46
AGREEMENT AND PLAN OF REORGANIZATION
This AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement"), dated as of
March __, 1998, by and among Xxxxxxx Purina Company, a Missouri corporation
("Xxxxxxx"), Xxxxxxx Purina International Holding Company, Inc., a Delaware
corporation and wholly owned subsidiary of Xxxxxxx ("RPIHCI") and Agribrands
International, Inc. ("Agribrands"), a Missouri corporation and wholly owned
subsidiary of RPIHCI.
WITNESSETH:
WHEREAS, Xxxxxxx'x businesses consist of the manufacture, distribution
and sale of battery products and pet products domestically and
internationally, and the manufacture, distribution and sale of agricultural
formula animal feeds and other agricultural animal nutrition products
primarily outside the United States; and
WHEREAS, the Board of Directors of Xxxxxxx (the "Xxxxxxx Board") has
determined that it is in the best interests of the Xxxxxxx shareholders to
separate Xxxxxxx'x international agribusiness from its core pet products and
battery businesses, and to consolidate such agribusiness, which is currently
conducted by various subsidiaries and affiliates, into Agribrands, and to
distribute the $.01 par value Agribrands Stock ("Agribrands Stock") to
shareholders of its $.10 par value Xxxxxxx Purina Common Stock ("Xxxxxxx
Stock"); and
WHEREAS, in order to effect such separation, the Xxxxxxx Board has
determined that it is necessary and advisable to consolidate the international
agribusiness through various restructurings and to transfer to Agribrands the
direct stock ownership of those subsidiaries and other assets of Xxxxxxx that
are engaged in the operation of the agribusiness, as well as certain
trademarks and technology used in the international agribusiness, as more
fully set forth below; and
WHEREAS, in connection with such consolidation, Xxxxxxx formed Agribrands
by causing Tradico, Inc., a Delaware corporation and wholly-owned subsidiary
of Xxxxxxx, to be merged into Tradico Missouri, Inc., a Missouri corporation
and wholly-owned subsidiary of Xxxxxxx, and the surviving Missouri corporation
to be renamed Agribrands International, Inc., effective November 18, 1997; and
WHEREAS, in order to effect such distribution of the ownership of
Agribrands to the holders of Xxxxxxx Stock, the Xxxxxxx Board has determined
that it is necessary and desirable to distribute all outstanding shares of
Agribrands Stock on a pro rata basis to the holders of Xxxxxxx Stock, such
distribution being hereinafter referred to as the "Distribution"; and
WHEREAS, the mergers and liquidations of certain affected subsidiaries
are intended to qualify under Sections 368(a)(1)(A) and 332 of the Internal
Revenue Code of 1986, as amended (the "Code"), the transfer of assets are
intended to qualify under Code Section 368(a)(1)(D), and the distribution of
Agribrands Stock is intended to qualify under Code Section 355; and
WHEREAS, the parties hereto have determined that it is necessary and
desirable to set forth the principal corporate transactions required to effect
the Distribution and to set forth other agreements that will govern certain
other matters prior to and following the Distribution;
NOW THEREFORE, in consideration of the premises and the mutual covenants
herein contained and intending to be legally bound thereby, the parties hereto
agree as follows:
ARTICLE I
DEFINITIONS
1.01 General. As used in this Agreement, the following terms shall
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have the following meanings (such meanings to be equally applicable to both
the singular and plural forms of the terms defined):
AAFCO: the Association of American Feed Control Officials.
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Action: any action, claim, suit, arbitration, inquiry, proceeding or
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investigation by or before any court, governmental or other regulatory or
administrative agency or commission or any arbitration or other tribunal.
Affiliate: with respect to any specified Person, an "affiliate" as
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defined in Rule 405 promulgated pursuant to the Securities Act; provided,
however, that for purposes of this Agreement (i) Affiliates of Agribrands
shall not be deemed to include Xxxxxxx or any corporation which will be a
subsidiary or affiliate of Xxxxxxx following the Distribution; and (ii)
Affiliates of Xxxxxxx shall not be deemed to include Affiliates of Agribrands.
Agribrands Asset Purchase Prices: Cash contributed to Agribrands or its
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Affiliates by Xxxxxxx or its Affiliates in connection with the purchase by
Affiliates of Agribrands, as set forth in Section 2.01, of certain assets and
liabilities of Xxxxxxx Purina Canada Inc. and of Xxxxxxx Purina do Brasil,
LTDA.
Agribrands Board: the Board of Directors of Agribrands International,
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Inc. and their duly elected or appointed successors.
Agribrands Cash Holdings: the Cash to be held by Agribrands as of the
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Distribution, as defined in Section 2.04(a) and as adjusted pursuant to
Section 2.04(g).
Agribrands Deferred Compensation Plan: as defined in Section 7.07 of
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this Agreement.
Agribrands Notes: the promissory notes issued by Agribrands to Xxxxxxx
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in connection with the contribution by Xxxxxxx to Agribrands of the stock of
certain foreign subsidiaries.
Agribrands Stock: Agribrands common stock, par value $.01 per share.
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Agribusiness: Xxxxxxx'x direct or indirect ownership of (i) the
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international business of the manufacture, distribution and sale of feeds for
commercial livestock, commercial poultry, laboratory animals, zoo animals,
wild birds and game, and fish and shellfish raised in commercial aquaculture
facilities; and operation of hatcheries; (ii) pet food manufacturing
operations in Korea and sale and distribution of such locally manufactured pet
food products; (iii) pet food manufacturing operations in Canada at Strathroy,
Ontario, and the sale and distribution of such locally manufactured products;
and (iv) all joint ventures involving or associated with the businesses
described in (i) through (iii) above.
Agribusiness Assets: except to the extent provided in, and subject to
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the provisions of, any of the Ancillary Agreements, (i) all of the Assets used
or held by or on behalf of any member of the Agribusiness Group or the Xxxxxxx
Group immediately prior to the Distribution, which Assets are used or held for
use exclusively in the Agribusiness rather than the Xxxxxxx Business; (ii) any
office equipment and furniture used immediately prior to the Distribution
exclusively by Agribusiness Employees; and (iii) all of the other Assets
listed on Schedule ___. Notwithstanding the above, however, Agribusiness
Assets shall not include the Assets listed or described on Schedule ___ [e.g.,
Encrucijada].
Agribusiness Employee: any individual who (a) is identified on Schedule
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___, (b) on the Distribution Date is, or immediately following the
Distribution will be, an officer or employee of any member of the Agribusiness
Group, (c) is employed by a member of the Xxxxxxx Group but, pending transfer
of employment to a member of the Agribusiness Group, performs duties primarily
for the Agribusiness; or (d) is on leave (including but not limited to leave
for disability) or layoff from active employment on the Distribution Date but
who, immediately prior to commencement of such leave or layoff, was primarily
employed in the Agribusiness. Notwithstanding the foregoing, an Agribusiness
Employee shall not include any individual who, as of the Distribution Date,
(i) has been determined to be disabled under the Purina Benefit Association
Long Term Disability Plan ("LTD Plan"), the Xxxxxxx Purina Company Group Life
Insurance Plan or the Retirement Plan; (ii) is on leave during a waiting
period prior to a determination of disability under the LTD Plan; or (iii) is
employed by a member of the Agribusiness Group but performs duties primarily
for a Xxxxxxx Business, pending subsequent transfer of employment to a member
of the Xxxxxxx Group or termination of employment.
Agribusiness Group: Agribrands and its Affiliates at the Distribution.
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Agribusiness Individual: any individual who is an Agribusiness Employee,
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a Former Agribusiness Employee, or a beneficiary of an Agribusiness Employee
or of a Former Agribusiness Employee.
Agribusiness Obligations: as defined in Article X of this Agreement.
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Agricultural Channel: as defined in Section 5.01(_) of this Agreement.
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Ancillary Agreements: any and all of the agreements, instruments,
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understandings, assignments and other arrangements entered into in connection
with the transactions contemplated hereby, including, without limitation, the
Tax Sharing Agreement, the Bridging Services Agreement, the Trademark
Agreement, the Technology License Agreement and certain Toll-Milling
Agreements.
Asset: any and all assets and properties, tangible or intangible,
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including, but not limited to, the following: (i) cash, notes and trade
receivable accounts (whether current or non-current and including all rights
with respect thereto); (ii) certificates of deposit, bankers' acceptances,
stock, debentures, evidences of indebtedness, certificates of interest or
participation in profit-sharing agreements, collateral-trust certificates,
preorganization certificates, investment contracts, voting-trust certificates;
(iii) trade secrets, confidential information, registered and unregistered
trademarks, service marks, service names, trade styles and trade names and
associated goodwill; statutory, common law and registered copyrights;
applications for any of the foregoing, rights to use any of the foregoing and
other rights in, to and under any of the foregoing; (iv) rights under leases,
contracts, licenses, permits, and sales and purchase agreements; (v) real
estate and buildings and other improvements thereon and timber and mineral
rights of every kind; (vi) leasehold improvements, fixtures, trade fixtures,
machinery, equipment (including transportation and office equipment), tools,
dies and furniture; (vii) office supplies, production supplies, spare parts,
other miscellaneous supplies and other tangible property of any kind; (viii)
raw materials, work-in-process, finished goods, consigned goods and other
inventories; (ix) prepayments or prepaid expenses; (x) claims, causes of
action, choses in action, rights of recovery and rights of set-off of any
kind; (xi) the right to receive mail and other communications; (xii) lists of
advertisers, records pertaining to advertisers and accounts, lists and records
pertaining to suppliers and agents, and books, ledgers, files and business
records of every kind; (xiii) advertising materials and other recorded,
printed or written materials; (xiv) goodwill as a going concern and other
intangible properties; (xv) personnel records and employee contracts,
including any rights thereunder to restrict an employee from competing in
certain respects; and (xvi) licenses and authorizations issued by any
governmental authority.
Bridging Services Agreement: as defined in Section 5.03 of this
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Agreement.
Business: the Agribusiness or the Xxxxxxx Business; together, the
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"Businesses."
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Business Day: any day other than a Saturday, a Sunday or a day on which
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banking institutions located in the State of Missouri are obligated by law or
executive order to close.
Cash: cash, marketable securities, compensating balances used to secure
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debt financing, [checks in transit] and such other items as have been
classified as cash consistent with accounting practices historically employed
by Xxxxxxx.
CME: calculated metabolizable energy.
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Code: the Internal Revenue Code of 1986, as amended, or any successor
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legislation.
Committee: the Nominating and Compensation Committee of the Board of
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Directors of Agribrands.
Comparable Product: as defined in Section 5.01(_) of this Agreement.
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Current Plan Year: the plan year or fiscal year, to the extent
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applicable with respect to any Plan, during which the Distribution Date
occurs.
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Distribution: as defined in the recitals to this Agreement.
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Distribution Date: the date, to be determined by the Xxxxxxx Board as of
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which the Distribution shall be effected.
DuPont Agreement: the agreement as defined in Section 5.01(_) of this
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Agreement.
ERISA: the Employee Retirement Income Security Act of 1974, as amended,
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or any successor legislation.
ESOP Stock: Xxxxxxx Purina Company Series A ESOP Convertible Preferred
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Stock, $1.00 par value.
Exchange Act: the Securities Exchange Act of 1934, as amended, together
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with the rules and regulations promulgated thereunder.
Executive SIP: the Xxxxxxx Purina Executive Savings Investment Plan.
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Fair Market Value: the fair market value of property as determined by
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appraisals performed by third party appraisers independent of Xxxxxxx and
Agribrands.
Form 10: as defined in Section 2.06 of this Agreement.
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Former Agribusinesses: all of the following international businesses and
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operations heretofore, but not currently, owned and conducted directly or
indirectly by Xxxxxxx: (i) former international businesses of producing and
distributing commercial feeds for livestock and poultry and rations for
laboratory animals, zoo animals and wild birds and game; and operation of
hatcheries; (ii) former pet food manufacturing operations in Korea, and sale
and distribution in Korea of pet foods formerly locally manufactured; (iii)
poultry processing; (iv) finished poultry products; (v) manufacture and sale
of silos; (vi) manufacture and distribution of livestock and poultry health
products; (vii) commercial egg production (fertile and infertile); (viii)
raising of laboratory rats; (ix) fishmeal processing; (x) oilseed processing;
(xi) sale and lease of breeding hogs; (xii) other businesses managed or
directed by employees of the Agribusiness, other than cereal, baked goods,
tuna processing and soy protein businesses; and (xiii) all joint ventures
involving or associated with the businesses described in (i) through (xii)
above or the Agribusiness.
Former Agribusiness Employee: an individual who was employed by a member
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of the Agribusiness Group or a Former Agribusiness at the time of his or her
termination or retirement on or prior to the Distribution Date.
Former Businesses: the Former Xxxxxxx Businesses and the Former
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Agribusinesses.
Former Xxxxxxx Businesses: all of the businesses and operations
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heretofore, but not currently, directly or indirectly owned and conducted by
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Xxxxxxx, other than a Former Agribusiness.
Former Xxxxxxx Employee: an individual who was employed by a member of
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the Xxxxxxx Group or a Former Xxxxxxx Business at the time of his or her
termination or retirement.
Group: the Xxxxxxx Group or the Agribusiness Group.
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Indebtedness of Agribrands: external obligations in the form of money
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that is borrowed from third party banks and/or financial institutions, to the
extent that such indebtedness (i) is incurred in connection with, or arising
out of the operations of, the Agribusiness and (ii) is reflected and booked on
the balance sheet statements of the Agribusiness consistent with accounting
practices historically employed by Xxxxxxx; provided that, that the following
shall not be deemed to constitute Indebtedness of Agribrands: (A) obligations
incurred with respect to third party banks and/or financial institutions for
which the proceeds are used to finance intercompany and/or intracompany
obligations, and (B) obligations of Xxxxxxx or its Affiliates arising on or
prior to May 31, 1998 in connection with Xxxxxxx'x guarantee of any borrowings
from third parties by Purina Korea, Inc.
Indemnifiable Loss: with respect to any claim by an Indemnitee for
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indemnification hereunder, any and all losses, liabilities, claims, damages,
obligations, payments, costs and expenses (including, without limitation, the
costs and expenses of any and all Actions, demands, claims and assessments,
and any and all judgments, settlements and compromises related thereto and
reasonable attorney's fees and expenses in connection therewith) incurred or
suffered by such Indemnitee with respect to such claim except as may arise in
connection with the performance of any of the Ancillary Agreements, which
shall, in each such case, be governed by the terms of such Ancillary
Agreement.
Indemnitee: as defined in Section 4.03 of this Agreement.
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Indemnitor: as defined in Section 4.03 of this Agreement.
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Information: as defined in Section 6.02 of this Agreement.
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Information Statement: the information statement to be sent to holders
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of Xxxxxxx Stock in connection with the Distribution, which shall set forth
appropriate disclosures concerning the Agribusiness, Agribrands, the
Distribution and other related matters.
IRS: the Internal Revenue Service.
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ISP: the Xxxxxxx Purina 1988 and 1996 Incentive Stock Plans.
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Liabilities: all claims, debts, liabilities, royalties, license fees,
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losses, costs, expenses, deficiencies, litigation proceedings, taxes, levies,
imposts, duties, deficiencies, assessments, attorneys' fees, charges,
allegations, demands, damages, judgments, guaranties, indemnities, or
obligations, whether absolute or contingent, matured or unmatured, liquidated
or unliquidated, accrued or unaccrued, known or unknown and whether or not the
same would properly be reflected on a balance sheet, including all costs and
expenses relating thereto.
LIBOR: London Interbank Offer Rate.
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Notice of Claim: as defined in Section 4.03 of this Agreement.
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NYSE: the New York Stock Exchange.
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Operating Agreement: an agreement as described in Section 2.04(f) in
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effect during a period of beneficial ownership of the Agribusiness Assets or
the Xxxxxxx Assets.
Person: an individual, a partnership, a joint venture, a corporation, a
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trust or other entity, an unincorporated organization or a government or any
department or agency thereof.
Plan: any plan, policy, arrangement, contract or agreement providing
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benefits (including salary, bonuses, deferred compensation, incentive
compensation, savings, stock purchases, pensions, profit sharing, welfare
benefits or retirement or other retiree benefits, including retiree medical
benefits) for any group of employees or former employees or individual
employee or former employee, or the beneficiary or beneficiaries of any such
employee or former employee, whether formal or informal or written or
unwritten and whether or not legally binding, and including any means, whether
or not legally required, pursuant to which any benefit is provided by an
employer to any employee or former employee or the beneficiary or
beneficiaries of any such employee or former employee.
Protected Agribrands Business: the business described in Section 5.01(_)
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of this Agreement.
Protected Xxxxxxx Business: the business described in Section 5.01(_) of
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this Agreement.
Qualified Plan: a Plan which is an employee pension benefit plan (within
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the meaning of Section 3(2) of ERISA) and which constitutes or is intended in
good faith to constitute a qualified plan under Section 401(a) of the Code.
Xxxxxxx: as defined in the recitals to this Agreement.
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Xxxxxxx Assets: subject to the provisions of any of the other agreements
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referred to in this Agreement, all of the Assets, other than the Agribusiness
Assets, used or held immediately prior to the Distribution Date by or on
behalf of any member of either Group.
Xxxxxxx Board: the Board of Directors of Xxxxxxx Purina Company and
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their duly elected or appointed successors.
Xxxxxxx Business: all of the businesses owned, directly or indirectly,
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by Xxxxxxx and conducted immediately prior to the Distribution Date, other
than the Agribusiness.
Xxxxxxx Deferred Compensation Plan: the Xxxxxxx Purina Deferred
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Compensation Plan for Key Employees.
Xxxxxxx Employee: any individual who at any time is or was an officer or
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employee of any member of either Group, other than an Agribusiness Employee.
Xxxxxxx Group: Xxxxxxx and its Subsidiaries and Affiliates, other than
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members of the Agribusiness Group.
Xxxxxxx Individual: any individual who (i) is a Xxxxxxx Employee, (ii)
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at any time prior to the Distribution Date is or was an officer or employee of
any Former Xxxxxxx Business or (iii) is a beneficiary of any individual
specified in clause (i) or (ii).
Xxxxxxx Option: the option defined in Section 7.08(_) of this Agreement.
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Xxxxxxx Stock: Xxxxxxx Purina Company common stock, $.10 par value.
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Xxxxxxx Stock and Asset Purchase Prices: cash paid after the
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Distribution to Agribrands or its Affiliates by Xxxxxxx or its Affiliates, to
the extent necessary, to close the purchase by Xxxxxxx or its Affiliates, as
set forth in Section 2.01, of the stock of Newco France or, as applicable,
certain assets and liabilities of Purina de Guatemala, S.A., Purina
Colombiana, S.A., Purina de Venezuela, C.A., and Purina Peru, S.A.
Record Date: the date to be determined by the Board of Directors of
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Xxxxxxx, or the Executive Committee thereof, as the record date for
determining shareholders of Xxxxxxx Stock entitled to receive the
Distribution.
Retirement Plan: the Xxxxxxx Purina Retirement Plan.
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Rights: the rights to be issued by Agribrands pursuant to the Agribrands
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Rights Agreement.
RPIHCI: Xxxxxxx Purina International Holding Company, Inc.
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SEC: the Securities and Exchange Commission.
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Securities Act: the Securities Act of 1933, as amended, together with
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the rules and regulations promulgated thereunder.
Shared Liability: a Liability arising out of, or associated with, the
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ownership of both the Agribusiness Assets and the Xxxxxxx Assets; or the
operation of the Agribusiness or a Former Agribusiness, on the one hand, and
the Xxxxxxx Business or a Former Xxxxxxx Business, on the other hand, prior to
the Distribution.
SIP: a Savings Investment Plan.
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Subsidiary: with respect to any specified Person, any corporation or
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other legal entity of which such Person or any of its Subsidiaries controls or
owns, directly or indirectly, 50% or more of the stock or other equity
interest entitled to vote on the election of members to the board of directors
or similar governing body of such corporation or other legal entity.
Tax Sharing Agreement: as defined in Section 5.03 of this Agreement.
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Technology License Agreement: as defined in Section 5.03 of this
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Agreement.
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Third-Party Claim: any Action or claim by a third party against or
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otherwise involving an Indemnitee for which indemnification may be sought
pursuant to Article IV hereof.
Toll-Milling Agreements: as defined in Section 5.03 of this Agreement.
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Trademark Agreement: as defined in Section 5.03 of this Agreement.
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Welfare Plan: any Plan, including but not limited to the Plans listed on
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Schedule 7.04, which is not a Qualified Plan and which provides medical,
health, disability, accident, life insurance, death, dental or other welfare
benefits, including any post-employment benefits or retiree medical benefits.
1.02 References to Time. All references to times of the day in this
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Agreement shall refer to St. Louis, Missouri time.
ARTICLE II
CERTAIN RESTRUCTURING TRANSACTIONS
2.01 Restructuring Transactions. Prior to, or as soon as practicable
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following, the Distribution Date, the following shall be effected:
(a) Italian Demerger. Pursuant to Italian law, Purina Italia S.p.A.,
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an Italian corporation, shall be divided into two corporations by transferring
all assets and liabilities of Purina Italia associated with the Xxxxxxx
Business to Newco Italy 1 and thereafter by issuing the stock of Newco Italy 1
to RPIHCI (99.98% owner) and Xxxxxxx (.02% owner), in proportion to their
ownership of shares of Purina Italia. A pro rata portion of the shares of
Purina Italia, representing the net book value of the assets of the Xxxxxxx
Business in proportion to the entire net book value of assets of Purina
Italia, shall be canceled and new share certificates in Purina Italia shall be
issued to reflect the reduction in the number of shares outstanding as a
result of the demerger. Schedule 2.01(a) sets forth the balance sheet for
Purina Italia as of the effective date of the demerger.
(b) Canadian Restructuring. Agribrands shall form a new wholly-owned
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subsidiary, Newco Canada. Agribrands shall contribute capital to Newco Canada
in an amount sufficient to purchase, and shall cause Newco Canada to purchase,
all of the assets and liabilities associated with the portion of the
Agribusiness owned and conducted by Xxxxxxx Purina Canada Inc., as set forth
on Schedule 2.01(b). The purchase price shall be equal to the Fair Market
Value of such assets.
(c) Brazilian Restructuring. Agribrands shall form a new
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wholly-owned subsidiary, Newco Brazil, a Brazilian corporation. Agribrands
shall contribute capital to Newco Brazil in an amount sufficient to purchase,
and shall cause Newco Brazil to purchase, all of the assets and certain
liabilities associated with the portion of the Agribusiness owned and
conducted by Xxxxxxx Purina do Brasil, LTDA, a Brazilian corporation, as set
forth on Schedule 2.01(c). The purchase price shall be equal to the Fair
Market Value of such assets.
(d) French Restructuring. Xxxxxxx Purina France, a French
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corporation, shall form a new wholly-owned subsidiary, Newco France, and shall
contribute all of the assets and liabilities associated with its ownership and
operation of the Xxxxxxx Business to Newco France. Xxxxxxx shall then
purchase from Xxxxxxx Purina France all of the stock of Newco France for cash
in an amount equal to its Fair Market Value as set forth on Schedule 2.01(d).
(e) Mexican Restructuring/Merger. PPA Investments Inc., a Delaware
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corporation, shall purchase from Xxxxxxx Purina Holdings Mexico S.A. de C.V.,
a Mexican corporation, all of the capital stock of Industrias Purina, S.A. de
C.V., a Mexican corporation, owned by Xxxxxxx Purina Holdings Mexico, for cash
in an amount equal to its Fair Market Value as set forth on Schedule 2.01(e).
PPA Investments Inc. shall then adopt a plan of complete liquidation and merge
into RPIHCI, as a result of which Industrias Purina shall become a direct
subsidiary of RPIHCI. Any intercompany debt owed by RPIHCI to PPA Investments
at the time of the merger will be extinguished as a result of the merger.
(f) Guatemalan Restructuring. Xxxxxxx shall cause [a Xxxxxxx
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Affiliate] to purchase from Purina de Guatemala, S.A., a Guatemalan
corporation, certain of the assets and liabilities associated with the pet
products operations of Purina de Guatemala for cash in an amount equal to the
net book value of such assets as set forth on Schedule 2.01(f).
(g) Colombian Restructuring. Checkerboard Holding Company, a wholly
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owned subsidiary of Xxxxxxx, shall form a new wholly-owned subsidiary, Newco
Colombiana, and shall cause Newco Colombiana to purchase from Purina
Colombiana S.A, a Colombian corporation, certain of the assets and liabilities
associated with the pet products operations of Purina Colombiana for cash in
an amount equal to the net book value of such assets as set forth on Schedule
2.01(g).
(h) Venezuelan Restructuring. Checkerboard Holding Company, a wholly
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owned subsidiary of Xxxxxxx, shall form a new wholly-owned subsidiary, Newco
Venezuela, a Venezuelan corporation, and shall cause Newco Venezuela to
purchase from Purina de Venezuela, C.A., a Venezuelan corporation, all of the
assets and liabilities associated with the pet products operations of Purina
de Venezuela and certain of the assets formerly associated with the
Agribusiness for cash in an amount equal to the net book value of such assets
as set forth on Schedule 2.01(h).
(i) Peruvian Restructuring. Newco Colombiana, a Colombian
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corporation,shall purchase from Purina Peru, S.A., a Peruvian corporation, all
of the assets and liabilities associated with the pet products operations of
Purina Peru for cash in an amount equal to the net book value of such assets
as set forth on Schedule 2.01(i).
(j) Merger of RPIHCI into Xxxxxxx. Xxxxxxx and RPIHCI shall enter
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into an Agreement and Plan of Merger and Complete Liquidation in substantially
the form attached to this Agreement as Exhibit ___, ("Merger Agreement")
pursuant to which RPIHCI shall be merged with and into Xxxxxxx pursuant to the
General and Business Corporation Law of Missouri and Delaware General
Corporation Law, and in accordance with the terms and conditions of the Merger
Agreement. Following such merger, RPIHCI will cease to exist, and Xxxxxxx
shall become the direct owner of Agribrands and all other stock interests
owned by RPIHCI at the time of the merger. Intercompany debt owed by RPIHCI
to Xxxxxxx at the time of the merger will be paid through the liquidating
distribution of RPIHCI's assets to Xxxxxxx at such time.
(k) Contribution to Agribrands; Issuance of Notes Prior to the
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Distribution, Xxxxxxx shall contribute to Agribrands, as contributions to
capital, all of its stock ownership in the following:
(i) Latin American Agribusiness Development Corporation, a Panamanian
corporation;
(ii) Purina Italia S.p.A.;
(iii Purina de Guatemala, S.A., a Guatemalan corporation;
(iv) Purina Colombiana S.A., a Colombian corporation;
(v) Purina de Venezuela, C.A., a Venezuelan corporation;
(vi) Purina Peru S.A., a Peruvian corporation;
(vii) Purina Korea, Inc., a Korean corporation;
(viii) Industrias Purina, S.A. de C.V, a Mexican corporation;
(ix) Purina Espana, S.A., a Spanish corporation;
(x) Xxxxxxx Purina France, a French corporation;
(xi) Purina Besin Maddeleri Sanayi VE Ticaret A.S., a Turkish corporation;
(xii) Agribrands Services, Inc., a Delaware corporation;
(xiii) Purina Nanjing Feedmill Company Limited, a Chinese corporation;
(xiv) Purina Yantai Feedmill Company Ltd, a Chinese corporation;
(xv) Purina Fushun Feedmill Company, Ltd., a Chinese corporation;
(xvi) Agribrands Purina (Langfang) Feedmill Company, Ltd., a Chinese
corporation;
(xvii) Purina Philippines, Inc., a Philippines corporation;
(xviii) Purina Hungaria Animal Feed and Trading Company Limited, a Hungarian
corporation;
(xix) Purina Portugal Alimentacao e Sanidade Animal Lda., a Portuguese
corporation.
In partial consideration for the contribution by Xxxxxxx to Agribrands of the
stock of each majority-owned foreign subsidiary as set forth above, Agribrands
shall issue to Xxxxxxx a separate Agribrands Note with respect to each such
subsidiary. Each Agribrands Note shall be in the principal amount of
US$1,000, bear interest at the rate of 6% per annum and be payable in a lump
sum on September 30, 1998. Prior to the Distribution, Xxxxxxx shall transfer
the Agribrands Notes to one or more members of the Xxxxxxx Group as payment
against outstanding indebtedness which is owed to such member or members by
Xxxxxxx and is reflected in interest-bearing intercompany accounts.
2.02 Issuance of Stock. Prior to the Distribution Date, the parties
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hereto shall take all steps necessary so that immediately prior to the
Distribution Date, the number of shares of Agribrands Stock outstanding and
held by Xxxxxxx shall equal the number of shares necessary to effect the
Distribution. The Distribution shall be effected by distributing, on a pro
rata basis to every holder of Xxxxxxx Stock, one share of Agribrands Stock for
every ten (10) shares of Xxxxxxx Stock held as of the Record Date.
2.03 Share Purchase Rights Agreement; Articles of Incorporation;
-----------------------------------------------------------
Bylaws. Prior to the Distribution Date, Agribrands shall adopt an Agribrands
Share Purchase Rights Agreement in substantially the form filed with the SEC
as an exhibit to the Form 10, and the Board of Directors of Agribrands shall
authorize a distribution of one Right to every share of outstanding Agribrands
Stock, such distribution to occur prior to the Distribution. Xxxxxxx and
Agribrands shall take all action necessary so that, at the Distribution Date,
the Articles of Incorporation and Bylaws of Agribrands shall be substantially
in the forms filed with the SEC as exhibits to the Form 10.
2.04 Transfer of Assets; Assumption of Liabilities.
--------------------------------------------------
(a) Prior to the Distribution Date, the parties hereto shall also take
all action necessary to convey, assign and transfer to Agribrands, effective
as of the Distribution Date, all of the right, title and interest of Xxxxxxx
or its Affiliates in the Agribusiness Assets and to convey, assign and
transfer to Xxxxxxx or its Affiliates all of the right, title and interest of
any member of the Agribusiness Group to the Xxxxxxx Assets. Effective as of
the Distribution Date, Xxxxxxx shall contribute to Agribrands the capital
stock of the Subsidiaries of Agribrands listed in Schedule 2.01(k), and
Agribrands shall become the beneficial owner of all of the Agribusiness
Assets. Xxxxxxx shall use its best efforts to cause Agribrands to hold, as of
the Distribution Date, Cash in an amount equal to the Agribrands Cash
Holdings, which shall be defined as: the sum of (A) the outstanding
Indebtedness of Agribrands as of the Distribution, (B) US$25 million, and (C)
the Agribrands Asset Purchase Prices, less (D) the Xxxxxxx Stock and Asset
Purchase Prices and (E) any amounts Xxxxxxx may become obligated, on or prior
to May 31, 1998, to pay in connection with its guarantee of certain
third-party indebtedness of Purina Korea, Inc. Effective as of the
Distribution Date, Xxxxxxx and its Affiliates shall become the beneficial
owners of all of the Xxxxxxx Assets. The parties acknowledge that formal
actions to effect fully such transfers of Assets may not be completed by the
Distribution Date, but that the entire beneficial title and interest in and to
each Asset shall pass to Agribrands or to Xxxxxxx, as the case may be, as of
the Distribution Date. Except as provided otherwise in other agreements, the
parties shall take such action as is necessary in their reasonable discretion,
whether before or after the Distribution Date, to complete the transfer of the
Agribusiness Assets to Agribrands and the Xxxxxxx Assets to Xxxxxxx, as the
case may be, and each party shall cooperate fully with the other in such
regard.
(b) As of the Distribution Date, Agribrands and Xxxxxxx and, as
appropriate, other members of their respective Groups, shall assume or retain
all of, the Liabilities, with respect to Agribrands, of the Agribusiness and
Former Agribusinesses and, with respect to Xxxxxxx, the Xxxxxxx Business and
Former Xxxxxxx Businesses, of whatsoever type or nature, arising exclusively
out of or associated exclusively with the ownership of the Assets of such
Businesses or Former Businesses or the operation of such Businesses or Former
Businesses prior to the Distribution, whether such Liabilities become known
prior to or after, or are asserted prior to or after, the Distribution.
Agribrands and its Affiliates and Xxxxxxx and its Affiliates shall assume a
share of any Shared Liability in proportion, as applicable, to their
respective ownership of the applicable assets, control of affected operations
or employment of affected individuals. Notwithstanding the foregoing,
effective as of the Distribution Date, Agribrands or another member of the
Agribusiness Group shall assume Liabilities specifically described in any
other provision of this Agreement or any Ancillary Agreement, and Liabilities
described on Schedule 2.04(b) to this Agreement. Xxxxxxx and members of the
Xxxxxxx Group shall, except as qualified hereinabove, retain or assume (i) the
Liabilities specifically described in this Agreement or any Ancillary
Agreement, and (ii) the Liabilities specifically described on Schedule 2.04(b)
to this Agreement.
(c) The parties agree and acknowledge that the assumption by Agribrands
or other members of the Agribusiness Group or Xxxxxxx or other members of the
Xxxxxxx Group, as the case may be, of all such Liabilities described herein is
part of a single plan to transfer the Agribusiness and the Agribusiness Assets
to Agribrands. With regard to that plan, the parties further agree that (i)
the entire beneficial title and interest in and to each and all of the
Agribusiness Assets shall, regardless of when legal title to any such asset is
in fact transferred to Agribrands or its Subsidiaries, remain in Xxxxxxx until
the Distribution Date at which time all beneficial title and interest in all
of the Agribusiness Assets will pass to Agribrands, and all title and interest
in and to each and all of the Xxxxxxx Assets which is owned by a member of the
Agribusiness Group prior to the Distribution Date shall, regardless of when
legal title to any such asset is in fact transferred to Xxxxxxx or its
Subsidiaries after the Distribution Date, be beneficially owned by Xxxxxxx;
(ii) the economic burden of the assumption by the members of the Agribusiness
Group or the Xxxxxxx Group, as the case may be, of each and all of the
Liabilities described herein shall pass to the Agribusiness Group or the
Xxxxxxx Group, as the case may be, as of the Distribution Date, regardless of
when Agribrands or any other member of the Agribusiness Group or Xxxxxxx or
any other member of the Xxxxxxx Group, as the case may be, in fact assumes or
becomes legally obligated to the obligee of any one or more of such
Liabilities; and (iii) all operations of the Agribusiness shall be for the
account of Xxxxxxx through 12:01 a.m. on the Distribution Date and shall be
for the account of Agribrands thereafter.
(d) Xxxxxxx and Agribrands shall, and shall cause their Affiliates to,
execute prior to, or as soon as practicable following, the Distribution Date,
such additional agreements and arrangements as may be necessary or appropriate
(i) to effect the restructuring transactions set forth in Section 2.01; (ii)
to transfer to the appropriate member of the Agribusiness Group or Xxxxxxx
Group such local product registrations, franchises, licenses, and any other
governmental authorizations or other rights owned or held by Xxxxxxx,
Agribrands or their respective Groups that are necessary to the conduct of
their Businesses in such jurisdiction; (iii) to make all such further
assignments and do all such other acts as are necessary or desirable to carry
out the intent of the parties that each of the Businesses, as a going concern,
be fully vested in the appropriate party as of the Distribution Date and
operated for its benefit and burden as of 12:01 a.m. CST; and (iv) to provide
for, and negotiate in good faith, such other agreements and arrangements
relating to the foregoing as the parties deem appropriate, including but not
limited to any such agreements or arrangements relating to the treatment of
employees, benefit plans and taxes.
(e) If any Agribusiness Asset or Xxxxxxx Asset is not owned,
respectively, by a member of the Agribusiness Group or Xxxxxxx Group or leased
from a third party or governmental entity by a member of the appropriate
Group, as of the Distribution Date, Xxxxxxx and Agribrands shall use their
reasonable best efforts to transfer, assign and deliver such assets or leases
to the appropriate member of the other Group as soon as practicable
thereafter. Prior to such transfer or assignment, Xxxxxxx or Agribrands, as
the case may be, shall use its best efforts to give the benefits of ownership
of such Assets to the appropriate member of the other Group. The entire
economic beneficial interest in and to, and the risk of loss with respect to,
such Assets shall, regardless of when legal title thereto shall be transferred
to the appropriate member of the Agribusiness or Xxxxxxx Group, pass to those
entities as of the Distribution. Xxxxxxx and Agribrands shall, or shall cause
their Affiliates to, hold such Assets for the benefit and risk of the other
and shall cooperate with the other in any lawful and reasonable arrangements
designed to provide the benefits of ownership of the Assets to it, including
but not limited to properly recording evidence of such beneficial ownership
and risk of loss with appropriate governmental entities as required by
applicable law. In the event that the legal interest in such Assets or any
claim, right or benefit arising thereunder or resulting therefrom, is not
capable of being sold, assigned, transferred or conveyed hereunder as a result
of the failure to receive any consents or approvals required for such
transfer, then the legal interest in such Assets shall not be sold, assigned,
transferred or conveyed unless and until approval, consent or waiver thereof
is obtained. Xxxxxxx and Agribrands shall, or shall cause their Affiliates,
at their expense, to use reasonable best efforts to cooperate in obtaining
such consents or approvals as may be necessary to complete such transfers and
to obtain satisfaction of conditions to transfer as soon as practicable.
Nothing in this Agreement shall be construed as an attempt to assign to a
member of the Agribusiness Group or the Xxxxxxx Group any legal interest in
such Assets which, as a matter of law or by the terms of any legally binding
contract, engagement or commitment to which the legal owner is subject, is not
assignable without the consent of any other party, unless such consent shall
have been given.
(f) After the Distribution Date, Xxxxxxx and Agribrands shall cause
such Assets (including the capital stock of any Affiliates) which are
beneficially owned by the other party to be managed at the direction of the
beneficial owner pursuant to an Operating Agreement until such Assets are
actually legally transferred and conveyed. Without limiting the foregoing,
all revenues, earnings and cash flows associated with the Assets following the
Distribution Date shall be for the account of the beneficial owner but shall
be retained by the respective legal owner until the transfers are legally
effected. Following the Distribution Date, neither Xxxxxxx nor Agribrands
shall be required to lend, advance, contribute or use any of its own funds in
connection with the operations of such Assets.
(g) Xxxxxxx and Agribrands shall, as soon as practicable, review the
books and records of Agribrands and its Affiliates to determine the actual
Indebtedness of Agribrands and the Cash held by Agribrands and its Affiliates
as of the Distribution. To the extent that it is determined that, at the
Distribution Date, Agribrands and its Affiliates held Cash in excess of the
Agribrands Cash Holdings amount, Agribrands shall remit such excess to Ralston
in US dollars; and if Agribrands and its Affiliates held Cash less than the
Agribrands Cash Holdings amount, Xxxxxxx shall pay such difference to
Agribrands in US dollars. Such amounts shall be increased by an amount equal
to interest accrued on such unpaid excess (or underpayment, as applicable) at
LIBOR plus 25 basis points for the period from the Distribution Date until the
date such adjustment is paid to the party to which it is owed. Prior to any
such payment, Xxxxxxx shall have the opportunity to review, to its
satisfaction, the books and records of Agribrands and its Affiliates, bank
records, loan documentation and other relevant materials in order to enable
Xxxxxxx to verify the amount to be transferred. Agribrands shall cooperate in
Xxxxxxx'x review and shall remit such funds, if any, to Xxxxxxx, or Xxxxxxx
shall pay such funds to Agribrands, as soon as practicable after the final
determination of the amount to be transferred.
2.05 Conduct of Business Pending the Distribution Date. Prior to the
-------------------------------------------------
Distribution Date, the Agribusiness shall be operated for the sole benefit of
Xxxxxxx.
2.06 Registration and Listing. Prior to the Distribution Date:
-------------------------
(a) Xxxxxxx and Agribrands shall prepare, and Agribrands shall file with
the SEC, a Registration Statement on Form 10 pursuant to Section 12(b) of the
Exchange Act with respect to the Agribrands Stock and associated Rights.
Xxxxxxx and Agribrands shall use reasonable efforts to cause the Form 10 to
become effective under the Exchange Act, and, following such effectiveness,
Xxxxxxx shall mail the Information Statement to the holders of record of
Xxxxxxx Stock as of the close of business on the Record Date.
(b) The parties hereto shall take all such actions as may be necessary or
appropriate under state securities and Blue Sky laws in connection with the
Distribution.
(c) Xxxxxxx and Agribrands shall prepare, and Agribrands shall file and
seek to make effective, an application for the listing of the Agribrands Stock
and associated Rights on the NYSE.
ARTICLE III
THE DISTRIBUTION
3.01 Record Date and Distribution Date. Subject to the satisfaction
---------------------------------
of the conditions set forth in Section 12.01, the Xxxxxxx Board shall
establish the Record Date and the Distribution Date and any appropriate
procedures in connection with the Distribution. The determination of record
holders of Xxxxxxx Stock on the Record Date shall be as of 12:01 a.m. CST on
the Distribution Date, and the Distribution shall also be effective as of
12:01 a.m. CST on the Distribution Date.
3.02 Distribution. Xxxxxxx shall distribute all of the outstanding
------------
shares of Agribrands Stock to holders of record of Xxxxxxx Stock on the Record
Date on the basis of one share of Agribrands Stock for each ten (10) shares of
Xxxxxxx Stock outstanding as of 12:01 a.m. CST on the Record Date, subject to
the treatment of fractional shares set forth in Section 3.03. All shares of
Agribrands Stock issued in the Distribution shall be duly authorized, validly
issued, fully paid and nonassessable.
3.03 Payment in Lieu of Fractional Shares. No fractional shares of
------------------------------------
Agribrands Stock shall be issued in the Distribution. In lieu thereof, a
distribution agent will aggregate fractional shares into whole shares and sell
them in the open market at then prevailing prices on behalf of holders who
otherwise would be entitled to receive fractional share interests, and such
distribution agent shall remit to each holder of Xxxxxxx Stock who would
otherwise be entitled to receive such fractional shares a cash payment equal
to such holder's pro rata share of the total gross sale proceeds (after making
appropriate deductions of the amount required for Federal tax withholding
purposes). Xxxxxxx shall bear the cost of commissions incurred in connection
with such sales.
ARTICLE IV
INDEMNIFICATION
4.01 Indemnification.
---------------
(a) From and after the Distribution Date, Xxxxxxx agrees to indemnify
and hold harmless Agribrands against and in respect of any and all Liabilities
assumed or retained by Xxxxxxx pursuant to Section 2.04(b) of this Agreement
or related to, arising from, or associated with:
(i) any breach or violation of any covenant made in this
Agreement or any Ancillary Agreement by Xxxxxxx or any of its Subsidiaries;
(ii) any Third-Party Claim primarily relating to the actions of
the Xxxxxxx Board in authorizing the Distribution;
(iii) the ownership, use or possession of the Xxxxxxx Assets or
the operation of the Xxxxxxx Business or Former Xxxxxxx Businesses, whether
relating to or arising out of occurrences prior to or after the Distribution,
except to the extent liability therefor is assumed or retained by Agribrands
or another member of the Agribusiness Group pursuant to Section 2.04(b) of
this Agreement; and all operations conducted by Xxxxxxx, its successors and
their Affiliates following the Distribution.
(iv) with respect to employee benefit plans sponsored by
Xxxxxxx, Xxxxxxx'x failure to comply with the provisions of ERISA or the Code;
(v) any violations of the Code, or of federal or state
securities laws, in connection with the Distribution, the Information
Statement and Form 10 or any filings made with governmental agencies with
respect thereto, except to the extent that such violations, or allegations of
violations, result from or are related to the disclosure to Xxxxxxx'x
corporate staff of information, or failure to disclose information, by
officers, directors, employees, agents, consultants or representatives of the
Agribusiness.
Any indemnification provided for under this Section shall be deemed to
also extend to other members of the Agribusiness Group, Affiliates,
Agribusiness Employees, directors, Plan fiduciaries, shareholders, agents,
consultants, representatives, successors, transferees and assigns of
Agribrands or members of the Agribusiness Group.
(b) From and after the Distribution Date, Agribrands agrees to indemnify
and hold harmless Xxxxxxx against and in respect of all Liabilities assumed or
retained by Agribrands or another member of the Agribusiness Group pursuant to
Section 2.04(b) of this Agreement or related to, arising from, or associated
with:
(i) any breach or violation of any covenant made in this
Agreement or any Ancillary Agreement by Agribrands or any of its Subsidiaries
or Affiliates; or
(ii) the ownership, use or possession of the Agribusiness Assets
or the operation of the Agribusiness or Former Agribusinesses, whether
relating to or arising out of occurrences prior to or after the Distribution,
except to the extent liability therefor is assumed or retained by Xxxxxxx or
another member of the Xxxxxxx Group pursuant to Section 2.04(b) of this
Agreement; and all operations conducted by Agribrands, its successors and
their Affiliates following the Distribution.
(iii) with respect to employee benefit plans sponsored by
Agribrands, Agribrands' failure to comply with the provisions of the plan,
ERISA or the Code;
(iv) any violation or allegations of violations of federal or
state securities laws in connection with the Distribution, the Information
Statement and Form 10 or any filings made with governmental agencies with
respect thereto, to the extent that such violations, or allegations of
violations, result from or are related to, the disclosure to Xxxxxxx'x
corporate staff of information, or failure to disclose information, by
officers, directors, employees, agents, consultants or representatives of the
Agribusiness; and
(v) any continuing guarantee by Xxxxxxx of any obligation of
Agribrands or its Affiliates.
Notwithstanding the foregoing, neither party shall have any obligation to
indemnify the other for a single Liability of less than US$10,000.
Any indemnification provided for under this Section shall also be deemed
to extend to other members of the Xxxxxxx Group, Affiliates, Xxxxxxx
Employees, directors, Plan fiduciaries, shareholders, agents, consultants,
representatives, successors, transferees and assigns of Xxxxxxx or members of
the Xxxxxxx Group.
4.02 Insurance and Third-Party Obligations. Any indemnification
-------------------------------------
otherwise payable pursuant to Section 4.01 shall be reduced by the amount of
any insurance or other amounts (net of deductibles and allocated paid loss
retro-premiums) that would be payable by any third party to the Indemnitee or
on the Indemnitee's behalf in the absence of this Agreement. It is expressly
agreed that no insurer or any other third party shall be (i) entitled to a
benefit it would not be entitled to receive in the absence of the foregoing
indemnification provisions, (ii) relieved of the responsibility to pay any
claims for which it is obligated, or (iii) entitled to any subrogation rights
with respect to any obligation hereunder.
4.03 Actions and Claims Other Than Third-Party Claims; Notice and
------------------------------------------------------------
Payment. Upon obtaining knowledge of any Action, Liability or claim, other
than Third-Party Claims, which any Person entitled to indemnification (the
"Indemnitee") believes may give rise to any Indemnifiable Loss, the Indemnitee
shall promptly notify the party liable for such indemnification (the
"Indemnitor") in writing of such Action or claim (such written notice being
hereinafter referred to as a "Notice of Claim"); provided, however, that
failure of an Indemnitee timely to give a Notice of Claim to the Indemnitor
shall not release the Indemnitor from its indemnity obligations set forth in
this Article IV except to the extent that such failure materially increases
the amount of indemnification which the Indemnitor is obligated to pay
hereunder, in which event the amount of indemnification which the Indemnitee
shall be entitled to receive shall be reduced to an amount which the
Indemnitee would have been entitled to receive had such Notice of Claim been
timely given. A Notice of Claim shall specify in reasonable detail the nature
and estimated amount of any such Action Liabilities or claim giving rise to a
right of indemnification. The Indemnitor shall have ninety Business Days
after receipt of a Notice of Claim to notify the Indemnitee (a) whether or not
it disputes its liability to the Indemnitee with respect to such Action
Liabilities or claim or the amount thereof, and setting forth the basis for
such objection. If the Indemnitor fails to respond to the Indemnitee within
such ninety Business Day period, the Indemnitor shall be deemed to have
acknowledged its responsibility for such Indemnifiable Loss. The Indemnitor
shall pay and discharge any such Indemnifiable Loss which is not contested
within one hundred twenty days after its receipt of a Notice of Claim.
4.04 Third-Party Claims; Notice, Defense and Payment. Promptly
------------------------------------------------
following the earlier of (i) receipt of notice of the commencement of a
Third-Party Claim or (ii) receipt of information from a third party alleging
the existence of a Third-Party Claim, any Indemnitee who believes that it is
or may be entitled to indemnification by any Indemnitor under Section 4.01
with respect to such Third-Party Claim shall deliver a Notice of Claim to the
Indemnitor. Failure of an Indemnitee timely to give a Notice of Claim to the
Indemnitor shall not release the Indemnitor from its indemnity obligations set
forth in this Section 4.04 except to the extent that such failure adversely
affects the ability of the Indemnitor to defend such Action, Liabilities or
claim or materially increases the amount of indemnification which the
Indemnitor is obligated to pay hereunder, in which event the amount of
indemnification which the Indemnitee shall be entitled to receive shall be
reduced to an amount which the Indemnitee would have been entitled to receive
had such Notice of Claim been timely given. Indemnitee shall not settle or
compromise any Third-Party Claim in an amount in excess of US$________ prior
to giving a Notice of Claim to Indemnitor. In addition, if an Indemnitee
settles or compromises any Third-Party Claims prior to giving a Notice of
Claim to an Indemnitor, the Indemnitor shall be released from its indemnity
obligations to the extent that such settlement or compromise was not made in
good faith and was not commercially reasonable. Within ninety (90) days after
receipt of such Notice of Claim (or sooner if the nature of such Third-Party
Claim so requires), the Indemnitor may (x) by giving written notice thereof to
the Indemnitee, acknowledge liability for, and at its option elect to assume,
the defense of such Third-Party Claim at its sole cost and expense or (y)
object to the claim of indemnification set forth in the Notice of Claim
delivered by the Indemnitee; provided that if the Indemnitor does not within
the same ninety (90) day period give the Indemnitee written notice either
objecting to such claim and setting forth the grounds therefor or electing to
assume the defense, the Indemnitor shall be deemed to have acknowledged its
responsibility to accept the defense and its ultimate liability, if any, for
such Third-Party Claim. Any contest of a Third-Party Claim as to which the
Indemnitor has elected to assume the defense shall be conducted by attorneys
employed by the Indemnitor and reasonably satisfactory to the Indemnitee;
provided that the Indemnitee shall have the right to participate in such
proceedings and to be represented by attorneys of its own choosing at the
Indemnitee's sole cost and expense. If the Indemnitor assumes the defense of
a Third-Party Claim, the Indemnitor may settle or compromise the Third-Party
Claim without the prior written consent of Indemnitee; provided that the
Indemnitor may not agree to any such settlement pursuant to which any such
remedy or relief, other than monetary damages for which the Indemnitor shall
be responsible hereunder, shall be applied to or against the Indemnitee,
without the prior written consent of the Indemnitee, which consent shall not
be unreasonably withheld. If the Indemnitor does not assume the defense of a
Third-Party Claim for which it has acknowledged liability for indemnification
under Section 4.01, the Indemnitee may require the Indemnitor to reimburse it
on a current basis for its reasonable expenses of investigation, reasonable
attorney's fees and reasonable out-of-pocket expenses incurred in defending
against such Third-Party Claim and the Indemnitor shall be bound by the result
obtained with respect thereto by the Indemnitee, provided that the Indemnitor
shall not be liable for any settlement effected without its consent, which
consent shall not be unreasonably withheld. The Indemnitor shall pay to the
Indemnitee in cash the amount for which the Indemnitee is entitled to be
indemnified (if any) within thirty (30) days after the final resolution of
such Third-Party Claim (whether by settlement, a final nonappealable judgment
of a court of competent jurisdiction or otherwise) or, in the case of any
Third-Party Claim as to which the Indemnitor has not acknowledged liability,
within thirty (30) days after such Indemnitor's objection has been resolved by
settlement, compromise or arbitration pursuant to the provisions of Article XI
of this Agreement.
4.05 Remedies Cumulative; Survival of Indemnities. The remedies
--------------------------------------------
provided in this Article IV shall be cumulative and shall not preclude
assertion by any Indemnitee of any other rights or the seeking of any and all
other remedies against any Indemnitor. The obligations of each of the Xxxxxxx
Group and the Agribusiness Group under this Article IV shall survive the sale
or other transfer by it of any assets or businesses or the assignment by it of
any Liabilities, with respect to any claim of the other for any Indemnifiable
Losses related to such assets, businesses or Liabilities.
ARTICLE V
CERTAIN ADDITIONAL COVENANTS
5.01 Non-Competition. (a) In light of the extensive affiliation
---------------
among Xxxxxxx, Agribrands and their respective Affiliates, and in order to
secure the benefit of the good will previously associated with Xxxxxxx'x
business, which is being transferred to Agribrands, and to maintain the good
will associated with those businesses being retained by Xxxxxxx, and to secure
the good will previously associated with that portion of Agribrands' business
which is being assumed by Xxxxxxx, all as provided in the terms of this
Reorganization Agreement; and in light of the continuing relationship among
the parties, as provided in the Ancillary Agreements; the parties mutually
agree that, except as otherwise provided in this Section 5.01, for the period
ending on the fifth anniversary of the Distribution Date (except with respect
to obligations under the Agreement and Plan of Merger and Exchange dated as of
December 2, 1997, by and among E. I. du Pont de Nemours and Company, Xxxxxxx
and certain of their affiliates (the "DuPont Agreement"), which obligations
shall continue for the period specified in the DuPont Agreement):
(i) Neither Xxxxxxx, nor any of its Affiliates, nor any of their
successors or successive successors, shall, directly or indirectly, own,
operate, manage, participate as a partner or co-venturer in, or otherwise
engage in the business of the manufacture, distribution or sale of feeds for
commercial livestock, commercial poultry, laboratory animals, zoo animals, or
fish or shellfish raised in commercial aquaculture facilities; or in the
business of providing services or facilities to the foregoing classes of
animals and fish (collectively, the foregoing are hereafter termed the
"Protected Agribrands Business").
(ii) Neither Agribrands, nor any of its Affiliates, nor any of
their successors or successive successors shall, directly or indirectly, own,
operate, manage, participate as a partner or co-venturer in, or otherwise
engage in the manufacture, distribution or sale of foods or feeds for pets,
pet products, pet supplies, pet accessories, litter or personal care products
for cats, dogs or other pets; provided that:
A. Agribrands and its Affiliates in Canada may manufacture and
sell, solely under trademarks authorized by the Trademark License Agreement
and solely in Canada, those pet food products which they were manufacturing
and selling at the date of this Agreement; and, without the prior written
consent of Xxxxxxx, the commercial and nutritional characteristics of such
products shall not be changed, and the composition of such products shall not
be changed materially.
B. Agribrands and its Affiliates may distribute any pet food
purchased from Xxxxxxx, it being expressly agreed that Xxxxxxx may, in its
sole discretion, refuse to supply or limit the supply of such pet foods to
Agribrands or any of its Affiliates at any time and in any country; provided
that, should Xxxxxxx refuse to supply any of the following products to
Agribrands and its Affiliates in any country, then Agribrands and its
Affiliates may manufacture (and distribute only a product of its own
manufacture) in any such country--
1) not more than one (1) brand (which brand shall be owned solely
by Agribrands or its Affiliates) of dry dog food, which shall be formulated to
provide sufficient nutritional properties as are then deemed adequate to
maintain an adult dog under standards promulgated by the Association of
American Feed Control Officials ("AAFCO"), which in no case shall contain more
than 18% protein and 8% fat (both as reflected in the guaranteed analysis or
average analysis), which shall be formulated so that the top three (3)
ingredients of the ration are not animal-, poultry-, or fish-based protein
ingredients, and which shall possess a calculated metabolizable energy ("CME")
of no more than 3500 kilocalories per kilogram ("KCal/Kg");
2) not more than one (1) brand (which brand shall be owned solely
by Agribrands or its Affiliates) of dry puppy food, which shall be formulated
to provide sufficient nutritional properties as are then deemed adequate for
the growth of puppies under standards promulgated by AAFCO, which shall in no
case contain more than 22% protein and 9% fat (as reflected on the same
basis), which shall be formulated so that the top three (3) ingredients of the
ration are not animal-, poultry-, or fish-based protein ingredients, and which
shall possess a CME of no more than 3700 KCal/Kg; and
3) not more than one (1) brand (which brand shall be owned solely by
Agribrands or its Affiliates) of dry cat food, which shall be formulated to
provide sufficient nutritional properties as are then deemed adequate to
maintain an adult animal under standards promulgated by AAFCO, which shall in
no case contain more than 28% protein and 10% fat (as reflected on the same
basis), which shall be formulated so that the top three ingredients of the
ration are not animal-, poultry- or fish-based protein ingredients, and which
shall possess a CME of no more than 3600 KCal/Kg.
C. With respect to all products described in sub-Section
5.01(ii)(B), Xxxxxxx shall be deemed to have "refused" to supply any such
products only if Xxxxxxx and Agribrands have failed, following good faith
negotiations which shall be conducted within sixty (60) days following written
notice from Agribrands to Xxxxxxx, to agree on mutually acceptable terms for
the supply of any such products to Agribrands or its Affiliates by Xxxxxxx.
D. Neither Agribrands, nor any of its Affiliates, nor any of
their successors nor successive successors, shall directly or indirectly
solicit, offer for sale, sell, distribute, encourage the sale, or be otherwise
involved in any distribution of any dog or cat food products to any person
outside the "Agricultural Channel," which Channel shall consist exclusively
of:
1) persons outside the United States principally (i.e., more than
one-half of the monthly gross sales of which are generated by) engaged in the
resale of formulated livestock and poultry feeds (exclusive of dog and cat
foods);
2) persons outside the United States principally engaged in the
resale of farm supplies, farm equipment, and/or animal feeds other than dog or
cat foods, provided that no less than seventy-five per cent (75%) of the
monthly gross animal feed sales of any such person consists of feeds for
animals other than dogs and/or cats; and
3) persons outside the United States who are, at the date of this
Reorganization Agreement, customers of Agribrands or any of its Affiliates,
provided that, should any such persons either change the location or the
nature of their present business activities, or experience a direct or
indirect change of control by any means, then in either case such person shall
be deemed removed from the Agricultural Channel promptly upon written notice
from Xxxxxxx to Agribrands.
E. Agribrands, its Affiliates, and their successors and
successive successors:
1) shall not solicit sales of any dog or cat food products in or
into the United States, or to any purchaser outside the Agricultural Channel;
2) shall not develop, encourage, assist or participate in any sales
of such products in or into the United States, or outside the Agricultural
Channel; and
3) shall use their best efforts, including but not limited to
ceasing to sell dog and cat foods to any person, to deter any sales of such
products in or into the United States, or outside the Agricultural Channel, by
any such person.
(iii) Neither Agribrands, nor any of its Affiliates, nor any or
their successors or successive successors, shall, directly or indirectly, own,
operate, manage, participate as a partner or co-venturer in, or otherwise
engage in:
A. the business of the manufacture, sale or distribution of
primary or rechargeable batteries, lighting products or devices; or
B. any activities which are proscribed as to Xxxxxxx or its
Affiliates under the terms of Section 6.10 of the DuPont Agreement, the terms
of which are hereby acknowledged as binding upon Agribrands and its
Affiliates, and their successors and successive successors.
The businesses defined in sub-paragraphs (ii) and (iii) of this Section 5.01
of this Reorganization Agreement, are hereafter termed the "Protected Xxxxxxx
Business."
(b) The proscriptions contained in sub-sections (i) and (ii) of
Section 5.01(a) of this Reorganization Agreement shall not be interpreted to
prevent:
(i) either Agribrands or Xxxxxxx, or any of their Affiliates, or
any of their successors or successive successors, respectively, from the
acquisition and ownership of no more than fifteen per cent (15%) of either a
voting or equity interest in a Person engaged in either the Protected Xxxxxxx
Business or the Protected Agribrands Business; or
(ii) either Agribrands or Xxxxxxx, or any of their Affiliates, or
any of their successors or successive successors, respectively, from the
acquisition or ownership of any interest in a Person engaged in either a
Protected Xxxxxxx Business or Protected Agribrands Business if no more than
ten per cent (10%) of such Person's gross sales (as reflected in its most
recent regularly prepared financial statements) are derived from either the
Protected Xxxxxxx Business or the Protected Agribrands Business, as the case
may be.
(c) If any Person who is not at the date of this Agreement an Affiliate
of Xxxxxxx or Agribrands, respectively, should acquire (by any means,
including but not limited to operation of law) a voting or equity interest of
twenty per cent (20%) or more in either Xxxxxxx or Agribrands, then the other
shall be relieved of its responsibilities under this Section 5.01, except that
Agribrands, its Affiliates, and their successors and successive successors
shall continue to observe and be bound by the terms of Section 6.10 of the
DuPont Agreement.
(d) Without limiting the remedies otherwise available to either party,
the parties expressly agree that (i) damages at law for breach of this
Agreement would be an inadequate remedy, and that either party would be
subjected to irreparable harm upon breach by the other, and is entitled to
injunctive or other equitable relief upon breach or threatened breach by the
other; and (ii) since equitable relief may not be available in the
jurisdiction in which such breach has occurred, the party against whom such
breach has occurred may cancel all or any of the Ancillary Agreements upon
such breach or threat thereof; provided, however, that neither party shall be
entitled to invoke any of the remedies provided in this Section 5.01(d) unless
it has given written notice of such alleged breach or threat thereof to the
other party, and the other party has failed to cure such breach or threat
thereof to the reasonable satisfaction of the notifying party within sixty
(60) days of its receipt of such notice.
(e) If any of the provisions of this Section 5.01 are held by a court or
governmental authority of competent jurisdiction to be unenforceable as
written, then any such provision shall be deemed automatically amended so that
it is enforceable to the maximum extent permissible under the laws and public
policy of the applicable jurisdiction or authority. The provisions of this
Section 5.01 are severable and this Section 5.01 shall be interpreted and
enforced as if all completely invalid or unenforceable provisions were not
contained in this Section ___, and partially valid or enforceable provisions
shall be enforceable to the extent they are valid or enforceable.]
5.02 Further Assurances. Each party hereto shall cooperate with the
------------------
other parties, and execute and deliver, or use its best efforts to cause to be
executed and delivered, all instruments, including instruments of conveyance,
assignment and transfer, and to make all filings with, and to obtain all
consents, approvals or authorizations of, any governmental or regulatory
authority or any other Person under any permit, license, agreement, indenture
or other instrument, and take all such other actions as such party may
reasonably be requested to take by any other party hereto from time to time,
consistent with the terms of this Agreement, in order to effectuate the
provisions and purposes of this Agreement and the transfers of Assets and
Liabilities and the other transactions contemplated hereby or in any of the
Ancillary Agreements. If any such transfer of Assets or Liabilities is not
consummated prior to or on the Distribution Date, then the party hereto
retaining such Asset or Liability shall thereafter hold such Asset in trust
for the use and benefit of the party entitled thereto (at the expense of the
party entitled thereto), or shall retain such Liability for the account of the
party by whom such Liability is to be assumed pursuant hereto, as the case may
be, and shall take such other action as may be reasonably requested by the
party to whom such Asset is to be transferred, or by whom such Liability is to
be assumed, as the case may be, in order to place such party, insofar as
reasonably possible, in the same position as if such Asset or Liability had
been transferred as contemplated hereby. If and when any such Asset or
Liability becomes transferable, such transfer shall be effected forthwith.
The parties hereto agree that, as of the Distribution Date, each party hereto
shall be deemed to have acquired complete and sole beneficial ownership of all
of the Agribusiness Assets, or Xxxxxxx Assets, as the case may be, together
with all rights, powers and privileges incident thereto, and shall be deemed
to have assumed in accordance with the terms of this Agreement all of the
Liabilities, and all duties, obligations and responsibilities incident
thereto, that such party is entitled to acquire or required to assume pursuant
to the terms of this Agreement.
5.02 Agribrands Board. Prior to the Distribution Date, Agribrands
----------------
shall take such actions as are necessary so that its Board of Directors is
comprised of those individuals named as directors in the Form 10.
5.03 Contractual Arrangements.
-------------------------
(a) Effective as of the Distribution Date, Xxxxxxx and Agribrands
shall enter into the Tax Sharing Agreement, substantially in the form attached
to this Agreement as Exhibit 5.03(a) ("Tax Sharing Agreement").
(b) Effective as of the Distribution Date, Xxxxxxx and Agribrands
shall enter into the Bridging Services Agreement, substantially in the form
attached to this Agreement as Exhibit 5.03(b) ("Bridging Services Agreement").
(c) Effective as of the Distribution Date, Xxxxxxx and Agribrands
shall enter into the Trademark Agreement, substantially in the form attached
to this Agreement as Exhibit 5.03(c) ("Trademark Agreement").
(d) Effective as of the Distribution Date, Xxxxxxx and Agribrands
shall enter into the Technology License Agreement, substantially in the form
attached to this Agreement as Exhibit 5.03(d) ("Technology Agreement").
(e) Effective as of the Distribution Date, Xxxxxxx and Agribrands
shall enter into certain Toll-Milling Agreements, substantially in the form
attached to this Agreement as Exhibit 5.03(e) ("Toll-Milling Agreement").
5.04 Cash Management and Intercompany Accounts.
----------------------------------------------
(a) Through and including 12:01 a.m. local time on the Distribution
Date, Xxxxxxx shall continue to employ cash management practices with respect
to the Agribusiness consistent with those employed immediately prior to the
date of this Agreement.
(b) All bank accounts used exclusively in the Agribusiness, and the
balances therein existing as of 12:01 a.m. local time on the Distribution
Date, shall be transferred on the Distribution Date to Agribrands or its
Subsidiaries or Affiliates. All bank accounts used jointly by a member of the
Agribusiness Group and any member of the Xxxxxxx Group, and balances therein
existing as of the Distribution Date, shall remain with the Xxxxxxx Group.
Following the Distribution Date, each party shall promptly pay to the other
any amounts collected by it through any of its accounts to the extent any of
such amounts collected relate exclusively to the Business of the other party.
(c) All intercompany services provided by the Xxxxxxx Group to the
Agribusiness Group, and vice versa, shall terminate as of the Distribution
Date unless otherwise provided in the Bridging Agreement or any other
Ancillary Agreement. Effective as of the close of business on the
Distribution Date, all intercompany receivables or payables and loans then
existing between any member of one Group and any member of the other Group
shall be settled or forgiven as set forth on Schedule 5.04(c), except that,
unless otherwise provided on Schedule 5.04(c), trade receivables or payables
arising out of intercompany sales of inventories or other tangible goods shall
be settled in the normal course of business.
ARTICLE VI
ACCESS TO INFORMATION
6.01 Provision of Corporate Records. Subject to the terms of the
------------------------------
Ancillary Agreements, prior to, or as promptly as practicable after, the
Distribution Date, Xxxxxxx shall deliver to Agribrands all corporate books and
records of Agribrands and its Subsidiaries. Xxxxxxx shall also make available
for copying or, to the extent not detrimental, in Xxxxxxx'x reasonable
opinion, to the interests of Xxxxxxx, originals of all books, records and data
reasonably related to the Agribusiness Assets, the Agribusiness, and the
Liabilities assumed or retained by Agribrands, including, but not limited to,
all books, records and data relating to the purchase of materials, supplies
and services, financial results, sale of products, records of the Agribusiness
Employees, commercial data, catalogues, brochures, training and other manuals,
sales literature, advertising and other sales and promotional materials,
maintenance records and drawings, all active agreements, active litigation
files and government filings. To the extent that originals of such books,
records and data are provided to Agribrands, Agribrands shall provide Xxxxxxx
copies thereof as reasonably requested in writing by Xxxxxxx. Notwithstanding
the above, Xxxxxxx shall provide copies of customer information, invoices and
credit information only to the extent reasonably requested in writing by
Agribrands, and Xxxxxxx shall provide such copies of all books, records and
data only to the extent that such action is not prohibited by the terms of any
agreements pertaining to such information or is not prohibited by law. From
and after the Distribution Date, all books, records and copies so delivered
shall be the property of Agribrands. Notwithstanding the above, Xxxxxxx shall
not be required to make copies, other than pursuant to Section 6.02 of this
Agreement, of any books, records and data which are more than seven years old
or which relate to events occurring more than seven (7) years prior to the
Distribution Date, or of any portion of any books, records or data to the
extent such portion relates exclusively to the Xxxxxxx Assets, the Xxxxxxx
Business or to Liabilities assumed or retained by Xxxxxxx.
6.02 Access to Information. From and after the Distribution Date,
---------------------
each of Xxxxxxx and Agribrands shall afford to the other and to the other's
agents, employees, accountants, counsel and other designated representatives,
reasonable access and duplicating rights during normal business hours to all
records, books, contracts, instruments, computer data and other data and
information ("Information") within such party's possession relating to such
other party's businesses, assets or liabilities, insofar as such access is
reasonably required by such other party. Without limiting the foregoing, such
Information may be requested under this Section 6.02 for audit, accounting,
claims, litigation and tax purposes, as well as for purposes of fulfilling
disclosure and reporting obligations.
6.03 Retention of Records. Except as otherwise required by law or
--------------------
agreed in writing, or as otherwise provided in the Tax Sharing Agreement, each
of Xxxxxxx and Agribrands shall retain, for a period of at least seven years
following the Distribution Date, all significant Information in such party's
possession or under its control relating to the business, assets or
liabilities of the other party and, after the expiration of such seven-year
period, prior to destroying or disposing of any of such Information, (a) the
party proposing to dispose of or destroy any such Information shall provide no
less than 30 days' prior written notice to the other party, specifying the
Information proposed to be destroyed or disposed of, and (b) if, prior to the
scheduled date for such destruction or disposal, the other party requests in
writing that any of the Information proposed to be destroyed or disposed of be
delivered to such other party, the party proposing to dispose of or destroy
such Information promptly shall arrange for the delivery of the requested
Information to a location specified by, and at the expense of, the requesting
party.
6.04 Confidentiality. From and after the Distribution Date, each
---------------
Group shall hold, in strict confidence, all Information obtained from the
other Group prior to the Distribution Date or furnished to it pursuant to this
Agreement or any other agreement referred to herein which relates to or
concerns the business conducted by such other Group, and such Information
shall not be used by it to the detriment of the other Group, or disclosed by
it or its agents, officers, employees or directors without the prior written
consent of such other Group unless and to the extent that (a) disclosure is
compelled by judicial or administrative process or, in the opinion of such
Group's counsel, by other requirements of law, or (b) such Group can show that
such Information was (i) available to such Group on a nonconfidential basis
prior to its disclosure by the other Group, (ii) in the public domain through
no fault of such Group, (iii) lawfully acquired by such Group from other
sources after the time that it was furnished to such Group pursuant to this
Agreement or any other agreement referred to herein, or (iv) independently
developed by such Group. Notwithstanding the foregoing, each Group shall be
deemed to have satisfied its obligations of confidentiality under this Section
6.04 with respect to any Information concerning or supplied by the other Group
if it exercises substantially the same care with regard to such Information as
it takes to preserve confidentiality for its own similar Information.
6.05 Reimbursement. Each member of any Group providing Information
-------------
pursuant to Sections 6.02 or 6.03 to any member of the other Group shall be
entitled to receive from the recipient, upon presentation of an invoice
therefor, payment in U. S. dollars of all out-of-pocket costs and expenses as
may reasonably be incurred in providing such Information.
ARTICLE VII
EMPLOYEE MATTERS
7.01 Employee Liabilities; Continuation of Employment.
-----------------------------------------------------
After the Distribution Date, except as otherwise specifically provided
for in this Agreement and Plan of Reorganization, the Agribusiness Group shall
be responsible for all employment and benefit liabilities related to the
Agribusiness Individuals and the Xxxxxxx Group shall be responsible for all
employment and benefit liabilities related to the Xxxxxxx Individuals, whether
arising before, coincident with or after the Distribution. Xxxxxxx and
Agribrands shall cause each member of their respective Groups to cooperate
with the members of the other's Group to effect, as soon as practicable in a
cost-effective manner, the transfer of employment, where applicable, of
Agribusiness Employees and Xxxxxxx Employees to the appropriate Affiliate of
either Group.
7.02 Xxxxxxx Purina Retirement Plan.
---------------------------------
Effective as of the Distribution Date, all Agribusiness Employees who are
participants in the Retirement Plan shall cease to accrue benefits under such
Plan. Xxxxxxx shall retain all assets and liabilities under the Plan
associated with such Employees and Former Agribusiness Employees.
Xxxxxxx shall cause the Retirement Plan to be amended, effective as of
the Distribution Date, to provide that Agribusiness Employees who are
participants in the Plan as of such date who are between 50 and 54 years of
age, or who have a combination of age and years of service for vesting
purposes greater than or equal to 65, will have the number of years necessary
to attain age 55 added to the calculation of their age (but not credited
service) for purposes of determining their accrued benefit under such Plan.
Commencement of payment of retirement benefits under the Plan shall be subject
to the terms of the Plan currently in effect, without taking into account the
deemed addition of years of service.
7.03 International Retirement Plans.
--------------------------------
(a) Canadian Pensions. Effective as of the Distribution Date, the
Agribusiness Employees participating in the defined benefit pension plan
sponsored by Xxxxxxx Purina Canada Inc. (the "Xxxxxxx Canadian Pension Plan")
shall cease to accrue further benefits under such plan, and all liabilities
for benefits accrued by such individuals as of such Distribution Date shall be
transferred to a new pension plan (the "Agribrands Canadian Pension Plan")
established by Newco Canada, an Affiliate of Agribrands, the terms of which
are substantially the same as those of the Xxxxxxx Canadian Pension Plan. The
Agribrands Canadian Pension Plan shall give the Agribusiness Employees credit,
for purposes of eligibility, vesting and benefit accrual, for service with the
Xxxxxxx Group on or prior to the Distribution Date, to the extent such service
was recognized under the Xxxxxxx Canadian Pension Plan. Benefits accrued by
Former Agribusiness Employees under the Xxxxxxx Canadian Pension Plan shall
remain liabilities of such plan. Xxxxxxx shall, as soon as practicable after
the Distribution Date, cause Xxxxxxx Purina Canada Inc. to transfer from the
Xxxxxxx Canadian Pension Plan to the Agribrands Canadian Pension Plan an
amount (the "Transfer Amount") equal to (i) the present value of benefits
accrued by the Agribusiness Employees as of the Distribution Date (determined
on the greater of an ongoing concern or solvency basis in accordance with plan
documents, plan interpretations specified therein and actuarial assumptions as
used in the last filed actuarial report adjusted as necessary to comply with
legislation and regulatory authorities), plus (ii) a proportionate share of
the defined benefit assets held in the Xxxxxxx Canadian Pension Plan in excess
of the present value of defined benefit liabilities for all participants in
the plan as of that date, plus (iii) interest based on the Xxxxxxx Canadian
Pension Plan rate of return on the Transfer Amount as at the Distribution Date
from the Distribution Date to the actual transfer date, less any expenses,
less (iv) an adjustment for the value of benefits for Agribusiness Employees
who terminate, die or retire after the Distribution Date and prior to the
actual transfer date. Such transfer shall be conditioned upon receipt of, and
subject to, all requisite governmental and other approvals and consents and if
a different Transfer Amount is required by applicable regulatory authorities,
an adjustment to the Transfer Amount will be made. Upon completion of the
transfer of such assets and liabilities, the Xxxxxxx Canadian Pension Plan and
the Xxxxxxx Group shall have no further liability for pension benefits for the
Agribusiness Employees.
(b) Other Foreign Funded Benefit Plans. With respect to other
foreign funded pension plans in which Agribusiness Employees, Former
Agribusiness Employees, Xxxxxxx Employees and Former Xxxxxxx Employees
participate, Agribrands and Xxxxxxx shall cooperate in taking such actions as
are necessary or desirable to ensure that the assets and liabilities related
to the current and former employees, respectively, of the Agribusiness Group
and the Xxxxxxx Group are transferred to (or retained in, as the case may be)
the pension plan applicable to each such Group's employees or former
employees. The amount to be transferred from one defined contribution plan to
another shall be equal to the account balances accrued as of the date of
transfer. The amount to be transferred from one defined benefit plan to
another shall be equal to the present value of benefits accrued by the
transferred employees as of the Distribution Date (determined in accordance
with plan documents, plan interpretations and actuarial assumptions specified
therein), plus a proportionate share of the funds held in the plan in excess
of the amount required to satisfy the accumulated benefit obligation for all
participants in the plan as of that date. If such defined benefit plan lacks
sufficient funds to satisfy the accumulated benefit obligations of all
participants in the plan prior to the transfer, then such transfer shall be
equal to a share of total assets proportionate to the share of total
liabilities being transferred. The transfers of assets and liabilities shall
be conditioned upon receipt of, and subject to, all requisite governmental and
other approvals and consents. Upon completion of the transfer of such assets
and liabilities, the transferring plan and the Group which sponsors the
transferring plan shall have no further responsibility for pension benefits
for the employees for whom such assets and liabilities were transferred.
7.04 Savings Investment Plan.
-------------------------
(a) Agribrands shall take, or cause to be taken, all necessary and
appropriate actions to establish, effective as of the day after the
Distribution Date, and administer a defined contribution Plan which will be a
Qualified Plan and which will also be subject to Section 401(k) of the Code
("Agribrands SIP"), and to provide benefits thereunder for all Agribusiness
Employees who, immediately prior to the Distribution Date, were participants
in the Xxxxxxx Purina Company SIP ("Xxxxxxx SIP"). Agribrands agrees that
each such Agribusiness Employee shall be, to the extent applicable, entitled,
for all purposes under the Agribrands SIP, to be credited with the term of
service and any account balance credited to such Agribusiness Employee as of
the Distribution Date under the terms of the Xxxxxxx SIP as if such service
had been rendered to the Agribusiness Group and as if such account balance had
originally been credited to such Agribusiness Employee under the Agribrands
SIP. Xxxxxxx agrees to provide Agribrands, as soon as practicable after the
Distribution Date (with the cooperation of Agribrands to the extent that
relevant information is in the possession of the Agribusiness Group), with a
list of the Agribusiness Employees who were, to the best knowledge of Xxxxxxx,
participants in the Xxxxxxx SIP immediately prior to the Distribution Date,
together with a listing, if requested by Agribrands, of each such Agribusiness
Employee's term of service for eligibility and vesting purposes under such
Plan and a listing of each such Agribusiness Employee's account balance
thereunder. Xxxxxxx shall, as soon as practicable after the Distribution
Date, provide Agribrands with such additional information (in the possession
of the Xxxxxxx Group and not already in the possession of the Agribusiness
Group) as may be reasonably requested by Agribrands and necessary in order for
Agribrands to establish and administer effectively the Agribrands SIP. The
Agribrands SIP receiving transfers of accounts from the Xxxxxxx SIP shall
contain an "Agribrands Stock Fund" as an investment alternative for
participants, and Agribusiness Employees for whom account balances are to be
transferred to the Agribrands SIP from the Xxxxxxx SIP, as described below,
shall be permitted to elect to invest such balances, or any portion thereof,
in the Agribrands Stock Fund.
(b) Xxxxxxx shall amend the Xxxxxxx SIP to cause the Agribrands
Employees to be fully vested, as of the Distribution, in amounts credited to
their accounts in the Xxxxxxx SIP as of such date. Xxxxxxx further agrees, as
soon as practicable following the Distribution Date, to direct the trustees of
the Xxxxxxx Purina Company Savings Investment Trust to transfer to the trustee
of the Agribrands SIP in cash, securities or other property (including notes
associated with the outstanding balance of any loans to Agribrands Employees
pursuant to ERISA section 408(b)(1) and Code section 4975(d)(1)) or a
combination thereof, as reasonably determined by Xxxxxxx, an amount equal to
the account balances credited as of the date of transfer to the participants
and beneficiaries in the Xxxxxxx SIP who are Agribusiness Employees. Such
transfer shall be adjusted, if and to the extent necessary, to comply with
Section 414(l) of the Code and the regulations promulgated thereunder. At the
time determined by the appropriate fiduciaries of the Xxxxxxx SIP, such
fiduciaries shall cause shares of ESOP Stock allocated to accounts of
Agribusiness Employees under the Xxxxxxx SIP to be converted into or redeemed
for shares of Xxxxxxx Stock, as provided by the terms of the ESOP Stock.
Shares of Xxxxxxx Stock received by the Xxxxxxx SIP upon such redemption or
conversion, as well as shares of such stock otherwise held in the Plan with
respect to Agribusiness Employee participant accounts in the Xxxxxxx Stock
Fund, will be transferred directly to the trustee of the Agribrands SIP for
attribution to respective participant accounts in that Plan. Shares of
Agribrands Stock distributed with respect to shares of Xxxxxxx Stock held in
the Xxxxxxx SIP as of the Distribution, to the extent allocated to accounts of
Agribusiness Employees, shall be transferred to respective participant
accounts in the Agribrands Stock Fund of the Agribrands SIP.
(c) In connection with the transfers described in Section 7.03(b),
Xxxxxxx and Agribrands shall cooperate in making any and all appropriate
filings required under the Code or ERISA, and the regulations thereunder, and
any applicable securities laws and take all such action as may be necessary
and appropriate to cause such transfers to take place as soon as practicable
after the Distribution Date; provided, however, that each such transfer shall
not take place until as soon as practicable after the earlier of (A) the
receipt of a favorable IRS determination letter with respect to the
qualification of the Agribrands SIP under Section 401(a) of the Code or (B)
the receipt by Xxxxxxx of an opinion of counsel retained by Agribrands and
reasonably satisfactory in form and substance to Xxxxxxx to the effect that
such counsel believes the Agribrands SIP will be found by the IRS to be
qualified under Section 401(a) of the Code and that each trust established
thereunder is exempt from federal income tax under Section 501(a) of the Code.
Xxxxxxx and Agribrands agree to provide to such counsel such information in
the possession of the Xxxxxxx Group and the Agribusiness Group, respectively,
as may be reasonably requested by such counsel in connection with the issuance
of such opinion. Xxxxxxx agrees, during the period ending with the date of
complete transfer of assets and liabilities to the Agribrands SIP, to
administer the Xxxxxxx SIP in accordance with plan provisions, and, insofar as
it is practical, in the ordinary course as it was operated prior to the
Distribution, except as otherwise set forth in this Agreement.
(d) Except as specifically set forth in this Section 7.03, from and
after the Distribution Date, Xxxxxxx shall cease to have any liability or
obligation whatsoever with respect to Agribusiness Employees under the Xxxxxxx
SIP (other than the obligation to complete the transfer of assets and
liabilities to the Agribrands SIP described in (c) above) and Agribrands shall
assume and shall be solely responsible for all liabilities and obligations
whatsoever of either Xxxxxxx or Agribrands with respect to Agribusiness
Employees under the Xxxxxxx SIP and shall be solely responsible for all
liabilities and obligations whatsoever under the Agribrands SIP; provided,
however, that Xxxxxxx shall, in respect of Agribusiness Employees
participating in the Xxxxxxx SIP prior to the Distribution, either be
responsible for or make all required contributions, no later than the date
such contributions are legally required to be made, for all prior Plan years
and for the portion of the Current Plan Year ending on the Distribution Date,
to the extent not previously made.
7.05 U.S. Welfare Plans
--------------------
(a) Agribrands shall take, or cause to be taken, all actions
necessary and appropriate on behalf of itself and the Agribusiness Group to
adopt such Welfare Plans as necessary to provide welfare benefits, effective
as of the Distribution Date, to Agribusiness Individuals, including the Plans
listed on Schedule 7.04. In connection with the foregoing, Xxxxxxx agrees to
provide Agribrands or its designated representative with such information (in
the possession of the Xxxxxxx Group and not already in the possession of the
Agribusiness Group) as may be reasonably requested by Agribrands and necessary
for the Agribusiness Group to establish any such Welfare Plan.
(b) Except as otherwise noted in this Section 7.04, Agribrands shall
assume, or cause one or more members of the Agribusiness Group to assume, and
shall be solely responsible for, or cause its insurance carriers or agents to
be responsible for, all welfare benefit claims incurred by Agribusiness
Individuals under the Agribusiness Welfare Plans described above in which such
Agribusiness Individuals are eligible to, and elect to, participate on or
after 12:01 a.m. on the Distribution Date. Xxxxxxx shall retain liability for
welfare benefit claims incurred by Agribusiness Individuals under the Purina
Comprehensive Health and Well-Med Plan or other Xxxxxxx Welfare Plans before
12:01 a.m. on the Distribution Date. For purposes of this Section 7.03,
medical and dental services are incurred when the Agribusiness Individual is
provided with medical or dental care; death benefit claims are incurred at the
time of death of the insured notwithstanding any other provision of any
welfare benefit plan to the contrary. As of 12:01 a.m. on the Distribution
Date, Agribusiness Employees will cease participating in Welfare Plans
maintained by any member of the Xxxxxxx Group, except to the extent they elect
continued coverage under Xxxxxxx'x health benefit plans pursuant to the
Consolidated Omnibus Budget Reconciliation Act.
(c) Xxxxxxx and the Xxxxxxx Group shall be responsible for any
retiree medical and life insurance benefits payable under any Welfare Plans of
Xxxxxxx and the Xxxxxxx Group on or after the Distribution Date with respect
to any employees working in the Agribusiness who have retired from the
Agribusiness Group or the Xxxxxxx Group on or before the Distribution Date and
who have met the eligibility requirements for such benefits at that time.
Agribusiness Employees who retire from the Agribusiness Group after the
Distribution Date shall not be entitled to retiree medical and life insurance
benefits from such Welfare Plans of Xxxxxxx and the Xxxxxxx Group. For
purposes of this subsection, the distribution of ownership of the Agribusiness
Group to shareholders of Xxxxxxx Stock shall not be deemed a termination of
employment of Agribusiness Employees.
7.06 International Welfare Plans
-----------------------------
Xxxxxxx and Agribrands shall each retain all liabilities related to
international welfare plans in which only employees of members of their
respective Groups are enrolled. With respect to welfare plans in which
employees and former employees of members of both Groups are participants,
Xxxxxxx and Agribrands shall cause each member of their respective Groups to
cooperate with members of the other Group to establish additional welfare
plans as soon as practicable after the Distribution Date in order to enroll
the Employees and Former Employees of the Agribusiness and Xxxxxxx in separate
plans.
7.07 Internationalist Retirement Plan.
----------------------------------
As of the Distribution Date, Agribusiness Employees who participate in
the Internationalist Retirement Plan shall cease to accrue benefits under such
plan, and Xxxxxxx shall retain all liabilities in connection with such accrued
benefits. Benefits shall be paid to the participants or their beneficiaries
in accordance with the terms of such plan.
7.08 Stock Options and Restricted Stock.
--------------------------------------
(a) The stock options held by Agribusiness Employees as of the
Distribution Date shall be administered in accordance with the terms of such
agreements. For purposes of restricted stock awards and stock options under
the ISPs, the Distribution shall be deemed to constitute an involuntary
termination of employment of Agribusiness Employees.
(b) Effective immediately after the Distribution Date, the number of
shares of Xxxxxxx Stock subject to, and the exercise price of, each
non-qualified option to acquire Xxxxxxx Stock granted pursuant to the terms of
an ISP ("Xxxxxxx Option") which immediately prior to the Record Date is
outstanding and not exercised shall be adjusted by the Human Resources
Committee of the Xxxxxxx Board in order to reflect the difference in the fair
market value of the Xxxxxxx Stock attributable to the Distribution, in
accordance with the requirements of Section 424 of the Code and the
regulations promulgated thereunder, based upon (i) the average of the closing
prices on the NYSE Composite Index for the Xxxxxxx Stock, trading regular way
with due bills for the Agribrands Stock, for the __ trading day period prior
to the Distribution Date and (ii) the average of the closing prices on the
NYSE Composite Index for the Xxxxxxx Stock, trading regular way, for the _ day
trading period following the Distribution Date.
(c) Xxxxxxx and Agribrands agree that Xxxxxxx, as sole shareholder of
the outstanding capital stock of Agribrands, will approve the adoption by the
Board of Agribrands of an ISP prior to the Distribution, such plan to be
administered by the Nominating and Compensation Committee of the Agribrands
Board (the "Committee"). The Committee shall have authority under such plan
to grant stock options, restricted stock awards and other awards payable in
Agribrands Stock, to directors of Agribrands and eligible Agribusiness
Employees, including executive officers.
7.09 Unfunded Deferred Compensation Plans.
---------------------------------------
(a) Xxxxxxx shall retain liability for all unpaid benefits,
obligations and liabilities with respect to account balances of Agribusiness
Employees and Former Agribusiness Employees in the Fixed Benefit Option of the
Xxxxxxx Purina Company Deferred Compensation Plan for Key Employees ("Xxxxxxx
Deferred Compensation Plan").
(b) Prior to the Distribution Date, Agribrands will establish a
Deferred Compensation Plan, which shall be a non-qualified unfunded deferred
compensation plan ("Agribrands Deferred Compensation Plan"). Effective as of
the Distribution, Xxxxxxx shall (i) amend the Xxxxxxx Deferred Compensation
Plan to permit the transfer to the Agribrands Deferred Compensation Plan of
that portion of the Xxxxxxx Deferred Compensation Plan relating to the
benefits accrued as of the Distribution Date by the Agribusiness Employees in
the Equity Option and Variable Interest Option of such Plan; and in connection
therewith, Xxxxxxx shall assign to Agribrands all its right, title and
obligations under the deferred compensation agreements associated with such
accrued benefits; and (ii) amend the Executive SIP to permit the transfer to
the Agribrands Deferred Compensation Plan of that portion of the Executive SIP
relating to the benefits accrued as of the Distribution Date by the
Agribusiness Employees.
After the Distribution Date, Agribrands shall be solely responsible for the
payment of all liabilities and obligations for benefits with respect to all
Agribusiness Employees under the Agribrands Deferred Compensation Plan, and
Xxxxxxx shall have no liability with respect thereto.
7.10 U. S. Life Insurance Programs.
---------------------------------
(a) Partnership Life Insurance Plan. Agribusiness Individuals who,
immediately prior to the Distribution Date, were participants in or otherwise
entitled to benefits under the Xxxxxxx Partnership Life Insurance Plan, will,
as of the Distribution Date, be treated as terminated employees for purposes
of such Xxxxxxx Partnership Life Insurance Plan, and will be afforded all
rights and benefits to which all terminated employees are entitled under the
terms of such Plan. Xxxxxxx will retain ownership of any individual life
insurance contracts then insuring the life of any Agribusiness Employee in
accordance with the terms of the Partnership Life Insurance Plan.
(b) Split-Dollar Second-To-Die Life Insurance Contracts. On the
Distribution date, Xxxxxxx shall relinquish all rights under any Split-Dollar
Second-To-Die Life Insurance policies currently insuring the lives of any
Agribusiness Employees and their spouses, including but not limited to, rights
to any portion of the cash value or death benefits under such policies,
created in accordance with the terms of the Split Dollar Agreement and
Collateral Assignment between Xxxxxxx and such employee regarding such
policies, and will take all reasonable steps necessary to assign such rights
to Agribrands. Prior to the Distribution date, Xxxxxxx shall perform any and
all obligations required of it under the terms of such Split Dollar Agreement
and Collateral Assignment with respect to such policies.
7.11 Vacation Pay. Agribrands and the Agribusiness Group will assume
------------
(or, as applicable, retain) all liability for unpaid vacation pay accrued by
Agribusiness Employees prior to the Distribution Date. After the Distribution
Date, Xxxxxxx and the Xxxxxxx Group will have no liability for vacation pay
for Agribusiness Employees. Xxxxxxx and the Xxxxxxx Group will assume (or, as
applicable, retain) all liability for unpaid vacation pay accrued by Xxxxxxx
Employees prior to the Distribution Date. After the Distribution Date,
Agribrands and the Agribusiness Group will have no liability for vacation pay
for Xxxxxxx Employees.
7.12 U. S. Severance Pay.
----------------------
(a) Xxxxxxx and Agribrands agree that, with respect to individuals
who, in connection with the Distribution, cease to be employees of the Xxxxxxx
Group and become employees of the Agribusiness Group, such cessation shall not
be deemed a severance of employment from either Group for purposes of any Plan
that provides for the payment of severance, salary continuation or similar
benefits and shall, in connection with the Distribution, if and to the extent
appropriate obtain waivers from individuals against any such assertion.
(b) The Xxxxxxx Group shall assume and be solely responsible for all
liabilities and obligations whatsoever in connection with claims made by or on
behalf of Xxxxxxx Individuals and the Agribusiness Group shall assume and be
solely responsible for all liabilities and obligations whatsoever in
connection with claims made by or on behalf of Agribusiness Individuals in
respect of severance pay, salary continuation and similar obligations relating
to the termination or alleged termination of any such person's employment
either before, to the extent unpaid, or on or after the Distribution Date.
7.13 International Severance Pay.
-----------------------------
(a) Xxxxxxx and Agribrands agree that, with respect to individuals
who, in connection with the Distribution, cease to be employees of the Xxxxxxx
Group and become employees of the Agribusiness Group or vice versa, such
cessation shall not be deemed a severance of employment from either Group
except to the extent so required by the terms of any benefit plan, labor
agreement, applicable law or governmental regulation that provides for the
payment of severance pay, salary continuation, termination indemnity or
similar benefits. The parties agree, if and to the extent appropriate, to
obtain waivers from individuals against any such assertion.
(b) To the extent severance pay, salary continuation or termination
indemnity is payable with respect to an Agribusiness Individual or Xxxxxxx
Individual, the respective Group shall assume and be solely responsible for
all liabilities and obligations whatsoever in connection with claims for such
benefits made by or on behalf of such Individuals relating to the termination
or alleged termination of any such person's employment either before, to the
extent unpaid, or on or after the Distribution Date.
Notwithstanding the foregoing, after the Distribution Date, employees of
Purina Colombiana, S.A. whose principal duties after the Distribution Date are
in connection with the manufacture of pet food pursuant to a Toll-Milling
Agreement shall be considered Xxxxxxx Individuals for purposes of this Section
7.13, and the Xxxxxxx Group shall be solely responsible for payment of any
claims for severance benefits by such employees; and employees of Purina de
Venezuela, C.A. whose principal duties after the Distribution Date are in
connection with the manufacture of agricultural formula animal feeds pursuant
to a Toll-Milling Agreement shall be considered Agribusiness Individuals for
purposes of this Section 7.13, and the Agribusiness Group shall be solely
responsible for payment of any claims for severance benefits by such
employees.
In the event that the individual to whom the benefits are due was an employee
of both the Agribusiness and the Xxxxxxx Business, then the termination
expenses shall be shared on an equal basis by both the Agribusiness Group and
the Xxxxxxx Group.
7.14 Other Balance Sheet Adjustments. To the extent not otherwise
-------------------------------
provided in this Agreement, Xxxxxxx and Agribrands shall take such action as
is necessary to effect an adjustment to the books of the members of the
Xxxxxxx Group and the Agribusiness Group so that, as of the Distribution Date,
the prepaid expense balances and accrued employee liabilities with respect to
any employee liability or obligation assumed or retained as of the
Distribution Date by the Xxxxxxx Group or the Agribusiness Group are
appropriately reflected on the consolidated balance sheets as of the
Distribution Date of Xxxxxxx and Agribrands, respectively.
7.15 Preservation of Rights to Amend or Terminate Plans. Subject to
--------------------------------------------------
the provisions of Article VII hereof, no provision of this Agreement,
including the agreement of Xxxxxxx or Agribrands that it, or any member of the
Xxxxxxx Group or the Agribusiness Group, will make a contribution or payment
to or under any Plan herein referred to for any period, shall be construed as
a limitation on the right of Xxxxxxx or Agribrands or any member of the
Xxxxxxx Group or the Agribusiness Group to amend such Plan or terminate its
participation therein which Xxxxxxx or Agribrands or any member of the Xxxxxxx
Group or the Agribusiness Group would otherwise have under the terms of such
Plan or otherwise, and no provision of this Agreement shall be construed to
create a right in any employee or former employee or beneficiary of such
employee or former employee under a Plan which such employee or former
employee or beneficiary would not otherwise have under the terms of the Plan
itself.
7.16 Reimbursement; Indemnification. Each of the parties hereto
------------------------------
acknowledges that the Xxxxxxx Group, on the one hand, and the Agribusiness
Group, on the other hand, may incur costs and expenses (including
contributions to Plans and the payment of insurance premiums) arising from or
related to any of the Plans which are, as set forth in this Agreement, the
responsibility of the other party hereto. Xxxxxxx and Agribrands agree that
they, or the appropriate members of their respective Groups, shall reimburse
the appropriate members of the other's Group, as soon as practicable but in
any event within 30 days of receipt from the other party of appropriate
verification, for all such costs and expenses.
7.17 Further Transfers. For a period of six months following the
-----------------
Distribution Date, no member of either Group shall, directly or indirectly,
without the prior written consent of a corporate officer of the other Group,
solicit or attempt to solicit any employee or officer of such other Group for
the purpose of obtaining his or her services for hire, or otherwise causing
such employee to leave employment with such other Group, and no member of
either Group, without the prior written consent of a corporate officer of the
other Group, will, for such period of six months, hire such employee or
officer; provided, however, if the employment of any officer or employee of
one Group is terminated by that Group at any time following the Distribution,
a member of the other Group may employ such person without the consent of the
other Group
7.18 Other Liabilities. As of the Distribution Date, Agribrands and
-----------------
Xxxxxxx shall each assume and be solely responsible for all Liabilities
whatsoever of the other's Group with respect to claims made by, in the case of
Agribrands, Agribusiness Individuals and, in the case of Xxxxxxx, Xxxxxxx
Individuals, relating to any Liability not otherwise expressly provided for in
this Agreement, including earned salaries, wages, severance payments, bonus
accruals or other compensation, regardless of whether such Liability was
incurred before or after the Distribution Date.
7.19 Compliance. Notwithstanding anything to the contrary in this
----------
Article VII, to the extent any actions of the parties contemplated in this
Article are determined prior to the Distribution to violate law or result in
unintended tax liability for Xxxxxxx Individuals or Agribusiness Individuals,
such action may be modified to avoid such violation of law or unintended tax
liability.
7.20 Agreement of Parties. Notwithstanding anything herein to the
--------------------
contrary, the agreements contained in this Article VII shall be binding only
as between the parties to this Agreement, no Xxxxxxx Individual or
Agribusiness Individual or other person shall have any right with respect to
any such agreement, and no person other than the parties to this Agreement
shall have any rights to enforce any provision hereof.
ARTICLE VIII
POST-DISTRIBUTION OBLIGATIONS
8.01 Agribrands' Post-Distribution Obligations. Agribrands shall, and
-----------------------------------------
shall cause each member of the Agribusiness Group to, comply with each
representation and statement made, or to be made, to the Internal Revenue
Service (the "IRS") in connection with any ruling obtained, or to be obtained,
by Xxxxxxx, from the IRS with respect to any transaction contemplated by this
Agreement. Neither Agribrands nor any member of the Agribusiness Group shall
for a period of three years following the Distribution Date engage in any of
the following transactions, unless, in the sole discretion of Xxxxxxx, either
(a) an opinion in form and substance satisfactory to Xxxxxxx is obtained from
counsel to Agribrands, the selection of which counsel is agreed to by Xxxxxxx
or (b) a supplemental ruling is obtained from the IRS, in either case to the
effect that such transactions would not adversely affect the tax consequences
of the contributions, transfers, assumptions, Merger and Distribution
described in Articles II and III of this Agreement to (1) Xxxxxxx or any
member of the Xxxxxxx Group, (2) Agribrands or any member of the Agribusiness
Group, or (3) the Xxxxxxx shareholders. The transactions subject to this
provision are: (i) making a material disposition (including transfers from one
member of the Agribusiness Group to another member of the Agribusiness Group),
by means of a sale or exchange of assets or capital stock, a distribution to
shareholders, or otherwise, of any of its assets (other than the transactions
contemplated by this Agreement) except in the ordinary course of business;
(ii) repurchasing any Agribrands capital stock, unless such repurchase
satisfies the requirements of Section 4.05(1)(b) of Revenue Procedure 96-30 or
any successor Revenue Procedure; (iii) issuing any Agribrands capital stock
that in the aggregate exceeds twenty percent (20%) of the issued and
outstanding stock of Agribrands immediately following the Distribution; (iv)
liquidating or merging with any other corporation (including a member of the
Agribusiness Group); or (v) ceasing to engage in the active conduct of a trade
or business within the meaning of Section 355(b)(2) of the Code. Agribrands
hereby represents that neither Agribrands nor any member of the Agribusiness
Group has any present intention to undertake any of the transactions set forth
in (i), (ii), (iii), (iv) or (v) above.
8.02 Xxxxxxx'x Post-Distribution Obligations. For a period of three
---------------------------------------
years after the date of the Distribution, Xxxxxxx shall, and shall cause each
member of the Xxxxxxx Group, to refrain from taking any action which would
adversely impact any ruling obtained, or to be obtained, by Xxxxxxx from the
IRS with respect to any transaction contemplated by this Agreement.
8.03 Indemnification of Shareholders. In the event that Xxxxxxx or
-------------------------------
Agribrands breaches or violates any covenant made in this Article VIII, the
breaching party shall indemnify and hold harmless (a) all shareholders of
Xxxxxxx, and (b) if the breaching party is Agribrands, Xxxxxxx as of the
Record Date against and in respect of any and all costs, expenses,
deficiencies, litigation, proceedings, taxes, levies, assessments, attorneys'
fees, damages or judgments of any kind or nature whatsoever, related to,
arising from, or associated with such breach or violation.
ARTICLE IX
NO REPRESENTATIONS OR WARRANTIES; EXCEPTIONS
Agribrands understands and agrees that, except as set forth in Article
VIII, no member of the Xxxxxxx Group is, in this Agreement or in any Ancillary
Agreement or other agreement or document, implicitly or explicitly
representing or warranting to Agribrands in any way as to the Agribusiness
Assets, the Agribusiness or the Liabilities of the Agribusiness Group or as to
any consents or approvals required in connection with the consummation of the
transactions contemplated by this Agreement, it being agreed and understood
that the Agribusiness Group shall take all of the Agribusiness Assets "as is,
where is" and that, except as provided in Section 2.04, the Agribusiness Group
shall bear the economic and legal risk that conveyances of the Agribusiness
Assets shall prove to be insufficient or that the title of any member of the
Agribusiness Group to any Agribusiness Assets shall be other than good and
marketable and free from encumbrances.
ARTICLE X
GUARANTEES AND SURETY BONDS OF XXXXXXX
Agribrands agrees that as soon as practicable following the Distribution
Date, it will substitute surety bonds obtained by it for each of the surety
bonds of any member of the Xxxxxxx Group, if any, relating to any Agribusiness
Asset, the Agribusiness or any Liability assumed by Agribrands or its
Subsidiaries of Affiliates hereunder. Agribrands agrees that it shall enter
indemnification agreements in its name with each provider of a surety bond
obtained with respect to the Agribusiness Assets, the Agribusiness or any
Liability assumed by Agribrands. Except as set forth on Schedule ___,
Agribrands shall use its best efforts to obtain the complete release and
discharge of any member of the Xxxxxxx Group from all obligations (including
any obligations upon any renewal or extension) related to the Agribusiness
Assets, the Agribusiness or any Liability assumed by Agribrands on which any
member of the Xxxxxxx Group is directly or contingently obligated as a
guarantor or assignor or otherwise contingently liable (including, without
limitation, any letter of credit) (the " Agribusiness Obligations"). In the
event that Agribrands is unable to obtain any such release, Agribrands agrees
that (i) it shall not extend the term or otherwise modify any such
Agribusiness Obligation in a manner which would expand Xxxxxxx'x financial
exposure under such Agribusiness Obligation, (ii) it shall use its best
efforts to substitute itself or another member of the Agribusiness Group as
primary guarantor of such Agribusiness Obligations, and (iii) Agribrands or
any member of the Agribusiness Group shall not assign any such Agribusiness
Obligation or directly or indirectly transfer, sell or assign any assets
securing such Agribusiness Obligation or comprising all or any substantial
portion of a project, the financing of which gave rise to such Agribusiness
Obligation, including, but not limited to, the transfer, sale or assignment of
the capital stock of any Affiliate holding title to such assets, unless
Xxxxxxx or the appropriate member of the Xxxxxxx Group, as the case may be, is
released and discharged of all liabilities with respect to such Agribusiness
Obligation. Without limiting any other obligation of indemnification under
this Agreement or any agreement described herein, Agribrands shall defend,
indemnify and hold harmless each member of the Xxxxxxx Group and their
respective Affiliates, Subsidiaries, directors, officers and employees against
any and all Liabilities whatsoever incurred or suffered by any of them as a
result of any Agribusiness Obligation.
ARTICLE XI
NEGOTIATION
If any question shall arise in regard to (a) the interpretation of any
provision of this Agreement or, except to the extent provided otherwise
therein, any Ancillary Agreement, or (b) the rights or obligations of either
Group hereunder or thereunder, each Group shall designate a senior executive
within its organization who shall, within thirty days after such question
arises, meet with the designated executive of the other Group to negotiate and
attempt to resolve such question in good faith. Such senior executives may,
if they so desire, consult outside advisors for assistance in arriving at such
a resolution. In the event that a resolution is not achieved within sixty
days following such initial meeting, then the parties may seek other legal
means of resolving such question, including but not limited to binding or
non-binding arbitration.
ARTICLE XII
MISCELLANEOUS
12.01 Conditions to the Distribution.
---------------------------------
(a) The obligation of Xxxxxxx to make the Distribution is subject to
the satisfaction of each of the following conditions:
(i) The transactions contemplated by Article II shall have been
consummated in all material respects;
(ii) Xxxxxxx shall have received rulings from the IRS, in form and
substance satisfactory to Xxxxxxx'x tax counsel and independent auditors, that
the contributions, transfers, assumptions, Merger and Distribution described
in Articles II and III of this Agreement will not be subject to federal income
taxation at the corporate or shareholder level;
(iii) The Agribrands Stock and associated Rights shall have been
approved for listing on the NYSE, subject to official notice of issuance;
(iv) The Form 10 shall have been filed with the SEC and shall have
become effective, and no stop order with respect thereto shall be in effect;
(v) All authorizations, consents, approvals and clearances of all
federal, state, local and foreign governmental agencies required to permit the
valid consummation by the parties hereto of the transactions contemplated by
this Agreement shall have been obtained; and no such authorization, consent,
approval or clearance shall contain any conditions which would have a material
adverse effect on (A) the Xxxxxxx Business or the Agribusiness, (B) the
Assets, results of operations or financial condition of the Xxxxxxx Group or
the Agribusiness Group, in each case taken as a whole, or (C) the ability of
Xxxxxxx or Agribrands to perform its obligations under this Agreement; and all
statutory requirements for such valid consummation shall have been fulfilled;
(vi) Xxxxxxx shall have provided the NYSE with the prior written
notice of the Record Date required by Rule 10b-17 of the Exchange Act and the
rules and regulations of the NYSE;
(vii) No preliminary or permanent injunction or other order, decree
or ruling issued by a court of competent jurisdiction or by a government,
regulatory or administrative agency or commission, and no statute, rule,
regulation or executive order promulgated or enacted by any governmental
authority, shall be in effect preventing the payment of the Distribution;
(viii) The Distribution shall be payable in accordance with
applicable law;
(ix) All necessary consents, waivers or amendments to each bank
credit agreement, debt security or other financing facility to which any
member of the Xxxxxxx Group or the Agribusiness Group is a party or by which
any such member is bound shall have been obtained, or each such agreement,
security or facility shall have been refinanced, in each case on terms
satisfactory to Xxxxxxx and Agribrands and to the extent necessary to permit
the Distribution to be consummated without any material breach of the terms of
such agreement, security or facility; and
(x) One or more members of the Agribusiness Group shall have been
substituted, as of the Distribution Date in respect of all Xxxxxxx Group debt
obligations assumed by Agribrands or another member of the Agribusiness Group
pursuant to this Agreement.
(b) Any determination made by the Xxxxxxx Board in good faith
concerning the satisfaction or waiver of any or all of the conditions set
forth in Section 12.01(a) shall be conclusive.
12.02 Survival of Agreements. All covenants and agreements of the
----------------------
parties hereto contained in this Agreement shall survive the Distribution
Date.
12.03 Entire Agreement. This Agreement, the Exhibits and Schedules
----------------
hereto and the Ancillary Agreements shall constitute the entire agreement
between the parties hereto with respect to the subject matter hereof
superseding all previous negotiations, commitments and writings with respect
to such subject matter. To the extent that the provisions of this Agreement
are inconsistent with the provisions of any Ancillary Agreement, the
provisions of such Ancillary Agreement shall prevail.
12.04 Expenses. Except as otherwise provided in this Agreement and
--------
the other agreements referred to herein, each party shall pay all of its costs
and expenses (including attorneys' and accountants' fees, legal costs and
expenses) incurred in connection with this Agreement and the consummation of
the transactions contemplated hereby.
12.05 GOVERNING LAW; JURISDICTION AND VENUE. THIS AGREEMENT IS MADE
-------------------------------------
AND ENTERED INTO IN, AND SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF, THE STATE OF MISSOURI, UNITED STATES OF AMERICA,
WITHOUT REGARD TO ITS CONFLICTS OF LAW PRINCIPLES, AS TO ALL MATTERS,
INCLUDING MATTERS OF VALIDITY, CONSTRUCTION, EFFECT, PERFORMANCE AND REMEDIES
UNDER THIS AGREEMENT. ALL MATTERS RELATING TO THIS AGREEMENT SHALL, SUBJECT
TO THE PROVISIONS OF ARTICLE XI OF THIS AGREEMENT, BE ADJUDICATED EXCLUSIVELY
IN THE COURTS OF THE STATE OF MISSOURI LOCATED IN ST. LOUIS, MISSOURI, OR
WITHIN THE UNITED STES DISTRICT COURT FOR THE EASTERN DISTRICT OF MISSOURI;
AND EACH PARTY HEREBY CONSENTS TO THE EXCLUSIVE JURISDICTION AND VENUE OF SUCH
COURTS FOR ALL SUCH MATTERS.
12.06 Notices. All notices, requests, claims, demands and other
-------
communications hereunder (collectively, "Notices") shall be in writing and
shall be given (and shall be deemed to have been duly given upon receipt) by
delivery in person, by cable, telegram, telex, facsimile or other standard
form of telecommunications, or by registered or certified mail, postage
prepaid, return receipt requested, addressed as follows:
If to a member of the Xxxxxxx Group:
Xxxxxxx Purina Company
Xxxxxxxxxxxx Xxxxxx
Xx. Xxxxx, Xxxxxxxx 00000
Attention: General Counsel
If to a member of the Agribusiness Group:
Agribrands International, Inc.
0000 Xxxxx Xxxxx Xxxxx
Xx. Xxxxx, Xxxxxxxx 00000
Attention: General Counsel
or to such other address as either Group may have furnished to the other Group
by a notice in writing in accordance with this Section 12.06.
12.07 Amendment and Modification; Non-Waiver. This Agreement may be
--------------------------------------
amended, modified or supplemented, or rights, powers or options hereunder
waived or impaired, only by a written agreement signed by a corporate officer
Xxxxxxx and Agribrands and attested by their respective corporate secretaries.
Neither party shall be deemed to have waived or impaired any right, power or
option created or reserved by this Agreement (including without limitation,
each party's right to demand compliance with every term herein, or to declare
any breach a default and exercise its rights in accordance with the terms
hereof) by virtue of: (i) any custom or practice of the parties at variance
with the terms hereof; (ii) any failure, refusal or neglect to exercise any
right hereunder, or to insist upon compliance with any term; (iii) any waiver,
forbearance, delay, failure or omission to exercise any right or option,
whether of the same, similar or different natures, under this Agreement or in
any other circumstances; or (iv) the acceptance by either party of any payment
or other consideration from the other following any breach of this Agreement.
The rights and remedies set forth in this Agreement are in addition to any
other rights or remedies which may be granted by law.
12.08 Successors and Assigns; No Third-Party Beneficiaries. This
----- --------------------------------------------------------
Agreement and all of the provisions hereof shall be binding upon and inure to
-----
the benefit of each Group and their respective successors and permitted
assigns, but neither this Agreement nor any of the rights, interests and
obligations hereunder shall be assigned by either Group without the prior
written consent of the other Group (which consent shall not be unreasonably
withheld). Except for the provisions of Sections 4.02 and 4.03 relating to
Indemnities, which are also for the benefit of the Indemnitees, this Agreement
is solely for the benefit of each Group and is not intended to confer
upon any other Person any rights or remedies hereunder.
12.09 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
12.10 Interpretation.
--------------
(a) The Article and Section headings contained in this Agreement are
solely for the purpose of reference, are not part of the agreement of the
parties hereto and shall not in any way affect the meaning or interpretation
of this Agreement.
(b) The parties hereto intend that, for federal income tax purposes,
the contributions, transfers, assumptions, Distribution and Merger
contemplated hereby shall qualify for non-recognition treatment under Sections
332, 336, 337, 355, 357(a), 361, 368(a)(1)(D) and 1032 of the Code.
12.11 Legal Enforceability. Any provision of this Agreement or any
--------------------
of the Ancillary Agreements which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof. Any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction. Each party acknowledges that money damages would be
an inadequate remedy for any breach of the provisions of this Agreement or any
of the Ancillary Agreements and agrees that the obligations of the parties
hereunder and thereunder shall be specifically enforceable.
12.12 References; Construction. References to any "Article",
-------------------------
"Exhibit", "Schedule" or "Section", without more, are to Articles, Exhibits,
Schedules and Sections to or of this Agreement. Unless otherwise expressly
stated, clauses beginning with the term "including" set forth examples only
and in no way limit the generality of the matters thus exemplified.
12.13 Termination. Notwithstanding any provision hereof, this
-----------
Agreement may be terminated and the Distribution abandoned at any time prior
to the Distribution Date by and in the sole discretion of the Xxxxxxx Board
without the approval of any other party hereto or of Xxxxxxx'x shareholders.
In the event of such termination, no party hereto shall have any Liability to
any Person by reason of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
AGRIBRANDS INTERNATIONAL, INC. XXXXXXX PURINA COMPANY
By: By:
XXXXXXX PURINA INTERNATIONAL
HOLDING COMPANY, INC.
By:
c:0319reo.doc
