Exhibit 10.2
Execution Version
PURCHASE AND SALE AGREEMENT
This Purchase and Sale Agreement (this "Agreement"), dated
as of October 18, 2002 (the "Effective Date"), is made by and
between FLOUR HOLDINGS LLC, a Delaware limited liability company
("Purchaser"), and SEABOARD FLOUR CORPORATION, a Delaware
corporation ("Seller").
WITNESSETH
WHEREAS, subject to the terms and conditions of this
Agreement, Purchaser desires to purchase from Seller, and Seller
desires to sell to Purchaser, certain assets in exchange for
Earnout Payments (as hereinafter defined).
NOW, THEREFORE, in consideration of the premises and the
mutual promises and agreements contained herein, the parties
hereto, intending to be legally bound, hereby agree as follows:
1. Definitions. For purposes of this Agreement, the following
terms have the meanings set forth below:
"Adjusted Xxxxxxxx Net Income" shall mean, for any
Xxxxxxxx Year, the net income, if any, of Xxxxxxxx for such
Xxxxxxxx Year determined in accordance with GAAP, with the
following adjustments:
(a) for any Xxxxxxxx Year in which Purchaser did
not own Xxxxxxxx for the entire Xxxxxxxx Year,
Adjusted Xxxxxxxx Net Income shall mean the net
income, if any, of Xxxxxxxx for the portion of
such Xxxxxxxx Year that Purchaser owned
Xxxxxxxx;
(b) an appropriate reserve shall be established,
from time to time, to reflect future capital
expenditures of Xxxxxxxx, working capital needs
of Xxxxxxxx, and any unfunded pension
obligations of Xxxxxxxx; and
(c) an appropriate reserve shall be established,
from time to time, to reflect an allowance for
distributions for any income taxes payable by
the Flour Group with respect to the net taxable
income, if any, reflected in such net income.
For purposes of the calculation of such
reserve, it shall be assumed that each member
of the Flour Group who pays taxes with respect
to his allocable share of such net taxable
income pays taxes at the highest applicable
marginal federal and state rates in effect on
the last day of such Xxxxxxxx Year for each
category of income and gain contained in such
net taxable income.
"Adjusted Xxxxxxxx Net Proceeds" shall mean the net
proceeds, if any, realized by Purchaser from a Xxxxxxxx Sale,
less an appropriate reserve to reflect any unfunded pension
obligations of Xxxxxxxx and less an appropriate reserve to
reflect an allowance for distributions for any income taxes
payable by the Flour Group with respect to the net taxable
income, if any, reflected in such net proceeds. For purposes of
the calculation of such reserve, it shall be assumed that each
member of the Flour Group who pays taxes with respect to his
allocable share of such net taxable income pays taxes at the
highest applicable marginal federal and state rates in effect at
the time of such Xxxxxxxx Sale for each category of income and
gain contained in such net income.
"Business Day" shall mean any day except a Saturday,
Sunday or other day on which national banks in New York, New York
are authorized or required by law, rule or regulation to close.
"CHP" shall mean Chestnut Hill Plantation, Inc., a South
Carolina corporation.
"CHP Indebtedness" means all indebtedness owed by CHP to
Seller, which, as of the Effective Date, is in the approximate
aggregate amount of $17,606,330 and is being transferred to
Purchaser pursuant to this Agreement.
"CHP Real Estate" shall mean the real property owned by
CHP.
"CHP Shares" shall mean all of the shares of CHP owned by
Seller, representing 90% of the outstanding capital stock of CHP,
which are being transferred to Purchaser pursuant to this
Agreement.
"Cost Basis" means an amount equal to $30,241,838, which
is agreed by the parties to represent a reasonable estimate of
the aggregate adjusted cost basis for federal income tax purposes
of Seller in the Seller Real Estate, the Purchase Money
Mortgages, the CHP Indebtedness and the CHP Shares.
"Development Expenses" shall mean all expenses incurred,
directly or indirectly, by Purchaser in connection with the
ownership, development, management and selling of the Seller Real
Estate and the CHP Real Estate, including, but not limited to,
property taxes, fees paid to developers or managers, and sales
closing expenses (exclusive, however, of any such expenses
incurred by CHP directly).
"Earnout Payments" shall mean, collectively, the Real
Estate Earnout Payments and the Xxxxxxxx Earnout Payments.
"Final Real Estate Payment Calculation Date" shall mean
August 17, 2007.
"Final Real Estate Payment Date" shall mean the date
which is twenty (20) Business Days after the Final Real Estate
Payment Calculation Date.
"Xxxxxxxx" shall mean X. Xxxxxxxx & Co. LLC, a Delaware
limited liability company and wholly owned subsidiary of Seller,
which is being transferred to Purchaser pursuant to this
Agreement.
"Xxxxxxxx Earnout Payments" shall mean the payments
payable to Seller pursuant to Section 4 of this Agreement.
"Xxxxxxxx Sale" shall mean a sale of all or substantially
all of the assets of Xxxxxxxx or a sale of all or substantially
all of the equity interests of Xxxxxxxx (including by merger) by
Purchaser to an unaffiliated third party.
"Xxxxxxxx Year" shall mean each calendar year (or portion
thereof) within the period commencing on the Effective Date and
ending on the last day of the Last Xxxxxxxx Year; provided,
however, that, for purposes of this Agreement, the first Xxxxxxxx
Year shall commence as of the Effective Date and end as of
December 31, 2002 and the last day of the Last Xxxxxxxx Year
shall end on August 17, 2007.
"Firm" shall mean Ernst & Young LLP or such other
independent public accounting firm as is mutually acceptable to
Purchaser and Seller.
"Flour Group" shall mean Seller and Purchaser and each of
their respective subsidiaries (including the Real Estate
Companies and Xxxxxxxx, but not including Seaboard Corporation or
any of its subsidiaries) and each of the members or partners of
Seller and Purchaser and each of their respective subsidiaries
(including the Real Estate Companies and Xxxxxxxx, but not
including Seaboard Corporation or any of its subsidiaries).
"GAAP" shall mean generally accepted accounting
principles applied consistently with past practices.
"Gross Real Estate Proceeds" shall mean all cash proceeds
received, directly or indirectly, by Purchaser (or any
subsidiary) from (a) the sale, transfer or other disposition to
an unaffiliated third party of any or all of the Seller Real
Estate, (b) the collection or receipt of principal or interest
payments from any or all of the Purchase Money Mortgages or the
CHP Indebtedness, and (c) distributions from CHP (other than in
payment of the CHP Indebtedness) minus an allowance for
distributions for any income taxes, if any, payable by the Flour
Group with respect to the net taxable income, if any, reflected
in such cash proceeds. For purposes of the calculation of Gross
Real Estate Proceeds, it shall be assumed that each member of the
Flour Group who pays taxes with respect to such net taxable
income pays taxes at the highest applicable marginal federal and
state rates in effect at the time of receipt of such cash
proceeds for each category of income and gain contained in such
net taxable income.
"Last Xxxxxxxx Year" shall mean the fiscal year
commencing January 1, 2007 and ending on August 17, 2007.
"Net Real Estate Proceeds" shall mean, as of and through
any particular date, the cumulative Gross Real Estate Proceeds
received by Purchaser as of and through such date less the
cumulative Development Expenses incurred by Purchaser as of and
through such date.
"Net Real Estate Proceeds Account" shall mean, as of any
particular date, the cumulative Net Real Estate Proceeds as of
and through such date less the sum of (a) the balance, if any, of
the Real Estate Reserve Account as of such date, plus (b) the
cumulative Net Real Estate Proceeds Payout as of and through the
day immediately prior to such date.
"Net Real Estate Proceeds Payout" shall mean, as of any
particular date, the aggregate amount of Net Real Estate Proceeds
actually included (after reduction for any balances in the Real
Estate Reserve Account), on or prior to such date, in a
calculation of the Real Estate Earnout Payments payable pursuant
to this Agreement.
"Periodic Real Estate Payment Calculation Date" shall
mean the first Business Day of March, June, August and December
of each calendar year commencing on June 2, 2003 and ending on
June 1, 2007.
"Periodic Real Estate Payment Date" shall mean each date
which is twenty (20) Business Days after a Periodic Real Estate
Payment Calculation Date.
"Purchase Money Mortgages" shall mean the purchase money
mortgages (and promissory notes related thereto) owned by any
Real Estate Company with respect to real property previously sold
by such Real Estate Company, which purchase money mortgages (and
promissory notes related thereto) are being transferred,
indirectly, to Purchaser pursuant to this Agreement.
"Real Estate Companies" shall mean, collectively, the
Real Estate LLC's.
"Real Estate Earnout Payments" shall mean the payments
payable to Seller pursuant to Section 3 of this Agreement.
"Real Estate LLC's" shall mean those limited liability
companies set forth on Annex I, all of which are wholly owned
subsidiaries of Seller and are being transferred to Purchaser
pursuant to this Agreement.
"Real Estate Reserve Account" shall mean, as of any
particular date, an amount designated by Purchaser, in its good
faith discretion, to cover future Development Expenses expected
to be incurred within one (1) year of such date and payments and
distributions previously made, or to be made, by Purchaser (or
any subsidiary) to unaffiliated third parties holding an equity
interest in any Real Estate Company.
"Seller Real Estate" shall mean the real property owned
by the Real Estate Companies and transferred, indirectly, to
Purchaser pursuant to this Agreement. The Seller Real Estate
shall include all improvements and fixtures thereto, whether or
not existing on the Effective Date.
"Unrecovered Cost" shall mean, as of any particular date,
an amount equal to (a) the Cost Basis less (b) the Net Real
Estate Proceeds Payout prior to such date; provided, however,
that if the "Unrecovered Cost" would otherwise be a negative
number, the "Unrecovered Cost" shall be deemed to be zero.
2. Purchase and Sale.
2.1. Purchase and Sale. Subject to the terms and conditions
of this Agreement, Seller hereby grants, sells, assigns,
transfers and delivers to Purchaser, and Purchaser hereby
purchases and acquires from Seller, the following:
(a) all of the equity interests of the Real Estate LLC's;
(b) all of the CHP Shares;
(c) all of Seller's right, title and interest in and to the CHP
Indebtedness; and
(d) all of the equity interests of Xxxxxxxx.
2.2. Instruments of Conveyance. Contemporaneously with the
execution hereof, Seller has delivered to Purchaser (a)
assignments representing all of the equity interests of each of
the Real Estate LLC's and Xxxxxxxx and (b) all stock certificates
representing the CHP Shares, duly endorsed in blank (or
accompanied by a duly executed stock power).
2.3. Further Assurances. Each party hereto shall from time
to time hereafter, at the other party's reasonable request and
without further consideration, execute and deliver to such other
party such instruments of transfer, conveyance, and assignment in
addition to those delivered pursuant to Section 2.2 as shall
reasonably be requested to effect the transactions contemplated
by this Agreement.
3. Real Estate Earnout Payments.
3.1. Periodic Real Estate Payments. On each Periodic Real Estate
Payment Date, Purchaser shall pay to Seller, for no additional
consideration, an amount, if any, equal to the sum of the amounts
determined in accordance with the following calculations set
forth in Sections 3.1(a) and 3.1(b):
(a) An amount (for purposes of this Section 3.1, the "Current
Recaptured Cost") equal to the lesser of (1) the
Unrecovered Cost as of the immediately preceding Periodic
Real Estate Payment Calculation Date or (2) the positive
balance, if any, of the Net Real Estate Proceeds Account
as of the immediately preceding Periodic Real Estate
Payment Calculation Date; and
(b) An amount equal to one-half of the difference between (1)
the positive balance, if any, of the Net Real Estate
Proceeds Account as of the immediately preceding Periodic
Real Estate Payment Calculation Date less (2) the Current
Recaptured Cost, if any, utilized to calculate the Real
Estate Earnout Payment payable on such Periodic Real Estate
Payment Date pursuant to Section 3.1(a).
3.2. Final Real Estate Payment. On the Final Real Estate Payment
Date, Purchaser shall pay to Seller, for no additional consideration, an
amount, if any, equal to the sum of the amounts determined in accordance with
the following calculations set forth in Sections 3.2(a) and 3.2(b):
(a) An amount (for purposes of this Section 3.2, the "Current
Recaptured Cost") equal to the lesser of (1) the
Unrecovered Cost as of the Final Real Estate Payment
Calculation Date or (2) the positive balance, if any, of
the Net Real Estate Proceeds Account as of the Final Real
Estate Payment Calculation Date; and
(b) An amount equal to one-half of the difference between (1)
the positive balance, if any, of the Net Real Estate
Proceeds Account as of the Final Real Estate Payment
Calculation Date less (2) the Current Recaptured Cost,
if any, utilized to calculate the Real Estate Earnout
Payment payable on the Final Real Estate Payment Date
pursuant to Section 3.2(a).
4. Xxxxxxxx Earnout Payments.
4.1. Annual Payments. No later than thirty (30) Business Days
after the end of each Xxxxxxxx Year, Purchaser shall pay to Seller, for no
additional consideration, an amount equal to 95% of the Adjusted Xxxxxxxx Net
Income, if any, for such Xxxxxxxx Year.
4.2. Xxxxxxxx Sale Payment. In the event that a Xxxxxxxx Sale is
consummated prior to the end of the Last Xxxxxxxx Year, no later than thirty
(30) Business Days after the consummation of such Xxxxxxxx Sale, Purchaser
shall pay to Seller, for no additional consideration, an amount equal to 95%
of the Adjusted Xxxxxxxx Net Proceeds, if any, for such Xxxxxxxx Sale.
5. Review Rights and Decisions.
5.1. Calculation of Earnout Payments. Within (a) five (5)
Business Days following each Periodic Real Estate Payment
Calculation Date and the Final Real Estate Payment Calculation
Date, (b) five (5) Business Days following consummation of a
Xxxxxxxx Sale consummated prior to the end of the Last Xxxxxxxx
Year, and (c) within fifteen (15) Business Days following the end
of each Xxxxxxxx Year, Purchaser shall prepare and submit to
Seller a statement setting forth, in reasonable detail,
Purchaser's calculation of the amount of the Earnout Payment for
such Periodic Real Estate Payment Calculation Date, Final Real
Estate Payment Calculation Date, Xxxxxxxx Sale or Xxxxxxxx Year,
as the case may be, together with reasonably detailed support for
such calculations. If Seller disputes the correctness of
Purchaser's calculation of the amount of the Earnout Payment,
Seller shall notify Purchaser of the objections within five (5)
Business Days of receipt of Purchaser's calculations. If Seller
fails to deliver such notice of objections within such time,
Seller shall be deemed to have accepted Purchaser's calculations.
The parties shall endeavor in good faith to resolve any disputed
matters within five (5) Business Days after the receipt of a
notice of objections. If the parties are unable to resolve all
of the items that were identified in the notice of objection,
Purchaser and Seller will jointly retain the Firm to resolve any
disagreements. Purchaser and Seller will direct the Firm to
render a determination within ten (10) Business Days of its
retention and Purchaser, Seller and their respective agents will
cooperate with the Firm during its engagement. The Firm will
determine the actual amount of Earnout Payment for the applicable
period. The determination of the Firm in respect of the
correctness of each matter in dispute shall be conclusive and
binding on the parties. The cost of the Firm shall be borne one-
half by Purchaser and one-half by Seller.
5.2. Accounting Practice. The calculation of the Earnout Payments
shall be determined first in accordance with this Agreement and
second in accordance with GAAP.
5.3. Operation of Seller Real Estate and Xxxxxxxx. Subject to
Section 5.4 with respect to the Seller Real Estate, Purchaser
shall manage and operate the Seller Real Estate and Xxxxxxxx in
such manner as it deems appropriate.
5.4. Final Liquidation. On the fourth anniversary of the
Effective Date, Purchaser shall, and shall cause any developers
or agents employed on its behalf to, commence the process of
liquidating the remaining Seller Real Estate and the remaining
CHP Real Estate. Purchaser shall use all commercially reasonable
efforts to sell, transfer or dispose of to an unaffiliated third
party all of the Seller Real Estate and the CHP Real Estate no
later than the Final Real Estate Payment Calculation Date.
5.5. Cooperation. Purchaser shall make available, in
accordance with reasonable and customary practices, the books,
records, documents and workpapers underlying the preparation and
review of Purchaser's calculations of the Earnout Payments.
5.6. Finality. The payment of Earnout Payments by Purchaser
shall be final and irrevocable and not subject to any claims,
adjustments, offsets or the like. Any assignee of Seller's right
to receive Earnout Payments shall be entitled to unconditionally
rely on this Section 5.6.
6. Representations and Warranties.
6.1. By Purchaser. Purchaser hereby represents and warrants
to Seller that (a) Purchaser is a limited liability company duly
formed, validly existing, and in good standing under the laws of
the State of Delaware, (b) Purchaser has full power and authority
to execute and deliver this Agreement and to perform its
obligations under this Agreement and to consummate the
transactions contemplated hereby, and (c) this Agreement has been
duly executed and delivered by Purchaser and constitutes the
valid and binding agreement of Purchaser, enforceable against
Purchaser in accordance with its terms, subject to applicable
bankruptcy, insolvency and other similar laws affecting the
enforceability of creditors' rights generally, general equitable
principles and the discretion of courts in granting equitable
remedies.
6.2. By Seller. Seller hereby represents and warrants to
Purchaser that (a) Seller is a corporation duly incorporated,
validly existing, and in good standing under the laws of the
State of Delaware, (b) Seller has full power and authority to
execute and deliver this Agreement and to perform its obligations
under this Agreement and to consummate the transactions
contemplated hereby, and (c) this Agreement has been duly
executed and delivered by Seller and constitutes the valid and
binding agreement of Seller, enforceable against Seller in
accordance with its terms, subject to applicable bankruptcy,
insolvency and other similar laws affecting the enforceability of
creditors' rights generally, general equitable principles and the
discretion of courts in granting equitable remedies
7. Miscellaneous.
7.1. Amendment and Waiver. This Agreement may be amended,
modified or supplemented only by a written instrument signed by
the parties hereto. Any of the terms or conditions of this
Agreement may be waived in writing at any time by the party
entitled to the benefits thereof. No waiver of any of the
provisions of this Agreement shall be deemed to waive or shall
constitute a waiver of any other provision hereof (whether or not
similar).
7.2. Descriptive Headings. The descriptive headings are for
convenience of reference only and shall not control or affect the
meaning or construction of any provision of this Agreement. When
a reference is made in this Agreement to Sections, such reference
shall be to a Section of this Agreement unless otherwise
indicated.
7.3. Counterparts. This Agreement may be executed in any number
of counterparts, and each such counterpart shall be deemed to be
an original instrument, but all such counterparts together shall
constitute but one agreement. This Agreement shall become
effective when one or more counterparts have been signed by each
of the parties and delivered to the other parties, it being
understood that the parties need not sign the same counterpart.
7.4. Entire Agreement. This Agreement contains the entire
agreement between the parties with respect to transactions
described herein, and supersedes all prior arrangements or
understandings with respect to the subject matter hereof.
7.5. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE
(WITHOUT REGARD TO ANY APPLICABLE CONFLICTS OF LAW PROVISIONS
THEREOF).
7.6. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by
any rule of law or public policy, all other conditions and
provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of
the transactions contemplated hereby are not affected in any
manner materially adverse to any party. Upon such determination
that any term or other provision is invalid, illegal or incapable
of being enforced, the parties shall negotiate in good faith to
modify this Agreement so as to effect the original intent of the
parties as closely as possible in a mutually acceptable manner in
order that the transactions be consummated as originally
contemplated to the fullest extent possible.
7.7. Relationship of the Parties. Nothing in this Agreement
shall create or constitute any agency, partnership or joint
venture arrangement by and between Purchaser and Seller. Neither
Purchaser nor Seller has the power or authority, express or
implied to obligate or bind the other to anything whatsoever.
7.8. Assignment. No assignment or transfer by any party of such
party's rights and obligations under this Agreement will be made
except with the prior written consent of the other party to this
Agreement; provided, however, that Seller shall be entitled to
assign the right to receive Earnout Payments (including, without
limitation, the right to enforce such payments) to any person
without the consent of Purchaser and, upon notice to Purchaser,
such payments shall be made directly to such assignee. An
assignee of Seller's rights under this Agreement shall not, under
any circumstances, be liable for any of Seller's obligations
under this Agreement or otherwise. This Agreement will be
binding upon and will inure to the benefit of the parties hereto
and their successors and permitted assigns, and any reference to
a party will also be a reference to a successor or permitted
assign.
IN WITNESS WHEREOF, each of the parties hereto has caused
this Agreement to be executed and delivered by its respective
duly authorized officers, all as of the date first above written.
FLOUR HOLDINGS LLC
By:
Name: H. Xxxxx Xxxxxx
Title: Manager
SEABOARD FLOUR CORPORATION
By:
Name: H. Xxxxx Xxxxxx
Title: President
ANNEX I
Real Estate LLC's
1. New Xxxxxx Street, LLC, a South Carolina limited liability company;
2. Modern Baking LLC, a Tennessee limited liability company;
3. East Lake Company, LLC, a South Carolina limited liability company;
4. Waverly Place, LLC, a South Carolina limited liability company;
5. Parcel F, LLC, a South Carolina limited liability company;
6. Richmond Farms, LLC, a South Carolina limited liability company; and
7. Chapin New Town, LLC, a South Carolina limited liability company.
