-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Ux9+GhhdfZ5FhRjVYe8ooOJaSW+0gvWwzi/hc25o20TVbgSwCnlShZIvxB7/u9R2 2XxcRj+yTY2qvrpwdaY5VQ== 0000088121-99-000002.txt : 19990114 0000088121-99-000002.hdr.sgml : 19990114 ACCESSION NUMBER: 0000088121-99-000002 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19981230 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19990113 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SEABOARD CORP /DE/ CENTRAL INDEX KEY: 0000088121 STANDARD INDUSTRIAL CLASSIFICATION: POULTRY SLAUGHTERING AND PROCESSING [2015] IRS NUMBER: 042260388 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-03390 FILM NUMBER: 99505663 BUSINESS ADDRESS: STREET 1: 9000 W. 67TH STREET CITY: SHAWNEE MISSION STATE: KS ZIP: 66201 BUSINESS PHONE: 913-676-8939 MAIL ADDRESS: STREET 1: 9000 W. 67 STREET CITY: SHAWNEE MISSION STATE: KS ZIP: 66202 FORMER COMPANY: FORMER CONFORMED NAME: SEABOARD ALLIED MILLING CORP DATE OF NAME CHANGE: 19820328 FORMER COMPANY: FORMER CONFORMED NAME: HATHAWAY BAKERIES INC DATE OF NAME CHANGE: 19710315 8-K 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported) December 30, 1998 Seaboard Corporation (Exact name of registrant as specified in its charter) Delaware 1-3390 04-2260388 (State or other jurisdiction of (Commission (I.R.S. Employer) incorporation or organization) File Number) Indentification No.) 9000 W. 67th Street, Shawnee Mission, Kansas 66202 (Address of principal executive offices) (Zip Code) (Registrant's telephone number, including area code) (913) 676-8800 Not Applicable (Former name or former address, if changed since last report.) Item 2. Acquisition or Disposition of Assets Effective December 30, 1998, the Registrant completed the sale of its Holsum Bakers business located at Toa Baja, Puerto Rico and its Harinas de Puerto Rico flour milling operation located at Guanica, Puerto Rico, to a management group led by the current President of Holsum Bakers, Ramon Calderon. These assets were sold for approximately $81 million (which includes an adjustment increasing the purchase price by approximately $1 million pursuant to section 2(b)(iii) of the sale agreement) and the assumption of approximately $12 million in liabilities. Approximately $35 million of cash and short-term investments carried on the books of these companies were excluded from the sale and retained by the registrant. The registrant also retained approximately $2 million in net tax liabilities. The proceeds consist of approximately $72 million in cash, an $8 million interest bearing subordinated note receivable due in 2004, and a $1 million interest bearing note receivable from Ramon Calderon due in 2000. Consideration was determined by arms length negotiations. Item 7. Financial Statements and Exhibits (b) Pro forma financial information: The following pro forma unaudited condensed consolidated financial data of Seaboard Corporation (the Company) reflects the pro forma impact on the Company's financial position and results of operations of the sale of its Holsum Bakers and Harinas de Puerto Rico flour milling businesses (the Sold Businesses). Pro forma condensed consolidated statements of earnings are presented for the nine months ended September 30, 1998 and the year ended December 31, 1997, reflecting pro forma adjustments as if the sale was consummated at the beginning of each of the periods presented. A pro forma condensed consolidated balance sheet is presented as of September 30, 1998, reflecting pro forma adjustments as if the sale was consummated on that date. Certain management assumptions and adjustments are described in the accompanying notes. The following pro forma financial information is not necessarily indicative of the actual financial position or results of operations that would have resulted had the sale been consummated on the dates assumed, nor is it necessarily indicative of future operating results. SEABOARD CORPORATION AND SUBSIDIARIES Pro Forma Condensed Consolidated Statements of Earnings Nine months ended September 30, 1998 (Thousands of dollars except per share amounts) (Unaudited) Historical Pro Forma September 30, Pro Forma September 30, 1998 Adjustments 1998 Net sales $1,340,086 $ (68,356) (1)$1,271,730 Cost of sales and operating expenses 1,180,994 (35,667) (1) 1,145,327 Gross income 159,092 (32,689) 126,403 Selling, general and administrative expenses 106,068 (27,541) (1) 78,527 Operating income 53,024 (5,148) 47,876 Other income (expense): Interest income 5,166 761 (2) 560 (3) 6,487 Interest expense (24,343) 2,298 (4) (22,045) Loss from foreign affiliates (12,052) -- (12,052) Miscellaneous 3,460 4 (1) 3,464 Total other income (expense), net (27,769) 3,623 (24,146) Earnings before income taxes 25,255 (1,525) 23,730 Income tax expense 9,441 (2,208) (1) 1,114 (5) 8,347 Net earnings $ 15,814 $ (431) $ 15,383 Earnings per common share $ 10.63 $ (0.29) $ 10.34 Average number of shares outstanding 1,487,520 -- 1,487,520 SEABOARD CORPORATION AND SUBSIDIARIES Pro Forma Condensed Consolidated Statements of Earnings Year ended December 31, 1997 (Thousands of dollars except per share amounts) (Unaudited) Historical Pro Forma December 31, Pro Forma December 31, 1997 Adjustments 1997 Net sales $1,780,333 $ (93,977) (1)$1,686,356 Cost of sales and operating expenses 1,561,265 (49,443) (1) 1,511,822 Gross income 219,068 (44,534) 174,534 Selling, general and administrative expenses 141,993 (36,616) (1) 105,377 Operating income 77,075 (7,918) 69,157 Other income (expense): Interest income 6,127 1,012 (2) 760 (3) 7,899 Interest expense (31,108) 2,890 (4) (28,218) Loss from foreign affiliates (8,733) -- (8,733) Miscellaneous 1,221 -- 1,221 Total other income (expense), net (32,493) 4,662 (27,831) Earnings before income taxes 44,582 (3,256) 41,326 Income tax expense 14,008 (2,579) (1) 1,423 (5) 12,852 Net earnings $ 30,574 $ (2,100) $ 28,474 Earnings per common share $ 20.55 $ (1.41) $ 19.14 Average number of shares outstanding 1,487,520 -- 1,487,520 SEABOARD CORPORATION AND SUBSIDIARIES Notes to Pro Forma Condensed Consolidated Statements of Earnings Nine months ended September 30, 1998 and Year ended December 31, 1997 1. Adjustment eliminates from consolidated results the amounts contributed by the Sold Businesses. Adjustments do not reflect the net gain on the sale of the Sold Businesses of approximately $34 million, after tax on the gain of approximately $22 million. 2. Adjustment reflects pro forma interest income earned during the period on $28.8 million in cash proceeds from the sale invested in short-term investments, consistent with the actual application of proceeds resulting after the closing of the transaction. Pro forma interest income for each period was based on an average, non-taxable interest rate of 3.5%. 3. Adjustment reflects pro forma interest income earned during the period on the $9 million of notes receivable received as components of total sales proceeds, based on interest rates of 8% on the $8 million note and 12% on the $1 million note. 4. Adjustment reflects the pro forma reduction in interest expense assuming $43.5 million in cash proceeds are used to reduce short-term borrowings, consistent with the actual application of proceeds resulting after the closing of the transaction. Calculations are based on annual interest rates of 7.2% for the nine months ending September 30, 1998 and 6.6% for the year ended December 31, 1997. 5. Adjustment reflects the pro forma tax effect of additional interest income and reduced interest expense discussed in 2., 3. and 4. above at statutory tax rates. Note that the additional pro forma interest income discussed in 2. above is nontaxable. SEABOARD CORPORATION AND SUBSIDIARIES Pro Forma Condensed Consolidated Balance Sheet September 30, 1998 (Thousands of dollars) (Unaudited) Pro Forma Historical Adjustments Pro Forma Assets Current assets: Cash and cash equivalents $ 12,865 $ 1,107 (1) $ 13,972 Short-term investments 117,963 28,839 (2) 146,802 Receivables, net 177,921 (8,978) (1) 500 (3) 169,443 Inventories 196,807 (3,408) (1) 193,399 Deferred income taxes 11,117 -- 11,117 Prepaid expenses and deposits 18,980 (1,369) (1) 17,611 Total current assets 535,653 16,691 552,344 Investments in and advances to foreign affiliates 122,410 -- 122,410 Net property, plant and equipment 470,656 (20,356) (1) 450,300 Other assets 17,182 (1,457) (1) 8,500 (3) 24,225 Total assets $1,145,901 $ 3,378 $1,149,279 Liabilities and Stockholders' Equity Current liabilities: Notes payable to banks $ 175,048 $ (43,500) (4) $ 131,548 Current maturities of long-term debt 6,883 -- 6,883 Accounts payable 67,009 (2,929) (1) 64,080 Other current liabilities 113,293 (4,802) (1) 1,500 (5) 21,942 (6) 131,933 Total current liabilities 362,233 (27,789) 334,444 Long-term debt, less current maturities 306,048 -- 306,048 Deferred income taxes 32,342 -- 32,342 Other liabilities 31,428 (3,153) (1) 28,275 Total non-current and deferred liabilities 369,818 (3,153) 366,665 Stockholders' equity: Common stock of $1 par value, Authorized 4,000,000 shares; issued 1,789,599 shares 1,790 -- 1,790 Less 302,079 shares held in treasury (302) -- (302) 1,488 -- 1,488 Additional capital 13,214 -- 13,214 Accumulated other comprehensive income 147 -- 147 Retained earnings 399,001 34,320 (7) 433,321 Total stockholders' equity 413,850 34,320 448,170 Total liabilities and stockholders'equity $1,145,901 $ 3,378 $1,149,279 SEABOARD CORPORATION AND SUBSIDIARIES Notes to Pro Forma Condensed Consolidated Balance Sheet September 30, 1998 1. Adjustment eliminates amounts attributable to the Sold Businesses, net of assets and liabilities to be retained and the settlement of intercompany balances. 2. Adjustment reflects pro forma increase in short-term investments funded by cash proceeds not used to pay down short-term borrowings, consistent with actual application of cash proceeds after the closing of the transaction. 3. Adjustment reflects pro forma increase of $9 million in notes receivable representing a portion of the sale proceeds. $500,000 of the notes receivable are classified as current, the remaining $8.5 million are classified as long term. 4. Adjustment reflects the pro forma paydown of short-term borrowings with a portion of the cash proceeds received from the buyer, consistent with actual application of cash proceeds after the closing of the transaction. 5. Adjustment reflects pro forma estimated expenses and liabilities associated with the sale. 6. Adjustment reflects the pro forma estimated tax liability due on the gain from the sale based on statutory tax rates. 7. Adjustment reflects the pro forma estimated gain, net of tax, realized on the sale. (c) Exhibits: 2.1 Stock and Asset Purchase Agreement by and between HDPR Acquisitions Corp., and CB Acquisitions Corp., as Buyers and Seaboard Corporation, as Seller, dated as of November 9, 1998. 2.2 Asset Purchase Agreement by and between HDPR Acquisitions Corp., as Buyer, Harinas de Puerto Rico, Inc., as Seller and Seaboard Corporation, dated as of November 9, 1998. 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 thereunto duly authorized. DATE: January 13, 1999 Seaboard Corporation by: /s/ Robert L. Steer Robert L. Steer, Vice President-Chief Financial Officer EX-2.1 2 STOCK AND ASSET PURCHASE AGREEMENT by and between HDPR ACQUISITIONS CORP., and CB ACQUISITIONS CORP., as Buyers, and SEABOARD CORPORATION, as Seller ________________________________________ Dated as of November 9, 1998 ________________________________________ TABLE OF CONTENTS Section Page 1. Purchase and Sale of the Assets and the Shares; Assumption of Assumed Liabilities. . . . . . . . . . .2 2. Closing; Purchase Price Adjustment.. . . . . . . . . 10 3. Conditions to Closing. . . . . . . . . . . . . . . . 13 4. Representations and Warranties of Seller.. . . . . . 17 5. Covenants of Seller. . . . . . . . . . . . . . . . . 20 6. Representations and Warranties of Buyer. . . . . . . 27 7. Mutual Covenants.. . . . . . . . . . . . . . . . . . 28 8. Employee Matters . . . . . . . . . . . . . . . . . . 31 9. Further Assurances.. . . . . . . . . . . . . . . . . 31 10. Indemnification. . . . . . . . . . . . . . . . . . . 32 11. Tax Matters. . . . . . . . . . . . . . . . . . . . . 36 12. Assignment.. . . . . . . . . . . . . . . . . . . . . 41 13. No Third-Party Beneficiaries.. . . . . . . . . . . . 41 14. Termination. . . . . . . . . . . . . . . . . . . . . 41 15. Survival of Representations. . . . . . . . . . . . . 44 16. Expenses.. . . . . . . . . . . . . . . . . . . . . . 45 17. Amendments.. . . . . . . . . . . . . . . . . . . . . 45 18. Notices. . . . . . . . . . . . . . . . . . . . . . . 46 19. Interpretation.. . . . . . . . . . . . . . . . . . . 47 20. Counterparts.. . . . . . . . . . . . . . . . . . . . 47 21. Entire Agreement.. . . . . . . . . . . . . . . . . . 47 22. Fees.. . . . . . . . . . . . . . . . . . . . . . . . 48 23. Severability.. . . . . . . . . . . . . . . . . . . . 48 24. Governing Law; Consent to Jurisdiction.. . . . . . . 48 25. Waiver of Trial by Jury. . . . . . . . . . . . . . . 49 EXHIBITS B C D E F G SCHEDULES STOCK AND ASSET PURCHASE AGREEMENT Stock and Asset Purchase Agreement dated as of November 9, 1998, by and between HDPR Acquisitions Corp. ("HDPR") and CB Acquisitions Corp. ("CB"), Puerto Rico corporations (each, a "Buyer" and, collectively, "Buyers"), and Seaboard Corporation, a Delaware corporation ("Seller"). WHEREAS HDPR desires to purchase from Seller and Seller desires to sell to HDPR all the Holsum Assets (as defined below), and HDPR desires to assume all the Assumed Liabilities (as defined below) relating to the Holsum Business (as defined below) on the terms and subject to the conditions set forth herein; and WHEREAS CB desires to purchase from Seller and Seller desires to sell to CB all the issued and outstanding shares of capital stock (the "Shares") of Seaboard Bakeries, Inc. ("Seaboard Bakeries"), a Delaware corporation and a wholly owned subsidiary of Seller, and the Seaboard Bakeries Trademarks (as defined below), to the extent not owned directly by Seaboard Bakeries; NOW THEREFORE, in consideration of the mutual covenants and agreements contained herein, and for other good and valuable con sideration, the receipt and sufficiency of which is hereby acknowledged, and intending to be legally bound, the parties hereto agree as follows: 1. Purchase and Sale of the Assets and the Shares; Assumption of Assumed Liabilities. (a) Purchase and Sale of the Assets and the Shares; Purchase Price Allocation. (i) On the terms and subject to the conditions of this Agreement, (A) Seller will sell, transfer, assign, convey and deliver to HDPR, and HDPR will purchase from Seller, the Holsum Assets, and (B) Seller will sell, transfer, assign, convey and deliver to CB, and CB will purchase from Seller, the Shares and the Seaboard Bakeries Trademarks (to the extent not owned direct directly by Seaboard Bakeries) for an aggregate purchase price equal to $74,500,000 plus the assumption of the Assumed Liabilities (the "Purchase Price"), payable as set forth below in Section 2(a), and subject to adjustment as provided in Section 2(b). (ii) Without affecting Seller's obligations hereunder, Seller shall have the right to transfer the Holsum Assets and the Assumed Liabilities related to the Holsum Business to a newly formed wholly owned limited liability company on or prior to the Closing Date and to cause such limited liability company to transfer the Holsum Assets and the Assumed Liabilities related to the Holsum Business pursuant to this Agreement. Seller shall not use the name Holsum Bakers' in connection with the Business after the Closing Date and shall change the name no later than six months after the Closing Date (or earlier if necessary in order to allow Buyer to use the name). Seller agrees to execute any consent that may be required in connection with Buyer's use of such name. (iii) Seller and Buyers agree that the Purchase Price shall be allocated as follows: $67,500,000 plus the assumption of the Assumed Liabilities for the Holsum Assets, and $7,000,000 for the Shares and the Seaboard Bakeries Trademarks. The allocation of the purchase price among the Holsum Assets will be agreed to between Seller and HDPR after the date hereof; provided, however, that to the extent that HDPR requests, and Seaboard agrees, that any portion of the purchase price be allocated to the Restrictive Covenant, (as defined below), HDPR shall indemnify Seller for any Puerto Rico income tax payable by Seller attributable to such Restrictive Covenant in excess of the amount of Puerto Rico income tax thereon that would be payable by Seller if no portion of the purchase price had been allocated to such Restrictive Covenant, any interest and penalties and for any taxes payable with respect to this indemnity (gross up). Buyers and Seller agree to file all income, franchise and other tax returns, and execute such other documents or instruments as may be required by any governmental authority in a manner consistent with such allocations. (b) Holsum Assets. The term "Holsum Assets" shall mean the right, title and interest of Seller and any affiliate of Seller in the assets of Seller or such affiliate used or held primarily in the conduct of the business (the "Holsum Business") of the Holsum Bakers of Puerto Rico division of Seller ("Holsum Bakers"), wherever located and whether or not reflected on the books of Seller or such affiliate, whether tangible or intangible, whether real, personal or mixed, and whether existing on the date hereof or acquired hereafter, but excluding prepaid or deferred tax assets. Without limiting the generality of the foregoing, the Holsum Assets include, among other things, the following: (i) Real Property. The real property described on Schedule 1(b)(i) hereto, together with all buildings, improvements and fixtures thereon and all rights (including, but not limited to, any rights that Seller may possess over any other properties, such as any related rights of way or options), privileges and easements appurtenant thereto (the "Real Property"); (ii) Equipment. All machinery, equipment, vehicles, parts, supplies, fixtures, computers, trade fixtures and furnishings, whether leased or owned, that are located on the Real Property on the date hereof or otherwise used primarily in connection with the Holsum Business (the "Equipment"), including without limitation the Equipment set forth on Schedule 1(b)(ii); (iii) Contracts. All contracts, leases, agreements, commitments, purchase orders and other legally binding arrangements, whether oral or written, to which Seller is a party or by which Seller is bound which are related to the Holsum Business, including but not limited to those listed on Schedule 1(b)(iii) (the "Contracts"); (iv) Inventory. All inventory, goods, materials and supplies that are used in the Holsum Business (the "Inventory") and that are owned by Seller on the Closing Date; (v) Computer Software. To the extent permitted by the relevant license agreement, all computer software (including, without limitation, licenses, warranties and documentation related thereto and related objects and source codes) primarily utilized in the Holsum Business; (vi) Records. All information, files, records, data and plans relating to the operation of the Holsum Business, including, without limitation, maintenance records and manuals, and as- built drawings and surveys (provided that Seller shall have the right to retain copies of any or all such records); (vii) Licenses, Licensing Agreements and Permits. To the extent permitted by law and the terms of the license or permit, all permits, authorizations, licenses, licensing agreements, privileges and rights related to the Holsum Business, including all government authorizations, permits and licenses; (viii) Intellectual Property. Any and all patents, patent applications (whether filed, unfiled or being prepared), invention disclosures, trademarks (whether registered or unregistered), trademark registrations, trademark applications (whether filed, unfiled or being prepared), trade names, copyrights (registered or unregistered), copyright applications (whether filed, unfiled or being prepared), service marks (registered or unregistered), service mark applications (whether filed, unfiled or being prepared), all together with the goodwill of the Holsum Business associated with such marks or names, trade secrets, technology, inventions, know how, processes and confidential and proprietary information, including any being developed (including, but not limited to, drawings, designs, manufacturing data, design data, test data, operational data, engineering drawings, formulae, computer programs, computer software and manuals), whether or not subject to statutory registration, and Seller's patent and trademark files (or copies thereof) on all such intellectual property, and all other intellectual property and all rights thereunder, or in respect thereof, in each and every case referred to in this Section 1(b)(viii) relating primarily to the Holsum Business, including without limitation the trademarks and service marks listed on Schedule 1(b)(viii); provided that Seller expressly disclaims any warranty, express or implied, that it owns or has the exclusive right to use the same or that any of the intellectual property transferred does not violate or infringe upon the intellectual property rights of any third person; (ix) Accounts Receivable. All accounts receivable owed to the Holsum Business and generated from sales of products of the Holsum Business; (x) Cash. All cash and investments held by or for the account of Holsum Bakers on the Closing Date to the extent that the sum of the Seaboard Bakeries Dividend (as defined below) and the Holsum Cash Balance (as defined below) exceeds $30,488,851; and (xi) Other Assets. All other assets of the Holsum Business not described above reflected on the August 1, 1998, balance sheet set forth as Schedule 1(b)(xi) (the "Balance Sheet"), to the extent such assets have not been sold in the ordinary course of business or by persons under the direct or indirect supervision of Mr. Ramon Calderon. (c) Seaboard Bakeries Assets. The term "Seaboard Bakeries Assets" shall mean the right, title and interest of Seller and any affiliate of Seller, including Seaboard Bakeries, in the assets of Seller or such affiliate used or held primarily in the conduct of the business of Seaboard Bakeries (the "Seaboard Bakeries Business"), wherever located and whether or not reflected on the books of Seller or such affiliate, whether tangible or intangible, whether real, personal or mixed, and whether existing on the date hereof or acquired hereafter. Without limiting the generality of the foregoing, the Seaboard Bakeries Assets include, among other things, the types of assets described in Section 1(b) above, but relating to the Seaboard Bakeries Business instead of the Holsum Business, and the assets of the Seaboard Bakeries Business listed in the schedules specified in Section 1(b). (d) Seaboard Bakeries Trademarks. The term "Seaboard Bakeries Trademarks" shall mean the trademarks, service marks, trade names and other intellectual property of the type described in Section 1(b)(viii) used exclusively by the Business, including that set forth on Schedule 1(d). Seller makes no warranty, express or implied, that the Seaboard Bakeries Trademarks do not infringe upon the intellectual property rights of any other person or that it owns or has the exclusive right to use the same. (e) The term "Assets" means, collectively, the Holsum Assets and the Seaboard Bakeries Assets. The term "Business" means, collectively, the Holsum Business and the Seaboard Bakeries Business. (f) EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED HEREIN, BUYERS TAKE THE ASSETS "AS IS" AND BUYERS ACKNOWLEDGE THAT, EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED HEREIN, NEITHER SELLER NOR ANY PREDECESSOR OR SUCCESSOR IN INTEREST OF SELLER NOR ITS EMPLOYEES, REPRESENTATIVES, AGENTS OR ASSIGNS HAS MADE, NOR SHALL BE DEEMED TO HAVE MADE, ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO VALUE, CONDITION, MERCHANTABILITY, DESIGN, QUALITY, DURABILITY, OPERATION, OR FITNESS FOR USE OR PURPOSE OF SUCH ASSETS, OR ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO SUCH ASSETS, OR ANY COMPONENT THEREOF, IT BEING AGREED THAT ALL RISKS INCIDENT THERETO ARE TO BE BORNE BY BUYERS IN THE EVENT OF ANY DEFECT OR DEFICIENCY IN SUCH ASSETS OR ANY COMPONENT PART THEREOF, OF ANY NATURE, WHETHER PATENT OR LATENT, AND THAT SELLER SHALL HAVE NO RESPONSIBILITY OR LIABILITY WITH RESPECT THERETO. This provision is intended as a complete exclusion and negation of any warranties by Seller, express or implied, with respect to the Assets or any component thereof, other than the warranties set forth herein. (g) Assumed Liabilities. On the Closing Date, HDPR and CB shall assume, and shall thereafter pay, perform and discharge when due by their terms or as required by law, all the obligations and liabilities of Seller related to the Holsum Business and the Seaboard Bakeries Business, respectively, other than Retained Liabilities (as defined below), all in accordance with their terms (the "Assumed Liabilities"), including, but not limited to, (i) all liabilities included in the balance sheet of Holsum Bakers as of the Closing Date to be prepared by the parties (the "Closing Date Balance Sheet"); (ii) all obligations to perform the Contracts; (iii) all liabilities or claims arising from the operations of the Holsum Business and the Seaboard Bakeries Business, respectively (whether accruing prior to or after the Closing Date), other than Retained Liabilities; (iv) all liabilities arising under all employee benefit plans of Holsum Bakers and Seaboard Bakeries relating to all present and former employees of Holsum Bakers and Seaboard Bakeries (the "Plans"), including all unfunded liabilities under such Plans relating to such employees, any liability arising from any "deemed termination" of any such Plan, any liability arising from prior violations of law with respect to the Plans, any liability for violations of the minimum funding rules, any liability for violations of the reporting and disclosure rules, any liability for any past or present breach of fiduciary rules, any liability for any violation of rules under the Internal Revenue Code, any liability for any breach of ERISA, any liability for breach of COBRA rules, any liability for the failure to file any Form 5500 for prior years and the responsibility for Form 5500 filings in all subsequent years, any liability or responsibility with respect to any audit of the Plans, and all responsibility for any and all reporting requirements under Section 4043 of ERISA; (v) all claims and liability arising from the termination or deemed termination of any contract, whether under Act 75 of the Legislature of Puerto Rico or otherwise; and (vi) all liabilities as successor employer of the employees of the Business, including but not limited to any existing or future claim of wrongful termination, discrimination or any other claims related to terms and conditions of employment; but excluding Retained Liabilities, which Retained Liabilities will be retained by Seller. In addition, the Assumed Liabilities shall include liability for any WARN Act, severance, or other labor or employment obligations or claims under United States law, the law of the Commonwealth of Puerto Rico, or any local law or ordinance arising from or relating to the sale of the Assets and the Shares or the operation of the Business, other than Retained Liabilities. (h) Retained Liabilities. The term "Retained Liabilities" shall mean, with respect to both Holsum Bakers and Seaboard Bakeries, (i) all liability relating to or arising from the claims identified on Schedule 1(h)(i), except to the extent of any amount reserved for such claims on the Balance Sheet and indicated on said schedule; (ii) any liability under any agreement entered into by Seller or Seaboard Bakeries that (A) is not listed on Schedule 1(b)(ii) and (B) was entered into on behalf of Seller or Seaboard Bakeries by officers or employees of Seller or Seaboard Bakeries not under the direct or indirect supervision of Mr. Ramon Calderon, but only if any such agreement was not actually or constructively known to Buyers on the date hereof; and (iii) any liability arising from any action taken by officers or employees of Seller or Seaboard Bakeries not under the direct or indirect supervision of Mr. Ramon Calderon, and which action was not actually or constructively known to Buyers on the date hereof. (i) Withholding. All payments relating to the Purchase Price, including all payments of principal and interest due on the Note (as defined below) shall be made without any withholding or deduction of any kind other than (i) those relating to payments on account of the Restrictive Covenant (as defined below) and (ii) those required as a result of any change in any applicable law or regulation adopted after the date hereof. In the event that any such change in law is adopted prior to the Closing Date, the parties shall negotiate in good faith the net effect, if any, of such change in law on the economic benefit to be derived by Seller from the transactions contemplated herein. If such net effect is, in the reasonable opinion of Seller, adverse to Seller, Seller may terminate this Agreement pursuant to Section 14(a)(iv); provided, however, that Seller shall not have this termination right if Buyers agree to fully indemnify Seller to the extent of such adverse effect. Seller shall not have any termination right as a result of any change in law adopted after the Closing Date. 2. Closing; Purchase Price Adjustment. (a) Closing. The closing (the "Closing") of the purchase and sale of the Holsum Assets and the Shares shall be held simultaneously at the offices of McConnell Vald,s (in the case of the Holsum Assets) and at the principal offices of Seaboard Corporation in Shawnee Mission, Kansas (in the case of the Shares), at 10:00 a.m. on November 30, 1998, or if the conditions to Closing set forth in Section 3 of this Agreement shall not have been satisfied by such date, as soon as practicable after such conditions shall have been satisfied or, if permitted, waived. The parties agree that title to the Shares shall pass to Buyer in Shawnee Mission, Kansas, and agree that this agreement was negotiated and signed by Seller outside Puerto Rico. The date on which the Closing shall occur is hereinafter referred to as the "Closing Date." At the Closing, Buyers shall deliver to Seller (i) immediately available funds in an amount equal to $66,500,000, by wire transfer to one or more bank accounts designated in writing by Seller, (ii) a subordinated promissory note substantially in the form of Exhibit A in a principal amount equal to $8,000,000, duly executed by HDPR and CB (the "Note"), subordinate only to Buyers' acquisition financing (including senior and subordinated debt not exceeding $80,000,000), (iii) an assumption agreement or agreements in form and substance reasonably satisfactory to Seller, duly executed by Buyers (the "Assumption Agreement"), (iv) a guaranty agreement substantially in the form of Exhibit B duly executed by Mr. Ramon Calderon (the "Guaranty"), and secured by a lien on all the issued and outstanding Capital Stock of CB and Seaboard Bakeries, subordinate only to Buyers' acquisition financing (including senior and subordinated debt not exceeding $80,000,000); (v) mortgage (in the amount of $9,000,000) and security agreements in form and substance reasonably satisfactory to Seller on the Assets and the Shares, subordinate only to Buyers' acquisition financing (including senior and subordinated debt not exceeding $80,000,000) securing the Note, Mr. Ramon Calderon's obligations under the Guaranty and all obligations owing under this Agreement, the agreement relating to the acquisition of the assets of Harinas de Puerto Rico, Inc. or under any other documents or instruments delivered in connection therewith, (vi) if a mortgagee title policy is required by the banks providing the acquisition financing, a mortgage title insurance policy to Seller with respect to the mortgage describe above and (vii) the other documents described in Section 3(b). Concurrently, Seller shall deliver or cause to be delivered to Buyers (w) duly executed real property deeds and bills of sale in form and substance reasonably satisfactory to Buyers, (x) such other instruments of sale, assignment, transfer or conveyance, in form and substance reasonably satisfactory to Buyers and their counsel, as are necessary to convey to Buyers good, and in the case of real property, recordable, title to the Assets (provided that title to the Seaboard Bakeries Assets, other than the Seaboard Bakeries Trademarks, shall be transferred to CB by transfer of the Shares), (y) to CB, in Shawnee Mission, Kansas, certificates representing the Shares, duly endorsed in blank or accompanied by stock powers duly endorsed in blank in proper form for transfer, with appropriate transfer stamps, if any, affixed, and (z) the other documents described in Section 3(a). (b) Purchase Price Adjustment. (i) On the Closing Date, Seller shall prepare and deliver to Buyers a statement setting forth the balance of cash and cash equivalents (including short term and long term investments) held by or for the account of each of Holsum Bakers and Seaboard Bakeries on the Closing Date (the "Cash Balance"). (ii) At the Closing, Seaboard Bakeries may, if determined by Seller, pay a dividend to Seller in an amount equal to the lesser of (A) its Cash Balance, and (B) $30,488,851 (the "Seaboard Bakeries Dividend"). To the extent that the sum of the Seaboard Bakeries Dividend and the Holsum Bakers Cash Balance is less than $30,488,851, the Purchase Price payable in immediately available funds shall be increased by the amount by which such sum is less than $30,488,851. Seller shall have the right to determine not to pay the Seaboard Bakeries Dividend or to pay such dividend in an amount that is less than the amount set forth above (but not in excess of $30,488,851), in which event, Seaboard Bakeries shall lend to CB at the time of the Closing the difference between the amount that it could have paid as the Seaboard Bakeries Dividend and the amount actually paid. (iii) The Purchase Price shall also be increased by an amount equal to the interest from November 1, 1998, until such date as Buyers and Seller consummate the Closing, (A) at the rate of 6% per annum, with respect to $30,488,851, and (B) at the rate payable by Buyers under their senior acquisition debt, with respect to $74,500,000. Interest shall be computed on the basis of a 360-day year and the actual number of days elapsed, provided that if Buyers' acquisition financing provides for the calculation of interest on the basis of twelve 30-day months, interest shall be calculated on that basis. 3. Conditions to Closing. (a) Buyer's Obligation. The obligation of Buyers to purchase the Assets and the Shares is subject to the satisfaction (or waiver by Buyers) as of the Closing of the following conditions: (i) The representations and warranties of Seller made in this Agreement shall be true and correct in all material respects as of the date hereof and on and as of the Closing, as though made on and as of the Closing Date, and Seller shall have performed or complied in all material respects with all obligations and covenants required by this Agreement to be performed or complied with by Seller by the time of the Closing; and Seller shall have delivered to Buyers a certificate dated the Closing Date and signed by an authorized officer of Seller confirming the foregoing. (ii) Buyers shall have received an opinion or opinions dated the Closing Date of Fiddler Gonz lez & Rodriguez, LLP, Sullivan & Worcester LLP or David Becker, Esq., in form and substance reasonably satisfactory to Buyers. (iii) The waiting period under the Hart-Scott- Rodino Antitrust Improvements Act of 1976 (the "HSR Act") shall have expired or been terminated. (iv) Seller shall have delivered to the relevant Buyer the following documents, certified by the Secretary or any Assistant Secretary of Seller, as appropriate: (A) the charter, by-laws and corporate books of Seaboard Bakeries; (B) the resolution or resolutions of the board of directors of Seller authorizing the transactions contemplated hereby; (C) a document evidencing the authority and incumbency of the persons executing documents on behalf of Seller relating to the transactions contemplated hereby; (D) deeds of purchase and sale in form and substance reasonably satisfactory to Buyers conveying good and recordable title to the Real Property, free and clear of all liens other than those set forth on the title studies or title insurance policies set forth as Schedule 3(a)(iv)(D), easements and restrictions of record which do not unreasonably interfere with the use of the premises as presently used, and those created by officers and employees of Seller or Seaboard Bakeries under the direct or indirect supervision of Mr. Ramon Calderon (collectively, "Permitted Encumbrances"); (E) such bills of sale, assignments, and other instruments of transfer and conveyance as may be necessary to evidence and effect the sale, assignment, transfer, conveyance and delivery to Buyers of good title to the Assets and the Shares, free and clear of all liens other than Permitted Encumbrances, but which shall contain no additional warranties (provided that title to the Seaboard Bakeries Assets that are owned directly by Seaboard Bakeries shall be transferred to CB by transfer of the Shares). (v) Buyers shall have received the financing necessary to consummate the transactions contemplated hereby. (vi) There shall not have occurred any material adverse change in the Business caused by fire, explosion, acts of God or of the public enemy, natural disasters or events of similar nature occurring after the date hereof. (vii) All the conditions to the obligations of HDPR Acquisitions Corp. to consummate the closing contemplated by the agreement relating to the acquisition of the assets of Harinas de Puerto Rico, Inc. (the "Harinas Acquisition") shall have been satisfied or waived by HDPR Acquisitions Corp. and such closing shall be consummated simultaneously with the Closing hereunder. (b) Seller's Obligation. The obligation of Seller to sell and deliver the Assets and the Shares to Buyers is subject to the satisfaction (or waiver by Seller) as of the Closing of the following conditions: (i) The representations and warranties of Buyers made in this Agreement shall be true and correct in all material respects as of the date hereof and on and as of the Closing Date as though made on and as of the Closing Date, and each Buyer shall have performed or complied in all material respects with all obligations and covenants required by this Agreement to be performed or complied with by such Buyer by the time of the Closing; and each Buyer shall have delivered to Seller a certificate dated the Closing Date and signed by an authorized officer of such Buyer confirming the foregoing. (ii) Seller shall have received an opinion dated the Closing Date of McConnell Vald,s, counsel to Buyers, in form and substance reasonably satisfactory to Seller. (iii) The waiting period under the HSR Act shall have expired or been terminated. (iv) Each Buyer shall have delivered to Seller the following documents, certified by the Secretary or any Assistant Secretary of such Buyer, as appropriate: (A) copies of the certificate of incorporation and by-laws of such Buyer and of the resolution or resolutions of such Buyer authorizing the transactions contemplated hereby; (B) a document evidencing the authority and incumbency of the persons executing documents on behalf of such Buyer relating to the transactions contemplated hereby; (C) the Note; (D) the Assumption Agreement; and (E) the documents referred to in Section 2(a)(iv), (v) and (vi). (v) Seller shall have received a favorable ruling in relation with its ruling request to the Puerto Rico Treasury Department dated October 7, 1998. (vi) All the conditions to the obligations of Harinas de Puerto Rico, Inc. to consummate the closing contemplated by the agreement relating to the acquisition of the assets of Harinas de Puerto Rico, Inc. shall have been satisfied or waived by Harinas de Puerto Rico, Inc. and such closing shall be consummated simultaneously with the Closing hereunder. 4. Representations and Warranties of Seller. Seller hereby represents and warrants to Buyer as follows: (a) Authority. Seller and Seaboard Bakeries are duly organized, validly existing and in good standing under the laws of the state of Delaware, and are authorized to do business in the Commonwealth of Puerto Rico. Seller has all requisite power and authority to enter into this Agreement and to consummate the transactions contemplated hereby. All corporate acts and other proceedings required to be taken by Seller to authorize the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby have been duly and properly taken. This Agreement has been duly executed and delivered by Seller and constitutes a valid and binding obligation of Seller, enforceable against Seller in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance and similar laws relating to the protection of debtors and by principles of equity. The execution and delivery of this Agreement does not, and the consummation of the transactions contemplated hereby and compliance with the terms hereof will not, conflict with, or result in any violation of or default (with or without notice or lapse of time, or both) under, or give right to a right of termination, cancellation or acceleration of any material obligation or to loss of a material benefit under, or result in the creation of any lien, claim, encumbrance, security interest, option, charge or restriction of any kind upon any of the properties or assets of Seller or Seaboard Bakeries under, any provision of (i) the corporation law of the State of Delaware, (ii) the Certificate of Incorporation or By-laws of Seller or Seaboard Bakeries, (iii) except as disclosed on the Schedules hereto, any material note, bond, mortgage, indenture, deed of trust, license, lease, contract, commitment, agreement or arrangement to which Seller or Seaboard Bakeries is a party or by which any of their respective properties or assets are bound which was entered into without the knowledge of Mr. Ramon Calderon by officers or employees of Seller or Seaboard Bakeries not under the direct or indirect supervision of Mr. Ramon Calderon, or (iv) any judgment, order or decree, or statute, law, ordinance, rule or regulation applicable to Seller or Seaboard Bakeries or the property or assets of Seller or Seaboard Bakeries and not to Buyer or the property or assets of Buyer, other than any such conflicts, violations, defaults, rights or liens, claims, encumbrances, security interests, options, charges or restrictions that individually or in the aggregate would not have a material adverse effect on the business, assets, condition (financial or otherwise) or results of operations the Business. No consent, approval, license, permit, order or authorization of, or registration, declaration or filing with, any court, administrative agency or commission or other governmental authority or instrumentality, domestic or foreign, or any other person, is required to be obtained or made by or with respect to Seller or Seaboard Bakeries or their respective affiliates in connection with the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby, other than (A) those set forth on Schedule 4(a), (B) compliance with and filings under the HSR Act, if applicable, and (C) those that may be required solely by reason of Buyers' and their lenders (as opposed to any other third party's) participation in the transactions contemplated hereby. (b) Title to the Assets and the Shares. Seller has good and valid title to the Assets and the Shares, directly or through Seaboard Bakeries, free and clear of any liens or encumbrances other than Permitted Encumbrances. Upon delivery to CB at the Closing in Shawnee Mission, Kansas, of certificates representing the Shares, duly endorsed by Seller for transfer to CB, and upon delivery to HDPR and CB of the documents described in Section 3(a)(iv)(D) and (E), good and, in the case of real properties, recordable, title to the Assets and the Shares will pass to Buyers, free and clear of any liens or encumbrances other than Permitted Encumbrances. (c) Capital Stock of Seaboard Bakeries. The authorized capital stock of Seaboard Bakeries consists of 1,000 shares of common stock, no par value, of which 100 shares, constituting the Shares, are duly authorized and validly issued and outstanding, fully paid and nonassessable. Seller is the registered and bene ficial holder of the Shares. The Shares have not been issued in violation of, and none of the Shares is subject to, any preemptive or similar rights. Except as set forth above, there are no shares of capital stock or other equity securities of Seaboard Bakeries outstanding. There are no outstanding warrants, options, agree ments, convertible or exchangeable securities or other commitments (other than this Agreement) pursuant to which Seller is or may become obligated to issue, sell, purchase, return or redeem any shares of capital stock or other securities of Seaboard Bakeries, and there are not any equity securities of Seaboard Bakeries reserved for issuance for any purpose. 5. Covenants of Seller. Seller covenants and agrees as follows: (a) Ordinary Conduct of Business by Seller. Except for actions taken by Mr. Ramon Calderon and officers or employees of Seller or Seaboard Bakeries under the direct or indirect supervision of Mr. Ramon Calderon, and except as permitted by the terms of this Agreement, from the date hereof to the Closing Date, Seller will conduct the Business in the ordinary course in substantially the same manner as presently conducted. Except for actions taken by Mr. Ramon Calderon and officers or employees of Seller or Seaboard Bakeries under the direct or indirect supervision of Mr. Ramon Calderon, and except as set forth on Schedule 5(a) or otherwise expressly permitted by the terms of this Agreement, from the date hereof to the Closing Date, Seller, will not, and will not permit Seaboard Bakeries to, do any of the following without the prior written consent of Buyers, which consent shall not be unreasonably withheld or delayed: (i) amend Seaboard Bakeries' Certificate of Incorporation or By-laws; (ii) issue any capital stock of Seaboard Bakeries or any option, warrant or right relating thereto or any securities convertible into or exchangeable for any shares of such capital stock; (iii) adopt or amend in any material respect any employee benefit plan or collective bargaining agreement in any way affecting the employees of the Business; (iv) approve any compensation or other benefit increases to employees of the Business; (v) incur or assume any liabilities, obliga tions or indebtedness for borrowed money or guarantee any such liabilities, obligations or indebtedness, other than in the ordinary course of business consistent with past practice; provided that in no event shall the Seller or Seaboard Bakeries incur, assume or guarantee any long-term indebtedness for borrowed money relating to the Business; (vi) permit, allow or suffer any of the Assets or Shares to be subjected to any encumbrance other than Permitted Encumbrances; (vii) cancel any material indebtedness (individually or in the aggregate) or waive any claims or rights of substantial value; (viii) make or incur any capital expenditure or expenditures which, individually, is in excess of $10,000; (ix) make any material change in the conduct or character of the Business; (x) make any sale, assignment, transfer or other conveyance of any of the Assets, except in the ordinary course of business; (xi) acquire or agree to acquire any assets that will form part of the Assets other than in the ordinary course of business; (xii) enter into any material transactions other than in the ordinary course of business; (xiii) take any action that would cause or permit the representations and warranties made herein to be inaccurate at the Closing Date; or (xiv) agree, whether in writing or otherwise, to do any of the foregoing. None of the actions described above may be taken by Mr. Ramon Calderon or any person under his direct or indirect supervision without the express approval of Mr. Robert Steer. (b) Access. Prior to the Closing, Seller will give each Buyer and its financing sources, and their respective representatives, employees, counsel and accountants, access, during normal business hours and upon reasonable notice, to the personnel, properties, books and records of Holsum Bakers and Seaboard Bakeries. Seller will arrange for its directors, officers, employees and independent public accountants and legal counsel to cooperate with such examination. Each Buyer and its representatives shall execute such confidentiality agreements as Seller shall reasonably require. (c) Insurance. Seller shall keep, or cause to be kept, all insurance policies relating to the Business, or suitable replacements therefor, in full force and effect through the close of business on the Closing Date. (d) Resignations. On the Closing Date, Seller shall cause to be delivered to Buyer duly signed resignations, effective immediately after the Closing Date, of all directors of Seaboard Bakeries and shall take such other action as is necessary to accomplish the foregoing. (e) Insured Claims. (i) Notwithstanding anything to the contrary set forth herein, Seller will assume full responsibility as of the Closing Date for all claims relating to events occurring before Closing which are covered by the insurance policies set forth on Schedule 5(e) (such claims being herein called "Insured Claims," and such policies being herein called "Section 5(e) Policies"). (ii) Buyers shall bear, or shall reimburse Seller for, such portion of the amounts payable by Seller following the Closing under the Section 5(e) Policies and any similar prior policies as are attributable to liabilities which would be Assumed Liabilities but for this Section, such amount to be determined by agreement of Buyers and Seller, including retroactive or retrospective premium adjustments relating thereto. (iii) With respect to all Insured Claims, Buyers shall cooperate in all reasonable respects with Seller (and its affiliates) in the defense thereof. Such cooperation shall include the retention and (upon Seller's request) the provision to Seller of records and information which are reasonably relevant to such Insured Claims, and making employees available on a mutually convenient basis to testify and provide additional information and explanation of any materials provided. (iv) Any disputes with respect to the coverage of any claim which would constitute an Assumed Liability but for this Section under any Section 5(e) Policy shall be prosecuted entirely at Buyers' expense. (f) Other Transactions. Prior to the Closing, none of Seller, nor any affiliate of Seller shall, nor shall they permit any of their respective officers, directors, stockholders or other representatives to, directly or indirectly, encourage, solicit or initiate discussions or negotiations with, any corporation, partnership, person, or other entity or group (other than Buyers and their representatives) concerning any merger, sale of securities, sale of assets or similar transaction involving the Business. (g) Non-Competition. (i) Seller, on its behalf and on behalf of its affiliates and subsidiaries, agrees that, for a period of ten (10) years after the Closing Date, Seller and its affiliates shall not, directly or indirectly, engage in (1) the production, marketing or sale of bakery products, or (2) the manufacture, marketing or sale of flour, in each case in Puerto Rico or with respect to customers in Puerto Rico (the "Restricted Business"), or acquire any equity securities of, or make any loan to, or enter into any joint venture or similar agreement with, any person engaged in the Restricted Business in Puerto Rico or with respect to customers in Puerto Rico; provided, however, that this clause (i)(2) shall not prohibit (A) any minority investment in any entity that is not engaged in the Restricted Business as a material line of business, (B) any joint venture for which the Restricted Business is not a material line of business or (C) any investment representing less than 5% of the ownership in a publicly traded company in the management of which Seller does not participate. This covenant (the "Restrictive Covenant") shall cease to have any effect with respect to the business described in clause (i)(2) above if Mr. Ramon Calderon, or his lineal descendants, persons who are members of the management of the Business on the Closing Date, or any person or entity acquiring an interest in the Business as a result of a foreclosure or work-out of the acquisition financing shall at any time cease to own, directly or indirectly, a controlling interest in the "Business" (as defined in the Asset Purchase Agreement relating to the acquisition of Harinas de Puerto Rico, Inc.). (ii) The parties agree that if any court of competent jurisdiction determines that the Restrictive Covenant or any part thereof is invalid or unenforceable, the remainder of the Restrictive Covenant shall not thereby be affected and shall be given full effect, without regard to the invalid portions. Furthermore, if any portion of the Restrictive Covenant, or the application of any portion of the Restrictive Covenant to any person or circumstances, shall be held invalid or unenforceable by any court of competent jurisdiction, the remaining portion of the Restrictive Covenant, or the application of such portion of the Restrictive Covenant to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby. In either of the foregoing cases, the parties agree that they will amend the terms of the Restrictive Covenant or portion thereof so determined to be invalid or unenforceable, but only in the most minimal manner necessary to make such terms comply with the determination of such court. (iii) If Seller breaches, or threatens to commit a breach of, the Restrictive Covenant, Buyers shall have the right to have the Restrictive Covenant specifically enforced by any court of competent jurisdiction, it being acknowledged and agreed that any such breach or threatened breach will cause irreparable injury to Buyers and that money damages will not provide an adequate remedy to Buyers. Such right of specific performance shall be independent of, and in addition to, and not in lieu of, any other rights and remedies available to Buyer at law or in equity. (h) Supplemental Disclosure. Seller shall have the continuing obligation until the Closing promptly to supplement or amend the Schedules hereto with respect to any matter hereafter arising or discovered which, if existing or known at the date of this Agreement, would have been required to be set forth or described in such Schedules; provided, however, that for the purpose of the rights and obligations of the parties hereunder, any such supplemental or amended disclosure shall not be deemed to have been disclosed as of the date of this Agreement unless so agreed in writing by Buyer. (i) Tax Ruling. Seller shall use its best efforts to obtain the ruling referred to in Section 3(b)(v). 6. Representations and Warranties of Buyers. (a) Each Buyer hereby jointly and severally represents and warrants to Seller that it is a corporation duly organized, validly existing and in good standing under the laws of the Commonwealth of Puerto Rico. Each Buyer has all requisite power and authority to enter into this Agreement and to consummate the transactions contemplated hereby. All corporate acts and other proceedings required to be taken by each Buyer to authorize the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby have been duly and properly taken. This Agreement has been duly executed and delivered by each Buyer and constitutes a valid and binding obligation of each Buyer, enforceable against each Buyer in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance and similar laws relating to the protection of debtors and by principles of equity. The execution and delivery of this Agreement by each Buyer does not, and the consummation of the transactions contemplated hereby and compliance with the terms hereof will not, conflict with, or result in any violation of or default (with or without notice or lapse of time, or both) under, or give right to a right of termination, cancellation or acceleration of any obligation or to loss of a material benefit under, or result in the creation of any lien, claim, encumbrance, security interest, option, charge or restriction of any kind upon any of its properties or assets under, any provision of (i) the corporation law of the Commonwealth of Puerto Rico, (ii) its Certificate of Incorporation or By-laws, (iii) except as disclosed on the Schedules hereto, any material note, bond, mortgage, indenture, deed of trust, license, lease, contract, commitment, agreement or arrangement to which it is a party or by which any of its properties or assets are bound, or (iv) any judgment, order or decree, or statute, law, ordinance, rule or regulation applicable to it or its property or assets and not to Seller or the property or assets of Seller, other than any such conflicts, violations, defaults, rights or liens, claims, encumbrances, security interests, options, charges or restrictions that individually or in the aggregate would not have a material adverse effect on the business, assets, condition (financial or otherwise) or results of operations of the Business. No consent, approval, license, permit, order or authorization of, or registration, declaration or filing with, any court, administrative agency or commission or other governmental authority or instrumentality, domestic or foreign, is required to be obtained or made by or with respect to Buyers or their respective affiliates in connection with the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby, other than (A) those described on Schedule 6, (B) compliance with and filings under the HSR Act, if applicable, and (C) those that may be required solely by reason of Seller's (as opposed to any other third party's) participation in the transactions contemplated hereby. 7. Mutual Covenants. (a) Consents. Buyers and Seller shall use their reasonable best efforts to obtain, prior to the Closing, any consents of third parties and any authorizations or permits from any governmental authority required in connection with the consummation of the transactions contemplated herein; provided, however, that (i) Buyers shall be solely responsible for obtaining any consent required in connection with the assignment of particular contracts, licenses, authorizations or permits that require the consent of a counterparty or government entity as a condition to such assignment (including the consent of the Puerto Rico government under Seaboard Bakeries' grant of tax exemption), as well as for obtaining new governmental permits and authorizations to replace permits and authorizations that are not assignable, and (ii) the obtaining of any consent or new governmental permit or authorization referred to in clause (i) shall not be a condition to Buyers obligations to consummate the Closing. (b) Cooperation. Each Buyer and Seller shall cooperate with each other and shall cause their officers, employees, agents, auditors and representatives to cooperate with each other after the Closing to ensure the orderly transition of the Assets from Seller to Buyers and to minimize any disruption to the respective businesses of Seller or Buyers that might result from the transactions contemplated hereby. Each party shall reimburse the other for reasonable out-of-pocket costs and expenses incurred in connection with actions taken at the request of the other party pursuant to this Section 7(b), provided that the party seeking such reimbursement shall have notified the other prior to incurring any such expense that it intends to seek reimbursement for such expense. (c) Publicity. Seller and Buyers agree that, from the date hereof through the Closing Date, no public release or announcement, and no disclosure to any third party, concerning the transactions contemplated hereby shall be made by either party without the prior consent of the other party, except as such release or announcement may be required by law or by the regulations of the American Stock Exchange, in which case the party required to make the release or announcement shall allow the other party reasonable time to comment on such release or announcement in advance of such issuance to the extent possible. Buyers acknowledge Seller s Press Release of October 20, 1998. (d) Reasonable Best Efforts. Subject to the terms and conditions of this Agreement, each party will use its reasonable best efforts to cause the Closing to occur as soon as possible. (e) Records. On the Closing Date, Seller shall deliver or cause to be delivered to the relevant Buyer all original agree ments, documents, books, records and files (collectively, "Records"), in the possession of Seller relating to the Business, except that Seller may retain all Records prepared in connection with the sale of the Assets and the Shares. Seller shall have access to and be authorized to make copies of any Records delivered to the Buyers. Each Buyer shall keep all Records for six years after the Closing Date or until the expiration of the applicable statute of limitations for third party claims, if longer. (f) Seller Trade Payables. Buyers shall repay in full, within five days after the Closing Date, all trade payables and all intercompany payables due by Holsum Bakers or Seaboard Bakeries to Seller or any affiliate of Seller. On the Closing Date, such trade and intercompany payables shall be secured by the same collateral securing the Note. Non-payment of these payables shall be deemed a default under the Note. (g) Confidentiality. Each party shall take reasonable appropriate actions to keep confidential, and cause its affiliates and instruct its and their officers, directors, employees and advisors to keep confidential, all nonpublic information relating to the Business, Seller, Seaboard Bakeries and Buyers, except as required by law or administrative process or the rules of the American Stock Exchange and except for information which becomes public other than as a result of a breach of this Section 7(g), and provided that this covenant shall not restrict the ability of any person's and its affiliates' respective officers, directors, advisors and employees to discuss such information internally. (h) Cooperation with Respect to Litigation. Buyers shall cooperate with Seller in all respects, at Seller's expense, in the defense of all claims which constitute Retained Liabilities. (i) Liquidation of Seaboard Bakeries. Buyers jointly and severally agree that Seaboard Bakeries will be liquidated into CB, and its legal existence dissolved, within 30 days after the Closing Date. 8. Employee Matters. (a) HDPR shall offer employment, effective as of the Closing Date, on the same terms and conditions as provided by Seller as of the Closing Date, including compensation level and benefits, to each person employed by Seller in the Holsum Business in Puerto Rico on the Closing Date. Notwithstanding the above, Buyers intend to change the existing defined benefit plan of Seller and Seaboard Bakeries to a defined contribution plan, it being understand that Buyers shall be responsible for any liability or claim resulting from such action. (b) The parties shall take all actions required on their part to cause Buyers to substitute the sponsors of the Plan effective as of the Closing Date. 9. Further Assurances. From time to time, as and when requested by either party hereto, the other party shall execute and deliver, or cause to be executed and delivered, all such documents and instruments and shall take, or cause to be taken, all such further or other actions, as such other party may reasonably deem necessary or desirable to consummate the transactions contemplated by, or give effect to the agreements set forth in, this Agreement. 10. Indemnification. (a) Indemnification by Seller. Seller shall indemnify each Buyer and its officers, directors, employees and agents and hold them harmless from any loss, liability, claim, damage or expense (including reasonable legal fees and expenses) suffered or incurred by any such indemnified party (other than any relating to income taxes, for which indemnification provisions are set forth in Section 11) to the extent arising from (i) any breach of any representation or warranty of Seller contained in this Agreement, (ii) any breach of any covenant of Seller contained in this Agreement requiring performance after the Closing Date, (iii) the Retained Liabilities and (iv) Insured Claims, but only to the extent actually covered by the Section 5(e) Policies; provided, however, that Seller shall not have any liability under clause (i) above unless the aggregate of all losses, liabilities, costs and expenses relating thereto for which Seller would, but for this provision, be liable exceeds on a cumulative basis an amount equal to $350,000, and then only to the extent of any such excess up to a maximum aggregate amount equal to $1,500,000; and provided further, however, that Seller shall not have any liability hereunder for any breach of a representation or warranty of Seller contained in this Agreement if Mr. Ramon Calderon or any officer of Seller or Seaboard Bakeries directly or indirectly supervised by him had actual or constructive knowledge of such breach on the Closing Date. (b) Indemnification by Buyer. Each Buyer shall jointly and severally indemnify Seller, its affiliates and each of its officers, directors, employees and agents against and hold them harmless from any loss, liability, claim, damage or expense (including reasonable legal fees and expenses) suffered or incurred by any such indemnified party (other than any relating to income taxes, for which indemnification provisions are set forth in Section 11) to the extent arising from (i) any breach of any representation or warranty of any Buyer contained in this Agreement, (ii) any breach of any covenant of any Buyer contained in this Agreement requiring performance after the Closing Date, and (iii) the Assumed Liabilities. (c) Losses Net of Insurance. The amount of any loss, liability, claim, damage or expense for which indemnification is provided under this Section 10 shall be net of any amounts recovered or recoverable by the indemnified party under insurance policies with respect to such loss, liability, claim, damage or expense and net of any tax benefit derived by the indemnified party from such loss, liability, claim, damage or expense. (d) Termination of Indemnification. The obligations to indemnify and hold harmless a party hereto, (i) pursuant to Sections 10(a)(i) and 10(b)(i), shall terminate when the applicable representation or warranty terminates pursuant to Section 15, (ii) pursuant to Sections 10(a)(ii) and 10(b)(ii), shall terminate when the applicable covenant terminates in accordance with its terms, and (iii) pursuant to Sections 10(a)(iii), 10(a)(iv) and 10(b)(iii), shall not terminate; provided, however, that as to clause (i) above such obligations to indemnify and hold harmless shall not terminate with respect to any item as to which the person to be indemnified or the related party hereto shall have, before the expiration of the applicable period, previously made a claim by delivering a notice (stating in reasonable detail the basis of such claim) to the indemnifying party. (e) Procedures Relating to Indemnification. In order for a party (the "indemnified party") to be entitled to any indemnification provided for under this Agreement, arising out of or involving a claim or demand made by any person, firm, governmental authority or corporation against the indemnified party (a "Third Party Claim"), such indemnified party must notify the indemnifying party in writing, and in reasonable detail, of the Third Party Claim within 30 days after receipt by such indemnified party of written notice of the Third Party Claim; provided, however, that failure to give such notification shall not affect the indemnification provided hereunder except to the extent the indemnifying party shall have been actually prejudiced as a result of such failure (except that the indemnifying party shall not be liable for any expenses incurred during the period following the end of such 30-day period referred to above in which the indemnified party failed to give such notice and the date on which such notice is given). Thereafter, the indemnified party shall deliver to the indemnifying party, within ten (10) business days after the indemnified party's receipt thereof, copies of all notices and documents (including court papers) received by the indemnified party relating to the Third Party Claim. If a Third Party Claim is made against an indemnified party, the indemnifying party will be entitled to participate in the defense thereof and, if it so chooses, to assume the defense thereof (unless the indemnifying party is also a party to such Third Party Claim and the indemnified party determines in good faith that joint representation would be inappropriate due to a potential conflict of interest) with counsel selected by the indemnifying party and reasonably satisfactory to the indemnified party. Should the indemnifying party be entitled under the preceding sentence to assume the defense of a Third Party Claim and so elect to assume such defense, the indemnifying party will not be liable to the indemnified party for legal expenses subsequently incurred by the indemnified party in connection with the defense thereof. If the indemnifying party assumes such defense, the indemnified party shall have the right to participate in the defense thereof and to employ counsel, at its own expense, separate from the counsel employed by the indemnifying party, it being understood that the indemnifying party shall control such defense (except in the circumstances set forth in the parenthetical to the first sentence of this paragraph). The indemnifying party shall be liable for the fees and expenses of counsel employed by the indemnified party for any period during which the indemnifying party has not assumed the defense thereof (other than during any period following the 30-day period referred to in the first sentence of this Section 10(e) in which the indemnified party shall have failed to give notice of the Third Party Claim as provided above). If the indemnifying party chooses to defend or prosecute any Third Party Claim, all of the parties hereto shall cooperate in the defense or prosecution thereof. Such cooperation shall include the retention and (upon the indemnifying party's request) the provision to the indemnifying party of records and information which are reasonably relevant to such Third Party Claim, and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder. Whether or not the indemnifying party shall have assumed the defense of a Third Party Claim, the indemnified party shall not admit any liability with respect to, or settle, compromise or discharge, such Third Party Claim without the indemnifying party's prior written consent (which consent shall not be unreasonably withheld or delayed). (f) This Section 10 shall not apply to indemnification for taxes, which shall be governed by Section 11. 11. Tax Matters. (a) Income Tax Matters Relating to Seaboard Bakeries (i) Income Tax Liability. Buyers shall be responsible and shall indemnify Seller for any federal and Puerto Rico income tax liabilities (net of any foreign tax credit) of Seaboard Bakeries relating to the period from August 2, 1998 to the Closing Date, provided that Buyers shall not be responsible for any additional federal income tax incurred during such period which is attributable to: (i) Seaboard Bakeries' revocation of its election under Section 936 of the United States Internal Revenue Code (the "Section 936 revocation"), or (ii) its election under Section 338(h)(10) of the United States Internal Revenue Code (the "Section 338(h)(10) election"). Buyers shall agree, at the request of Seller, to the Section 338(h)(10) election and the Section 936 revocation. Seller shall be responsible and shall indemnify Buyers for any federal and Puerto Rico income tax liabilities of Seaboard Bakeries for any period prior to August 2, 1998 (net of any estimated payments or overpayments refundable to Seller), and for any federal income tax attributable to: (i) the Section 936 revocation, or (ii) its Section 338(h)(10) election. The income taxes for the period that includes August 2, 1998 shall be allocated among the parties based on Seaboard Bakeries' monthly financial statements as of, and for the year to date period ended on, August 1, 1998, provided that reconciling items between book net income and net taxable income shall be attributed to the period to which they are directly allocable and those items not attributable to any period shall be apportioned based on the net taxable income before such reconciling items. The marginal income tax rate for both periods (on and before August 1 and on and after August 2, 1998) shall be the same. (ii) United States Income Tax Liability and Filings. The taxable period of Seaboard Bakeries that includes the Closing Date shall be reported to the United States by the Seller. Seller will timely prepare and file with the appropriate authorities (after approval by Buyer, which approval shall not be unreasonably withheld or delayed) all United States income tax returns, reports and forms required to be filed and will pay all income taxes due with respect to such returns, reports and forms. Buyer shall, within thirty (30) days of the later of the filing of such return or notification by Seller of the amounts owed, pay to Seller any amounts that are owed in accordance with the allocation methodology set forth above. Conversely, if amounts are owed to Buyer, they shall be paid within thirty (30) days of the filing of such return. For tax periods commencing after the Closing Date, Buyer shall be responsible for preparing and filing all returns, reports and forms and for any liability associated with those filings. (iii) Puerto Rico Income Tax Liability and Filings. The taxable period of Seaboard Bakeries that includes the Closing Date shall be reported to the Puerto Rico tax authorities by the Buyer. Buyer will timely prepare and file with the appropriate authorities (after approval by Seller, which approval shall not be unreasonably withheld or delayed) all Puerto Rico income tax returns, reports and forms required to be filed and will pay all income taxes due with respect to such returns, reports and forms. Seller shall, within thirty (30) days of the later of the filing of such return or notification by Buyer of the amounts owed, pay to Seller any amounts owed in accordance with the allocation methodology set forth above. Conversely, if amounts are owed to Seller, they shall be paid within thirty (30) days of the filing of such return. (iv) Tax Audits and Amended Returns. Any liability or refund resulting from a tax audit, revenue agent review or similar proceeding of either taxing jurisdiction shall be borne or shared by Seller and Buyer in accordance with the allocation methodology set forth above and paid over to the appropriate party within thirty (30) days of the finalization of such proceeding. Seller shall give notice to Buyer of any United States audits and allow Buyer to participate in the process. Seller shall not agree to any audit adjustments which would increase Buyer s income or other tax liability without Buyer s consent, which consent shall not be unreasonably withheld or delayed. Buyer shall give notice to Seller of any Puerto Rico audits and allow Seller to participate in the process. Buyer shall not agree to any audit adjustments which would increase Seller s income or other tax liability without Seller s consent, which consent shall not be unreasonably withheld or delayed. Buyer shall, if Seller so requests and at Seller s expense, file for and obtain any refunds or credits to which Seller is entitled under this Section. Buyer shall permit Seller to control the prosecution of any such refund claim and, where deemed appropriate by Seller, authorize by appropriate powers of attorney such persons as Seller shall designate to represent the Seller or Seaboard Bakeries with respect to such refund claim. Buyer shall forward to Seller any refund within thirty (30) days after the refund is received (or reimburse Seller for any such credit within thirty (30) days after the credit is allowed and applied against other income tax liability), provided, however, that such amounts payable to Seller shall be net of any reasonable expense incurred by Buyer attributable to the receipt of such refund and/or the payment of such amount to Seller. Seller and Buyer shall treat any payments under the preceding sentence that Seller shall receive pursuant to this Section as an adjustment to the Purchase Price. (b) Income Tax Matters relating to Holsum Bakers (i) Income Tax Liability. Buyer shall be responsible and shall indemnify Seller for any Puerto Rican income tax liabilities of Holsum Bakers related to the period from August 2, 1998 to the Closing Date (net of any estimated payments made after August 2, 1998 or overpayments attributable to such payments), but excluding any gains resulting from the sale of the Holsum Assets and the Shares. Seller shall be responsible and shall indemnify Buyers for any Puerto Rican income tax liabilities of Holsum Bakers for any period prior to August 2, 1998 (net of any estimated payments or overpayments attributable to such payments and refundable to Seller) and for any tax attributable to any gains resulting from the sale of the Holsum Assets and the Shares. The amount of such Puerto Rican income tax liabilities for the taxable period including the period from January 1, 1998 to the Closing Date will be allocated among the parties as provided in Section 11(a) above. The Buyer's income tax liability for the period that includes August 2, 1998 shall be determined assuming a marginal tax rate of 39%. In addition, the interest paid by Buyer to Seller as an increase to the Purchase Price pursuant to Section 2(b)(iii) shall be treated as interest expense to Buyer and as interest income to Seller for purposes of calculating the income tax liability. The apportioning of income tax liabilities as provided above shall not have any bearing on the Seller's ability to claim on its U.S. income tax return a foreign tax credit for the Puerto Rican taxes paid. (ii) Tax Returns. Seller shall be responsible for filing the Puerto Rican income tax returns of Holsum Bakers for the period from January 1, 1998 to the Closing Date. On the Closing Date, Seller and Buyer shall agree on an estimated amount of income taxes to be paid by Buyer pursuant to Section 11(b)(i), which amount shall be paid by Buyer to Seller ten (10) business days after the later of (A) the date notice requesting payment is given to Buyer by Seller and (B) the date when the tax is due. Such amount shall be collateralized by the same collateral securing the Note. If, based on the tax return to be filed, the amount of income taxes attributable to the Buyer is more or less than the aforementioned estimated amount, then the excess or the shortage shall be paid to the Buyer or Seller, as the case may be, on or before thirty (30) days after the income tax return is filed. (iii) The aforementioned apportionment of the Puerto Rican income tax liability shall be made irrespective of Seller's ability to take as a credit any Puerto Rican income tax paid. (iv) Any adjustments to the income tax liability based on audit shall be borne in accordance with the apportionment set forth herein within thirty (30) days after the final audit determination. (c) General Tax Matters. Seller and Buyers shall reasonably cooperate, and shall cause their respective affiliates, officers, employees, agents, auditors and representatives reasonably to cooperate, in preparing and filing all returns, reports and forms relating to income taxes, including maintaining and making available to each other all records necessary in connection with income taxes and in resolving all disputes and audits with respect to all taxable periods relating to income taxes. Buyers and Seller recognize that Seller and its affiliates will need access, from time to time, after the Closing Date, to certain accounting and tax records and information of Holsum Bakers and Seaboard Bakeries, and therefore, each party agrees (1) to use its best efforts to properly retain and maintain such records until such time as the other party agrees that such retention and maintenance is no longer necessary; and (2) to allow the other party and its agents and representative (and agents or representatives of any of its affiliates), at times and dates mutually acceptable to the parties, to inspect, review and make copies of such records as the other party may deem necessary or appropriate from time to time, such activities to be conducted during normal business hours and at the other party's expense. 12. Assignment. This Agreement and the rights and obligations hereunder shall not be assignable or transferable by any Buyer or Seller (including by operation of law) without the prior written consent of the other parties hereto; provided, however, that (i) any Buyer may assign its right hereunder to a subsidiary or affiliate of such Buyer which is controlled by Mr. Ramon Calderon without the prior written consent of Seller and (ii) Seller may assign its rights and obligations hereunder to any entity wholly owned by Seller; provided further, however, that no assignment shall limit or affect the assignor's obligations hereunder. 13. No Third-Party Beneficiaries. This Agreement is for the sole benefit of the parties hereto and their permitted assigns and nothing herein expressed or implied shall give or be construed to give to any person or entity, other than the parties hereto and such assigns, any legal or equitable rights hereunder. 14. Termination. (a) Anything contained herein to the contrary notwith standing, this Agreement may be terminated and the transactions contemplated hereby abandoned at any time prior to the Closing Date: (i) by mutual written consent of Seller and Buyers; (ii) by either party hereto, if the Closing does not occur on or prior to December 31, 1998; (iii) by Seller, if on or prior to December 4, 1998, Buyers shall not have executed a credit agreement providing for sufficient financing to consummate the transactions contemplated herein and containing terms that, to the extent affecting the rights of Seller or the ability of Buyers to consummate the transactions contemplated herein, shall be reasonably satisfactory to Seller; or (iv) by Seller, as provided in Section 1(g), in the event that Seller and Buyers shall not reach an agreement with respect to any adverse economic effect arising from any change in any applicable law or regulation adopted prior to the Closing Date and requiring any tax withholding with respect to payment of the Purchase Price; provided, however, that the party seeking termination pursuant to clause (ii) or (iii) is not in breach of any of its representations, warranties, covenants or agreements contained in this Agreement. Seller shall not be deemed to be in breach of any of its representations, warranties, covenants or agreements contained in this Agreement as a result of any act or any failure to take any required action by Mr. Ramon Calderon and/or officers or employees of Seller or Seaboard Bakeries under the direct or indirect supervision of Mr. Ramon Calderon. (b) In the event of termination by Seller or Buyers pursuant to this Section 14, written notice thereof shall forthwith be given to the other party and the transactions contemplated by this Agreement shall be terminated, without further action by either party. If the transactions contemplated by this Agreement are terminated as provided herein: (i) Buyers shall return all documents and other material received from Seller relating to the transactions contemplated hereby, whether so obtained before or after the execution hereof, to Seller; (ii) if such termination is pursuant to Sec- tion 14(a)(ii) under such circumstances that all the conditions to Closing set forth in Section 3(a) shall have been satisfied or would have been satisfied but for any action taken or omitted to be taken by Buyer or any of its affiliates, then such termination shall not result in any liability to Seller; and (iii) if such termination is pursuant to Section 14(a)(ii) under such circumstances that all the conditions to Closing set forth in Section 3(b) shall have been satisfied or would have been satisfied but for any action taken or omitted to be taken by Seller or any of its affiliates, then such termination shall not result in any liability to Buyer. (c) If this Agreement is terminated and the transactions contemplated hereby are abandoned as described in this Section 14, this Agreement shall become void and of no further force and effect, except for the provisions of (i) Section 16 hereof relating to expenses, (ii) Section 7(c) hereof relating to publicity, (iii) Section 22 hereof relating to finder's fees and broker's fees, (iv) this Section 14 and (v) Section 7(g) relating to confidentiality. Nothing in this Section 14 shall be deemed to release either party from any liability for any breach by such party of the terms and provisions of this Agreement or to impair the right of either party to compel specific performance by the other party of its obligations under this Agreement or to claim damages from the other party for breach of this Agreement; provided, however, that a termination of this Agreement based solely on the breach of a representation, which breach is not intentional and does not involve fraud or bad faith, shall only entitle the non-breaching party to recover its out-of-pocket expenses incurred in connection with this transaction, and not any consequential or other damages. 15. Survival of Representations. The representations and warranties in this Agreement shall survive the Closing for a period of one year commencing on the Closing Date. The representations and warranties in the Note, the collateral documents securing the Note and the Guaranty shall survive until the Note is paid in full. The obligations of each party hereto under the covenants that are required to be performed after the Closing pursuant to this Agreement and the Assumption Agreement and the obligations of Mr. Ramon Calderon and Buyers under the Note, the collateral documents securing the Note and the Guaranty shall survive until such obligations have been fully performed. 16. Expenses. Whether or not the transactions contemplated hereby are consummated, all costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such costs or expenses. The relevant Buyer shall be responsible for the payment of the expenses related to the preparation and execution of the real property deeds necessary for the transfer of the Real Property (except for the internal revenue stamps to be affixed to the original of the real property deeds, which shall be paid by Seller), and for the payment of the internal revenue stamps required in the first certified copy of such deeds and the internal revenue vouchers required for the recordation of such deeds in the Registry of Property of Puerto Rico. The relevant Buyer shall also be responsible for the expenses related to the execution and recordation of any mortgages and security interests provided herein. If the transactions contemplated hereby are not consummated within the agreed period, Buyers and Ramon Calderon shall reimburse Seller for any expenses of Buyers paid for by Seller or Seaboard Bakeries related to the transaction within ten (10) days after the termination of this Agreement. 17. Amendments. No amendment to this Agreement shall be effective unless it shall be in writing and signed by all parties hereto. 18. Notices. All notices or other communications required or permitted to be given hereunder shall be in writing and shall be delivered by hand or sent by prepaid telex, cable or telecopy, or sent, postage prepaid, by registered, certified or express mail, or reputable overnight courier service and shall be deemed given when so delivered by hand, telexed, cabled or telecopied, or if mailed, three days after mailing (one business day in the case of express mail or overnight courier service), as follows: (a) if to any Buyer, Mr. Ramon Calderon Holsum Bakers of Puerto Rico Call Box 8282 Toa Baja, P.R. 00951 Telecopier: (787) 251-2060 with copies to: McConnell Valdes 270 Munoz Rivera Avenue Hato Rey, Puerto Rico 00918 Telecopier: (787) 759-8282 Attention: Julio Pietrantoni, Esq. (b) if to Seller, Seaboard Corporation 9000 West 67th Street PO Box 2972 Shawnee Mission, Kansas 66201 Telecopier: (913) 676-8978 Attention: David M. Becker, Esq. Department of Legal Affairs with copies to: Sullivan & Worcester LLP One Post Office Square Boston, MA 02108 Telecopier: (617) 338-2880 Attention: Marshall L. Tutun, Esq. and Fiddler Gonzalez & Rodriguez, LLP 254 Munoz Rivera Avenue Hato Rey, Puerto Rico 00918 Telecopier: (787) 754-7539 Attention: Rafael Cortes Dapena, Esq. 19. Interpretation. The headings contained in this Agreement, in any Exhibit or Schedule hereto and in the table of contents to this Agreement, are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. 20. Counterparts. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement, and shall become effective when one or more such counterparts have been signed by each of the parties and delivered to the other party. 21. Entire Agreement. This Agreement, including the Schedules and Exhibits hereto, contains the entire agreement and understanding between the parties hereto with respect to the subject matter hereof and super sedes all prior agreements and understandings relating to such subject matter. 22. Fees. Each party hereto hereby represents and warrants that no brokers or finders have acted for such party in connection with this Agreement or the transactions contemplated hereby, and agrees to indemnify the other for any such fees. 23. Severability. If any provision of this Agreement or the application of any such provision to any person or circumstance shall be held invalid, illegal or unenforceable in any respect by a court of competent jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision hereof. 24. Governing Law; Consent to Jurisdiction. This Agreement shall be governed by and construed in accordance with the laws of New York, without regard to the conflicts of law principles thereof, except as to matters relating to real estate, in which case Puerto Rico law shall apply. Each party hereto consents to the jurisdiction of the courts of New York and of the federal courts in New York in connection with any claim arising hereunder, and waives and expressly agrees not to raise any claim that it is not personally subject to the jurisdiction of such court, that the venue of the suit is improper, that this agreement may not be litigated in such court, and expressly agrees not to raise forum non conveniens in any such proceeding. With respect to any action brought by any Buyer against Seller pursuant to Section 10(a)(i) or (ii), Buyers agree to bring such action in a New York court so long as such New York court shall have jurisdiction (including as a result of the consent to jurisdiction contained herein) over the parties and the subject matter of the action. Other actions brought by any Buyer and actions brought by Seller may also be brought in any appropriate forum. Each of the parties agrees that service of process may be made upon it by certified or registered mail to the address for notices set forth in this agreement or as otherwise provided by law. 25. Waiver of Trial by Jury. Seller and Buyers expressly waive all right to trial by jury in any action, proceeding or counter claim related to this Agreement. The parties acknowledge that the provisions of this paragraph have been bargained for and that they have been represented by counsel in connection therewith. 26. Schedules. Matters disclosed in any Schedule hereto shall be deemed to have been disclosed in all Schedules hereto. All Schedules shall be integral part of this Agreement. - 52 - 27. Execution by Mr. Ramon Calderon. Mr. Ramon Calderon is executing this agreement solely for purposes of confirming his agreement set forth in Sections 5(a) and 16. IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed as of the date first written above. SEABOARD CORPORATION HDPR ACQUISITIONS CORP. By: /s/ Robert Steer By: /s/ Ramon Calderon Name: Robert Steer Name: Ramon Calderon Title: Vice President- Title: President Chief Financial Officer CB ACQUISITIONS CORP. By: /s/ Ramon Calderon By: /s/ Stanley N. Woodworth Ramon Calderon Name: Stanley N. Woodworth Title: Attorney in Fact The following exhibits and schedules have been excluded from this filing, registrant agrees to furnish supplementally a copy of any omitted schedule to the SEC upon request: Exhibit A-Form of Promissory Note Exhibit B-Form of Guaranty Schedule 1(b) (i)-Real Property Schedule 1(b) (ii)-Machinery & Equipment Schedule 1(b) (iii)-Contracts Schedule 1(b) (viii)-Trademarks Schedule 1(b) (xi)-Baking Division Consolidated Balance Sheet Schedule 1(h) (i)-Claims, Product Liability and Accident Complaints Schedule 3(a) (iv) (D)-Title Studies Schedule 4(a)-Consents to Transaction (Seller) Schedule 5(a)-Seaboard Bakeries Ordinary Course of Business Exceptions Schedule 5(e)-Holsum Bakers and Harinas De Puerto Rico insurance policies Schedule 6-Consents to transaction (buyer) EX-2.2 3 ASSET PURCHASE AGREEMENT by and between HDPR ACQUISITIONS CORP., as Buyer, HARINAS DE PUERTO RICO, INC., as Seller and SEABOARD CORPORATION ________________________________________ Dated as of November 9, 1998 ________________________________________ TABLE OF CONTENTS Section Page 1. Purchase and Sale of the Assets; Assumption of Assumed Liabilities. . . . . . . . . . . . . . . . . .1 2. Closing; Purchase Price Adjustment.. . . . . . . . . .6 3. Conditions to Closing. . . . . . . . . . . . . . . . .8 4. Representations and Warranties of Seller.. . . . . . 12 5. Covenants of Seller. . . . . . . . . . . . . . . . . 27 6. Representations and Warranties of Buyer. . . . . . . 32 7. Mutual Covenants.. . . . . . . . . . . . . . . . . . 34 8. Further Assurances.. . . . . . . . . . . . . . . . . 36 9. Indemnification. . . . . . . . . . . . . . . . . . . 37 10. Assignment.. . . . . . . . . . . . . . . . . . . . . 41 11. No Third-Party Beneficiaries.. . . . . . . . . . . . 41 12. Termination. . . . . . . . . . . . . . . . . . . . . 41 13. Survival of Representations. . . . . . . . . . . . . 44 14. Expenses.. . . . . . . . . . . . . . . . . . . . . . 45 15. Amendments.. . . . . . . . . . . . . . . . . . . . . 45 16. Notices. . . . . . . . . . . . . . . . . . . . . . . 46 17. Interpretation.. . . . . . . . . . . . . . . . . . . 47 18. Counterparts.. . . . . . . . . . . . . . . . . . . . 47 19. Entire Agreement.. . . . . . . . . . . . . . . . . . 47 20. Fees.. . . . . . . . . . . . . . . . . . . . . . . . 48 21. Severability.. . . . . . . . . . . . . . . . . . . . 48 23. Governing Law. . . . . . . . . . . . . . . . . . . . 49 24. Waiver of Trial by Jury. . . . . . . . . . . . . . . 49 EXHIBITS B C D E F G SCHEDULES ASSET PURCHASE AGREEMENT Asset Purchase Agreement dated as of November 9, 1998, by and between HDPR Acquisitions Corp., a Puerto Rico corporation (the "Buyer"), Harinas de Puerto Rico, Inc. ("Harinas"), a Delaware corporation (the "Seller") and a wholly owned subsidiary of Seaboard Corporation, a Delaware corporation ("Seaboard"), and Seaboard. WHEREAS, Buyer desires to purchase from Seller and Seller desires to sell to Buyer all the Assets (as defined below), and Buyer desires to assume all the Assumed Liabilities (as defined below) relating to the Business (as defined below) on the terms and subject to the conditions set forth herein; and NOW THEREFORE, in consideration of the mutual covenants and agreements contained herein, and for other good and valuable con sideration, the receipt and sufficiency of which is hereby acknowledged, and intending to be legally bound, the parties hereto agree as follows: 1. Purchase and Sale of the Assets; Assumption of Assumed Liabilities. (a) Purchase and Sale of the Assets; Purchase Price Allocation. (i) On the terms and subject to the conditions of this Agreement, (A) Seller will sell, transfer, assign, convey and deliver to Buyer, and Buyer will purchase from Seller, the Assets for an aggregate purchase price equal to $5,500,000 plus the assumption of the Assumed Liabilities (the "Purchase Price"), payable as set forth below in Section 2(a), and subject to adjustment as provided in Section 2(b). (ii) The allocation of the purchase price among the Assets will be agreed to between Seller and Buyer on or prior to the Closing Date. Buyer and Seller agree to file all income, franchise and other tax returns, and execute such other documents or instruments as may be required by any governmental authority in a manner consistent with such allocations. (b) The Assets. The term "Assets" shall mean the right, title and interest of Seller and any affiliate of Seller in the assets of Seller or such affiliate used or held primarily in the conduct of its business (the "Business"), wherever located and whether or not reflected on the books of Seller or such affiliate, whether tangible or intangible, whether real, personal or mixed, and whether existing on the date hereof or acquired hereafter, but excluding prepaid or deferred tax assets and the Harinas Trademarks described in Schedule 1(c)(iii). Without limiting the generality of the foregoing, the Assets include, among other things, the following: (i) Real Property. The ground lease and the buildings described on Schedule 1(b)(i) hereto, together with all improvements and fixtures thereon and all rights (including, but not limited to, any rights that Seller may possess over any other properties, such as any related rights of way or options) privileges and easements appurtenant thereto (the "Real Property"); (ii) Equipment. All machinery, equipment, vehicles, parts, supplies, fixtures, computers, trade fixtures and furnishings, whether leased or owned, that are located on the Real Property on the date hereof or otherwise used primarily in connection with the Business (the "Equipment"), including, without limitation, the Equipment set forth on Schedule 1(b)(ii); (iii) Contracts. All contracts, leases, agreements, commitments, purchase orders and other legally binding arrangements, whether oral or written, to which Seller is a party or by which Seller is bound which are related to the Business and which are listed on Schedule 1(b)(iii) (the "Contracts"); (iv) Inventory. All inventory, goods, materials and supplies that are currently used in the Business (the "Inventory") and that are owned by Seller on the Closing Date; (v) Computer Software. To the extent permitted by the relevant license agreement, all computer software (including, without limitation, licenses, warranties and documentation related thereto and related objects and source codes) primarily utilized in the Business, it being understood by Buyer that substantially all of the computer software utilized in the Business belongs to Seaboard Corporation, is used on a shared basis by Seller and will therefore not form part of the Assets; (vi) Records. All information, files, records, data and plans relating to the operation of the Business, including, without limitation, maintenance records and manuals, and as- built drawings and surveys, but excluding any files or records relating to Employees; (vii) Licenses, Licensing Agreements and Permits. To the extent permitted by law and the terms of the license or permit, all permits, authorizations, licenses, licensing agreements, privileges and rights related to the Business, including all government authorizations, permits and licenses; (viii) Intellectual Property. Any and all patents, patent applications (whether filed, unfiled or being prepared), invention disclosures, trademarks (whether registered or unregistered), trademark registrations, trademark applications (whether filed, unfiled or being prepared), trade names, copyrights (registered or unregistered), copyright applications (whether filed, unfiled or being prepared), service marks (registered or unregistered), service mark applications (whether filed, unfiled or being prepared), all together with the goodwill of the Business associated with such marks or names, trade secrets, technology, inventions, know how, processes and confidential and proprietary information, including any being developed (including, but not limited to, drawings, designs, manufacturing data, design data, test data, operational data, engineering drawings, formulae, computer programs, computer software and manuals), whether or not subject to statutory registration, and Seller's patent and trademark files (or copies thereof) on all such intellectual property, and all other intellectual property and all rights thereunder, or in respect thereof, in each and every case referred to in this Section 1(b)(viii) relating primarily to the Business, including, without limitation, the trademarks and service marks listed on Schedule 1(b)(viii) (the "Intellectual Property"); provided that Seller expressly disclaims any warranty, express or implied, that it owns or has the exclusive right to use the same or that any of the Intellectual Property does not violate or infringe upon the intellectual property rights of any third person; (ix) Accounts Receivable. All accounts receivable owed to Seller and generated from sales of products of the Business; (x) Cash. All cash and investments held by or for the account of the Seller on the Closing Date in excess of $4,336,618; (xi) Other Assets. All other assets of the Business not described above reflected on the August 1, 1998 (the "Balance Sheet Date") balance sheet set forth as Schedule 1(b)(xi) (the "Balance Sheet"), other than Inventory sold in the ordinary course of business and accounts receivable which have been paid. (c) Assumed Liabilities. On the Closing Date, Buyer shall assume, and shall thereafter pay, perform and discharge when due, the following obligations and liabilities of Seller related to the Business, all in accordance with their terms (the "Assumed Liabilities"): (i) all liabilities specifically included in the balance sheet of Seller as of the Closing Date to be prepared by the parties (the "Closing Date Balance Sheet"), which shall reflect liabilities identical to the Balance Sheet except for changes in current liabilities in the ordinary course of business or attributable to the shutdown caused by Hurricane Georges (but excluding repairs that Seaboard Corporation has agreed to make pursuant to section 5(a)(v)); (ii) all obligations to perform the Contracts after the Closing Date, but not any claims relating to events prior to the Closing Date (other than claims for delivery of finished products to the extent the purchase price thereof is reflected on the Closing Date Balance Sheet); and (iii) the liabilities identified as Assumed Liabilities on Schedule 1(c)(iii). Buyer shall give access to Seller to Buyer's offices for purposes of preparing the Closing Date Balance Sheet. (d) Retained Liabilities. Except to the extent constituting Assumed Liabilities, Buyer shall not assume or be responsible for any liabilities of Seller related to the Business ("Retained Liabilities"), including without limitation (i) liabilities relating to or arising from the operation of the Business, or from conditions existing, prior to the Closing Date; (ii) liabilities under any agreement entered into by Seller or any affiliate of Seller that is not listed on Schedule 1(b)(iii); (iii) liabilities arising from the consummation of the transactions contemplated herein; (iv) liabilities relating to the employees of Seller or to the termination of their employment; and (v) the liabilities identified as Retained Liabilities on Schedule 1(c) (iii). In no event shall the Retained Liabilities include any amount specifically included in the Closing Date Balance Sheet. (e) Withholding. All payments of principal and interest due on the Note (as defined below) shall be made without any withholding or deduction of any kind other than those required as a result of any change in any applicable law or regulation adopted after the date hereof. In the event that any such change in law is adopted prior to the Closing Date, the parties shall negotiate in good faith the net effect, if any, of such change in law on the economic benefit to be derived by Seller from the transactions contemplated herein. If such net effect is, in the reasonable opinion of Seller, adverse to Seller, Seller may terminate this Agreement pursuant to Section 13(a)(iv); provided, however, that Seller shall not have this termination right if Buyer agrees to fully indemnify Seller to the extent of such adverse effect. Seller shall not have any termination right as a result of any change in law adopted after the Closing Date. 2. Closing; Purchase Price Adjustment. (a) Closing. The closing (the "Closing") of the purchase and sale of the Assets shall be held at the offices of McConnell Valdes, at 10:00 a.m. on November 30, 1998, or if the conditions to Closing set forth in Section 3 of this Agreement shall not have been satisfied by such date, as soon as practicable after such conditions shall have been satisfied or, if permitted, waived. The date on which the Closing shall occur is hereinafter referred to as the "Closing Date." At the Closing, Buyer shall deliver to Seller (i) immediately available funds in an amount equal to $5,500,000 by wire transfer to one or more bank accounts designated in writing by Seller, (ii) an assumption agreement or agreements in form and substance reasonably satisfactory to Seller, duly executed by Buyer (the "Assumption Agreement"), (iii) a guaranty agreement substantially in the form of Exhibit A duly executed by Mr. Ramon Calderon (the "Guaranty"), (iv) mortgage (in the amount of $9,000,000) and security agreements in form and substance reasonably satisfactory to Seller on the Assets, subordinate only to the acquisition financing (including senior and subordinated debt not exceeding $80,000,000) (the "Acquisition Financing") relating to the purchase of the Holsum Bakers division of Seaboard and the shares of Seaboard Bakeries, Inc. (the "Holsum Acquisition"), securing a note issued by Buyer relating to the Holsum Acquisition, Mr. Ramon Calderon's obligations under the Guaranty and all obligations owing under this Agreement, the agreement relating to the Holsum Acquisition or under any other documents or instruments delivered in connection therewith, (v) if a mortgage title insurance policy is required by the banks providing the acquisition financing, a mortgagee title insurance policy with respect to the mortgage describe above and (vi) the other documents described in Section 3(b). Concurrently, Seller shall deliver or cause to be delivered to Buyer (x) duly executed real property deeds and bills of sale in form and substance reasonably satisfactory to Buyer, (y) such other instruments of sale, assignment, transfer or conveyance, in form and substance reasonably satisfactory to Buyer and its counsel, as are necessary to convey to Buyer good and, in the case of Real Property, recordable title to the Assets and (z) the other documents described in Section 3(a). (b) Purchase Price Adjustment. (i) On the Closing Date, Seller shall prepare and deliver to Buyer a statement setting forth the balance of cash and cash equivalents (including short term and long term investments) held by or for the account of Seller on the Closing Date (the "Cash Balance"). (ii) To the extent that the Cash Balance is less than $4,336,618, the Purchase Price shall be increased by the amount by which such sum is less than $4,336,618. Such increase shall be payable at Closing in immediately available funds. (iii) The Purchase Price shall also be increased by an amount equal to the interest from November 1, 1998, until such date as Buyer and Seller consummate the Closing, (A) at the rate of 6% per annum, with respect to $4,336,618, and (B) at the rate payable under the senior portion of the Acquisition Financing, with respect to $5,500,000. Interest shall be computed on the basis of a 360-day year and the actual number of days elapsed, provided that if the acquisition financing relating to the Holsum Acquisition provides for the calculation of interest on the basis of twelve 30- day months, interest shall be calculated on that basis. 3. Conditions to Closing. (a) Buyer's Obligation. The obligation of Buyer to purchase the Assets is subject to the satisfaction (or waiver by Buyer) as of the Closing of the following conditions: (i) The representations and warranties of Seller made in this Agreement shall be true and correct in all material respects as of the date hereof and on and as of the Closing, as though made on and as of the Closing Date, and Seller shall have performed or complied in all material respects with all obligations and covenants required by this Agreement to be performed or complied with by Seller by the time of the Closing; and Seller shall have delivered to Buyer a certificate dated the Closing Date and signed by an authorized officer of Seller confirming the foregoing. (ii) Buyer shall have received an opinion or opinions dated the Closing Date of Fiddler Gonzalez & Rodriguez, LLP, Sullivan & Worcester LLP or David Becker, Esq. in form and substance reasonably satisfactory to Buyer. (iii) The waiting period under the Hart-Scott- Rodino Antitrust Improvements Act of 1976 (the "HSR Act") shall have expired or been terminated. (iv) Seller shall have delivered to the Buyer the following documents, certified by the Secretary or any Assistant Secretary of Seller, as appropriate: (A) the charter and by-laws of Seller; (B) the resolution or resolutions of the board of directors of Seller authorizing the transactions contemplated hereby; (C) a document evidencing the authority and incumbency of the persons executing documents on behalf of Seller relating to the transactions contemplated hereby; (D) deeds of purchase and sale in form and substance reasonably satisfactory to Buyer conveying good and recordable title to the Real Property, free and clear of all liens other than those set forth on the title studies or title insurance policies set forth as Schedule 3(a)(iv)(D), and easements and restrictions of record which do not unreasonably interfere with the use of the premises as presently used (collectively, "Permitted Encumbrances"); (E) such bills of sale, assignments, and other instruments of transfer and conveyance as Buyer may reasonable request or as may otherwise be necessary to evidence and effect the sale, assignment, transfer, conveyance and delivery to Buyer of good title to the other Assets, but containing no representations or warranties other than as set forth herein. (v) Buyer shall have received the Acquisition Financing necessary to consummate the Holsum Acquisition; (vi) There shall not have occurred any material adverse change in the Business caused by fire, explosion, acts of God or of the public enemy, natural disasters or events of similar nature occurring after the date hereof. Buyer understands that the Business has not operated since Hurricane Georges struck Puerto Rico and that from that date until October 20, 1998, the Business had no electrical power and that Seller does not intend to operate the Business prior to the Closing Date. (vii) All the conditions to the obligations of HDPR Acquisitions Corp. and CB Acquisitions Corp. to consummate the closing contemplated by the agreement relating to the Holsum Acquisition shall have been satisfied or waived by such companies. (b) Seller's Obligation. The obligation of Seller to sell and deliver the Assets to Buyer is subject to the satisfaction (or waiver by Seller) as of the Closing of the following condi- tions: (i) The representations and warranties of Buyer made in this Agreement shall be true and correct in all material respects as of the date hereof and on and as of the Closing Date as though made on and as of the Closing Date, and Buyer shall have performed or complied in all material respects with all obligations and covenants required by this Agreement to be performed or complied with by Buyer by the time of the Closing; and Buyer shall have delivered to Seller a certificate dated the Closing Date and signed by an authorized officer of Buyer confirming the foregoing. (ii) Seller shall have received an opinion dated the Closing Date of McConnell Valdes, counsel to Buyer, in form and substance reasonably satisfactory to Seller. (iii) The waiting period under the HSR Act shall have expired or been terminated. (iv) Buyer shall have delivered to Seller the following documents, certified by the Secretary or any Assistant Secretary of Buyer, as appropriate: (A) copies of its certificate of incorporation, by-laws and the resolution or resolutions of Buyer authorizing the transactions contemplated hereby; (B) a document evidencing the authority and incumbency of the persons executing documents on behalf of Buyer relating to the transactions contemplated hereby; (C) the Assumption Agreement; and (D) the documents referred to in Section 2(a)(iii), (iv) and (v). (v) Seller shall have received a favorable ruling in relation with its ruling request to the Puerto Rico Treasury Department dated October 7, 1998. (vi) All the conditions to the obligations of Seaboard Corporation to consummate the closing contemplated by the agreement relating to the Holsum Acquisition shall have been satisfied or waived by Seaboard Corporation and such closing shall be consummated simultaneously with the Closing hereunder. 4. Representations and Warranties of Seller. Seller and Seaboard hereby represent and warrant to Buyer as follows: (a) Authority. Seller is duly organized, validly existing and in good standing under the laws of the state of Delaware, and is authorized to do business in Puerto Rico. Seller has all requisite power and authority to enter into this Agreement and to consummate the transactions contemplated hereby. All corporate acts and other proceedings required to be taken by Seller to authorize the execution, delivery and performance of this Agree ment and the consummation of the transactions contemplated hereby have been duly and properly taken. This Agreement has been duly executed and delivered by Seller and constitutes a valid and binding obligation of Seller, enforceable against Seller in accordance with its terms, except to the extent such enforceability may be limited by (x) laws affecting the enforcement generally of the rights and remedies of creditors and secured parties and the obligations of debtors and (y) general principles of equity. The execution and delivery of this Agreement does not, and the consummation of the transactions contemplated hereby and compliance with the terms hereof will not, conflict with, or result in any violation of or default (with or without notice or lapse of time, or both) under, or give right to a right of termination, cancellation or acceleration of any material obligation or to loss of a material benefit under, or result in the creation of any lien, claim, encumbrance, security interest, option, charge or restriction of any kind upon any of the properties or assets of Seller under, any provision of (i) the corporation law of the State of Delaware, (ii) the Certificate of Incorporation or By-laws of Seller, (iii) except as disclosed on the Schedules hereto, any material note, bond, mortgage, indenture, deed of trust, license, lease, contract, commitment, agreement or arrangement to which Seller is a party or by which any of their respective properties or assets are bound, or (iv) any judgment, order or decree, or statute, law, ordinance, rule or regulation applicable to Seller or the property or assets of Seller and not to Buyer or the property or assets of Buyer, other than any such conflicts, violations, defaults, rights or liens, claims, encumbrances, security interests, options, charges or restrictions that individually or in the aggregate would not have a material adverse effect on the business, assets, condition (financial or otherwise) or results of operations of Seller. No consent, approval, license, permit, order or authorization of, or registration, declaration or filing with, any court, administrative agency or commission or other governmental authority or instrumentality, domestic or foreign, or any other person, is required to be obtained or made by or with respect to Seller or its affiliates in connection with the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby, other than (A) those set forth on Schedule 4(a), (B) compliance with and filings under the HSR Act, if applicable, and (C) those that may be required solely by reason of Buyer's (as opposed to any other third party's) participation in the transactions contemplated hereby. (b) Title to the Assets. Seller has good and valid title to the Assets, free and clear of any liens or encumbrances other than Permitted Encumbrances. Upon delivery to Buyer of the documents described in Section 3(a)(iv)(D) and (E), good and, in the case of the Real Property, recordable title to the Assets will pass to Buyer, free and clear of any liens or encumbrances, other than Permitted Encumbrances. (c) Power of Seller. Seller has full corporate power and authority and possesses all required governmental franchises, licenses, permits, authorizations and approvals which are material and necessary to entitle it to own, lease or otherwise hold the Assets and to carry on the Business as presently conducted. (d) Compliance with Applicable Laws. Except as disclosed on Schedule 4(d), the Business is being conducted in material compliance with all applicable laws, orders, ordinances, rules or regulations of any governmental authority, other than those where the failure to comply would not have a material adverse effect. (e) Real Property. Schedule 1(b)(i) sets forth a list of all the Real Property owned by Seller. Except as disclosed on Schedule 4(e), Seller has good and recordable title to the Real Property, free and clear of any encumbrances, except the Permitted Encumbrances. Except as disclosed on Schedule 4(e), Seller has received no written notice of any pending, contemplated or proposed eminent domain proceeding with respect to any Real Property which would materially and adversely affect the use, operation or value thereof. (f) Contracts. All Contracts are valid and binding obligations of Seller (or an affiliate of Seller, if applicable) and are in full force and effect, except as disclosed on Schedule 4(f). Except as disclosed on Schedule 4(f), Seller (or an affiliate of Seller, if applicable) has performed all material obligations required to be performed by it to date under the Contracts and is not (with or without the lapse of time or the giving of notice, or both) in breach or default thereunder. (g) Litigation. Schedule 4(g) sets forth a list of all material lawsuits and proceedings pending or, to Seller's knowledge, threatened in a written communication addressed to Seller or to Seaboard Corporation and of all material claims or investigations to Seller's knowledge pending or threatened, as of the date of this Agreement, by or against Seller which affect the Business or relate to the transactions contemplated by this Agreement. (h) Intellectual Property. All patents, patent applications, trademarks and trademark applications included in the Intellectual Property are listed on Schedule 1(b)(viii). Except as disclosed on Schedule 4(h), Seller has not received written notice of any claims that are currently pending or that have been threatened by any person, in each case with respect to the ownership, validity, enforceability or use of any Intellectual Property. Seller and Seaboard expressly disclaim any warranty, express or implied, that Seller owns or has the exclusive right to use any Intellectual Property or that any of the Intellectual Property does not violate or infringe upon the intellectual property of any third party. (i) Balance Sheet. Subject to end of period adjustments, the Balance Sheet fairly presents, in all material respects, the financial condition of the Business as of August 1, 1998, in accordance with Generally Accepted Accounting Principles. (j) Taxes. Except as set forth in Schedule 4(j), (i) Seller has, in respect of the Business and the Assets, filed all tax returns which are required to be filed and has paid all taxes which have become due pursuant to such tax returns or pursuant to any assessment which has become payable; (ii) all such tax returns are complete and accurate and disclose all taxes required to be paid in respect of the Business and the Assets; (iii) there is no action, suit, investigation, audit, claim or assessment pending or proposed or threatened with respect to taxes of the Business or the Assets; (iv) Seller has not waived or been requested to waive any statute of limitations in respect of taxes associated with the Business or the Assets; (v) all monies required to be withheld by Seller from employees for income taxes and social security and other payroll taxes have been collected or withheld, and all other taxes subject to withholding under applicable law and regulations have been either paid to the respective taxing authorities, set aside in accounts for such purpose, or accrued, reserved against and entered upon the books of Seller; and (vi) there are no liens for taxes upon the Assets, except for liens for taxes not yet due. (k) Operation Since Balance Sheet Date. (i) Except as set forth in Schedule 4(k) and Section 1(c), since the Balance Sheet Date, there has been: (A) no material adverse change in the Assets, it being understood that the Business has not operated since September 21, 1998, and is not expected to operate prior to the Closing Date; and (B) no material damage, destruction, loss or claim, whether or not covered by insurance, or condemnation or other taking adversely affecting any of the Assets, other than that caused by Hurricane Georges. (ii) Except as set forth in Schedule 4(k) or Section 1(c), since the Balance Sheet Date, Seller has not: (A) sold, leased (as lessor), transferred or otherwise disposed of (including any transfers from Seller to any of its affiliates) or mortgaged or pledged, or imposed or suffered to be imposed any encumbrance on, any of the assets reflected on the Balance Sheet or any assets acquired by Seller after the Balance Sheet Date, except for inventory and minor amounts of personal property sold or otherwise disposed of for fair value in the ordinary course of the Business consistent with past practice and except for Permitted Encumbrances; (B) canceled any debts owed to Seller and reflected on the Balance Sheet other than in the ordinary course of the Business consistent with past practice; (C) created, incurred or assumed, or agreed to create, incur or assume, any indebtedness for borrowed money or entered into, as lessee, any capitalized lease obligations; (D) accelerated or delayed collection of notes or accounts receivable generated by the Business in advance of or beyond their regular due dates or the dates when the same would have been collected in the ordinary course of the Business consistent with past practice; (E) delayed or accelerated payment of any account payable or other liability of the Business beyond or in advance of its due date or the date when such liability would have been paid in the ordinary course of the Business consistent with past practice; or (F) made any change in the accounting principles and practices used by Seller from those applied in the preparation of the Balance Sheets. (l) Availability of Assets and Legality of Use. Except as set forth in Schedule 4(l) or otherwise described in Section 1(b), the Assets constitute all the assets used in the Business (including, but not limited to, all books and records), will on the Closing Date be in good working condition (subject to normal wear and tear) and are suitable for the uses for which intended. (m) Governmental Permits. Seller owns, holds or possesses all material licenses, franchises, permits, privileges, immunities, approvals and other authorizations which are necessary to entitle it to own or lease, operate and use the Assets and to carry on and conduct the Business substantially as currently conducted (herein collectively called "Governmental Permits"). Schedule 4(m) sets forth a list and brief description of each Governmental Permit. Complete and correct copies of all of the Governmental Permits have heretofore been delivered to Buyer by Seller. Except as set forth in Schedule 4(m), (i) Seller has fulfilled and performed its material obligations under each of the Governmental Permits, and no event has occurred or condition or state of facts exists which constitutes or, after notice or lapse of time or both, would constitute a material breach or default under any such Governmental Permit or which permits or, after notice or lapse of time or both, would permit revocation or termination of any such Governmental Permit, or which might materially and adversely affect the rights of Seller under any such Governmental Permit; (ii) no notice of cancellation, of default or of any material dispute concerning any Governmental Permit, or of any event, condition or state of facts described in the preceding clause, has been received by, or is known to, Seller; and (iii) each of the Governmental Permits is valid, subsisting and in full force and effect. (n) Accounts Receivable; Inventories. All accounts receivable of Seller existing on the Closing Date have arisen from bona fide transactions by Seller in the ordinary course of the Business. Except as set forth on Schedule 4(n), the inventories of Seller (including supplies and other materials) are in good, merchantable and useable condition. The reserve for inventory obsolescence contained in the Balance Sheet fairly reflects the amount of obsolete inventory as of the Balance Sheet Date. (o) Environmental Matters. For purposes of this Agreement, (A) "CERCLA" shall mean the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. 9601 et seq., as amended as of the date hereof, and any federal, state, Commonwealth of Puerto Rico or local regulations promulgated thereunder; (B) "Contaminant" shall mean any hazardous or toxic substance or waste, petroleum, petroleum-based substance or waste or special waste; (C) "Environmental Encumbrance" shall mean an encumbrance in favor of any Governmental Body for (i) any liability under any Environmental Law, or (ii) damages arising from, or costs incurred by such Governmental Body in response to, a Release or threatened Release of a Contaminant into the environment; (D) "Environmental Law" shall mean all federal, state, commonwealth and local laws or regulations relating to or addressing the environment, including but not limited to CERCLA, RCRA, the Clean Water Act, the Clean Air Act, the Safe Drinking Water Act, the Toxic Substances Control Act, and any state or commonwealth equivalent thereof; (E) "Governmental Body" shall mean any foreign, federal, state, local or other governmental authority or regulatory body; (F) "Person" shall mean any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or Governmental Body; (G) "RCRA" shall mean the Resource Conservation and Recovery Act, 42 U.S.C. 6901 et seq., and any state or Commonwealth of Puerto Rico regulations promulgated thereunder; (H) "Release" shall mean release, spill, emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching or migration of a Contaminant into the indoor or outdoor environment or into or out of any Assets, including the movement of Contaminants through or in the air, soil, surface water, groundwater or the Assets; and (I) "Remedial Action" shall mean actions required under applicable Environmental Law to (i) clean up, remove, treat or in any other way address Contaminants in the indoor or outdoor environment; (ii) prevent the Release or threatened Release or minimize the further Release of Contaminants; or (iii) investigate and determine if a remedial response is needed and to design such a response and post-remedial investigation, monitoring, operation and maintenance and care. Except as set forth in Schedule 4(o): (i) the Assets and the operations of the Business comply in all material respects with all applicable Environmental Laws; (ii) Seller has, in respect of the Business, obtained all Governmental Permits required under applicable Environmental Law necessary for its operation, and all such Governmental Permits required under applicable Environmental Law are in good standing and Seller is in compliance with all terms and conditions of such permits, except where the failure to have or be in compliance with such permits would not reasonably be expected to have a material adverse effect on the Business; (iii) to Seller's knowledge, neither Seller, with respect to the Business, nor any of the Assets is currently subject to any on-going investigation by, agreement with any Person respecting (A) any Environmental Law, (B) any Remedial Action or (C) any claim arising from a Release or threatened Release, in each case, that would reasonably be expected to have a material adverse effect on the Business; (iv) Seller has not, with respect to the Assets or the Business, received written notice of any judicial or administrative proceeding, order, judgment, decree or settlement alleging or addressing a violation of or liability under any Environmental Law; (v) to Seller's knowledge, with respect to the Assets or the Business, Seller has never been required and is not currently required by any applicable Environmental Laws to: (A) report a Release of a hazardous substance pursuant to Section 103(a) of CERCLA, or any state equivalent; (B) file a notice pursuant to Section 103(c) of CERCLA; or (C) file any other notice under any applicable Environmental Law reporting a violation of any applicable Environmental Law which might reasonably be expected to have a material adverse effect on the Business; Seller, has not, with respect to the Assets or the Business, ever filed such a report or notice; (vi) to Seller's knowledge, there is not now, nor has there ever been, on or in any of the Assets any generation, transfer, handling treatment, recycling, storage or disposal of any hazardous waste or substance, as that term is defined under applicable Environmental Laws, that requires or required a Governmental Permit pursuant to such Environmental Laws; (vii) Seller has not received and is not aware of any written notice or claim to the effect that it is or may be liable to any Person as a result of a Release or threatened Release at or from the Assets or concerning the presence of a Contaminant in the Assets; (viii) to Seller's knowledge, no Environmental Encumbrance has attached to any of the Assets; and (ix) to Seller's knowledge, any asbestos- containing material which is on or part of the Assets is in good repair according to the current standards and practices governing such material, and its presence or condition does not violate any currently applicable Environmental Law. (p) Disclosure. None of the representations or warranties of Seller contained herein, none of the information contained in the Schedules hereto and none of the other information or documents furnished or to be furnished to Buyer or any of its representatives by Seller or its representatives pursuant to the terms of this Agreement, is false or misleading in any material respect or omits to state a fact herein or therein necessary to make the statements herein or therein not misleading in any material respect. To Seller's knowledge there is no fact which adversely affects or in the future is likely to adversely affect the Assets or the Business in any material respect which has not been set forth or referred to in this Agreement or the Schedules hereto. (q) Employees. Effective at or before the Closing Seller will have dismissed all its employees (the "Employees") and will have paid all Employees such sums as may be required to be paid to the Employees under all applicable laws, regulations, orders and employment contracts. 5. Covenants of Seller. Seller and Seaboard covenant and agree as follows: (a) Ordinary Conduct of Business by Seller. Seller expects that the Business will not operate prior to the Closing Date. If the Business is operated, then except as permitted by the terms of this Agreement, from the date hereof to the Closing Date, Seller will conduct the Business in the ordinary course in substantially the same manner as conducted prior to Hurricane Georges. Except as set forth on Schedule 5(a) or otherwise expressly permitted by the terms of this Agreement, from the date hereof to the Closing Date, Seller, will not do any of the following without the prior written consent of Buyer, which consent shall not be unreasonably withheld or delayed: (i) approve any compensation or other benefit increases to employees of the Business; (ii) incur or assume any liabilities, obliga- tions or indebtedness for borrowed money or guarantee any such liabilities, obligations or indebtedness, other than in the ordinary course of business consistent with past practice; provided that in no event shall the Seller, assume or guarantee any long-term indebtedness for borrowed money relating to the Business; (iii) permit, allow or suffer any of the Assets to be subjected to any encumbrance, other than Permitted Encumbrances; (iv) cancel any material indebtedness (individually or in the aggregate) or waive any claims or rights of substantial value; (v) make or incur any capital expenditure or expenditures which, individually, is in excess of $10,000, it being understood that damages caused by Hurricane Georges shall be repaired at the expense of Seaboard Corporation, and not of Seller; (vi) make any material change in the conduct or character of the Business; (vii) make any sale, assignment, transfer or other conveyance of any of the Assets, except in the ordinary course of business; (viii) acquire or agree to acquire any assets that will form part of the Assets other than in the ordinary course of business; (ix) pay any dividend or make any other distribution to its Stockholders; (x) enter into any material transactions other than in the ordinary course of business; (xi) take any action that would cause or permit the representations and warranties made herein to be inaccurate at the Closing Date; or (xii) agree, whether in writing or otherwise, to do any of the foregoing. (b) Access. Prior to the Closing, Seller will give Buyer and its financing sources, and their respective representatives, employees, counsel and accountants, access, during normal business hours and upon reasonable notice, to its personnel, properties, books and records. Seller will arrange for its directors, officers, employees and independent public accountants and legal counsel to cooperate with such examination. Buyer and its representatives shall execute such confidentiality agreements as Seller shall reasonably require. (c) Insurance. Seller shall keep, or cause to be kept, all insurance policies relating to the Business, or suitable replacements therefor, in full force and effect through the close of business on the Closing Date. (d) Other Transactions. Prior to the Closing, none of Seller, nor any affiliate of Seller shall, nor shall they permit any of their respective officers, directors, stockholders or other representatives to, directly or indirectly, encourage, solicit or initiate discussions or negotiations with, any corporation, partnership, person, or other entity or group (other than Buyer and their representatives) concerning any merger, sale of securities, sale of assets or similar transaction involving the Business. (e) Non-Competition. (i) Seller, on its behalf and on behalf of its affiliates and subsidiaries, agrees that, for a period of ten (10) years after the Closing Date, Seller and its affiliates shall not, directly or indirectly, engage in (1) the production, marketing or sale of bakery products, or (2) the manufacture, marketing or sale of flour, in each case in Puerto Rico or with respect to customers in Puerto Rico (the "Restricted Business"), or acquire any equity securities of, or make any loan to, or enter into any joint venture or similar agreement with, any person engaged in the Restricted Business in Puerto Rico or with respect to customers in Puerto Rico; provided, however, that this clause (i)(2) shall not prohibit (A) any minority investment in any entity that is not engaged in the Restricted Business as a material line of business, (B) any joint venture for which the Restricted Business is not a material line of business or (C) any investment representing less than 5% of the ownership in a publicly traded company in the management of which Seller does not participate. This covenant (the "Restrictive Covenant") shall cease to have any effect with respect to the business described in clause (i)(2) above if Mr. Ramon Calderon, or his lineal descendants, persons who are members of the management of the Business on the Closing Date, or any person or entity acquiring an interest in the Business as a result of a foreclosure or work-out of the Acquisition Financing shall at any time cease to own, directly or indirectly, a controlling interest in the Business. (ii) The parties agree that if any court of competent jurisdiction determines that the Restrictive Covenant or any part thereof is invalid or unenforceable, the remainder of the Restrictive Covenant shall not thereby be affected and shall be given full effect, without regard to the invalid portions. Furthermore, if any portion of the Restrictive Covenant, or the application of any portion of the Restrictive Covenant to any person or circumstances, shall be held invalid or unenforceable by any court of competent jurisdiction, the remaining portion of the Restrictive Covenant, or the application of such portion of the Restrictive Covenant to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby. In either of the foregoing cases, the parties agree that they will amend the terms of the Restrictive Covenant or portion thereof so determined to be invalid or unenforceable, but only in the most minimal manner necessary to make such terms comply with the determination of such court. (iii) If Seller breaches, or threatens to commit a breach of, the Restrictive Covenant, Buyer shall have the right to have the Restrictive Covenant specifically enforced by any court of competent jurisdiction, it being acknowledged and agreed that any such breach or threatened breach will cause irreparable injury to Buyer and that money damages will not provide an adequate remedy to Buyer. Such right of specific performance shall be independent of, and in addition to, and not in lieu of, any other rights and remedies available to Buyer at law or in equity. (f) Supplemental Disclosure. Seller shall have the continuing obligation until the Closing promptly to supplement or amend the Schedules hereto with respect to any matter hereafter arising or discovered which, if existing or known at the date of this Agreement, would have been required to be set forth or described in such Schedules; provided, however, that for the purpose of the rights and obligations of the parties hereunder, any such supplemental or amended disclosure shall not be deemed to have been disclosed as of the date of this Agreement unless so agreed in writing by Buyer. (g) Tax Ruling. Seller shall use its best efforts to obtain the ruling referred to in Section 3(b)(v). 6. Representations and Warranties of Buyer. Buyer hereby represents and warrants to Seller that it is a corporation duly organized, validly existing and in good standing under the laws of the Commonwealth of Puerto Rico. Buyer has all requisite power and authority to enter into this Agreement and to consummate the transactions contemplated hereby. All corporate acts and other proceedings required to be taken by Buyer to authorize the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby have been duly and properly taken. This Agreement has been duly executed and delivered by Buyer and constitutes a valid and binding obligation of Buyer, enforceable against Buyer in accordance with its terms, except to the extent such enforceability may be limited by (x) laws affecting the enforcement generally of the rights and remedies of creditors and secured parties and the obligations of debtors and (y) general principles of equity. The execution and delivery of this Agreement by Buyer does not, and the consummation of the transactions contemplated hereby and compliance with the terms hereof will not, conflict with, or result in any violation of or default (with or without notice or lapse of time, or both) under, or give right to a right of termination, cancellation or acceleration of any obligation or to loss of a material benefit under, or result in the creation of any lien, claim, encumbrance, security interest, option, charge or restriction of any kind upon any of its properties or assets under, any provision of (i) the corporation law of the Commonwealth of Puerto Rico, (ii) its Certificate of Incorporation or By-laws, (iii) except as disclosed on the Schedules hereto, any material note, bond, mortgage, indenture, deed of trust, license, lease, contract, commitment, agreement or arrangement to which it is a party or by which any of its properties or assets are bound, or (iv) any judgment, order or decree, or statute, law, ordinance, rule or regulation applicable to it or its property or assets, other than, in the case of clause (iii) above, any such conflicts, violations, defaults, rights or liens, claims, encumbrances, security interests, options, charges or restrictions that individually or in the aggregate would not have a material adverse effect on the business, assets, condition (financial or otherwise) or results of operations of the Business. No consent, approval, license, permit, order or authorization of, or registration, declaration or filing with, any court, administrative agency or commission or other governmental authority or instrumentality, domestic or foreign, is required to be obtained or made by or with respect to Buyer or its respective affiliates in connection with the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby, other than (A) those described on Schedule 6, (B) compliance with and filings under the HSR Act, if applicable, and (C) those that may be required solely by reason of Seller's (as opposed to any other third party's) participation in the transactions contemplated hereby. 7. Mutual Covenants. (a) Consents. Buyer and Seller shall use their reasonable best efforts to obtain, prior to the Closing, any consents of third parties and any authorizations or permits from any governmental authority required in connection with the consummation of the transactions contemplated herein; provided, however, that (i) Buyer shall be solely responsible for obtaining any consent required in connection with the assignment of particular contracts, licenses, authorizations or permits that require the consent of a counterparty or government entity as a condition to such assignment (including the consent of the Puerto Rico government under Seller's grant of tax exemption), as well as for obtaining new governmental permits and authorizations to replace permits and authorizations that are not assignable, and (ii) the obtaining of any consent or new governmental permit or authorization referred to in clause (i) (other than those set forth in Schedule 7(a), which shall be a condition to Buyer's obligation to consummate the Closing) shall not be a condition to Buyer s obligation to consummate the Closing. (b) Cooperation. Buyer and Seller shall cooperate with each other and shall cause their officers, employees, agents, auditors and representatives to cooperate with each other after the Closing to ensure the orderly transition of the Assets from Seller to Buyer and to minimize any disruption to the respective businesses of Seller or Buyer that might result from the transactions contemplated hereby. Each party shall reimburse the other for reasonable out-of-pocket costs and expenses incurred in connection with actions taken at the request of the other party pursuant to this Section 7(b), provided that the party seeking such reimbursement shall have notified the other prior to incurring any such expense that it intends to seek reimbursement for such expense. (c) Publicity. Seller and Buyer agree that, from the date hereof through the Closing Date, no public release or announcement, and no disclosure to any third party, concerning the transactions contemplated hereby shall be made by either party without the prior consent of the other party, except as such release or announcement may be required by law or by the regulations of the American Stock Exchange, in which case the party required to make the release or announcement shall allow the other party reasonable time to comment on such release or announcement in advance of such issuance to the extent possible. Buyer acknowledges Seller's Press Release of October 20, 1998. (d) Reasonable Best Efforts. Subject to the terms and conditions of this Agreement, each party will use its reasonable best efforts to cause the Closing to occur as soon as possible. (e) Records. On the Closing Date, Seller shall deliver or cause to be delivered to Buyer copies of all agreements, documents, books, records and files (collectively, "Records"), in the possession of Seller relating to the Business, except that Seller may retain all Records prepared in connection with the sale of the Assets. Seller shall have access to and be authorized to make copies of any records delivered to the Buyer. Buyer shall keep all Records for six years after the Closing Date or until the expiration of the applicable statute of limitations for third party claims, if longer. (f) Seller Trade Payables. Buyer shall repay in full, within five days after the Closing Date, all trade payables and all intercompany payables identified on the Closing Date Balance Sheet due by Seller to Seaboard or any affiliate of Seller. On the Closing Date, such trade and intercompany payables shall be secured by the same collateral securing the Note. Non-payment of these payables shall constitute a default under the Note. (g) Confidentiality. Each party shall take reasonable appropriate actions to keep confidential, and cause its affiliates and instruct its and their officers, directors, employees and advisors to keep confidential, all non-public information relating to the Business, Seller and Buyer, except as required by law or administrative process or the rules of the American Stock Exchange, and except for information which becomes public other than as a result of a breach of this Section 7(g), and provided that this covenant shall not restrict the ability of any person's and its affiliates' respective officers, directors, advisors and employees to discuss such information internally. (h) Cooperation with Respect to Litigation. Buyer shall cooperate with Seller in all respects, at Seller's expense, in the defense of all claims which constitute Retained Liabilities. 8. Further Assurances. From time to time, as and when requested by either party hereto, the other party shall execute and deliver, or cause to be executed and delivered, all such documents and instruments and shall take, or cause to be taken, all such further or other actions, as such other party may reasonably deem necessary or desirable to consummate the transactions contemplated by, or give effect to the agreements set forth in, this Agreement. 9. Indemnification. (a) Indemnification by Seller and Seaboard. Seller and Seaboard shall jointly and severally indemnify Buyer and its officers, directors, employees and agents and hold them harmless from any loss, liability, claim, damage or expense (including reasonable legal fees and expenses) suffered or incurred by any such indemnified party to the extent arising from (i) any breach of any of their representations or warranties contained in this Agreement, (ii) any breach of any of their covenants contained in this Agreement requiring performance after the Closing Date, and (iii) the Retained Liabilities; provided, however, that neither Seller nor Seaboard shall have any liability under clause (i) above unless the aggregate of all losses, liabilities, costs and expenses relating thereto for which Seller or Seaboard would, but for this provision, be liable exceeds on a cumulative basis an amount equal to $150,000, and then only to the extent of any such excess up to a maximum aggregate amount equal to $500,000; and provided further, however, that neither Seller nor Seaboard shall have any liability hereunder for any breach of a representation or warranty of Seller contained in this Agreement if Mr. Ramon Calderon, Buyer or any of its directors or officers had actual or constructive knowledge of such breach on the Closing Date. (b) Indemnification by Buyer. Buyer shall indemnify Seller, its affiliates and each of its officers, directors, employees and agents against and hold them harmless from any loss, liability, claim, damage or expense (including reasonable legal fees and expenses) suffered or incurred by any such indemnified party to the extent arising from (i) any breach of any representation or warranty of any Buyer contained in this Agreement, (ii) any breach of any covenant of any Buyer contained in this Agreement requiring performance after the Closing Date, and (iii) the Assumed Liabilities. (c) Losses Net of Insurance. The amount of any loss, liability, claim, damage or expense for which indemnification is provided under this Section 9 shall be net of any amounts recovered or recoverable by the indemnified party under insurance policies with respect to such loss, liability, claim, damage or expense and net of any tax benefit derived by the indemnified party from such loss, liability, claim, damage or expense. (d) Termination of Indemnification. The obligations to indemnify and hold harmless a party hereto, (i) pursuant to Sections 9(a)(i) and 9(b)(i), shall terminate when the applicable representation or warranty terminates pursuant to Section 13, (ii) pursuant to Sections 9(a)(ii) and 9(b)(ii), shall terminate when the applicable covenant terminates in accordance with its terms, and (iii) pursuant to Sections 9(a)(iii) and 9(b)(iii) shall not terminate; provided, however, that as to clause (i) above such obligations to indemnify and hold harmless shall not terminate with respect to any item as to which the person to be indemnified or the related party hereto shall have, before the expiration of the applicable period, previously made a claim by delivering a notice (stating in reasonable detail the basis of such claim) to the indemnifying party. (e) Procedures Relating to Indemnification. In order for a party (the "indemnified party") to be entitled to any indemnification provided for under this Agreement, arising out of or involving a claim or demand made by any person, firm, governmental authority or corporation against the indemnified party (a "Third Party Claim"), such indemnified party must notify the indemnifying party in writing, and in reasonable detail, of the Third Party Claim within 30 days after receipt by such indemnified party of written notice of the Third Party Claim; provided, however, that failure to give such notification shall not affect the indemnification provided hereunder except to the extent the indemnifying party shall have been actually prejudiced as a result of such failure (except that the indemnifying party shall not be liable for any expenses incurred during the period following the end of such 30-day period referred to above in which the indemnified party failed to give such notice and the date on which such notice is given). Thereafter, the indemnified party shall deliver to the indemnifying party, within ten (10) business days after the indemnified party's receipt thereof, copies of all notices and documents (including court papers) received by the indemnified party relating to the Third Party Claim. If a Third Party Claim is made against an indemnified party, the indemnifying party will be entitled to participate in the defense thereof and, if it so chooses, to assume the defense thereof (unless the indemnifying party is also a party to such Third Party Claim and the indemnified party determines in good faith that joint representation would be inappropriate due to a potential conflict of interest) with counsel selected by the indemnifying party and reasonably satisfactory to the indemnified party. Should the indemnifying party be entitled under the preceding sentence to assume the defense of a Third Party Claim and so elect to assume such defense, the indemnifying party will not be liable to the indemnified party for legal expenses subsequently incurred by the indemnified party in connection with the defense thereof. If the indemnifying party assumes such defense, the indemnified party shall have the right to participate in the defense thereof and to employ counsel, at its own expense, separate from the counsel employed by the indemnifying party, it being understood that the indemnifying party shall control such defense (except in the circumstances set forth in the parenthetical to the first sentence of this paragraph). The indemnifying party shall be liable for the fees and expenses of counsel employed by the indemnified party for any period during which the indemnifying party has not assumed the defense thereof (other than during any period following the 30-day period referred to in the first sentence of this Section 9(f) in which the indemnified party shall have failed to give notice of the Third Party Claim as provided above). If the indemnifying party chooses to defend or prosecute any Third Party Claim, all of the parties hereto shall cooperate in the defense or prosecution thereof. Such cooperation shall include the retention and (upon the indemnifying party's request) the provision to the indemnifying party of records and information which are reasonably relevant to such Third Party Claim, and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder. Whether or not the indemnifying party shall have assumed the defense of a Third Party Claim, the indemnified party shall not admit any liability with respect to, or settle, compromise or discharge, such Third Party Claim without the indemnifying party's prior written consent (which consent shall not be unreasonably withheld or delayed). (f) This Section 9 shall not apply to indemnification for taxes, which shall be governed by Section 10. 10. Tax Matters. (a) Income Tax Liability. Buyer shall be responsible and shall indemnify Seller for any Puerto Rican and federal income tax liabilities of Seller related to the period from August 2, 1998 to the Closing Date (net of any estimated payments made on or after August 2, 1998 or overpayments attributable to such payments). Seller and Seaboard shall be responsible and shall jointly and severally indemnify Buyer for any Puerto Rican and federal income tax liabilities of Seller for any period prior to August 2, 1998 (net of any estimated payments made prior to August 2, 1998 or overpayments attributable to such payments and refundable to Seller). The income taxes for the period that includes August 2, 1998 shall be allocated among the parties based on Seller's monthly financial statements as of, and for the year to date period ended on, August 1, 1998, provided that reconciling items between book net income and net taxable income shall be attributed to the period to which they are directly allocable and those items not attributable to any period shall be apportioned based on the net taxable income before such reconciling items. The marginal income tax rate for both periods (on and before August 1, 1998 and on and after August 2, 1998) shall be the same. (b) Tax Returns and Filings. The taxable period of Seller that includes the Closing Date shall be reported to the United States and Puerto Rico by the Seller. Seller will timely prepare and file with the appropriate authorities (after approval by Buyer, which approval shall not be unreasonably withheld or delayed) all United States income tax returns, reports and forms required to be filed and will pay all income taxes due with respect to such returns, reports and forms. Buyer shall, within thirty (30) days of the later of the filing of such return or notification by Seller of the amounts owed, pay to Seller any amounts are owed in accordance with the allocation methodology set forth above. Conversely, if amounts are owed to Buyer, they shall be paid by Seller or Seaboard within thirty (30) days of the filing of such return. (c) Tax Audits and Amended Returns. Any liability or refund resulting from a tax audit, revenue agent review or similar proceeding of either taxing jurisdiction shall be borne or shared by Seller (or Seaboard) and Buyer in accordance with the allocation methodology set forth above and paid over to the appropriate party within thirty (30) days of the finalization of such proceeding. Seller shall give notice to Buyer of any United States audits and allow Buyer to participate in the process. Seller shall not agree to any audit adjustments which would increase Buyer s income or other tax liability without Buyer s consent, which consent shall not be unreasonably withheld or delayed. Seller shall, if Buyer so requests and at Buyer's expense, file for and obtain any refunds or credits to which Buyer is entitled under this Section. Seller shall permit Buyer to control the prosecution of any such refund claim and, where deemed appropriate by Buyer, authorize by appropriate powers of attorney such persons as Buyer shall designate to represent the Buyer with respect to such refund claim. Seller shall forward to Buyer any refund within thirty (30) days after the refund is received (or reimburse Buyer for any such credit within thirty (30) days after the credit is allowed and applied against other income tax liability), provided, however, that such amounts payable to Buyer shall be net of any reasonable expense incurred by Seller attributable to the receipt of such refund and/or the payment of such amount to Buyer. Seller and Buyer shall treat any payments under the preceding sentence as an adjustment to the Purchase Price. (d) Any adjustments to the income tax liability based on audit shall be borne in accordance with the apportionment set forth herein within thirty (30) days after the final audit determination. (e) General Tax Matters. Seller and Buyer shall reasonably cooperate, and shall cause their respective affiliates, officers, employees, agents, auditors and representatives reasonably to cooperate, in preparing and filing all returns, reports and forms relating to income taxes, including maintaining and making available to each other all records necessary in connection with income taxes and in resolving all disputes and audits with respect to all taxable periods relating to income taxes. Buyer and Seller recognize that Seller and its affiliates will need access, from time to time, after the Closing Date, to certain accounting and tax records and information of Seller, and therefore, each party agrees (1) to use its best efforts to properly retain and maintain such records until such time as the other party agrees that such retention and maintenance is no longer necessary; and (2) to allow the other party and its agents and representative (and agents or representatives of any of its affiliates), at times and dates mutually acceptable to the parties, to inspect, review and make copies of such records as the other party may deem necessary or appropriate from time to time, such activities to be conducted during normal business hours and at the other party's expense. 11. Assignment; Successors. This Agreement and the rights and obligations hereunder shall not be assignable or transferable by any Buyer or Seller (including by operation of law) without the prior written consent of the other parties hereto; provided, however, that (i) any Buyer may assign its right hereunder to a subsidiary or affiliate of such Buyer which is controlled by Mr. Ramon Calderon without the prior written consent of Seller and (ii) Seller may assign its rights and obligations hereunder to any entity wholly owned by Seller; provided further, however, that no assignment shall limit or affect the assignor's obligations hereunder. 12. No Third-Party Beneficiaries. This Agreement is for the sole benefit of the parties hereto and their permitted assigns and nothing herein expressed or implied shall give or be construed to give to any person or entity, other than the parties hereto and such assigns, any legal or equitable rights hereunder. 13. Termination. (a) Anything contained herein to the contrary notwith standing, this Agreement may be terminated and the transactions contemplated hereby abandoned at any time prior to the Closing Date: (i) by mutual written consent of Seller and Buyer; (ii) by either party hereto, if the Closing does not occur on or prior to December 31, 1998; (iii) by Seller, if on or prior to December 4, 1998, Buyer shall not have executed a credit agreement providing for sufficient financing to consummate the Holsum Acquisition and containing terms that, to the extent affecting the rights of Seller or the ability of Buyer to consummate the transactions contemplated herein, shall be reasonably satisfactory to Seller; or (iv) by Seller, as provided in Section 1(g), in the event that Seller and Buyer shall not reach an agreement as to the indemnification, if any, of Seller by Buyer with respect to any adverse economic effect arising from any change in any applicable law or regulation adopted prior to the Closing Date and requiring any tax withholding with respect to payment of the Purchase Price; provided, however, that the party seeking termination pursuant to clause (ii) or (iii) is not in breach of any of its representations, warranties, covenants or agreements contained in this Agreement. (b) In the event of termination by Seller or Buyer pursuant to this Section 13, written notice thereof shall forthwith be given to the other party and the transactions contemplated by this Agreement shall be terminated, without further action by either party. If the transactions contemplated by this Agreement are terminated as provided herein: (i) Buyer shall return all documents and other material received from Seller relating to the transactions contemplated hereby, whether so obtained before or after the execution hereof, to Seller; (ii) if such termination is pursuant to Section 12(a)(ii) under such circumstances that all the conditions to Closing set forth in Section 3(a) shall have been satisfied or would have been satisfied but for any action taken or omitted to be taken by Buyer or any of its affiliates, then such termination shall not result in any liability to Seller; and (iii) if such termination is pursuant to Section 13(a)(ii) under such circumstances that all the conditions to Closing set forth in Section 3(b) shall have been satisfied or would have been satisfied but for any action taken or omitted to be taken by Seller or any of its affiliates, then such termination shall not result in any liability to Buyer. (c) If this Agreement is terminated and the transactions contemplated hereby are abandoned as described in this Section 13, this Agreement shall become void and of no further force and effect, except for the provisions of (i) Section 15 hereof relating to expenses, (ii) Section 7(c) hereof relating to publicity, (iii) Section 21 hereof relating to finder's fees and broker's fees, (iv) this Section 13 and (v) Section 7(g) relating to confidentiality. Nothing in this Section 13 shall be deemed to release either party from any liability for any breach by such party of the terms and provisions of this Agreement or to impair the right of either party to compel specific performance by the other party of its obligations under this Agreement or to claim damages from the other party for breach of this Agreement; provided, however, that a termination of this Agreement based solely on the breach of a representation, which breach is not intentional and does not involve fraud or bad faith, shall only entitle the non-breaching party to recover its out-of-pocket expenses incurred in connection with this transaction, and not any consequential or other damages. 14. Survival of Representations. The representations and warranties in this Agreement shall survive the Closing for a period of one year commencing on the Closing Date. The representations and warranties in the Note, the collateral documents securing the Note and the Guaranty shall survive until the Note is paid in full. The obligations of each party hereto under the covenants that are required to be performed after the Closing pursuant to this Agreement or the Assumption Agreement and the obligations of Mr. Ramon Calderon and Buyer under the Note, the collateral documents securing the Note and the Guaranty shall survive until such obligations have been fully performed. 15. Expenses. Whether or not the transactions contemplated hereby are consummated, all costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such costs or expenses. Buyer shall be responsible for the payment of the expenses related to the preparation and execution of the real property deeds necessary for the transfer of the Real Property (except for the internal revenue stamps to be affixed to the original of the real property deeds, which shall be paid by Seller), and for the payment of the internal revenue stamps required in the first certified copy of such deeds and the internal revenue vouchers required for the recordation of such deeds in the Registry of Property of Puerto Rico. Buyer shall also be responsible for the expenses related to the execution and recordation of any mortgages and security interests provided herein. If the transactions contemplated hereby are not consummated within the agreed period, Buyer and Ramon Calderon shall reimburse Seller for any expenses of Buyer paid for by Seaboard Corporation or Seaboard Bakeries related to the transaction within ten (10) days after the termination of this Agreement. 16. Amendments. No amendment to this Agreement shall be effective unless it shall be in writing and signed by all parties hereto. 17. Notices. All notices or other communications required or permitted to be given hereunder shall be in writing and shall be delivered by hand or sent by prepaid telex, cable or telecopy, or sent, postage prepaid, by registered, certified or express mail, or reputable overnight courier service and shall be deemed given when so delivered by hand, telexed, cabled or telecopied, or if mailed, three days after mailing (one business day in the case of express mail or overnight courier service), as follows: (a) if to Buyer, Mr. Ramon Calderon Holsum Bakers of Puerto Rico Call Box 8282 Toa Baja, P.R. 00951 Telecopier: (787) 251-2060 with copies to: McConnell Valdes 270 Munoz Rivera Avenue Hato Rey, Puerto Rico 00918 Telecopier: (787) 759-8282 Attention: Julio Pietrantoni, Esq. (b) if to Seller, Seaboard Corporation 9000 West 67th Street PO Box 2972 Shawnee Mission, Kansas 66201 Telecopier: (913)676-8978 Attention: David M. Becker, Esq. Department of Legal Affairs with a copy to: Sullivan & Worcester LLP One Post Office Square Boston, MA 02108 Telecopier: (617) 338-2880 Attention: Marshall L. Tutun, Esq. and Fiddler Gonzalez & Rodriguez, LLP 254 Munoz Rivera Avenue Hato Rey, Puerto Rico 00918 Telecopier: (787) 754-7539 Attention: Rafael Cortes Dapena, Esq. 18. Interpretation. The headings contained in this Agreement, in any Exhibit or Schedule hereto and in the table of contents to this Agreement, are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. 19. Counterparts. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement, and shall become effective when one or more such counterparts have been signed by each of the parties and delivered to the other party. 20. Entire Agreement. This Agreement, including the Schedules and Exhibits hereto, contains the entire agreement and understanding between the parties hereto with respect to the subject matter hereof and super sedes all prior agreements and understandings relating to such subject matter. 21. Fees. Each party hereto hereby represents and warrants that no brokers or finders have acted for such party in connection with this Agreement or the transactions contemplated hereby, and agrees to indemnify the other for any such fees. 22. Severability. If any provision of this Agreement or the application of any such provision to any person or circumstance shall be held invalid, illegal or unenforceable in any respect by a court of competent jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision hereof. 23. Governing Law; Consent to Jurisdiction. This Agreement shall be governed by and construed in accordance with the laws of New York, without regard to the conflicts of law principles thereof, except as to matters relating to real estate, in which case Puerto Rico law shall apply. Each party hereto consents to the jurisdiction of the courts of New York and of the federal courts in New York in connection with any claim arising hereunder, and expressly waives and agrees not to raise any claim that it is not personally subject to the jurisdiction of such court, that the venue of the suit is improper, that this agreement may not be litigated in such court, and expressly agrees not to raise forum non conveniens in any such proceeding. With respect to any action brought by Buyer against Seller pursuant to Section 9(a)(i) or (ii), Buyer agrees to bring such action in a New York court so long as such New York court shall have jurisdiction (including as a result of the consent to jurisdiction contained herein) over the parties and the subject matter of the action. Other actions brought by Buyer and actions brought by Seller may additionally be brought in any appropriate forum. Each of the parties agrees that service of process may be made upon it by certified or registered mail to the address for notices set forth in this agreement or as otherwise provided by law. 24. Waiver of Trial by Jury. Seller and Buyer expressly waive all right to trial by jury in any action, proceeding or counter claim related to this Agreement. The parties acknowledge that the provisions of this paragraph have been bargained for and that they have been represented by counsel in connection therewith. 25. Schedules. Matters disclosed in any Schedule hereto shall be deemed to have been disclosed in all Schedules hereto. The Schedules shall be an integral part of this Agreement. 26. Execution by Mr. Ramon Calderon. Mr. Ramon Calderon is executing this Agreement solely for purposes of confirming his agreement set forth in Section 15 hereof. IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed as of the date first written above. HARINAS DE PUERTO RICO, INC. HDPR ACQUISITIONS CORP. By: /s/ Robert Steer By: /s/ Ramon Calderon Name: Robert Steer Name: Ramon Calderon Title: Vice President Title: President SEABOARD CORPORATION By: /s/ Robert Steer Name: Robert Steer Title: Vice President- Chief Financial Officer /s/ Ramon Calderon Ramon Calderon The following exhibits and schedules have been excluded from this filing, registrant agrees to furnish supplementally a copy of any omitted schedule to the SEC upon request: Exhibit A-Form of Guaranty Schedule 1(b) (i) to Asset Purchase Agreement-Harinas-Real Property Schedule 1(b) (ii) to Asset Purchase Agreement-Harinas- Machinery & Equipment Schedule 1(b) (iii) to Asset Purchase Agreement-Harinas- Contracts Schedule 1(b) (viii) to Asset Purchase Agreement-Harinas- Intellectual Property Schedule 1(b) (xi) to Asset Purchase Agreement-Harinas-Other Assets Schedule 1(c) (iii)-Nunez Agreement and Harinas Trademarks Schedule 3(a) (iv) (D) to Asset Purchase Agreement-Harinas- Buyer's Obligations Schedule 4(a) to Asset Purchase Agreement-Harinas-Authority Schedule 4(d) to Asset Purchase Agreement-Harinas-Compliance with Applicable Laws Schedule 4(e) to Asset Purchase Agreement-Harinas-Real Property Schedule 4(f) to Asset Purchase Agreement-Harinas-Contracts Schedule 4(g) to Asset Purchase Agreement-Harinas-Litigation Schedule 4(h) to Asset Purchase Agreement-Harinas- Intellectual Property Schedule 4(j) to Asset Purchase Agreement-Harinas-Taxes Schedule 4(k) to Asset Purchase Agreement-Harinas-Operation since Balance Sheet Schedule 4(I) to Asset Purchase Agreement-Harinas- Availability of Assets and Legality of Use Schedule 4(m) to Asset Purchase Agreement-Harinas- Governmental Permits Schedule 4(n) to Asset Purchase Agreement-Harinas-Accounts Receivable; Inventories Schedule 4(p) to Asset Purchase Agreement-Harinas- Environmental Matters Schedule 5(a) to Asset Purchase Agreement-Harinas-Ordinary Conduct of Business by Seller Schedule 7(a) to Asset Purchase Agreement-Harinas-Consents -----END PRIVACY-ENHANCED MESSAGE-----