<PAGE> 1
FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 21, 1998
----------------------
CORN PRODUCTS INTERNATIONAL, INC.
----------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 1-13397 22-3514823
- ---------------------------- ----------- ------------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
6500 South Archer Road, Bedford Park, Illinois 60501-1933
- ---------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (708) 563-2400
Not Applicable
-------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE> 2
Item 5. Other Events.
On October 21, 1998, Corn Products International, Inc. ("Corn
Products") entered into certain agreements providing for the acquisition by Corn
Products of the remaining interest in its Mexican joint venture, Arancia - CPC
S.A. de C.V. (the "Joint Venture"). The acquisition is expected to occur in a
series of transactions over the next several years and will be paid for with a
combination of cash and Corn Products Common Stock. In the event that Corn
Products acquires all of the remaining interest in the Joint Venture, the
aggregate purchase price would consist of (i) US$90 million of cash, plus (ii)
1,764,706 shares of Corn Products Common Stock, plus (iii) at the option of Corn
Products, US$30 million in either cash or Corn Products Common Stock valued at
the time of issuance. In addition, an earnout payment not to exceed US$15
million and not less than US$9 million will be made.
Corn Products currently owns a 49% interest in the Joint
Venture. The remaining 51% interest is held 41% by Aracorn S.A. de C.V.
("Aracorn") and 10% by Arancia Industrial, S.A. de C.V. ("Arinsa"). Promociones
Industriales Aralia, S.A. de C.V. ("Aralia") currently owns 100% of Aracorn.
Aracorn, Arinsa, and Aralia are controlled by the Aranguren family of Mexico.
The Joint Venture is a leading producer in Mexico of a large
variety of food ingredients and industrial products derived from the wet milling
of corn. This business includes the manufacturing, marketing, distribution,
sales and trading of all types of products derived from the corn wet milling
process, such as corn starch, glucose corn syrups, corn syrup blends, high
fructose sweeteners, caramel color, maltrodextrins, dextrose, sorbitol, gluten
meal, gluten feed and corn oil. The Joint Venture has plants located in
Guadalajara, San Juan Del Rio and Mexico City with a total corn grinding
capacity of 3,600 tons per day, equivalent to 144 thousand bushels a day.
The Joint Venture's headquarters are in Guadalajara, Mexico
and the Mexican participants in the Joint Venture have been in the corn refining
business for more than 70 years. It has a grind share of close to 70% and
approximately 50% market share in Mexico. It is the market leader in corn
starch, dextrose, glucose corn syrup, maltrodextrine, high fructose 55 syrups,
sorbitol and caramel color. The Joint Venture's annual sales total approximately
$330 million.
The closing of the initial transaction will take place as soon
as Mexican regulatory approvals are received and certain other conditions are
satisfied and is expected to occur in the fourth quarter of 1998. After the
consummation of the initial transaction, Corn Products will hold effective
control of 79.1% of the Joint Venture. The initial transaction will consist of
the acquisition by Corn Products of:
(i) 49% of the capital stock of Aracorn from Aralia for
US$10 million in cash and 1,764,706 shares of Corn
Products Common Stock;
(ii) 10% of the capital stock of the Joint Venture from
Arinsa, for approximately US$35 million in cash; and
<PAGE> 3
(iii) 91.7% of the capital stock of Poliquimicos del
Ecuador, S.A., a small Ecuadorian corn wet miller
("Poliecsa"), from Arinsa for US$2 million in cash.
The agreements provide that Corn Products will also pay Aralia
an earnout with respect to each of the years 2000, 2001 and 2002, the actual
amount of which will be determined by a formula. The aggregate earnout payment
will not exceed US$15 million or be less than US$9 million.
All earnings and losses of the Joint Venture will be accrued
on the Corn Products financial statements after the closing of the initial
transaction.
In addition to the initial transaction, the agreements provide
for reciprocal put and call options with respect to the remaining 51% of the
capital stock of Aracorn, which may be exercised by either Corn Products or
Aralia in two deferred transactions over the next 5 years. If the options are
exercised by either Aralia or Corn Products, the first such deferred transaction
would transfer a 26.6% interest in Aracorn to Corn Products and the second such
deferred transaction would transfer the remaining 24.4% interest in Aracorn to
Corn Products. If both such transactions are consummated, Corn Products would
own 100% of Aracorn and, accordingly, would hold 100% of the interest in the
Joint Venture.
The first deferred transaction must occur between the date one
year and one day after the closing of the initial transaction and the date one
year and one month after the closing of the initial transaction. The purchase
price for the 26.6% interest in Aracorn will be, at Corn Products' option,
either (i) cash in the amount approximately equal to US$38 million plus
interest, or (ii) (A) approximately US$18 million plus interest in cash, plus
(B) Corn Products Common Stock with a then current market value equal to US$20
million plus interest.
The second deferred transaction must occur between the date
eighteen months after the closing of the initial transaction and December 31,
2003. The purchase price for the 24.4% interest in Aracorn will be, at Corn
Products' option, either (i) approximately US$35 million plus interest in cash,
or (ii) (A) approximately US$25 million plus interest in cash plus (B) Corn
Products common stock with a then current market value of US$10 million plus
interest.
Aralia, and certain related transferees, will have the right
to sell to Corn Products any Corn Products Common Stock acquired in the
transactions described above. Such right may not be exercised until after the
thirteenth month following the closing of the initial transaction. Thereafter
such right may be exercised from time to time over a period of ten years, which
period may be extended by Corn Products for an additional three years. Such
right may be exercised only once during any six month period and must be
exercised for a minimum of 250,000 shares of Corn Products Common Stock at any
one time. The purchase price for the shares of Corn Products Common Stock so
sold to Corn Products will be the then current market value of such shares
payable in cash.
During the continuance of the foregoing right to sell Corn
Products Common Stock, shares of Corn Products Common Stock held by certain
members of, or by entities controlled by, the Aranguren family may not be sold
to any of the six largest competitors of Corn Products. In addition, prior to
any sale of Corn Products Common Stock by such members or
<PAGE> 4
entities, other than certain exempt transfers, such shares must first be offered
to Corn Products at a price stipulated by the selling person.
Corn Products has agreed to nominate Ignacio Aranguren
Castiello or a qualified nominee designated by the Aranguren family to its Board
of Directors as long as the Aranguren family continues to hold at least 70% of
their original holdings of Corn Products Common Stock and at least 2.5% of the
total outstanding shares of Corn Products Common Stock.
The consummation of the transactions contemplated by the
agreements is subject to obtaining approvals, consents and assurances from the
Mexican Federal Competition Commission, the Mexican Foreign Investment
Commission, expiration of the Hart-Scott-Rodino waiting period and certain
other conditions.
The agreements include various other provisions including
standstill provisions, registration rights and certain agreements relating to
voting the Corn Products Common Stock. Reference is made to the Transaction
Agreement, Stockholder Agreement, and Option Agreement filed herewith as
Exhibits 1-3, respectively, and incorporated herein by reference, for a more
complete description of the terms and conditions thereof.
<PAGE> 5
Item 7. Financial Statements and Exhibits.
(c) Exhibits
The exhibit accompanying this report is listed in the
accompanying Exhibit Index.
Upon the closing of the initial transaction, Corn
Products expects to file a Current Report on Form 8-K
to report its acquisition. In accordance with item
7(a)(4) of Form 8-K any required financial statements
will be filed at that time or by amendment within 60
days of the date such report is due.
<PAGE> 6
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereto duly authorized.
CORN PRODUCTS INTERNATIONAL, INC.
(Registrant)
Date: October 21, 1998 By: /s/ James W. Ripley
------------------------------------------
James W. Ripley
Chief Financial Officer
(principal financial officer)
<PAGE> 7
EXHIBIT INDEX
Exhibit Number Description of Exhibit
-------------- ----------------------
1 Transaction Agreement
2 Stockholder Agreement
3 Option Agreement
Certain Schedules to the foregoing agreements have been omitted and will be
supplied to the Commission upon request.
<PAGE> 1
EXECUTION COPY
TRANSACTION AGREEMENT
DATED AS OF OCTOBER 21, 1998
AMONG
ARANCIA INDUSTRIAL, S.A. DE C.V.,
PROMOCIONES INDUSTRIALES ARALIA, S.A. DE C.V.,
AND
CORN PRODUCTS INTERNATIONAL, INC.
<PAGE> 2
TABLE OF CONTENTS
PAGE
ARTICLE I................................................................... 2
DEFINITIONS AND INTERPRETATION.............................................. 2
1.1. Definitions...................................................... 2
1.2. Interpretation................................................... 10
ARTICLE II.................................................................. 10
PURCHASE AND SALE OF SHARES; PURCHASE PRICE................................. 10
2.1. Purchase and Sale of Shares...................................... 10
2.2. Purchase Price................................................... 11
ARTICLE III................................................................. 12
CLOSING AND PURCHASE PRICE ADJUSTMENT....................................... 12
3.1. Closing Date..................................................... 12
3.2. Payment of Purchase Price; Delivery of Shares.................... 13
3.3. Corn Products' Additional Deliveries............................. 15
3.4. Parent Companies' Additional Deliveries.......................... 17
3.5. Purchase Price Adjustment For Earnout............................ 18
ARTICLE IV.................................................................. 20
REPRESENTATIONS AND WARRANTIES OF THE PARENT COMPANIES...................... 20
4.1. Due Incorporation................................................ 20
4.2. Due Authorization................................................ 20
4.3. Enforceability................................................... 21
4.4. No Conflict...................................................... 21
4.5. Authorized and Issued Capital.................................... 22
4.6. No Subsidiaries.................................................. 22
4.7. Title to Shares.................................................. 22
4.8. No Options....................................................... 22
4.9. Proceedings Pertaining to Shares................................. 22
4.10. Corporate Records............................................... 23
4.11. Financial Statements............................................ 23
4.12. Liabilities..................................................... 23
4.13. Property........................................................ 23
4.14. Condition....................................................... 24
4.15. Intellectual Property Rights.................................... 24
4.16. Product Liability............................................... 24
4.17. Insurance....................................................... 25
4.18. Bank Accounts; Powers of Attorney............................... 25
4.19. Litigation...................................................... 25
-i-
<PAGE> 3
4.20. No Default Under Material Contracts............................. 25
4.21A. Aracorn Tax Matters............................................ 26
4.21B. Poliecsa and Joint Venture Tax Matters......................... 26
4.22. Employee Matters................................................ 27
4.23. Benefit Plans................................................... 27
4.24. Compliance with Laws............................................ 28
4.25. Compliance with Environmental Laws.............................. 28
4.26. Licenses and Permits............................................ 28
4.27. Ordinary Course................................................. 28
4.28. Stand Alone..................................................... 29
4.29. Copies.......................................................... 29
4.30. Relationships with Affiliates................................... 29
4.31. Investment Representation....................................... 29
4.32. U.S. Antitrust Compliance....................................... 29
4.33. No Finder....................................................... 30
4.34. No Other Representations........................................ 30
ARTICLE V................................................................... 30
REPRESENTATIONS AND WARRANTIES OF CORN PRODUCTS............................. 30
5.1. Due Incorporation................................................ 30
5.2. Due Authorization................................................ 30
5.3. Enforceability................................................... 31
5.4. No Conflict...................................................... 31
5.5. Investment Representation........................................ 31
5.6. Consideration Shares............................................. 32
5.7. No Finder........................................................ 32
5.8. SEC Reports...................................................... 32
5.9. Financial Statements............................................. 32
5.10. Litigation...................................................... 32
5.11. Subsequent Liabilities.......................................... 33
5.12. No Other Representations........................................ 33
ARTICLE VI.................................................................. 33
ACTION PRIOR TO THE CLOSING DATES........................................... 33
6.1. Examination of Corn Products and the Companies................... 33
6.2. Preserve Accuracy of Representations and Warranties.............. 34
6.3. Consents of Third Parties; Governmental Approvals................ 34
6.4. Operations Prior to the Initial Closing Date and the
Transfer of Aracorn Shares...................................... 35
6.5. Notification by Parent Companies of Certain Matters.............. 36
6.6. Mexican Regulatory Compliance.................................... 36
6.7. Insurance........................................................ 37
6.8. Facilitation of Closings......................................... 37
6.9. U.S. Antitrust Law Compliance.................................... 37
-ii-
<PAGE> 4
ARTICLE VII................................................................. 37
ADDITIONAL AGREEMENTS....................................................... 37
7.1. Confidential Nature of Information................................ 38
7.2. No Public Announcement............................................ 38
7.3. Expenses.......................................................... 38
7.4. Further Assurances................................................ 38
7.5. Termination of Joint Ownership Agreement.......................... 38
7.6. Dividends......................................................... 38
7.7. Amendment to Confidentiality Agreement............................ 39
ARTICLE VIII................................................................ 39
CONDITIONS PRECEDENT TO OBLIGATIONS OF PARTIES.............................. 39
8.1. Conditions to the Initial Closing................................. 39
8.2. Conditions to the First Put Closing............................... 41
8.3. Conditions to the Second Put Closing.............................. 42
ARTICLE IX.................................................................. 43
INDEMNIFICATION............................................................. 43
9.1. Indemnification by Parent Companies............................... 43
9.2. Indemnification by Corn Products.................................. 43
9.3. Limitation on Indemnification..................................... 44
9.4. Notification of Claims............................................ 44
9.5. Defense of Claims................................................. 44
9.6. Exclusive Remedy.................................................. 46
9.7. Waiver of Claims.................................................. 46
9.8. Available Claims.................................................. 46
ARTICLE X................................................................... 46
TERMINATION................................................................. 46
10.1. Termination...................................................... 46
10.2. Notice of Termination............................................ 47
10.3. Effect of Termination............................................ 47
ARTICLE XI.................................................................. 47
GENERAL PROVISIONS.......................................................... 47
11.1. Survival of Obligations.......................................... 47
11.2. Notices.......................................................... 47
11.3. Language......................................................... 48
11.4. Successors and Assigns........................................... 49
11.5. Amendments....................................................... 49
11.6 Disclaimer of Warranties......................................... 49
11.7. Waivers.......................................................... 49
-iii
<PAGE> 5
11.8. Severability.................................................... 49
11.9. Execution in Counterparts....................................... 50
11.10. Governing Law................................................... 50
11.11. Submission to Jurisdiction...................................... 50
-iv-
<PAGE> 6
EXHIBITS
A Opinion of Counsel to Corn Products
B Corporate Name License Agreement
C Non-Competition Agreement
D Stockholder Agreement
E Opinion of Counsel to Parent Companies
F Amended and Restated Bylaws of Joint Venture
SCHEDULES
1.1A Arancia Entities
1.1B Knowledge
3.3 Individuals Entering into Non-Competition Agreements
3.4 Resignations
3.5(g) Earnout Payment Example
4.4 No Conflict
4.5 Authorized and Issued Capital
4.6 No Subsidiaries
4.10 Corporate Records
4.11(a) Parent Companies Financial Statements
4.11(b) Companies Financial Statements
4.12(a) Aracorn Liabilities
4.12(b) Poliecsa Liabilities
4.13 Property
4.14(a) Condition
4.15 Intellectual Property Rights
4.16 Inventories and Product Liability
4.17 Insurance
4.18 Bank Accounts; Powers of Attorney
4.19 Litigation
4.20 No Default Under Material Contracts
4.21A Aracorn Tax Matters
4.21B Poliecsa Tax Matters
4.22 Employee Matters
4.23 Benefit Plans
4.24 Compliance with Laws
4.25 Compliance with Environmental Laws
4.27 Ordinary Course
4.28 Stand Alone
4.30 Relationships with Affiliates
4.33 No Finder
5.4 No Conflict
-v-
<PAGE> 7
5.7 No Finder
5.10(b) Litigation
5.11 Subsequent Liabilities
6.4 Transferable Employees
-vi-
<PAGE> 8
TRANSACTION AGREEMENT
TRANSACTION AGREEMENT, dated as of October 21, 1998 (the "Agreement"),
among Corn Products International, Inc., a Delaware corporation ("Corn
Products"), Promociones Industriales Aralia, S.A. de C.V., a corporation
organized and existing under the laws of the Republic of Mexico ("Aralia") and
Arancia Industrial, S.A. de C.V., a corporation organized and existing under the
laws of the Republic of Mexico ("Arinsa" and, together with Aralia, the "Parent
Companies").
PRELIMINARY STATEMENT
WHEREAS, (i) CPC International, Inc., the predecessor of Corn Products
("CPC"), (ii) Productos de Maiz, S.A. de C.V., a corporation organized and
existing under the laws of the Republic of Mexico ("PM"), (iii) Arinsa, (iv)
Arancia Productos Industriales, S.A. de C.V., a corporation organized and
existing under the laws of the Republic of Mexico ("Apisa"), (v) Arancia, S.A.
de C.V., a corporation organized and existing under the laws of the Republic of
Mexico ("Arancia"), and (vi) the following real estate companies: (1)
Inmobiliaria Zuri, S.A. de C.V., (2) Arrendadora Gefemesa, S.A. de C.V., (3)
Inmobiliaria la Gloria, S.A. de C.V., (4) Arrendadora la Gloria, S.A. de C.V.,
and (5) Arrendadora del Roble, S.A. de C.V., each organized and existing under
the laws of the Republic of Mexico (together with Apisa and Arancia, the
"Arancia Companies"), entered into that certain Joint Ownership Agreement dated
October 12, 1994 (the "Joint Ownership Agreement").
WHEREAS, on November 1, 1994, prior to the closing of the transactions
contemplated by the Joint Ownership Agreement, PM transferred its consumer
products and modified starch businesses to wholly-owned subsidiaries of CPC and
changed its corporate name to CPC Industrial, S.A. de C.V. and on September 1,
1995, again changed its corporate name to Arancia-CPC, S.A. de C.V.
WHEREAS, on January 1, 1996, all of the Arancia Companies, other than
Arrendadora Gefemesa, S.A. de C.V., merged with and into Arancia - CPC S.A. de
C.V. (the "Joint Venture").
WHEREAS, Aracorn S.A. de C.V., a corporation organized under the laws of
the Republic of Mexico ("Aracorn"), was spun-off from Arinsa, which spin-off
was effective as of July 31, 1998.
WHEREAS, Aralia is owner, beneficially and of record, of all (except
thirty-two) of the issued and outstanding capital stock of Aracorn S.A. de C.V.
and Arinsa is owner, beneficially and of record of (a) 100,000 shares (the
"Arinsa JV Shares") of capital stock of the Joint Venture, and (b) 2,201,205
shares (the "Poliecsa Shares") of capital stock of Poliquimicos del Ecuador,
S.A., a corporation organized under the laws of the Republic of Ecuador
("Poliecsa" and, together with Aracorn and the Joint Venture, the "Companies").
<PAGE> 9
WHEREAS, Aralia desires to sell to Corn Products, and Corn Products desires
to purchase from Aralia, forty-nine percent of the outstanding capital stock of
Aracorn represented by 110,079,250 shares, including the thirty-two shares not
held of record by Aralia (the "Aracorn Minority Shares"), on the terms and
subject to the conditions set forth herein.
WHEREAS, Corn Products desires to grant to Aralia, and Aralia desires to
have, an option to sell the remaining fifty-one percent of the outstanding
capital stock of Aracorn to Corn Products on the terms and subject to the
conditions set forth herein.
WHEREAS, Arinsa desires to sell to Corn Products, and Corn Products desires
to purchase from Arinsa, (a) the Arinsa JV Shares and (b) the Poliecsa Shares,
on the terms and subject to the conditions set forth herein.
Accordingly, in consideration of the mutual agreements hereinafter set
forth, Corn Products and the Parent Companies agree as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATION
1.1. DEFINITIONS. In this Agreement, the following terms have the
meanings specified or referred to in this Section 1.1 and shall be equally
applicable to both the singular and plural forms.
"24.4% SHARES" has the meaning specified in Section 2.1(c).
"26.6% SHARES" has the meaning specified in Section 2.1(b).
"ACCOUNTING PRINCIPLES" Wherever in this Agreement reference is made to
Accounting Principles, any such reference with respect to the Parent Companies,
the Joint Venture or Aracorn shall be deemed to be the generally accepted
accounting principles from time to time approved by the Mexican Institute of
Chartered Accountants (Instituto Mexicano de Contadores Publicos), any such
reference with respect to Poliecsa shall be deemed to be the generally accepted
accounting principles in general usage in the Republic of Ecuador, and any such
reference to Corn Products shall be deemed to be United States generally
accepted accounting principles.
"AFFILIATE" means with respect to any Person, any other Person or
Individual which directly or indirectly controls, is controlled by or is under
common control with such Person. In addition to the foregoing, as used in the
definition of "Arancia Entity," the term "Affiliate" shall include, with respect
to any Individual, any present or future child, stepchild, grandchild, parent,
stepparent, grandparent, spouse, sibling, brother-in-law, sister-in-law, mother-
-2-
<PAGE> 10
in-law, father-in-law, son-in-law, daughter-in-law of such Individual, and shall
include adoptive relationships. For the avoidance of doubt, the Parties
acknowledge that (i) Corn Products, on the one hand, and the Arancia Entities,
on the other hand, shall not be considered "Affiliates" of each other, (ii) the
Companies and their Subsidiaries shall not be considered "Affiliates" of the
Parent Companies at any time, and (iii) the Companies and their Subsidiaries
shall be considered "Affiliates" of Corn Products following the Initial Closing.
"AGREED RATE" means the rate calculated from time to time pursuant to the
term "Base Rate," as such term is defined, without giving effect to any
amendments, in the U.S.$340,000,000 5-Year Revolving Credit Agreement dated as
of December 17, 1997 among Corn Products, the Lenders named therein, Citibank,
N.A., as Administrative Agent, Citicorp Securities, Inc. as Arranger, The First
National Bank of Chicago, as Documentation Agent, The Chase Manhattan Bank, as
Co-Agent and CPC International Inc., as Interim Guarantor, whether or not such
agreement thereafter remains in effect. Except as otherwise provided herein,
interest calculations based on the Agreed Rate shall be computed based on
quarterly compounding.
"AGREEMENT" has the meaning specified in the first paragraph of this
Agreement.
"ANNUAL GOALS" has the meaning specified in Section 3.5 (b).
"APISA" has the meaning specified in the second paragraph of this
Agreement.
"ARACORN" has the meaning specified in the fifth paragraph of this
Agreement.
"ARACORN MINORITY SHARES" has the meaning specified in the seventh
paragraph of this Agreement.
"ARALIA" has the meaning specified in the first paragraph of this
Agreement.
"ARANCIA" has the meaning specified in the second paragraph of this
Agreement.
"ARANCIA COMPANIES" has the meaning specified in the second paragraph of
this Agreement, and "ARANCIA COMPANY" means any one of them.
"ARANCIA ENTITY" means those Persons and Individuals set forth on Schedule
1.1A and any Persons or Individuals who are, from time to time, Affiliates or
Subsidiaries of any Arancia Entity.
"ARINSA" has the meaning specified in the first paragraph of this
Agreement.
"ARINSA JV SHARE PURCHASE PRICE" has the meaning specified in Section
2.2(b).
-3-
<PAGE> 11
"ARINSA JV SHARES" has the meaning specified in the sixth paragraph of this
Agreement.
"BANKRUPTCY" means the rendering of a ruling or an order by a court of
competent jurisdiction declaring a Person or Individual bankrupt or naming a
trustee to its goods; or the rendering of a ruling by a court of competent
jurisdiction or the passing of a resolution for the liquidation or the
dissolution of a Person's or Individual's enterprise or affairs or the filing by
a Person or Individual of procedures to be declared voluntarily bankrupt or the
assignment of its goods for the benefit of its creditors; or the loss, by a
Person or Individual, in the hands of a creditor, of the enjoyment of its goods
or a substantial part thereof, unless this Person or Individual contests in good
faith the right of such creditor to seize its goods within 10 days of such loss
before the competent authorities and the creditor does not prevail.
"BENEFIT PLANS" means all pension, retirement, bonus, profit sharing,
compensation, incentive, stock purchase, stock option, savings, stock
appreciation, phantom stock, severance, change-of-control, savings, thrift,
insurance, medical, hospitalization, disability, death, and other similar plans,
programs, arrangements or practices applicable to any or all of the past or
present shareholders, directors, officers, employees, or agents of the Person in
question; and "BENEFIT PLAN" means any one of them.
"BUSINESS" means the following activities: corn wet milling processing,
manufacturing, marketing, distribution, sales and trading of all types of
products derived from the corn wet milling process, such as, but not limited to,
all types of starches, modified corn starch, corn syrups, syrup blends, fructose
sweeteners, caramel colors, maltrodextrins, dextroses, sorbitols, gluten meal,
gluten feed and corn germ meal, corn germ, corn oil, ethanol, citric acid, and
lactic acid. The aforesaid products covered by this Agreement will not be
limited to regular corn derivatives, but will also include starches derived from
any other agricultural products such as, but not limited to: waxy corn, sorghum,
high amylose corn, potato, wheat, and tapioca, and their derivatives
independently of the industrial process employed to produce them.
"BUSINESS DAY" shall mean any day on which the principal commercial banks
located in Mexico City, Mexico and New York, New York, United States of America
are open for business during normal banking hours.
"COMMISSION" shall mean the United States Securities and Exchange
Commission.
"COMPANIES" has the meaning specified in the sixth paragraph of this
Agreement, and "COMPANY" means any one of them.
"COMPANY AGREEMENTS" has the meaning specified in Section 4.20.
"COMPOSITE BONUS PERCENTAGE" has the meaning specified in Section 3.5(b).
-4-
<PAGE> 12
"CONFIDENTIALITY AGREEMENT" has the meaning specified in Section 6.1.
"CONSIDERATION SHARES" means shares of Corn Products Common Stock delivered
pursuant to Section 2.2(a)(ii) plus the Optional Shares, if any.
"CORN PRODUCTS" has the meaning specified in the first paragraph of this
Agreement.
"CORN PRODUCTS ANCILLARY AGREEMENTS" means all agreements, instruments and
documents being or to be executed and delivered by Corn Products to the Parent
Companies on the date hereof, or otherwise pursuant to this Agreement.
"CORN PRODUCTS CHANGE IN CONTROL" shall be deemed to have occurred when, as
the result of a transaction or a series of related transactions (including any
proxy contests): (a) Individuals who constitute the Board of Directors of Corn
Products immediately prior to such transactions or series of related
transactions (including any proxy contests) constitute less than 50% of the
Board of Directors of Corn Products, (b) the stockholders of Corn Products
immediately prior to such transaction or series of related transactions own
beneficially less than 50% of the issued and outstanding Voting Securities of
Corn Products or (c) all or substantially all of the assets of Corn Products are
transferred pursuant to Section 11.4(b) unless after such transaction at least
50% of the Individuals who constitute the Board of Directors of the transferee
were members of the Corn Products Board of Directors immediately prior to such
transaction and at least 50% of the issued and outstanding Voting Stock of the
transferee is held by stockholders of Corn Products immediately prior to the
transaction.
"CORN PRODUCTS COMMON STOCK" has the meaning specified in Section 2.2(a).
"CORN PRODUCTS GROUP MEMBER" means Corn Products, the Companies and their
Subsidiaries and any Affiliates of Corn Products and their respective successors
and assigns.
"CORN PRODUCTS SEC DOCUMENTS" has the meaning specified in Section 5.8.
"CPC" has the meaning specified in the second paragraph of this Agreement.
"EARNOUT NOTICE" has the meaning specified in Section 3.5(a).
"EARNOUT PAYMENT" has the meaning specified in Section 3.5(a).
"EARNOUT YEAR" means any of the twelve-month periods ending December 31,
2000, December 31, 2001, and December 31, 2002.
"ENVIRONMENTAL LAW" means all Laws relating to or addressing the
environment, health or safety.
-5-
<PAGE> 13
"EXCHANGE ACT" shall mean the United States Securities Exchange Act of
1934, as amended.
"FAIR MARKET VALUE" has the meaning specified in Section 2.2(f).
"FINANCIAL STATEMENTS" means a balance sheet and income statement for the
year ended December 31, 1997 and unaudited balance sheet and income statement
for the nine-month period ended September 30, 1998 or the latest available
quarterly period, including, in the case of year end financial statements, the
appropriate notes thereto. In the case of Aracorn, "Financial Statements" means
an unaudited balance sheet as of September 30, 1998 and an income statement from
inception through September 30, 1998.
"FIRST PUT CLOSING" means the closing of the transfer of the 26.6% Shares
from Aralia to Corn Products or its designated Affiliate pursuant to the First
Put Exercise Notice.
"FIRST PUT CLOSING DATE" has the meaning specified in Section 3.1(b).
"FIRST PUT EXERCISE NOTICE" has the meaning specified in Section 2.1(b).
"FIRST PUT PURCHASE PRICE" has the meaning specified in Section 2.2(d).
"GOVERNMENTAL BODY" means: (i) any national, federal, provincial, state,
municipal or other government or body; (ii) any multinational, multilateral or
international body; (iii) any subdivision, ministry, department, secretariat,
bureau, agency, commission, board, instrumentality or authority of any of the
foregoing governments or bodies; (iv) any administrative agency or
quasi-governmental or private body exercising any regulatory, expropriation or
taxing authority under or for the account of any of the foreign governments or
bodies; or (v) any national, international, multilateral or multinational
judicial, quasi-judicial, arbitration or administrative court, tribunal, grand
jury, commission, board or panel.
"HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended.
"INDEMNIFIED PARTY" has the meaning specified in Section 9.5(a).
"INDEMNIFYING PARTY" has the meaning specified in Section 9.5(a).
"INDIVIDUAL" means a physical person.
"INITIAL CLOSING" means the closing of the transfer of the Aracorn Minority
Shares, the Arinsa JV Shares and the Poliecsa Shares from the Parent Companies
to Corn Products.
-6-
<PAGE> 14
"INITIAL CLOSING DATE" has the meaning specified in Section 3.1(a).
"INTELLECTUAL PROPERTY RIGHTS" means (i) all patents, trademarks, trade
names, service marks, copyrights, industrial designs, trade secrets, processes,
inventions, know-how, recipes, technology, software, formulas, franchises,
licenses, right-to-use, drawings, specifications for products, materials and
equipment, process development, manufacturing information, quality control
information, performance data, policy or procedure manuals, plant service
information and other intellectual property, and (ii) all registrations and
applications for registration of intellectual property, in each case used or
held for use in connection with the Business of any of the Companies, and
"INTELLECTUAL PROPERTY RIGHT" means any one of them; provided however, that, in
no case shall the term Intellectual Property Rights include intellectual
property rights (A) in the form of software that is available in consumer retail
stores or is available "off-the-shelf" and is subject to "shrink wrap" or "box
top" license agreements, or (B) licensed or otherwise made available by Corn
Products to any of the Companies.
"JOINT OWNERSHIP AGREEMENT" has the meaning specified in the second
paragraph of this Agreement.
"JOINT VENTURE" has the meaning specified in the fourth paragraph of this
Agreement.
"JVA ANCILLARY AGREEMENTS" means the Arinsa Trademark License and
Technology Agreement dated November 1, 1994 between Arancia Industrial, S.A. de
C.V. and CPC Industrial, S.A. de C.V., the Arinsa Trademark License and
Technology Agreement dated November 1, 1994 between Arinsa and Arancia, the CPC
Technology and Trademark License Agreement dated November 1, 1994 between Corn
Products and CPC Industrial, S.A. de C.V. and the CPC Technology and Trademark
License Agreement dated November 1, 1994 between Corn Products and Arancia.
"KNOWLEDGE" shall mean, with respect to the Parent Companies, actual
knowledge of any Individual listed on Schedule 1.1B hereto.
"LAWS" means: (i) all constitutions, treaties, laws, statutes, codes,
ordinances, orders, decrees, rules, regulations, and municipal by-laws, whether
domestic, foreign or international; (ii) all judgments, orders, writs,
injunctions, decisions, rulings, regulations, notices, administrative
pronouncements, interpretations, decrees, and awards of any Governmental Body;
and (iii) all provisions of the foregoing; in each case binding on or affecting
the Party or Person, or the property thereof, referred to in the context in
which such word is used; and "LAW" means any one of them; for greater certainty
the words "LAWS" and "LAW" shall include Laws relating in whole or in part to
the environment and its protection.
"LIENS" mans (i) all hypothecations, mortgages, pledges, liens, security
interests, transfers of property in stock, servitudes, easements, conditional
sale contracts, ownership or title
-7-
<PAGE> 15
retention agreements, occupation rights, encroachments, restrictive covenants,
title defects and other encumbrances or rights of others of any nature
whatsoever or however arising; and (ii) any arrangement or condition that in
substance secures payment or performance of an obligation; and a "LIEN" means
any one of them.
"LOSSES" has the meaning specified in Section 9.1.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on the business,
assets or results of operations of (a) in the case of the Companies, the
Companies and their Subsidiaries, taken as whole, except any such effect
resulting from or arising in connection with (i) this Agreement or the
transaction contemplated hereby, (ii) changes or conditions affecting the
corn-milling industry generally, (iii) economic conditions in the United States
or Mexico generally, (iv) any action by Corn Products or any of its Affiliates,
or (v) any inaction by Corn Products or any of its Affiliates not taken in good
faith and, (b) in the case of Corn Products, Corn Products and its Subsidiaries,
taken as a whole, except any such effect resulting from or arising in connection
with (i) this Agreement or the transactions contemplated hereby, (ii) changes or
conditions affecting the corn-milling industry generally or (iii) economic
conditions in the United States or Mexico generally.
"MINORITY SHARE PURCHASE PRICE" has the meaning specified in Section 2.2.
"OPTIONAL SHARES" has the meaning specified in Section 2.2(f).
"PARENT COMPANIES" has the meaning specified in the first paragraph of
this Agreement.
"PARENT COMPANY ANCILLARY AGREEMENTS" means all agreements, instruments and
documents being or to be executed and delivered by either of the Parent
Companies to Corn Products on the date hereof, or otherwise pursuant to this
Agreement.
"PARENT COMPANY GROUP MEMBER" means the Parent Companies and their
Affiliates, and their respective successors and assigns.
"PARTIES" means all of the parties hereto collectively; and a "PARTY" shall
mean any one of them.
"PERMITTED ENCUMBRANCES" means: (i) Liens arising solely by operation of
Law or of any employees for salary or wages earned but not yet due and payable;
(ii) Liens of workmen, suppliers of material, builders and architects, or
warehousemen's and carriers' Liens, or unregistrable Liens of unpaid vendors of
moveable property, arising solely by operation of Law in each case arising in
the ordinary course of business for charges which are earned but not yet due and
payable and (iii) Liens that neither detract from the value of, nor interfere
with the use or operation of, the applicable asset.
-8-
<PAGE> 16
"PERSON" means a corporation, company, limited liability company,
cooperative, partnership, trust, unincorporated association, entity with
juridical personality or Governmental Body, but shall not include any
Individual.
"PM" has the meaning specified in the second paragraph of this Agreement.
"POLIECSA" has the meaning specified in the sixth paragraph of this
Agreement.
"POLIECSA SHARE PURCHASE PRICE" has the meaning specified in Section
2.2(c).
"POLIECSA SHARES" has the meaning specified in the sixth paragraph of this
Agreement.
"SECOND PUT CLOSING" means the closing of the transfer of the 24.4% Shares
from Aralia to Corn Products or its designated Affiliate pursuant to the Second
Put Exercise Notice.
"SECOND PUT CLOSING DATE" has the meaning specified in Section 3.1(c).
"SECOND PUT EXERCISE NOTICE" has the meaning set forth in Section 2.1(c).
"SECOND PUT PURCHASE PRICE" has the meaning specified in Section 2.2(e).
"SECURITIES ACT" means the United States Securities Act of 1933, as
amended.
"SUBSIDIARY" means, with respect to any Person, any other Person which is
controlled by it or by one or more Persons each of which is controlled by it,
and for the purpose of this definition "CONTROL" means, with respect to any
Person, the ownership of more than 50% of the voting shares of the Person.
"TARGET AMOUNT" has the meaning specified in Section 3.5(a).
"TARGET BONUSES" has the meaning specified in Section 3.5(b).
"TAX" (and, with correlative meaning, "TAXES" and "TAXABLE") means any
taxes, charges, fees, levies, contributions or other assessments or
reassessments imposed or administered by any Taxing Authority, including all net
income, gross income, gross receipts, sales, use, ad valorem, value added,
transfer, trade, franchise, privilege, profits, license, withholding, payroll,
employment, profit sharing, social security, housing fund, retirement savings
systems, excise, estimated, severance, stamp, occupation, property, assets or
other taxes, customs, duties, fees, assessments or charges of any kind
whatsoever, together with any interest, penalties, additions to tax or
additional amounts imposed thereon or with respect thereto.
-9-
<PAGE> 17
"TAXING AUTHORITY" means any Governmental Body having or exercising any
authority to assess, impose or collect Taxes of any kind.
"TAX RETURN" means all returns (including amended returns and estimated Tax
returns), Dictamen Fiscal, declarations, reports, schedules, information
returns, statements or other documents, any amendments thereto and any related
or supporting information filed or required to be filed, with respect to Taxes.
"TAX SHARING ARRANGEMENT" means any written or unwritten agreement or
arrangement for the allocation or payment of Tax liabilities or payment for Tax
benefits with respect to a consolidated, combined or unitary Tax Return which
Tax Return includes any Company or any Subsidiary of a Company.
"VOTING SECURITIES" means any securities entitled to vote in the election
of directors generally, securities convertible or exchangeable into or
exchangeable for such securities and any rights or options to acquire any such
securities.
1.2. INTERPRETATION. As used in this Agreement, the word "including"
means without limitation, the word "or" is not exclusive and the words "herein",
"hereof", "hereby", "hereto" and "hereunder" refer to this Agreement as a whole.
Unless the context otherwise requires, references herein: (i) to Articles,
Sections, Exhibits and Schedules mean the Articles and Sections of and the
Exhibits and Schedules attached to this Agreement; (ii) to an agreement,
instrument or other document means such agreement, instrument or other document
as amended, supplemented and modified from time to time to the extent permitted
by the provisions thereof and by this Agreement; and (iii) except with respect
to Articles IV and V hereof, to a statute means such statute as amended from
time to time and includes any successor legislation thereto. The Schedules and
Exhibits referred to herein shall be construed with and as an integral part of
this Agreement to the same extent as if they were set forth verbatim herein.
Titles to Articles and headings of Sections are inserted for convenience of
reference only and shall not be deemed a part of or to affect meaning or
interpretation of this Agreement.
ARTICLE II
PURCHASE AND SALE OF SHARES; PURCHASE PRICE
2.1. PURCHASE AND SALE OF SHARES. (a) Upon the terms and subject to the
conditions of this Agreement, on the Initial Closing Date, (i) Arinsa shall
sell, transfer, assign, convey and deliver to Corn Products, free and clear of
all Liens, and Corn Products shall purchase from Arinsa, the Arinsa JV Shares,
(ii) Aralia shall sell, transfer, assign, convey and deliver, or cause to be
sold, transferred, assigned, conveyed and delivered, to Corn Products, free and
clear of all Liens, and Corn Products shall purchase from Aralia, the Aracorn
Minority Shares and (iii)
-10-
<PAGE> 18
Arinsa shall sell, transfer, assign, convey and deliver to Corn Products, free
and clear from all Liens, and Corn Products shall purchase from Arinsa, the
Poliecsa Shares.
(b) At the option of Aralia, exercised by written notice (the "First Put
Exercise Notice") delivered to Corn Products no later than two Business Days
prior to the First Put Closing Date, and upon the terms and subject to the
conditions of this Agreement, on the First Put Closing Date, Aralia shall sell,
transfer, assign, convey and deliver to Corn Products, free and clear of all
Liens, 59,757,307 shares of capital stock of Aracorn (the "26.6% Shares"), and
Corn Products shall purchase such 26.6% Shares from Aralia.
(c) At the option of Aralia, exercised by written notice (the "Second Put
Exercise Notice") delivered to Corn Products no later than December 1, 2003, and
upon the terms and subject to the conditions of this Agreement, on the Second
Put Closing Date, Aralia shall sell, transfer, assign, convey and deliver to
Corn Products, free and clear of all Liens, 54,814,973 shares of capital stock
of Aracorn (the "24.4% Shares") and Corn Products shall purchase such 24.4%
Shares from Aralia.
2.2. PURCHASE PRICE. (a) The purchase price for the Aracorn Minority
Shares (the "Minority Share Purchase Price") shall be (i) cash in the amount of
US$10,152,939, plus (ii) 1,764,706 shares of Common Stock, par value US$.01 per
share, of Corn Products ("Corn Products Common Stock"), plus (iii) amounts
payable pursuant to Section 3.5 hereof.
(b) The purchase price for the Arinsa JV Shares (the "Arinsa JV Share
Purchase Price") shall be cash in an amount of US$34,901,960.
(c) The purchase price for the Poliecsa Shares (the "Poliecsa Share
Purchase Price") shall be cash in the amount of US$2,000,000.
(d) The purchase price for the 26.6% Shares (the "First Put Purchase
Price") shall be, at Corn Products' option, either (i) cash in the amount equal
to US$38,043,141 plus the amount accrued thereon from the Initial Closing Date
to the First Put Closing Date at the Agreed Rate, or (ii) (A) cash in the amount
equal to US$18,043,141 plus the amount accrued thereon from the Initial Closing
Date to the First Put Closing Date at the Agreed Rate plus (B) a number of
shares of Corn Products Common Stock determined by dividing (1) US$20,000,000
plus the amount accrued thereon from the Initial Closing Date to the First Put
Closing Date at the Agreed Rate by (2) the average of the Fair Market Value of
Corn Products Common Stock for the twenty (20) trading days immediately prior to
the First Put Closing Date.
(e) The purchase price for the 24.4% Shares (the "Second Put Purchase
Price") shall be, at Corn Products' option, either (i) cash in the amount equal
to US$34,901,960 plus the amount accrued thereon from the Initial Closing Date
to the Second Put Closing Date at the Agreed Rate, subject to adjustment, if
any, pursuant to Section 7.6 hereof, or (ii) (A) cash in the amount equal to
US$24,901,960 plus the amount accrued thereon from the Initial Closing Date to
-11-
<PAGE> 19
the Second Put Closing Date at the Agreed Rate, subject to adjustment pursuant
to Section 7.6 hereof, plus (B) a number of shares of Corn Products Common Stock
determined by dividing (1) US$10,000,000 plus the amount accrued thereon from
the Initial Closing Date to the Second Put Closing Date at the Agreed Rate by
(2) the average of the Fair Market Value of Corn Products Common Stock for the
twenty (20) trading days immediately prior to the Second Put Closing Date.
(f) The term "Fair Market Value" means the closing sales price of Corn
Products Common Stock, on the applicable exchange if it is listed on a national
securities exchange, or if not, as reported on the Nasdaq National Market
System, or if there have been no sales on any such exchange or the Nasdaq
National Market System on any day, the average of the highest bid and lowest
asked prices at the end of such day. If Corn Products Common Stock is not
listed on any national securities exchange or the Nasdaq National Market System,
then Corn Products shall not have the option to pay any of the First Put
Purchase Price or the Second Put Purchase Price in shares of Corn Products
Common Stock. The term "Optional Shares" means any shares of Corn Products
Common Stock received by Aralia or its designee from Corn Products as partial
consideration for the purchase by Corn Products of the 26.6% Shares or the
24.4% Shares from Aralia.
ARTICLE III
CLOSING AND PURCHASE PRICE ADJUSTMENT
3.1. CLOSING DATE. (a) The Initial Closing shall take place on the third
Business Day after the conditions set forth in Section 8.1 have been satisfied
or waived, at the offices of Sidley & Austin, 875 Third Avenue, New York, New
York 10022 or at such other place or at such other time as shall be agreed upon
by Corn Products and the Parent Companies. The date on which the Initial
Closing is actually held is sometimes referred to herein as the "Initial Closing
Date."
(b) If the First Put Exercise Notice shall have been delivered by Aralia
as provided in Section 2.1(b), the First Put Closing shall take place on the
date that is 366 calendar days (or, if such day is not a Business Day, on the
immediately succeeding Business Day), after the Initial Closing Date at the
offices of Sidley & Austin, 875 Third Avenue, New York, New York 10022 or at
such other place or at such other time as shall be agreed upon by Corn Products
and Aralia. In the event that the First Put Closing cannot take place on the
date specified above solely because the conditions to such Closing have not been
satisfied, the date of such Closing shall be deferred for up to 120 days so long
as there exists a good faith expectation that such conditions will be satisfied
within such 120 day period and throughout such period the Parties shall use all
commercially reasonable efforts in accordance with Section 6.8(a) to consummate
such closing. The date on which the First Put Closing is actually held is
sometimes referred to herein as the "First Put Closing Date."
-12-
<PAGE> 20
(c) If the Second Put Exercise Notice shall have been delivered by Aralia
as provided in Section 2.1(c), the Second Put Closing shall take place on the
thirtieth day (or, if such day is not a Business Day, on the immediately
succeeding Business Day), after delivery of the Second Put Exercise Notice, at
the offices of Sidley & Austin, 875 Third Avenue, New York, New York 10022 or at
such other place or at such other time as shall be agreed upon by Corn Products
and Aralia. In no event shall the Second Put Closing take place unless the
transfer of the 26.6% Shares to Corn Products shall have occurred and, in any
event, the Second Put Closing shall not take place before the date that is
eighteen months after the Initial Closing Date or after December 31, 2003,
unless otherwise agreed by Corn Products and Aralia. In the event that the
Second Put Closing cannot take place on the date specified above solely because
the conditions to such Closing have not been satisfied, the date of such Closing
shall be deferred for up to 120 days so long as there exists a reasonable
expectation that such conditions will be satisfied within such 120 day period
and throughout such period the Parties shall use all commercially reasonable
efforts in accordance with Section 6.8(a) to consummate such closing. The time
and date on which the Second Put Closing is actually held are sometimes referred
to herein as the "Second Put Closing Date."
3.2. PAYMENT OF PURCHASE PRICE; DELIVERY OF SHARES.
(a) Subject to fulfillment or waiver of the conditions set forth in
Section 8.1 of the Transaction Agreement, at the Initial Closing:
(i) Corn Products shall:
(A) pay to Aralia the cash portion of the Minority Share
Purchase Price (other than amounts to be paid pursuant to Section
3.5) by wire transfer of immediately available funds to the account
in the United States or Mexico specified by Aralia in writing to
Corn Products at least two Business Days prior to the Initial
Closing;
(B) deliver to Aralia a stock certificate representing
1,764,706 shares of Corn Products Common Stock registered in the
name of Aralia or such other Arancia Entity as Aralia may specify in
writing at least two Business Days prior to the Initial Closing
Date; provided that if such shares are to be delivered to an Arancia
Entity other than Aralia, such Arancia Entity shall enter into an
agreement with Corn Products pursuant to which such Arancia Entity
agrees to be bound by Sections 2.2, 2.3, 3.4, 3.5 and 3.8 of the
Stockholder Agreement; and
(C) pay to Arinsa an amount equal to the sum of the Arinsa JV
Share Purchase Price plus the Poliecsa Share Purchase Price by wire
transfer of immediately available funds to the account in the United
States or Mexico specified by Arinsa in writing to Corn Products at
least two Business Days prior to the Initial Closing;
-13-
<PAGE> 21
(ii) Aralia shall deliver to Corn Products a stock certificate
representing the Aracorn Minority Shares, duly endorsed in favor of Corn
Products or such other Affiliate of Corn Products as Corn Products may
specify in writing at least two Business Days prior to the Initial Closing
Date (provided that Corn Products may not designate an Affiliate if such
designation would adversely affect or delay the closing) and shall duly
record such transfer in the stock record books of Aracorn; and
(iii) Arinsa shall deliver to Corn Products:
(A) a stock certificate representing the Arinsa JV Shares,
duly endorsed in favor of Corn Products or such other Affiliate of
Corn Products as Corn Products may specify in writing at least two
Business Days prior to the Initial Closing Date (provided that Corn
Products may not designate an Affiliate if such designation would
adversely affect or delay the closing) and, together with Corn
Products, shall cause such transfer to be duly recorded in the stock
record books of the Joint Venture; and
(B) a stock certificate representing the Poliecsa Shares, duly
endorsed in favor of Corn Products or such Affiliate of Corn
Products as Corn Products may specify in writing at least two
Business Days prior to the Initial Closing Date (provided that Corn
Products may not designate an Affiliate if such designation would
adversely affect or delay the Closing) and shall duly record such
transfer in the stock record books of Poliecsa.
(iv) Corn Products and Aralia shall cause (i) Ignacio Aranguren
Castiello to be the representative of Aracorn on the Board of Directors
of the Joint Venture and (ii) the following individuals to be elected to
the Board of Directors of Aracorn:
Members Alternate Members
------- -----------------
Ignacio Aranguren Castiello Santiago Aranguren Trellez
Luis Aranguren Trellez Miguel Guzman
Ignacio Aranguren Trellez Arturo Tovar Romero
Jack C. Fortnum James W. Ripley
Marcia E. Doane Cheryl Beebe
(b) Subject to the fulfillment or waiver of the conditions set
forth in Section 8.2, at the First Put Closing:
(i) Corn Products shall:
(A) pay, without any right of setoff, to Aralia an amount
equal to (x) the First Put Purchase Price or (y) the cash component
of the First Put Purchase Price as described in Section 2.2(d)
hereof, in either case by wire transfer of immediately available
funds to the account in the United States or Mexico specified by
Aralia in writing to Corn Products at least two Business Days prior
to the First Put Closing; and
(B) deliver to Aralia a stock certificate representing
Optional Shares, if any, registered in the name of Aralia or such
other Arancia Entity as Aralia may specify in writing at least two
Business Days prior to the First Put Closing Date;
-14-
<PAGE> 22
provided that if such Optional Shares are to be delivered to an
Arancia Entity other than Aralia, such Arancia Entity shall enter
into an agreement with Corn Products pursuant to which such Arancia
Entity agrees to be bound by Sections 2.2, 2.3, 3.4, 3.5 and 3.8 of
the Stockholder Agreement;
(ii) Aralia shall deliver to Corn Products a stock certificate
representing the 26.6% Shares, duly endorsed in favor of Corn Products to
Corn Products or such other Affiliate of Corn Products as Corn Products
may specify in writing at least two Business Days prior to the First Put
Closing Date (provided that Corn Products may not designate an Affiliate
if such designation would adversely affect or delay the Closing) and,
together with Corn Products, cause such transfer to be duly recorded in
the stock record books of Aracorn.
(c) Subject to the fulfillment or waiver of the conditions set
forth in Section 8.3, at the Second Put Closing:
(i) Corn Products shall:
(A) pay, without any right of setoff, to Aralia an amount
equal to (x) the Second Put Purchase Price or (y) the cash component
of the Second Put Purchase Price as described in Section 2.2(e)
hereof, in either case, by wire transfer of immediately available
funds to the account in the United States or Mexico specified by
Aralia in writing to Corn Products at least two Business Days prior
to the Second Put Closing; and,
(B) deliver to Aralia a stock certificate representing the
Optional Shares, if any, registered in the name of Aralia or such
other Arancia Entity as Aralia may specify in writing at least two
Business Days prior to the Second Put Closing Date; provided that if
such Optional Shares are to be delivered to an Arancia Entity other
than Aralia, such Arancia Entity shall enter into an agreement with
Corn Products pursuant to which such Arancia Entity agrees to be
bound by Sections 2.2, 2.3, 3.4, 3.5 and 3.8 of the Stockholder
Agreement;
(ii) Aralia shall deliver to Corn Products a stock certificate
representing the 24.4% Shares, duly endorsed in favor of Corn Products or
to such other Affiliate of Corn Products as Corn Products may specify in
writing at least two Business Days prior to the Second Put Closing Date
(provided that Corn Products may not designate an Affiliate if such
designation would adversely affect or delay the Closing).
3.3. CORN PRODUCTS' ADDITIONAL DELIVERIES. Subject to fulfillment or
waiver of the conditions set forth in Section 8.1(a), at the Initial Closing
Corn Products shall deliver to the Parent Companies all of the following:
-15-
<PAGE> 23
(i) A copy of Corn Products' Certificate of Incorporation certified
as of a recent date by the Secretary of State of the State of Delaware;
(ii) Certificate of good standing of Corn Products issued as of a
recent date by the Secretary of State of the State of Delaware;
(iii) Certificate of the secretary or an assistant secretary of
Corn Products, dated the Initial Closing Date, in form and substance
reasonably satisfactory to the Parent Companies, as to (A) no amendments
to the Certificate of Incorporation of Corn Products since a specified
date, (B) the by-laws of Corn Products, (C) the resolutions of the Board
of Directors of Corn Products authorizing the execution and performance of
this Agreement and the transactions contemplated hereby, and (D)
incumbency and signatures of the officers of Corn Products executing this
Agreement and any Corn Products Ancillary Agreement;
(iv) Opinion of counsel to Corn Products substantially in the form
contained in Exhibit A.
(v) A certificate to the effect of Section 8.1(b)(i) and (ii), duly
executed by the President or any Vice President of Corn Products;
(vi) The Corporate Name License Agreement substantially in the form
contained in Exhibit B duly executed by Corn Products;
(vii) A Non-Competition Agreement with each of the Individuals
listed on Schedule 3.3 substantially in the form contained in Exhibit C
duly executed by Corn Products;
(viii) The Stockholder Agreement substantially in the form of
Exhibit D duly executed by Corn Products; and
(ix) All approvals and consents from the Mexican Federal
Competition Commission and the Mexican Foreign Investment Commission and
from the Persons and Individuals listed in Schedule 4.4, in form and
substance reasonably satisfactory to the Parent Companies' legal counsel,
necessary in order to permit the transactions contemplated herein to be
completed at the Initial Closing, the First Put Closing and the Second Put
Closing without adversely affecting, modifying, amending, varying or
renegotiating in a way that is not insignificant to the Parent Companies
in their judgment exercised in good faith, or resulting in the termination
or cancellation of this Agreement or any Corn Products Ancillary
Agreements;
-16-
<PAGE> 24
3.4. PARENT COMPANIES' ADDITIONAL DELIVERIES. (a) Subject to
fulfillment or waiver of the conditions set forth in Section 8.1(b), at the
Initial Closing the Parent Companies shall deliver to Corn Products all of the
following:
(i) Copies of the Certificate of Incorporation of each Parent
Company and each Company notarized as of a recent date by a notary public
of the appropriate jurisdiction;
(ii) Certificate of the secretary or an assistant secretary of each
Parent Company and each Company, dated the Initial Closing Date, in form
and substance reasonably satisfactory to Corn Products, as to (A) no
amendments to the Certificate of Incorporation of such Parent Company or
such Company as the case may be, since a specified date, (B) the by-laws
of such Parent Company or Company, as the case may be, (C) the resolutions
of the Board of Directors of such Parent Company and of the stockholders
of such Parent Company authorizing the execution and performance of this
Agreement and the transactions contemplated hereby, and (D) incumbency and
signatures of the officers of such Parent Company executing this Agreement
and any Parent Company Ancillary Agreement to which such Parent Company is
a party;
(iii) Opinion of counsel to the Parent Companies substantially in
the form contained in Exhibit E;
(iv) All approvals and consents from the Mexican Federal
Competition Commission and the Mexican Foreign Investment Commission and
from the Persons and Individuals listed in Schedule 4.4, in form and
substance reasonably satisfactory to Corn Products legal counsel,
necessary in order to permit the transactions contemplated herein to be
completed at the Initial Closing, the First Put Closing and the Second Put
Closing without adversely affecting, modifying, amending, varying or
renegotiating in a way that is not insignificant to Corn Products in its
judgment exercised in good faith, or resulting in the termination or
cancellation of this Agreement or any Parent Company Ancillary Agreements;
(v) The Corporate Name License Agreement substantially in the form
contained in Exhibit B duly executed by Arinsa;
(vi) A Non-Competition Agreement substantially in the form
contained in Exhibit C duly executed by each of the Individuals listed on
Schedule 3.3;
(vii) A certificate to the effect of Section 8.1(a)(i) and (ii),
duly executed by the authorized officer of each Parent Company;
(viii) A copy of a signed resignation tendered by each of the
directors and officers of each of the Companies set forth on Schedule 3.4;
-17-
<PAGE> 25
(ix) A certificate representing one share of Arrendadora Gefemesa,
S.A. de C.V. duly endorsed for transfer to Corn Products;
(x) The Stockholder Agreement substantially in the form contained
in Exhibit D duly executed by the Parent Companies; and
(xi) The minute books and stock record books of the Joint Venture.
(b) Subject to fulfillment or waiver of the conditions set forth in
Section 8.2(b), at the First Put Closing Aralia shall deliver to Corn Products
all of the following:
(i) The minute books and stock record books of Aracorn;
(ii) Copies of the Certificate of Incorporation for Aralia and
Aracorn certified by a Mexican notary public as of a recent date; and
(iii) Certificate of the secretary or an assistant secretary of
Aralia, dated the First Put Closing Date, in form and substance reasonably
satisfactory to Corn Products, as to (A) no amendments to the by-laws of
Aralia except as provided therein, and (B) the continued existence of
Aralia.
(c) Subject to fulfillment or waiver of the conditions set forth in
Section 8.3(b), at the Second Put Closing Aralia shall deliver to Corn Products
all of the following:
(i) Copies of the Certificate of Incorporation for Aralia certified
as of a recent date; and
(ii) Certificate of the secretary or an assistant secretary of
Aralia dated the Second Put Closing Date, in form and substance reasonably
satisfactory to Corn Products, as to (A) no amendments to the by-laws of
Aralia except as provided therein, and (B) the continued existence of
Aralia.
3.5. PURCHASE PRICE ADJUSTMENT FOR EARNOUT. The Minority Share
Purchase Price shall be increased by the Earnout Payments, which Earnout
Payments shall be as follows:
(a) Prior to each of March 1, 2001, March 1, 2002 and March 1,
2003, Corn Products shall pay to Aralia an "Earnout Payment" equal to the
Composite Bonus Percentage (as defined below) determined as set forth below, for
the most recently ended Earnout Year multiplied by US$4,000,000 in the case of
Earnout Years 2000 and 2001 and US$4,500,000 in the case of Earnout Year 2002
(each, a "Target Amount") and shall deliver to Aralia a certificate setting
forth Corn Products' calculation of such amounts for such Earnout Year (an
"Earnout Notice"). Notwithstanding the previous sentence, no Earnout Payment
for any Earnout Year shall exceed US$5,000,000 or be less than US$3,000,000.
-18-
<PAGE> 26
(b) For purposes of determining the amount of each Earnout Payment,
the "Composite Bonus Percentage" for each Earnout Year shall be the average of
the percentage of each of the Target Bonuses (as defined below) earned by the
Chief Operating Officer and the Chief Executive Officer of Corn Products with
respect to such Earnout Year. The "Target Bonuses" shall be the bonuses payable
to such officers, respectively, in the event that 100% of the performance
targets determined in good faith by the Board of Directors of Corn Products are
achieved. Such performance targets shall be established no later than January
31 of the applicable Earnout Year. In the event no such performance target is
established for any Earnout Year, the performance target for the preceding
calendar year shall apply, provided that the Earnout Payment shall not be less
than the Target Amount for such Earnout Year.
(c) If Aralia disagrees with any calculation in the Earnout Notice
delivered pursuant to paragraph (a) above, Aralia may, within 30 Business Days
after the delivery of such Earnout Notice, deliver a notice of disagreement to
Corn Products setting forth Aralia's calculation of the disputed amounts. Any
such notice shall specify those items or amounts as to which Aralia disagrees,
and Aralia shall be deemed to have agreed to all other items and amounts
contained in the Earnout Notice. If Aralia fails to deliver a notice of
disagreement within such 30 Business Day period, Corn Products' Earnout Notice
shall be final and binding.
(d) If a notice of disagreement is timely delivered by Aralia
pursuant to Section 3.5(c), Corn Products and Aralia will use their good faith
best efforts to resolve any such disagreement. If, within 30 Business Days of
the date of receipt by Corn Products of Aralia's notice of disagreement, Corn
Products and Aralia are unable to resolve such disagreement, they shall promptly
thereafter appoint a firm of independent accountants of internationally
recognized standing (who shall not have any material relationship with Corn
Products or Aralia) promptly to review the disputed calculation of the Earnout
Payment, and to make their own calculation thereof. Such review shall not
include the validity or accuracy of any of the amounts used in calculating the
Earnout Payment, to the extent they are included in the audited financial
statements or the regularly maintained financial and accounting records of Corn
Products or the notes or schedules thereto. Such independent accountants shall,
as promptly as practicable, deliver a calculation of the Earnout Payment and a
report thereof to Corn Products and Aralia, and the calculation of the Earnout
Payment effected by such independent accountant shall be final and binding on
all Parties. The cost of such independent accountant shall be borne equally by
Corn Products, on the one hand, and Aralia, on the other.
(e) Upon final determination of any Earnout Payment with respect to
any Earnout Year, Corn Products shall deliver to Aralia the amount of the
shortfall, if any, so determined, together with interest thereon at the Agreed
Rate from the date that the Earnout Payment was otherwise payable to the date of
payment.
(f) In the event that a Corn Products Change in Control shall occur
prior to the last date upon which any one or more Earnout Payments shall be
payable hereunder, such remaining Earnout Payment or Payments shall be payable
to Aralia promptly, but in no event later
-19-
<PAGE> 27
than 10 Business Days, following the occurrence of such Corn Products Change of
Control, and if the amount of such remaining Earnout Payment or Payments cannot
be determined at the time as provided in Section 3.5(b) above, the amount of
each remaining Earnout Payment or Payments shall be the Target Amount for the
relevant Earnout Year.
(g) Set forth on Schedule 3.5(g), for illustrative purposes only,
is an example of the method for calculating the Earnout Payment.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PARENT COMPANIES
The Parent Companies, jointly and severally, represent and warrant
as of the date hereof and as of the Initial Closing Date to Corn Products as
follows:
4.1. DUE INCORPORATION. (a) Each of the Parent Companies is a
corporation duly incorporated and organized and validly existing under the laws
of the Republic of Mexico and has all necessary corporate power and authority to
own, lease and operate its properties and to conduct its business as and in the
places where such properties are now owned, leased or operated or such business
is now conducted.
(b) Aracorn is a corporation duly incorporated and organized and
validly existing under the laws of the Republic of Mexico. Poliecsa is a
corporation duly incorporated and organized and validly existing under the laws
of the Republic of Ecuador.
(c) The Joint Venture is a corporation duly incorporated and
organized and validly existing under the laws of the Republic of Mexico.
(d) Each of the Companies has all necessary corporate power and
authority to own, lease and operate its properties and to conduct its business
as and in the places where such properties are now owned, leased or operated or
such business is now conducted. Parent Companies have delivered to Corn
Products true and complete copies of each Company's Articles of Incorporation,
as in effect on the date hereof, and Bylaws, as in effect on the date hereof.
4.2. DUE AUTHORIZATION. (a) Each of the Parent Companies has the
necessary corporate power and authority to enter into and deliver this Agreement
and the Parent Company Ancillary Agreements to which it is or will be a party
and to perform its obligations hereunder and thereunder. The execution and
delivery of this Agreement and the Parent Company Ancillary Agreements by Arinsa
and Aralia, as the case may be, and the performance by each of them of their
respective obligations hereunder and thereunder have been duly authorized by all
necessary corporate action on their parts. Except for the authorization of the
Mexican Foreign Investment Commission and the notification to the Mexican
Federal Competition Commission as set forth in
-20-
<PAGE> 28
Section 6.6, and the filings under the HSR Act pursuant to Section 6.9, and
except as set forth in Schedule 4.4, such execution, delivery and performance by
each of the Parent Companies does not require any action or consent of, any
registration with, or notification to, any Person or Individual, or any action
or consent under any Laws to which any of them is subject, which, if not
obtained or made would be material to any of the Companies or the transactions
contemplated by this Agreement.
(b) Except as set forth in Schedule 4.4, no approvals or consents
are required to be obtained from any Person or Individual pursuant to any
material contracts, agreements, indentures, instruments or commitments to which
any of the Parent Companies or the Companies or any of their Subsidiaries, as
the case may be, is a party or by which it is bound.
4.3. ENFORCEABILITY. This Agreement constitutes, and the Parent
Company Ancillary Agreements that are intended to constitute binding obligations
will constitute, legal, valid and binding obligations of each of the Parent
Companies who is a party hereto or thereto, enforceable against each of them in
accordance with their terms subject, however, to limitations with respect to
enforcement imposed by Bankruptcy and other Laws affecting creditors' rights
generally.
4.4. NO CONFLICT. Except as set forth in Schedule 4.4, the
execution and delivery of this Agreement and the Parent Company Ancillary
Agreements, the consummation of the transactions contemplated herein and therein
and the performance by each of the Parent Companies of their obligations
hereunder and thereunder and the compliance by each of them with the provisions
hereof and thereof do not or will not:
(a) violate, contravene or breach, or constitute a default under,
(i) the instruments of incorporation or by-laws of either Parent Company
or any of the Companies, or (ii) any Laws;
(b) violate, contravene or breach, or constitute a default under,
any material contract, agreement, indenture, instrument, or commitment to
which any of the Parent Companies, any of the Companies or any of their
Affiliates may be a party, or their properties may be subject, or by which
any of them are bound;
(c) result in the creation of, or require the creation of, any
material Lien upon any property of either of the Parent Companies or any
of the Companies or their Subsidiaries;
(d) result in the loss of any material license, permit,
registration or certificate held by any of the Companies or any of their
Subsidiaries; or
(e) result in, or give any Person or Individual the right to cause,
(i) the termination, cancellation, modification, amendment, variation or
renegotiation of any material contract, agreement, indenture, instrument
or commitment to which any of the
-21-
<PAGE> 29
Parent Companies or any of the Companies or their Subsidiaries may be a
party or by which any of them are bound or their properties affected, or
(ii) the acceleration or forfeiture of any term of payment, or (iii) the
loss in whole or in material part of any material benefit which would
otherwise accrue to, or be to the benefit of, either of the Parent
Companies or any of the Companies or their Subsidiaries.
4.5. AUTHORIZED AND ISSUED CAPITAL. The authorized capital of each
of the Companies consists only of the number of shares reflected in Schedule 4.5
(and no more), which are duly and validly subscribed and issued to the Parties
listed in Schedule 4.5 and, other than shares of the Companies owned by Corn
Products, are outstanding as fully paid and non-assessable and are not subject
to any preemptive rights.
4.6. NO SUBSIDIARIES. (a) The Companies do not, and will not upon
the Initial Closing, own, directly or indirectly, any shares of the capital
stock of any Person and have not made any equity investment in, and do not have
any equity interest in, any Person, except as specifically reflected herein in
Schedule 4.6.
(b) Schedule 4.6 sets forth a true and complete list of the names
and addresses of each of the holders of record of capital stock of each of the
Subsidiaries of the Companies and the respective number of outstanding shares or
other equity interests held by each such holder; each such holder which is the
Company or a Subsidiary thereof is the beneficial owner and holder of record
with good and valid title, free and clear of all Liens, of all of such capital
stock or other equity interests.
4.7. TITLE TO SHARES. Arinsa is the beneficial owner and holder of
record with good and valid title, free and clear of all Liens, of all of the
Arinsa JV Shares and all of the Poliecsa Shares. Aralia is the beneficial owner
and holder of record with good and valid title, free and clear of all Liens, of
all of the Aracorn Minority Shares, the 26.6% Shares and the 24.4% Shares.
4.8. NO OPTIONS. Other than agreements to which Corn Products or
its Affiliates are parties, there is no: (a) outstanding security of any of the
Companies convertible or exchangeable into any share or shares of the capital
stock of such Company; (b) outstanding subscription, option, call, commitment or
other agreement obligating any of the Companies to issue any share or shares of
its capital stock or any security or securities of any class or kind which in
any way relate to the authorized or issued capital stock of such Company; (c)
agreement which grants to any Person or Individual the right to purchase or
otherwise acquire any share or shares issued and outstanding or otherwise, of
the capital stock of any of the Companies; or (d) voting trust or proxy with
respect to any shares of the capital stock of any of the Companies.
4.9. PROCEEDINGS PERTAINING TO SHARES. There are no actions,
suits, claims, trials, demands, investigations, arbitrations or other
proceedings on behalf of or against either of the Parent Companies or any of the
Companies pending or, to the knowledge of the Parent
-22-
<PAGE> 30
Companies, threatened with respect to, any of the Arinsa JV Shares, the Aracorn
Minority Shares, the 26.6% Shares, the 24.4% Shares or the Poliecsa Shares.
4.10. CORPORATE RECORDS. Except as set forth in Schedule 4.10, the
minute books and registers of shareholders of the Companies are complete and
accurate.
4.11. FINANCIAL STATEMENTS. (a) The Financial Statements of each
of the Parent Companies were prepared in good faith and fairly present, in
accordance with Accounting Principles applied, except as described on Schedule
4.11(a), on a basis consistent with the prior period for the Person or its
predecessor and throughout the period involved, the financial position of each
of the Parent Companies, all as of the dates and for the periods therein
specified (subject to normal year-end adjustments in the case of any unaudited
interim financial statements).
(b) The Financial Statements of each of the Companies were prepared
in good faith and fairly present, in accordance with Accounting Principles
applied, except as described on Schedule 4.11(b), on a basis consistent with the
prior period, if any, for the Person or its predecessor and throughout the
period involved, the financial position of each of the Companies as of the dates
and for the periods therein specified (subject to normal year-end adjustments in
the case of any unaudited interim financial statements).
4.12. LIABILITIES. (a) Except as set forth in Schedule 4.12(a),
Aracorn does not have any liabilities or obligations (absolute, accrued or
contingent), which in any such case are required by Accounting Principles to be
reflected in a balance sheet or reflected in the notes thereto except for those
liabilities or obligations: (i) reflected in or reserved against in the
September 30, 1998 Financial Statements; or (ii) incurred after September 30,
1998 in the ordinary course of business.
(b) Except as set forth in Schedule 4.12(b), neither Poliecsa, nor,
to the knowledge of the Parent Companies, the Joint Venture have any
liabilities or obligations (absolute, accrued or contingent), which in any such
case are required by Accounting Principles to be reflected in a balance sheet or
reflected in the notes thereto except for those liabilities or obligations: (i)
reflected in or reserved against in the September 30, 1998 Financial Statements;
or (ii) incurred after September 30, 1998 in the ordinary course of business.
4.13. PROPERTY. Except as disclosed in Schedule 4.13 and except for
Permitted Encumbrances, each of the Companies and each of their Subsidiaries
has: (a) good, valid and marketable title, free and clear of any and all Liens,
to all of its immoveable property currently used and owned for the conduct of
its business, and (b) good and valid title, free and clear of any and all Liens,
to all moveable property presently used to conduct its business and reflected on
the September 30, 1998 Financial Statements or which has been acquired on or
after the date of the September 30, 1998 Financial Statements (other than such
moveable property consumed or disposed of after such date, in the ordinary
course of business and in a manner consistent with past practice). For all
immovable property leased by any of the Companies or their Subsidiaries,
-23-
<PAGE> 31
such Company or Subsidiary is entitled to the use and possession of the leased
immovable property and has complied with all conditions of the relevant lease
agreements.
4.14. CONDITION. (a) Except as set forth in Schedule 4.14(a), all
of the immovables, buildings, structures, appurtenances, leasehold improvements,
equipment, machinery, rolling stock and other tangible properties of Poliecsa
are: (i) in reasonable operating condition and repair, ordinary wear and tear
excepted, (ii) not in need of substantial maintenance or repairs (except for
ordinary or routine maintenance or repairs that are not material in nature or
costs), (iii) adequate and sufficient for the continuing conduct of the business
of Poliecsa as now conducted, and (iv) free of structural or non-structural
defects to the buildings on such properties and all of the utilities serving
such buildings are in good working order.
(b) Except as set forth in Schedule 4.14(a), to the knowledge of
the Parent Companies, all of the immovables, buildings, structures,
appurtenances, leasehold improvements, equipment, machinery, rolling stock and
other tangible properties of the Joint Venture and its Subsidiaries are: (A) in
reasonable operating condition and repair, ordinary wear and tear excepted, (B)
not in need of substantial maintenance or repairs (except for ordinary or
routine maintenance or repairs that are not material in nature or costs), (C)
adequate and sufficient for the continuing conduct of the business of such
Company as now conducted, and (D) free of structural or non-structural defects
to the buildings on such properties and all of the utilities serving such
buildings are in good working order.
4.15. INTELLECTUAL PROPERTY RIGHTS. (a) Except as set forth in
Schedule 4.15, to the knowledge of the Parent Companies, the Intellectual
Property Rights have not been opposed or held unenforceable. Except as set
forth in Schedule 4.15, Aracorn, the Joint Venture or Poliecsa is the sole and
exclusive owner of, with the sole and exclusive right to use, the Intellectual
Property Rights owned or used by such Company or its Subsidiaries in Mexico or,
with respect to Poliecsa in Ecuador, and, except as set forth in Schedule 4.15,
there is no license or sub-license to which any Company or any Arancia Entity is
a party affecting the exercise of such Intellectual Property Rights in Mexico
or, with respect to Intellectual Property Rights owned or used by Poliecsa,
Ecuador. To the knowledge of the Parent Companies, no Person or Individual has
asserted that the operations of any of the Companies, other than pursuant to an
intellectual property right licensed or otherwise made available by Corn
Products to the Joint Venture, infringe upon the intellectual property rights of
such Person or Individual.
(b) Except as set forth in Schedule 4.15, all Intellectual Property
Rights are owned by Aracorn, the Joint Venture, or Poliecsa free and clear of
all Liens. The Intellectual Property Rights that are owned by Aracorn are
listed on Schedule 4.15.
4.16. PRODUCT LIABILITY. Except as set forth in Schedule 4.16, all
products which have been sold through any of the Companies or their Subsidiaries
have been merchantable and free from defects in material or workmanship for the
term of any applicable warranties and under the conditions of any express or
implied warranties arising under Law and as set forth in standard
-24-
<PAGE> 32
warranties, if any. Except as disclosed in Schedule 4.16 hereto, during the
last two years, none of the Companies or any of their Subsidiaries have received
any claims based on alleged breach of product warranty arising from any
applicable manufacture or sale of their products.
4.17. INSURANCE. Schedule 4.17 lists each insurance policy, other
than policies with limits of less than $1,000,000, to which any of the Companies
or any of their Subsidiaries are a party, a named insured or otherwise the
beneficiary of coverage. Neither the Companies nor any party to such insurance
policies is in breach or default and no event has occurred which, with notice or
lapse of time, would constitute a breach or default or permit termination,
modification, or acceleration of the policy. Neither of the Parent Companies
nor any of the Companies has received any notice of termination of any such
policies and there is no pending termination of insurance under such policies.
4.18. BANK ACCOUNTS; POWERS OF ATTORNEY. Schedule 4.18 sets forth:
(a) the name of each Person with whom any of the Companies or any of their
Subsidiaries maintains an account or safety deposit box, and (b) the name of
each Person or Individual holding a general power of attorney for any of the
Companies or any of their Subsidiaries.
4.19. LITIGATION. (a) Except as set forth in Schedule 4.19, there
are no: (1) actions, suits, claims, trials, injunctions, demands,
investigations, arbitrations, and other proceedings involving the Parent
Companies or any of the Companies or their Subsidiaries, pending against or, to
the knowledge of the Parent Companies, threatened against, any of the Companies
or their properties or Business, or (2) outstanding judgments, orders, decrees,
writs, injunctions, decisions, rulings or awards against, or with respect to,
any of the Companies or their Subsidiaries or their properties or Business.
(b) There is no action, suit, investigation or proceeding pending
against, or to the knowledge of Parent Companies threatened against, any of the
Arancia Entities before any court or arbitrator or any governmental body, agency
or official which in any manner challenges or seeks to prevent, enjoin, alter or
materially delay the transactions contemplated by this Agreement.
4.20. NO DEFAULT UNDER MATERIAL CONTRACTS. Schedule 4.20 provides
a list of all contracts of the Companies or any of their Subsidiaries that
either: (a) involve amounts in excess of US$1 million or (b) involve amounts in
excess of US$100,000 and have a duration in excess of one year (the "Company
Agreements"). Each of the Companies and their Subsidiaries, as applicable: (i)
is in compliance with and entitled to all benefits under, (ii) has substantially
performed all obligations required to be performed under, and (iii) is not in
default under, or in breach of, any of the Company Agreements binding upon them.
All such contracts are valid and enforceable. Except as set forth on Schedule
4.20, to the knowledge of the Parent Companies, there exists no fact, condition
or circumstance which, after notice or lapse of time or both, would constitute a
default or breach of any Company Agreement.
-25-
<PAGE> 33
4.21A. ARACORN TAX MATTERS. (a) Aracorn will timely file for every
taxable year or taxable period ending on or including the Initial Closing Date
and the First Put Closing Date, all Tax Returns that it is required to file, and
all such Tax Returns are, or will be, true, correct and complete in all
respects. Aracorn has paid, or has made adequate provisions in its Financial
Statements (or, in the case of Taxes accruing after September 30, 1998, in its
accounting records) for all Taxes as required by Accounting Principles. Aracorn
has not requested any extensions of time within which to file any Tax Returns,
which Tax Returns have not since been filed. There are no Liens for Taxes on
the assets of Aracorn other than statutory Liens for current Taxes not yet due.
(b) Aracorn has complied with all applicable Laws relating to the
payment and withholding of Taxes and has, within the manner prescribed by
applicable Law, withheld from its past and present employees, shareholders,
directors, officers, customers and any other applicable Persons or Individuals,
and paid over to the appropriate Taxing Authority, all Taxes required to be
withheld and paid over.
(c) Except as set forth in Schedule 4.21A;
(i) Aracorn has not waived any statute of limitations or otherwise
agreed to any extension of time with respect to an assessment or
collection of Taxes;
(ii) No audits or other administrative or court proceedings are
presently pending with regard to Taxes of Aracorn, nor do of the Parent
Companies have knowledge of any such impending audit not yet undertaken;
(iii) No deficiency for any Taxes of Aracorn has been proposed,
asserted or assessed against Aracorn which has not been resolved and paid
in full;
(iv) Aracorn has no liability with respect to Taxes of any
Affiliate; and
(v) Aracorn is not a party to any Tax Sharing Agreement.
(d) No Taxes have been imposed or will be imposed on Aracorn or the
Joint Venture relating to or arising from the formation of Aracorn or the
transfer of any assets to Aracorn.
4.21B. POLIECSA AND JOINT VENTURE TAX MATTERS. (a) Each of
Poliecsa and the Joint Venture has timely filed, and will timely file for every
taxable year or taxable period ending on or including the Initial Closing Date
all Tax Returns that it is required to file, and all such Tax Returns are, or
will be, true, correct and complete in all respects. Each of Poliecsa and the
Joint Venture has paid, or has made adequate provisions in its Financial
Statements (or, in the case of Taxes accruing after September 30, 1998, in its
accounting records) for, all Taxes as required by Accounting Principles. None
of Poliecsa and the Joint Venture has requested any extensions of
-26-
<PAGE> 34
time within which to file any Tax Returns, which Tax Returns have not since been
filed. There are no Liens for Taxes on the assets of any of Poliecsa and the
Joint Venture other than statutory Liens for current Taxes not yet due.
(b) Each of Poliecsa and the Joint Venture has complied with all
applicable Laws relating to the payment and withholding of Taxes and has, within
the manner prescribed by applicable Law, withheld from its past and present
employees, shareholders, directors, officers, customers and any other applicable
Persons or Individuals, and paid over to the appropriate Taxing Authority, all
Taxes required to be withheld and paid over.
(c) Except as set forth in Schedule 4.21B;
(i) None of Poliecsa and the Joint Venture has waived any statute
of limitations or otherwise agreed to any extension of time with respect
to an assessment or collection of Taxes;
(ii) No audits or other administrative or court proceedings are
presently pending with regard to Taxes of Poliecsa or the Joint Venture,
and neither of the Parent Companies has knowledge of any such impending
audit not yet undertaken;
(iii) No deficiency for any Taxes of Poliecsa or the Joint Venture
has been proposed, asserted or assessed against any of Poliecsa and the
Joint Venture which has not been resolved and paid in full;
(iv) None of Poliecsa and the Joint Venture has any liability with
respect to Taxes of any Affiliate; and
(v) None of Poliecsa and the Joint Venture is a party to any Tax
Sharing Agreement.
4.22. EMPLOYEE MATTERS. The Parent Companies have delivered to
Corn Products a complete and accurate list of all employees as of September 30,
1998 of the Companies and their Subsidiaries together with years of service.
Schedule 4.22 provides a description of any collective bargaining agreement or
other labor contract which is applicable to any of the Companies or any of their
Subsidiaries. To the knowledge of the Parent Companies no fact, condition or
circumstance exists which could reasonably be expected to provide the basis for
any work stoppage or other labor dispute. Each of the Companies and each of
their Subsidiaries has complied with all applicable employment Laws and does not
have any obligation in respect of any amount due to employees of such Company or
Subsidiary, other than normal salary, other fringe benefits accrued but not
payable on the date hereof and unused vacation benefits.
4.23. BENEFIT PLANS. Except as set forth in Schedule 4.23, the
Companies have no Benefit Plans. With respect to the Benefit Plans listed in
Schedule 4.23, true and correct copies
-27-
<PAGE> 35
of the said Benefit Plans have heretofore been delivered to Corn Products, all
required contributions and premiums have been paid thereunder, no promise or
commitment to increase benefits thereunder has been made except as required by
Law, no event has occurred which could subject any of the Companies or any of
their Subsidiaries or the seniority premium fund of the Joint Venture to any
tax, penalty or other liability in connection therewith, there are no unfunded
liabilities with respect to such Benefit Plans and no payments under any
employee benefit plans, programs or arrangements will be triggered as a result
of the transactions contemplated by this Agreement or any other agreement
entered into pursuant hereto.
4.24. COMPLIANCE WITH LAWS. Except as set forth in Schedule 4.24,
and except for the matters relating to the environment and its protection, each
of the Companies and each of their Subsidiaries is in compliance with all Laws.
Without limiting the generality of the foregoing, each of the Companies and each
of their Subsidiaries has complied with all Laws relating to health, product
safety, quality assurance, employment, occupational safety and public health.
4.25. COMPLIANCE WITH ENVIRONMENTAL LAWS. Except as set forth in
Schedule 4.25, each of Aracorn and the Joint Venture and each of their
Subsidiaries is in compliance with all applicable Mexican Laws relating to the
environment and its protection and Poliecsa and each of its Subsidiaries is in
compliance with Ecuadorian Laws relating to the environment and its protection.
Except as indicated in Schedule 4.25: (a) there have been no governmental
claims, citations, notices of violation, judgements, decrees or orders issued
against any of the Companies or any of their Subsidiaries for impairment or
damage, injury or adverse effect to the environment or public health or, to the
knowledge of the Parent Companies, there have been no private complaints on such
matters; (b) there is no condition relating to any properties of any of the
Companies or any of their Subsidiaries that would require any type of remedial,
clean-up, response or other action under applicable Mexican Law or, with respect
to Poliecsa and its Subsidiaries, Ecuadorian Law; and (c) each of the Companies
and each of their Subsidiaries has complied with existing Mexican Law or, with
respect to Poliecsa and its Subsidiaries, Ecuadorian Law in the generation,
treatment, storage and disposal of toxic and hazardous substances, as defined
under existing Law.
4.26. LICENSES AND PERMITS. Each of the Companies and each of
their Subsidiaries has obtained all licenses, permits, registrations and
certificates necessary to conduct its business as now operated and all such
licenses, permits, registrations and certificates are in full force and effect.
Each of the Companies and each of their Subsidiaries, as applicable, has
complied with the terms and requirements of such licenses, permits,
registrations and certificates.
4.27. ORDINARY COURSE. Except as set forth in Schedule 4.27, and
except for transactions contemplated hereunder, since September 30, 1998, each
Company and each of its Subsidiaries has conducted its business and affairs in
the ordinary course and in a manner consistent with past practices.
-28-
<PAGE> 36
4.28. STAND ALONE. Except as set forth in Schedule 4.28, (a) no
part of the Business of any of the Companies is conducted through any Person or
Individual other than such Company or its wholly-owned Subsidiaries, and (b) the
assets owned, leased or licensed by the Companies and their Subsidiaries
constitute all of the assets used or held for use in the Business of the
Companies.
4.29. COPIES. All copies of documents provided or caused to be
provided by either of the Parent Companies or any of the Companies at the
direction of the Parent Companies to Corn Products or its legal, accounting and
other representatives are true, complete and correct copies of the originals.
4.30. RELATIONSHIPS WITH AFFILIATES. Except as set forth in
Schedule 4.30: (a) none of the Parent Companies or their Affiliates have, and
none of their directors or officers and no Arancia Entity has, any interest in
any property, immovable or movable, tangible or intangible, used or held for use
by the business of any of the Companies; (b) none of the Parent Companies or
their Affiliates, and none of their directors or officers and no Arancia Entity,
owns of record or beneficially, any equity interest (other than equity interests
of less than 5% in the aggregate of any class of capital stock of any
corporation if such stock is publicly traded and listed on any national or
regional stock exchange or on the Nasdaq National Market) or any other interest
in any Person (i) which has, or within the past three years had, business
dealings with any of the Companies or any of their Subsidiaries other than
business dealings or transactions which are or were conducted in the ordinary
course of business with such Company or such Subsidiary and at ordinary
prevailing market prices and on ordinary prevailing market terms or (ii) which
is in competition with any of the Companies in the Mexican market or, with
respect to Poliecsa, the Ecuadorian market with respect to any line of the
products or services of any of the Companies; and (c) since December 31, 1996
there have been no transactions between any of the Companies or any of their
Subsidiaries and any Arancia Entity other than business dealings or transactions
which are or were conducted in the ordinary course of business with such Company
or Subsidiary of such Company and at ordinary prevailing market prices and on
ordinarily prevailing terms. Neither of the Parent Companies or any Arancia
Entity nor any of their Affiliates has any claim against any of the Companies or
any Subsidiaries of the Companies.
4.31. INVESTMENT REPRESENTATION. The Consideration Shares are
being acquired by Aralia for its own account for investment, and not with a view
to the sale or distribution of any part thereof without registration under the
Securities Act or pursuant to an applicable exemption therefrom.
4.32. U.S. ANTITRUST COMPLIANCE. (a) The Joint Venture, together
with all entities controlled by the Joint Venture, do not hold assets (other
than investment assets) located in the United States having an aggregate book
value of US$15 million or more.
-29-
<PAGE> 37
(b) The Joint Venture, together with all entities controlled by the
Joint Venture, did not make sales in or into the United States of US$25 million
or more in the most recent fiscal year.
4.33. NO FINDER. Except as set forth on Schedule 4.33, neither the
Parent Companies nor any party acting on their behalf has paid or become
obligated to pay any fee or commission to any broker, finder or intermediary for
or on account of the transactions contemplated by this Agreement or any of the
other agreements or instruments contemplated hereby.
4.34. NO OTHER REPRESENTATIONS. Corn Products acknowledges that
the Parent Companies do not make any representation or warranty with respect to
(i) any projections, estimates or budgets delivered to or made available to Corn
Products of future revenues, future results of operations (or any component
thereof), future cash flows, or future financial condition (or any component
thereof) of any of the Parent Companies, the Companies and their respective
Subsidiaries or (ii) any other information or documents made available to Corn
Products and its counsel, accountants or advisors with respect to any of the
Parent Companies, the Companies or their respective Subsidiaries or their
respective businesses or operations, except as expressly set forth in this
Agreement.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF CORN PRODUCTS
Corn Products hereby represents and warrants as of the date hereof
and as of the Initial Closing Date to the Parent Companies as follows:
5.1. DUE INCORPORATION. Corn Products is a corporation duly
incorporated and organized and validly existing under the laws of the State of
Delaware, United States of America, and has all necessary corporate power and
authority to own, lease and to operate its properties and to conduct its
business as and in the places where such properties are now owed, leased or
operated or such business is now conducted.
5.2. DUE AUTHORIZATION. Corn Products has the necessary corporate
power and authority to enter into and deliver this Agreement and the Corn
Products Ancillary Agreements and to perform its obligations hereunder or
thereunder. The execution and delivery of this Agreement and the Corn Products
Ancillary Agreements by Corn Products and the performance by Corn Products of
its obligations hereunder and thereunder have been duly authorized by all
necessary corporate action. Except for the authorization of the Mexican Foreign
Investment Commission and notification to the Mexican Federal Competition
Commission and as set forth in Section 6.6, and the filings under the HSR Act
pursuant to Section 6.9, such execution, delivery and performance by Corn
Products does not require any action or consent of, any registration
-30-
<PAGE> 38
with, or notification to, any Person or Individual, or any action or consent
under any Laws to which Corn Products is subject. No approvals or consents are
required to be obtained from any Person or Individual pursuant to any contracts,
agreements, indentures, instruments or commitments to which Corn Products is a
party or by which it is bound, which, if not obtained or made would be material
to Corn Products or the transactions contemplated by this Agreement.
5.3. ENFORCEABILITY. This Agreement constitutes, and the Corn
Products Ancillary Agreements that are intended to be binding obligations will
constitute, legal, valid and binding obligations of Corn Products, enforceable
against Corn Products in accordance with their terms subject, however, to
limitations with respect to enforcement imposed by Bankruptcy and other Laws
affecting creditors' rights generally.
5.4. NO CONFLICT. Except as set forth in Schedule 5.4, the
execution and delivery of this Agreement and the execution and delivery of the
Corn Products Ancillary Agreements, the consummation of the transactions
contemplated herein and therein and the performance by Corn Products of its
obligations hereunder and thereunder and the compliance by Corn Products with
the provisions hereof and thereof do not or will not:
(a) violate, contravene or breach, or constitute a default under,
(i) the instruments of incorporation or by-laws of Corn Products, or (ii)
any Laws:
(b) violate, contravene or breach, or constitute a default under,
any material contract, agreement, indenture, instrument, or commitment to
which Corn Products or any of its Affiliates may be a party, or their
properties may be subject, or by which any of them are bound;
(c) result in the creation of, or require the creation of, any
material Lien upon any property of Corn Products; or
(d) result in, or give any Person or Individual the right to cause,
(i) the termination, cancellation, modification, amendment, variation or
renegotiation of any material contract, agreement, indenture, instrument
or commitment to which Corn Products may be a party or by which Corn
Products is bound or its properties affected, or (ii) the acceleration or
forfeiture of any term of payment, or (iii) the loss in whole or in
material part of any material benefit which would otherwise accrue to, or
be to the benefit of, Corn Products.
5.5. INVESTMENT REPRESENTATION. The Arinsa JV Shares, the Aracorn
Minority Shares and the Poliecsa Shares (and if acquired, the 24.4% Shares and
the 26.6% Shares) are being acquired by Corn Products for its own account for
investment, and not with a view to the sale or distribution of any part thereof
without registration under the Securities Act or pursuant to an applicable
exemption therefrom.
-31-
<PAGE> 39
5.6. CONSIDERATION SHARES. The issuance of the Consideration
Shares in connection with the transactions contemplated hereby has been duly
authorized on behalf of Corn Products and such shares, when issued pursuant to
this Agreement, will be duly and validly issued and outstanding, fully paid and
nonassessable and free of preemptive rights.
5.7. NO FINDER. Except as set forth on Schedule 5.7, neither Corn
Products nor any party acting on behalf of Corn Products has paid or become
obligated to pay any fee or commission to any broker, finder or intermediary for
or on account of the transactions contemplated by this Agreement or any of the
other agreements or instruments contemplated hereby.
5.8. SEC REPORTS. Corn Products has filed all required reports,
proxy statements, registration statements, forms and other documents with the
Commission since January 1, 1998 (the "Corn Products SEC Documents"). As of
their respective dates, and giving effect to any amendments thereto filed prior
to the date of this Agreement, the Corn Products SEC Documents complied or, in
the case of any reports, proxy statements, registration statements, forms or
other documents filed by Corn Products with the Commission after the date of
this Agreement, will comply in all material respects with the requirements of
the Securities Act or the Exchange Act, as the case may be, and the applicable
rules and regulations of the Commission promulgated thereunder and none of the
Corn Products SEC Documents contained or, in the case of any reports, proxy
statements, registration statements, forms or other documents filed by Corn
Products with the Commission after the date of this Agreement, will contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading.
5.9. FINANCIAL STATEMENTS. The audited consolidated balance sheet
as of December 31, 1997 and the related audited consolidated statements of
income and cash flows for the year ended December 31, 1997 and the unaudited
interim consolidated balance sheet for the six months ended June 30, 1998 and
the related unaudited interim consolidated statements of income and cash flows
for the six months ended June 30, 1998 of Corn Products and its Subsidiaries
were prepared in good faith and fairly present, in conformity with Accounting
Principles the consolidated financial position of Corn Products and its
Subsidiaries as of the dates thereof and their consolidated results of
operations and cash flows for the period then ended (subject to normal year-end
adjustments in the case of any unaudited interim financial statements) applied
on a basis consistent with the prior period for the Person or its predecessor
and throughout the period involved.
5.10. LITIGATION. (a) There is no action, suit, investigation or
proceeding pending against, or to the knowledge of Corn Products threatened
against, Corn Products before any court or arbitrator or any governmental body,
agency or official which in any manner challenges or seeks to prevent, enjoin,
alter or materially delay the transactions contemplated by this Agreement.
-32-
<PAGE> 40
(b) Except as set forth on Schedule 5.10(b), there are no (i)
actions, suits, claims, trials, injunctions, demands, investigations,
arbitrations, and other proceedings involving Corn Products or its Subsidiaries
pending against or, to the knowledge of Corn Products, threatened against, Corn
Products or its Subsidiaries or its or their properties or business, or (ii)
outstanding judgments, orders, decrees, writs, injunctions, decisions, rulings
or awards against, or with respect to, Corn Products or its Subsidiaries or its
or their business, that, in either case, (A) have not been reflected in the Corn
Products SEC Documents, and (B) Corn Products believes will be required to be
disclosed in Corn Products Quarterly Report on Form 10-Q for the quarter ended
September 30, 1998.
5.11. SUBSEQUENT LIABILITIES. Except as set forth on Schedule 5.11
or as otherwise disclosed to the Parent Companies by Corn Products in writing,
Corn Products does not have any liabilities or obligations (absolute, accrued or
contingent), which in any such case are required by Accounting Principles to be
reflected in a balance sheet or the notes thereto, except for (i) those
reflected in the financial statements contained in the Corn Products SEC
Documents, or (ii) incurred after June 30, 1998 in the ordinary course of
business.
5.12. NO OTHER REPRESENTATIONS. Each of the Parent Companies
acknowledges that Corn Products does not make any representation or warranty
with respect to (i) any projections, estimates or budgets delivered to or made
available to the Parent Companies of future revenues, future results of
operations (or any component thereof), future cash flows, or future financial
condition (or any component thereof) of Corn Products and its Subsidiaries or
(ii) any other information or documents made available to the Parent Companies
and their counsel, accountants or advisors with respect to Corn Products or its
Subsidiaries or their respective businesses or operations, except as expressly
set forth in this Agreement.
ARTICLE VI
ACTION PRIOR TO THE CLOSING DATES
The respective parties hereto covenant and agree to take the
following actions between the date hereof and the applicable Closing Date:
6.1. EXAMINATION OF CORN PRODUCTS AND THE COMPANIES. Subject to
the terms of the letter agreement dated as of August 3, 1998 between Arinsa and
Corn Products (the "Confidentiality Agreement"), from the date hereof up to the
Initial Closing Date, the Parent Companies and each of the Companies shall
afford to Corn Products and its legal, accounting, engineering, environmental
and other representatives access during normal business hours (without undue
interference to the ordinary conduct of the business of the Companies) to (a)
the Companies and their affairs, business, properties, documents, records and
written materials, and (b) all executive personnel and auditors of the Companies
to consult with them in respect of (i)
-33-
<PAGE> 41
affairs, business and properties of each of the Companies and the manner in
which they are conducted, held or used and (ii) any questions raised by the
examination made by Corn Products and their representatives pursuant to this
Section 6.1. Nothing contained herein shall be deemed to limit any rights Corn
Products may have by virtue of its current interest in the Joint Venture.
6.2. PRESERVE ACCURACY OF REPRESENTATIONS AND WARRANTIES. Each of
the parties hereto shall refrain from taking any action which would render any
representation or warranty made by such party in this Agreement inaccurate as of
the Initial Closing Date. Each party shall promptly notify the other of any
action, suit or proceeding that shall be instituted or threatened against such
party to restrain, prohibit or otherwise challenge the legality of any
transaction contemplated by this Agreement. The Parent Companies shall promptly
notify Corn Products of (i) any lawsuit, claim, proceeding or investigation that
may be threatened, brought, asserted or commenced against any of the Companies
which would have been listed in Schedule 4.19 if such lawsuit, claim, proceeding
or investigation had arisen prior to the date hereof and (ii) any other event or
matter which becomes known to either Parent Company and would cause any other
representation or warranty contained in Article IV to be untrue in any material
respect. Corn Products shall promptly notify the Parent Companies of (i) any
lawsuit, claim, proceeding or investigation that may be threatened, brought,
asserted or commenced against Corn Products which would have been listed on
Schedule 5.10(b) if such lawsuit, claim, proceeding or investigation had arisen
prior to the date hereof and (ii) any other event which becomes known to Corn
Products and would cause any other representation or warranty contained in
Article V to be untrue in any material respect.
6.3. CONSENTS OF THIRD PARTIES; GOVERNMENTAL APPROVALS. (a) The
Parent Companies will (and will cause the Companies to) act diligently and
reasonably to secure, before the Initial Closing Date, the consents, approvals
and waivers, in form and substance reasonably satisfactory to Corn Products, set
forth on Schedule 4.4, provided that (i) none of the Parent Companies, the
Companies or Corn Products shall have any obligation to offer or pay any
consideration in order to obtain any such consents or approvals, and (ii)
neither Parent Company nor any of the Companies shall make or permit any
Subsidiary to make any agreement or understanding affecting the assets or
business of any of the Companies or its Subsidiaries as a condition for
obtaining any such consents or waivers except with the prior written consent of
Corn Products. During the period prior to the applicable Closing Date, Corn
Products shall act diligently and reasonably to cooperate with the Parent
Companies and the Companies to obtain the consents, approvals and waivers
contemplated by this Section 6.3(a).
(b) During the period prior to the applicable Closing Date, the
Parent Companies and Corn Products shall (and the Parent Companies shall cause
the Companies to) act diligently and reasonably, and shall cooperate with each
other, in making any required filing or notification and in securing any
consents and approvals of any Governmental Body required to be obtained by them
in order to permit the consummation of the transactions contemplated by this
Agreement or any of the Parent Company Ancillary Agreements, or to otherwise
satisfy the conditions set forth in Article VIII; provided that (i) none of the
Parent Companies, the Companies or Corn Products
-34-
<PAGE> 42
shall have any obligation to offer or pay any consideration other than ordinary
fees of any Governmental Body in order to obtain such consents and approvals,
and (ii) neither Parent Company nor any of the Companies shall make or permit
any Subsidiary of any Company to make any agreement or understanding affecting
the assets or business of any of the Companies or its Subsidiaries as a
condition for obtaining any such consents or approvals except with the prior
written consent of Corn Products.
6.4. OPERATIONS PRIOR TO THE INITIAL CLOSING DATE AND THE TRANSFER
OF ARACORN SHARES. (a) The Parent Companies shall cause each Company and its
Subsidiaries to operate and carry on its business only in the ordinary course
and substantially as presently operated in the case of the Joint Venture and its
Subsidiaries prior to the Initial Closing Date, and in the case of Aracorn prior
to the transfer of the 26.6% Shares to Corn Products or its designated
Affiliate. Consistent with the foregoing, the Parent Companies shall cause each
of Poliecsa and the Joint Venture and their Subsidiaries prior to the Initial
Closing Date and Aracorn prior to the transfer of the 26.6% Shares to Corn
Products or its designated Affiliate to keep and maintain the assets and
properties of such Company and its Subsidiaries in good operating condition and
repair and shall use its reasonable efforts consistent with good business
practice to maintain the business organization of such Company and its
Subsidiaries intact and to preserve the goodwill of the suppliers, contractors,
licensors, employees, customers, distributors and others having business
relations with such Company and its Subsidiaries. Neither Parent Company shall
have any obligation or liability pursuant to the two foregoing sentences, nor
shall it be considered a breach of a representation or warranty, to the extent
they are prohibited or restricted from taking any action by the action or
inaction of Corn Products or any of its Affiliates. In connection therewith,
except with respect to the employees listed on Schedule 6.4 hereto prior to the
Initial Closing, the Parent Companies shall not (nor permit any of the Companies
or any of their Subsidiaries to) transfer or cause to be transferred from any of
the Companies or any of their Subsidiaries, any employee or agent thereof.
(b) Except with the express written approval of Corn Products, the
Parent Companies shall not permit the Joint Venture or Poliecsa or any of their
Subsidiaries prior to the Initial Closing, and shall not permit Aracorn prior
to the transfer of the 26.6% Shares to Corn Products or its designated
Affiliate, to take any of the following actions:
(i) amend its charter or by-laws;
(ii) issue any share or shares of capital stock;
(iii) issue any security convertible or exchangeable into any share
or shares of the capital stock of such Company or Subsidiary of any
Company;
(iv) enter into any subscription, option, call, commitment or other
agreement obligating any Company or Subsidiary of any Company to issue any
share or shares of its
-35-
<PAGE> 43
capital stock or any security or securities of any class or kind which in
any way relate to the authorized or issued capital stock of such Company
or such Subsidiary;
(v) enter into any agreement which grants to any Person or
Individual the right to purchase or otherwise acquire any share or shares
issued and outstanding or otherwise, of the capital stock of any Company
or Subsidiary of any Company;
(vi) enter into any voting trust or proxy with respect to any shares
of the capital stock of any Company or Subsidiary of any Company; or
(vii) make any changes to the composition of the board of directors
or officers of any Company or Subsidiary of any Company, except as
otherwise contemplated by this Agreement; provided, however, that if any
member of the board of directors or officers of any Company or Subsidiary
of any Company which the Parent Companies have the power to elect or
appoint dies or becomes incapacitated, the Parent Companies may designate
a replacement with the consent of Corn Products, which shall not be
unreasonably withheld.
Neither Parent Company shall have any obligation or liability
pursuant to Section 6.4(b), nor shall it be considered a breach of a
representation or warranty, to the extent they are prohibited or restricted from
taking any action by the action of Corn Products or any of its Affiliates.
6.5. NOTIFICATION BY PARENT COMPANIES OF CERTAIN MATTERS. During
the period prior to the Initial Closing Date in the case of the Joint Venture or
Poliecsa, or prior to the First Put Closing Date in the case of matters directly
affecting Aracorn (and not indirectly through an impact on the Joint Venture),
the Parent Companies will promptly advise Corn Products in writing of (i) any
Material Adverse Effect, (ii) any notice or other communication from any third
Person alleging that the consent of such third Person is or may be required in
connection with the transactions contemplated by this Agreement, and (iii) any
material default under any Company Agreement or event which, with notice or
lapse of time or both, would become such a default on or prior to the Initial
Closing Date and of which either Parent Company has knowledge.
6.6. MEXICAN REGULATORY COMPLIANCE. Aralia has filed with the
Mexican Federal Competition Commission and the Mexican Foreign Investment
Commission the notifications and other information required to be filed pursuant
to the terms of the Mexican Federal Economic Competition Law and the Mexican
Foreign Investment Law, respectively, with respect to the transactions
contemplated hereby. Each Party warrants that all information supplied by such
Party for inclusion in such filings was, as of the date filed, true and accurate
in all material respects and in accordance with the requirements of the Mexican
Federal Economic Competition Law and the Mexican Foreign Investment Law, as
applicable. Each of Corn Products and the Parent Companies agrees to make
available to the other such information as each of them may reasonably request
relative to its business, assets and property as may be required of each of them
to make such filings and to provide any additional information requested
-36-
<PAGE> 44
by the Mexican Federal Competition Commission under the Mexican Federal Economic
Competition Law or by the Mexican Foreign Investment Commission under the
Mexican Foreign Investment Law.
6.7. INSURANCE. At all times from the date hereof through the
transfer of the 26.6% Shares to Corn Products or its designated Affiliate,
Aralia and Corn Products shall cause Aracorn to carry such insurance as is
reasonable and customary for such an entity.
6.8. FACILITATION OF CLOSINGS. (a) Subject to the terms and
conditions of this Agreement, each of Corn Products and Parent Companies will
use all commercially reasonable efforts to take, or cause to be taken, all
actions and to do, or cause to be done, all things necessary or desirable under
applicable laws and regulations to consummate the transactions contemplated by
this Agreement.
(b) In addition to the foregoing, if the 120 day period specified
in Sections 3.1(b) and 3.1 (c) for the First Put Closing and the Second Put
Closing shall pass without the conditions to such closings being satisfied or
waived, the parties agree to negotiate in good faith in an effort to restructure
the transaction contemplated by this Agreement and the Parent Company and Corn
Products Ancillary Agreements so as to provide the rights and benefits to the
respective Parties as initially contemplated by the Parties.
SECTION 6.9. U.S. ANTITRUST LAW COMPLIANCE. As promptly as
practicable after the date hereof, and from time to time thereafter as
necessary, Aralia and Corn Products shall file with the Federal Trade Commission
and the Antitrust Division of the Department of Justice the notifications and
other information required to be filed under the HSR Act, or any rules and
regulations promulgated thereunder, with respect to the transactions
contemplated hereby. Each party warrants that all such filings by it will be,
as of the date filed, true and accurate in all material respects and in material
compliance with the requirements of the HSR Act and any such rules and
regulations. Each of Aralia and Corn Products agrees to make available to the
other such information as each of them may reasonably request relative to its
business, assets and property as may be required of each of them to file any
additional information requested by such agencies under the HSR Act and any
such rules and regulations. Aralia and Corn Products will supply each other
with copies of all correspondence, filings or communications (or memoranda
setting forth the substance thereof) between either of them or their respective
representatives and the Federal Trade Commission, the Antitrust Division of the
United States Department of Justice or any other governmental agency or
authority or members of their respective staffs with respect to this Agreement
or the transactions contemplated hereby.
ARTICLE VII
ADDITIONAL AGREEMENTS
-37-
<PAGE> 45
7.1. CONFIDENTIAL NATURE OF INFORMATION. The provisions of the
Confidentiality Agreement shall apply to all documents, materials and other
information which any Party shall have obtained regarding any other Party during
the course of the negotiations leading to the consummation of the transactions
contemplated hereby (whether obtained before or after the date of this
Agreement) and the preparation of this Agreement and other related documents.
7.2. NO PUBLIC ANNOUNCEMENT. On the date hereof, each of the
Parties will issue a press release in a form previously agreed to by the
Parties. Any subsequent written press release or any written public
announcement, statement or publicity with respect to the transactions
contemplated by this Agreement shall be made only with the prior consent of the
Parties (which consent shall not be unreasonably withheld), unless such release,
announcement, statement or publicity is required by Laws or the rules of any
stock exchange or quotation system.
7.3. EXPENSES. Each Party shall pay the costs, expenses, fees,
taxes and duties which it incurs in the course of negotiation, execution and
performance of its obligations pursuant to this Agreement.
7.4. FURTHER ASSURANCES. From time to time following the Initial
Closing Date, the transfer of the 26.6% Shares to Corn Products and the transfer
of the 24.4% Shares to Corn Products, as applicable, each Parent Company shall
execute and deliver, or cause to be executed and delivered, to Corn Products or
any of the Companies, as the case may be, such other bills of sale, deeds,
endorsements, assignments and other instruments of conveyance and transfer as
Corn Products or such Company may reasonably request or as may be otherwise
necessary to more effectively convey and transfer to, and vest in, such Company
or Corn Products and put such Company or Corn Products, as appropriate, in
possession of, the securities intended to be transferred to Corn Products as
contemplated hereby and by the Corn Products and Parent Company Ancillary
Agreements, or any part of the assets or properties of such Company not in its
possession on the applicable Closing Date.
7.5. TERMINATION OF JOINT OWNERSHIP AGREEMENT. Upon the Initial
Closing, the Parties agree that the Joint Ownership Agreement shall be
terminated and shall be of no further force or effect and that the JVA Ancillary
Agreements shall by their terms terminate.
7.6. DIVIDENDS. (a) In the event that prior to the transfer of the
24.4% Shares to Corn Products or its designated Affiliate the Board of Directors
of Aracorn shall recommend to the stockholders of Aracorn and the stockholders
of Aracorn shall declare or pay a dividend or dividends on or shall make any
other distribution of cash with respect to, shares of capital stock of Aracorn
and the record date for any such dividend or distribution is a date that is on
or after the transfer of the 26.6% Shares to Corn Products or its designated
Affiliate but prior to the transfer of the 24.4% Shares to Corn Products or its
designated Affiliate, the Second Put Purchase Price shall be reduced by the
aggregate amount of any such dividends or distributions actually received by
Aralia (converted, if paid in any currency other than U.S. dollars, into U.S.
dollars at the rate
-38-
<PAGE> 46
quoted on the date of payment by The Wall Street Journal for such currency) plus
the amount accrued thereon from the date paid to the Second Put Closing Date at
the Agreed Rate.
(b) In no event may the aggregate amount of any dividend or
distribution declared, paid or otherwise made by Aracorn and actually received
by either of the Parent Companies or any Arancia Entity prior to the transfer of
the 24.4% Shares to Corn Products or its designated Affiliate be in excess of
the Second Put Purchase Price.
(c) In no event shall Corn Products permit Aracorn to pay any
dividends or distributions which would reduce the amounts otherwise payable to
Parent Companies hereunder, unless at the time of actual payment thereof, the
currency of such payments can be freely exchanged into U.S. dollars as described
in paragraph (a) above and the amounts of such dividends or distributions, when
so converted, is freely transferable to bank accounts in the United States of
America.
(d) Notwithstanding anything in this Section 7.6 to the contrary,
(a) Aracorn shall not declare or pay any dividend prior to the date that is
nineteen months after the Initial Closing Date or (b) pay any dividend
distribution except in cash prior to the transfer of the 24.4% Shares to Corn
Products or its designated Affiliate.
7.7. AMENDMENT TO CONFIDENTIALITY AGREEMENT. Arancia and Corn
Products hereby amend the Confidentiality Agreement to provide that the
obligations set forth on pages 3-4, paragraphs (a) through (h) of the
Confidentiality Agreement shall terminate upon the earlier to occur of (i) the
execution and delivery of the Stockholder Agreement by the Parties or (ii) six
months after the termination of this Agreement.
ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS OF PARTIES
8.1. CONDITIONS TO THE INITIAL CLOSING. (a) The obligations of
Corn Products to consummate the Initial Closing are subject to the satisfaction,
on or prior to the Initial Closing Date, of the following conditions any one of
which may be waived in writing by Corn Products:
(i) The representations and warranties of each Parent Company
contained in this Agreement shall be true and correct at the time of the
Initial Closing as though made on such date (except for those
representations and warranties made as of a specific date), with such
exceptions as, individually or in the aggregate, would not have a Material
Adverse Effect;
(ii) Each of the Parent Companies shall have performed or complied
in all material respects with all of their covenants, agreements and
obligations herein contained, to the
-39-
<PAGE> 47
extent the same are required to be performed or complied with at or prior
to the time of the Initial Closing;
(iii) All approvals and consents shall have been obtained from the
Mexican Federal Competition Commission and the Mexican Foreign Investment
Commission, and from the Persons and Individuals listed in Schedule 4.4,
in form and substance reasonably satisfactory to Corn Products' legal
counsel, necessary in order to permit the transactions contemplated herein
to be completed at the Initial Closing, the First Put Closing and the
Second Put Closing without adversely affecting, modifying, amending,
varying or renegotiating in a way that is not insignificant to Corn
Products in its judgment exercised in good faith or resulting in the
termination or cancellation of, this Agreement or any Parent Company
Ancillary Agreements;
(iv) The waiting period under the HSR Act shall have expired or
terminated, and no (A) temporary restraining order, preliminary or
permanent injunction or other order issued by a court of competent
jurisdiction, or (B) other legal restraint or prohibition, including those
arising as a result of the failure to obtain or maintain any necessary
governmental approval or consent, shall be in effect preventing or
materially affecting the consummation of the transactions contemplated by
this Agreement or any Parent Company Ancillary Agreements or Corn Products
Ancillary Agreements;
(v) All of the Parent Company Ancillary Agreements required to be
delivered at the Initial Closing shall have been duly executed and
delivered by the parties thereto;
(vi) All of the directors and officers of Aracorn, the Joint
Venture or Poliecsa set forth on Schedule 3.4 shall have tendered their
resignation from each such position held by them with the applicable
corporation; and
(vii) the Bylaws of the Joint Venture shall have been amended to
read in their entirety as set forth in Exhibit F hereto.
(b) The obligations of each of the Parent Companies to consummate
the Initial Closing are subject to the satisfaction, on or prior to the Initial
Closing Date, of the following conditions any one of which may be waived in
writing by either of the Parent Companies:
(i) The representations and warranties of Corn Products contained
in this Agreement shall be true and correct at the time of the Initial
Closing as though made on such date, with such exceptions as, individually
or in the aggregate, would not have a Material Adverse Effect;
(ii) Corn Products shall have performed or complied in all material
respects with all of its covenants, agreements and obligations herein
contained, to the extent the same are required to be performed or complied
with at or prior to the time of the Initial Closing;
-40-
<PAGE> 48
(iii) All approvals and consents shall have been obtained from the
Mexican Federal Competition Commission and the Mexican Foreign Investment
Commission and from the Persons and Individuals listed in Schedule 4.4, in
form and substance reasonably satisfactory to Parent Companies' legal
counsel, necessary in order to permit the transactions contemplated herein
to be completed at the Initial Closing, the First Put Closing and the
Second Put Closing without adversely affecting, modifying, amending,
varying or renegotiating in a way that is not insignificant to the Parent
Companies in their judgment exercised in good faith or resulting in the
termination or cancellation of this Agreement or any Corn Products
Ancillary Agreements;
(iv) The waiting period under the HSR Act shall have expired or
terminated, and no (A) temporary restraining order, preliminary or
permanent injunction or other order issued by a court of competent
jurisdiction, or (B) other legal restraint or prohibition, including those
arising as a result of the failure to obtain or maintain any necessary
governmental approval or consent, shall be in effect preventing or
materially affecting the consummation of the transactions contemplated by
this Agreement or any Parent Company Ancillary Agreements or Corn Products
Ancillary Agreements;
(v) All of the Corn Products Ancillary Documents required to be
delivered at the Initial Closing shall have been duly executed and
delivered by parties thereto.
8.2. CONDITIONS TO THE FIRST PUT CLOSING. (a) The obligations of
Corn Products to consummate the First Put Closing are subject to the
satisfaction, on or prior to the First Put Closing Date, of the following
conditions any one of which may be waived in writing by Corn Products:
(i) The representations and warranties of Aralia contained in
Section 4.7 relating to the 26.6% Shares shall be true and correct at the
time of the First Put Closing as though made on such date;
(ii) Aralia shall have performed or complied in all material
respects with all of its covenants, agreements and obligations contained
in Section 3.4(b), to the extent the same are required to be performed or
complied with after the Initial Closing and at or prior to the time of the
First Put Closing; and
(iii) No (A) temporary restraining order, preliminary or permanent
injunction or other order issued by a court of competent jurisdiction, or
(B) other legal restraint or prohibition, including those arising as a
result of the failure to obtain or maintain any necessary governmental
approval or consent, shall be in effect preventing or materially affecting
the consummation of the transactions contemplated by this Agreement or any
Parent Company Ancillary Agreements or Corn Products Ancillary Agreements
relating to the transfer of the 26.6% Shares or the 24.4% Shares to Corn
Products, unless the temporary restraining order, preliminary or
permanent injunction or other order affecting the Non-Competition
Agreements or the
-41-
<PAGE> 49
Corporate Name License was issued at the request of the Parent Companies or
any of their Affiliates or any of the Arancia Entities either directly or
by another Person or Individual acting on their behalf.
(b) The obligations of Aralia to consummate the First Put Closing are
subject to the satisfaction, on or prior to the First Put Closing Date, of the
following condition which may be waived in writing by Aralia:
(i) No (A) temporary restraining order, preliminary or permanent
injunction or other order issued by a court of competent jurisdiction, or (B)
other legal restraint or prohibition, including those arising as a result of
the failure to obtain or maintain any necessary governmental approval or
consent shall be in effect preventing or materially affecting the consummation
of the transactions contemplated by this Agreement or any Parent Company
Ancillary Agreements or Corn Products Ancillary Agreements relating to the
transfer of the 26.6% Shares or the 24.4% Shares to Corn Products, unless the
temporary restraining order, preliminary or permanent injunction or other
order affecting the Non-Competition Agreements or the Corporate Name License
was issued at the request of the Parent Companies or any of their Affiliates
or any of the Arancia Entities either directly or by another Person or
Individual acting on their behalf.
8.3. CONDITIONS TO THE SECOND PUT CLOSING. (a) The obligations of Corn
Products to consummate the Second Put Closing are subject to the satisfaction,
on or prior to the Second Put Closing Date, of the following conditions any one
of which may be waived in writing by Corn Products:
(i) The representations and warranties of Aralia contained in Section
4.7 relating to the 24.4% Shares shall be true and correct at the time of the
First Put Closing as though made on such date;
(ii) Aralia shall have performed or complied in all material respects
with all of its covenants, agreements and obligations contained in Section
3.4(c), to the extent the same are required to be performed or complied with
after the First Put Closing and at or prior to the time of the Second Put
Closing; and
(iii) No (A) temporary restraining order, preliminary or permanent
injunction or other order issued by a court of competent jurisdiction, or (B)
other legal restraint or prohibition, including those arising as a result of
the failure to obtain or maintain any necessary governmental approval or
consent, shall be in effect preventing or materially affecting the
consummation of the transactions contemplated by this Agreement or any Parent
Company Ancillary Agreements or Corn Products Ancillary Agreements relating
to the transfer of the 24.4% Shares to Corn Products, unless the temporary
restraining order, preliminary or permanent injunction or other order
affecting the Non-Competition Agreements or the Corporate Name License was
issued at the
-42-
<PAGE> 50
request of the Parent Companies or any of their Affiliates or any of the
Arancia Entities either directly or by another Person or Individual acting on
their behalf.
(b) The obligations of Aralia to consummate the Second Put Closing are
subject to the satisfaction, on or prior to the Second Put Closing Date, of the
following condition which may be waived in writing by Aralia:
(i) No (A) temporary restraining order, preliminary or permanent
injunction or other order issued by a court of competent jurisdiction, or (B)
other legal restraint or prohibition, including those arising as a result of
the failure to obtain or maintain any necessary governmental approval or
consent, shall be in effect preventing or materially affecting the
consummation of the transactions contemplated by this Agreement or any Parent
Company Ancillary Agreements or Corn Products Ancillary Agreements relating
to the transfer of the 24.4% Shares to Corn Products, unless the temporary
restraining order, preliminary or permanent injunction or other order
affecting the Non-Competition Agreements or the Corporate Name License was
issued at the request of the Parent Companies or any of their Affiliates or
any of the Arancia Entities either directly or by another Person or
Individual acting on their behalf.
ARTICLE IX
INDEMNIFICATION
9.1. INDEMNIFICATION BY PARENT COMPANIES. The Parent Companies agree,
jointly and severally, to indemnify and save harmless each Corn Products Group
Member from and against any losses (which shall include any diminution in
value), liabilities, costs or expenses (including interest, penalties and
reasonable attorneys' and experts' fees and disbursements, collectively, the
"Losses") which any such Corn Products Group Member may suffer or incur as a
result of, arising out of or relating to:
(i) any breach of any representation or warranty made by either of the
Parent Companies in this Agreement; or
(ii) any breach or failure of either Parent Company to perform their
covenants or obligations under Sections 6.2 and 6.4 of this Agreement or
Section 5.3 of the Corporate Name License Agreement..
9.2. INDEMNIFICATION BY CORN PRODUCTS. Corn Products agrees to indemnify
and save harmless each Parent Company Group Member from and against any Losses
which any such Parent Company Group Member may suffer or incur as a result of,
arising out of or relating to:
-43-
<PAGE> 51
(i) any breach of any representation or warranty made by Corn Products in
this Agreement; or
(ii) any breach or failure of Corn Products to perform its covenants or
obligations under Sections 6.2 and 6.4 of this Agreement or Section 5.4 of the
Corporate Name License Agreement.
9.3. LIMITATION ON INDEMNIFICATION. (a) The obligations of
indemnification set forth in Sections 9.1 and 9.2 shall not apply to claims for
Losses in amounts less than US$50,000 per occurrence. For all claims in
amounts in excess of US$50,000, such claims may be aggregated and when the
total of all such claims exceeds US$1,000,000 the indemnifying party shall be
required to indemnify the applicable Corn Products Group Member or Parent
Company Group Member, as the case may be, for the amount of all Losses
exceeding US$1,000,000. The obligations of indemnification shall not exceed
the amount of US$5,000,000, except in the cases mentioned in the following
sentence. None of the limitations contained in this Section 9.3 shall apply to
any indemnification obligations arising out of breaches of the representations
and warranties continued in Sections 4.1(a), 4.1(b), the first two sentences of
4.2(a), 4.2(b) insofar as it applies to Aracorn, 4.3, 4.4(a)(i), 4.5 insofar as
it applies to Aracorn, 4.7, 4.8 insofar as it applies to Aracorn, 4.9, 4.11(b)
insofar as it applies to Aracorn, 4.12(a), 4.21A, 5.1, the first two sentences
of 5.2, 5.3, 5.4(a)(i) and 5.6 which shall be indemnifiable in full; provided,
however, that for any such Losses to be indemnifiable, it must be for an amount
in excess of US$50,000 per occurrence and provided, further, that in no event
shall the obligations of indemnification exceed $120,000,000. There shall be no
obligation to indemnify for amounts of Losses covered by insurance.
(b) Notwithstanding anything in Article IX to the contrary, except with
respect to breaches of the representations and warranties contained in Sections
4.1(a) and 4.1(b), 4.2(a), 4.3, 4.4(a)(i), 4.7, and 4.9, the indemnification
obligation of the Parent Companies for any claim based upon any Loss suffered
by the Joint Venture or its Subsidiaries shall be limited to, regardless of the
entity making the claim, 51% of such Loss, which limit is intended to reflect
the interest of the Parent Companies in the Joint Venture or its Subsidiaries
prior to the Initial Closing.
9.4. NOTIFICATION OF CLAIMS. In the event that a Corn Products Group
Member or a Parent Company Group Member has a claim for indemnification under
Section 9.1 or 9.2, as applicable, the applicable Corn Products Group Member or
Parent Company Group Member shall promptly deliver a written notice to the
Party from whom indemnification is requested which shall: (a) state that a Loss
has occurred or is threatened for which such Corn Products Group Member of
Parent Company Group Member is entitled to indemnification pursuant to this
Agreement and (b) specify in reasonable detail each individual Loss including
the amount thereof, if reasonably ascertainable, and the nature of the breach
to which each Loss is related.
9.5. DEFENSE OF CLAIMS. (a) If a Corn Products Group Member or a Parent
Company Group Member has a claim to indemnification relating to an ongoing legal
action, claim
-44-
<PAGE> 52
or proceeding against such Corn Products Group Member or Parent Company Group
Member, the indemnified party in accordance with Section 9.1 or 9.2 (the
"Indemnified Party") shall have the right to conduct and control, through
counsel of its choosing, the defense, compromise or settlement of any third
Person claim, action or suit against such Indemnified Party as to which
indemnification will be sought by any Indemnified Party from any indemnifying
party hereunder (the "Indemnifying Party"), and in any such case the
Indemnifying Party shall cooperate in connection therewith and shall furnish
such records, information and testimony and attend such conferences, discovery
proceedings, hearings, trials and appeals as may be reasonably requested by the
Indemnified Party in connection therewith; provided, that (i) the Indemnifying
Party may participate, through counsel chosen by it and at its own expense, in
the defense of any such claim, action or suit as to which the Indemnified Party
has so elected to conduct and control the defense thereof; and (ii) the
Indemnified Party shall not, without the written consent of the Indemnifying
Party (which written consent shall not be unreasonably withheld), pay,
compromise or settle any such claim, action or suit, except that no such consent
shall be required if, following a written request from the Indemnified Party,
the Indemnifying Party shall fail, within 14 days after the making of such
request, to acknowledge and agree in writing that, if such claim, action or suit
shall be adversely determined, such Indemnifying Party has an obligation to
provide indemnification hereunder to such Indemnified Party. Notwithstanding the
foregoing, the Indemnified Party shall have the right to pay, settle or
compromise any such claim, action or suit without such consent, provided that in
such event the Indemnified Party shall waive any right to indemnity therefor
hereunder unless such consent is unreasonably withheld.
(b) If any third Person claim, action or suit against any Indemnified
Party is solely for money damages or, where the Parent Companies are the
Indemnifying Party, will have no continuing effect in any material respect on
Corn Products or its business, assets or operations, including each of the
Companies, then the Indemnifying Party shall have the right to conduct and
control, through counsel of its choosing, the defense, compromise or settlement
of any such third Person claim, action or suit against such Indemnified Party as
to which indemnification will be sought by any Indemnified Party from any
Indemnifying Party hereunder if the Indemnifying Party has acknowledged and
agreed in writing that, if the same is adversely determined, the Indemnifying
Party has an obligation to provide indemnification hereunder to the Indemnified
Party in respect thereof, and in any such case the Indemnified Party shall
cooperate in connection therewith and shall furnish such records, information
and testimony and attend such conferences, discovery proceedings, hearings,
trials and appeals as may be reasonably requested by the Indemnifying Party in
connection therewith; provided that the Indemnified Party may participate,
through counsel chosen by it and at its own expense, in the defense of any such
claim, action or suit as to which the Indemnifying Party has so elected to
conduct and control the defense thereof. Notwithstanding the foregoing, the
Indemnified Party shall have the right to pay, settle or compromise any such
claim, action or suit, provided that in such event the Indemnified Party shall
waive any right to indemnity therefor hereunder unless the Indemnified Party
shall have sought the consent of the Indemnifying Party to such payment,
settlement or compromise and such consent was unreasonably withheld, in which
event no claim for indemnity therefor hereunder shall be waived.
-45-
<PAGE> 53
9.6. EXCLUSIVE REMEDY. Each of the Parties hereby acknowledges and
agrees that, after the Initial Closing, the exclusive remedy (whether at law or
equity) with respect to any claims based upon a breach of any of the
representations and warranties contained in Articles IV and V hereof or the
covenants contained in Sections 6.2 and 6.4 hereof or Sections 5.3 and 5.4 of
the Corporate Name License Agreement shall be pursuant to the indemnification
provisions set forth in Article IX hereof. Each of the Parties further
acknowledges and agrees that the indemnification provisions set forth in
Article IX hereof are not the exclusive remedy with respect to any claims based
upon a breach of any covenants, except Sections 6.2 and 6.4 hereof, or Sections
5.3 and 5.4 of the Corporate Name License Agreement whether contained in this
Agreement, the Parent Company Ancillary Agreements or the Corn Products
Ancillary Agreements.
9.7. WAIVER OF CLAIMS. In the event that (i) prior to the Initial
Closing either of the Parent Companies shall give written notice to Corn
Products describing facts and circumstances that result in the representations
and warranties of the Parent Companies contained in this Agreement being untrue
or incorrect as of the time of the Initial Closing in a manner that,
individually or in the aggregate, has a Material Adverse Effect and acknowledges
that the condition set forth in Section 8.1(a)(i) has not been satisfied, and
(ii) Corn Products waives the failure of condition under Section 8.1(a)(i)
resulting therefrom and proceeds to consummate the transactions contemplated to
occur at the Initial Closing, then Corn Products shall be deemed to have waived
any claim for indemnification under Article IX with respect to any such breach
of representation or warranty arising from such facts or circumstances.
9.8. AVAILABLE CLAIMS. Notwithstanding anything else contained in this
Agreement to the contrary, if the representations and warranties of the Parent
Companies shall be untrue as of the time of the Initial Closing but not in a
manner that has a Material Adverse Effect, Corn Products shall have the right to
make a claim pursuant to Article IX hereof with respect to any such breach of
representation or warranty and shall not be deemed to have waived its right to
make such a claim by virtue of having consummated the Initial Closing.
ARTICLE X
TERMINATION
10.1. TERMINATION. Anything contained in this Agreement to the contrary
notwithstanding, this Agreement may be terminated at any time prior to the
Initial Closing Date:
(a) by the mutual consent of Corn Products and the Parent Companies; or
(b) by Corn Products or the Parent Companies if the Initial Closing shall
not have occurred on or before March 31, 1999 (or such later date as may be
mutually agreed to by Corn Products and each Parent Company).
-46-
<PAGE> 54
10.2. NOTICE OF TERMINATION. Any party desiring to terminate this
Agreement pursuant to Section 10.1 shall give notice of such termination to the
other party to this Agreement.
10.3. EFFECT OF TERMINATION. In the event that this Agreement shall be
terminated pursuant to this Article X, all further obligations of the parties
under this Agreement (other than Sections 7.3, 7.5, 11.2, 11.10 and 11.11) shall
be terminated without further liability of any party to the other, provided that
nothing herein shall relieve any party from liability for its willful breach of
this Agreement.
ARTICLE XI
GENERAL PROVISIONS
11.1. SURVIVAL OF OBLIGATIONS. All representations, warranties,
covenants, agreements and obligations contained in this Agreement shall survive
the consummation of the transactions contemplated by this Agreement; provided,
however, that the representations and warranties contained in Articles IV and V
(other than the representations and warranties contained in Sections 4.1(a),
4.1(b), the first two sentences of 4.2(a), 4.2(b) insofar as it applies to
Aracorn, 4.3, 4.4(a)(i), 4.5 insofar as it applies to Aracorn, 4.7, 4.8 insofar
as it applies to Aracorn, 4.9, 4.11(b) insofar as it applies to Aracorn,
4.12(a), 4.21A, 5.1, the first two sentences of 5.2, 5.3, 5.4(a)(i) and 5.6,
which shall survive indefinitely) shall terminate on the date that is six months
after the Initial Closing Date and the covenants contained in Sections 6.2 and
6.4 shall terminate on the date that is six months after the applicable Closing
Date. Except as otherwise provided herein, no claim shall be made for the
breach of any representation or warranty contained in Article IV or V under this
Agreement after the date on which such representations and warranties terminate
as set forth in this Section.
11.2. NOTICES. Any notice, consent, authorization, direction or other
communication required or permitted to be given hereunder shall be in writing
and shall be delivered either by personal delivery or by telecopier or similar
telecommunication device, and addressed as follows:
If to Corn Products, to:
6500 South Archer Road
Bedford Park, IL 60501-1933
Attention: General Counsel
FAX: (708) 563-6592
with a copy to:
-47-
<PAGE> 55
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
Attention: John M. O'Hare
FAX: (312) 853-7036
If to Aralia, to:
Lopez Cotilla 2032 - Mezzanine
Sector Juarez
Guadalajara, Jal. 44100
Mexico
Attention: General Counsel
FAX: 011-523-818-3395
If to Arinsa, to:
Lopez Cotilla 2032 - 8th Floor
Sector Juarez
Guadalajara, Jal. 44100
Mexico
Attention: General Counsel
FAX: 011-523-818-3387
with a copy to:
Davis Polk & Wardwell
450 Lexinton Avenue
New York, NY 10017
Attention: George R. Bason, Jr.
FAX: (212) 450-4800
Any notice, consent, authorization, direction or other communication delivered
as aforesaid shall be deemed to have been effectively delivered and received, if
sent by telecopier or similar telecommunications device upon receipt of
confirmation of such transmission or, if delivered, on the date of such
delivery; provided, however, that if such date is not a Business Day then it
shall be deemed to have been delivered and received on the Business Day next
following such delivery. Any Party may change its address by written notice
delivered as aforesaid.
11.3. LANGUAGE. This Agreement is made and signed in the English language.
-48-
<PAGE> 56
11.4. SUCCESSORS AND ASSIGNS. (a) This Agreement shall be binding upon
and inure to the benefit of the Parties and the respective successors and
assigns; provided, however, that neither party shall have the right to transfer
or assign its interest in this Agreement without the prior written consent of
the other parties, which consent shall not be unreasonably withheld.
(b) Notwithstanding the foregoing provisions of this Section 11.4, at any
time after the transfer of the 26.6% Shares and the 24.4% Shares to Corn
Products, Corn Products may assign its rights and obligations under this
Agreement to any corporation or other entity that shall acquire all or
substantially all of Corn Products' business and assets and which shall assume
in writing all of Corn Products' obligations hereunder and deliver a signed
copy of such assumption agreement to the Parent Companies.
11.5. AMENDMENTS. This Agreement shall not be amended, modified or
supplemented except by a written instrument signed by an authorized
representative of each of the Parties.
11.6 DISCLAIMER OF WARRANTIES. EXCEPT AS TO THOSE MATTERS EXPRESSLY
COVERED BY THE REPRESENTATIONS AND WARRANTIES IN THIS AGREEMENT, THE PARENT
COMPANIES AND CORN PRODUCTS EACH DISCLAIM ALL OTHER WARRANTIES, REPRESENTATIONS
AND GUARANTIES WHETHER EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION, ANY
WARRANTIES AS TO MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PROPOSE AND ANY
OTHER IMPLIED WARRANTIES.
11.7. WAIVERS. Any term or provision of this Agreement may be waived, or
the time for its performance may be extended, by the Party or Parties entitled
to the benefit thereof. Any such waiver shall be validly and sufficiently given
for the purposes of this Agreement if, as to any Party, it is in writing signed
by an authorized representative of such Party. The failure of any Party hereto
to enforce at any time any provision of this Agreement shall not be construed to
be a waiver of such provision, nor in any way to affect the validity of this
Agreement or any part hereof or the right of any Party thereafter to enforce
each and every such provision. No waiver of any of the provisions of this
Agreement shall be deemed to constitute a waiver of any other provisions
(whether or not similar), nor shall such waiver constitute a continuing waiver
unless otherwise expressly provided in an instrument duly executed by the Party
to be bound thereby.
11.8. SEVERABILITY. Any Article, Section or other subdivision of this
Agreement or any other provision of this Agreement which is, or becomes,
illegal, invalid or unenforceable shall be severed from this Agreement and shall
be ineffective to the extent of such illegality, invalidity or unenforceability,
but the Parties shall in good faith agree on a substitute provision that is
legal, valid and enforceable and that most closely reflects the intention of the
Parties. Such severed and ineffective provision shall not affect or impair the
remaining provisions hereof, which provisions shall (i) be severed from any
illegal, invalid or unenforceable Article, Section or other
-49-
<PAGE> 57
subdivision of this Agreement or any other provision of this Agreement and (ii)
otherwise remain in full force and effect.
11.9. EXECUTION IN COUNTERPARTS. This Agreement may be executed in
several identical counterparts, each of which when executed and delivered by the
Parties hereto shall be an original, but all of which together shall constitute
a single instrument.
11.10. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the internal laws (as opposed to the conflicts of law
provisions) of the State of New York, United States of America.
11.11. SUBMISSION TO JURISDICTION. Each Parent Company and Corn Products
hereby irrevocably submits in any suit, action or proceeding arising out of or
related to this Agreement or any of the transactions contemplated hereby or
thereby to the exclusive jurisdiction of any court of the State of New York,
United States of America and waives any and all objections to jurisdiction that
they may have under the laws of the State of New York, the United States of
America or the Republic of Mexico and any claim or objection that any such court
is an inconvenient forum.
* * * * *
-50-
<PAGE> 58
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed the day and year first above written.
CORN PRODUCTS INTERNATIONAL INC.
By: ___________________________
Name:
Title:
PROMOCIONES INDUSTRIALES ARALIA, S.A. DE C.V.
By: ___________________________
Name:
Title:
ARANCIA INDUSTRIAL S.A. DE C.V.
By: ___________________________
Name:
Title:
-51-
<PAGE> 1
STOCKHOLDER AGREEMENT
DATED AS OF __________________, 1998
AMONG
ARANCIA INDUSTRIAL, S.A. DE C.V.,
PROMOCIONES INDUSTRIALES ARALIA, S.A. DE C.V.,
AND
CORN PRODUCTS INTERNATIONAL, INC.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
ARTICLE I DEFINITIONS AND INTERPRETATION . . . . . . . . . . . . . . . . 1
1.1. Definitions. . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II PUT AND CALL RIGHTS . . . . . . . . . . . . . . . . . . . . . 6
2.1. Consideration Share Put Option . . . . . . . . . . . . . 6
2.2. Restrictions on Transfer . . . . . . . . . . . . . . . . 8
2.3. Consideration Share Call Option. . . . . . . . . . . . . 9
ARTICLE III ADDITIONAL AGREEMENTS. . . . . . . . . . . . . . . . . . . . 10
3.1. Access to Records after Closing. . . . . . . . . . . . . 10
3.2. No Solicitation. . . . . . . . . . . . . . . . . . . . . 11
3.3. Board of Directors of Corn Products. . . . . . . . . . . 11
3.4. Voting . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.5. Standstill . . . . . . . . . . . . . . . . . . . . . . . 12
3.6. Tax Covenants. . . . . . . . . . . . . . . . . . . . . . 14
3.7. Aracorn Shares . . . . . . . . . . . . . . . . . . . . . 15
3.8. Consideration Shares . . . . . . . . . . . . . . . . . . 15
ARTICLE IV REGISTRATION RIGHTS . . . . . . . . . . . . . . . . . . . . . 15
4.1. Demand Registration. . . . . . . . . . . . . . . . . . . 15
4.2. Piggyback Registration . . . . . . . . . . . . . . . . . 17
4.3. Registration Procedures. . . . . . . . . . . . . . . . . 18
4.4. Holders' Obligations . . . . . . . . . . . . . . . . . . 20
4.5. Expenses of Registration . . . . . . . . . . . . . . . . 20
4.6. Indemnification; Contribution. . . . . . . . . . . . . . 21
ARTICLE V GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . 23
5.1. Survival of Obligations. . . . . . . . . . . . . . . . . 23
5.2. Notices. . . . . . . . . . . . . . . . . . . . . . . . . 24
5.3. Language . . . . . . . . . . . . . . . . . . . . . . . . 25
5.4. Successors and Assigns . . . . . . . . . . . . . . . . . 25
5.5. Amendments . . . . . . . . . . . . . . . . . . . . . . . 25
5.6. Waivers. . . . . . . . . . . . . . . . . . . . . . . . . 25
5.7. Severability . . . . . . . . . . . . . . . . . . . . . . 25
5.8. Execution in Counterparts. . . . . . . . . . . . . . . . 26
5.9. Governing Law. . . . . . . . . . . . . . . . . . . . . . 26
5.10. Submission to Jurisdiction . . . . . . . . . . . . . . . 26
5.11. Expenses . . . . . . . . . . . . . . . . . . . . . . . . 26
5.12. Adjustments. . . . . . . . . . . . . . . . . . . . . . . 26
</TABLE>
<PAGE> 3
Exhibit A Promissory Note
Exhibit B Aracorn Capital Stock Legend
Exhibit C Consideration Shares Legend
Schedule 1.1 Arancia Entities
ii
<PAGE> 4
STOCKHOLDER AGREEMENT
STOCKHOLDER AGREEMENT, dated as of _______, 1998 (the "Agreement"), among
Corn Products International, Inc., a Delaware corporation ("Corn Products"),
Promociones Industriales Aralia, S.A. de C.V., a corporation organized and
existing under the laws of the Republic of Mexico ("Aralia") and Arancia
Industrial, S.A. de C.V., a corporation organized and existing under the laws of
the Republic of Mexico ("Arinsa" and, together with Aralia, the "Parent
Companies").
PRELIMINARY STATEMENT
WHEREAS, the Parties to this Agreement have previously entered into a
Transaction Agreement and certain other agreements related thereto.
WHEREAS, on the date hereof, the Parties to this Agreement are closing the
initial transactions contemplated by the Transaction Agreement and wish to enter
into this Agreement to memorialize their relationship following such closing.
Accordingly, in consideration of the mutual agreements hereinafter set
forth, Corn Products and the Parent Companies hereby agree as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATION
1.1. DEFINITIONS. In this Agreement, the following terms have the meanings
specified or referred to in this Section 1.1 and shall be equally applicable to
both the singular and plural forms.
"AFFILIATE" means with respect to any Person, any other Person or
Individual which directly or indirectly controls, is controlled by or is under
common control with such Person. In addition to the foregoing, as used in the
definition of "Arancia Entity" (but not in the definition of "Bound Arancia
Entity") the term "Affiliate" shall include, with respect to any Individual, any
present or future child, stepchild, grandchild, parent, stepparent, grandparent,
spouse, sibling, brother-in-law, sister-in-law, mother-in-law, father-in-law,
son-in-law, daughter-in-law of such Individual, and shall include adoptive
relationships. For the avoidance of doubt, the Parties acknowledge that (i) Corn
Products on the one hand and the Arancia Entities on the other hand shall not be
considered "Affiliates" of each other, (ii) the Companies and their Subsidiaries
shall not be considered "Affiliates" of the Parent Companies at any time, and
(iii) the Companies and their Subsidiaries shall be considered "Affiliates" of
Corn Products following the Initial Closing.
<PAGE> 5
"AGREED RATE" means the rate calculated from time to time pursuant to the
term "Base Rate" as such term is defined, without giving effect to any
amendments, in the U.S.$340,000,000 5-Year Revolving Credit Agreement dated as
of December 17, 1997 among Corn Products, the Lenders named therein, Citibank,
N.A., as Administrative Agent, Citicorp Securities, Inc. as Arranger, The First
National Bank of Chicago, as Documentation Agent, The Chase Manhattan Bank, as
Co-Agent and CPC International Inc., as Interim Guarantor, whether or not such
agreement thereafter remains in effect. Except as otherwise provided herein,
interest calculations based on the Agreed Rate shall be computed based on
quarterly compounding.
"ARANCIA CHANGE OF CONTROL" means, with respect to any Arancia Entity,
Bound Arancia Entities no longer, directly or indirectly, beneficially own and
control more than 50% of the Voting Securities of such Arancia Entity.
"ARANCIA ENTITY" means those Persons and Individuals set forth on Schedule
1.1 and any Persons or Individuals who are, from time to time, Affiliates or
Subsidiaries of any Persons and Individuals set forth on Schedule 1.1.
"ARANCIA PUT OPTION SHARES" has the meaning specified in Section 2.1(a).
"ARANCIA REPRESENTATIVE" means Aralia or such other party as Aralia
designates in writing to Corn Products or such other party as may be designated
by the Arancia Representative at such time.
"BOUND ARANCIA ENTITY" means (i) those Persons and Individuals set forth on
Schedule 1.1, (ii) any Persons or Individuals who are, from time to time,
Affiliates or Subsidiaries of any Bound Arancia Entity, (iii) any Arancia Entity
that owns beneficially or of record or who at any time has owned beneficially or
of record Consideration Shares, (iv) any family trust, partnership or similar
entity that holds or has held Consideration Shares received pursuant to clause
(A)(2) of the definition of "Exempt Transfer," and (v) any holder of a
beneficial interest or an ownership interest in an entity referred to in (iv)
above, and, in each case, which has entered into an agreement with Corn Products
to be bound by the provisions of Sections 2.2, 2.3, 3.4, 3.5 and 3.8 hereof.
"BUSINESS" means the following activities: corn wet milling processing,
manufacturing, marketing, distribution, sales and trading of all types of
products derived from the corn wet milling process, such as, but not limited to,
all types of starches, modified corn starch, corn syrups, syrup blends, fructose
sweeteners, caramel colors, maltrodextrins, dextroses, sorbitols, gluten meal,
gluten feed and corn germ meal, corn germ, corn oil, ethanol, citric acid, and
lactic acid. The aforesaid products covered by this Agreement will not be
limited to regular corn derivatives, but will also include starches derived from
any other agricultural products such as, but not limited to: waxy corn, sorghum,
high amylose corn, potato, wheat, and tapioca, and their derivatives
independently of the industrial process employed to produce them.
-2-
<PAGE> 6
"BUSINESS DAY" means any day on which the principal commercial banks
located in Mexico City, Mexico and New York, New York, United States of America
are open for business during normal banking hours.
"COMMISSION" means the United States Securities and Exchange Commission.
"COMPANIES" means Aracorn, Poliecsa, and the Joint Venture.
"COMPETITOR" has the meaning specified in Section 2.2(a).
"CONSIDERATION SHARE CALL DATE" has the meaning specified in Section
2.3(a).
"CONSIDERATION SHARE CALL NOTICE" has the meaning specified in Section
2.3(a).
"CONSIDERATION SHARE CALL OPTION" has the meaning specified in Section
2.3(a).
"CONSIDERATION SHARE PUT NOTICE" has the meaning specified in Section
2.1(c).
"CONSIDERATION SHARE PUT OPTION" has the meaning specified in Section
2.1(a).
"CONSIDERATION SHARE PUT PERIOD" has the meaning specified in Section
2.1(a).
"CONSIDERATION SHARES" means shares of Corn Products Common Stock delivered
pursuant to Section 2.2(a)(ii) of the Transaction Agreement plus the Optional
Shares, if any.
"CONTINUOUSLY EFFECTIVE", with respect to a specified registration
statement, means that it shall not cease to be effective and available for
transfers of Consideration Shares thereunder for longer than three Business Days
during the period specified in the relevant provision of Article IV; provided,
however, that such registration statement shall not be Continuously Effective if
it ceases to be effective and available for transfers of Consideration Shares
thereunder during the first five Business Days of such effectiveness.
"CORN PRODUCTS COMMON STOCK" means common stock, par value US$.01 per
share, of Corn Products.
"DEMAND REGISTRATION" has the meaning specified in Section 4.1(c)(ii).
"DEMAND REGISTRATION STATEMENT" has the meaning specified in Section 4.1.
"EXCHANGE ACT" means the United States Exchange Act of 1934, as amended.
"EXEMPT TRANSFER" has the meaning specified in Section 2.2(b).
-3-
<PAGE> 7
"EXERCISE NOTICE" has the meaning specified in Section 2.2(b)(ii).
"FAIR MARKET VALUE" has the meaning specified in Section 2.1(c).
"FIRST PUT CLOSING DATE" has the meaning specified in Section 3.1 of the
Transaction Agreement.
"GOVERNMENTAL BODY" means: (i) any national, federal, provincial, state,
municipal or other government or body; (ii) any multinational, multilateral or
international body; (iii) any subdivision, ministry, department, secretariat,
bureau, agency, commission, board, instrumentality or authority of any of the
foregoing governments or bodies; (iv) any administrative agency or
quasi-governmental or private body exercising any regulatory, expropriation or
taxing authority under or for the account of any of the foreign governments or
bodies; or (v) any national, international, multilateral or multinational
judicial, quasi-judicial, arbitration or administrative court, tribunal, grand
jury, commission, board or panel.
"INDIVIDUAL" means a physical person.
"INITIAL CLOSING DATE" has the meaning specified in Section 3.1 of the
Transaction Agreement.
"OPTIONAL SHARES" means any shares of Corn Products Common Stock received
by Aralia or its designee from Corn Products as partial consideration for the
purchase by Corn Products of the 26.6% Shares or the 24.4% Shares (each, as
defined in the Transaction Agreement) from Aralia.
"PARENT COMPANIES" has the meaning specified in the first paragraph of this
Agreement.
"PAYMENT DATE" has the meaning specified in Section 2.1(d).
"PERSON" means a corporation, company, limited liability company,
cooperative, partnership, trust, unincorporated association, entity with
juridical personality or Governmental Body, but shall not include any
Individual.
"PIGGYBACK REGISTRATION" has the meaning specified in Section 4.2(a).
"QUALIFIED NOMINEE" has the meaning specified in Section 3.3.
"QUALIFIED PLEDGEE" means a recognized financial or banking institution
with a combined capital and surplus in excess of US $100,000,000 and which is
not an Affiliate of a Competitor.
-4-
<PAGE> 8
"REGISTRATION EXPENSES" has the meaning specified in Section 4.5(a).
"REGISTRATION NOTICE" has the meaning specified in Section 4.1(a).
"RESTRICTED PERIOD" has the meaning specified in Section 3.5.
"SECURITIES ACT" means the United States Securities Act of 1933, as
amended.
"SELLING ENTITY" has the meaning specified in Section 4.3(b).
"SHARE TRANSFER DATE" has the meaning specified in Section 2.1(c).
"SUBSIDIARY" means, with respect to any Person, any other Person which is
controlled by it or by one or more Persons each of which is controlled by it,
and for the purpose of this definition "CONTROL" means, with respect to any
Person, the ownership of more than 50% of the voting shares of the Person.
"TAX" (and, with correlative meaning, "TAXES" and "TAXABLE") means any
taxes, charges, fees, levies, contributions or other assessments or
reassessments imposed or administered by any Taxing Authority, including all net
income, gross income, gross receipts, sales, use, ad valorem, value added,
transfer, trade, franchise, privilege, profits, license, withholding, payroll,
employment, profit sharing, social security, housing fund, retirement savings
systems, excise, estimated, severance, stamp, occupation, property, assets or
other taxes, customs, duties, fees, assessments or charges of any kind
whatsoever, together with any interest, penalties, additions to tax or
additional amounts imposed thereon or with respect thereto.
"TAX RETURN" means all returns (including amended returns and estimated Tax
returns), Dictamen Fiscal, declarations, reports, schedules, information
returns, statements or other documents, any amendments thereto and any related
or supporting information filed or required to be filed, with respect to Taxes.
"TAXING AUTHORITY" means any Governmental Body having or exercising any
authority to assess, impose or collect Taxes of any kind.
"TRANSACTION AGREEMENT" shall mean the Transaction Agreement dated as of
October 21, 1998 by and between Corn Products and the Parent Companies.
"TRANSFER" means with respect to any item, to directly or indirectly sell,
transfer, assign, convey or otherwise dispose of such item or to enter into any
agreement, commitment or arrangement to do the same.
"TRANSFER NOTICE" has the meaning specified in Section 2.2(b)(i).
-5-
<PAGE> 9
"TRANSFER PRICE" has the meaning specified in Section 2.2(b)(i).
"UNDERWRITER'S REPRESENTATIVE" means the managing underwriter, or, in the
case of a co-managed underwriting, the lead managing underwriter.
"VIOLATION" has the meaning specified in Section 4.6.(a).
"VOTING SECURITIES" means any securities entitled to vote in the election
of directors generally, securities convertible or exchangeable into or
exchangeable for such securities and any rights or options to acquire any such
securities.
ARTICLE II
PUT AND CALL RIGHTS
2.1. CONSIDERATION SHARE PUT OPTION. (a) For a period of ten (10) years
beginning thirteen months after the Initial Closing Date (as such period may be
extended as provided below, the "Consideration Share Put Period"), each Bound
Arancia Entity shall have the right (a "Consideration Share Put Option") from
time to time to require Corn Products to purchase the number of Consideration
Shares issued by Corn Products pursuant to the Transaction Agreement, including
any securities issued with respect to such Consideration Shares and any
securities into which such Consideration Shares may be converted or
recapitalized (the "Arancia Put Option Shares") held by such Bound Arancia
Entity or any portion thereof; provided, however, that no Consideration Share
Put Option (i) may be exercised with respect to less than 250,000 Arancia Put
Option Shares at any one time, (ii) may be exercised if a Consideration Share
Put Option has been exercised by any Bound Arancia Entity within six months of
the proposed exercise and (iii) may be exercised other than in conformity with
the procedures set forth in Sections 2.1(c) and (d).
(b) The Consideration Share Put Period may be extended for an additional
period of three years at the option of Corn Products upon written notice
delivered to the Arancia Representative at least 30 days prior to the end of the
initial ten year period.
(c) The Arancia Representative may exercise a Consideration Share Put
Option on behalf of any Bound Arancia Entity by delivering to Corn Products a
written notice (the "Consideration Share Put Notice") to such effect stating (i)
the number of Arancia Put Option Shares for which such Consideration Share Put
Option is being exercised and (ii) the price per share to be paid by Corn
Products, which price shall be the average of the Fair Market Value for the 20
trading days immediately preceding the date of such Consideration Share Put
Notice. The term "Fair Market Value" means (i) the closing sales price of Corn
Products Common Stock, on the applicable exchange if it is listed on a national
securities exchange, or if not, as reported on the Nasdaq National Market
System, or if there have been no sales on any such exchange or the
-6-
<PAGE> 10
Nasdaq National Market System on any day, the average of the highest bid and
lowest asked prices at the end of such day, or if on any day Corn Products
Common Stock is not so listed, the average of the representative bid and asked
prices quoted in the Nasdaq System as of 4:00 P.M., New York time, on such day,
or if on any day Corn Products Common Stock is not quoted in the Nasdaq System,
the average of the highest bid and lowest asked prices on such day in the
domestic over-the-counter market as reported by the National Quotation Bureau,
Incorporated, or any similar successor organization or (ii) if Corn Products
Common Stock is not listed on any national securities exchange or the Nasdaq
National Market System or quoted in the Nasdaq System or the domestic
over-the-counter market, the fair value thereof shall be determined by an
accounting firm of nationally recognized standing jointly selected by Corn
Products and such Bound Arancia Entity. Corn Products and such Bound Arancia
Entity shall each pay an equal portion of the costs and fees of such accounting
firm, and the decision of the accounting firm shall be final and binding on Corn
Products and such Bound Arancia Entity. The Consideration Share Put Notice shall
specify a date (the "Share Transfer Date") at least two Business Days after the
date of such Consideration Share Put Notice.
(d) On the Share Transfer Date the Bound Arancia Entity or Entities holding
the Arancia Put Option Shares with respect to which such Consideration Share Put
Option has been exercised shall deliver to Corn Products the stock certificate
or certificates representing such Arancia Put Option Shares, accompanied by a
duly executed stock power transferring such Arancia Put Option Shares to Corn
Products. In the event that any such stock certificate delivered by a Bound
Arancia Entity represents more shares of Corn Products Common Stock than are
being purchased by Corn Products pursuant hereto, upon receipt of such
certificate Corn Products shall issue a new stock certificate to such Bound
Arancia Entity representing the appropriate number of shares. On the Share
Transfer Date Corn Products shall issue to the relevant Bound Arancia Entity a
promissory note substantially in the form of Exhibit A hereto in the principal
amount equal to the purchase price for such Arancia Put Option Shares. The
principal amount of any such promissory note shall be due and payable on (1)
with respect to the first 1,764,706 shares of Arancia Put Option Shares with
respect to which such Consideration Share Put Option is exercised, (i) the 90th
calendar day following the Consideration Share Put Notice in the event such
Consideration Share Put Option is exercised with respect to 250,000 Arancia Put
Option Shares, (ii) the 360th calendar day in the event that such Consideration
Share Put Option is exercised with respect to 1,764,706 Arancia Put Option
Shares or (iii) a prorated date between the 90th and 360th day (pro rated based
on the number of shares) in the event that such Consideration Share Put Option
is exercised with respect to a number of Arancia Put Option Shares that is
greater than 250,000 and less than 1,764,706, and (2) with respect to any excess
of the Arancia Put Option Shares with respect to which such Consideration Share
Put Option is exercised over 1,764,706, (i) the 360th calendar day in the event
that such excess is less than 10 Arancia Put Option Shares, (ii) the 720th
calendar day in the event that such excess consists of all remaining
Consideration Shares or (iii) a prorated date between the 360th and 720th day
(prorated based on the number of shares) in the event such excess is greater
than 10 and less than all remaining Consideration Shares. For purposes of the
foregoing clause (2), "remaining" Consideration Shares shall consist of the
total number of Option Shares issued or issuable
-7-
<PAGE> 11
pursuant to the Transaction Agreement (assuming, if the 24.4% Shares have not
yet been transferred to Corn Products, that the Fair Market Value of Corn
Products Common Stock at the time of the Second Put Closing will be the same as
such Fair Market Value at the time of the First Put Closing). If the date on
which the principal amount becomes due is not a Business Day then the principal
amount shall become due on the next subsequent Business Day. Such promissory
note will bear interest at the Agreed Rate which shall be payable quarterly
after the Share Transfer Date.
2.2. RESTRICTIONS ON TRANSFER. (a) The Bound Arancia Entities shall not
Transfer, at any time prior to the end of the Consideration Share Put Period,
any Consideration Shares to any Competitor (as defined below); provided,
however, that a sale made to a Person or Individual making a public tender offer
approved by the Board of Directors of Corn Products shall not be deemed to be a
Transfer for purposes hereof. A "Competitor" shall mean any one of the six
largest Persons engaged in the corn wet milling business ranked by worldwide
sales revenue from the corn wet milling business based upon the most recent
publicly available data. Corn Products shall from time to time (or upon request
by the Arancia Entity) provide the Arancia Representative with a written notice
of the then current "Competitors". If the Arancia Representative shall not
deliver to Corn Products within 30 days of receipt of such notice written
objection to such notice, together with substantiation as to why the Persons set
forth in such notice do not meet the definition of a Competitor set forth above,
the Persons listed on such notice shall be deemed to be the Competitors for
purposes hereof until a subsequent notice (in accordance with the provisions set
forth above) changing such list of Competitors is given to the Arancia
Representative.
(b) Subject to paragraph (a) above, prior to the end of the Consideration
Share Put Period, none of the Bound Arancia Entities shall Transfer any
Consideration Shares unless:
(i) Prior to such Transfer of Consideration Shares, other than an Exempt
Transfer (as defined below), such Bound Arancia Entity shall deliver to Corn
Products a written notice (the "Transfer Notice") setting forth, the maximum
number of Consideration Shares proposed to be Transferred and the terms and
conditions, if any, upon which such Bound Arancia Entity intends to make
such Transfer, including the then present value of the purchase price
discounted at the Agreed Rate (the "Transfer Price") of such Consideration
Shares; and
(ii) Corn Products shall have been given the right to purchase such
Consideration Shares at the Transfer Price, which right may be exercised by
the delivery of a written notice of exercise (the "Exercise Notice") to
such Bound Arancia Entity no later than 10 Business Days after the receipt
by Corn Products of the Transfer Notice.
A Transfer shall be an "Exempt Transfer" if (A) it is a Transfer (1) to any
Arancia Entity, (2) to any family trust, partnership or similar entity control
of which is vested in an Arancia Entity and the majority of the beneficial
interests and/or ownership interests in which are held by
-8-
<PAGE> 12
Arancia Entities, (3) to which Corn Products has given its prior written
consent, (4) which constitutes a bona fide pledge to a Qualified Pledgee
(including foreclosure by such Qualified Pledgee, but not including a
foreclosure sale to third parties) to secure debt for borrowed money or
obligations to the Qualified Pledgee incurred in connection with a derivatives
transaction, (5) in an unsolicited brokers' transaction on an exchange pursuant
to Rule 144 of the Securities Act, including, whether or not required by Rule
144, paragraphs (f) and (g) thereof, or (6) to a Person or Individual making a
public tender offer approved by the Board of Directors of Corn Products, (B) in
the case of an Exempt Transfer made pursuant to clause 1, 2 or 3 above, the
transferee enters into an agreement with Corn Products pursuant to which such
transferee agrees to be bound by Sections 2.2, 2.3, 3.4, 3.5 and 3.8 hereof, and
(C) in the case of an Exempt Transfer pursuant to clause 4 above, the Qualified
Pledgee enters into an agreement with Corn Products pursuant to which such
Qualified Pledgee agrees to be bound by Sections 2.2, 2.3, and 3.8 hereof.
Provided that the qualifications of this Section 2.2 are met, upon foreclosure
a Qualified Pledgee shall have the same rights under Section 2.1, clause (5) of
the "Exempt Transfer" definition and Article IV with respect to the
Consideration Shares held by it as a Bound Arancia Entity.
In the event that Corn Products elects to purchase such Consideration
Shares, the closing of such purchase shall occur on the tenth Business Day after
the date of the Exercise Notice, on which date (A) Corn Products shall deliver
the Transfer Price by wire transfer of immediately available funds to an account
in the United States or Mexico specified by such Bound Arancia Entity in the
Transfer Notice and (B) such Bound Arancia Entity shall deliver to Corn Products
a stock certificate or certificates representing such Consideration Shares
accompanied by a duly executed stock power transferring such Consideration
Shares to Corn Products. In the event that any such stock certificate delivered
by such Bound Arancia Entity represents more Consideration Shares than are being
purchased by Corn Products pursuant hereto, upon receipt of such certificate
Corn Products shall issue a new stock certificate to such Bound Arancia Entity
representing the appropriate number of Consideration Shares.
In the event that Corn Products does not deliver the Exercise Notice within
10 Business Days of the delivery of the Transfer Notice, such Bound Arancia
Entity shall be permitted to Transfer such Consideration Shares at any time
during the 120 calendar days following the date of the Transfer Notice to any
third party other than a Competitor for a consideration that is no less than the
Transfer Price, and on substantially the same terms and conditions, if any, as
were specified in the Transfer Notice. The consideration may have a deferred
component so long as the present value of the payments constituting such
consideration is not less than the Transfer Price.
2.3. CONSIDERATION SHARE CALL OPTION. (a) In the event that an Arancia
Change of Control shall occur during the Consideration Share Put Period with
respect to any Arancia Entity that holds Consideration Shares of record or
beneficially, Corn Products shall have the right (the "Consideration Share Call
Option") to purchase any or all of the Consideration Shares
-9-
<PAGE> 13
held beneficially or of record by such Arancia Entity. Corn Products shall
exercise the Consideration Share Call Option by delivery of a written notice
(the "Consideration Share Call Notice") to the Arancia Representative (at any
time prior to the 30th day after receipt of notice from the Arancia
Representative of the relevant Arancia Change of Control) to such effect stating
(i) the price per share to be paid by Corn Products, which price shall be the
Fair Market Value for the 20 trading days immediately preceding the date of such
Consideration Share Call Notice and (ii) the date (the "Consideration Share Call
Date") on which Corn Products shall purchase such Consideration Shares which
shall be no later than 10 days after the date of such Consideration Share Call
Notice.
(b) Corn Products shall purchase the Consideration Shares subject to a
Consideration Share Call Notice on the Consideration Share Call Date by wire
transfer of immediately available funds to an account in the United States or
Mexico specified in writing by the Arancia Entity from which Corn Products is
purchasing the Consideration Shares at least two Business Days prior to the
Consideration Share Call Date, in return for the delivery on the Consideration
Share Call Date by the Bound Arancia Entity that holds any such Consideration
Shares to Corn Products of the stock certificate or certificates representing
such Consideration Shares, accompanied by a duly executed and witnessed stock
power transferring such Consideration Shares to Corn Products. In the event that
any such stock certificate represents more Consideration Shares than are being
purchased by Corn Products pursuant hereto, upon receipt of such certificate
Corn Products shall issue a new stock certificate to the appropriate Bound
Arancia Entity representing the appropriate number of Consideration Shares.
ARTICLE III
ADDITIONAL AGREEMENTS
3.1. ACCESS TO RECORDS AFTER CLOSING. (a) For a period of five years after
December 31 of the calendar year in which the Initial Closing Date occurs, the
Parent Companies and their representatives shall have reasonable access to all
of the books and records of the Companies to the extent that such access may
reasonably be required by Parent Companies in connection with matters relating
to or affected by the operations of the Companies prior to the Initial Closing
Date. Such access shall be afforded by Corn Products upon receipt of reasonable
advance notice and during normal business hours. The Parent Companies shall be
solely responsible for any costs or expenses incurred by them pursuant to this
Section 3.1. If Corn Products shall desire to dispose of any of such books and
records prior to the expiration of such period, Corn Products shall, prior to
such disposition, give Parent Company a reasonable opportunity, at Parent
Companies' expense, to segregate and remove such books and records as the Parent
Companies may select.
(b) For a period of five years after December 31 of the calendar year in
which the Initial Closing occurs, Corn Products and its representatives shall
have reasonable access to all of
-10-
<PAGE> 14
the books and records relating to the Companies which the Parent Companies or
any of their Affiliates may retain after the Initial Closing Date. Such access
shall be afforded by the Parent Companies and their Affiliates upon receipt of
reasonable advance notice and during normal business hours. Corn Products shall
be solely responsible for any costs and expenses incurred by it pursuant to this
Section 3.1. If the Parent Companies or any of their Affiliates shall desire to
dispose of any of such books and records prior to the expiration of such period,
the Parent Companies shall, prior to such disposition, give Corn Products a
reasonable opportunity, at Corn Products's expense, to segregate and remove such
books and records as Corn Products may select.
3.2. NO SOLICITATION. For a period of three years from the Initial Closing
Date, the Parent Companies and their Affiliates and Subsidiaries shall not
directly or indirectly solicit any employee of the Companies or any of their
Subsidiaries to terminate such employment in order to enter into any such
relationship on behalf of any other business organization in competition with
the Business conducted by the Companies or any of their Subsidiaries.
3.3. Board of Directors of Corn Products. (a) Subject to paragraph (b)
below, as long as the number of shares of Corn Products Common Stock held
beneficially by the Bound Arancia Entities, in the aggregate, is equal to or
greater than both (1) 1,235,293 and (2) 2.5% of the number of shares of Corn
Products Common Stock issued and outstanding from time to time, Corn Products
agrees to nominate or cause to be nominated Ignacio Aranguren Castiello or a
Qualified Nominee (as defined below) to its Board of Directors and to solicit
proxies in favor of such election. In the event that the number of shares of
Corn Products Common Stock held beneficially by the Bound Arancia Entities is
less than either number set forth in the preceding sentence, Corn Products shall
have the option, but shall no longer be required, to nominate Ignacio Aranguren
Castiello or a Qualified Nominee to its Board of Directors upon the expiration
of such Individual's term. Notwithstanding anything contained herein to the
contrary, Corn Products shall have the right to remove Ignacio Aranguren
Castiello or the Qualified Nominee, as the case may be, from its Board of
Directors at any time for cause (subject to any requirements of applicable law),
or withdraw his or the Qualified Nominee's name from nomination, at any time for
cause or any other reason, established by the Compensation and Nominating
Committee of the Board of Directors of Corn Products in its sole discretion
exercised in good faith, applicable to all members of Corn Products' Board of
Directors. Subject to the first sentence of this paragraph, if Ignacio Aranguren
Castiello or a Qualified Nominee is removed from Corn Products' Board of
Directors pursuant to the preceding sentence or if Ignacio Aranguren Castiello
or a Qualified Nominee is not a member of Corn Products' Board of Directors for
any reason, the Arancia Representative may designate a Qualified Nominee to be
elected to the Board of Directors to replace Ignacio Aranguren Castiello or such
Qualified Nominee or be nominated for election to the Board of Directors, as
applicable. A "Qualified Nominee" means an Individual specified by the Arancia
Representative who meets the general eligibility standards established by the
Compensation and Nominating Committee of the Board of Directors of Corn
Products, in its sole discretion exercised in good faith, for all board
nominees.
-11-
<PAGE> 15
(b) In the event that, after the expiration of the Consideration Share Put
Period, any of the Bound Arancia Entities shall sell any Consideration Shares to
a Competitor or to a Person or Entity who has filed a Schedule 13D, or any
successor form thereto with the Commission, upon the request of Corn Products,
Parent Companies shall cause Ignacio Aranguren Castiello or the Qualified
Nominee, as the case may be, to resign as a director of Corn Products and Corn
Products shall not be required to nominate Ignacio Aranguren Castiello or a
Qualified Nominee to its Board of Directors.
(c) In the event that Corn Products is merged with or into another
corporation or other entity, as long as the number of shares of any
publicly-held parent of the successor entity (the "Acquiror") held beneficially
by the Bound Arancia Entities, in the aggregate, is equal to or greater than
both (1) and (2) in Section 3.3(a) with respect to the issued and outstanding
shares of common stock of the Acquiror, the Acquiror shall be bound by this
Section 3.3 as if it were Corn Products.
3.4. VOTING. For so long as Ignacio Aranguren Castiello or a Qualified
Nominee is a member of the Board of Directors of Corn Products, Parent Companies
shall cause each Bound Arancia Entity, so long as any such Person or Individual
beneficially owns any Corn Products Common Stock, (a) to be present, in person
or by proxy, at all meetings of stockholders of Corn Products so that all Corn
Products Common Stock beneficially owned by each such Bound Arancia Entity may
be counted for the purpose of determining the presence of a quorum at such
meeting, (b) to vote all such shares of Corn Products Common Stock which he, she
or it is entitled to vote for the election of directors (i) in favor of each of
those individuals properly nominated in accordance with Corn Products's By-Laws
for election as directors who receive the greatest number of votes from the
holders of all shares of Corn Products Common Stock beneficially owned by
stockholders other than the Bound Arancia Entities (equal to the number of
directors to be elected at such meeting) or (ii) in favor of each of those
individuals recommended by the Board of Directors of Corn Products for election
as a director and (c) to vote and refrain from voting all such shares of Corn
Products Common Stock which he, she or it is entitled to vote (i) for all
matters (other than those referred to in clause (b) above), in the same
proportions as the shares of Corn Products Common Stock beneficially owned by
stockholders other than the Bound Arancia Entities are voted (i.e., for,
against, abstain) or refrain from voting thereof or (ii) for any or all matters
as recommended by the Board of Directors of Corn Products.
3.5. STANDSTILL. Unless otherwise requested expressly in writing in
advance by the Board of Directors of Corn Products, neither of the Parent
Companies shall, and they shall take all action necessary to prohibit each other
Bound Arancia Entity from, at any time during the nine-year period commencing on
the Initial Closing Date (the "Restricted Period"):
(a) Acquire or agree, offer, seek or propose to acquire, directly or
indirectly, alone or in concert with any other Person, by purchase or
otherwise, any ownership, including beneficial ownership as defined in Rule
13d-3 under the Exchange Act, of any of the assets, businesses or
securities of, or claims against, Corn Products or any Subsidiary
-12-
<PAGE> 16
thereof, or any rights or options to acquire such ownership (including from
any third party), except for ownership compensation plans or arrangements
generally applicable to members of Corn Products' Board of Directors;
(b) Solicit proxies (as such terms are defined in Rule 14a-1 under the
Exchange Act), whether or not such solicitation is exempt under Rule 14a-2
under the Act, with respect to any matter from holders of any shares of
Corn Products Voting Securities or make any communication exempted from the
definition of solicitation by Rule 14a-1(l)(2)(iv) under the Exchange Act,
except in connection with the solicitation of proxies by the Board of
Directors of Corn Products;
(c) Initiate, or induce or take any action to induce any other Person,
entity or group (as defined in Section 13(d)(3) of the Exchange Act) to
initiate, any stockholder proposal or tender offer for any securities of,
or claims against, Corn Products or any Subsidiary thereof, any change of
control of Corn Products or any Subsidiary thereof or the convening of a
stockholders' meeting of Corn Products or any Subsidiary thereof;
(d) Otherwise seek or propose to influence or control the management or
policies of Corn Products or any Subsidiary thereof, except with respect to
actions taken in connection with Board of Director activities or as an
employee or director of Corn Products or any Subsidiary thereof within the
scope of such position;
(e) Enter into any discussions, negotiations, arrangements or
understandings with any Person with respect to any Bound Arancia Entity
taking any action described in the foregoing subparagraphs (a) through (d);
or
(f) Take any action with respect to any of the matters described in this
Section 3.5, including any request to Corn Products (or its directors,
officers, employees or agents), directly or indirectly, to amend or waive
any provision of this Section 3.5, if such action (i) is disclosed publicly
by or on behalf of such Bound Arancia Entity or any of its Affiliates, or
(ii) would, in the judgment of Corn Products, be required to be referred to
in a public disclosure under the Securities Act or the Exchange Act or
otherwise, other than, in each such case, disclosure that would result from
Corn Products' agreement to the amendment or waiver in question and the
actions taken in connection therewith or as otherwise taken with the
agreement of Corn Products.
provided, however, that, notwithstanding anything in this Section 3.5 to the
contrary, the Bound Arancia Entities may purchase, directly or indirectly,
shares of Corn Products Common Stock that, together with shares of Corn Products
Common Stock already owned by the Arancia Entities, represent in the aggregate
up to 9.8% of the number of shares of Corn Products Common Stock issued and
outstanding from time to time; provided further, that, notwithstanding anything
in this Section 3.5 to the contrary, any delivery of Optional Shares by Corn
Products to Aralia that immediately results in the Bound Arancia Entities owning
in excess of 9.8% of the
-13-
<PAGE> 17
number of shares of Corn Products Common Stock issued and outstanding at such
time shall not constitute a breach of this Section 3.5. For the avoidance of
doubt, the Parties acknowledge that nothing contained in this Section 3.5 shall
restrict the right of any Bound Arancia Entity to Transfer Consideration Shares
(and take any actions necessary in connection therewith) in accordance with the
other provisions of this Agreement.
3.6. TAX COVENANTS. (a) The Parent Companies agree and covenant that they
will reimburse each of Aracorn and the Joint Venture for any overpayment of
Taxes remitted by such corporation to either Parent Company (or any Affiliate of
a Parent Company) by reason of such corporation's inclusion in the filing of a
consolidated Tax return. For purposes hereof, an "overpayment of Taxes" shall
mean any amount of Taxes so remitted along with any additional amounts paid or
payable thereon to the applicable Taxing Authority, which such corporation would
have the right to recover or claim for its refund, whether in cash or by means
of a credit against future Tax liabilities, if such corporation had not been
included in the filing of its consolidated Tax Return.
(b) Each Parent Company agrees and covenants that it will cause, or
cooperate with Corn Products to cause, each of Aracorn and the Joint Venture to
take all appropriate actions to supply to Corn Products, in a manner that is
reasonably satisfactory to Corn Products, all documents and information
reasonably requested by Corn Products in relation to any applicable United
States federal or state Tax requirement, including preparation of corporate
financial statements and all supporting data, and maintenance of receipts or
other evidence reasonably satisfactory to Corn Products of payment of Taxes.
(c) Corn Products agrees that it will cause, or cooperate with the Parent
Companies to cause, Aracorn and the Joint Venture to take all appropriate
actions to supply to each of the Parent Companies in a manner that is reasonably
satisfactory to each Parent Company, all documents and information reasonably
requested by either Parent Company in relation to any applicable Mexican Tax
consolidation requirement applicable to periods prior to the Initial Closing
Date, including preparation of corporate financial statements and all supporting
data, and maintenance of receipts or other evidence reasonably satisfactory to
each Parent Company of payment of Taxes.
(d) Each Parent Company agrees and covenants that it will pay any Taxes
which are imposed upon, assessed against or otherwise payable by either of
Aracorn or the Joint Venture solely by reason of the inclusion of such Company
in a consolidated Tax Return with any Arancia Entity or any of their Affiliates
and which would not otherwise be attributable to such Company.
(e) Each Parent Company agrees and covenants that it will reimburse to
Aracorn any Taxes imposed on, assessed against or otherwise payable by Aracorn
which are attributable to any corporate reorganization or intercompany transfers
or contributions prior to the Initial Closing involving either of the Parent
Companies, Aracorn or any of their Affiliates.
-14-
<PAGE> 18
(f) Each Party agrees and covenants to maintain, or to cause its respective
Affiliates to maintain, until the expiration of the applicable statutory period,
all records and files which any Company may need for filing Tax and other
returns and governmental reports, as well as for any action, exception, lawsuit
or remedy, of any kind, before any administrative, regulatory or judicial
authority and to give access, to the extent necessary for the filing of such
returns, reports, actions, exceptions, lawsuits or remedies, to such records and
files to any other Company or Party having a need for such access for any such
purpose.
3.7. ARACORN SHARES. All certificates representing shares of capital stock
of Aracorn held beneficially by Aralia shall bear the legend set forth in
Exhibit B and such legend may be removed from such certificate or certificates
only upon the earlier of (i) their transfer to Corn Products or its designee or
(ii) May 1, 2004.
3.8. CONSIDERATION SHARES. (a) All certificates representing Consideration
Shares shall bear the legend set forth in Exhibit C and such legend may be
removed from such certificate or certificates only in accordance with the terms
of such legend. The legend requirement shall terminate with respect to any
particular Consideration Shares upon the sale of such Consideration Shares in
accordance with clause (5) of the definition of "Exempt Transfer" set forth in
Section 2.2 (b) and Corn Products agrees to deliver to the transferee in such a
transfer certificates for such Consideration Shares without such legend. In the
event of a sale of Consideration Shares in accordance with the last paragraph of
Section 2.2 (b), all references in the legend to the restrictions in this
Agreement may be removed and Corn Products agrees to deliver to the transferee
in such a transfer certificates for the applicable Consideration Shares with a
legend without such references.
(b) Each of the Parent Companies agrees that it will not directly or
indirectly sell, assign, exchange, transfer, distribute or otherwise dispose of,
pledge or otherwise encumber (or offer to enter into any agreement to do so),
any Consideration Shares prior to the end of the Consideration Share Put Period
except as contemplated hereby or with the prior written consent of Corn
Products.
ARTICLE IV
REGISTRATION RIGHTS
4.1. DEMAND REGISTRATION. (a) Subject to paragraph (d) below, at any time
on or after the expiration of the Consideration Share Put Period, if the Arancia
Representative shall make a written request (the "Registration Notice") to Corn
Products, which request shall include (i) the number of Consideration Shares to
be registered, which number shall be at least 1% of the number of shares of Corn
Products Common Stock outstanding as of the date of the Registration Notice,
(ii) the intended methods of disposition thereof and (iii) a statement that the
request is for a Demand Registration pursuant to this Section 4.1, Corn Products
shall cause there to be filed
-15-
<PAGE> 19
with the Commission a registration statement meeting the requirements of the
Securities Act (a "Demand Registration Statement"), and each Bound Arancia
Entity approved by the Arancia Representative shall be entitled to have included
therein (subject to Section 4.1(g)) all or such number of Consideration Shares,
as such Arancia Entity shall set forth in the Registration Notice; provided,
however, that no request may be made pursuant to this Section 4.1 (i) if within
three months prior to the date of such request a Demand Registration Statement
pursuant to this Section 4.1 shall have been declared effective by the
Commission and shall have remained Continuously Effective until the earlier of
45 days after such declaration or an earlier date on which all Consideration
Shares requested to be included have been disposed thereunder in a manner
described thereon, or (ii) another Demand Registration Statement is effective at
the time of such request.
(b) Corn Products shall be entitled to postpone for up to 180 days the
filing of any Demand Registration Statement otherwise required to be prepared
and filed pursuant to this Section 4.1, if the Board of Directors of Corn
Products determines, in its good faith judgment, that such registration and the
transfer of Consideration Shares contemplated thereby would interfere with, or
require premature disclosure of, any financing, acquisition or reorganization
involving Corn Products or any of its Subsidiaries, and Corn Products promptly
gives the Bound Arancia Entity or Entities requesting registration notice of
such determination; provided, however, that such postponement shall not occur
more than twice in any 18-month period.
(c) Following receipt of a request for a registration pursuant to this
Section 4.1, Corn Products shall:
(i) Prepare and file the Demand Registration Statement with the Commission
as promptly as practicable, and shall use reasonable efforts to have the
registration declared effective under the Securities Act as soon as
reasonably practicable, in each instance giving due regard to the need to
prepare current financial statements, conduct due diligence and complete
other actions that are reasonably necessary to effect a registered public
offering; and
(ii) Use reasonable efforts to cause the relevant Demand Registration
Statement to be declared effective under the Securities Act and to remain
Continuously Effective for up to 45 days or until such earlier date as of
which all the Consideration Shares under the Demand Registration Statement
shall have been disposed of in the manner described in the Demand
Registration Statement (a "Demand Registration").
(d) Corn Products shall be obligated to effect no more than two Demand
Registrations; provided that if the Demand Registration Statement is not
maintained Continuously Effective for 45 days after the registration statement
related thereto has been declared effective by the Commission (or until an
earlier date on which all Consideration Shares requested to be included have
been disposed thereunder in a manner described thereon), such registration shall
not be deemed a Demand Registration for any purpose hereunder. If Corn Products
shall have
-16-
<PAGE> 20
complied with its obligations under this Section 4.1, a right to demand a
registration pursuant hereto shall be deemed to have been satisfied upon the
earlier of (x) the date as of which all of the Consideration Shares included
therein shall have been disposed of pursuant to the Demand Registration
Statement or otherwise, and (y) the date as of which such Demand Registration
Statement shall have been Continuously Effective for a period of 45 days.
(e) Notwithstanding Section 4.1(d), no registration hereunder shall be
deemed a Demand Registration for the purpose of determining whether two Demand
Registrations have occurred if (1) such registration has not remained
Continuously Effective for 45 days after declaration of effectiveness by the
Commission (or until an earlier date on which all Consideration Shares requested
to be included have been disposed thereunder in a manner described therein) or
(2) the Demand Registration Statement has not yet been declared effective and
the Arancia Representative has in writing withdrawn its demand for registration
and assumed responsibility in connection with payment of any expenses of
registration otherwise payable by Corn Products pursuant to Section 4.5.
(f) A registration pursuant to this Section 4.1 shall be on such
appropriate registration form of the Commission as shall (i) be selected by Corn
Products, and (ii) permit the disposition of the Consideration Shares in
accordance with the intended method or methods of disposition specified in the
Registration Notice.
(g) Corn Products shall have the right to select the lead underwriter or
lead manager to administer any underwritten offering pursuant hereto and the
Arancia Representative shall have the right to select one co-manager; provided,
however, that each Person so selected shall be reasonably acceptable to the
Arancia Representative or Corn Products, as the case may be.
(h) Whenever Corn Products shall effect a registration pursuant to this
Section 4.1 in connection with an underwritten offering by one or more Bound
Arancia Entities of Consideration Shares, if the managing underwriters,
including the co-managing underwriters, advise Corn Products in writing that, in
their joint opinion, the amount of securities requested to be included in such
offering (whether by the Bound Arancia Entities or others) exceeds the amount
which can be sold in such offering within a price range acceptable to the
Arancia Representative, securities shall be included in such offering and the
related registration only to the extent of the amount of such securities that
can, in the opinion of such managing underwriters, be sold within such price
range. No securities other than the Consideration Shares shall be otherwise
entitled to participate in the Offering unless (1) all the Consideration Shares
to which the Arancia Representative has requested registration have been
included in the registration statement, and (2) the managing underwriters advise
that other shares can be added to the Offering at a price acceptable to the
Arancia Representative.
4.2. PIGGYBACK REGISTRATION. (a) At any time on or after the expiration of
the Consideration Share Put Period, if Corn Products proposes to register
(including for this purpose
-17-
<PAGE> 21
a registration effected by Corn Products for shareholders of Corn Products other
than the Bound Arancia Entities) Corn Products Common Stock under the Securities
Act in connection with a public offering solely for cash on Form S-1, S-2 or S-3
(or any replacement or successor forms), Corn Products shall promptly give the
Arancia Representative written notice of such registration (a "Piggyback
Registration"). Upon the written request of any Bound Arancia Entity given
within 10 days following the date of such notice, Corn Products shall cause to
be included in such registration statement and use reasonable efforts to be
registered under the Securities Act all the Consideration Shares that each such
Bound Arancia Entity has requested to be registered. Corn Products shall have
the absolute right to withdraw or cease to prepare or file any registration
statement for any offering referred to in this Section 4.2 without any
obligation or liability to any Bound Arancia Entity or Affiliate thereof.
(b) If the Underwriters' Representative shall advise Corn Products in
writing that, in its opinion, the amount of Consideration Shares requested to be
included in such registration would adversely affect such offering, or the
timing thereof, then Corn Products will include in such registration, to the
extent of the amount which Corn Products is so advised can be sold without such
adverse effect in such offering: First, all securities proposed to be sold by
Corn Products for its own account; second, the Consideration Shares requested to
be included in such registration pursuant to this Section 4.2, and all other
securities being registered pursuant to the exercise of contractual rights, pro
rata based on the estimated gross proceeds from the sale thereof; and third, all
other securities requested to be included in such registration.
4.3. REGISTRATION PROCEDURES. Whenever required under Section 4.1 or
Section 4.2 to effect the registration of any Consideration Shares, Corn
Products shall, as expeditiously as practicable:
(a) Prepare and file with the Commission such amendments and supplements to
the applicable registration statement and the prospectus used in connection with
such registration statement as may be necessary to comply with the provisions of
the Securities Act and rules thereunder with respect to the disposition of all
securities covered by such registration statement, which registration statement
and prospectus shall include required information relating to each Selling
Entity (as defined below) in a form reasonably acceptable to such Selling
Entity. If the registration is for an underwritten offering, Corn Products shall
amend the registration statement or supplement the prospectus whenever required
by the terms of the underwriting agreement entered into pursuant to Section
4.4(b). Pending such amendment or supplement each Bound Arancia Entity shall,
and shall cause their Affiliates to, cease making offers or Transfers of
Consideration Shares pursuant to the prior prospectus. In the event that any
Consideration Shares included in a registration statement subject to, or
required by, this Article IV remain unsold at the end of the period during which
Corn Products is obligated to maintain the effectiveness of such registration
statement, Corn Products may file a post-effective amendment to the registration
statement for the purpose of removing such Securities from registered status.
-18-
<PAGE> 22
(b) Furnish to each Bound Arancia Entity selling Consideration Shares
pursuant hereto (each, a "Selling Entity"), without charge, such numbers of
copies of the registration statement, any pre-effective or post-effective
amendment thereto, the prospectus, including each preliminary prospectus and any
amendments or supplements thereto, in each case in conformity with the
requirements of the Securities Act and the rules thereunder, and such other
related documents as any such Bound Arancia Entity may reasonably request in
order to facilitate the disposition of Consideration Shares owned by such Bound
Arancia Entity.
(c) Use Corn Products' reasonable efforts (i) to register and qualify the
securities covered by such registration statement under such other securities or
Blue Sky laws of such states or jurisdictions as shall be reasonably requested
by the Underwriters' Representative, and (ii) to obtain the withdrawal of any
order suspending the effectiveness of a registration statement, or the lifting
of any suspension of the qualification (or exemption from qualification) of the
offer and transfer of any of the Consideration Shares in any jurisdiction, at
the earliest possible moment; provided, however, that Corn Products shall not be
required in connection therewith or as a condition thereto to qualify to do
business or to file a general consent to service of process in any such states
or jurisdictions.
(d) In the event of any underwritten offering, enter into and perform Corn
Products' obligations under an underwriting agreement (including indemnification
and contribution obligations of underwriters or agents), in usual and customary
form, with the managing underwriter or underwriters of or agents for such
offering. Corn Products shall also cooperate to the extent customary in such
offerings with the Selling Entities, and the Underwriters' Representative for
such offering in the marketing of the Consideration Shares, including making
available Corn Products' officers, accountants, counsel, premises, books and
records for such purpose, but Corn Products shall not be required to incur any
material out-of-pocket expense pursuant to this sentence.
(e) Promptly notify each Selling Entity of any stop order issued or
threatened to be issued by the Commission in connection therewith (and take all
reasonable actions required to prevent the entry of such stop order or to remove
it if entered).
(f) Make available for inspection by any Selling Entity participating in
such offering, any underwriter participating in such offering and the
representatives of such Selling Entity and underwriter (but not more than one
firm of counsel to all such Selling Entities), all financial and other
information as shall be reasonably requested by them, and provide any such
Selling Entity, any underwriter participating in such offering and the
representatives of such Selling Entity and underwriter the reasonable
opportunity to discuss the business affairs of Corn Products with its principal
executives and independent public accountants who have certified the audited
financial statements included in such registration statement, in each case all
as necessary to enable them to exercise their due diligence responsibility under
the Securities Act; provided, however, that information that Corn Products
determines, in good faith, to be confidential and which Corn Products advises
such Person in writing, is confidential shall not be disclosed unless
-19-
<PAGE> 23
such Person signs a confidentiality agreement reasonably satisfactory to Corn
Products or the Selling Entity agrees to be responsible for such Person's breach
of confidentiality on terms reasonably satisfactory to Corn Products.
(g) Use reasonable efforts to obtain a so-called "comfort letter" from its
independent public accountants, and legal opinions of counsel to Corn Products
addressed to the Selling Entities, in customary form and covering such matters
of the type customarily covered by such letters, and in a form that shall be
reasonably satisfactory to the Selling Entities. Corn Products shall furnish to
each Selling Entity a signed counterpart of any such comfort letter or legal
opinion. Delivery of any such opinion or comfort letter shall be subject to the
recipient furnishing such written representations or acknowledgments as are
customarily provided by selling shareholders who receive such comfort letters or
opinions.
(h) Take such other actions as are reasonably required in order to expedite
or facilitate the disposition of Consideration Shares included in each such
registration.
4.4. HOLDERS' OBLIGATIONS. It shall be a condition precedent to the
obligations of Corn Products to take any action pursuant to this Article IV with
respect to the Consideration Shares held by any Selling Entity that such Selling
Entity shall:
(a) Furnish to Corn Products such information regarding such Selling
Entity, the number of the Consideration Shares owned by it, and the intended
method of disposition of such securities as shall be required to effect the
registration of such Selling Entity's Consideration Shares, and to cooperate
with Corn Products in preparing such registration; and
(b) In the case of a Piggyback Registration agree to sell their
Consideration Shares to the underwriters at the same price and on substantially
the same terms and conditions as Corn Products or the other Persons on whose
behalf the registration statement was being filed have agreed to sell their
securities, and to execute the underwriting agreement agreed to by the Selling
Entities (in the case of a registration under Section 4.1) or Corn Products (in
the case of a registration under Section 4.2).
4.5. EXPENSES OF REGISTRATION. Expenses in connection with registrations
pursuant to this Article IV shall be allocated and paid as follows:
(a) Except as otherwise provided herein, with respect to each Demand
Registration Corn Products shall bear and pay all expenses incurred in
connection with any registration, filing, or qualification of Consideration
Shares with respect to such Demand Registrations for each Selling Entity,
including all registration, filing and National Association of Securities
Dealers, Inc. fees, all fees and expenses of complying with securities or blue
sky laws, all word processing, duplicating and printing expenses, messenger and
delivery expenses, the reasonable fees and disbursements of counsel for Corn
Products, and of Corn Products' independent public accountants, including the
expenses of "cold comfort" letters required by or
-20-
<PAGE> 24
incident to such performance and compliance (the "Registration Expenses"), but
excluding underwriting discounts and commissions relating to Consideration
Shares (which shall be paid on a pro rata basis by the Selling Entities).
(b) Corn Products shall bear and pay all Registration Expenses incurred in
connection with any Piggyback Registrations pursuant to Section 4.2 for each
Selling Entity, but excluding underwriting discounts and commissions relating to
Consideration Shares (which shall be paid on a pro rata basis by the Selling
Entities).
4.6. INDEMNIFICATION; CONTRIBUTION. If any Consideration Shares are
included in a registration statement under this Article IV:
(a) To the extent permitted by applicable law, Corn Products shall
indemnify and hold harmless each Selling Entity, each Person, if any, who
controls such Selling Entity within the meaning of the Securities Act, and each
officer, director, partner, and employee of such Selling Entity and such
controlling Person, against any and all losses, claims, damages, liabilities and
expenses, including reasonable attorneys' fees and disbursements and expenses of
investigation, incurred by such party pursuant to any actual or threatened
action, suit, proceeding or investigation, or to which any of the foregoing
Persons may become subject under the Securities Act, the Exchange Act or other
federal or state laws, insofar as such losses, claims, damages, liabilities and
expenses arise out of or are based upon or caused by any untrue statement or
alleged untrue statement of a material fact contained in such registration
statement, any prospectus or preliminary prospectus contained therein or any
amendment or supplement thereto, or arising out of, based upon or caused by any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages, liabilities or expenses are
caused by any such untrue statement or omission or alleged untrue statement or
omission (collectively, a "Violation") based upon information relating to Corn
Products or its Affiliates; provided, however, that Corn Products shall not be
liable in any such case for any such loss, claim, damage, liability or expense
to the extent that it arises out of or is based upon a Violation which occurs in
reliance upon and in conformity with information furnished in writing to Corn
Products by the indemnified party or any of its Affiliates expressly for use in
connection with such registration; provided, further, that the indemnity
agreement contained in this Section 4.6 shall not apply to the extent that any
such loss is based on or arises out of an untrue statement or alleged untrue
statement of a material fact, or an omission or alleged omission to state a
material fact, contained in or omitted from any preliminary prospectus if the
final prospectus shall correct such untrue statement or alleged untrue
statement, or such omission or alleged omission, and a copy of the final
prospectus has not been sent or given to such person at or prior to the
confirmation of sale to such person if the co-managing underwriter selected by
the Arancia Representative was under an obligation to deliver such final
prospectus and failed to do so.
(b) To the extent permitted by applicable law, each Selling Entity shall
indemnify and hold harmless Corn Products, each of its directors, each of its
officers who shall have signed
-21-
<PAGE> 25
the registration statement, each Person, if any, who controls Corn Products
within the meaning of the Securities Act, any other Selling Entity, any
controlling Person of any such other Selling Entity and each officer, director,
partner, and employee of such other Selling Entity and such controlling Person,
against any and all losses, claims, damages, liabilities and expenses, including
reasonable attorneys' fees and disbursements and expenses of investigation,
incurred by such party pursuant to any actual or threatened action, suit,
proceeding or investigation, or to which any of the foregoing Persons may
otherwise become subject under the Securities Act, the Exchange Act or other
federal or state laws, insofar as such losses, claims, damages, liabilities and
expenses arise out of or are based upon any Violation, in each case to the
extent that such Violation occurs in reliance upon and in conformity with
information furnished in writing by such Selling Entity expressly for use in
connection with such registration.
(c) Promptly after receipt by an indemnified party under this Section 4.6
of notice of the commencement of any action, suit, proceeding, investigation or
threat thereof made in writing for which such indemnified party may make a claim
under this Section 4.6, such indemnified party shall deliver to the indemnifying
party a written notice of the commencement thereof and the indemnifying party
shall have the right to participate in, and, to the extent the indemnifying
party so desires, jointly with any other indemnifying party similarly noticed,
to assume the defense thereof. The failure to deliver written notice to the
indemnifying party within a reasonable time following the commencement of any
such action, if prejudicial to its ability to defend such action, shall relieve
such indemnifying party of any liability to the indemnified party under this
Section 4.6 but shall not relieve the indemnifying party of any liability that
it may have to any indemnified party otherwise than pursuant to this Section
4.6. Any such indemnified party shall have the right to employ separate counsel
in any such action, claim or proceeding and to participate in the defense
thereof, but the fees and expenses of such counsel shall be the expenses of such
indemnified party unless (i) the indemnifying party has agreed to pay such fees
and expenses or (ii) the indemnifying party shall have failed to promptly assume
the defense of such action, claim or proceeding or (iii) the named parties to
any such action, claim or proceeding (including any impleaded parties) include
both such indemnified party and the indemnifying party, (in which case, if such
indemnified party notifies the indemnifying party in writing that it elects to
employ separate counsel at the expense of the indemnifying party, the
indemnifying party shall not have the right to assume the defense of such
action, claim or proceeding on behalf of such indemnified party, it being
understood, however, that the indemnifying party shall not, in connection with
any one such action, claim or proceeding or separate but substantially similar
or related actions, claims or proceedings arising out of the same general
allegations or circumstances, be liable for the reasonable fees and expenses of
more than one separate firm of attorneys and one firm of local counsel at any
time for all such indemnified parties). No indemnifying party shall be liable to
an indemnified party for any settlement of any action, proceeding or claim
without the written consent of the indemnifying party, such consent not to be
unreasonably denied.
-22-
<PAGE> 26
(d) If the indemnification required by this Section 4.6 from the
indemnifying party is unavailable to an indemnified party hereunder in respect
of any losses, claims, damages, liabilities or expenses referred to in this
Section 4.6:
(i) The indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified
party as a result of such losses, claims, damages, liabilities or expenses
in such proportion as is appropriate to reflect the relative fault of the
indemnifying party and indemnified parties in connection with the actions
which resulted in such losses, claims, damages, liabilities or expenses, as
well as any other relevant equitable considerations. The relative fault of
such indemnifying party and indemnified parties shall be determined by
reference to, among other things, whether any Violation has been committed
by, or relates to information supplied by, such indemnifying party or
indemnified parties, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such Violation. The
amount paid or payable by a party as a result of the losses, claims,
damages, liabilities and expenses referred to above shall be deemed to
include, subject to the limitations set forth in Section 4.6(a) and Section
4.6(b), any legal or other fees or expenses reasonably incurred by such
party in connection with any investigation or proceeding.
(ii) The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 4.6 were determined by pro rata
allocation or by any other method of allocation which does not take into
account the equitable considerations referred to in Section 4.6(d)(i).
(e) If indemnification is available under this Section 4.6, the
indemnifying parties shall indemnify each indemnified party to the full extent
provided in this Section 4.6 without regard to the relative fault of such
indemnifying party or indemnified party or any other equitable consideration
referred to in Section 4.6(d).
(f) The obligations of Corn Products and the Selling Entities under this
Section 4.6 shall survive the completion of any offering of Consideration Shares
pursuant to a registration statement pursuant to this Agreement.
ARTICLE V
GENERAL PROVISIONS
5.1 SURVIVIAL OF OBLIGATIONS. All covenants, agreements and obligations
contained in this Agreement shall survive the consummation of the transactions
contemplated by this Agreement.
-23-
<PAGE> 27
5.2. NOTICES. Any notice, consent, authorization, direction or other
communication required or permitted to be given hereunder shall be in writing
and shall be delivered either by personal delivery or by telecopier or similar
telecommunication device, and addressed as follows:
If to Corn Products, to:
6500 South Archer Road
Bedford Park, IL 60501-1933
Attention: General Counsel
FAX: (708) 563-6592
with a copy to:
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
Attention: John M. O'Hare
FAX: (312) 853-7036
If to Aralia, to:
Lopez Cotilla 2032 - Mezzanine
Sector Juarez
Guadalajara, Jal. 44100
Mexico
Attention: General Counsel
FAX: 011-523-818-3395
If to Arinsa, to:
Lopez Cotilla 2032 - 8th Floor
Sector Juarez
Guadalajara, Jal. 44100
Mexico
Attention: General Counsel
FAX: 011-523-818-3387
with a copy to:
Davis Polk & Wardwell
450 Lexington Avenue
New York, NY 10017
Attention: George R. Bason, Jr.
FAX: (212) 450-4800
-24-
<PAGE> 28
Any notice, consent, authorization, direction or other communication delivered
as aforesaid shall be deemed to have been effectively delivered and received, if
sent by telecopier or similar telecommunications device upon receipt of
confirmation of such transmission or, if delivered, on the date of such
delivery; provided, however, that if such date is not a Business Day then it
shall be deemed to have been delivered and received on the Business Day next
following such delivery. Any Party may change its address by written notice
delivered as aforesaid.
5.3. LANGUAGE. This Agreement is made and signed in the English language.
5.4. SUCCESSORS AND ASSIGNS. (a) This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns; provided, however, that neither party shall have the right to transfer
or assign its interest in this Agreement without the prior written consent of
the other parties, which consent shall not be unreasonably withheld.
(b) Notwithstanding the foregoing provisions of this Section 5.4, Corn
Products may assign its rights and obligations under this Agreement to any
corporation or other entity that shall acquire all or substantially all of Corn
Products' business and assets and who shall assume in writing all of Corn
Products' obligations hereunder and deliver a signed copy of such assumption
agreement to the Parent Companies.
(c) Nothing in this Section 5.4 shall be deemed to prohibit any Bound
Arancia Entity from Transferring the Consideration Shares in accordance with the
terms of this Agreement.
5.5. AMENDMENTS. This Agreement shall not be amended, modified or
supplemented except by a written instrument signed by an authorized
representative of each of the Parties.
5.6. WAIVERS. Any term or provision of this Agreement may be waived, or
the time for its performance may be extended, by the Party or Parties entitled
to the benefit thereof. Any such waiver shall be validly and sufficiently given
for the purposes of this Agreement if, as to any Party, it is in writing signed
by an authorized representative of such Party. The failure of any Party hereto
to enforce at any time any provision of this Agreement shall not be construed to
be a waiver of such provision, nor in any way to affect the validity of this
Agreement or any part hereof or the right of any Party thereafter to enforce
each and every such provision. No waiver of any of the provisions of this
Agreement shall be deemed to constitute a waiver of any other provisions
(whether or not similar), nor shall such waiver constitute a continuing waiver
unless otherwise expressly provided in an instrument duly executed by the Party
to be bound thereby.
5.7. SEVERABILITY. Any Article, Section or other subdivision of this
Agreement or any other provision of this Agreement which is, or becomes,
illegal, invalid or unenforceable shall be severed from this Agreement and shall
be ineffective to the extent of such illegality, invalidity or unenforceability,
but the Parties shall in good faith agree on a substitute provision that is
legal,
-25-
<PAGE> 29
valid and enforceable and that most closely reflects the intention of the
Parties. Such severed and ineffective provision shall not affect or impair the
remaining provisions hereof, which provisions shall (i) be severed from any
illegal, invalid or unenforceable Article, Section or other subdivision of this
Agreement or any other provision of this Agreement and (ii) otherwise remain in
full force and effect.
5.8. EXECUTION IN COUNTERPARTS. This Agreement may be executed in several
identical counterparts, each of which when executed and delivered by the Parties
hereto shall be an original, but all of which together shall constitute a single
instrument.
5.9. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the internal laws (as opposed to the conflicts of law
provisions) of the State of New York, United States of America.
5.10. SUBMISSION TO JURISDICTION. Each Parent Company and Corn Products
hereby irrevocably submits in any suit, action or proceeding arising out of or
related to this Agreement or any of the transactions contemplated hereby or
thereby to the exclusive jurisdiction of any court of the State of New York,
United States of America and waives any and all objections to jurisdiction that
they may have under the laws of the State of New York, the United States of
America or the Republic of Mexico and any claim or objection that any such court
is an inconvenient forum.
5.11. EXPENSES. Each Party shall pay the costs, expenses, fees, taxes and
duties which it incurs in the course of negotiation, execution and performance
of its obligations pursuant to this Agreement.
5.12. ADJUSTMENTS. (a) References contained in Sections 2.1(a), 2.1(d) and
3.3(a) to specific numbers of shares of Corn Products Common Stock shall be
adjusted to account for any stock dividend, stock split, reverse split or
similar combination or subdivision of such capital stock.
(b) As used in Sections 2.1, 3.3, 3.4 and 3.5, "Corn Products Common Stock"
shall include any securities issued in respect of Corn Products Common Stock and
any securities into which Corn Products Common Stock may be converted or
recapitalized (including by operation of a merger or a business combination).
(c) As used in Sections 2.2, 2.3 and Article IV, "Consideration Shares"
shall include any securities issued in respect of Consideration Shares and any
securities into which Consideration Shares may be converted or recapitalized.
-26-
<PAGE> 30
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed the day and year first above written.
CORN PRODUCTS INTERNATIONAL INC.
By: ___________________________
Name:
Title:
PROMOCIONES INDUSTRIALES ARALIA, S.A. DE C.V.
By: ___________________________
Name:
Title:
ARANCIA INDUSTRIAL S.A. DE C.V.
By: ___________________________
Name:
Title:
-27-
<PAGE> 1
EXECUTION VERSION
OPTION AGREEMENT
Option Agreement made this 21st day of October, 1998, by and among Corn
Products International, Inc., a Delaware corporation ("Corn Products") and
Promociones Industriales Aralia, S.A. de C.V., a corporation organized and
existing under the laws of the Republic of Mexico ("Aralia").
WHEREAS, Corn Products has entered into that certain Transaction Agreement
dated as of October 21, 1998 (the "Transaction Agreement") with Arancia
Industrial S.A. de C.V., a corporation organized and existing under the laws of
the Republic of Mexico ("Arinsa"), and Aralia. Unless otherwise specified
herein, all capitalized terms used or incorporated by reference herein without
definition shall have the meanings set forth in the Transaction Agreement.
WHEREAS, pursuant to the Transaction Agreement, Corn Products (i) agreed to
purchase from Aralia, and Aralia agreed to sell to Corn Products, forty-nine
percent of the outstanding capital stock of Aracorn S.A. de C.V., a corporation
organized under the laws of the Republic of Mexico ("Aracorn"), and (ii) granted
to Aralia options to sell the remaining fifty-one percent of the outstanding
capital stock of Aracorn to Corn Products on the terms and conditions set forth
therein.
WHEREAS, Aralia desires to grant to Corn Products, and Corn Products
desires to have, options to purchase the remaining fifty-one percent of the
outstanding capital stock of Aracorn from Aralia on the terms and conditions set
forth herein.
NOW THEREFORE, in consideration of the promises and mutual covenants
contained in this Agreement and the Transaction Agreement and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, Corn Products and Aralia covenant and agree as follows:
ARTICLE I
PURCHASE OF SHARES
1.1. PURCHASE AND SALE OF SHARES. (a) At the option of Corn Products,
exercised by written notice (the "First Call Exercise Notice") delivered to
Aralia no later than two Business Days prior to the First Call Closing Date, and
upon the terms and subject to the conditions of this Agreement, on the First
Call Closing Date, Aralia shall sell, transfer, assign, convey and deliver to
Corn Products, free and clear of all Liens, 59,757,307 shares of capital stock
of Aracorn (the "26.6% Shares"), and Corn Products shall purchase such 26.6%
Shares from Aralia.
<PAGE> 2
(b) At the option of Corn Products, exercised by written notice (the
"Second Call Exercise Notice") delivered to Aralia no later than December 1,
2003, and upon the terms and subject to the conditions of this Agreement, on the
Second Call Closing Date, Aralia shall sell, transfer, assign, convey and
deliver to Corn Products, free and clear of all Liens, 54,814,973 shares of
capital stock of Aracorn (the "24.4% Shares") and Corn Products shall purchase
such 24.4% Shares from Aralia.
1.2. PURCHASE PRICE. (a) The purchase price for the 26.6% Shares (the
"First Call Purchase Price") shall be, at Corn Products' option, either (i) cash
in the amount equal to US$38,043,141 plus the amount accrued thereon from the
Initial Closing Date to the First Call Closing Date at the Agreed Rate, or (ii)
(A) cash in the amount equal to US$18,043,141 plus the amount accrued thereon
from the Initial Closing Date to the First Call Closing Date at the Agreed Rate
plus (B) a number of shares of Corn Products Common Stock determined by dividing
(1) US$20,000,000 plus the amount accrued thereon from the Initial Closing Date
to the First Call Closing Date at the Agreed Rate by (2) the average of the Fair
Market Value of Corn Products Common Stock for the twenty (20) trading days
immediately prior to the First Call Closing Date.
(b) The purchase price for the 24.4% Shares (the "Second Call Purchase
Price") shall be, at Corn Products' option, either (i) cash in the amount equal
to US$34,901,960 plus the amount accrued thereon from the Initial Closing Date
to the Second Call Closing Date at the Agreed Rate, subject to adjustment, if
any, pursuant to Section 3.2 hereof, or (ii) (A) cash in the amount equal to
US$24,901,960 plus the amount accrued thereon from the Initial Closing Date to
the Second Call Closing Date at the Agreed Rate, subject to adjustment pursuant
to Section 3.2 hereof, plus (B) a number of shares of Corn Products Common Stock
determined by dividing (1) US$10,000,000 plus the amount accrued thereon from
the Initial Closing Date to the Second Call Closing Date at the Agreed Rate by
(2) the average of the Fair Market Value of Corn Products Common Stock for the
twenty (20) trading days immediately prior to the Second Call Closing Date.
(c) The term "Fair Market Value" means the closing sales price of Corn
Products Common Stock, on the applicable exchange if it is listed on a national
securities exchange, or if not, as reported on the Nasdaq National Market
System, or if there have been no sales on any such exchange or the Nasdaq
National Market System on any day, the average of the highest bid and lowest
asked prices at the end of such day. If Corn Products Common Stock is not listed
on any national securities exchange or the Nasdaq National Market System, then
Corn Products shall not have the option to pay any of the First Call Purchase
Price or the Second Call Purchase Price in shares of Corn Products Common Stock.
The term "Optional Shares" means any shares of Corn Products Common Stock
received by Aralia or its designee from Corn Products as partial consideration
for the purchase by Corn Products of the 26.6% Shares or the 24.4% Shares from
Aralia.
-2-
<PAGE> 3
ARTICLE II
CLOSING AND PURCHASE PRICE ADJUSTMENT
2.1. CLOSING DATE. (a) If the First Call Exercise Notice shall have been
delivered by Corn Products as provided in Section 1.1(a), the First Call Closing
shall take place on the date that is thirteen months after the Initial Closing
Date (or, if such day is not a Business Day, on the immediately succeeding
Business Day), after the Initial Closing Date at the offices of Sidley & Austin,
875 Third Avenue, New York, New York 10022 or at such other place or at such
other time as shall be agreed upon by Corn Products and Aralia. In the event
that the First Call Closing cannot take place on the date specified above solely
because the conditions to such Closing have not been satisfied, the date of such
Closing shall be deferred for up to 120 days so long as there exists a good
faith expectation that such conditions will be satisfied within such 120 day
period and throughout such period the Parties shall use all commercially
reasonable efforts in accordance with Section 6.8(a) of the Transaction
Agreement to consummate such closing. The date on which the First Call Closing
is actually held is sometimes referred to herein as the "First Call Closing
Date."
(b) If the Second Call Exercise Notice shall have been delivered by Corn
Products as provided in Section 1.1(b), the Second Call Closing shall take place
on the thirtieth day (or, if such day is not a Business Day, on the immediately
succeeding Business Day), after delivery of the Second Call Exercise Notice, at
the offices of Sidley & Austin, 875 Third Avenue, New York, New York 10022 or at
such other place or at such other time as shall be agreed upon by Corn Products
and Aralia. In no event shall the Second Call Closing take place unless the
transfer of the 26.6% Shares to Corn Products shall have occurred and, in any
event, the Second Call Closing shall not take place before the date that is
nineteen months after the Initial Closing Date or after December 31, 2003,
unless otherwise agreed by Corn Products and Aralia. In the event that the
Second Call Closing cannot take place on the date specified above solely because
the conditions to such Closing have not been satisfied, the date of such Closing
shall be deferred for up to 120 days so long as there exists a good faith
expectation that such conditions will be satisfied within such 120 day period
and throughout such period the Parties shall use all commercially reasonable
efforts in accordance with Section 6.8(a) of the Transaction Agreement to
consummate such closing. The time and date on which the Second Call Closing is
actually held are sometimes referred to herein as the "Second Call Closing
Date."
2.2. PAYMENT OF PURCHASE PRICE; DELIVERY OF SHARES. (a) Subject to the
fulfillment or waiver of the conditions set forth in Section 8.2 of the
Transaction Agreement, at the First Call Closing:
(i) Corn Products shall:
(A) pay, without any right of setoff, to Aralia an amount equal to (x)
the First Call Purchase Price or (y) the cash component of the First Call
Purchase
-3-
<PAGE> 4
Price as described in Section 1.2(a) hereof, in either case by wire
transfer of immediately available funds to the account in the United States
or Mexico specified by Aralia in writing to Corn Products at least two
Business Days prior to the First Call Closing; and
(B) deliver to Aralia a stock certificate representing Optional
Shares, if any, registered in the name of Aralia or such other Arancia
Entity as Aralia may specify in writing at least two Business Days prior to
the First Call Closing Date; provided that if such Optional Shares are to
be delivered to an Arancia Entity other than Aralia, such Arancia Entity
shall enter into an agreement with Corn Products pursuant to which such
Arancia Entity agrees to be bound by Sections 2.2, 2.3, 3.4, 3.5 and 3.8
of the Stockholder Agreement;
(ii) Aralia shall deliver to Corn Products a stock certificate representing
the 26.6% Shares, duly endorsed in favor of Corn Products to Corn Products
or such other Affiliate as Corn Products may specify in writing at least
two Business Days prior to the First Call Closing Date (provided that Corn
Products may not designate an Affiliate if such designation would adversely
affect or delay the Closing) and, together with Corn Products, cause such
transfer to be duly recorded in the stock record books of Aracorn.
(c) Subject to the fulfillment or waiver of the conditions set forth in
Section 8.3 of the Transaction Agreement, at the Second Call Closing:
(i) Corn Products shall:
(A) pay, without any right of setoff, to Aralia an amount equal to (x)
the Second Call Purchase Price or (y) the cash component of the Second Call
Purchase Price as described in Section 1.2(b) hereof, in either case, by
wire transfer of immediately available funds to the account in the United
States or Mexico specified by Aralia in writing to Corn Products at least
two Business Days prior to the Second Call Closing; and
(B) deliver to Aralia a stock certificate representing the Optional
Shares, if any, registered in the name of Aralia or such other Arancia
Entity as Aralia may specify in writing at least two Business Days prior to
the Second Call Closing Date; provided that if such Optional Shares are to
be delivered to an Arancia Entity other than Aralia, such Arancia Entity
shall enter into an agreement with Corn Products pursuant to which such
Arancia Entity agrees to be bound by Sections 2.2, 2.3, 3.4, 3.5 and 3.8
of the Stockholder Agreement;
(ii) Aralia shall deliver to Corn Products a stock certificate representing
the 24.4% Shares, duly endorsed in favor of Corn Products or to such other
Affiliate as Corn Products may specify in writing at least two Business Days
prior to the Second Call
-4-
<PAGE> 5
Closing Date (provided that Corn Products may not designate an Affiliate if
such designation would adversely affect or delay the Closing).
2.3. ARALIA'S ADDITIONAL DELIVERIES. Subject to fulfillment or waiver of
the conditions set forth in Section 8.2(b) of the Transaction Agreement (which
Section is hereby incorporated by reference herein), at the First Call Closing
and the Second Call Closing Aralia shall deliver to Corn Products all of the
documents relating to Aralia set forth in Section 3.4(b) and Section 3.4(c) of
the Transaction Agreement (which Sections are hereby incorporated by reference
herein).
ARTICLE III
OTHER AGREEMENTS
3.1. ESCROW AND TRUST AGREEMENT. Concurrently with the execution of this
Agreement, the parties hereto agree to enter into and abide by the terms of the
Informal Escrow Agreement in the form attached as Exhibit A. At the earlier of
the First Call Closing hereunder or the First Put Closing under the Transaction
Agreement, the parties hereto agree to enter into and abide by the terms of the
Trust Agreement in the form attached as Exhibit B. The obligation of Aralia to
enter into the Informal Escrow Agreement and the Trust Agreement shall be deemed
to be obligations of Aralia under Sections 3.4(a) and (b) of the Transaction
Agreement at the Initial Closing and the First Put Closing, respectively.
3.2. DIVIDENDS. (a) In the event that prior to the transfer of the 24.4%
Shares to Corn Products or its designee the Board of Directors of Aracorn shall
recommend to the stockholders of Aracorn and the stockholders of Aracorn shall
declare or pay a dividend or dividends on or shall make any other distribution
of cash with respect to, shares of capital stock of Aracorn and the record date
for any such dividend or distribution is a date that is on or after the transfer
of the 26.6% Shares to Corn Products or its designee but prior to the transfer
of the 24.4% Shares to Corn Products or its designee, the Second Call Purchase
Price shall be reduced by the aggregate amount of any such dividends or
distributions actually received by Aralia (converted, if paid in any currency
other than U.S. dollars, into U.S. dollars at the rate quoted on the date of
payment by The Wall Street Journal for such currency) plus the amount accrued
thereon from the date paid to the Second Call Closing Date at the Agreed Rate.
(b) In no event may the aggregate amount of any dividend or distribution
declared, paid or otherwise made by Aracorn and actually received by either of
the Parent Companies or any Arancia Entity prior to the transfer of the 24.4%
Shares to Corn Products or its designee be in excess of the Second Call Purchase
Price.
(c) In no event shall Corn Products permit Aracorn to pay any dividends
or distributions which would reduce the amounts otherwise payable to Parent
Companies hereunder,
-5-
<PAGE> 6
unless at the time of actual payment thereof, the currency of such payments can
be freely exchanged into U.S. dollars as described in paragraph (a) above and
the amounts of such dividends or distributions, when so converted, is freely
transferable to bank accounts in the United States of America.
(d) Notwithstanding anything in this Section 3.2 to the contrary, (a)
Aracorn shall not declare or pay any dividend prior to the date that is nineteen
months after the Initial Closing Date or (b) pay any dividend distribution
except in cash prior to the transfer of the 24.4% Shares to Corn Products or its
designee.
3.3. TRANSFER RESTRICTIONS. Aralia hereby agrees that it will not directly
or indirectly sell, assign, exchange, transfer, distribute or otherwise dispose
of, pledge or otherwise encumber (or enter into any agreement to do so), any
shares of capital stock of Aracorn except as contemplated by this Agreement or
the Transaction Agreement or with the prior written consent of Corn Products.
ARTICLE IV
GENERAL PROVISIONS
4.1. FURTHER ASSURANCES. Each of Aralia and Aracorn hereby agrees to
execute and deliver, or cause to be executed and delivered, to Corn Products,
such other bills of sale, assignments, proxies, options and other instruments of
conveyance and transfer as Corn Products shall reasonably request or as may be
otherwise necessary to carry out the terms and provisions of and consummate the
transactions contemplated by this Agreement.
4.2. INCORPORATION BY REFERENCE. The terms "First Put Closing," "First Put
Closing Date," "Second Put Closing," and "Second Put Closing Date" as used in
any provisions of the Transaction Agreement expressly incorporated by reference
herein shall be deemed to refer to the First Call Closing, First Call Closing
Date, Second Call Closing, and Second Call Closing Date, respectively, for
purposes of this Agreement.
4.3. NOTICES. Any notice, consent, authorization, direction or other
communication required or permitted to be given hereunder shall be in writing
and shall be delivered either by personal delivery or by telecopier or similar
telecommunication device, and addressed as follows:
If to Corn Products, to:
6500 South Archer Road
Bedford Park, IL 60501-1933
Attention: General Counsel
FAX: (708) 563-6592
-6-
<PAGE> 7
with a copy to:
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
Attention: John M. O'Hare
FAX: (312) 853-7036
If to Aralia, to:
Lopez Cotilla 2032-Mezzanine
Sector Juarez
Guadalajara, Jal. 44100
Mexico
Attention: General Counsel
FAX: 011-523-818-3387
with a copy to:
Davis, Polk & Wardwell
450 Lexington Avenue
New York, NY 10017
Attention: George R. Bason, Jr.
FAX: (212) 450-4800
Any notice, consent, authorization, direction or other communication delivered
as aforesaid shall be deemed to have been effectively delivered and received, if
sent by telecopier or similar telecommunications device upon receipt of
confirmation of such transmission or, if delivered, on the date of such
delivery; provided, however, that if such date is not a Business Day then it
shall be deemed to have been delivered and received on the Business Day next
following such delivery. Any party may change its address by written notice
delivered as aforesaid.
4.4. LANGUAGE. This Agreement is made and signed in the English language.
4.5. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the Parties and the respective successors and assigns;
provided, however, that neither party shall have the right to transfer or assign
its interest in this Agreement without the prior written consent of the other
parties, which consent shall not be unreasonably withheld.
4.6. WAIVERS. Any term or provision of this Agreement may be waived, or
the time for its performance may be extended, by the party or parties entitled
to the benefit thereof. Any such waiver shall be validly and sufficiently given
for the purposes of this Agreement if, as to any party, it is in writing signed
by an authorized representative of such party. The failure of any party hereto
to enforce at any time any provision of this Agreement shall not be construed to
be a waiver of such provision, nor in any way to affect the validity of this
Agreement or any part hereof or the right of any party thereafter to enforce
each and every such provision. No waiver of any of the provisions of this
Agreement shall be deemed to constitute a waiver of any other provisions
(whether or not similar), nor shall such waiver constitute a continuing waiver
unless otherwise expressly provided in an instrument duly executed by the party
to be bound thereby.
-7-
<PAGE> 8
4.7. SEVERABILITY. Any Article, Section or other subdivision of this
Agreement or any other provision of this Agreement which is, or becomes,
illegal, invalid or unenforceable shall be severed from this Agreement and shall
be ineffective to the extent of such illegality, invalidity or unenforceability,
but the parties shall in good faith agree on a substitute provision that is
legal, valid and enforceable and that most closely reflects the intention of the
parties. Such severed and ineffective provision shall not affect or impair the
remaining provisions hereof, which provisions shall (i) be severed from any
illegal, invalid or unenforceable Article, Section or other subdivision of this
Agreement or any other provision of this Agreement and (ii) otherwise remain in
full force and effect.
4.8. EXECUTION IN COUNTERPARTS. This Agreement may be executed in several
identical counterparts, each of which when executed and delivered by the parties
hereto shall be an original, but all of which together shall constitute a single
instrument.
4.9. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the internal laws (as opposed to the conflicts of law
provisions) of the State of New York, United States of America.
4.10. SUBMISSION TO JURISDICTION. Each of Aralia, Aracorn and Corn Products
hereby irrevocably submits in any suit, action or proceeding arising out of or
related to this Agreement or any of the transactions contemplated hereby or
thereby to the exclusive jurisdiction of any court of the State of New York,
United States of America and waives any and all objections to jurisdiction that
they may have under the laws of the State of New York, the United States of
America or the Republic of Mexico and any claim or objection that any such court
is an inconvenient forum.
4.11. EXPENSES. Each Party shall pay the costs, expenses, fees, taxes and
duties which it incurs in the course of negotiation, execution and performance
of its obligations pursuant to this Agreement.
4.12 ENTIRE AGREEMENT; AMENDMENTS. The Transaction Agreement, this Option
Agreement, the Stockholder Agreement and the Exhibits and Schedules referred to
herein and therein and the documents delivered pursuant hereto and thereto and
the two letter agreements between Corn Products and Aralia dated the date of the
Transaction Agreement contain the entire understanding of the parties hereto
with regard to the subject matter contained herein or therein, and supersede all
prior agreements, understandings or letters of intent between or among any of
the parties hereto, including without limitation the Confidentiality Agreement.
This Option Agreement shall not be amended, modified or supplemented except by a
written instrument signed by an authorized representative of each of the
Parties.
4.13 ACKNOWLEDGMENT. Each of Aralia, Aracorn and Corn Products
acknowledges that this Agreement constitutes a Parent Company Ancillary
Agreement and a Corn Products Ancillary Agreement as those terms are used in the
Transaction Agreement. Each of
-8-
<PAGE> 9
Aralia, Aracorn and Corn Products acknowledges that the Optional Shares referred
to in this Agreement constitute Consideration Shares as used in the Stockholder
Agreement to be entered into by Corn Products, Arinsa and Aralia pursuant to the
Transaction Agreement.
-9-
<PAGE> 10
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed the day and year first above written.
CORN PRODUCTS INTERNATIONAL INC.
By:_______________________________________
Name:
Title:
PROMOCIONES INDUSTRIALES ARALIA,
S.A. de C.V.
By:_______________________________________
Name:
Title:
-10-
