buyer shall return all documents
and other material received from Seller relating to the transactions
contemplated hereby, whether so obtained before or after the execution
hereof, to Seller;
(ii) if such termination is pursuant to
Section 12(a)(ii) under such circumstances that all the conditions
to Closing set forth in Section 3(a) shall have been satisfied or
would have been satisfied but for any action taken or omitted to be
taken by Buyer or any of its affiliates, then such termination shall
not result in any liability to Seller; and
(iii) if such termination is pursuant to
Section 13(a)(ii) under such circumstances that all the conditions
to Closing set forth in Section 3(b) shall have been satisfied or
would have been satisfied but for any action taken or omitted to be
taken by Seller or any of its affiliates, then such termination
shall not result in any liability to Buyer.
(c) If this Agreement is terminated and the transactions
contemplated hereby are abandoned as described in this Section 13,
this Agreement shall become void and of no further force and effect,
except for the provisions of (i) Section 15 hereof relating to
expenses, (ii) Section 7(c) hereof relating to publicity,
(iii) Section 21 hereof relating to finder's fees and broker's fees,
(iv) this Section 13 and (v) Section 7(g) relating to
confidentiality. Nothing in this Section 13 shall be deemed to
release either party from any liability for any breach by such party
of the terms and provisions of this Agreement or to impair the right
of either party to compel specific performance by the other party of
its obligations under this Agreement or to claim damages from the
other party for breach of this Agreement; provided, however, that a
termination of this Agreement based solely on the breach of a
representation, which breach is not intentional and does not involve
fraud or bad faith, shall only
entitle the non-breaching party to recover its out-of-pocket
expenses incurred in connection with this transaction, and not any
consequential or other damages.
14. Survival of Representations.
The representations and warranties in this Agreement shall
survive the Closing for a period of one year commencing on the
Closing Date. The representations and warranties in the Note, the
collateral documents securing the Note and the Guaranty shall
survive until the Note is paid in full. The obligations of each
party hereto under the covenants that are required to be performed
after the Closing pursuant to this Agreement or the Assumption
Agreement and the obligations of Mr. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and Buyer under
the Note, the collateral documents securing the Note and the
Guaranty shall survive until such obligations have been fully
performed.
15. Expenses.
Whether or not the transactions contemplated hereby are
consummated, all costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by
the party incurring such costs or expenses. Buyer shall be
responsible for the payment of the expenses related to the
preparation and execution of the real property deeds necessary for
the transfer of the Real Property (except for the internal revenue
stamps to be affixed to the original of the real property deeds,
which shall be paid by Seller), and for the payment of the internal
revenue stamps required in the first certified copy of such deeds
and the internal revenue vouchers required for the recordation of
such deeds in the Registry of Property of Puerto Rico. Buyer shall
also be responsible for the expenses related to the execution and
recordation of any mortgages and security interests provided herein.
If the transactions contemplated hereby are not consummated within
the agreed period, Buyer and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ shall reimburse Seller
for any expenses of Buyer paid for by Seaboard Corporation or
Seaboard Bakeries related to the transaction within ten (10) days
after the termination of this Agreement.
16. Amendments.
No amendment to this Agreement shall be effective unless
it shall be in writing and signed by all parties hereto.
17. Notices.
All notices or other communications required or permitted
to be given hereunder shall be in writing and shall be delivered by
hand or sent by prepaid telex, cable or telecopy, or sent, postage
prepaid, by registered, certified or express mail, or reputable
overnight courier service and shall be deemed given when so
delivered by hand, telexed, cabled or telecopied, or if mailed,
three days after mailing (one business day in the case of express
mail or overnight courier service), as follows:
(a) if to Buyer,
Mr. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Holsum Bakers of Puerto Rico
Call ▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, Esq.
(b) if to Seller,
Seaboard Corporation
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇)▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Department of Legal Affairs
with a copy to:
▇▇▇▇▇▇▇▇ & Worcester LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
and
Fiddler ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
18. Interpretation.
The headings contained in this Agreement, in any Exhibit
or Schedule hereto and in the table of contents to this Agreement,
are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
19. 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.
20. Entire Agreement.
This Agreement, including the Schedules and Exhibits
hereto, contains the entire agreement and understanding between the
parties hereto with respect to the subject matter hereof and super
sedes all prior agreements and understandings relating to such
subject matter.
21. Fees.
Each party hereto hereby represents and warrants that no
brokers or finders have acted for such party in connection with this
Agreement or the transactions contemplated hereby, and agrees to
indemnify the other for any such fees.
22. Severability.
If any provision of this Agreement or the application of
any such provision to any person or circumstance shall be held
invalid, illegal or unenforceable in any respect by a court of
competent jurisdiction, such invalidity, illegality or
unenforceability shall not affect any other provision hereof.
23. Governing Law; Consent to Jurisdiction.
This Agreement shall be governed by and construed in
accordance with the laws of New York, without regard to the
conflicts of law principles thereof, except as to matters relating
to real estate, in which case Puerto Rico law shall apply. Each
party hereto consents to the jurisdiction of the courts of New York
and of the federal courts in New York in connection with any claim
arising hereunder, and expressly waives and agrees not to raise any
claim that it is not personally subject to the jurisdiction of such
court, that the venue of the suit is improper, that this agreement
may not be litigated in such court, and expressly agrees not to
raise forum non conveniens in any such proceeding. With respect to
any action brought by Buyer against Seller pursuant to
Section 9(a)(i) or (ii), Buyer agrees to bring such action in a New
York court so long as such New York court shall have jurisdiction
(including as a result of the consent to jurisdiction contained
herein) over the parties and the subject matter of the action. Other
actions brought by Buyer and actions brought by Seller may
additionally be brought in any appropriate forum. Each of the
parties agrees that service of process may be made upon it by
certified or registered mail to the address for notices set forth in
this agreement or as otherwise provided by law.
24. Waiver of Trial by Jury.
Seller and Buyer expressly waive all right to trial by jury in
any action, proceeding or counter claim related to this Agreement.
The parties acknowledge that the provisions of this paragraph have
been bargained for and that they have been represented by counsel in
connection therewith.
25. Schedules. Matters disclosed in any Schedule hereto shall
be deemed to have been disclosed in all Schedules hereto. The
Schedules shall be an integral part of this Agreement.
26. Execution by Mr. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇. Mr. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ is
executing this Agreement solely for purposes of confirming his
agreement set forth in Section 15 hereof.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed as of the date first written above.
HARINAS DE PUERTO RICO, INC. HDPR ACQUISITIONS CORP.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇▇▇▇▇ Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Vice President Title: President
SEABOARD CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: Vice President-
Chief Financial Officer
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
The following exhibits and schedules have been excluded from
this filing, registrant agrees to furnish supplementally a
copy of any omitted schedule to the SEC upon request:
Exhibit A-Form of Guaranty
Schedule 1(b) (i) to Asset Purchase Agreement-Harinas-Real
Property
Schedule 1(b) (ii) to Asset Purchase Agreement-Harinas-
Machinery & Equipment
Schedule 1(b) (iii) to Asset Purchase Agreement-Harinas-
Contracts
Schedule 1(b) (viii) to Asset Purchase Agreement-Harinas-
Intellectual Property
Schedule 1(b) (xi) to Asset Purchase Agreement-Harinas-Other
Assets
Schedule 1(c) (iii)-▇▇▇▇▇ Agreement and Harinas Trademarks
Schedule 3(a) (iv) (D) to Asset Purchase Agreement-Harinas-
Buyer's Obligations
Schedule 4(a) to Asset Purchase Agreement-Harinas-Authority
Schedule 4(d) to Asset Purchase Agreement-Harinas-Compliance
with Applicable Laws
Schedule 4(e) to Asset Purchase Agreement-Harinas-Real
Property
Schedule 4(f) to Asset Purchase Agreement-Harinas-Contracts
Schedule 4(g) to Asset Purchase Agreement-Harinas-Litigation
Schedule 4(h) to Asset Purchase Agreement-Harinas-
Intellectual Property
Schedule 4(j) to Asset Purchase Agreement-Harinas-Taxes
Schedule 4(k) to Asset Purchase Agreement-Harinas-Operation
since Balance Sheet
Schedule 4(I) to Asset Purchase Agreement-Harinas-
Availability of Assets and Legality of Use
Schedule 4(m) to Asset Purchase Agreement-Harinas-
Governmental Permits
Schedule 4(n) to Asset Purchase Agreement-Harinas-Accounts
Receivable; Inventories
Schedule 4(p) to Asset Purchase Agreement-Harinas-
Environmental Matters
Schedule 5(a) to Asset Purchase Agreement-Harinas-Ordinary
Conduct of Business by Seller
Schedule 7(a) to Asset Purchase Agreement-Harinas-Consents