Exhibit 4.1
Seaboard Corporation
Second Amendment to Note Purchase Agreements
Dated as of September 30, 2002
Re:
Note Purchase Agreements dated as of December 1, 1993
and
$100,000,000 6.49% Senior Notes
Due December 1, 2005
Seaboard Corporation
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Second Amendment to Note Purchase Agreements
Dated as of September 30, 2002
Re:Note Purchase Agreements dated as of December 1, 1993
and
$100,000,000 6.49% Senior Notes
Due December 1, 2005
To the Noteholders named in
Schedule I hereto which are also
signatories to this Second Amendment
to Note Purchase Agreements.
Ladies and Gentlemen:
Reference is made to the separate Note Purchase Agreements
dated as of December 1, 1993, as amended by the separate First
Amendment to Note Agreements dated as of March 31, 1994 (the
"Note Agreements"), between Seaboard Corporation, a Delaware
corporation (the "Company"), and the purchasers named therein,
under and pursuant to which $100,000,000 aggregate principal
amount of 6.49% Senior Notes due December 1, 2005 (the "Notes")
of the Company were originally issued. The holders of the Notes
are hereinafter referred to as the "Noteholders." Terms used but
not otherwise defined herein shall have the meanings set forth in
the Note Agreements.
The Company desires to amend the Note Agreements and hereby
agrees with you as follows:
Article 1
Amendment of Note Agreement
Section 1.1. Amendment of Section 4 (Letter Agreement
Prepayments). Section 4 of the Note Agreements shall be and is
hereby amended by the addition thereto of a new Section 4.7 to
read as follows:
"Section 4.7. Letter Agreement Prepayments. The
Company will from time to time make such offer or
offers to prepay the Notes (and will prepay such Notes
to the extent that the holder or holders thereof accept
such offer or offers), in each case as provided for in
that certain Letter Agreement dated the Closing Date
among the Company, the Purchasers, ▇▇▇▇▇ ▇▇▇▇▇▇ and the
Parent Corporation."
Section 1.2. Amendment of Section 6.6 (Consolidated Tangible Net
Worth). Section 6.6 of the Note Agreements shall be and is
hereby amended to read in its entirety as follows:
"Section 6.6. Consolidated Tangible Net Worth;
Restricted Payments. (a) The Company will not, at any
time, permit Consolidated Tangible Net Worth to be less
than the sum of (i) Three Hundred Fifty Million Dollars
($350,000,000) plus (ii) an aggregate amount equal to
25% of the Consolidated Net Income (but, in each case,
only if a positive number) on a cumulative basis for
each completed fiscal year beginning with the fiscal
year ending December 31, 2002.
(b) The Company will not at any time declare or
make, or incur any liability to declare or make, any
Restricted Payments unless immediately after giving
effect to such action: (i) the aggregate amount of
Restricted Payments of the Company declared or made
during the period commencing on January 1, 2002 and
ending on the date such Restricted Payment is declared
or made, inclusive, would not exceed the sum of (A)
$10,000,000, plus (B) 50% of Consolidated Adjusted Net
Income for such period (or minus 100% of Consolidated
Adjusted Net Income for such period if Consolidated
Adjusted Net Income for such period is a loss), plus
(C) the aggregate amount of Net Proceeds of Capital
Stock for such period; and (ii) no Default or Event of
Default would exist.
(c) The Company will not authorize a Restricted
Payment that is not payable within 60 days of the
authorization of such Restricted Payment."
Section 1.3. Amendment of Section 6.7 (Funded Debt). Section
6.7 of the Note Agreements shall be and is hereby amended in its
entirety to read as follows:
"Section 6.7. Funded Debt; Interest Charge
Coverage Ratio. (a) The Company will not at any time
permit Consolidated Funded Debt to be greater than
ninety percent (90%) of Consolidated Shareholders'
Equity, determined in each case at such time.
(b) The Company will not permit the Interest
Charge Coverage Ratio, as of the end of each fiscal
quarter, to be less than 2.00 to 1.00; provided,
however, that the Company shall be permitted on two
occasions under the provisions of this Section 6.7(b)
to fail to meet such Interest Charge Coverage Ratio
(and no Default or Event of Default shall exist on
account thereof) so long as the Company shall have been
in compliance with the provisions of this Section
6.7(b) at the end of the immediately preceding fiscal
quarter."
Section 1.4. Amendment of Section 6.8 (Transfer of Property).
The first sentence of Section 6.8 of the Note Agreements shall be
and is hereby amended in its entirety to read as follows:
"The Company will not, and will not permit any
Subsidiary, to sell, lease as lessor, transfer or
otherwise dispose of Property (including, without
limitation, Subsidiary Stock but excluding, in any
case, any capital stock of the Company) (each such
transaction a "Transfer") provided that the foregoing
restriction does not apply to a Transfer of Property
if:".
Section 1.5. Amendment of Section 6.12 (Transactions with
Affiliates). Section 6.12 of the Note Agreements shall be and is
hereby amended in its entirety to read as follows:
"[Intentionally Omitted]"
Section 1.6. Amendment of Section 6.13 (Guaranties). Section
6.13 of the Note Agreements shall be and is hereby amended in its
entirety to read as follows:
"Section 6.13. Guaranties; Transactions with
Affiliates; Investments. (a) Neither the Company nor any
Subsidiary will become liable for, or permit any of its
Property to become subject to, any Guaranty, unless:
(i) the maximum dollar amount of the obligation being
guaranteed is readily ascertainable by the terms of such
obligation, or the agreement or instrument evidencing such
Guaranty specifically limits the dollar amount of the
maximum exposure of the guarantor thereunder; and
(ii) after giving effect thereto and to any concurrent
transactions, no Default or Event of Default exists or would
exist under any provision hereof.
(b) Transactions with Affiliates. The Company will
not, and will not permit any Subsidiary to, enter into any
transaction, including, without limitation, the purchase,
sale or exchange of Property or the rendering of any
service, with any Affiliate, except in the ordinary course
of and pursuant to the reasonable requirements of the
Company's or such Subsidiary's business and upon fair and
reasonable terms no less favorable to the Company or such
Subsidiary than would be obtained in a comparable
arm's-length transaction with a Person not an Affiliate;
provided that the Permitted Affiliate Transactions shall not
be required to comply with the provisions of this
Section 6.13(b), and provided, further, that the price per
share of the Company's common stock that will be utilized
for determining the number of shares of common stock of the
Company which will be issued by the Company to the Parent
Corporation pursuant to, and at the closing of, the
Permitted Affiliate Transactions will be at a price per
share equal to eighty-eight percent (88%) of the average of
the closing price per share of the Company's common stock on
the American Stock Exchange for the ten trading days
immediately preceding the determination of such price by the
Board of Directors of the Company on October 2, 2002 and the
maximum aggregate number of shares of common stock of the
Company which will be issued to the Parent Corporation
pursuant to, and at the closing of, the Permitted Affiliate
Transactions will be no greater than the number of shares of
common stock of the Company transferred to the Company by
the Parent Corporation as a part of said transaction.
(c) Limitation on Investments. Except for the
Permitted Affiliate Transactions (including, without
limitation, the Investment by the Company in the
"earnout agreement" referred to in Exhibit A to the
Second Amendment), the Company will not, and will not
permit any Subsidiary to, make or hold any Investment
in any Person which is a member of the ▇▇▇▇▇▇ Group
(excluding from the definition of "▇▇▇▇▇▇ Group" for
purposes of this sentence the Company and its
Subsidiaries), provided that, the foregoing
notwithstanding, the Company or any Subsidiary, as the
case may be, may advance travel expenses and other
business-related expenses incurred or to be incurred,
in each case, in the ordinary course of business to any
individual which is a member of the ▇▇▇▇▇▇ Group and an
officer, director or employee of the Company or any
Subsidiary if the aggregate outstanding amount of all
such advances to all such individuals shall not at any
time exceed $50,000. The Company will not Transfer,
and will not permit any Subsidiary to issue, any
Subsidiary Stock to any member of the ▇▇▇▇▇▇ Group
(excluding from the definition of "▇▇▇▇▇▇ Group" for
purposes of this sentence the Company and its
Subsidiaries)."
Section 1.7. Amendment of Section 7.1 (Financial and Business
Information). The first sentence of clause (ii) in Section
7.1(b) of the Note Agreements shall be and is hereby amended in
its entirety to read as follows: "(ii) a consolidated and
consolidating statement of income of the Company and its
consolidated subsidiaries for such year and consolidated
statements of changes in shareholders' equity and cash flows of
the Company and its consolidated subsidiaries for such year,".
Section 1.8. Amendment of Section 7.2 (Officer's Certificate).
Section 7.2(a) of the Note Agreements shall be and is hereby
amended in its entirety to read as follows:
"(a) Covenant Compliance - the information
(including detailed calculations) required in order to
establish whether the Company was in compliance with
the requirements of Section 6.5 through Section 6.9,
inclusive, and Section 6.13(c) during the period
covered by the financial statement then being furnished
(including with respect to each such Section, where
applicable, the calculations of the maximum or minimum
amount, ratio or percentage, as the case may be,
permissible under the terms of such Sections, and the
calculation of the amount, ratio or percentage then in
existence and a summary of payments, if any, received
under the "earnout agreement" referred to in Exhibit A
to the Second Amendment pursuant to the Permitted
Affiliate Transactions and the number of shares of
common stock of the Company issued to the Parent
Corporation pursuant to such agreement and the
valuation assigned to such shares); and".
Section 1.9. Amendment of Section 7 (Permitted Affiliate
Transactions; Accountants' Certificate; Inspection). Section 7
of the Note Agreements shall be and is hereby amended by
renumbering Section 7.3 and Section 7.4 of the Note Agreements as
Section 7.4 and Section 7.5, respectively, and by the addition
thereto of a new Section 7.3 in lieu of such former Section 7.3
to read as follows:
"Section 7.3. Permitted Affiliate Transactions.
Promptly, but in no event more than 15 days after the
consummation of the repurchase of the Company's common
stock from the Parent Corporation and the issuance of
new common stock of the Company to the Parent
Corporation in the Permitted Affiliate Transactions,
the Company shall deliver to the holders of the Notes a
certificate which shall (i) set forth the valuation
assigned to the shares of the Company's common stock in
connection with the repurchase, (ii) the number of
shares held by the Parent Corporation immediately
preceding and immediately following the transaction,
and (iii) state that the terms of the transaction
comply with the requirements set forth in
Section 6.13(b) and conform in all material respects to
the description of the Permitted Affiliate
Transactions. In addition, promptly, but in no event
more than 15 days after the consummation of the
repurchase of the Company's common stock from the
Parent Corporation and the issuance of new common stock
of the Company to the Parent Corporation in the
Permitted Affiliate Transactions, the Company shall
deliver to the holders of the Notes, a copy of the
fairness opinion prepared by the financial advisor to
the special committee of the Board of Directors."
Section 1.10. Amendment to Section 9.1 (Terms Defined). Section
9.1 of the Note Agreements shall be and is hereby amended by the
addition thereto of the following new definitions which shall
read as follows:
"`▇▇▇▇▇▇ Group' means (i) H. ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇, ▇▇. (brother of H. ▇▇▇▇▇ ▇▇▇▇▇▇) and the estate
of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (deceased sister of H. ▇▇▇▇▇
▇▇▇▇▇▇), (ii) spouses, heirs, legatees, lineal
descendants, and spouses of lineal descendants, other
blood relatives, step-children, adopted children,
and/or estates or representatives of estates of H.
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇. and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
(iii) trusts established for the benefit of spouses,
lineal descendants and spouses of lineal descendants,
other blood relatives, step-children, and/or adopted
children of H. ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇., and
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and (iv) any person which is directly
or indirectly Controlled by a person described in the
preceding clauses (i), (ii) or (iii)."
"`Capital Lease Obligation' means, with respect to
any Person and a Capital Lease, the amount of the
obligation of such Person as a lessee under such
Capital Lease which would, in accordance in GAAP,
appear as a liability on a balance sheet of such
Person."
"`Consolidated Adjusted Net Income' means, with
reference to any period, the Consolidated Net Income
for such period after excluding therefrom the following
(to the extent included in the determination thereof):
any extraordinary items; any discontinued operations or
the disposition thereof; any non-cash charges or
credits relating to economic hedging transactions
engaged in by, and specifically limited to, the
Company's trading and milling group, whether or not
constituting hedging activities pursuant to FASB 133;
and any non-cash charges or credits relating to
currency adjustments on account of, and specifically
limited to, the Company's Argentinean sugar Subsidiary,
Ingenio Y Refineria San ▇▇▇▇▇▇ del Tabacal SRL, in each
case, as determined by GAAP, where applicable."
"`Consolidated Net Income' for any period shall
mean the gross revenues of the Company and its
Subsidiaries for such period less all expenses and
other proper charges (including taxes on income),
determined on a consolidated basis in accordance with
GAAP."
"`Distribution' means, in respect of any
corporation, association or other business entity, (a)
dividends or other distributions or payments on capital
stock or other equity interest of such corporation,
association or other business entity (except
distributions in such stock or other equity interest),
and (b) the redemption or acquisition of such stock or
other equity interests or of warrants, rights or other
options to purchase such stock or other equity
interests (except when solely in exchange for such
stock or other equity interests) unless made,
contemporaneously, from the net proceeds of a sale of
such stock or other equity interests."
"`EBITDA' shall mean, with respect to any period,
the total of the following calculated without
duplication for the Company and its Subsidiaries on a
consolidated basis for such period: (a) Consolidated
Adjusted Net Income for such period, less any interest
income included in determining Consolidated Adjusted
Net Income for such period; plus (b) any provision for
(or less any benefit from) income or franchise taxes
deducted in determining Consolidated Adjusted Net
Income for such period; plus (c) Interest Charges
deducted in determining Consolidated Adjusted Net
Income for such period; plus (d) amortization and
depreciation expense deducted in determining
Consolidated Adjusted Net Income for such period."
"`Interest Charge Coverage Ratio' means, at any
time, the ratio of (a) EBITDA for the period of four
consecutive fiscal quarters ending on, or most recently
ended prior to, such time to (b) Interest Charges for
such period."
"`Interest Charges' mean, with respect to any
period, the total (without duplication) of the
following (in each case, after eliminating all
offsetting debits and credits between the Company and
its Subsidiaries and all other items required to be
eliminated in the course of the preparation of the
consolidated financial statements of the Company and
its Subsidiaries in accordance with GAAP): (a) all
interest in respect of the Indebtedness of the Company
and its Subsidiaries (including imputed interest on
Capital Lease Obligations) deducted in determining
Consolidated Net Income for such period; plus (b) all
debt discount and expense amortized or required to be
amortized in the determination of Consolidated Net
Income for such period less (c) all interest income
included in determining Consolidated Net Income for
such period."
"`Investment' means any investment, made in cash
or by delivery of Property, by the Company or any of
its Subsidiaries (i) in any Person, whether by
acquisition of stock, Indebtedness or other obligation
or Security, or by loan, Guaranty, advance, capital
contribution or otherwise, or (ii) in any property."
"`Net Proceeds of Capital Stock' means, with
respect to any period, cash proceeds (net of all costs
and out-of-pocket expenses in connection therewith,
including, without limitation, placement, underwriting
and brokerage fees and expenses), received by the
Company and its Subsidiaries during such period, from
the sale of all capital stock or other equity interests
(other than Redeemable capital stock or other
Redeemable equity interests) of the Company and its
Subsidiaries, including in such net proceeds: (a) the
net amount paid upon issuance and exercise during such
period of any right to acquire any capital stock or
other equity interest, or paid during such period to
convert a convertible debt Security to capital stock or
other equity interest (but excluding any amount paid to
the Company upon issuance of such convertible debt
Security), and (b) any amount paid to the Company or
any Subsidiary upon issuance of any convertible debt
Security issued after January 1, 2003 and thereafter
converted to capital stock or other equity interest
(other than Redeemable capital stock or other
Redeemable equity interests) during such period."
"`Parent Corporation' means Seaboard Flour
Corporation, a Delaware corporation, and any successor
in interest thereto."
"`Permitted Affiliate Transactions' shall mean the
transactions described in Exhibit A to the Second
Amendment."
"`Redeemable' means, with respect to the capital
stock or other equity interest of any Person, each
share of such Person's capital stock or other equity
interest that is
(a) redeemable, payable or required to be
purchased or otherwise retired or extinguished, or
convertible into Indebtedness of such Person (i) at a
fixed or determinable date, whether by operation of
sinking fund or otherwise, (ii) at the option of any
Person other than such Person or (iii) upon the
occurrence of a condition not solely within the control
of such Person; or
(b) convertible into other Redeemable capital
stock or other equity interests."
"`Responsible Officer' means any Senior Financial
Officer and any other officer of the Company with
responsibility for the administration of the relevant
portion of this Agreement."
"`Restricted Payment' means any Distribution in
respect of the Company, including, without limitation,
any Distribution resulting in the acquisition by the
Company of Securities which would constitute treasury
stock (provided (i) any Distribution of common stock of
the Company in exchange for capital stock or other
equity interests of the Company shall not be a
Restricted Payment even if as a result of such exchange
treasury stock is created and (ii) any Distribution of
common stock of the Company in connection with the
Permitted Affiliate Transactions shall not be a
Restricted Payment). For purposes of this Agreement,
the amount of any Restricted Payment made in property
shall be the greater of (x) the Fair Market Value of
such property (as determined in good faith by the board
of directors of the Company) and (y) the net book value
thereof on the books of the Company, in each case
determined as of the date on which such Restricted
Payment is made."
"`Second Amendment' means that certain Second
Amendment to Note Purchase Agreements dated as of
September 30, 2002 between the Company and the
Noteholders named in Schedule I thereto, in respect of
this Agreement."
"`Synthetic Lease Indebtedness' means the present
value of all payments due under "synthetic leases,"
being those leases which are treated as operating
leases for accounting purposes but for which the lessee
is treated as the owner for federal income tax
purposes, having a term (excluding any renewal thereof
at the option of the lessee) of more than one year,
discounted at the implicit rate, if known, with respect
thereto, or, if unknown, at 8% per annum. In making
such computation, the following leases and arrangements
shall not be included:
(a) Any other operating leases entered into in
the ordinary course of business, including, without
limitation, leases for office space, warehouse or other
storage space or production facilities; and any other
operating leases for any personal property, including,
without limitation, motor vehicles, copiers, computer
and telephone equipment, office furniture and
equipment, production equipment and machinery, and any
charters, whether time or voyage, of any vessels, in
each case so long as such operating leases would
qualify as conventional operating leases under GAAP and
do not constitute synthetic leases, tax retention
leases or any other similar off-balance sheet financing
arrangements in respect of any of the property
described therein;
(b) Any leases, contracts, installment purchases
or other arrangements which for accounting purposes are
capitalized and included on the Company's balance sheet
as an asset and an accompanying liability; and
(c) The production facilities financed by the
synthetic lease programs in existence on the Closing
Date, including any renewals or refinancings thereof
pursuant to synthetic leases."
Section 1.11. Amendment of Section 9.1 (Terms Defined; Funded
Debt). The definition of "Funded Debt" in Section 9.1 of the
Note Agreements shall be and is hereby amended by removing the
period at the end thereof and substituting in lieu thereof a
comma and the following phrase: "and any Synthetic Lease
Indebtedness in respect of "synthetic leases" having a remaining
term of greater than one year."
Section 1.12. Amendment of Section 9.2 (Generally Accepted
Accounting Principles). Section 9.2 of the Note Agreements shall
be and is hereby amended by deleting the last sentence thereof.
Article 2
Representations and Warranties
The Company represents and warrants that as of the date
hereof and after giving effect hereto:
(a) No Default or Event of Default exists under the
Note Agreements;
(b) The Company has paid no remuneration in connection
with the solicitation of this Second Amendment to Note
Purchase Agreements and the amendments of other agreements
pursuant to which Indebtedness of the Company is outstanding
which relate to the subject matter of this Second Amendment
to Note Purchase Agreements;
(c) The execution and delivery of this Second
Amendment to Note Purchase Agreements by the Company and
compliance by the Company with all of the provisions of the
Note Agreement, as amended hereby:
(i) is within the corporate powers of the
Company; and
(ii) will not violate any provisions of any law or
any order of any court or governmental authority or
agency and will not conflict with or result in any
breach of any of the terms, conditions or provisions
of, or constitute a default under the Certificate of
Incorporation or By-laws of the Company or any
indenture or other agreement or instrument to which the
Company is a party or by which it may be bound or
result in the imposition of any Liens or encumbrances
on any property of the Company;
(d) The execution and delivery of this Second
Amendment to Note Purchase Agreements has been duly
authorized by proper corporate action on the part of the
Company (no action by the stockholders of the Company being
required by law, by the Certificate of Incorporation or By-
laws of the Company or otherwise); and this Second Amendment
to Note Purchase Agreements has been duly executed and
delivered by the Company, and the Note Agreement, as amended
by this Second Amendment to Note Purchase Agreements,
constitute the legal, valid and binding obligations,
contracts and agreements of the Company enforceable in
accordance with their terms.
Article 3
Miscellaneous
Section 3.1. No Legend Required. References in the Note
Agreements or in any Note, certificate, instrument or other
document to the Note Agreements shall be deemed to be references
to the Note Agreement as amended hereby and as further amended
from time to time.
Section 3.2. Effect of Amendment. Except as expressly amended
hereby, the Company agrees that the Note Agreements, the Notes
and all other documents and agreements executed by the Company in
connection with the Note Agreements in favor of the Noteholders
are ratified and confirmed and shall remain in full force and
effect and that it has no set-off, counterclaim or defense with
respect to any of the foregoing.
Section 3.3. Successors and Assigns. This Second Amendment to
Note Purchase Agreements shall be binding upon the Company and
its successors and assigns and shall inure to the benefit of the
Noteholders and to the benefit of the Noteholders' successors and
assigns, including each successive holder or holders of any
Notes.
Section 3.4. Requisite Approval; Expenses. This Second
Amendment to Note Purchase Agreements shall not be effective
until (a) the Company and the Required Holders shall have
executed and delivered this Second Amendment to Note Purchase
Agreements, (b) the Company shall have paid all out-of-pocket
expenses incurred by the Noteholders in connection with the
consummation of the transactions contemplated by this Second
Amendment to Note Purchase Agreements, including, without
limitation, the fees, expenses and disbursements of ▇▇▇▇▇▇▇ and
▇▇▇▇▇▇ which are reflected in statements of such counsel rendered
on or prior to the effective date of this Second Amendment to
Note Purchase Agreements, and (c) H. ▇▇▇▇▇ ▇▇▇▇▇▇, Seaboard Flour
Corporation and the Company shall have executed and delivered to
each of the Noteholders a letter in substantially the form
attached hereto as Exhibit B.
Section 3.5. Counterparts. This Second Amendment to Note
Purchase Agreements may be executed in any number of
counterparts, each executed counterpart constituting an original
but all together only one agreement.
In Witness Whereof, the Company has executed this Second
Amendment to Note Purchase Agreements as of the day and year
first above written.
Seaboard Corporation
By
Its
This Second Amendment to Note Purchase Agreements is
accepted and agreed to as of the day and year first above
written.
[Variation/Name of 1993 Noteholder]
By
Its
Schedule I
Outstanding
Noteholder Principal Amount
of Notes
Allstate Life Insurance Company $16,000,000
Northwest Farm Credit Services $10,400,000
The Lincoln National Life Insurance Company $24,400,000
First Penn-Pacific Life Insurance Company $2,000,000
Employers Health Insurance Company $2,400,000
United of Omaha Life Insurance Company $3,200,000
Mutual of Omaha Insurance Company $8,800,000
GEFA Special Purpose Six, LLC $8,000,000
Security Financial Life Insurance Co. $800,000
SAFECO Life Insurance Company $4,000,000
Total $80,000,000
Confidential
Seaboard Corporation
Seaboard Flour Corporation
Summary of Terms of Proposed Transaction
The following is a summary of the material terms of the proposed
transaction between Seaboard Corporation and Seaboard Flour
Corporation.
Transaction Seaboard Corporation (the "Company") is
considering a transaction (the
"Transaction") with Seaboard Flour
Corporation ("Flour") in which Flour will
transfer all of the Company common stock
owned by Flour and the Earnout Agreement
described below to the Company in
exchange for cash and new Company common
stock.
Parties The Company is a diversified
international agribusiness and
transportation company with fiscal 2001
sales of $1.8 billion. The Company's
common stock is traded on the AMEX under
the symbol "SEB."
Flour is a closely held corporation which
currently owns approximately 75.3% of the
Company's outstanding common stock.
Flour is owned and controlled by the
Company's Chairman and Chief Executive
Officer, Mr. H. ▇▇▇▇▇ ▇▇▇▇▇▇, and other
members of the ▇▇▇▇▇▇ family, including
trusts created for their benefit and
decedent's estate.
Earnout Agreement Prior to the consummation of the
Transaction, Flour will transfer all of
its real estate assets (primarily
consisting of residential lots located in
South Carolina) and its interest in
▇▇▇▇▇▇▇▇ Flour Co. (a wholesale
distributor of baking ingredients which
is wholly owned by Flour) to a newly
formed subsidiary company of Flour
("Newco") in exchange for an Earnout
Agreement. The Earnout Agreement will
provide for future cash payments to Flour
over the ensuing 5 year period based upon
sales of the real estate and the earnings
of ▇▇▇▇▇▇▇▇ Flour.
With respect to the real estate, the
Earnout Agreement will provide for
distributions in the following order or
priority:
To the payment of all development
costs incurred by Newco with respect to
the real estate;
To the payment to Flour for its
aggregate adjusted cost basis in the real
estate (approximately $22 million); and
The remaining balance shall be split
evenly between Flour (one-half) and Newco
(one-half).
With respect to ▇▇▇▇▇▇▇▇ Flour, the
Earnout Agreement will provide for
distributions in the following order of
priority:
For the first five (5) years
following the closing, the "adjusted net
income" (and "adjusted net proceeds" of
any sale) of ▇▇▇▇▇▇▇▇ will be paid 95% to
Flour and 5% to Newco; and
Following the fifth anniversary of
the closing, all net income (and all net
proceeds) of ▇▇▇▇▇▇▇▇ Flour will be paid
to Newco.
Assets Acquired The assets to be acquired by the Company
in the Transaction are the following:
All of the Company common stock
owned by Flour (which will immediately
become treasury stock and is expected to
be cancelled and returned to authorized
but unissued status).
All of Flour's rights under the
Earnout Agreement. Flour will not retain
any residual rights in the Earnout
Agreement. All amounts to be paid by
Newco will be paid directly to the
Company.
Cash and Retirement of The Company will transfer to Flour cash
Flour Debt in the approximate net amount of $35.5
million, which will be used by Flour
(i) to repay certain bank indebtedness of
Flour in the approximate amount of
$34.5 million, and (ii) to pay
transaction expenses in the approximate
amount of $1 million. In connection with
the transaction, the indebtedness
currently owing to the Company by Flour
in the approximate amount of $11 million
also will be retired.
New Company Common
Stock The Company will reissue to Flour a
number of new shares of Company common
stock based on the value of the common
stock acquired, less the cash paid to
Flour and the intercompany balance
retired.
Issuance of Common
Stock No consideration will initially be paid
Based on Earnout by the Company for the Earnout Agreement
Agreement assigned by Flour to the Company.
Instead, as and when (if ever) cash is
actually received by the Company under
the Earnout Agreement, additional shares
of Company common stock will be issued to
Flour in an amount equal to the net after-
tax cash amount actually received by the
Company.
Anticipated The Company anticipates that the cash
Accounting payments received by the Company under
the Earnout Agreement will be treated as
additional paid-in capital, and that the
obligation of the Company to issue common
stock will not constitute any liability
which must be accrued on the Company's
balance sheet.
Summary The economic substance of the Transaction
resembles a redemption of a portion of
shares of Company common stock owned by
Flour for cash and retirement of
intercompany debt owing by Flour to the
Company. There will be no assumption of
liabilities of Flour by the Company.
Following completion of Transaction, it
is expected that Flour will still own in
excess of 70% of the Company's
outstanding common stock. In no event
will the total number of Shares of
Company common stock issued to Flour
(including the shares issued on the
closing date and the additional shares
issued with respect to the Earnout
Agreement) exceed the number of shares of
Company common stock initially
transferred by Flour to the Company. The
structure of the Transaction is designed
to qualify for favorable tax treatment
under the Internal Revenue Code.
Conditions The Transaction is subject to several
conditions, including, most
significantly:
Approval of the final terms of the
Transaction by the Special Committee of
Directors (as defined below), the Board
of Directors of the Company, the Board of
Directors of Flour and the stockholders
of Flour.
Approval of the transaction by the
holders of a majority of each series of
the Company's outstanding senior notes,
Bank of New York, Standard Chartered Bank
and SunTrust Bank.
Receipt of a fairness opinion of an
investment banker engaged by the Special
Committee of Directors to the effect that
the Transaction is fair to the Company
and its stockholders from a financial
point of view.
Receipt of confirmation from the
American Stock Exchange that no vote of
stockholders of the Company is required
for the Transaction under the Exchange's
listing requirements.
Special The Board of Directors of the Company has
Committee/Fairness appointed a special committee of
Opinion independent directors (the "Special
Committee of Directors") to negotiate the
terms of the Transaction and consummation
of the Transaction is conditioned upon
the approval of the Special Committee of
Directors. The Special Committee of
Directors has retained ▇▇▇▇▇ ▇▇▇▇ LLP as
its independent legal counsel and will
also retain an independent financial
advisor. As noted above, that
independent financial advisor is expected
to render a fairness opinion to the
Special Committee of Directors and the
Company in connection with the
Transaction.
Anticipated Closing of On or prior to December 31, 2002.
Asset Acquisition and
Initial Exchange of
Stock
September 30, 2002
To the Institutional Investors Named in
Schedule I Hereto
Re:Note Purchase Agreements dated as of December 1,1993
(the "Note Purchase Agreement")
of
Seaboard Corporation ("Seaboard")
Ladies and Gentlemen:
Reference is hereby made to the captioned Note Purchase
Agreement and to the $100,000,000 aggregate principal amount of
6.49% Senior Notes due December 1, 2005 of Seaboard purchased by
you pursuant thereto (collectively the "Notes"). The
undersigned, H. ▇▇▇▇▇ ▇▇▇▇▇▇ and Seaboard Flour Corporation, a
Delaware corporation ("Seaboard Flour"), hereby acknowledge and
agree that, in consideration of, and as an inducement to, your
execution and delivery of the Second Amendment to Note Purchase
Agreements dated as of September 30, 2002 and absent prior
written consent of holders of a majority of the outstanding
principal amount of the Notes,
(a) the shares of common stock of Seaboard owned by
Seaboard Flour and its successors and assigns that are members of
the ▇▇▇▇▇▇ Group will not be pledged to secure any indebtedness
or other obligation of H. ▇▇▇▇▇ ▇▇▇▇▇▇ or Seaboard Flour except
for pledges relating to indebtedness having an aggregate
outstanding principal amount which is not in excess of $7,000,000
and except for pledges currently existing and to be unwound in
connection with the Permitted Affiliate Transactions (as such
term is defined in the Note Purchase Agreement, as amended),
(b) neither H. ▇▇▇▇▇ ▇▇▇▇▇▇ nor Seaboard Flour nor any of
their successors or assigns will sell or otherwise dispose of any
shares of common stock of Seaboard to any person (as such term is
used in section 13(d) and section 14(d)(2) of the Securities
Exchange Act of 1934, as amended) other than a member of the
▇▇▇▇▇▇ Group (as such term is defined below) if, after giving
effect to such sale or disposition, such person or any persons
related to such person that (with such person) constitute a group
(as such term is used in Rule 13d-5 under the aforesaid
Securities Exchange Act of 1934) would be the beneficial owners
(as such term is used in Rule 13d-3 under the aforesaid
Securities Exchange Act of 1934) of more than 50% of the total
voting power of all classes then outstanding of the voting stock
of Seaboard (nothing in this clause (b) shall prohibit or prevent
the sale of shares of common stock of Seaboard held by H. ▇▇▇▇▇
▇▇▇▇▇▇ or Seaboard Flour in connection with the consummation of
the Permitted Affiliate Transactions), and
(c) neither H. ▇▇▇▇▇ ▇▇▇▇▇▇ nor Seaboard Flour nor any of
their successors and assigns will, directly or indirectly through
any person other than Seaboard or the subsidiaries of Seaboard,
acquire shares of capital stock or other equity interests in any
subsidiaries of Seaboard.
"▇▇▇▇▇▇ Group" means (i) H. ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇.
(brother of H. ▇▇▇▇▇ ▇▇▇▇▇▇) and the estate of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
(deceased sister of H. ▇▇▇▇▇ ▇▇▇▇▇▇), (ii) spouses, heirs,
legatees, lineal descendants, and spouses of lineal descendants,
other blood relatives, step-children, adopted children, and/or
estates or representatives of estates of H. ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇, ▇▇. and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, (iii) trusts established for
the benefit of spouses, lineal descendants and spouses of lineal
descendants, other blood relatives, step-children, and/or adopted
children of H. ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇., and ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ and (iv) any person which is directly or indirectly
Controlled by a person described in the preceding clauses (i),
(ii) or (iii). "Control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the
management and policies of a person, whether through the
ownership of voting securities, by contract or otherwise.
The undersigned, H. ▇▇▇▇▇ ▇▇▇▇▇▇ and Seaboard Flour, agree
to permit Seaboard to place, and to otherwise cooperate with
Seaboard's placing of, appropriate legends on the stock
certificates that evidence the shares of common stock of Seaboard
owned by Seaboard Flour which legends shall reflect the
restrictions set forth in clause (a) and clause (b) above. Such
legends shall remain on such stock certificates until this letter
agreement is terminated in accordance with the terms hereof or
until the conditions of removal of such legend set forth herein
are satisfied.
Seaboard agrees to deliver a copy of this agreement to the
registrar and transfer agent for its common stock and to direct
such registrar and transfer agent not to register the transfer of
any stock certificate legended as set forth above unless it shall
have obtained a sworn statement from the person or persons
requesting such registration of transfer that the conditions set
forth in clause (a) above and clause (b) above, as the case may
be, have been satisfied and such registrar and transfer agent
shall have sent a written notice thereof (together with a copy of
such sworn statement) to the holders of Notes as identified by
Seaboard (and Seaboard agrees to provide to such registrar and
transfer agent the names and addresses of all then current
holders of Notes).
The undersigned, H. ▇▇▇▇▇ ▇▇▇▇▇▇ and Seaboard Flour, agree
that, to the extent that either of them shall breach the
restrictions set forth in clauses (a), (b) and/or (c) above (a
"breaching person") and for so long as any such breach shall
exist, any cash dividends declared and payable by Seaboard in
respect of the shares of common stock of Seaboard owned of record
by such breaching person or, to the actual knowledge of Seaboard,
beneficially owned by such breaching person shall not be paid by
Seaboard to or for the benefit of such breaching person but
instead a ratable portion of such cash dividends (based upon the
ratio that the aggregate outstanding principal amount of the
Notes bears to the sum of the aggregate outstanding principal
amount of the Notes, the 2002 Notes (as such term is defined
below) and the 1995 Notes (as such term is defined below)) shall
be offered by Seaboard as a prepayment of the Notes on the same
terms and conditions as an "Offered Prepayment Amount" would be
made under Section 4.4 of the Note Purchase Agreement except that
(i) the amount of such "Offered Prepayment Amount" shall be such
ratable portion of such cash dividends, (ii) the offer of such
"Offered Prepayment Amount" shall be made not more than 5 days
after the date on which such cash dividends would have otherwise
been paid to the breaching person and such offer will fix the
date of such prepayment to be a date not less than 30 nor more
than 60 days after the date on which such cash dividends would
have otherwise been paid to such breaching person, (iii) such
offer will refer to this letter agreement, and (iv) no Make-Whole
Amount shall be due and payable with respect thereto. The
undersigned, H. ▇▇▇▇▇ ▇▇▇▇▇▇ and Seaboard Flour, hereby
irrevocably instruct Seaboard to carry out the provisions of this
paragraph and Seaboard agrees to so carry out the provisions of
this paragraph. The undersigned, H. ▇▇▇▇▇ ▇▇▇▇▇▇ and Seaboard
Flour, further agree that Seaboard may rely upon any written
notice delivered to it from any holder or holders of the Notes,
the 2002 Notes and/or the 1995 Notes that a breach of any one or
more of clauses (a), (b) and (c) above exists in connection with
its carrying out of the provisions of this paragraph and may
further assume that any such breach continues until the cure of
the same shall have been confirmed, in writing, to Seaboard by
holders of a majority of the outstanding principal amount of the
Notes. The undersigned, H. ▇▇▇▇▇ ▇▇▇▇▇▇ and Seaboard Flour,
further agree that they shall have no rights of subrogation under
any of the Notes with respect to any prepayment thereof effected
under this paragraph until all of the Notes shall have been fully
and finally paid. This paragraph shall be binding upon the
successors and assigns of the undersigned, H. ▇▇▇▇▇ ▇▇▇▇▇▇ and
Seaboard Flour, to the extent that the breached clause (a), (b)
or (c) above would have been binding upon such successors and
assigns and the restrictive legend referred to above shall refer
to the provisions of this paragraph.
"1995 Notes" means those certain 7.88% Senior Notes due June
1, 2007 issued under those certain Note Purchase Agreements, each
dated as of June 1, 1995, between Seaboard and each of the
institutional purchasers signatory thereto, as such Note Purchase
Agreements have previously been and may hereafter be amended from
time to time.
"2002 Notes" means those certain (i) 5.80% Senior Notes,
Series A, due September 30, 2009, (ii) 6.21% Senior Notes, Series
B, due September 30, 2009, (iii) 6.21% Senior Notes, Series C,
due September 30, 2012, and (iv) 6.92% Senior Notes, Series D,
due September 30, 2012 issued under those certain Note Purchase
Agreements, each dated as of September 30, 2002, between Seaboard
and each of the institutional purchasers signatory thereto, as
such Note Purchase Agreements may hereafter be amended from time
to time.
This letter agreement shall terminate upon the full and
final payment of the Notes and all amounts owing in respect
thereof under the aforesaid Note Purchase Agreements, provided
that any person that is not a member of the ▇▇▇▇▇▇ Group and that
otherwise satisfies the requirements of clause (a) and clause (b)
above on the date of such person's acquisition of beneficial
ownership of shares of common stock of Seaboard shall not be
subject to the restrictions of clause (a) and/or clause (b) above
and shall be entitled to have Seaboard (or the registrar and
transfer agent of Seaboard) remove the restrictive legend on the
certificates of the shares of common stock so acquired by such
person if such person shall have submitted to Seaboard (or such
registrar and transfer agent) a sworn statement that all of the
requirements of clause (a) and clause (b) above have been
satisfied in connection with such person's acquisition of such
shares of common stock of Seaboard and that such person and any
persons related to such person that constitute a group (as such
term is used in Rule 13d-5 under the aforesaid Securities
Exchange Act of 1934) are not the beneficial owners (as such term
is used in Rule 13d-3 under the aforesaid Securities Exchange Act
of 1934) of more than 50% of the total voting power of all
classes then outstanding of the voting stock of Seaboard.
This letter agreement shall be governed by, and construed
and enforced in accordance with, internal New York law.
This letter agreement constitutes the final written
expression of all of the terms hereof and is a complete and
exclusive statement of those terms.
Two or more duplicate originals of this letter agreement may
be signed by the parties, each of which shall be an original but
all of which together shall constitute one and the same
instrument. This letter agreement may be executed in one or more
counterparts and shall be effective when at least one counterpart
shall have been executed by each party hereto, and each set of
counterparts that, collectively, show execution by each party
hereto shall constitute one duplicate original.
Very truly yours
By
H. ▇▇▇▇▇ ▇▇▇▇▇▇
Seaboard Flour Corporation
By
Its
Seaboard Corporation
By
Its
Acknowledged and Agreed:
[Variation/93 Noteholder]
By
Its
