EXECUTION COPY
CONSENT AND AGREEMENT
CONSENT AND AGREEMENT, dated as of December 1, 2000, by and among Xxxxxxx,
Xxxxxxxxxxxx, a Delaware corporation ("Cargill"), Agribrands International,
Inc., a Missouri corporation ("Agribrands"), and Xxxxxxx Purina Company, a
Missouri corporation ("RP").
WHEREAS, in connection with a distribution by RP of all of the shares of
capital stock of Agribrands to the shareholders of RP (the "Distribution"), RP
and Agribrands entered into the following agreements, among others, each dated
as of April 1, 1998: Agreement and Plan of Reorganization (the "Reorganization
Agreement"), Tax Sharing Agreement (the "Tax Sharing Agreement"), Trademark
License Agreement (the "Trademark License Agreement"), and Technology Transfer
and License Agreement (the "Technology License Agreement"); and
WHEREAS, pursuant to a letter dated March 19, 1998, as corrected by a
subsequent letter dated April 29, 1998, the Internal Revenue Service (the "IRS")
issued favorable rulings under section 355 and other provisions of the Internal
Revenue Code of 1986, as amended (the "Code"), with respect to the tax
consequences of the Distribution and certain related transactions (the "Ruling
Letter"); and
WHEREAS, subsequent to the Distribution, pursuant to a letter dated July
12, 1999, the IRS issued additional favorable rulings under Code section 355 and
other Code provisions with respect to certain transactions and events occurring
incident to and after the Distribution (the "First Supplemental Ruling Letter");
and
WHEREAS, simultaneously herewith, Agribrands, Cargill and a wholly-owned
subsidiary of Cargill ("Merger Sub") are entering into an Agreement and Plan of
Merger (the "Merger Agreement") pursuant to which Merger Sub will merge (the
"Merger") with and into Agribrands, and Agribrands, the surviving corporation
in the Merger, will become a wholly-owned subsidiary of Cargill, without (except
as provided in this Consent and Agreement) affecting any of the rights or
obligations set forth in the Reorganization Agreement, the Tax Sharing
Agreement, the Trademark License Agreement or the Technology License Agreement;
And
WHEREAS, it is a condition to Cargill's and Merger Sub's willingness to
enter into the Merger Agreement that Cargill, Agribrands and RP enter into this
Consent and Agreement.
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, and intending to be legally bound hereby, the parties
agree as follows:
1. Reorganization Agreement.
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1.1 Notwithstanding anything to the contrary contained in the Reorganization
Agreement (including without limitation Section 5.01(c)), (a) in the event the
Merger is consummated, the provisions of sub-sections (i) and (ii) of Section
5.01(a) of the Reorganization Agreement shall remain in effect until April 1,
2006, and (b) from and after the Merger, notwithstanding the foregoing, such
provisions shall not apply to Cargill and its Affiliates other than Agribrands,
its Subsidiaries and Licensed Consolidated Entities (as defined below) as to
their own activities and not those of Cargill and its other Affiliates.
1.2 Notwithstanding anything to the contrary contained in the Reorganization
Agreement, from and after the consummation of the Merger, (x) the restrictions
contained in sub-section (iii) of Section 5.01(a) of the Reorganization
Agreement with respect to Clause A thereof shall not apply to Cargill and its
affiliates other than Agribrands and its Subsidiaries as to their own activities
and not those of Cargill and its other Affiliates and (y) each of Agribrands,
its Affiliates, successors and successive successors shall be prohibited from
owning, operating, managing, participating in or engaging in the activities
proscribed by Section 6.10 of the DuPont Agreement only to the extent such
activities are proscribed as to it by the terms of Section 6.10 of the DuPont
Agreement (as in effect as of the date hereof).
1.3 From and after the consummation of the Merger, Cargill shall indemnify
and hold harmless RP from and against any action or liability arising under
Section 6.10 of the DuPont Agreement as a result of action taken by Cargill,
Agribrands or any of their Affiliates. The provisions of Sections 4.02, 4.03,
4.04 and 4.05 of the Reorganization Agreement shall apply to a claim for
indemnification by RP under this Section 1.3 (as if such claim were pursuant to
Section 4.01 of the Agreement), with Cargill having the obligations thereunder
of the "Indemnitor" and RP having the obligations thereunder of the
"Indemnitee."
1.4 RP, Agribrands and Cargill agree and acknowledge that Section 8.01 of
the Reorganization Agreement and Article V of the Tax Sharing Agreement require,
as a condition precedent to the Merger, that either (i) Cargill shall obtain an
opinion in form and substance satisfactory to RP from Fried, Frank, Harris,
Xxxxxxx & Xxxxxxxx (the "Opinion"), or (ii) Agribrands (with the cooperation of
Cargill) shall obtain a supplemental ruling from the IRS (a "Second Supplemental
Ruling Letter") substantially to the effect that the Merger and any related
transactions thereto would not adversely affect the continuing validity of any
of the rulings that accorded RP and shareholders of RP as of the Record Date
nonrecognition tax treatment with respect to the Distribution and related
transactions, including, but not limited to, rulings under Code sections 332,
351, 355, 361 and 368(a)(1)(D), contained in the Ruling Letter or the First
Supplemental Ruling Letter (the Ruling Letter and the First Supplemental Ruling
Letter are sometimes collectively referred to as the "Rulings"). Agribrands
(with the cooperation of Cargill) agrees to first seek, and use reasonable best
efforts to obtain, a Second Supplemental Ruling Letter from the IRS ;provided,
however, that if Cargill provides an Opinion, Agribrands (with the cooperation
of Cargill) shall remain obligated to use reasonable best efforts to obtain a
Second Supplemental Ruling Letter from the IRS until the earlier of August 31,
2001, or the date on which the IRS notifies Agribrands that it declines to issue
the Second Supplemental Ruling Letter or that it proposes to issue an adverse
ruling.
In the event an Opinion is obtained by Cargill and provided to RP, and a Second
Supplemental Ruling Letter is not subsequently obtained, then Agribrands and
Cargill, and each of them, shall and do hereby indemnify and hold harmless (i)
all shareholders of RP as of the Record Date, and (ii) RP itself from and
against any and all taxes, including any interest, penalties or other additions
that may become payable in respect thereof, plus any costs, expenses,
deficiencies, litigation, proceedings, levies, assessments, attorneys' fees,
damages or judgments related thereto, which arise solely as a result of the
Merger or any related transactions adversely affecting the continued validity of
the Rulings. Any indemnification payment required to be made by Agribrands and
Cargill, and each of them, pursuant to the prior sentence (other than any costs,
expenses and required prepayment of taxes which shall be paid when due and
owing) shall be made forthwith after a non-appealable, final determination is
made regarding the matter in respect of which such indemnification is payable.
In rendering an Opinion, counsel may rely upon such representations in
certificates of officers of RP, Agribrands, Cargill and others as counsel may
reasonably request.
In the event that a Second Supplemental Ruling Letter is obtained, then
Agribrands, Cargill and Merger Sub, and each of them, agree to comply fully with
each representation and statement made to the IRS in connection with the Second
Supplemental Ruling, and Agribrands, Cargill and Merger Sub, and each of them,
shall and do hereby indemnify and hold harmless (i) the shareholders of RP as of
the Record Date and (ii) RP itself from and against any and all taxes, including
any interest, penalties or other additions that may become payable in respect
thereof, plus any costs, expenses, deficiencies, litigation, proceedings,
levies, assessments, attorneys' fees, damages or judgments related thereto,
which arise from any failure so to comply.
RP agrees to use its reasonable best efforts to cooperate with Agribrands,
Cargill, and Merger Sub, as necessary to reasonably assist in obtaining an
Opinion or Second Supplemental Ruling Letter including, if requested by Cargill,
obtaining the Second Supplemental Ruling Letter after consummation of the
Merger. In the case of RP, such cooperation shall include RP making such
appropriate representations as are reasonably requested to support the Opinion
or the Second Supplemental Ruling Letter.
RP agrees and acknowledges that Agribrands' obligations under Section 8.01 of
the Reorganization Agreement and Article V of the Tax Sharing Agreement shall be
fully satisfied with respect to the Merger if Cargill and Agribrands comply
fully with the foregoing provisions of this Section 1.4.
Cargill shall have the sole right to control and direct any tax audit or
controversy relating to the matters for which Cargill, Agribrands and Merger Sub
have agreed to provide indemnification pursuant this Section 1.4. RP shall have
the right to participate, at RP's expense, in any discussions, conferences,
meetings or proceedings with any tax authority with respect to any such audit or
controversy. To the extent reasonably requested by Xxxxxxx, XX shall cooperate
with Cargill in connection with any such audit or controversy, including by (x)
making RP employees available to Cargill on a mutually convenient basis to
provide such assistance to Cargill as Cargill may reasonably request and (y)
providing to Cargill such information, including records, schedules, documents
and other relevant materials, as Cargill may reasonably request, other than
documents which are of a proprietary and confidential nature to RP. Cargill
shall not consent to any resolution, compromise or conclusion of any such audit
or controversy affecting an RP tax return without the written approval of RP,
which approval shall not be unreasonably withheld. If RP withholds its approval
to any proposed resolution, compromise or conclusion of such audit or
controversy (the "Proposed Resolution") and the ultimate resolution, compromise
or conclusion of such audit or controversy is less favorable to RP or its
shareholders than the Proposed Resolution, Cargill, Agribrands and Merger Sub,
and each of them, shall be required to indemnify RP and shareholders of RP only
for the amount of the indemnification payment that would have been payable had
the Proposed Resolution been accepted.
1.5 Capitalized terms used in this Section 1 but not defined in this Consent and
Agreement shall have the respective meanings ascribed to those terms in the
Reorganization Agreement.
2. Trademark License Agreement.
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2.1 RP hereby consents to the transfer of the trademark license under the
Trademark License Agreement that is deemed to occur pursuant to Section 16 of
such Agreement as a result of Agribrands' becoming a wholly owned subsidiary of
Cargill pursuant to the Merger. Such consent shall not prejudice RP's right to
withhold its consent in accordance with the terms of the Trademark License
Agreement to any subsequent transfer of such license.
2.2 After consummation of the Merger, Agribrands shall be permitted to grant
sublicenses to any of its subsidiaries and to any Consolidated Entity (as
defined below) in accordance with the terms of the Trademark License Agreement,
notwithstanding that such subsidiary or Consolidated Entity is a Principal
Competitor, but only if such subsidiary or Consolidated Entity is a Principal
Competitor solely by reason of its being an Affiliate of Cargill. "Consolidated
Entity" means any Affiliate of Cargill (other than Agribrands and its
subsidiaries) to which current or future operations conducted by Agribrands or
its subsidiaries are transferred (by way of merger, consolidation, transfer of
assets or otherwise). "Licensed Consolidated Entity" means any Consolidated
Entity holding a sublicense from Agribrands to use Licensed Marks.
2.3 Capitalized terms used in this Section 2 but not defined in this Consent
and Agreement shall have the respective meanings ascribed to those terms in the
Trademark License Agreement.
3. Technology License Agreement. RP hereby consents to the transfer of
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Agribrands' rights and obligations under the Technology License Agreement that
is deemed to occur pursuant to Section 7.1 of the Technology License Agreement
as a result of Agribrands' becoming a wholly owned subsidiary of Cargill
pursuant to the Merger. Such consent shall not prejudice RP's right to withhold
its consent in accordance with the terms of the Technology License Agreement to
any subsequent transfer of such rights and obligations.
4. Governing Law. This Consent and Agreement is made and entered into
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in, and shall be governed by and construed and interpreted in accordance with
the laws of, the State of Missouri, without regard to its conflicts of law
principles thereof.
5. Third-Party Beneficiary. This Consent and Agreement is solely for
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the benefit of the parties hereto and is not intended to confer upon any other
person or entity any rights or remedies hereunder.
6. Termination. In the event the Merger Agreement is terminated and
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the Merger is not consummated, this Consent and Agreement shall be void and of
no further effect.
7. Counterparts. This Consent and Agreement may be executed in two or
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more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
8. References. Any reference in agreements between RP and Agribrands to the
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Reorganization Agreement, the Tax Sharing Agreement, the Trademark License
Agreement or the Technology License Agreement shall be deemed to be a reference
to such agreement as modified by this Consent and Agreement.
9. Entire Agreement. This Consent and Agreement shall constitute the entire
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agreement between Cargill and RP with respect to the subject hereof, superseding
all previous discussions, agreements and communications with respect to such
subject matter between Cargill and RP.
IN WITNESS WHEREOF, the parties hereto have caused this Consent and
Agreement to be duly executed as of the date first above written.
AGRIBRANDS INTERNATIONAL, INC. XXXXXXX PURINA COMPANY
By: /s/Xxxxxxx X. Xxxxxxx By: /s/Xxxxx X. Xxxxxxxx
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Name: Name:
Title: Title:
XXXXXXX, XXXXXXXXXXXX
By: /s/Xxxxxxx X. Xxxxxx
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Name:
Title:
