EXHIBIT 10.1
FRAMEWORK AGREEMENT
The undersigned, His Excellency, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, Minister of Commerce and
Industry of Panama, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, acting as Secretary General of
SINDICATO INDUSTRIAL DE CHIRIQUI LAND COMPANY Y EMPRESAS AFINES (Hereinafter
SITRACHILCO) and as President of COOPERATIVA DE SERVICIOS MULTIPLES DE PUERTO
▇▇▇▇▇▇▇▇▇, ▇.▇. (Hereinafter "COOSEMUPAR"), ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, acting as
General Manager of PUERTO ARMUELLES FRUIT CO., Ltd., Panama branch (Hereinafter
"PAFCO"), before witnesses whose names appear at the bottom of this document;
agree to the following:
PAFCO has communicated to the Republic of Panama, through the Minister of
Commerce, its decision to cease its banana operations in the country. By virtue
of the Operations Contract Number 135, and Lease Contract Number 133 in the
corresponding lease relation between the State and PAFCO, the company has
arranged the transfer of its assets to a new operator.
COOSEMUPAR states that, with the purpose of becoming a new banana operator, it
is interested in acquiring the assets comprised by the banana plantations that
belong to PAFCO, located in the district of Baru, Province of Chiriqui, Republic
of Panama, to continue dedicating those assets to producing and selling bananas
for exportation.
SITRACHILCO states that considering the interest of all the workers it
represents and with the purpose of preserving the source of jobs and
contributing to making all its affiliates associates of COOSEMUPAR, it commits
to facilitate this negotiation in all manners possible.
NOW THEREFORE, the parties agree to the following:
1. PURCHASE OF ASSETS. COOSEMUPAR agrees to buy and PAFCO agrees to sell
the banana assets that comprise the plantations belonging to PAFCO in
the district of Baru, Province of Chiriqui, Republic of Panama, to
continue dedicating those assets to producing and selling bananas for
export. In general these assets are banana plants with their pending
fruit as to the day of transfer, the drainage systems, the irrigation
systems, the irrigation plants, the fuel storage tanks in Puerto
Armuelles and the farms, wheeled equipment and field work automobiles,
access roads to the plantations including bridges, the cable systems,
the packing stations with all their equipment and their fruit yards, the
housing or camps that belong to PAFCO, the warehouses and other related
buildings, the offices, with their equipment and furniture, the
conference room with all its furniture, the electric grid, the
facilities and buildings of the old box factory and the workshops
located on the banana farms including the shops located in Puerto
Armuelles with their wheeled equipment and in general, any other asset
that belongs to PAFCO and is not included in point 1.1 of excluded
assets, therefore, this list is only for illustrative purposes.
1.1. EXCLUDED ASSETS. Not withstanding the above and without
affecting the sale price, the parties agree to exclude the
following items from the sale: the working capital, bank
accounts and all inventories of materials and other supplies
except equipment parts. Also excluded are financial files and
other legal documents, mail, computer software and other
intangibles such as software and hardware licenses, intellectual
property and the assets needed by the fruit buying entities, the
technical representative and the providers of technical services
described in point 6 to perform their functions, automobiles and
motorcycles of the departments of Management, systems [IT] ,
operation analysis, as well as the office equipment and
furniture of the departments of management, accounting, systems
[IT] and operational analysis and legal department, the office
equipment, furniture and items of the ▇▇▇▇▇ House and the three
houses of Barrio Las Palmas that are property of PAFCO described
in Point 1.1 . PAFCO will submit to COOSEMUPAR a definitive list
of such assets sometime next week. The school and the Las Palmas
club are also excluded. They will be donated to the board of
trustees of their current users.
1.1.1. USE OF CERTAIN BUILDINGS. While the financing, technical
services or international banana purchase contracts are in force,
COOSEMUPAR agrees to give the entities providing technical services and
the Technical Representative free and pacific use of the following
buildings: the manager's office, accounting office, legal department,
information technology, the ▇▇▇▇▇ House, and the three houses located in
barrio Las Palmas, i.e. the general manager's house, the old Habeche
house, and the old ▇▇. ▇▇▇▇▇▇▇ house. COOSEMUPAR will not be responsible
for the maintenance of these facilities which will be done by the
occupants.
1.2. PRICE AND FORM OF PAYMENT. The total sale price is the sum of
NINETEEN MILLION EIGHT HUNDRED THOUSAND DOLLARS, in United
States of America currency (US$19,800,000.00). The final
determination of this price will depend on the calculation of
the severance payments and the transaction of other labor
contingencies contemplated in point 3 of this agreement, in a
way that the sale price must always be enough to cover the
totality of said labor liabilities. The price will be paid at
the moment of signing the transfer document through a banking
transfer of immediately available funds to the account in a bank
in Panama specified by PAFCO.
1.3. TERMS OF SALE. The goods included in the sales contract will be
sold at a fixed price regardless of their amount, location, and
condition in which they are. For this reason PAFCO will not give
guarantees of dispossession or latent defect, nor will it be
obligated to indemnification for said assets.
1.4. CIVIL AND COMMERCIAL OBLIGATIONS. COOSEMUPAR will not assume any
civil or commercial liability originated before the transfer.
PAFCO will be the only responsible party for paying any civil or
mercantile debts existing at the time of transfer.
1.5. INVENTORIES. PAFCO will sell to COOSEMUPAR, and COOSEMUPAR will
buy the existing materials and supplies in the warehouses at the
time of transfer. The price of said materials and supplies will
be the cost reflected on PAFCO's books. Payment will be made
over a period of one hundred and twenty days starting the day of
transfer and will be made through deductions per box based on a
mutual estimation from boxes that COOSEMUPAR will export during
those one hundred and twenty days.
2. ASSIGNMENT OF RIGHTS AS NEW OPERATOR. In order for COOSEMUPAR to fully
acquire the status of banana operator according to the contracts which
currently exist between PAFCO and the Republic of Panama; the parties
agree to proceed to assign Operation Contract No. 135 and the lease
relation contained in Lease Contract No. 133. This lease relation
includes the totality of the land currently planted with banana plants,
as well as the vacant that has no been previously released in favor of
the State. COOSEMUPAR will assume PAFCO's position in such contracts
with the same inherent benefits, rights and obligations. The State will
agree to the assignment and will grant the corresponding releases to
PAFCO.
3. PAYMENT OF SEVERANCE BENEFITS AND TRANSACTION ABOUT PENDING LABOR
PROCESSES
3.1. TERMINATION OF ALL LABOR CONTRACTS. PAFCO and SITRACHILCO will
end all labor contracts in force by legal procedure and agree to
facilitate all proceedings and necessary actions to transfer operations
by COOSEMUPAR.
3.1.1. REQUEST FOR AUTHORIZATION TO TERMINATE EMPLOYMENT. The
parties consider that one of the formulas to facilitate the
termination of the labor contracts is to request authorization
from the Ministry of Labor to terminate all employees for
economic reasons. Concurrently or independently, labor
termination agreements by reciprocal consent and with no
responsibility by the parties, could be signed.
3.1.2. 100% OF SEVERANCE PAYMENT. The indemnification to be
paid due to the termination of the labor contract will be as
indicated in Article 225 of the Labor Code, without causing
surcharges, interests or any other surcharge and without
exceeding 100%. The seniority bonus will also be paid as
established in Article 224 of the Labor Code.
3.1.3. UNION PRIVILEGE. Personnel that enjoy union privilege
will be paid-off as if it had worked up to January 31, 2005 for
those who are currently working
at their positions. Those who stopped working before the signing
of this agreement will be paid as if they had worked up to
January 31, 2004. SITRACHILCO will provide PAFCO with the list
of employees who enjoy union privilege. The costs resulting from
such payments will be added to the sales price of the assets
sold according to point 1 above.
3.1.4 MATERNITY PRIVILEGE. The parties agree that for all the
ladies that had informed PAFCO about their pregnancy, and
therefore, are protected by maternity privilege will be rehired
by COOSEMUPAR without interruption of their rights and
respecting their maternity benefit.
3.1.5. INJURED. Benefits for injured people will be deposited
at the Ministry of Labor so they can collect their money once
their situation is defined or when, by mutual agreement, their
labor relation is concluded.
3.1.6. Any amount paid as a consequence of section 3 that
results in excess of nineteen million eight hundred thousand
dollars will be for account and cost of COOSEMUPAR, which will
return the amount paid in excess no later than seven days after
closing. The parties will agree on the terms of such retention
and payment. In case PAFCO has to pay less that nine million
eight hundred thousand dollars for the totality of the sums
agreed to in section 3, it will return the balance to COOSEMUPAR
within a period of seven days after closing.
3.2. TRANSACTION ABOUT ALL PENDING LABOR PROCESSES AND LABOR
RELEASES. The parties agree to definitively settle and end as soon as
possible all the labor processes listed in Attachment A that are pending
at the time COOSEMUPAR's assumption as new operator takes effect,
according to the Operation and Lease Contracts.
PAFCO and SITRACHILCO agree that the totality of the pending case has a
value equivalent to B/.5,500,000.00. The parties agree to settle for 65%
of this amount, this is to say the single amount of B/.3,575,000.00,
including court costs.
3.3. RELEASES. SITRACHILCO and COOSEMUPAR will release PAFCO for all
liabilities contained in Point 3.
4. FINANCING
4.1. LOANS. In order to finance the payment of the sales
price for the assets, COOSEMUPAR will obtain two loans
as follows:
4.1.1. PAFCO will cause an affiliated company to lend
COOSEMUPAR up to FIVE MILLION DOLLARS in currency of the
United States of America (US$5,000,000.00). Disbursement
of this loan will be conditioned to disbursement of
funds by the Banco Nacional de Panama according to the
loan contract indicated in next paragraph.
4.1.2. COOSEMUPAR will negotiate a loan with the Banco Nacional
de Panama for the difference between five million
dollars and the sales price that finally results.
4.2. TERMS AND REPAYMENT. The loans will be for a term of ten
years and will earn an interest equivalent to LIBOR plus
3% to 4% that will be agreed by the lenders. Both loans
will be paid simultaneously by means of the retention of
US$0.40 per box of fruit exported under the Fruit
Purchase Contract described in next paragraph. This
retention will be shared equally by both creditors,
US$0.20 per box to each. The loans will allow the
accelerated payment of the capital without premiums or
penalties. Any acceleration will be shared in equal
parts by both creditors. In case the sales price is
lower as referenced in point 3.1.6, COOSEMUPAR will give
this amount only to the Banco Nacional de Panama as a
prepayment for the credit it will negotiate with this
bank. Both loan contracts will contain the usual
stipulations, guarantees and conditions for this type of
financing and will be established by mutual consent of
the creditors.
5. FRUIT PURCHASE CONTRACT. COOSEMUPAR and a purchasing entity affiliated
to PAFCO will sign an International Banana Purchase Contract according
to what has been discussed.
6. AGREEMENT OVER TECHNICAL SERVICES. The parties agree that PAFCO will
cause one or several of its affiliated entities to provide COOSEMUPAR
with technical services in the following areas: Financial Services and
Management Reporting, Logistic Services and Technical Agricultural
Services.
6.1. FINANCIAL AND MANAGEMENT INFORMATION SERVICES.
COOSEMUPAR will have the option of receiving for a
period of up to twenty four months, if it were to
require it, services in the areas of accounting,
information technology and operational analysis. These
services could be ended by giving one month notice.
COOSEMUPAR agrees to allow the use, free of charge, of
the office of operational analysis located in Corredor
during the time these services are being provided.
6.2. LOGISTIC SERVICES.
6.2.1. TRANSPORTATION. COOSEMUPAR will have the option, if it
requires it, to contract the transport of the bananas to
be exported under the international fruit purchase
contract, through an entity affiliated to PAFCO that
offers logistic services in Panama. If COOSEMUPAR
decides to contract the transport on their own, the
transportation company must fulfill all requirements
established by the fruit buyer with respect to quality
and safety in transportation in order to protect the
fruit, the chassis and the containers. COOSEMUPAR agrees
to honor PAFCO's current transport contracts which will
expire at the end of November, 2003.
6.2.2. YARD AND STOWING. COOSEMUPAR and the entity affiliated
to PAFCO that offers logistic services in Panama will
agree on a contract so the later provides fruit yard and
stowing services. The contract for the yard and stowing
services will be in force for the same period of time as
the international fruit purchase contract described in
point 5 above.
6.3. AGRICULTURAL SUPPORT SERVICE. As a requisite for
financing, COOSEMUPAR and an entity affiliated to PAFCO
will enter into a contract for agricultural support in
the areas of diseases and pests, nutrition, irrigation
and drainage, and pre and post harvest agricultural
practices, and it will be in force while the debt
between COOSEMUPAR and the creditor entity, subsidiary
of ▇▇▇▇▇▇▇▇ Brands International has payments pending.
The entity providing these services will present to
COOSEMUPAR a profile of the technicians to use and the
estimate of the cost of their services, taking into
account the economic capacity of COOSEMUPAR's. In case
there are objective reasons to object to the services of
one of the technicians providing services to COOSEMUPAR,
it will notify the service entity so it can take the
appropriate measures.
6.4. COMMON CONDITIONS TO TECHNICAL SERVICE CONTRACTS
6.4.1. All financial and agricultural services to be provided
according to the contracts mentioned in point 6 will be
provided at cost.
6.4.2. Yard and stowing services will be charged at cost. The
logistic transportation service will be offered at
competitive prices.
6.4.3. In no case could it be interpreted that providing
agricultural support services implies an assumption of
responsibility by the entities providing the technical
service. On the contrary, the parties recognize that
COOSEMUPAR, as the proprietor, will be the sole
administrator of its operations with full authority and
full responsibility in making decisions related to the
management of their banana for export producing
operations and its other activities.
6.4.4. Any technical service contract can be extended upon
expiration by mutual agreement of the parties.
7. PREVIOUS CONDITIONS TO THE CONCLUSION OF THE DEFINITIVE AGREEMENTS
7.1. THE RIGHT TO BECOME A MEMBER OF COOSEMUPAR. COOSEMUPAR
declares that all PAFCO workers have the right to become
members of the coop once they have fulfilled the
requirements of the law and articles of association of
the coop.
7.2. GOVERNMENT RECOGNITION OF COOSEMUPAR AS NEW OPERATOR,
CONSENT TO ASSIGN CONTRACTUAL RIGHTS
AND RELEASE. The Ministry of Commerce and Industry will
recommend the Council of the Cabinet to proceed to
formally recognize COOSEMUPAR as a competent banana
operator. Such recognition is a prerequisite to
acquiring the assets described in point 1 above. This
recognition will be made in order for COOSEMUPAR to take
advantage, as assignee of the Operations Contract number
135, of the concessions and benefits inherent to such
condition.
7.3. AUTHORIZATION BY AUTHORITIES TO TERMINATE WORKERS. As a
previous step to the definitive cease of operations and
sale of its assets, PAFCO will request formal
authorization from the competent authorities of the
Republic of Panama to end the totality of the labor
contracts in all its operations in the country for
economic causes. SITRACHILCO agrees to facilitate and
accelerate this legal process, easing PAFCO's
pretensions and procuring acceptance of the terminations
by its members. The authorization to terminate must be
issued by the labor authorities and executed by the
company before PAFCO and COOSEMUPAR can proceed to the
sale of the assets referred to in point 1 and before
COOSEMUPAR can sign the international banana purchase
contract to which point 5 refers.
7.4. PLEDGE OF BANK FINANCING. As a condition prior to the
conclusion of the purchase of the assets to which point
1 makes reference and the duration of the international
banana purchase contract to which point 5 refers,
COOSEMUPAR must be sure it has the necessary financing
commitment by the Banco Nacional de Panama to finance
the purchase of the assets and for the necessary working
capital to operate COOSEMUPAR's banana business. PAFCO
guarantees that its affiliate in charge of lending the
five million dollars to finance part of the sale price
of the assets, will sign the respective loan contract
jointly with the signing of the loans granted by the
Banco Nacional de Panama.
7.5. OTHER AGREEMENTS BETWEEN PAFCO AND COOSEMUPAR.
7.5.1. CERTAIN RELEASES. Before signing the sale of the assets,
at the latest, PAFCO will give COOSEMUPAR the documents
proving PAFCO is up to date in its obligations relative
to its contracts with the IDAAN for water supply and its
electrical supply contract with the corresponding
company. COOSEMUPAR and PAFCO will agree to
simultaneously and respectively exchange connection and
disconnection letters with the purpose of assuring
uninterrupted services.
7.5.2. BLUEPRINTS AND DOCUMENTS. PAFCO will hand over at the
latest on the day of the signing of the asset sales
contract, the blueprints to the farms, all engineering
files, and other documents which are useful for
operations.
7.5.3. VISITS AND INSPECTIONS. With the goal of facilitating a
greater familiarization with the assets to be acquired,
PAFCO will coordinate a previous inspection of the
assets with COOSEMUPAR's representatives, if it is
requested. Both parties are aware of the fact that this
is a working operation, such inspections must be
performed in a way that they cause the least disruption
to the operation of the parts as possible.
7.6. ELIMINATION OF THE LIST OF COMPLAINTS. With the signing
of this agreement, SITRACHILCO agrees to remove the list of
complaints currently being processed at the Direccion Regional
de Trabajo de Chiriqui. To this effect it will perform all
necessary actions as soon as possible.
Signed at the Ministry of Commerce and Industry on April 25, 2003