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Exhibit 10.3
EXECUTION COPY
TAX INDEMNIFICATION AGREEMENT
This TAX INDEMNIFICATION AGREEMENT ("Agreement") is made and entered into
as of the first day of December, 1997, by and between CPC INTERNATIONAL INC., a
Delaware corporation ("CPC"), and CORN PRODUCTS INTERNATIONAL, INC., a Delaware
corporation ("CORN").
WITNESSETH
WHEREAS, CPC is the common parent of an affiliated group of corporations
within the meaning of Code Section 1504 which includes CORN (all capitalized
terms not otherwise defined shall be as defined in Section 5.07 hereof); and
WHEREAS, CPC intends to transfer to CORN its corn refining business,
including all stock owned by it in domestic and foreign corporations engaged in
the corn refining business, in exchange for stock of CORN, and distribute to
its shareholders stock constituting control of CORN, within the meaning of Code
Section 368(c) (the "Spinoff"); and
WHEREAS, in connection therewith, it will be necessary for certain foreign
corporations owned by CPC to engage in Foreign Spinoffs; and
WHEREAS, the IRS has issued the IRS Rulings which state the United States
federal income tax treatment of the Spinoff and the Foreign Spinoffs, which tax
treatment also shall be relied upon and reported by CPC for all applicable
United States state and local Tax purposes
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(such United States federal income tax and state and local Tax treatment to be
referred to hereinafter as the "Tax Treatment"); and
WHEREAS, the parties hereto are entering into this Agreement to indemnify
CPC as hereinafter provided in the event the Spinoff or any of the Foreign
Spinoffs shall fail to qualify for the Tax Treatment due to actions by CORN or
its Affiliates.
NOW, THEREFORE, in consideration of the mutual agreements, provisions and
covenants contained in this Agreement, the parties hereby agree as follows:
ARTICLE 1
REPRESENTATIONS AND COVENANTS
SECTION 1.01. Representations.
(a) CORN hereby makes the following representations to CPC: (i) CORN has
reviewed the submissions to the IRS in connection with the IRS Rulings and, to
the best of CORN's knowledge, all statements and representations therein
concerning CORN, its business, operations, capital structure or organization,
are complete and accurate in all material respects; (ii) CORN shall, and shall
cause each of its Affiliates to, comply with each statement concerning CORN and
its Affiliates that is designated as a "representation" in the submissions or
the IRS Rulings; (iii) CORN concurs with all representations and statements
made in the submissions.
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All of the above representations shall survive the Spinoff Date until the
expiration of all statute of limitations (inclusive of extensions) in respect
of taxable periods for which Taxes might be imposed or otherwise assessed in
respect of the Spinoff and all of the Foreign Spinoffs.
(b) CORN hereby represents and warrants to CPC that neither CORN nor any
Foreign Spinco nor any of their respective Affiliates has any present intention
to cease to engage in its Active Business (as defined in Section 1.02(a)(i)),
undertake, or permit to be undertaken, any action that would result in a
violation of any of CORN's covenants in Section 1.02(a)(ii), or undertake,
authorize, approve, recommend, permit, facilitate, enter into any contract with
respect to, or consummate, any transaction described in Section 1.02(a)(iii).
SECTION 1.02. Covenants.
(a) CORN covenants and agrees with CPC that during the Restricted Period:
(i) CORN and each Foreign Spinco will continue to engage in the active
conduct, within the meaning of section 1.355-3(b) of the Regulations, of the
corn refining business, as described in the Ruling Request, which business, as
actively conducted, shall be referred to hereinafter as such corporation's
Active Business.
(ii) CORN and each Foreign Spinco will (A) continue to manage and to own
directly assets which represent at least fifty percent (50%) of the Gross
Assets which such corporation
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managed and owned directly immediately after the Spinoff or the
applicable Foreign Spinoff, as the case may be; (B) continue to manage and own
(directly and indirectly through one or more entities) assets which represent
at least 50% of the Gross Assets which such corporation managed and owned
(directly and indirectly through one or more entities) immediately after the
Spinoff or the applicable Foreign Spinoff, as the case may be; and (C) not take
any action (including the acquisition or entering into of businesses other than
extensions of its Active Business) which would cause the fair market value of
its Active Business to be less than five percent (5%) of its total Gross
Assets.
(iii) Neither CORN, nor any Foreign Spinco, nor any of their respective
directors, officers or other representatives, will undertake, authorize,
approve, recommend, permit, facilitate, enter into any contract with respect
to, or consummate, any of the following transactions:
(A) the issuance of Common Stock (whether or not subject to
restrictions), or the issuance of any options, warrants, rights or securities
exercisable for, or convertible into, Common Stock (collectively, the "New
Stock"), whether in a single transaction or in a series of related or unrelated
transactions or otherwise, which in the aggregate if issued (and in the case of
options, warrants, rights or securities, exercised or converted) immediately
prior to the Spinoff or the applicable Foreign Spinoff, as the case may be,
would exceed twenty percent (20%) of the outstanding shares of Common Stock
(including the New Stock) immediately following the Spinoff or the applicable
Foreign Spinoff, as the case may be;
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(B) the issuance of any class or series of capital stock or any other
instrument (other than Common Stock (whether or not subject to restrictions) or
options, warrants, rights or securities exercisable for, or convertible into,
Common Stock) that would constitute equity of CORN or any Foreign Spinco for
United States federal income tax purposes (such classes or series of capital
stock and other instruments being referred to herein as "Disqualified Stock")
other than pursuant to the CORN Rights Plan;
(C) the issuance of any options, rights, warrants, securities or similar
arrangements exercisable for, or convertible into, Disqualified Stock other
than pursuant to the CORN Rights Plan;
(D) any redemptions, purchases or other acquisitions from shareholders of
greater than 20% of the outstanding capital stock or other equity interests in
CORN or any Foreign Spinco in a single transaction or a series of related or
unrelated transactions, except redemptions, purchases or other acquisitions by
CORN, any Foreign Spinco or any of their respective Affiliates, of the capital
stock or other equity interests of CORN or any Foreign Spinco that satisfy all
of the following requirements: (1) there is a "sufficient business purpose"
(within the meaning of section 4.05(1)(b) of Revenue Procedure 96-30) for the
transaction, (2) the stock to be redeemed, purchased or otherwise acquired is
widely held, (3) the stock redemptions, purchases or other acquisitions will be
made on the open market, and (4) the amount of stock redemptions, purchases or
other acquisitions in a single transaction or in a series of related or
unrelated
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transactions will not exceed an amount of stock representing twenty percent
(20%) of the outstanding stock of CORN or the applicable Foreign Spinco
immediately following the Spinoff;
(E) the dissolution, merger, or complete or partial liquidation of CORN or
any Foreign Spinco or any announcement of such action; or
(F) the waiver, amendment, termination or modification of any provision of
the CORN Rights Plan, or redemption of Preferred Stock Purchase Rights, in
connection with, or in order to permit or facilitate, any acquisition or
proposed acquisition of Beneficial Ownership of capital stock or other equity
interest in CORN.
(b) In addition to the other representations, warranties, covenants and
agreements set forth in this Agreement, CORN and its Affiliates will take, or
refrain from taking, as the case may be, such actions as CPC may reasonably
request during the Ruling Period as necessary to ensure that the Spinoff and
the Foreign Spinoffs qualify for the Tax Treatment, including, without
limitation, such actions as CPC determines may be necessary to obtain and
preserve the IRS Rulings or any subsequent IRS ruling relating to the tax
treatment of the Spinoff or any of the Foreign Spinoffs on which the parties
can rely. For purposes hereof, the "Ruling Period" shall mean the period
commencing on the Spinoff Date and ending on the first anniversary of the date
on which there shall have expired all statutes of limitations (inclusive of
extensions) in respect of taxable periods for which Taxes might be imposed or
otherwise assessed in respect of the Spinoff and all of the Foreign Spinoffs,
but in no event ending sooner than the third
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anniversary of the close of the taxable year of CPC in which the Spinoff
occurs. Without limiting the generality of the foregoing, CORN and its
Affiliates shall cooperate with CPC if CPC determines to obtain additional IRS
rulings pertaining to whether any actual or proposed change in facts and
circumstances affects the United States federal income tax status of the
Spinoff or any of the Foreign Spinoffs. This Section 1.02(b) shall not apply
after the termination of the Restricted Period with respect to any of the
actions described in Section 1.02(a), unless (i) at the termination of the
Restricted Period, the federal income tax year of CPC that includes the Spinoff
is under examination by the Internal Revenue Service or any successor federal
income tax authority or, at or prior to the termination of the Restricted
Period, CPC has received notice that such an examination is to commence and
(ii) CPC delivers to CORN concurrent with any request after the termination of
the Restricted Period pertaining to an action described in Section 1.02(a), an
opinion of independent tax counsel of recognized national standing who is
experienced in the issues to be addressed and otherwise is reasonably
acceptable to CORN, that such request is reasonable; provided that this Section
1.02(b) will not apply if the possible adverse effect on CORN and its business
from the actions requested by CPC pursuant to this Section 1.02(b) is greater
than the possible adverse effect on CPC and its business from not taking such
actions.
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ARTICLE 2
CORN INDEMNITY OBLIGATIONS
SECTION 2.01. Tax Indemnities.
(a) Except as otherwise provided in Section 2.01(b), if CORN, any Foreign
Spinco, or any of their respective Affiliates (collectively the "Indemnifying
Party"), whether through any of their respective directors, officers, other
representatives or otherwise, shall violate, or cause or permit to be violated,
any representation or covenant contained in Article 1, and as a result
thereof (singly or in combination with other actions of the Indemnifying
Party), the Spinoff or any of the Foreign Spinoffs shall fail to qualify for
the Tax Treatment, the Indemnifying Party shall (jointly and severally)
indemnify and hold harmless CPC and each member of the CPC Group (collectively
the "Indemnified Party") against any and all Indemnified Liabilities (as
defined in Section 3.01(a) arising therefrom.
(b) If, following the six-month anniversary of the Spinoff Date, CORN, any
Foreign Spinco or any of their respective Affiliates takes any action or
engages in conduct prohibited by, or resulting in the violation of any covenant
in, Section 1.02(a) (other than any action or conduct that results in an event
described in Section 2.01(c)), and prior to such action or conduct, CORN
delivers to CPC (i) a ruling from the IRS in form and substance reasonably
satisfactory to CPC, and upon which CPC can rely, to the effect that the
proposed action or conduct will not cause the Spinoff or any of the Foreign
Spinoffs to fail to qualify for the tax treatment stated in the IRS
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Ruling or otherwise to be taxable for federal income tax purposes, or
(ii) an Opinion of Counsel, Section 2.01(a) will not apply with respect to such
action or conduct.
(c) Notwithstanding anything to the contrary set forth in this Agreement,
if, during the Restricted Period, any Person or Group acquires Beneficial
Ownership of fifty percent (50%) or more of the Common Stock (or any other
class of capital stock or other equity interest) of CORN or any Foreign Spinco
or commences a tender or other purchase offer for the capital stock or other
equity interest of CORN or any Foreign Spinco, upon consummation of which such
Person or Group would acquire Beneficial Ownership of fifty percent (50%) or
more of the Common Stock (or any other class of stock or other equity interest)
of CORN or any Foreign Spinco, and, as a result thereof, the Spinoff or any
of the Foreign Spinoffs shall fail to qualify for the Tax Treatment, the
Indemnifying Party shall indemnify and hold harmless the Indemnified Party
against any and all Indemnified Liabilities (as defined in Section 3.01(a))
arising therefrom. The Indemnified Party shall be so indemnified and held
harmless under this Section 2.01(c) without regard to whether the Indemnified
Party has received or delivered to CPC a supplemental ruling from the IRS or an
Opinion of Counsel, and without regard to whether an acquisition of Beneficial
Ownership results from a transaction which is not prohibited under Article 1.
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ARTICLE 3
INDEMNIFIED LIABILITIES
SECTION 3.01. Definition and Calculation of Indemnified Liabilities. For
purposes of this Agreement, "Indemnified Liabilities" shall mean any and all
demands, claims, actions or causes of action, assessments, losses, damages,
liabilities, costs and expenses, including, without limitation, interest,
penalties and reasonable attorneys' fees and expenses, imposed or incurred,
directly or indirectly on an Indemnified Party, by reason of or resulting from
the failure of the Spinoff or any of the Foreign Spinoffs to qualify for the
Tax Treatment, including (i) any and all Taxes imposed upon or incurred by the
Indemnified Party as a result of said failure, (ii) any liability of the
Indemnified Party arising from Taxes imposed on shareholders of CPC to the
extent any shareholder or shareholders of CPC successfully seek recourse
against the Indemnified Party on account of said failure, and (iii) any and all
costs, fees and expenses incurred in regard to any Indemnified Liability
(including, subject to Section 4.02(e), costs relating to the contest of any
Indemnified Liability). The amount of any Indemnified Liability for a tax
based on or determined with reference to income ("Income Tax") shall be deemed
to be the amount of the tax on the gain or income of the Indemnified Party
which is subject to tax and indemnified against under Article 2, computed at
the taxing jurisdiction's highest marginal tax rate applicable to taxable
income of corporations such as the Indemnified Party on income of the character
subject to tax and indemnified against under Article 2 for the taxable period
in which the Spinoff or the affected Foreign Spinoff, as the case may be,
occurs. If an Indemnified Party should be subject to an Income Tax on the
Indemnified Liability, the amount payable by the
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Indemnifying Party to the Indemnified Party shall be increased by (and
the Indemnified Liability shall be deemed to include) such additional amount
necessary to place the Indemnified Party in the same cash position it would
have been in had the Indemnified Liability not occurred, taking into account
for this purpose all Income Taxes paid or payable by the Indemnified Party with
respect to such Indemnified Liability (including such additional amount) and
any related Income Tax deductions to the Indemnified Party.
ARTICLE 4
PROCEDURAL MATTERS
SECTION 4.01. General. The parties hereto undertake and agree that from
and after such time as either shall obtain knowledge that any representative of
a taxing authority has begun to investigate or inquire into the Spinoff or any
of the Foreign Spinoffs (whether or not such investigation or inquiry is a
formal or an informal investigation or inquiry), the party obtaining such
knowledge shall (i) notify the other party thereof, provided that any delay by
the Indemnified Party in so notifying the Indemnifying Party shall not
relieve the Indemnifying Party of any liability hereunder (except to the extent
such delay restricts the ability of the Indemnifying Party to contest the
resulting Indemnified Liability administratively or in the courts in accordance
with Section 4.02 and the Indemnifying Party is materially and adversely
prejudiced by such delay), (ii) consult with the other party from time to time
as to the conduct of such investigation or inquiry, (iii) provide the other
party with copies of all correspondence with such taxing authority or any
representative thereof pertaining to such investigation or inquiry, and (iv)
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arrange for a representative of the other party to be present at all meetings
with such taxing authority or any representative thereof pertaining to such
investigation or inquiry.
SECTION 4.02. Contests.
(a) If any taxing authority shall propose in writing an adjustment (a
"Relevant Adjustment") that, if upheld, would result in an Indemnified
Liability, the party receiving such proposed adjustment shall promptly notify
the other party thereof, provided that any delay by the Indemnified Party in so
notifying the Indemnifying Party shall not relieve the Indemnifying Party of
any liability hereunder (except to the extent such delay restricts the ability
of the Indemnifying Party to contest the resulting Indemnified Liability
administratively or in the courts in accordance herewith and the Indemnifying
Party is materially and adversely prejudiced by such delay), and provide the
other party with copies of the portions of all written material between such
party and the taxing authority to the extent relating solely to such Relevant
Adjustment. Provided that the Indemnifying Party shall timely (i) furnish the
Indemnified Party with evidence reasonably satisfactory to the Indemnified
Party and its independent certified public accountants of the Indemnifying
Party's ability to pay the full amount of the Indemnified Liability on the
basis of its financial position or the provision of a letter of credit for the
full amount of the liability or other similar adequate security and (ii)
acknowledge in writing that the asserted liability is an Indemnified Liability,
the Indemnifying Party shall be entitled, at its expense, to contest the
Relevant Adjustment in its own name, or if the Indemnifying Party does not have
standing to contest the Relevant Adjustment, in the name of the Indemnified
Party, at the administrative level.
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(b) In the event that the issues giving rise to a Relevant Adjustment are
not resolved at the administrative level and an Indemnified Liability is
imposed by the taxing authority, the Indemnifying Party shall be entitled to
contest the Indemnified Liability beyond the administrative level, provided
that the Indemnifying Party shall acknowledge in writing that the asserted
liability is an Indemnified Liability and (i) pay the full amount of the
asserted liability to the taxing authority (in which case, the Indemnifying
Party would be entitled to pursue a claim for refund in the appropriate
judicial forum) or (ii) furnish the Indemnified Party with evidence reasonably
satisfactory to the Indemnified Party of its ability to pay the full amount of
the Indemnified Liability which may result at the conclusion of such contest.
If requested by the Indemnified Party, such evidence shall consist of a letter
of credit in favor of the Indemnified Party for the amount of the Indemnified
Liability (or a lesser amount agreed to by the Indemnified Party) or another
comparable means of directly providing for the payment of the Indemnified
Liability. The Indemnifying Party shall not be entitled to pursue a contest
beyond the first judicial level unless, in addition to meeting the above
requirements, the Indemnifying Party submits to the Indemnified Party an
opinion of Independent Tax Counsel (which shall mean an independent tax counsel
of recognized national standing and experienced in the issues to
be addressed and otherwise reasonably acceptable to the Indemnified Party) upon
which the Indemnified Party may rely, to the effect that it is more likely than
not that the Indemnifying Party will prevail on the merits in such contest, and
in no event shall the Indemnifying Party be permitted to contest the asserted
liability to the United States Supreme Court.
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(c) Subject to Section 4.02(d) and Section 4.02(f) and the conditions of
this Section 4.02(c), the Indemnifying Party shall control any administrative
level contest, but only insofar as it relates to the Relevant Adjustment, and
any contest at the judicial level relating to an Indemnified Liability,
provided that the Indemnified Party shall be entitled to participate in said
contest and any outside party engaged in connection with said contest shall be
subject to the prior approval of the Indemnified Party, which approval shall
not be unreasonably withheld. The Indemnifying Party shall (i) consult with
the Indemnified Party regarding the conduct of any said contest, (ii) keep the
Indemnified Party reasonably informed of the progress of such contest, (iii)
permit the Indemnified Party and its authorized representatives to be present
during the conduct of such contest and (iv) submit to the Indemnified Party for
its approval (which shall not be unreasonably withheld) any written protests,
challenges, pleadings, briefs, memoranda or other documents prepared prior to
or during to course of such contest by the Indemnifying Party or its counsel,
and provide to the Indemnified Party a copy of any written ruling, order or
other document resulting from said contest.
(d) If at any time during a contest controlled by the Indemnifying Party
pursuant to this Section 4.02 the Indemnifying Party shall, after a request by
the Indemnified Party, fail to provide evidence reasonably satisfactory to the
Indemnified Party of its continued ability to pay the full amount of the
Indemnified Liability or the Indemnified Party reasonably determines, after due
investigation, that the Indemnifying Party could not pay the full amount of the
Indemnified Liability, then the Indemnified Party may assume control of the
contest upon seven (7) days written notice.
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(e) The Indemnifying Party shall pay all out-of-pocket expenses and other
costs related to the Indemnified Liability, including but not limited to fees
for attorneys, accountants, expert witnesses or other consultants retained by
the Indemnifying Party or the Indemnified Party, other than costs and expenses
incurred solely in the discretion of the Indemnified Party as a participant in
a contest that, at the time such costs and expenses are incurred, is being
controlled by the Indemnifying Party pursuant to Section 4.02(c), and would not
otherwise be incurred by the Indemnifying Party. To the extent that any such
expenses and other costs have been or are paid by an Indemnified Party, the
Indemnifying Party shall promptly reimburse the Indemnified Party therefor.
(f) The Indemnifying Party shall not pay (unless otherwise required by a
proper notice of levy and after prompt notification to the Indemnified Party of
receipt of notice and demand for payment), settle, compromise or concede any
portion of the Indemnified Liability without the written consent of the
Indemnified Party, which consent shall not be unreasonably withheld.
(g) Any contest relating to an Indemnified Liability which is not
controlled or which is no longer controlled by the Indemnifying Party pursuant
to Section 4.02 shall be controlled and directed exclusively by the Indemnified
Party, and any related out-of-pocket expenses and other costs incurred by the
Indemnified Party, including but not limited to, fees for attorneys,
accountants, expert witnesses or other consultants, shall be reimbursed by the
Indemnifying Party. The Indemnified Party shall keep the Indemnifying Party
reasonably informed of the
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progress of such contest, including the scheduling and results of meetings
with the tax authorities. The Indemnified Party will not be required to pursue
the claim in a federal district court, the United States Court of Federal
Claims or any state court, if as a prerequisite to such court's jurisdiction,
the Indemnified Party is required to pay the asserted liability, unless the
funds necessary to invoke such jurisdiction are provided by the Indemnifying
Party.
SECTION 4.03. Time and Manner of Payment. The Indemnifying Party shall
pay to the Indemnified Party the amount of the Indemnified Liability and any
expenses or other costs indemnified against (less any amount paid directly by
the Indemnifying Party to the taxing authority) not less than (7) business days
prior to the date payment of the Indemnified Liability is to be made by any
party to the taxing authority. Such payment shall be paid by wire transfer of
immediately available funds to an account designated by the Indemnified Party
by written notice to the Indemnifying Party prior to the due date of such
payment. If the Indemnifying Party delays making payment beyond the due date
hereunder, such party shall pay interest on the amount unpaid at the IRS
Penalty Rate for each day and the actual number of days for which any amount
due hereunder is unpaid.
SECTION 4.04 Refunds. In connection with this Agreement, should an
Indemnified Party receive a refund in respect of amounts paid by an
Indemnifying Party to any taxing authority on its behalf, or should any such
amounts that would otherwise be refundable to the Indemnifying Party be
applied by the taxing authority to obligations of the Indemnified Party
unrelated to an Indemnified Liability, then such Indemnified Party shall,
promptly following
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receipt (or notification of credit), remit such refund (inclusive of any
interest thereon paid by the taxing authority) to the Indemnifying Party, net
of any tax paid or payable by the Indemnified Party with respect to the receipt
of such amount.
SECTION 4.05. Cooperation. The parties shall cooperate with one another
in a timely manner in any administrative or judicial proceeding involving any
matter that may result in an Indemnified Liability.
ARTICLE 5
GENERAL PROVISIONS
SECTION 5.01. Notices. All notices, requests, claims and other
communications hereunder shall be in writing and shall be given or made (and
shall be deemed to have been duly given or made upon receipt) by delivery in
person, by courier service, by cable, by telecopy, by telegram, by telex or any
means of electronic transmission with delivery confirmed (by voice or
otherwise) or by registered or certified mail (postage prepaid, return receipt
requested) to the respective parties at the addresses listed below, or at such
other address for a party as shall be specified in a notice given in accordance
with this Section 5.01:
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To CPC or any Indemnified Party:
X.X. Xxx 0000
Xxxxxxxxxxxxx Xxxxx
Xxxxxxxxx Xxxxxx, XX 00000
Telecopy: 0-000-000-0000
Attn: Vice President-Taxes
with a copy to: General Counsel
To CORN or any Indemnifying Party:
X.X. Xxx 000
0000 Xxxxxx Xxxx
Xxxx, Xxxxxxxx 00000
Telecopy: 0-000-000-0000
Attn: Chief Financial Officer
with a copy to: General Counsel
SECTION 5.02. Miscellaneous. This Agreement shall constitute the entire
agreement between the parties hereto with respect to the subject matter hereof
and shall supersede all prior agreements and undertakings, both written and
oral, between the parties with respect to the subject matter hereof and
thereof. This Agreement may be executed in one or more counterparts, and by
the different parties hereto in separate counterparts, each of which when
executed shall be
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deemed to be an original but all of which taken together shall constitute one
and the same agreement. This Agreement may not be amended, or modified except
by an instrument in writing signed by, or on behalf of, the parties or by a
waiver in accordance with Section 5.03. This Agreement shall be binding upon
and inure solely to the benefit of the parties hereto and their respective
subsidiaries, and nothing herein, expressed or implied, is intended to or shall
confer upon any third parties any legal or equitable right, benefit or remedy
of any nature whatsoever under or by reason of this Agreement.
SECTION 5.03. Waiver. The parties to this Agreement may extend the time
for the performance of any of the obligations hereunder, and either party may
waive any inaccuracies in the representations and warranties of the other party
contained herein or in any document delivered by the other party pursuant
hereto or waive compliance with any of the agreements or conditions of the
other party contained herein. Any such extension or waiver shall be valid only
if set forth in an instrument in writing signed by the party or parties to be
bound thereby. The waiver of any term or condition shall not be construed as a
waiver of any subsequent breach or a subsequent waiver of the same term or
condition, or a waiver of any other term or condition, of this Agreement. The
failure of any party to assert any of its rights hereunder shall not constitute
a waiver of any such rights.
SECTION 5.04. Successors and Assigns. The provisions of this Agreement
shall be binding upon, inure to the benefit of and be enforceable by the
parties and their respective successors and permitted assigns. Notwithstanding
the previous sentence, CORN shall not
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assign this Agreement or any rights, interests or obligations hereunder, or
delegate performance of any of its obligations hereunder, without the prior
written consent of CPC.
SECTION 5.05. Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or equity.
SECTION 5.06. Dispute Resolution. Article VI of the Distribution
Agreement shall apply hereto and shall be deemed incorporated herein by
reference with respect to any dispute arising out of the interpretation,
implementation or compliance with the provisions of this Agreement.
SECTION 5.07. Governing Law and Severability.
(a) This Agreement shall be governed by, and construed in accordance
with, the laws of the State of New York, other than its conflicts of laws.
Without limiting Section 5.06, each of the parties irrevocably submits to the
exclusive jurisdiction of (a) the Superior Court of the State of New Jersey for
the purposes of any suit, action or other proceeding arising out of this
Agreement. Each of the parties agrees to commence any action, suit or
proceeding relating hereto that is not required to be submitted to arbitration
pursuant to Section 5.06 either in the United States District Court for the
District of New Jersey or if such suit, action or other proceeding may not be
brought in such court for jurisdictional reasons, in the Superior Court of
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the State of New Jersey, Bergen County. Each of the parties further agrees
that service of any process, summons, notice or document by United States
registered mail to such party's respective address set forth above shall be
effective service of process for any such action, suit or proceeding in New
Jersey with respect to any matters to which it has submitted to jurisdiction
pursuant to this Section 5.07. Each of the parties irrevocably and
unconditionally waives any objection to the laying of venue of any action, suit
or proceeding arising out of this Agreement or the transactions contemplated
hereby in (i) the Superior Court of the State of New Jersey, Bergen County, or
(ii) the United States District Court for the District of New Jersey, and
hereby further irrevocably and unconditionally waives and agrees not to plead
or claim in any such court that any such action, suit or proceeding brought in
any such court has been brought in an inconvenient forum.
(b) If any term or other provision of this Agreement is invalid, illegal
or incapable of being enforced by any law or public policy, all other terms 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 is 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 hereto shall negotiate in good faith
to modify this Agreement so as to effect the original intent of the parties as
closely as possible in an acceptable manner in order that the transactions
contemplated hereby are consummated as originally contemplated to the greatest
extent possible.
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SECTION 5.08. Affiliates. Each party hereto shall cause to be performed,
and hereby guarantees the performance of, all actions, agreements and
obligations set forth herein to be performed by any of its Affiliates.
SECTION 5.09. Definitions. Capitalized terms not otherwise defined shall
have the meanings set forth below, and such meanings shall be equally
applicable to the singular and plural forms of the terms defined.
"Affiliate" shall mean, when used with respect to a specified Person,
another Person that directly, or indirectly through one or more intermediaries,
Controls, is Controlled by or is under common Control with such Person.
"Beneficial Owner" (including, with its correlative meanings,
"Beneficially Own" and "Beneficial Ownership"), with respect to any securities,
shall mean any Person who has, or any of whose Affiliates or Associates has (a)
directly or indirectly, the right to acquire, vote or dispose of, such
securities (whether such right is exercisable immediately or only after the
passage of time), whether pursuant to any agreement, arrangement or
understanding (whether or not in writing), upon the exercise of conversion
rights, exchange rights, warrants or options, or otherwise, (b) "beneficial
ownership" of such securities (as determined pursuant to Rule 13d-3 under the
Securities Exchange Act of 1934, as in effect on the date hereof, but including
all such securities which a Person has the right to acquire beneficial
ownership of, whether or not such
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right is exercisable within the 60-day period specified therein), including
pursuant to any agreement, arrangement or understanding (whether or not in
writing), or (c) any agreement, arrangement or understanding (whether or not in
writing) for the purpose of acquiring, holding, voting or disposing of any
securities which are Beneficially Owned, directly or indirectly, by any other
Person (or any Affiliate or Associate thereof). For this purpose, "Associate"
shall mean, when used to indicate a relationship with any Person, (a) any
corporation or organization of which such Person is an officer or partner or
is, directly or indirectly, the Beneficial Owner of 10 percent or more of any
class of capital stock or other equity interest; (b) any trust or other estate
in which such Person has a substantial beneficial interest or as to which such
Person serves as trustee or in a similar fiduciary capacity; and (c) any
relative or spouse of such Person, or any relative of such spouse, who has the
same home as such Person.
"Code" shall mean the Internal Revenue Code of 1986, as amended, including
any comparable successor legislation.
"Code Section" shall mean a section of the Code.
"Common Stock" shall mean, with respect to (a) CORN, common stock thereof
having a par value of $0.01 per share and including the Preferred Stock
Purchase Rights ("CORN Common Stock"), (b) New Canada Cornco, common stock
thereof, (c) BrazilCo Corn, quotas thereof and (d) ChilCo Corn, common stock
thereof.
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"Control" (including its correlative meanings, "Controlled by" and "under
common Control with") shall mean, with respect to a Person, possession by such
Person of the power, directly or indirectly through one or more
intermediaries, to (a) elect a majority of the board of directors (or the
equivalent governing body) of another Person, or (b) direct or cause the
direction of the management and policies of or with respect to another Person,
whether through ownership of securities, by contract or otherwise.
"CORN Rights Plan" shall mean the Preferred Stock Purchase Rights Plan of
CORN as governed by the Rights Agreement, dated as of November 19, 1997,
between CORN and First Chicago Trust Company of New York, as Rights Agent.
"CPC Group" shall mean the affiliated group of corporations as defined in
Code Section 1504(a) of which CPC (or any successor thereto) is the common
parent, excluding for tax periods of the CPC Group commencing subsequent to the
Spinoff Date, CORN and the other members of the CORN Group. For purposes
hereof, the "CORN Group" shall mean affiliated group of corporations as defined
in Code Section 1504(a) of which CORN (or any successor thereto) is the common
parent.
"Foreign Spinco" shall mean each of New Canada Cornco, BrazilCo Corn and
ChilCo Corn, as described and defined in the Ruling Request.
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"Foreign Spinoffs" shall mean, collectively, the distributions to CPC by
Canada Amalco of Canada Cornco, by Refinacoes de Milho, Brasil Ltda. of
BrazilCo Corn and by Industrias de Maiz y Alimentos S.A. of ChilCo Corn, all as
described in the Ruling Request. All capitalized terms not defined herein
shall have the meanings ascribed thereto in the Ruling Request.
"Gross Assets" shall mean, when used with respect to a specified Person,
the fair market value of such Person's assets unencumbered by any liabilities.
"Group" shall mean two or more Persons acting as a partnership, limited
partnership, syndicate, or otherwise acting in concert for the purpose of
acquiring, holding or disposing of securities of any Person.
"IRS" shall mean the United States Internal Revenue Service.
"IRS Penalty Rate" shall mean the rate of interest imposed from time to
time on underpayments of income tax pursuant to Code Section 6621.
"IRS Rulings" shall mean the private letter rulings (together with any
supplements) issued by the IRS in respect of the Ruling Request.
"Opinion of Counsel" shall mean an Unqualified Tax Opinion addressed to
CPC, in form and substance satisfactory to CPC and upon which CPC can rely. In
no event shall CPC be
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required to conclude that an opinion is satisfactory if there is any risk,
however remote, that the action or conduct which is the subject of the opinion
will cause the Spinoff or any of the Foreign Spinoffs to be taxable to any
extent under the Code. For this purpose, an "Unqualified Tax Opinion" shall
mean an unqualified "will" opinion of independent tax counsel of recognized
national standing who is experienced in the issues to be addressed and
otherwise is reasonably acceptable to CPC, to the effect that the action or
conduct which is the subject thereof does not disqualify the Spinoff or any of
the Foreign Spinoffs for tax-free treatment for the Indemnified Party and the
shareholders of CPC under Code Sections 355, 368(a)(1)(D) and any other
applicable Code Sections, assuming that the Spinoff and the Foreign Spinoffs
would have qualified for such tax-free treatment if the subject action or
conduct had not occurred. An Unqualified Tax Opinion may rely upon, and assume
the accuracy of, any representations contained in the Ruling Request.
"Person" shall mean any natural person, corporation, business trust, joint
venture, association, company, partnership or government, or any agency or
political subdivision thereof.
"Preferred Stock Purchase Rights" shall mean the rights to purchase
preferred stock of CORN specified in the CORN Rights Plan.
"Regulations" shall mean the income tax regulations issued, published or
promulgated under the Code.
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"Restricted Period" shall mean the period beginning on the date of the
first to occur of the Spinoff or any of the Foreign Spinoffs and ending on the
second anniversary of the Spinoff Date.
"Ruling Request" shall mean the request for rulings under Code Sections
355 and 368(a)(1)(D) filed in respect of the Spinoff and the Foreign Spinoffs
on behalf of CPC on April 11, 1997, and all amendments and supplements thereto
filed subsequent to such date.
"Section" shall refer to a section of this Agreement.
"Spinoff Date" shall mean the date determined by CPC's Board of Directors
as the date on which the Spinoff shall occur.
"Taxes" shall mean all United States federal, state or local gross or net
income, gross receipts, withholding, franchise, transfer, estimated or other
taxes or similar charges and assessments, including all interest, penalties and
additions imposed with respect to such amounts.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the date first written above.
CPC INTERNATIONAL INC. CORN PRODUCTS INTERNATIONAL, INC.
By By
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Name: Name:
Title: Title:
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