EXECUTION COPY
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CONTRIBUTION AND MERGER AGREEMENT
Dated as of January 25, 1999
Among
Xxxxxxx Corporation,
PepsiCo, Inc.,
And
Heartland Territories Holdings, Inc.
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TABLE OF CONTENTS
Page
ARTICLE I
The Closing
SECTION 1.01. Closing........................................................3
SECTION 1.02. Certain Definitions............................................5
ARTICLE II
The Contribution
SECTION 2.01. Contribution...................................................5
SECTION 2.02. Assumption of Certain Liabilities..............................6
SECTION 2.03. Termination of Certain Intercompany
Agreements...................................................7
ARTICLE III
The Merger; Effect of the Merger on
the Capital Stock of the Constituent
Corporations
SECTION 3.01. The Merger.....................................................7
SECTION 3.02. Effective Time.................................................7
SECTION 3.03. Effects........................................................7
SECTION 3.04. Certificate of Incorporation and
By-laws......................................................7
SECTION 3.05. Directors and Officers of the Surviving
Corporation..................................................8
SECTION 3.06. Effect on Capital Stock........................................8
(a) Capital Stock of Merger Sub...............................8
(b) Cancelation of Merger Sub-Owned
Stock; Conversion of Treasury
Stock...................................................8
(c) Conversion of Xxxxxxx Common Stock........................9
(d) Conversion of Xxxxxxx Stock
Options.................................................9
ARTICLE IV
Purchase and Sale Following the Effective Time
SECTION 4.01. Xxxxxxx Transfers.............................................10
SECTION 4.02. PepsiCo Transfers.............................................12
SECTION 4.03. Purchases Net of Indebtedness.................................13
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ARTICLE V
Representations and Warranties
SECTION 5.01. Representations and Warranties of Xxxxxxx.....................14
(a) Organization, Standing and
Corporate Power........................................14
(b) Subsidiaries.............................................15
(c) Capital Structure........................................15
(d) Authority; Noncontravention..............................17
(e) SEC Documents; Financial
Statements; Undisclosed
Liabilities............................................18
(f) Information Supplied.....................................20
(g) Absence of Certain Changes or
Events.................................................21
(h) Litigation...............................................22
(i) Changes in Benefit Plans.................................22
(j) ERISA Compliance.........................................23
(k) Taxes....................................................25
(l) No Excess Parachute Payments.............................26
(m) Compliance With Applicable Laws;
Permits................................................26
(n) Contracts................................................28
(o) Title to Properties......................................28
(p) Voting Requirements......................................28
(q) State Takeover Statutes..................................29
(r) Brokers..................................................29
(s) Opinion of Financial Advisor.............................29
(t) Xxxxxxx Rights Agreement.................................29
(u) Nature of Purchase.......................................30
(v) Sufficiency of Assets....................................30
(w) Year 2000 Compliance.....................................30
SECTION 5.02. Representations and Warranties of
PepsiCo and Merger Sub......................................31
(a) Organization, Standing and
Corporate Power........................................31
(b) PepsiCo Subsidiaries.....................................31
(c) Authority; Noncontravention..............................32
(d) Financial Statements;
Undisclosed Liabilities................................34
(e) Information Supplied.....................................35
(f) Absence of Certain Changes or
Events.................................................35
(g) Litigation...............................................36
(h) Changes in PepsiCo Benefit Plans.........................36
(i) ERISA Compliance.........................................37
(j) Taxes....................................................39
(k) No Excess Parachute Payments.............................40
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Page
(l) Compliance With Applicable Laws;
Permits................................................40
(m) Contracts................................................42
(n) Title to Properties......................................43
(o) Nature of Purchase.......................................43
(p) Sufficiency of Assets....................................43
(q) Brokers..................................................44
(r) Year 2000 Compliance.....................................44
ARTICLE VI
Covenants Relating to Business
SECTION 6.01. Alternative Transactions......................................44
SECTION 6.02. Interim Operations of Xxxxxxx.................................46
SECTION 6.03. Interim Operations of PepsiCo
Subsidiaries................................................49
SECTION 6.04. Advice of Changes.............................................51
SECTION 6.05. Other Actions.................................................52
ARTICLE VII
Additional Covenants
SECTION 7.01. Preparation of Form S-4 and the Proxy
Statement/Prospectus; Xxxxxxx
Stockholders Meeting........................................52
SECTION 7.02. Listing Application...........................................54
SECTION 7.03. Access to Information; Confidentiality........................54
SECTION 7.04. Reasonable Efforts............................................55
SECTION 7.05. Affiliates....................................................56
SECTION 7.06. Xxxxxxx Stock Options; Xxxxxxx Stock
Plans; Certain Employee Matters.............................56
SECTION 7.07. Fees and Expenses.............................................57
SECTION 7.08. Rights Agreement..............................................58
SECTION 7.09. PGB Stockholders' Agreement...................................59
SECTION 7.10. Public Announcements..........................................59
SECTION 7.11. Further Assurances............................................59
SECTION 7.12. Post-Closing Cooperation......................................60
SECTION 7.13. Merger Sub Rights Agreement...................................61
SECTION 7.14. Merger Sub Share Repurchase...................................61
SECTION 7.15. St. Petersburgco Indebtedness.................................61
SECTION 7.16. Services Agreements...........................................62
SECTION 7.17. Section 16b-3.................................................62
SECTION 7.18 Insured Claims................................................63
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Page
ARTICLE VIII
Conditions Precedent
SECTION 8.01. Conditions Precedent..........................................64
(a) Stockholder Approval.....................................64
(b) HSR Act..................................................64
(c) No Injunctions or Restraints.............................64
(d) NYSE Listing.............................................65
(e) Form S-4.................................................65
SECTION 8.02. Conditions to Obligations of PepsiCo and
Merger Sub..................................................65
(a) Representations and Warranties...........................65
(b) Performance of Obligations...............................65
(c) Tax Opinion..............................................65
SECTION 8.03. Conditions to Obligations of Xxxxxxx..........................66
(a) Representations and Warranties...........................66
(b) Performance of Obligations...............................66
(c) Tax Opinion..............................................66
(d) Contribution.............................................67
ARTICLE IX
Termination,
Amendment and Waiver
SECTION 9.01. Termination...................................................67
SECTION 9.02. Effect of Termination.........................................68
SECTION 9.03. Amendment.....................................................68
SECTION 9.04. Extension; Waiver.............................................69
ARTICLE X
Indemnification
SECTION 10.01. Indemnification...............................................69
(a) Indemnification by Merger Sub and
PGB....................................................69
(b) Indemnification by PepsiCo...............................70
(c) Losses Net of Insurance, Taxes,
etc....................................................71
(d) Procedures Relating to
Indemnification........................................72
(e) Termination of Indemnification...........................74
Page
ARTICLE XI
Tax Indemnification; Certain Other Tax Matters
SECTION 11.01. Tax Indemnification...........................................74
(a) Tax Indemnification by Merger Sub
and PGB................................................74
(b) Tax Indemnification by PepsiCo...........................75
(c) Tax Returns and Cooperations.............................75
(d) Coordination with Article X..............................76
SECTION 11.02. Certain Other Tax Matters.....................................76
(a) Termination of Tax Sharing
Agreements..............................................76
(b) FIRPTA Affidavit.........................................76
(c) FIRPTA Affidavit.........................................77
ARTICLE XII
Working Capital
Adjustments
SECTION 12.01. Working Capital Adjustments..................................77
ARTICLE XIII
General Provisions
SECTION 13.01. Survival of Representations and
Warranties.................................................80
SECTION 13.02. Notices......................................................80
SECTION 13.03. Assignment...................................................81
SECTION 13.04. Severability.................................................82
SECTION 13.05. Entire Agreement; No Third-Party
Beneficiaries..............................................82
SECTION 13.06. Interpretation...............................................82
SECTION 13.07. Governing Law................................................83
SECTION 13.08. Enforcement..................................................83
SECTION 13.09. Counterparts.................................................83
SECTION 13.10. Headings.....................................................83
ANNEXES
Annex I Certain Definitions
Annex II Restated Certificate of
Incorporation of Merger Sub
Annex III Amended and Restated By-Laws of Merger Sub
Annex IV Shareholder Agreement
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Page
EXHIBITS
Exhibit A Master Bottling Agreement
Exhibit B Master Fountain Syrup Agreement
Exhibit C International Master Bottling
Agreement
Exhibit D Registration Rights Agreement
Exhibit E-1 Employee Benefits Agreement
Exhibit E-2 Xxxxxxx Transfers Employee Benefits
Agreement
Exhibit F Agreement for Xxxxxxx Affiliates
Exhibit G Merger Sub Rights Plan
EXECUTION COPY
CONTRIBUTION AND MERGER AGREEMENT (this
"Agreement") dated as of January 25, 1999,
among Xxxxxxx Corporation, a Delaware
corporation ("Xxxxxxx"), PepsiCo, Inc., a
North Carolina corporation ("PepsiCo") and
Heartland Territories Holdings, Inc., a
Delaware corporation and a wholly owned
subsidiary of PepsiCo ("Merger Sub").
RECITALS
WHEREAS the respective Boards of Directors of PepsiCo, Merger Sub and
Xxxxxxx have approved and found advisable this Agreement and the merger of
Xxxxxxx with and into Merger Sub (the "Merger"), upon the terms and subject to
the conditions set forth in this Agreement, whereby each issued and outstanding
share of common stock, without par value, of Xxxxxxx ("Xxxxxxx Common Stock"),
other than shares owned by Merger Sub, will be converted into the Merger
Consideration;
WHEREAS, prior to consummation of the Merger, upon the terms and
subject to the conditions of this Agreement, PepsiCo shall cause each of
Pepsi-Cola Operating Company of St. Louis, Inc., a Missouri corporation and a
wholly owned subsidiary of PepsiCo ("St. Louis Sub"), Pepsi-Cola Bottling
Company of Ohio, Inc., a Delaware corporation and a wholly owned subsidiary of
PepsiCo ("Ohio Sub"), Pepsi-Cola Operating Company of Chesapeake and
Indianapolis, Inc., a Delaware corporation and a wholly owned subsidiary of
PepsiCo ("Opco Sub"), and Pepsi-Cola Metropolitan Bottling Company, Inc., a New
Jersey corporation and a wholly owned subsidiary of PepsiCo ("Metro Sub"), to
assign, transfer, convey and contribute certain assets and liabilities to Merger
Sub in exchange for the issuance by Merger Sub of shares of common stock, par
value $0.01 per share, of Merger Sub ("Merger Sub Common Stock") and the
assumption by Merger Sub of such liabilities (collectively, the "Contribution");
WHEREAS, upon consummation of the Merger, the name of Merger Sub shall
be changed to Xxxxxxx Corporation;
WHEREAS, immediately following consummation of the Merger, Merger Sub
shall contribute to Pepsi-Cola General Bottlers, Inc., currently a majority
owned subsidiary of Xxxxxxx ("PGB"), all of the operating assets and liabilities
received by Merger Sub in the Contribution;
WHEREAS, upon the terms and subject to the conditions of this
Agreement, Xxxxxxx shall sell all of the
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issued and outstanding shares of capital stock (and certain related assets) of
certain domestic and foreign Subsidiaries of Xxxxxxx to PepsiCo (or its
designee) in exchange for an aggregate purchase price of $137,800,000
(collectively, the "Xxxxxxx Transfers");
WHEREAS, immediately following consummation of the Merger, subject to
the terms and conditions of this Agreement, PepsiCo shall sell all of the issued
and outstanding shares of capital stock of certain foreign Subsidiaries owned by
PepsiCo and certain assets of certain domestic Subsidiaries of PepsiCo to PGB in
exchange for an aggregate purchase price of $176,000,000 (collectively, the
"PepsiCo Transfers");
WHEREAS, upon the Closing, PepsiCo and Merger Sub will enter into a
Shareholder Agreement (the "Shareholder Agreement") substantially in the form of
Annex IV hereto;
WHEREAS, upon the Closing, PepsiCo and Merger Sub will enter into a
Master Bottling Agreement (the "Master Bottling Agreement") substantially in the
form of Exhibit A hereto;
WHEREAS, upon the Closing, PepsiCo and Merger Sub will enter into a
Master Fountain Syrup Agreement (the "Master Fountain Syrup Agreement")
substantially in the form of Exhibit B hereto;
WHEREAS, upon the Closing, PepsiCo and Merger Sub will enter into an
International Master Bottling Agreement (the "International Master Bottling
Agreement", and together with the Master Bottling Agreement and the Master
Fountain Syrup Agreement, the "New Pepsi-Cola Bottling Agreements")
substantially in the form of Exhibit C hereto;
WHEREAS, upon the Closing, PepsiCo and Merger Sub will enter into
Allied Brand Agreements in accordance with Schedule I hereto (the "New Allied
Brand Agreements");
WHEREAS, upon the Closing, PepsiCo, Xxxxxxx, Merger Sub and one or more
other bottlers licensed by PepsiCo will enter into one or more Transition
Services Agreements (the "Services Agreements") in connection with the
Transactions;
WHEREAS, upon the Closing, PepsiCo and Merger Sub will enter into a
Registration Rights Agreement (the "Registration Rights Agreement"),
substantially in the form of Exhibit D hereto, with respect to the shares of
Merger Sub Common Stock to be issued to the Contributing PepsiCo
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Subsidiaries (or their respective designees) in connection with the
Contribution;
WHEREAS, upon the Closing, PepsiCo and Merger Sub will enter into an
Employee Benefits Agreement (the "Employee Benefits Agreement") substantially in
the form of Exhibit E-1 hereto and, upon consummation of the Xxxxxxx Transfers
(prior to or upon the Closing), PepsiCo (or its designee) and Xxxxxxx will enter
into an Employee Benefits Agreement relating to the Xxxxxxx Transfers (the
"Xxxxxxx Transfers Employee Benefits Agreement") substantially in the form of
Exhibit E-2 hereto;
WHEREAS, for Federal income tax purposes, the parties hereto intend
that (i) the Contribution, and the Contribution and Merger collectively, will
qualify as an exchange under the provisions of Xxxxxxx 000 xx xxx Xxxxxx Xxxxxx
Internal Revenue Code of 1986, as amended (the "Code"), and (ii) the Merger will
qualify as a reorganization under Section 368(a) of the Code; and
WHEREAS the parties desire to make certain representations, warranties,
covenants and agreements in connection with the transactions contemplated
hereby.
NOW, THEREFORE, in consideration of the mutual promises set forth
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties to this Agreement
hereby agree as follows:
ARTICLE I
The Closing
Section 1.01. Closing. (a) The closing (the "Closing") of the Merger
shall take place at the offices of Cravath, Swaine & Xxxxx, 000 Xxxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000 at 10:00 a.m. on the second business day following the
satisfaction (or, to the extent permitted by law, waiver by all parties) of the
conditions set forth in Article VIII (other than those conditions that by their
nature are to be satisfied at the Closing, but subject to the fulfillment or
waiver of those conditions), or at such other place, time and date as shall be
agreed in writing between the parties hereto. The date on which the Closing
occurs is referred to in this Agreement as the "Closing Date".
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(b) Upon the Closing, subject to the terms and conditions of this
Agreement:
(i) Xxxxxxx shall, and shall cause its Subsidiaries and affiliates to,
terminate the Xxxxxxx Intercompany Agreements, and such Agreements shall
thereafter have no force or effect; provided, however, that Xxxxxxx shall,
and shall cause its Subsidiaries and affiliates to, terminate the Xxxxxxx
Intercompany Agreements relating to the PepsiCo Acquired Businesses upon
consummation of the Xxxxxxx Transfers if such Transfers are consummated
prior to the Closing in accordance with Section 4.01(b), and such
Agreements shall thereafter have no force or effect;
(ii) PepsiCo shall, and shall cause its Subsidiaries and affiliates
to, terminate the PepsiCo Intercompany Agreements relating to the PGB
Acquired Businesses, and such Agreements shall thereafter have no force or
effect;
(iii) PepsiCo and Xxxxxxx shall, and shall cause their respective
Subsidiaries and affiliates to, terminate the Old Bottling Agreements;
(iv) PepsiCo and Merger Sub shall execute and deliver the New
Pepsi-Cola Bottling Agreements and the New Allied Brand Agreements;
(v) PepsiCo and Merger Sub shall execute and deliver the Shareholder
Agreement, the Services Agreements (provided that, if the Xxxxxxx Transfers
are consummated prior to the Closing, the Services Agreement relating to
the Xxxxxxx Transfers shall be executed and delivered by the parties
thereto upon such consummation), the Registration Rights Agreement, the
Employee Benefits Agreement and the Xxxxxxx Transfers Employee Benefits
Agreement (provided that, if the Xxxxxxx Transfers are consummated prior to
the Closing, the Xxxxxxx Transfers Employee Benefits Agreement shall be
executed and delivered by the parties thereto upon such consummation);
(vi) PepsiCo and Xxxxxxx shall cause the Merger to be effected as
provided in Section 3.01;
(vii) immediately following consummation of the Merger, PepsiCo and PGB
shall, and Merger Sub shall cause PGB to, effect the PepsiCo Transfers; and
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(viii) PepsiCo and Merger Sub shall effect the Xxxxxxx Transfers if
such Transfers have not previously been consummated.
SECTION 1.02. Certain Definitions. Capitalized terms used but not
defined herein shall have the meanings set forth in Annex I attached
hereto.
ARTICLE II
The Contribution
SECTION 2.01. Contribution. (a) Prior to the Closing, subject to
subparagraph (b) below:
(i) PepsiCo shall cause St. Louis Sub to assign, transfer, convey and
contribute to Merger Sub, and Merger Sub shall acquire from St. Louis Sub,
all the right, title and interest of St. Louis Sub in, to and under the
St. Louis Sub Bottling Business, free and clear of all Liens, other than
Permitted Liens;
(ii) PepsiCo shall cause Ohio Sub to assign, transfer, convey and
contribute to Merger Sub, and Merger Sub shall acquire from Ohio Sub, all
the right, title and interest of Ohio Sub in, to and under the Ohio Sub
Bottling Business, free and clear of all Liens, other than Permitted Liens;
(iii) PepsiCo shall cause Opco Sub to assign, transfer, convey and
contribute to Merger Sub, and Merger Sub shall acquire from Opco Sub, all
the right, title and interest of Opco Sub in, to and under the Opco Sub
Bottling Business, free and clear of all Liens, other than Permitted Liens;
and
(iv) PepsiCo shall cause Metro Sub to assign, transfer, convey and
contribute to Merger Sub, and Merger Sub shall acquire from Metro Sub, all
the right, title and interest of Metro Sub in, to and under the PGB Shares,
free and clear of all Liens.
(b) Prior to the Closing, in exchange for the St. Louis Sub Bottling
Business, the Ohio Sub Bottling Business, the Opco Sub Bottling Business and the
PGB Shares to be acquired by Merger Sub pursuant to subparagraph (a) above,
Merger Sub shall (i) issue to the Contributing PepsiCo Subsidiaries (or their
respective designees) an aggregate of 53,999,500 shares of Merger Sub Common
Stock and (ii) assume the Merger Sub Assumed Liabilities relating to the St.
Louis
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Sub Bottling Business, the Ohio Sub Bottling Business, the Opco Sub Bottling
Business and the Contributed Intercompany Indebtedness; provided, however, that
PepsiCo shall provide written notice to Xxxxxxx no later than seven days prior
to the Closing of the allocation of such shares among the Contributing PepsiCo
Subsidiaries (or their respective designees).
SECTION 2.02. Assumption of Certain Liabilities. Merger Sub shall
assume, effective as of the consummation of the Contribution, and from and after
the consummation of the Contribution, Merger Sub shall pay, perform and
discharge when due, all liabilities and obligations of any nature, or claims of
such liability or obligation, whether matured or unmatured, liquidated or
unliquidated, fixed or contingent, known or unknown ("Liabilities") arising out
of or relating to (in each case at any time prior to, on or after the
consummation of the Contribution) the Merger Sub Acquired Businesses, other than
the Excluded Liabilities (the "Merger Sub Assumed Liabilities"), including the
following:
(i) all Liabilities arising out of or related to the operation of the
Merger Sub Acquired Businesses arising at any time prior to, on or after
the consummation of the Contribution, including all Liabilities to the
extent arising out of or relating to the manufacture, distribution or sale
of any products or services of the Merger Sub Acquired Businesses at any
time prior to, on or after the consummation of the Contribution;
(ii) all Liabilities under the Assigned Contracts relating to the
Merger Sub Acquired Businesses which arise at any time prior to, on or
after the consummation of the Contribution;
(iii) all Liabilities to the extent, and as of the date, set forth in
the Employee Benefits Agreement;
(iv) any Taxes (other than United States Federal, state and local, or
foreign income or franchise taxes for any period, or portion thereof,
ending on or prior to the Closing Date and Taxes described in Section 7.07
(a)(3)) imposed on the Merger Sub Acquired Businesses relating to any
period, or any portion thereof, starting at any time prior to, on or after
the Closing Date; and
(v) intercompany indebtedness of PepsiCo and the Contributing PepsiCo
Subsidiaries to the extent set
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forth on Schedule 2.02(v) of the PepsiCo Disclosure Schedule (the
"Contributed Intercompany Indebtedness").
SECTION 2.03. Termination of Certain Intercompany Agreements. PepsiCo
shall, and shall cause its Subsidiaries and affiliates to, terminate the PepsiCo
Intercompany Agreements relating to the Merger Sub Acquired Businesses upon
consummation of the Merger, and such Agreements shall thereafter have no force
or effect.
ARTICLE III
The Merger; Effect of the Merger on
the Capital Stock of the Constituent
Corporations
SECTION 3.01. The Merger. On the terms and subject to the conditions
set forth in this Agreement, and in accordance with the Delaware General
Corporation Law (the "DGCL"), Xxxxxxx shall be merged with and into Merger Sub
at the Effective Time. At the Effective Time, the separate corporate existence
of Xxxxxxx shall cease and Merger Sub shall continue as the surviving
corporation (the "Surviving Corporation").
SECTION 3.02. Effective Time. Prior to the Closing, PepsiCo shall
prepare, and on the Closing Date PepsiCo shall file with the Secretary of State
for the State of Delaware, a certificate of merger or other appropriate
documents (in any such case, the "Certificate of Merger") executed in accordance
with the relevant provisions of the DGCL and shall make all other filings or
recordings required under the DGCL. The Merger shall become effective at such
at such time as the Certificate of Merger is duly filed with such Secretary of
State, or at such other time as PepsiCo and Xxxxxxx shall agree and specify in
the Certificate of Merger (the time the Merger becomes effective being the
"Effective Time").
SECTION 3.03. Effects. The Merger shall have the effects set forth
in Section 259 of the DGCL.
SECTION 3.04. Certificate of Incorporation and By-laws. (a) The
Certificate of Incorporation of Merger Sub, as in effect immediately prior to
the Effective Time, shall be amended as of the Effective Time so as to read in
its entirety in the form set forth as Annex II and, as so amended, such
Certificate of Incorporation shall be the certificate of incorporation of the
Surviving Corporation
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until thereafter changed or amended as provided therein or by applicable law.
(b) The By-laws of Merger Sub, as in effect immediately prior to the
Effective Time, shall be amended as of the Effective Time so as to read in their
entirety in the form set forth as Annex III and, as so amended, such By-laws
shall be the By-laws of the Surviving Corporation until thereafter changed or
amended as provided therein or by applicable law.
SECTION 3.05. Directors and Officers of the Surviving Corporation. (a)
The Board of Directors of the Surviving Corporation shall be as designated in
accordance with the Shareholder Agreement until the earlier of the resignation
or removal of any individual designated in accordance with the Shareholder
Agreement or until their respective successors are duly elected and qualified,
as the case may be, it being agreed that if any director who has been designated
by PepsiCo shall be unable or unwilling to serve as a director at the Effective
Time PepsiCo shall designate another individual reasonably acceptable to Xxxxxxx
to serve in such individual's place.
(b) The officers of Xxxxxxx immediately prior to the Effective Time
shall be the officers of the Surviving Corporation, until the earlier of their
resignation or removal or until their respective successors are duly elected and
qualified, as the case may be.
SECTION 3.06. Effect on Capital Stock. As of the Effective Time, by
virtue of the Merger and without any action on the part of the holder of any
shares of Xxxxxxx Common Stock or any shares of capital stock of Merger Sub:
(a) Capital Stock of Merger Sub. Each issued and outstanding share of
capital stock of Merger Sub shall be converted into and become one fully
paid and nonassessable share of Merger Sub Common Stock.
(b) Cancelation of Merger Sub-Owned Stock; Conversion of Treasury
Stock. Each share of Xxxxxxx Common Stock that is owned by Merger Sub shall
no longer be outstanding and shall automatically be canceled and retired
and shall cease to exist, and no Merger Sub Common Stock or other
consideration shall be delivered in exchange therefor. Each share of
Xxxxxxx Common Stock that is owned by Xxxxxxx shall be converted into and
become one fully paid and nonassessable share of Merger Sub Common Stock.
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(c) Conversion of Xxxxxxx Common Stock. Subject to Section 3.06(b),
each issued and outstanding share of Xxxxxxx Common Stock shall be
converted into one fully paid and nonassessable share of Merger Sub Common
Stock (the "Merger Consideration"). As of the Effective Time, all such
shares of Xxxxxxx Common Stock shall no longer be outstanding and shall
automatically be canceled and retired and shall cease to exist, and each
holder of a certificate representing any such shares of Xxxxxxx Common
Stock shall cease to have any rights with respect thereto, except that,
from and after the Effective Time, certificates representing Xxxxxxx Common
Stock immediately prior to the Effective Time shall be deemed for all
purposes to represent the number of shares of Merger Sub Common Stock into
which they were converted pursuant to this subparagraph (c) (provided that
if an exchange of certificates formerly representing Xxxxxxx Common Stock
for certificates representing Merger Sub Common Stock is required by law or
applicable rule or regulation, Merger Sub will arrange for such exchange on
a share-for-share basis pursuant to reasonable and customary exchange
procedures).
(d) Conversion of Xxxxxxx Stock Options. Each outstanding option to
purchase shares of Xxxxxxx Common Stock shall be converted into an option
to purchase an equal number of shares of Merger Sub Common Stock. As of the
Effective Time, all such options to purchase Xxxxxxx Common Stock shall no
longer be outstanding and shall automatically be canceled and retired and
shall cease to exist, except that, from and after the Effective Time, each
agreement representing an option to purchase Xxxxxxx Common Stock prior to
the Effective Time shall, without any action on the part of the holder
thereof, be deemed to constitute an agreement to purchase an equal number
of shares of Merger Sub Common Stock, subject to all of the same terms and
conditions, including without limitation, duration and price, as shall be
set forth in each such agreement (it being understood that all options
issued prior to January 1, 1999, shall be fully vested in accordance with
the terms of the applicable Xxxxxxx Stock Plans).
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ARTICLE IV
Purchase and Sale Following the Effective Time
SECTION 4.01. Xxxxxxx Transfers. (a) Upon the Closing, subject to the
terms and conditions of this Agreement, Xxxxxxx shall, and following the
Effective Time Merger Sub shall, cause its relevant Subsidiaries to sell,
transfer and convey to PepsiCo (or its designee), and PepsiCo (or its designee)
shall purchase all of such Subsidiaries' right, title and interest in, to and
under the Princetonco Shares, the Marionco Shares and the Xxxx Holdings LLC
Units, together with related assets, free and clear of all Liens, other than, in
the case of such assets, Permitted Liens, as follows:
(i) As to Princetonco:
(A) PGB shall sell, transfer and convey to PepsiCo (or its
designee) the Princetonco Shares in exchange for an aggregate purchase
price of $40,500,000;
(B) Globe Transport, Inc. shall sell, transfer and convey to
PepsiCo (or its designee) the vehicles and other fleet assets used or
held for use primarily in the operation or conduct of Princetonco's
business in exchange for an aggregate purchase price of $450,000 and
the assumption by PepsiCo (or its designee) of all Liabilities arising
out of or relating to (at any time prior to, on or after the
consummation of the Xxxxxxx Transfers) such vehicle and other fleet
assets;
(C) Globe Transport, Inc. will assign its leasehold interests in
any vehicles or fleet assets used or held for use primarily in the
operation or conduct of Princetonco's business to PepsiCo (or its
designee) in exchange for the assumption by PepsiCo (or its designee)
of all Liabilities arising out of or relating to (at any time prior
to, on or after the consummation of the Xxxxxxx Transfers) such
leasehold interests; and
(D) PCGB, Inc. shall sell, transfer and convey to PepsiCo (or its
designee) the intangible assets used or held for use primarily in the
operation or conduct of Princetonco's business in exchange for an
aggregate purchase price of $5,500,000; provided, however, that PCGB,
Inc.
11
shall retain all Liabilities arising out of or relating to (at any
time prior to, on or after the consummation of the Xxxxxxx Transfers)
such intangible assets (other than any such Liabilities arising after
the consummation of the Xxxxxxx Transfers as a result of PepsiCos use
of such intangible assets).
(ii) As to Marionco:
(A) PGB shall sell, transfer and convey to PepsiCo (or its
designee) the Marionco Shares in exchange for an aggregate purchase
price of $63,500,000;
(B) Globe Transport, Inc. shall sell, transfer and convey to
PepsiCo (or its designee) the vehicles and other fleet assets used or
held for use primarily in the operation or conduct of Marionco's
business in exchange for an aggregate purchase price of $550,000 and
the assumption by PepsiCo (or its designee) of all Liabilities arising
out of or relating to (at any time prior to, on or after the
consummation of the Xxxxxxx Transfers) such vehicle and other fleet
assets;
(C) Globe Transport, Inc. shall assign its leasehold interest in
any vehicles or fleet assets used or held for use primarily in the
operation or conduct of Marionco's business to PepsiCo (or its
designee) in exchange for the assumption by PepsiCo (or its designee)
of all Liabilities arising out of or relating to (at any time prior
to, on or after the consummation of the Xxxxxxx Transfers) such
leasehold interests; and
(D) PCGB, Inc. shall sell to PepsiCo (or its designee) the
intangible assets used or held for use primarily in the operation or
conduct of Marionco's business in exchange for an aggregate purchase
price of $7,300,000; provided, however, that PCGB, Inc. shall retain
all Liabilities arising out of or relating to (at any time prior to,
on or after the consummation of the Xxxxxxx Transfers) such intangible
assets (other than any such Liabilities arising after the consummation
of the Xxxxxxx Transfers as a result of PepsiCos use of such
intangible assets).
(iii) As to Xxxx Holdings LLC, PGB and GB International, Inc. shall
sell, transfer and
12
convey to PepsiCo (or its designee) the Xxxx Holdings LLC Units in
exchange for an aggregate purchase price of $20,000,000.
(iv) PepsiCo (or its designee) shall assume all Liabilities to the
extent, and as of the date, set forth in the Xxxxxxx Transfers
Employee Benefits Agreement.
(b) Notwithstanding the foregoing subparagraph (a) or any other
provision of this Agreement, Xxxxxxx and PepsiCo shall, upon reasonable prior
written notice from PepsiCo to Xxxxxxx, cause the Xxxxxxx Transfers to be
consummated as soon as practicable following Xxxxxxx'x receipt of such notice if
in the good faith determination of PepsiCo the consummation of the Xxxxxxx
Transfers prior to the Closing is reasonably necessary to permit PepsiCo to
prepare for another transaction intended to be entered into by PepsiCo;
provided, however, that the consummation of the Xxxxxxx Transfers shall be
subject to (i) the satisfaction (or, to the extent permitted by law, waiver by
all parties) of the conditions set forth in Sections 8.01(b) and (c), Sections
8.02(a) and (b) and Sections 8.03(a) and (b) (and the other conditions set forth
in Article VIII shall not be applicable to the Xxxxxxx Transfers), (ii) Section
10.01(a)(ii), Article XII and Article XIII and (iii) the execution and delivery
by PepsiCo (or its designee) and Xxxxxxx of the Xxxxxxx Transfers Employee
Benefits Agreement (as such Agreement may be finalized in accordance with the
terms thereof).
SECTION 4.02. PepsiCo Transfers. Upon the Closing, immediately
following consummation of the Merger, subject to the terms and conditions of
this Agreement:
(a) PepsiCo shall sell, transfer and convey to PGB, and Xxxxxxx shall,
and following the Effective Time Merger Sub shall, cause PGB to purchase from
PepsiCo, all the right, title and interest of PepsiCo in, to and under each of
the Slovackco Shares, the Czechco Shares, the Hungarianco Shares, the Poland
Distributionco Shares and the Polandco Shares, in each case free and clear of
all Liens, in exchange for an aggregate purchase price of $130,000,000;
provided, however, that (i) PepsiCo shall provide PGB with reasonable prior
written notice in advance of the Closing of the individual portions of such
aggregate purchase price attributable to the purchase of each of the Slovakco
Shares, the Czechco Shares, the Hungarianco Shares, the Poland Distributionco
Shares and the Polandco Shares, subject to PGB's consent as to the allocation of
such individual portions of the aggregate purchase price, which
13
consent shall not be unreasonably withheld, delayed or conditioned and (ii) if
the Poland Approvals shall not have been obtained prior to the Closing, PepsiCo
and Xxxxxxx shall cause the beneficial ownership of the Poland Distributionco
Shares and the Polandco Shares to be transferred from PepsiCo to PGB upon the
Closing in exchange for the purchase price attributable to such Poland
Distributionco Shares and Polandco Shares.
(b) PepsiCo shall cause Xxxx Xxxx Leasing Company to assign, transfer
and convey to PGB (or its designee), and Xxxxxxx shall, and following the
Effective Time Merger Sub shall, cause PGB (or its designee) to acquire from
Xxxx Xxxx Leasing Company, all the right, title and interest of Xxxx Hawk
Leasing Company in, to and under the vending machine assets used or held for use
primarily in the operation or conduct of the St. Louis Sub Bottling Business,
the Ohio Sub Bottling Business and the Opco Sub Bottling Business, free and
clear of all Liens, other than Permitted Liens, in exchange for an aggregate
purchase price of $32,000,000 and the assumption by PGB (or its designee) of all
Liabilities arising out of or relating to (at any time prior to, on or after the
Closing) such vending machine assets.
(c) PepsiCo shall cause New Bern Transport Company to assign, transfer
and convey to Globe Transport, Inc., and Xxxxxxx shall, and following the
Effective Time Merger Sub shall, cause Globe Transport, Inc. to acquire from New
Bern Transport Company, all the right, title and interest of New Bern Transport
Company in, to and under the vehicle and other fleet assets used or held for use
primarily in the operation or conduct of the St. Louis Sub Bottling Business,
the Ohio Sub Bottling Business and the Opco Sub Bottling Business, free and
clear of all Liens, other than Permitted Liens, in exchange for an aggregate
purchase price of $14,000,000 and the assumption by Globe Transport, Inc. of all
Liabilities arising out of or relating to (at any time prior to, on or after the
Closing) such vehicle and other fleet assets.
SECTION 4.03. Purchases Net of Indebtedness. The amount of the purchase
price attributable to the PepsiCo Acquired Businesses to be purchased by PepsiCo
(or its designee) pursuant to the Xxxxxxx Transfers, or attributable to the PGB
Acquired Businesses to be purchased by PGB pursuant to the PepsiCo Transfers,
shall in each case be reduced by the aggregate amount of (i) except for the
Contributed Intercompany Indebtedness, any short-term or long-term indebtedness
for borrowed money owed by any such Business to any person on the Closing (or,
if prior to the Closing, upon the consummation of the Xxxxxxx Transfers) and
14
(ii) any short-term or long-term capitalized lease obligations (as determined in
accordance with GAAP) owed by any such Business to any person on the Closing
(or, if prior to the Closing, upon the consummation of the Xxxxxxx Transfers);
provided, however, that to the extent the aggregate amount of any such
indebtedness and any such capitalized lease obligations exceeds the amount of
the applicable purchase price attributable to such Business, the seller of such
Business shall pay the purchaser at the Closing (or, if prior to the Closing,
upon the consummation of the Xxxxxxx Transfers) an amount in cash equal to the
amount of any such excess.
ARTICLE V
Representations and Warranties
SECTION 5.01. Representations and Warranties of Xxxxxxx. Except as
disclosed in the Xxxxxxx Filed SEC Documents or as set forth on the Disclosure
Schedule delivered by Xxxxxxx to PepsiCo prior to the execution of this
Agreement (the "Xxxxxxx Disclosure Schedule"), Xxxxxxx represents and warrants
to PepsiCo and Merger Sub as follows:
(a) Organization, Standing and Corporate Power. Each of Xxxxxxx and
each of its Subsidiaries is a corporation, limited liability company or
partnership duly organized or formed, as applicable, validly existing and,
in the case of a corporation or a limited liability company, in good
standing under the laws of the jurisdiction in which it is incorporated or
formed and has the requisite corporate, limited liability company or
partnership power and authority to carry on its business as now being
conducted. Each of Xxxxxxx and each of its Subsidiaries is duly qualified
or licensed to do business and is in good standing in each jurisdiction in
which the nature of its business or the ownership or leasing of its
properties makes such qualification or licensing necessary, other than in
such jurisdictions where the failure to be so qualified or licensed
individually or in the aggregate is not reasonably likely to have a
Material Adverse Effect on Xxxxxxx. Xxxxxxx has made available to PepsiCo
true, complete and correct copies of its certificate of incorporation and
by-laws and the certificates of incorporation and by-laws or certificates
of formation and limited liability company agreements or partnership
agreements, as applicable, of its Subsidiaries, in each case as amended to
the date of this Agreement.
15
(b) Subsidiaries. (i) Exhibit 21 to Xxxxxxx'x Annual Report on Form
10-K for the year ended December 31, 1997 (the "Xxxxxxx Form 10-K") lists
each Subsidiary of Xxxxxxx which as of the date of this Agreement is a
Significant Subsidiary of Xxxxxxx. All the outstanding shares of capital
stock of, or other ownership interests in, each Significant Subsidiary have
been validly issued and are fully paid and nonassessable and are owned
directly or indirectly by Xxxxxxx (except that, in the case of PGB and its
Subsidiaries, Xxxxxxx directly or indirectly owns 80% of such shares), free
and clear of all Liens and free of any other restriction (including any
restriction on the right to vote, sell or otherwise dispose of such capital
stock or such other ownership interest). Except for the capital stock of,
or other ownership interests in, its Significant Subsidiaries noted above,
Xxxxxxx does not own, directly or indirectly, any capital stock or other
ownership interest in any corporation, partnership, limited liability
company, joint venture or other entity constituting a Significant
Subsidiary. For purposes of this subparagraph (b)(i), each of Xxxx
Holdings LLC, Princetonco and Marionco shall be deemed to be a Significant
Subsidiary of Xxxxxxx.
(ii) All the outstanding shares of capital stock of St. Petersburgco
have been validly issued and are fully paid and nonassessable and are owned
by Xxxx Holdings LLC, free and clear of all Liens and free of any other
restriction (including any restriction on the right to vote, sell or
otherwise dispose of such capital stock or such other ownership interest).
(iii) Each of St. Petersburgco, Princetonco and Marionco is engaged
exclusively in the Bottling Business within the respective territories set
forth opposite its name in Schedule 5.01(b)(iii) of the Xxxxxxx Disclosure
Schedule and, except for such Bottling Business, is not engaged in any
other business. Xxxx Holdings LLC is not engaged in any business other than
holding shares of capital stock of St. Petersburgco.
(c) Capital Structure. The authorized capital stock of Xxxxxxx consists
of 250,000,000 shares of Xxxxxxx Common Stock and 12,500,000 shares of
preferred stock, without par value. At the close of business on January 20,
1999, (i) 101,069,077 shares of Xxxxxxx Common Stock were issued and
outstanding, (ii) 12,205,753 shares of Xxxxxxx Common Stock were
16
held by Xxxxxxx in its treasury, (iii) 6,837,823 shares of Xxxxxxx Common
Stock were reserved for issuance pursuant to outstanding options granted
under the Xxxxxxx Stock Incentive Plan and the Xxxxxxx Revised Stock
Incentive Plan (the "Xxxxxxx Stock Plans"), (iv) 2,500,000 shares of Junior
Participating Second Preferred Stock (Series 1) were reserved for issuance
in connection with the rights (the "Xxxxxxx Rights") to purchase shares of
Junior Participating Second Preferred Stock (Series 1), issued pursuant to
the Rights Agreement dated as of January 20, 1989, as amended (the "Xxxxxxx
Rights Agreement"), between Xxxxxxx and First Chicago Trust Company of New
York, as Rights Agent and (v) no shares of preferred stock were
outstanding. Except as set forth above, at the close of business on January
20, 1999, no shares of capital stock or other voting securities of Xxxxxxx
were issued, reserved for issuance or outstanding. There are no outstanding
stock appreciation rights ("SARs") which were not granted in tandem with a
related Xxxxxxx Stock Option. All outstanding shares of capital stock of
Xxxxxxx are, and all shares which may be issued pursuant to the Xxxxxxx
Stock Plans will be, when issued, duly authorized, validly issued, fully
paid and nonassessable and not subject to preemptive rights. There are not
any bonds, debentures, notes or other indebtedness of Xxxxxxx or any of its
Subsidiaries having the right to vote (or convertible into, or exchangeable
for, securities having the right to vote) on any matters on which
stockholders of Xxxxxxx or such Subsidiaries may vote. Xxxxxxx has made
available to PepsiCo a true and complete list of all outstanding options
(together with applicable exercise prices and vesting dates) to purchase
capital stock of Xxxxxxx ("Xxxxxxx Stock Options"). Except as set forth
above, there are not any securities, options, warrants, calls, rights,
commitments, agreements, arrangements or undertakings of any kind to which
Xxxxxxx or any of its Subsidiaries is a party or by which any of them is
bound obligating Xxxxxxx or any of its Subsidiaries to issue, deliver or
sell, or cause to be issued, delivered or sold, additional shares of
capital stock or other voting securities of Xxxxxxx or of any of its
Subsidiaries or obligating Xxxxxxx or any of its Subsidiaries to issue,
grant, extend or enter into any such security, option, warrant, call,
right, commitment, agreement, arrangement or undertaking. There are not any
outstanding contractual obligations of Xxxxxxx or any of its Subsidiaries
to repurchase, redeem or otherwise acquire any shares of capital stock of
Xxxxxxx or any of its Subsidiaries.
17
(d) Authority; Noncontravention. Xxxxxxx has the requisite corporate
power and authority to enter into this Agreement and the other Transaction
Documents to which it is a party (such other Transaction Documents, the
"Xxxxxxx Relevant Agreements") and, subject to adoption of this Agreement
by the holders of a majority of the total voting power of the outstanding
shares of Xxxxxxx Common Stock (the "Xxxxxxx Stockholder Approval"), to
consummate the transactions contemplated by this Agreement and the Xxxxxxx
Relevant Agreements. The execution and delivery by Xxxxxxx of this
Agreement and the Xxxxxxx Relevant Agreements and the consummation by
Xxxxxxx of the Merger and the other transactions contemplated by the
Transaction Documents have been duly authorized by all necessary corporate
action on the part of Xxxxxxx, subject, in the case of this Agreement, to
the Xxxxxxx Stockholder Approval. Each of this Agreement and the Xxxxxxx
Relevant Agreements has been (or upon execution will be) duly executed and
delivered by Xxxxxxx, and constitutes (or upon execution will constitute) a
valid and binding obligation of Xxxxxxx, enforceable against Xxxxxxx in
accordance with its respective terms. The execution and delivery of this
Agreement and each Xxxxxxx Relevant Agreement do not (or upon execution
will not), the consummation of the Merger and the other transactions
contemplated by the Transaction Documents and compliance with the
provisions of this Agreement and each Xxxxxxx Relevant Agreement 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 rise to a right of
termination, cancelation or acceleration of any obligation under, (i) the
certificate of incorporation or by-laws of Xxxxxxx or the comparable
charter or organizational documents of any of its Subsidiaries, (ii) any
loan or credit agreement, note, bond, mortgage, indenture, lease or other
agreement, instrument or permit applicable to Xxxxxxx or any of its
Subsidiaries or their respective properties or assets or (iii) subject to
the governmental filings and other matters referred to in the following
sentence, any judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to Xxxxxxx or any of its Subsidiaries or their
respective properties or assets, other than, in the case of clause (ii) or
(iii), any such conflicts, violations, defaults or rights that individually
or in the aggregate are not reasonably likely to have a Material Adverse
Effect on Xxxxxxx. No consent, approval, order or authorization of, or
registration, declaration or filing with, any Federal,
19
state or local government or any court, administrative agency or commission
or other governmental authority or agency, domestic or foreign, including
the European Community (a "Governmental Entity"), is required by or with
respect to Xxxxxxx or any of its Subsidiaries in connection with the
execution and delivery of this Agreement and any Xxxxxxx Relevant Agreement
or the consummation by Xxxxxxx of the Merger and the other transactions
contemplated by the Transaction Documents, except for (A) the filing of a
premerger notification and report form by Xxxxxxx under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (together
with the rules and regulations promulgated thereunder, the "HSR Act"), (B)
the filing with the SEC of (I) a proxy statement relating to the Xxxxxxx
Stockholder Approval (as amended or supplemented from time to time, the
"Proxy Statement/Prospectus"), (II) a registration statement of Merger Sub
on Form S-4 in connection with the issuance of Merger Sub Common Stock in
the Merger (as amended or supplemented from time to time, the "Form S-4")
and (III) such reports under Section 13(a) of the Securities Exchange Act
of 1934, as amended, and the rules and regulations promulgated thereunder
(the "Exchange Act"), as may be required in connection with this Agreement,
the Merger and the other transactions contemplated by the Transaction
Documents, (C) the filing of the Certificate of Merger with the Delaware
Secretary of State and appropriate documents with the relevant authorities
of other states in which Xxxxxxx is qualified to do business and such
filings with Governmental Entities to satisfy the applicable requirements
of state securities or "blue sky" laws, (D) if necessary, the filing of a
notification with the Polish Anti-Monopoly Office and the expiration of the
required waiting period in respect thereof and the obtaining by PGB of a
permit from the Polish Ministry of the Interior for the purchase of shares
of a Polish company owning real estate (collectively, the "Poland
Approvals") and (E) such other consents, approvals, orders, authorizations,
registrations, declarations and filings the failure of which to be made or
obtained, individually or in the aggregate, is not reasonably likely to
have a Material Adverse Effect on Xxxxxxx.
(e) SEC Documents; Financial Statements; Undisclosed Liablities. (i)
Xxxxxxx has filed all required reports, schedules, forms, statements and
other documents with the SEC since January 1, 1997 (the "Xxxxxxx SEC
Documents"). As of their respective dates, the Xxxxxxx SEC Documents
complied in all
18
material respects with the requirements of the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder (the
"Securities Act"), or the Exchange Act, as the case may be, and none of the
Xxxxxxx SEC Documents contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. Except to the extent that
information contained in any Xxxxxxx SEC Document has been revised or
superseded by a later filed Xxxxxxx SEC Document, none of the Xxxxxxx SEC
Documents contains any untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which
they were made, not misleading. The financial statements of Xxxxxxx
included in the Xxxxxxx SEC Documents comply as to form in all material
respects with applicable accounting requirements and the published rules
and regulations of the SEC with respect thereto, have been prepared in
accordance with GAAP applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto) and fairly
present the consolidated financial position of Xxxxxxx and its consolidated
Subsidiaries as of the dates thereof and the consolidated results of their
operations and cash flows for the periods then ended (subject, in the case
of unaudited statements, to normal year-end audit adjustments). Except for
Liabilities incurred in the ordinary course of business consistent with
past practice since the date of the most recent consolidated balance sheet
included in the Xxxxxxx SEC Documents and not in violation of this
Agreement, neither Xxxxxxx nor any of its Subsidiaries has any Liabilities
required by GAAP to be set forth on a consolidated balance sheet of Xxxxxxx
and its consolidated Subsidiaries or in the notes thereto.
(ii) Schedule 5.01(e)(ii) of the Xxxxxxx Disclosure Schedule sets
forth the unaudited statements of income for the three years ended December
31, 1997, and the nine months ended September 30, 1998, and the unaudited
balance sheets as of December 31, 1997, and September 30, 1998 (the
"PepsiCo Acquired Businesses Financial Statements"), for the PepsiCo
Acquired Businesses. Except for the omission of footnote disclosures, the
PepsiCo Acquired Businesses Financial Statements have been prepared in
accordance with GAAP, applied on a consistent basis and fairly present the
20
financial position of each of the PepsiCo Acquired Businesses as of the
dates thereof and the results of operations for the periods then ended
(subject to normal year-end adjustments). Except for Liabilities incurred
in the ordinary course of business consistent with past practice since
September 30, 1998, and not in violation of this Agreement, none of the
Subsidiaries of Xxxxxxx included as part of the PepsiCo Acquired Businesses
has any Liabilities required by GAAP to be set forth on a consolidated
balance sheet of such Subsidiary.
(iii) Schedule 5.01(e)(iii) of the Xxxxxxx Disclosure Schedule sets
forth the unaudited pro forma consolidated statements of income for the
year ended December 31, 1997, and the nine months ended September 30, 1998,
and the unaudited pro forma consolidated balance sheets as of December 31,
1997, and September 30, 1998 (the "Xxxxxxx Pro Forma Financial
Statements"), for Xxxxxxx, excluding the PepsiCo Acquired Businesses.
Except for the omission of footnote disclosures, the Xxxxxxx Pro Forma
Financial Statements have been prepared in accordance with GAAP, applied on
a consistent basis and fairly present the financial position of Xxxxxxx and
its Subsidiaries (excluding the PepsiCo Acquired Businesses) as of the
dates thereof and the results of operations for the periods then ended
(subject to normal year-end adjustments). Except for Liabilities incurred
in the ordinary course of business consistent with past practice since
September 30, 1998, and not in violation of this Agreement, none of Xxxxxxx
or its Subsidiaries (excluding the PepsiCo Acquired Businesses) has any
Liabilities required by GAAP to be set forth on a consolidated balance
sheet of Xxxxxxx or such Subsidiaries (excluding the PepsiCo Acquired
Businesses).
(f) Information Supplied. None of the information supplied or to be
supplied by Xxxxxxx or any of its Subsidiaries for inclusion or
incorporation by reference in (i) the Form S-4 will, at the time the Form
S-4 is filed with the SEC, at any time it is amended or supplemented or at
the time it becomes effective under the Securities Act, contain any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading or
(ii) the Proxy Statement/Prospectus will, at the date it is first mailed to
Xxxxxxx'x stock-
21
holders or at the time of the meeting of Xxxxxxx'x stockholders held to
vote on approval and adoption of this Agreement (the "Xxxxxxx Stockholders
Meeting"), contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they
are made, not misleading. The financial statements of Xxxxxxx included in
the Form S-4 and the Proxy Statement/Prospectus will comply as to form in
all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto, and will
be prepared in accordance with GAAP applied on a consistent basis during
the periods involved (except as may be indicated in the notes thereto) and
will fairly present the consolidated financial position of Xxxxxxx and its
consolidated Subsidiaries as of the dates thereof and the consolidated
results of their operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments). The Proxy Statement/Prospectus will comply as to form in all
material respects with the requirements of the Exchange Act, except that no
representation is made by Xxxxxxx with respect to statements made or
incorporated by reference therein based on information supplied by PepsiCo
or any PepsiCo Subsidiary for inclusion or incorporation by reference in
the Proxy Statement/Prospectus.
(g) Absence of Certain Changes or Events. Except as disclosed in the
Xxxxxxx SEC Documents filed since January 1, 1997 and publicly available
prior to the date of this Agreement (the "Xxxxxxx Filed SEC Documents"),
since January 1, 1998, Xxxxxxx has conducted its business only in the
ordinary course, and there has not been (i) any Material Adverse Change in
Xxxxxxx, (ii) any declaration, setting aside or payment of any dividend or
other distribution (whether in cash, stock or property) with respect to any
of Xxxxxxx'x capital stock, other than Xxxxxxx'x regular quarterly cash
dividend of $.05 per share of Xxxxxxx Common Stock, (iii) any split,
combination or reclassification of any of its capital stock or any issuance
or the authorization of any issuance of any other securities in respect of,
in lieu of or in substitution for shares of its capital stock, (iv) except
to the extent expressly permitted pursuant to Section 6.02 and Schedule
6.02 of the Xxxxxxx Disclosure Schedule, (x) any granting by Xxxxxxx or any
of its Subsidiaries to any employee, officer or director of Xxxxxxx or any
22
of its Subsidiaries of any increase in compensation, except for increases
in cash compensation in the ordinary course of business consistent with
past practice or to the extent required under employment agreements in
effect as of the date of this Agreement (true and complete copies of which
have been made available to PepsiCo), (y) any granting by Xxxxxxx or any of
its Subsidiaries to any such employee, officer or director of any increase
in severance or termination pay, except to the extent required under any
employment, severance or termination agreements in effect as of the date of
this Agreement (true and complete copies of which have been made available
to PepsiCo) or (z) any entry by Xxxxxxx or any of its Subsidiaries into any
employment, consulting, indemnification, severance or termination agreement
with any such employee, officer or director, (v) any damage, destruction or
loss, whether or not covered by insurance, that individually or in the
aggregate has had, or is reasonably likely to have, a Material Adverse
Effect on Xxxxxxx or (vi) any change in accounting methods, principles or
practices by Xxxxxxx materially affecting its assets, Liabilities or
business, except insofar as may have been required by a change in GAAP.
(h) Litigation. As of the date hereof, there is no suit, action or
proceeding pending or, to the knowledge of Xxxxxxx, threatened against or
affecting Xxxxxxx, any of its Subsidiaries, or any of its former
Subsidiaries or businesses, that individually or in the aggregate is
reasonably likely to have a Material Adverse Effect on Xxxxxxx, nor is
there any judgment, decree, injunction, rule or order of any Governmental
Entity or arbitrator outstanding against or affecting Xxxxxxx, any of its
Subsidiaries, or any of its former Subsidiaries or businesses, that
individually or in the aggregate is reasonably likely to have a Material
Adverse Effect on Xxxxxxx.
(i) Changes in Benefit Plans. (i) Since January 1, 1998, except for
the Xxxxxxx Revised Stock Incentive Plan, there has not been any adoption
or amendment by Xxxxxxx or any of its Subsidiaries of any collective
bargaining agreement or any bonus, pension, profit sharing, deferred
compensation, incentive compensation, stock ownership, stock purchase,
stock option, phantom stock, retirement, vacation, severance, disability,
death benefit, hospitalization, medical or other plan, arrangement or
understanding (whether or not legally binding) maintained, or contributed
to, by
23
Xxxxxxx or any of its Subsidiaries providing benefits to any current or
former employee, officer or director of Xxxxxxx or any of its Subsidiaries,
as of the Closing Date, or with respect to which Xxxxxxx or any of its
Subsidiaries, as of the Closing Date, has any Liability (collectively,
"Xxxxxxx Benefit Plans") that is reasonably likely to result in a Material
Adverse Effect on Xxxxxxx. There exist no employment, consulting,
severance, termination or indemnification agreements, arrangements or
understandings between Xxxxxxx or any of its Subsidiaries and any current
or former employee, officer or director of Xxxxxxx or any of its
Subsidiaries.
(ii) All actions taken, or to be taken, in accordance with the
Employee Benefits Agreement by Xxxxxxx or any of its Subsidiaries on or
prior to the Effective Time with respect to the Xxxxxxx Benefit Plans will
be taken without violating the terms of the Xxxxxxx Benefit Plans, ERISA or
the Code.
(iii) All actions required under the Employee Benefits Agreement
to be taken by PepsiCo or its designee on or after the Effective Time
with respect to the employees of Princetonco, Marionco, Xxxx Holdings
LLC or St. Petersburgco may be taken without violating the terms of
any Xxxxxxx Benefit Plans, ERISA or the Code.
(iv) Except as otherwise provided in the Employee Benefits Agreement,
neither Xxxxxxx nor any of its Subsidiaries, nor any employee or director
of any of them, has taken any action, has agreed in contract (excluding
collective bargaining agreements), or otherwise has created facts and
circumstances that are reasonably likely to preclude PepsiCo from taking
any action required to be taken by PepsiCo under the Employee Benefits
Agreement without incurring any Liability.
(j) ERISA Compliance. (i) Schedule 5.01(j) of the Xxxxxxx Disclosure
Schedule contains a list and brief description of all Xxxxxxx Benefit
Plans which are "employee pension benefit plans" (as defined in
Section 3(2) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA")) and which are subject to Title IV of ERISA (sometimes
referred to herein as "Xxxxxxx Pension Plans"), "employee welfare benefit
plans" (as defined in Section 3(1) of ERISA) and all other Xxxxxxx Benefit
Plans. Xxxxxxx has made available to PepsiCo true, complete and correct
copies
24
of (w) each Xxxxxxx Benefit Plan (or, in the case of any unwritten Xxxxxxx
Benefit Plans, descriptions thereof), (x) the most recent annual report on
Form 5500 filed with the Internal Revenue Service with respect to each
Xxxxxxx Benefit Plan (if any such report was required), (y) the most recent
summary plan description for each Xxxxxxx Benefit Plan for which such
summary plan description is required and (z) each trust agreement and group
annuity contract relating to any Xxxxxxx Benefit Plan.
(ii) All Xxxxxxx Pension Plans have been the subject of determination
letters from the Internal Revenue Service to the effect that such Xxxxxxx
Pension Plans are qualified and exempt from Federal income Taxes under
Section 401(a) and 501(a), respectively, of the Code, and no such
determination letter has been revoked nor, to the knowledge of Xxxxxxx, has
revocation been threatened, nor has any such Xxxxxxx Pension Plan been
amended since the date of its most recent determination letter or
application therefor in any respect that would adversely affect its
qualification or materially increase its costs.
(iii) No Xxxxxxx Pension Plan, other than any Xxxxxxx Pension Plan
that is a "multiemployer plan" (as such term is defined in Section
4001(a)(3) of ERISA; collectively, the "Xxxxxxx Multiemployer Pension
Plans"), had, as of the respective last annual valuation date for each such
Xxxxxxx Pension Plan, an accumulated benefit obligation, determined in
accordance with Financial Accounting Standard Number 87, in excess of fair
market value of the assets of such Xxxxxxx Pension Plan. None of the
Xxxxxxx Pension Plans has an "accumulated funding deficiency" (as such term
is defined in Section 302 of ERISA or Section 412 of the Code), whether or
not waived. None of Xxxxxxx, any of its Subsidiaries, any officer of
Xxxxxxx or any of its Subsidiaries, any of the Xxxxxxx Benefit Plans which
are subject to ERISA, including the Xxxxxxx Pension Plans, any trusts
created thereunder or, to Xxxxxxx'x knowledge, any trustee or administrator
thereof has engaged in a "prohibited transaction" (as such term is defined
in Section 406 of ERISA or Section 4975 of the Code) or any other breach of
fiduciary responsibility that could subject Xxxxxxx, any of its
Subsidiaries or any officer of Xxxxxxx or any of its Subsidiaries to the
Tax or penalty on prohibited transactions imposed by such Section 4975 or
to any Liability under Section 502(i) or (1) of ERISA. None of the Xxxxxxx
Pension Plans has been terminated
25
during the last five years and Xxxxxxx is not aware of any basis for any
Xxxxxxx Pension Plans to have been terminated. Neither Xxxxxxx nor any of
its Subsidiaries has incurred a "complete withdrawal" or a "partial
withdrawal" (as such terms are defined in Section 4203 and Section 4205,
respectively, of ERISA) with respect to any of the Xxxxxxx Multiemployer
Pension Plans which is reasonably likely to have a Material Adverse Effect
on Xxxxxxx.
(iv) With respect to any Xxxxxxx Benefit Plan that is an employee
welfare benefit plan (x) each such Xxxxxxx Benefit Plan that is a "group
health plan", as such term is defined in Section 5000(b)(1) of the Code,
complies with the applicable requirements of Section 4980B(f) of the Code
and (y) each such Xxxxxxx Benefit Plan (including any such Plan covering
retirees or other former employees) may be amended or terminated on or at
any time after the Closing without a Material Adverse Effect on Xxxxxxx.
(v) Neither Xxxxxxx nor any of its Subsidiaries has any outstanding
Liability imposed under ERISA or, with respect to any employee welfare
benefit plan, the Code, other than claims for benefits and expenses in the
ordinary course of business.
(k) Taxes. (i) Each of Xxxxxxx and each of its Subsidiaries has filed
all Tax Returns required to be filed by it, or requests for extensions to
file such Tax Returns have been timely filed and granted, and has paid (or
there have been paid on its behalf) all Taxes shown to be due on such Tax
Returns, except where the failure to file such Tax Returns or pay such
Taxes is not reasonably likely to have a Material Adverse Effect on
Xxxxxxx. All such Tax Returns are true, correct and complete in all
material respects. No deficiencies for any material Taxes have been
proposed, asserted or assessed in writing against Xxxxxxx or any of its
Subsidiaries, and no requests for waivers of the time to assess any such
Taxes are pending, except with respect to any deficiency for Taxes that
individually or in the aggregate is not reasonably likely to have a
Material Adverse Effect on Xxxxxxx.
(ii) Xxxx Holdings LLC is not and has not been a United States real
property holding corporation within the meaning of Section 897(c)(2) of the
Code. None of the assets being transferred in the sale of Xxxx Holdings LLC
is a United States real property interest within the meaning of Section
897(c)(1) of the Code.
26
(iii) No foreign Subsidiary of Xxxxxxx that is being transferred
pursuant to the Xxxxxxx Transfers is a party to any tax sharing agreement
or arrangement.
(l) No Excess Parachute Payments. Other than payments that may be made
to the persons referred to in Schedule 5.01(l) (the "Xxxxxxx Executives"),
any amount that could be received (whether in cash or property or the
vesting of property) as a result of the Merger or the Xxxxxxx Transfers by
any employee, officer or director of Xxxxxxx or any of its affiliates who
is a "disqualified individual" (as such term is defined in proposed
Treasury Regulation Section 1.280G-1) under any employment, severance or
termination agreement, other compensation arrangement or Xxxxxxx Benefit
Plan currently in effect would not be characterized as an "excess parachute
payment" (as such term is defined in Section 280G(b)(1) of the Code).
Xxxxxxx has made available to PepsiCo information concerning payment
obligations which may be incurred as a result of the Merger or the Xxxxxxx
Transfers and a subsequent termination of employment under existing change
in control and other similar agreements.
(m) Compliance With Applicable Laws; Permits. (i) Xxxxxxx and its
Subsidiaries are in compliance in all respects with all judgments,
orders, decrees, statutes, laws, ordinances, rules and regulations
applicable to Xxxxxxx, any of its Subsidiaries and their respective
properties or assets, except for instances of noncompliance that
individually or in the aggregate are not reasonably likely to have a
Material Adverse Effect on Xxxxxxx. Neither Xxxxxxx nor any of its
Subsidiaries has received any written notice regarding any matter that is
not fully resolved from a Governmental Entity that alleges that Xxxxxxx or
any of its Subsidiaries is not in compliance with any such judgments,
orders, decrees, statutes, laws, ordinances, rules or regulations and
Xxxxxxx has and is in compliance with all permits, licenses, registrations
and filings ("Permits") required for the operation of the business of
Xxxxxxx and its Subsidiaries as currently conducted, except for those
notices, instances of noncompliance or lack of Permits that individually or
in the aggregate are not reasonably likely to have a Material Adverse
Effect on Xxxxxxx.
(ii) There is no suit, action, proceeding or inquiry pending or, to
the knowledge of Xxxxxxx, threatened before any court, Governmental Entity
or other forum in which Xxxxxxx, any of its Subsidiaries,
27
or any of its former Subsidiaries or businesses, has been or, with respect
to threatened suits, actions and proceedings, may be named as a defendant
(A) for alleged noncompliance with any Environmental Law or (B) relating to
the release into the environment of, or human exposure to, any Hazardous
Material, whether or not occurring at, on, under or involving a site
currently or formerly owned, leased or operated by Xxxxxxx, or any of its
Subsidiaries, or any of its former Subsidiaries or businesses, except for
any such suits, actions, proceedings and inquiries which, individually or
in the aggregate, are not reasonably likely to have a Material Adverse
Effect on Xxxxxxx.
(iii) During the period of ownership or operation by Xxxxxxx, its
Subsidiaries or any of its former Subsidiaries or businesses of any of
their respective currently or formerly owned, leased or operated
properties, there have been no releases of Hazardous Material in, on, under
or affecting such properties or, to the knowledge of Xxxxxxx, any
surrounding site, except in each case for those which, individually or in
the aggregate, are not reasonably likely to have a Material Adverse Effect
on Xxxxxxx. Prior to the period of ownership or operation by Xxxxxxx, its
Subsidiaries or any of its former Subsidiaries or businesses of any of such
properties, to the knowledge of Xxxxxxx, there were no releases of
Hazardous Material in, on, under or affecting any such property or any
surrounding site, except in each case for those which, individually or in
the aggregate, are not reasonably likely to have a Material Adverse Effect
on Xxxxxxx.
(iv) Neither Xxxxxxx nor any of its Subsidiaries is subject to any
order, decree, injunction or other arrangement with any Governmental Entity
or any indemnity or other agreement with any third party relating to
liability under any Environmental Law or relating to any Hazardous
Material, except for any such order, decree, injunction, arrangement,
indemnity or other agreement which, individually or in the aggregate, is
not reasonably likely to have a Material Adverse Effect on Xxxxxxx.
(v) No products shipped, sold or delivered on or prior to the Closing
Date by or for Xxxxxxx or any of its Subsidiaries were, and no food or food
ingredients included in the Inventory of Xxxxxxx or any of its Subsidiaries
on or prior to the Closing Date and which are used by Xxxxxxx or any of its
Subsidiaries, were or
28
are adulterated or misbranded within the meaning of the Federal Food, Drug
& Cosmetic Act and the regulations promulgated thereunder or comparable
food laws and regulations of any jurisdiction of any Governmental Entity to
which such products have been or are intended to be shipped, sold or
delivered, except for any such adulteration or misbranding which,
individually or in the aggregate, is not reasonably likely to have a
Material Adverse Effect on Xxxxxxx.
(n) Contracts. Other than contracts or agreements that are required to
be filed and have been filed (or incorporated by reference) as an Exhibit
to the Xxxxxxx Form 10-K or contracts or agreements that have been entered
into after December 31, 1997 by Xxxxxxx or any of its Subsidiaries in the
ordinary course of business, there are no contracts or agreements that
would have been required to be filed as an Exhibit to an Annual Report on
Form 10-K that are material to the business, financial position or results
of operations of Xxxxxxx and its Subsidiaries, including (A) any
employment, severance, termination, consulting or retirement contract
providing for aggregate payments to any person in any calendar year in
excess of $250,000, (B) any contract relating to the borrowing of money or
the guarantee of any such obligation or (C) any material contract or
agreement between or among Xxxxxxx and its Subsidiaries.
(o) Title to Properties. Each of Xxxxxxx and each of its Subsidiaries
has, in the case of personal property, good and valid title to or valid
leasehold interests in, and in the case of real property, good and
marketable title to or valid leasehold interests in, all its properties and
assets, except for such as are no longer used or useful in the conduct of
its businesses or as have been disposed of in the ordinary course of
business and except for defects in title, easements, restrictive covenants
and similar encumbrances or impediments that individually or in the
aggregate are not reasonably likely to have a Material Adverse Effect on
Xxxxxxx. All such assets and properties are free and clear of all Liens
except for Permitted Liens.
(p) Voting Requirements. The Xxxxxxx Stockholder Approval is the only
vote of the holders of any class or series of Xxxxxxx'x capital stock
necessary to approve the Merger, this Agreement, the other Transaction
Documents and the transactions contemplated hereby and thereby; provided,
however, that if the
29
Xxxxxxx Transfers are consummated prior to the Merger in accordance with
Section 4.01, no vote of the holders of any class or series of Xxxxxxx'x
capital stock will be necessary to approve the Xxxxxxx Transfers.
(q) State Takeover Statutes. The Board of Directors of Xxxxxxx has
approved the Merger, this Agreement and the Xxxxxxx Relevant Agreements,
and such approval is sufficient to render inapplicable to the Merger, this
Agreement and the Xxxxxxx Relevant Agreements and the transactions
contemplated hereby, thereby and by the other Transaction Documents the
provisions of Section 203 of the DGCL. To Xxxxxxx'x knowledge, no other
state takeover statute or similar statute or regulation applies or purports
to apply to Xxxxxxx with respect to the Merger, this Agreement, the Xxxxxxx
Relevant Agreements and the other Transaction Documents and the
transactions contemplated hereby and thereby.
(r) Brokers. Except for Credit Suisse First Boston Corporation, no
broker, investment banker, financial advisor or other person is entitled to
any broker's, finder's, financial advisor's or other similar fee or
commission in connection with the Merger and the other transactions
contemplated by the Transaction Documents based upon arrangements made by
or on behalf of Xxxxxxx. Xxxxxxx will deliver to PepsiCo true and complete
copies of all agreements under which any such fees or expenses are payable
and all indemnification and other agreements related to the engagement of
the persons to whom such fees are payable promptly following the date of
this Agreement.
(s) Opinion of Financial Advisor. Xxxxxxx has received the opinion of
Credit Suisse First Boston Corporation, dated the date of this Agreement,
to the effect that, as of such date, the Merger Consideration is fair from
a financial point of view to the Xxxxxxx stockholders, a signed copy of
which will be delivered to PepsiCo promptly upon receipt.
(t) Xxxxxxx Rights Agreement. The Xxxxxxx Rights Agreement has been
amended (the "Xxxxxxx Rights Plan Amendment") to ensure that (y) none of
Merger Sub, PepsiCo or any of the other PepsiCo Subsidiaries is deemed to
be an Acquiring Person (as defined in the Xxxxxxx Rights Agreement)
pursuant to the Xxxxxxx Rights Agreement and (z) a Distribution Date or a
Shares Acquisition Date (as such terms are defined in the Xxxxxxx Rights
Agreement) does not occur, in the
30
case of clauses (y) and (z), solely by reason of the execution of this
Agreement or the other Transaction Documents or the consummation of the
Merger or the other transactions contemplated by the Transaction Documents.
(u) Nature of Purchase. (i) Xxxxxxx is not acquiring the Xxxxxxx
Acquired Foreign Shares with a view to the resale or distribution of the
Xxxxxxx Acquired Foreign Shares or any part thereof.
(ii) Xxxxxxx is an "accredited investor" within the meaning of Rule
501 under the Securities Act.
(v) Sufficiency of Assets. (i) Each of the PepsiCo Acquired Businesses
contains substantially all of the assets, properties and rights owned, used
or held for use primarily in connection with, or that otherwise primarily
relate to or are required for the conduct of, such PepsiCo Acquired
Businesses as presently conducted by Xxxxxxx and its Subsidiaries on the
date of this Agreement.
(ii) Schedule 5.01(v) of the Xxxxxxx Disclosure Schedule sets forth,
with respect to each of the PepsiCo Acquired Businesses, a true and
complete list (under corresponding headings) of (A) the Premises, U.S.
Personal Property (as of the date indicated on such Schedule) and material
Permits of such PepsiCo Acquired Business and (B) each Contract of such
PepsiCo Acquired Business that (i) has not been entered into the ordinary
course of business, (ii) may not be terminated by such PepsiCo Acquired
Business within one year or (iii) provides for aggregate payments by such
PepsiCo Acquired Business in any calendar year in excess of $250,000.
(w) Year 2000 Compliance. Xxxxxxx and each of its Subsidiaries has (i)
initiated a review and assessment of all areas within its business and
operations (including those affected by suppliers and vendors) that could
be adversely affected by the "Year 2000 Problem" (that is, the risk that
computer applications used by Xxxxxxx or any of its Subsidiaries (or its
suppliers and vendors) may be unable to recognize and perform properly
date-sensitive functions involving certain dates prior to and any dates
after December 31, 1999), (ii) developed a plan and timetable for
addressing the Year 2000 Problem on a timely basis, and (iii) as of the
date of this Agreement, implemented such plan in accordance with such
timetable. To the
31
knowledge of Xxxxxxx, all computer applications of Xxxxxxx and its
Subsidiaries (including those of its suppliers and vendors) that are
material to Xxxxxxx and its Subsidiaries will on a timely basis be able to
perform properly date-sensitive functions for all dates before and after
January 1, 2000, except to the extent that any failure to do so,
individually or in the aggregate, is not reasonably likely to have a
Material Adverse Effect on Xxxxxxx.
SECTION 5.02. Representations and Warranties of PepsiCo and Merger Sub.
Except as disclosed in the PepsiCo Filed SEC Documents or as set forth on the
Disclosure Schedule delivered by PepsiCo to Xxxxxxx prior to the execution of
this Agreement (the "PepsiCo Disclosure Schedule"), each of PepsiCo and Merger
Sub represents and warrants to Xxxxxxx as follows:
(a) Organization, Standing and Corporate Power. Each of PepsiCo and
each PepsiCo Subsidiary is a corporation, limited liability company or
partnership duly organized or formed, as applicable, validly existing and,
in the case of a corporation or a limited liability company, in good
standing under the laws of the jurisdiction in which it is incorporated or
formed and has the requisite corporate, limited liability company or
partnership power and authority to carry on its business as now being
conducted. Each PepsiCo Subsidiary is duly qualified or licensed to do
business and is in good standing in each jurisdiction in which the nature
of its business or the ownership or leasing of its properties makes such
qualification or licensing necessary, other than in such jurisdictions
where the failure to be so qualified or licensed individually or in the
aggregate is not reasonably likely to have a Material Adverse Effect on the
PepsiCo Subsidiaries. PepsiCo has made available to Xxxxxxx true, complete
and correct copies of its certificate of incorporation and by-laws and the
certificates of incorporation and by-laws or certificates of formation and
limited liability company agreements or partnership agreements, as
applicable, of each of the PepsiCo Subsidiaries, in each case as amended to
the date of this Agreement.
(b) PepsiCo Subsidiaries. (i) With respect to such PepsiCo
Subsidiaries that are corporations, all the outstanding shares of capital
stock of each such Subsidiary have been validly issued and are fully paid
and nonassessable and are owned by PepsiCo, by another Subsidiary of
PepsiCo or by PepsiCo and another such Subsidiary, free and clear of all
Liens. With respect
32
to such PepsiCo Subsidiaries that are limited liability companies or
partnerships, all the outstanding limited liability company interests or
partnership interests of each such PepsiCo Subsidiary have been validly
issued and are owned by PepsiCo, free and clear of all Liens.
(ii) Each of the PepsiCo Subsidiaries is engaged exclusively in
the Bottling Business within the respective territories set forth
opposite its name in Schedule 5.02(b)(ii) of the PepsiCo Disclosure
Schedule and, except for such Bottling Business, is not engaged in any
other business.
(iii) As of the date of this Agreement, the issued and
outstanding shares of capital stock of Merger Sub coNsist solely of
500 shares of Merger Sub Common Stock held by PepsiCo. Merger Sub has
no Liabilities other than those under this Agreement and the other
Transaction Documents.
(iv) There are not (A) any bonds, debentures, notes or other
indebtedness of any of the PGB Acquired Businesses or any of their
respective Subsidiaries having the right to vote (or convertible into,
or exchangeable for, securities having the right to vote) on any
matters on which stockholders of the PGB Acquired Businesses or any of
their respective Subsidiaries may vote; (B) any securities, options,
warrants, calls, rights, commitments, agreements, arrangements or
undertakings of any kind to which any of the PGB Acquired Businesses
or any of their respective Subsidiaries is a party or by which any of
them is bound obligating any of the PGB Acquired Businesses or of any
of their respective Subsidiaries to issue, deliver or sell, or cause
to be issued, delivered or sold, additional shares of capital stock or
other voting securities of any of the PGB Acquired Businesses or of
any of their respective Subsidiaries or obligating any of the PGB
Acquired Businesses or any of their respective Subsidiaries to issue,
grant, extend or enter into any such security, option, warrant, call,
right, commitment, agreement, arrangement or undertaking or (C) any
outstanding contractual obligations of any of the PGB Acquired
Businesses or any of their respective Subsidiaries to repurchase,
redeem or otherwise acquire any shares of capital stock of any of the
PGB Acquired Businesses or any of their respective Subsidiaries.
33
(c) Authority; Noncontravention. PepsiCo has the requisite
corporate power and authority to enter into this Agreement and the
other Transaction Documents to which it is a party (such other
Transaction Documents, the "PepsiCo Relevant Agreements") and to
consummate the transactions contemplated by each of this Agreement and
the PepsiCo Relevant Agreements. The execution and delivery by PepsiCo
of this Agreement and the PepsiCo Relevant Agreements and the
consummation by PepsiCo of the Merger and the other transactions
contemplated by the Transaction Documents have been duly authorized by
all necessary corporate action on the part of PepsiCo. No approval of
the stockholders of PepsiCo is required in connection with the
execution and delivery of the Transaction Documents or the
consummation of the transactions contemplated thereby. Each of this
Agreement and the PepsiCo Relevant Agreements has been (or upon
execution will be) duly executed and delivered by PepsiCo, and
constitutes (or upon execution will constitute) a valid and binding
obligation of PepsiCo, enforceable against PepsiCo in accordance with
its respective terms. The execution and delivery of this Agreement and
each PepsiCo Relevant Agreement do not (or upon execution will not),
the consummation of the Merger and the other transactions contemplated
by the Transaction Documents and compliance with the provisions of
this Agreement and each PepsiCo Relevant Agreement 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 rise to a right of
termination, cancelation or acceleration of any obligation under (i)
the certificate of incorporation or by-laws of PepsiCo or the
comparable charter or organizational documents of any PepsiCo
Subsidiary, (ii) any loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement, instrument or permit applicable
to PepsiCo or any PepsiCo Subsidiary or their respective properties or
assets or (iii) subject to the governmental filings and other matters
referred to in the following sentence, any judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to PepsiCo or
any PepsiCo Subsidiary or their respective properties or assets, other
than, in the case of clause (ii) or (iii), any such conflicts,
violations, defaults or rights that individually or in the aggregate
are not reasonably likely to have a Material Adverse Effect on the
PepsiCo Subsidiaries. No consent, approval, order or authorization of,
or registration, declaration or filing with, any Governmental Entity
is required by or with respect to PepsiCo or any PepsiCo Subsidiary in
34
connection with the execution and delivery of this Agreement and any
PepsiCo Relevant Agreement or the consummation by PepsiCo of the
Merger and the other transactions contemplated by the Transaction
Documents, except for (A) the filing of a premerger notification and
report form by PepsiCo under the HSR Act, (B) the filing with the SEC
of (I) the Form S-4, (II) a registration statement of Merger Sub on
Form S-8 under the Securities Act (the "Form S-8") and (III) such
reports under Section 13(a) of the Exchange Act as may be required in
connection with this Agreement, the Merger and the other transactions
contemplated by the Transaction Documents, (C) the filing of the
Certificate of Merger with the Delaware Secretary of State and the
filing of appropriate documents with the relevant authorities of other
states in which PepsiCo or any PepsiCo Subsidiary is qualified to do
business and such filings with Governmental Entities to satisfy
applicable requirements of state securities or "blue sky" laws, (D)
such filings with and approvals of the New York Stock Exchange, Inc.
(the "NYSE"), to permit the shares of Merger Sub Common Stock that are
to be issued in the Contribution and the Merger to be listed on the
NYSE, (E) the Poland Approvals and (F) such other consents, approvals,
orders, authorizations, registrations, declarations and filings the
failure of which to be made or obtained, individually or in the
aggregate, is not reasonably likely to have a Material Adverse Effect
on the PepsiCo Subsidiaries.
(d) Financial Statements; Undisclosed Liabilities. Schedule
5.02(d) of the PepsiCo Disclosure Schedule sets forth the unaudited
pro forma condensed combined statements of operations and the
unaudited pro forma condensed combined statements of cash flows for
the thirty-six week periods ended September 6, 1997, and September 5,
1998, and the unaudited pro forma condensed combined balance sheets as
of December 27, 1997, and September 5, 1998, for the Merger Sub
Acquired Businesses and the PGB Acquired Businesses (the "Merger
Sub/PGB Acquired Businesses Financial Statements"). The Merger Sub/PGB
Acquired Businesses Financial Statements have been prepared in
accordance with GAAP applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto) and fairly
present the consolidated financial position of each of the Merger
Sub Acquired Businesses and the PGB Acquired Businesses as of the
dates thereof and the consolidated results of the operations and cash
flows of each of the Merger Sub Acquired Businesses and the PGB
Acquired Businesses for
35
the periods then ended (subject to normal year-end audit adjustments).
Except for any other Liabilities incurred in the ordinary course of
business consistent with past practice since September 5, 1998, none
of the PepsiCo Subsidiaries has any Liabilities required by GAAP to be
set forth on a consolidated balance sheet of such PepsiCo Subsidiary
or in the notes thereto.
(e) Information Supplied. None of the information supplied or to
be supplied by PepsiCo or any of its Subsidiaries for inclusion or
incorporation by reference in (i) the Form S-4 will, at the time the
Form S-4 is filed with the SEC, at any time it is amended or
supplemented or at the time it becomes effective under the Securities
Act, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under
which they are made, not misleading or (ii) the Proxy
Statement/Prospectus will, at the date it is first mailed to Xxxxxxx'x
stockholders or at the time of the Xxxxxxx Stockholders Meeting,
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which
they are made, not misleading. The Form S-4 will comply as to form in
all material respects with the requirements of the Securities Act,
except that no representation is made by PepsiCo with respect to
statements made or incorporated by reference therein based on
information supplied by Xxxxxxx or any Subsidiary of Xxxxxxx for
inclusion or incorporation by reference in the Form S-4.
(f) Absence of Certain Changes or Events. Except as disclosed in
the reports, schedules, forms, statements and other documents required
to be filed by PepsiCo with the SEC since January 1, 1997 and publicly
available prior to the date of this Agreement (the "PepsiCo Filed SEC
Documents"), since September 5, 1998, PepsiCo has conducted the
business of each of the PepsiCo Subsidiaries only in the ordinary
course, and there has not been (i) any Material Adverse Change in the
PepsiCo Subsidiaries , (ii) any granting by any of the PepsiCo
Subsidiaries to any Transferred Individual of any increase in
compensation, except for increases in cash compensation in the
ordinary course of business consistent with past practice or to the
extent required under employment agreements in effect as of the date
of this Agreement (true and complete copies of which have
36
been made available to Xxxxxxx), (y) any granting by any of the
PepsiCo Subsidiaries to any such Transferred Individual of any
increase in severance or termination pay, except to the extent
required under any employment, severance or termination agreements in
effect as of the date of this Agreement (true and complete copies of
which have been made available to Xxxxxxx) or (z) any entry by any of
the PepsiCo Subsidiaries into any employment, consulting,
indemnification, severance or termination agreement with any such
Transferred Individual, (iii) any damage, destruction or loss, whether
or not covered by insurance, that individually or in the aggregate has
had, or is reasonably likely to have, a Material Adverse Effect on the
PepsiCo Subsidiaries or (iv) any change in accounting methods,
principles or practices by any of the PepsiCo Subsidiaries materially
affecting the assets, Liabilities or business of any of the Merger Sub
Acquired Businesses or the PepsiCo Acquired Businesses, except insofar
as may have been required by a change in GAAP.
(g) Litigation. As of the date hereof, there is no suit, action
or proceeding pending or, to the knowledge of PepsiCo, threatened
against or affecting any PepsiCo Subsidiary, or any former Subsidiary
or business of any PepsiCo Subsidiary, that individually or in the
aggregate is reasonably likely to have a Material Adverse Effect on
the PepsiCo Subsidiaries, nor is there any judgment, decree,
injunction, rule or order of any Governmental Entity or arbitrator
outstanding against or affecting any PepsiCo Subsidiary, or any former
Subsidiary or business of any PepsiCo Subsidiary, that individually or
in the aggregate is reasonably likely to have a Material Adverse
Effect on the PepsiCo Subsidiaries.
(h) Changes in PepsiCo Benefit Plan. (i) Other than the cessation
of stock option grants under the PepsiCo SharePower Program, since
September 5, 1998, there has not been any adoption or amendment by
PepsiCo or any of its Subsidiaries of any collective bargaining
agreement or any bonus, pension, profit sharing, deferred
compensation, incentive compensation, stock ownership, stock purchase,
stock option, phantom stock, retirement, vacation, severance,
disability, death benefit, hospitalization, medical or other plan,
arrangement or understanding (whether or not legally binding)
maintained, or contributed to, by PepsiCo or any of its Subsidiaries
as of the Closing Date, providing benefits to any current or former
employee,
37
officer or director of PepsiCo or any of its Subsidiaries or with
respect to which PepsiCo or any of its Subsidiaries as of the Closing
Date has any Liability (collectively, "PepsiCo Benefit Plans") that is
reasonably likely to result in a Material Adverse Effect on the
PepsiCo Subsidiaries. There exist no employment, consulting,
severance, termination or indemnification agreements, arrangements or
understandings between PepsiCo or any of its Subsidiaries and any
current or former employee, officer or director of any PepsiCo
Subsidiary who is a Transferred Individual.
(ii) All actions taken, or to be taken, in accordance with the
Employee Benefits Agreement by PepsiCo or any of its Subsidiaries on
or prior to the Effective Time with respect to the PepsiCo Benefit
Plans, will be taken without violating the terms of the PepsiCo
Benefit Plans, ERISA or the Code.
(iii) All actions required under the Employee Benefits Agreement
to be taken, or caused to be taken, by Merger Sub on or after the
Effective Time with respect to the PepsiCo Benefit Plans or successor
plans or programs to the PepsiCo Benefit Plans, in any case maintained
by Merger Sub in accordance with the Employee Benefits Agreement (the
"Merger Sub Benefit Plans"), may be taken without violating the terms
of the PepsiCo Benefit Plans, the Merger Sub Benefit Plans, ERISA or
the Code.
(iv) Except as otherwise specifically required of Merger Sub as
provided in the Employee Benefits Agreement, neither PepsiCo nor any
of its Subsidiaries, nor any employee or director of any of them, has
taken any action, has agreed in contract (excluding collective
bargaining agreements), or otherwise has created facts and
circumstances that are reasonably likely to preclude Merger Sub (A)
from amending or terminating, without incurring any Liability (other
than Liabilities incurred without regard to such amendment or
termination), any portion or all of any of the Merger Sub Benefit
Plans which are Merger Sub Health and Welfare Plans (as defined in the
Employee Benefits Agreement) or (B) from taking any action required to
be taken by Merger Sub pursuant to the Employee Benefits Agreement
without incurring any Liability.
(i) ERISA Compliance. (i) Schedule 5.02(i) of the PepsiCo
Disclosure Schedule contains a list and
38
brief description of all PepsiCo Benefit Plans which are "employee
pension benefit plans" (as defined in Section 3(2) of ERISA) which are
subject to Title IV of ERISA and which relate to any Transferred
Individual (sometimes referred to herein as "PepsiCo Pension Plans"),
"employee welfare benefit plans" (as defined in Section 3(1) of ERISA)
and all other PepsiCo Benefit Plans which relate to any Transferred
Individual. PepsiCo has made available to Xxxxxxx true, complete and
correct copies of (w) each PepsiCo Benefit Plan (or, in the case of
any unwritten PepsiCo Subsidiary Benefit Plans, descriptions thereof),
(x) the most recent annual report on Form 5500 filed with the Internal
Revenue Service with respect to each PepsiCo Benefit Plan (if any such
report was required), (y) the most recent summary plan description for
each PepsiCo Benefit Plan for which such summary plan description is
required and (z) each trust agreement and group annuity contract
relating to any PepsiCo Benefit Plan; provided, however, that clauses
(w), (x), (y) and (z) shall only apply to those PepsiCo Benefit Plans
providing a benefit to a Transferred Individual.
(ii) All PepsiCo Pension Plans have been the subject of
determination letters from the Internal Revenue Service to the effect
that such PepsiCo Pension Plans are qualified and exempt from Federal
income Taxes under Section 401(a) and 501(a), respectively, of the
Code, and no such determination letter has been revoked nor, to the
knowledge of PepsiCo, has revocation been threatened, nor has any such
PepsiCo Pension Plan been amended since the date of its most recent
determination letter or application therefor in any respect that would
adversely affect its qualification or materially increase its costs.
(iii) No Pension Plan that PepsiCo or any of its Subsidiaries
maintains, or to which PepsiCo or any of its Subsidiaries is obligated
to contribute, other than any such Pension Plan that is a
"multiemployer plan" (as such term is defined in Section 4001(a)(3) of
ERISA; collectively, the "PepsiCo Multiemployer Pension Plans"), had,
as of the respective last annual valuation date for each such PepsiCo
Pension Plan, an accumulated benefit obligation, determined in
accordance with Financial Accounting Standard Number 87, in excess of
fair market value of the assets of such PepsiCo Pension Plan. None of
the PepsiCo Pension Plans has an "accumulated funding deficiency" (as
such term is defined in Section 302 of ERISA or Section 412 of the
Code), whether or not waived. Except for any of
39
the following relating to employees other than the Transferred
Individuals, none of PepsiCo, any Subsidiary of PepsiCo, any officer
of PepsiCo or any Subsidiary of PepsiCo or any of the PepsiCo Benefit
Plans which are subject to ERISA, including the PepsiCo Pension Plans,
any trusts created thereunder, or, to PepsiCo's knowledge, any trustee
or administrator thereof, has engaged in a "prohibited transaction"
(as such term is defined in Section 406 of ERISA or Section 4975 of
the Code) or any other breach of fiduciary responsibility that could
subject PepsiCo or any officer of PepsiCo to the Tax or penalty on
prohibited transactions imposed by such Section 4975 or to any
Liability under Section 502(i) or (1) of ERISA. None of the PepsiCo
Pension Plans nor any of such trusts has been terminated during the
last five years and PepsiCo is not aware of any basis for any PepsiCo
Pension Plan to have been terminated. Neither PepsiCo nor any of its
Subsidiaries has incurred a "complete withdrawal" or a "partial
withdrawal" (as such terms are defined in Section 4203 and Section
4205, respectively, of ERISA) with respect to any of the PepsiCo
Multiemployer Pension Plans which is reasonably likely to have a
Material Adverse Effect on the PepsiCo Subsidiaries.
(iv) With respect to any PepsiCo Benefit Plan that is an employee
welfare benefit plan (x) each such PepsiCo Benefit Plan that is a
"group health plan", as such term is defined in Section 5000(b)(1) of
the Code, complies with the applicable requirements of Section
4980B(f) of the Code and (y) each such PepsiCo Benefit Plan (including
any such Plan covering retirees or other former employees) may be
amended or terminated on or at any time after the Closing without
Material Adverse Effect on the PepsiCo Subsidiaries.
(v) None of the PepsiCo Subsidiaries has any outstanding
Liability relating to any Transferred Individual imposed under ERISA
or, with respect to any employee welfare benefit plan, the Code, other
than claims for benefits and expenses in the ordinary course of
business.
(j) Taxes. (i) Each of PepsiCo and each of its Subsidiaries has
filed all Tax Returns required to be filed by it, or requests for
extensions to file such Tax Returns have been timely filed and
granted, and has paid (or there have been paid on its behalf) all
Taxes shown to be due on such Tax Returns, except where the failure to
file such Tax Returns or pay such Taxes is
40
not reasonably likely to have a Material Adverse Effect on the PepsiCo
Subsidiaries. All such Tax Returns are true, correct and complete in
all material respects. No deficiencies for any material Taxes have
been proposed, asserted or assessed in writing against any of the
PepsiCo Subsidiaries, and no requests for waivers of the time to
assess any such Taxes are pending, except with respect to any
deficiency for Taxes that individually or in the aggregate is not
reasonably likely to have a Material Adverse Effect on the PepsiCo
Subsidiaries.
(ii) None of Czechco, Hungarianco, Polandco, Poland
Distributionco or Slovackco is or has been a United States real
property holding corporation within the meaning of Section 897(c)(2)
of the Code. None of the assets being transferred in the Contribution
or the PepsiCo Transfers is a United States real property interest
within the meaning of Section 897(c)(1) of the Code.
(iii) No foreign Subsidiary of PepsiCo that is being transferred
pursuant to the PepsiCo Transfers is a party to any tax sharing
agreement or arrangement.
(k) No Excess Parachute Payments. Other than payments that may be
made to the persons referred to in Schedule 5.02(k) (the "PepsiCo
Subsidiary Executives"), any amount that could be received (whether in
cash or property or the vesting of property) as a result of the Merger
or the PepsiCo Transfers by any employee, officer or director of
PepsiCo or any of its affiliates who is a "disqualified individual"
(as such term is defined in proposed Treasury Regulation Section
1.280G-1) and who is a Transferred Individual under any employment,
severance or termination agreement, other compensation arrangement or
PepsiCo Subsidiary Benefit Plan currently in effect would not be
characterized as an "excess parachute payment" (as such term is
defined in Section 280G(b)(1) of the Code). PepsiCo has made available
to Xxxxxxx information concerning payment obligations which may be
incurred as a result of the Merger or the PepsiCo Transfers and a
subsequent termination of employment under existing change in control
and other similar agreements.
(l) Compliance With Applicable Laws; Permits. (i) Each PepsiCo
Subsidiary is in compliance in all respects with all judgments,
orders, decrees, statutes, laws, ordinances, rules and regulations
applicable to
41
any such PepsiCo Subsidiary and any such PepsiCo Subsidiary's
properties or assets, except for instances of noncompliance that
individually or in the aggregate are not reasonably likely to have a
Material Adverse Effect on the PepsiCo Subsidiaries. None of the
PepsiCo Subsidiaries has received any notice regarding any matter that
is not fully resolved from a Governmental Entity that alleges that
such PepsiCo Subsidiary is not in compliance with any such judgments,
orders, decrees, statutes, laws, ordinances, rules or regulations and
each of the PepsiCo Subsidiaries has and is in compliance with all
Permits required for the operation of its business as currently
conducted, except for those notices, instances of noncompliance or
lack of Permits that, individually or in the aggregate, are not
reasonably likely to have a Material Adverse Effect on the PepsiCo
Subsidiaries.
(ii) There is no suit, action, proceeding or inquiry pending or,
to the knowledge of PepsiCo, threatened before any court, Governmental
Entity or other forum in which any of the PepsiCo Subsidiaries, or any
of their respective former Subsidiaries or businesses, has been or,
with respect to threatened suits, actions and proceedings, may be
named as a defendant (A) for alleged noncompliance with any
Environmental Law or (B) relating to the release into the environment
of, or human exposure to, any Hazardous Material, whether or not
occurring at, on, under or involving a site currently or formerly
owned, leased or operated by the PepsiCo Subsidiaries or any of their
respective former Subsidiaries or businesses, except for any such
suits, actions, proceedings and inquiries which, individually or in
the aggregate, are not reasonably likely to have a Material Adverse
Effect on the PepsiCo Subsidiaries.
(iii) During the period of ownership or operation by the PepsiCo
Subsidiaries or any of their respective former Subsidiaries or
businesses of any of their respective currently or formerly owned,
leased or operated properties, there have been no releases of
Hazardous Material in, on, under or affecting such properties or, to
the knowledge of PepsiCo, any surrounding site, except in each case
for those which, individually or in the aggregate, are not reasonably
likely to have a Material Adverse Effect on the PepsiCo Subsidiaries.
Prior to the period of ownership or operation by the PepsiCo
Subsidiaries or any of their respective former Subsidiaries or
businesses of any of such properties, to the knowledge of PepsiCo,
there
42
were no releases of Hazardous Material in, on, under or affecting any
such property or any surrounding site, except in each case for those
which, individually or in the aggregate, are not reasonably likely to
have a Material Adverse Effect on the PepsiCo Subsidiaries.
(iv) None of the PepsiCo Subsidiaries or their respective
Subsidiaries is subject to any order, decree, injunction or other
arrangement with any Governmental Entity or any indemnity or other
agreement with any third party relating to liability under any
Environmental Law or relating to any Hazardous Material, except for
any such order, decree, injunction, arrangement, indemnity or other
agreement which, individually or in the aggregate, is not reasonably
likely to have a Material Adverse Effect on the PepsiCo Subsidiaries.
(v) No products shipped, sold or delivered on or prior to the
Closing Date by or for any of the PepsiCo Subsidiaries were, and no
food or food ingredients included in the Inventory of any PepsiCo
Subsidiary on or prior to the Closing Date and which are used by any
PepsiCo Subsidiary, were or are adulterated or misbranded within the
meaning of the Federal Food, Drug & Cosmetic Act and the regulations
promulgated thereunder or comparable food laws and regulations of any
jurisdiction of any Governmental Entity to which such products have
been or are intended to be shipped, sold or delivered, except for any
such adulteration or misbranding which, individually or in the
aggregate, is not reasonably likely to have a Material Adverse Effect
on the PepsiCo Subsidiaries.
(m) Contracts. Other than contracts or agreements entered into by
any PepsiCo Subsidiary in the ordinary course of business, there are
no contracts or agreements that would have been required to be filed
as an Exhibit to an Annual Report on Form 10-K if the PepsiCo
Subsidiaries (taken as a whole) were a company required to file
periodic reports pursuant to the Exchange Act that are material to the
business, financial position or results of operations of the PepsiCo
Subsidiaries, including (A) any employment, severance, termination,
consulting or retirement contract providing for aggregate payments to
any person in any calendar year in excess of $250,000, (B) any
contract relating to the borrowing of money or the guarantee of any
such obligation or (C) any material contract or agreement between or
among PepsiCo and the PepsiCo Subsidiaries.
43
(n) Title to Properties. Each PepsiCo Subsidiary has, in the case
of personal property, good and valid title to or valid leasehold
interests in, and in the case of real property, good and marketable
title to or valid leasehold interests in, all its properties and
assets, except for such as are no longer used or useful in the conduct
of its businesses or as have been disposed of in the ordinary course
of business and except for defects in title, easements, restrictive
covenants and similar encumbrances or impediments that individually or
in the aggregate are not reasonably likely to have a Material Adverse
Effect on the PepsiCo Subsidiaries. All such assets and properties are
free and clear of all Liens except for Permitted Liens.
(o) Nature of Purchase. (i) None of Ohio Sub, St. Louis Sub, Opco
Sub or Metro Sub is acquiring shares of Merger Sub Common Stock with a
view to the resale or distribution of such shares of Merger Sub Common
Stock or any part thereof.
(ii) Merger Sub is not acquiring the PGB Shares with a view to
the resale or distribution of the PGB Shares or any part thereof.
(iii) Each of Ohio Sub, St. Louis Sub, Opco Sub, Metro Sub and
Merger Sub is an "accredited investor" within the meaning of Rule 501
under the Securities Act.
(p) Sufficiency of Assets. (i) Except for the Excluded Assets,
each of the Merger Sub Acquired Businesses and the PGB Acquired
Businesses contains substantially all of the assets, properties and
rights owned, used or held for use primarily in connection with, or
that otherwise primarily relate to or are required for the conduct of,
such Merger Sub Acquired Businesses and PGB Acquired Businesses as
presently conducted by PepsiCo and the PepsiCo Subsidiaries on the
date of this Agreement.
(ii) Schedule 5.02(p) of the PepsiCo Disclosure Schedule sets
forth, with respect to each of the Merger Sub Acquired Businesses and
the PGB Acquired Businesses, a true and complete list (under
corresponding headings) of (A) the Premises, U.S. Personal Property
(as of the date indicated on such Schedule) and material Permits of
such Business and (B) each Contract of such Business that (i) has not
been entered into in the ordinary course of business, (ii) may not be
terminated by such Business within one
44
year or (iii) provides for aggregate payments by such Business in any
calendar year in excess of $250,000.
(q) Brokers. Except for Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated (the fees and expenses of which will be borne by
PepsiCo), no broker, investment banker, financial advisor or other
person is entitled to any broker's, finder's, financial advisor's or
other similar fee or commission in connection with the Merger and the
other transactions contemplated by the Transaction Documents based
upon arrangements made by or on behalf of PepsiCo or any of the
PepsiCo Subsidiaries.
(r) Year 2000 Compliance. Each of the PepsiCo Subsidiaries has
(i) initiated a review and assessment of all areas within its business
and operations (including those affected by suppliers and vendors)
that could be adversely affected by the "Year 2000 Problem" (that is,
the risk that computer applications used by any of the PepsiCo
Subsidiaries (or its suppliers and vendors) may be unable to recognize
and perform properly date-sensitive functions involving certain dates
prior to and any dates after December 31, 1999), (ii) developed a plan
and timetable for addressing the Year 2000 Problem on a timely basis
and (iii) as of the date of this Agreement, implemented such plan in
accordance with such timetable. To the knowledge of PepsiCo, all
computer applications of each of the PepsiCo Subsidiaries (including
those of its suppliers and vendors) that are material to the PepsiCo
Subsidiaries will on a timely basis be able to perform properly
date-sensitive functions for all dates before and after January 1,
2000, except to the extent that any failure to do so, individually or
in the aggregate, is not reasonably likely to have a Material Adverse
Effect on the PepsiCo Subsidiaries.
ARTICLE VI
Covenants Relating to Business
SECTION 6.01. Alternative Transactions. (a) Xxxxxxx shall not, nor
shall it permit any of its Subsidiaries to, nor shall it authorize or permit any
officer, director or employee of, or any investment banker, attorney or other
advisor or representative of, Xxxxxxx or any of its Subsidiaries to, (i)
directly or indirectly solicit, initiate or encourage the submission of, any
Takeover Proposal, (ii) enter into any agreement with respect to any Takeover
Proposal or (iii) directly or
45
indirectly participate in any discussions with third parties or negotiations
regarding, or furnish to any person any information with respect to, or take any
other action to facilitate any inquiries or the making of any proposal that
constitutes, or may reasonably be expected to lead to, any Takeover Proposal;
provided, however, that at any time prior to the date of the Xxxxxxx
Stockholders Meeting (the "Applicable Period"), Xxxxxxx may, in response to a
Superior Proposal which was not solicited by it and which did not otherwise
result from a breach of this Section 6.01(a), and subject to providing prior
written notice of its decision to take such action to PepsiCo (the "Xxxxxxx
Notice") and compliance with Section 6.01(c) following delivery of the Xxxxxxx
Notice (x) furnish information with respect to Xxxxxxx and its Subsidiaries to
any person making a Superior Proposal pursuant to a customary confidentiality
agreement (as determined by Xxxxxxx after consultation with its outside counsel)
and (y) participate in discussions or negotiations regarding such Superior
Proposal.
(b) Neither the Board of Directors of Xxxxxxx nor any committee thereof
shall (i) withdraw or modify, or propose to withdraw or modify, in a manner
adverse to PepsiCo, the approval or recommendation by the Board of Directors of
Xxxxxxx or any such committee of the Merger, this Agreement or the other
Transaction Documents, (ii) approve any letter of intent, agreement in
principle, acquisition agreement or similar agreement (other than a
confidentiality agreement in connection with a Superior Proposal which is
entered into by Xxxxxxx in accordance with Section 6.01(a)) relating to any
Takeover Proposal (each, a "Xxxxxxx Acquisition Agreement") or (iii) approve or
recommend, or propose to approve or recommend, any Takeover Proposal.
Notwithstanding the foregoing, in response to a Superior Proposal which was not
solicited by Xxxxxxx and which did not otherwise result from a breach of Section
6.01(a), the Board of Directors of Xxxxxxx may (subject to this sentence)
terminate this Agreement (and concurrently with or after such termination, if it
so chooses, cause Xxxxxxx to enter into any Xxxxxxx Acquisition Agreement with
respect to any Xxxxxxx Superior Proposal), but only at a time that is during the
Applicable Period and is after the fifth business day following PepsiCo's
receipt of written notice advising PepsiCo that the Board of Directors of
Xxxxxxx has resolved to accept a Superior Proposal (subject to such
termination), specifying the material terms and conditions of such Superior
Proposal and identifying the person making such Superior Proposal.
(c) Xxxxxxx promptly shall advise PepsiCo orally and in writing of any
Takeover Proposal or any inquiry with
46
respect to or that could reasonably be expected to lead to any Takeover
Proposal, the identity of the person making any such Takeover Proposal or
inquiry and the material terms of any such Takeover Proposal or inquiry. Xxxxxxx
shall keep PepsiCo fully informed of the status and material terms of any such
Takeover Proposal or inquiry.
(d) PepsiCo shall not, nor shall it permit any of its Subsidiaries to, nor
shall it authorize or permit any officer, director or employee of, or any
investment banker, attorney or other advisor or representative of, PepsiCo or
any of its Subsidiaries to, (i) directly or indirectly solicit, initiate or
encourage the submission of, any Acquisition Proposal, (ii) enter into any
agreement with respect to any Acquisition Proposal or (iii) directly or
indirectly participate in any discussions or negotiations regarding, or furnish
to any person any information with respect to, or take any other action to
facilitate any inquiries or the making of any proposal that constitutes, or may
reasonably be expected to lead to, any Acquisition Proposal.
SECTION 6.02. Interim Operations of Xxxxxxx. During the period from the
date of this Agreement to the Closing, Xxxxxxx shall, and shall cause each of
its Subsidiaries to, conduct its business in the usual, regular and ordinary
course in substantially the same manner as previously conducted (including
scheduled capital expenditures and with respect to matters relating to cash
management, accounts receivable and accounts payable) and, to the extent
consistent therewith, use all reasonable efforts to preserve intact its current
business organization, keep available the services of its current officers and
employees and keep its relationships with customers, suppliers, licensors,
licensees, distributors and others having business dealings with them to the end
that its goodwill and ongoing business shall be unimpaired at the Closing. In
addition, subject to the foregoing sentence and without limiting the generality
of the foregoing, except for matters set forth in the Xxxxxxx Disclosure
Schedule or otherwise contemplated by this Agreement or the other Transaction
Documents, from the date of this Agreement to the Closing, Xxxxxxx shall not,
and shall not permit any of its Subsidiaries to, do any of the following without
the prior written consent of PepsiCo:
(i) (A) declare, set aside or pay any dividends on, or make any
other distributions in respect of, any of its capital stock, other
than (1) dividends and distributions by a direct or indirect
Subsidiary of Xxxxxxx to its parent and (2) regular quarterly cash
47
dividends with respect to Xxxxxxx Common Stock, not in excess of $.05
per share, with usual declaration, record and payment dates and in
accordance with Xxxxxxx'x past dividend policy, (B) split, combine or
reclassify any of its capital stock or issue or authorize the issuance
of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock, or (C) purchase, redeem or otherwise
acquire any shares of capital stock of Xxxxxxx or any of its
Subsidiaries or any other securities thereof or any rights, warrants
or options to acquire any such shares or other securities;
(ii) issue, deliver, sell or grant (A) any shares of its capital
stock, (B) any bonds, debentures, notes or other indebtedness having
the right to vote or any other voting securities, (C) any securities
convertible into or exchangeable for, or any options, warrants or
rights to acquire, any such shares, voting securities or convertible
or exchangeable securities or (D) any "phantom" stock, "phantom" stock
rights, stock appreciation rights or stock-based performance units,
other than the issuance of Xxxxxxx Common Stock upon the exercise of
Xxxxxxx Stock Options in accordance with their present terms;
(iii) amend its certificate of incorporation, by-laws or other
comparable charter or organizational documents;
(iv) acquire or agree to acquire (A) by merging or consolidating
with, or by purchasing a substantial portion of the assets of, or by
any other manner, any business or any corporation, partnership, joint
venture, association or other business organization or division
thereof or (B) any material assets, except purchases of inventory in
the ordinary course of business consistent with past practice;
(v) (A) grant to any employee, officer or director of Xxxxxxx or
any of its Subsidiaries any increase in compensation, except for
increases in cash compensation in the ordinary course of business
consistent with past practice or to the extent required under
employment agreements in effect as of the date of this Agreement, (B)
grant to any employee, officer or director of Xxxxxxx or any of its
Subsidiaries any increase in severance or termination pay, except to
the extent required under any agreement in effect as of the date of
this Agreement, (C) enter into any employment, consulting,
indemnification, severance or termination
48
agreement with any such employee, officer or director, (D) establish,
adopt, enter into or amend in any material respect any collective
bargaining agreement or Xxxxxxx Benefit Plan or (E) take any action to
accelerate any rights or benefits, or make any material determinations
not in the ordinary course of business consistent with past practice,
under any collective bargaining agreement or Xxxxxxx Benefit Plan;
(vi) make any change in accounting methods, principles or
practices materially affecting the reported consolidated assets,
Liabilities or results of operations of Xxxxxxx, except insofar as may
be required by a change in GAAP;
(vii) sell, lease, license or otherwise dispose of or subject to
any Lien (x) any PepsiCo Acquired Businesses or (y) any other
properties or assets, except sales of inventory and excess or obsolete
assets in the ordinary course of business consistent with past
practice;
(viii) (A) incur any indebtedness for borrowed money or guarantee
any such indebtedness of another person, issue or sell any debt
securities or warrants or other rights to acquire any debt securities
of Xxxxxxx or any of its Subsidiaries, guarantee any debt securities
of another person, enter into any "keep well" or other agreement to
maintain any financial statement condition of another person or enter
into any arrangement having the economic effect of any of the
foregoing, except for short-term borrowings incurred in the ordinary
course of business consistent with past practice, or (B) make any
loans, advances or capital contributions to, or investments in, any
other person, other than to or in Xxxxxxx or any direct or indirect
wholly owned Subsidiary of Xxxxxxx;
(ix) make or agree to make any new capital expenditure or
expenditures that, individually, is in excess of $5,000,000 or, in the
aggregate, are in excess of $100,000,000; provided, however, that,
notwithstanding the foregoing, Xxxxxxx shall not, and shall cause its
Subsidiaries to not, make or agree to make any new capital expenditure
relating to the PepsiCo Acquired Businesses that, individually, is in
excess of $1,000,000 or, in the aggregate, are in excess of
$5,000,000;
(x) make any material Tax election or settle or compromise any
material Tax Liability or refund, except
49
to the extent already provided for in the Xxxxxxx Filed SEC Documents;
(xi) (A) pay, discharge or satisfy any material claims or
material Liabilities, other than the payment, discharge or
satisfaction, in the ordinary course of business consistent with past
practice or in accordance with their terms, of Liabilities reflected
or reserved against in, or contemplated by, the most recent
consolidated financial statements (or the notes thereto) of Xxxxxxx
included in the Xxxxxxx Filed SEC Documents or incurred in the
ordinary course of business consistent with past practice, (B) cancel
any material indebtedness (individually or in the aggregate) or waive
any claims or rights of substantial value or (C) waive the benefits
of, or agree to modify in any manner, any confidentiality, standstill
or similar agreement to which Xxxxxxx or any of its Subsidiaries is a
party;
(xii) amend the Xxxxxxx Rights Agreement; or
(xiii) authorize any of, or commit or agree to take any of, the
foregoing actions.
SECTION 6.03. Interim Operations of PepsiCo Subsidiaries. (a) During
the period from the date of this Agreement to the Closing, PepsiCo shall cause
each of the PepsiCo Subsidiaries to conduct its business in the usual, regular
and ordinary course in substantially the same manner as previously conducted
(including scheduled capital expenditures and with respect to matters relating
to cash management, accounts receivable and accounts payable) and, to the extent
consistent therewith, use all reasonable efforts to preserve intact its current
business organization, keep available the services of its current officers and
employees and keep its relationships with customers, suppliers, licensors,
licensees, distributors and others having business dealings with them to the end
that the goodwill and ongoing business of each of the PepsiCo Subsidiaries shall
be unimpaired at the Closing. In addition, subject to the foregoing sentence and
without limiting the generality of the foregoing, except for matters set forth
in the PepsiCo Disclosure Schedule or otherwise contemplated by this Agreement
or the other Transaction Documents, from the date of this Agreement to the
Closing,
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PepsiCo shall not permit any PepsiCo Subsidiary to do any of the
following without the prior written consent of Xxxxxxx:
(i) in the case of the PGB Acquired Businesses only, amend its
certificate of incorporation, by-laws or other comparable charter or
organizational documents;
(ii) except for the acquisition of any Excluded Asset, acquire or
agree to acquire (A) by merging or consolidating with, or by purchasing a
substantial portion of the assets of, or by any other manner, any business
or any corporation, partnership, joint venture, association or other
business organization or division thereof or (B) any material assets,
except purchases of inventory in the ordinary course of business consistent
with past practice;
(iii) (A) grant to any Transferred Individual any increase in
compensation, except in the ordinary course of business consistent with
past practice or to the extent required under employment agreements in
effect as of the date of this Agreement, (B) grant to any Transferred
Individual of any PepsiCo Subsidiary any increase in severance or
termination pay, except to the extent required under any agreement in
effect as of the date of this Agreement, (C) enter into any employment,
consulting, indemnification, severance or termination agreement with any
such Transferred Individual, (D) establish, adopt, enter into or amend in
any material respect any collective bargaining agreement or PepsiCo
Subsidiary Benefit Plan to the extent relating to any Transferred
Individual or (E) take any action to accelerate any rights or benefits, or
make any material determinations not in the ordinary course of business
consistent with past practice, under any collective bargaining agreement or
PepsiCo Subsidiary Benefit Plan to the extent relating to any Transferred
Individual;
(iv) make any change in accounting methods, principles or practices
materially affecting the reported consolidated assets, Liabilities or
results of operations of any of the PepsiCo Subsidiaries, except insofar as
may be required by a change in GAAP;
(v) except with respect to Excluded Assets, sell, lease, license or
otherwise dispose of or subject to any Lien any of the assets of the
PepsiCo Subsidiaries, except sales of inventory and excess or obsolete
assets in the ordinary course of business consistent with past practice;
51
(vi) except with respect to any such indebtedness, loans, advances,
capital contributions, or investments which is an Excluded Liability,
(A) incur any indebtedness for borrowed money or guarantee any such
indebtedness of another person, guarantee any debt securities of another
person, enter into any "keep well" or other agreement to maintain any
financial statement condition of another person or enter into any
arrangement having the economic effect of any of the foregoing, except for
short-term borrowings incurred in the ordinary course of business
consistent with past practice, or (B) make any loans, advances or capital
contributions to, or investments in, any other person, other than to or in
any investment existing on the date of this Agreement;
(vii) except with respect to any Excluded Liability, make or agree to
make any new capital expenditure or expenditures that (with respect to the
PepsiCo Subsidiaries taken as a whole), individually, is in excess of
$5,000,000 or, in the aggregate, are in excess of $100,000,000;
(viii) make any material Tax election or settle or compromise any
material Tax Liability (other than any such material Tax Liability which is
an Excluded Liability) or refund, except to the extent already provided for
in the PepsiCo Filed SEC Documents;
(ix) (A) except with respect to any Excluded Liability, pay, discharge
or satisfy any material claims or material Liabilities, other than the
payment, discharge or satisfaction, in the ordinary course of business
consistent with past practice or in accordance with their terms, of
Liabilities reflected or reserved against in the Merger Sub/PGB Acquired
Businesses Financial Statements or incurred in the ordinary course of
business consistent with past practice, (B) except with respect to any
Excluded Liability, cancel any material indebtedness (individually or in
the aggregate) or waive any claims or rights of substantial value or (C)
waive the benefits of, or agree to modify in any manner, any
confidentiality, standstill or similar agreement to which any PepsiCo
Subsidiary is a party;
(x) in the case of Merger Sub only, (A) conduct any business, (B)
split, combine or reclassify any of its capital stock, (C) issue, deliver,
sell or grant any shares of its capital stock, any securities having voting
rights, or any securities convertible or
52
exchangeable for securities having voting rights, or (D) otherwise alter
its capitalization; or
(xi) authorize any of, or commit or agree to take any of, the
foregoing actions.
SECTION 6.04. Advice of Changes. Xxxxxxx and PepsiCo shall promptly
advise the other orally and in writing of any change or event having, or which
is reasonably likely to have, a Material Adverse Effect on Xxxxxxx or the
PepsiCo Subsidiaries, as applicable; provided, however, that no such
notification shall affect the representations, warranties, covenants or
agreements of the parties or the conditions to the obligations of the parties
under this Agreement.
SECTION 6.05. Other Actions. Subject to Section 7.04, each of Xxxxxxx
and PepsiCo hereby agrees to take no action, and agrees that they will not
permit any of their respective Subsidiaries to take any action, that would
reasonably be likely to cause:
(a) the failure of any such party to perform and comply in all
material respects with all agreements, obligations and conditions required
by this Agreement or the other Transaction Documents to be performed or
complied with by such party on or prior to the Closing Date;
(b) any Material Adverse Effect on Xxxxxxx or the PepsiCo
Subsidiaries, as applicable; or
(c) the inability of the Contribution, and the Contribution and Merger
collectively, to constitute a tax-free transaction described in Section 351
or the inability of the Merger to constitute a tax-free transaction
described in Section 368(a) of the Code or the inability of Xxxxxxx or
PepsiCo to obtain the opinions of counsel referred to in Sections 8.02(c)
and 8.03(c).
ARTICLE VII
Additional Covenants
SECTION 7.01. Preparation of Form S-4 and the Proxy
Statement/Prospectus; Xxxxxxx Shareholders Meeting. (a) Each party shall
cooperate in the preparation of the Form S-4 and the Proxy Statement/Prospectus
and all pre- and post-effective amendments thereto and the filing thereof
53
with the SEC. Such cooperation shall include (i) preparation of historical and
pro forma financial statements relating to such party required to be included in
such filings, (ii) provision of financial and other information relating to such
party required to be included in such filings, (iii) engagement of accountants
to report on and provide comfort letters in customary form in respect of
financial information provided by such party for inclusion in such filings
(which comfort letters will be received by Xxxxxxx in accordance with customary
practice) and (iv) responding to comments relating to such party received from
the staff of the SEC in respect of such filings promptly after receipt thereof.
(b) Each party shall be entitled to review any materials related to the
Proxy Statement/Prospectus at any time and from time to time prior to their
mailing to the Xxxxxxx stockholders, and to comment thereon, and Xxxxxxx shall
incorporate into such materials PepsiCo's comments thereon so that such
materials are reasonably acceptable to each party. PepsiCo shall, on behalf of
Merger Sub, prepare and cause Merger Sub to file with the SEC the Form S-4 in
which the Proxy Statement/Prospectus will be included as a prospectus, as
promptly as practicable after comments are received from the SEC staff on the
initial filing of the Proxy Statement/Prospectus. Each of PepsiCo and Merger Sub
shall use its reasonable efforts to have the Form S-4 declared effective under
the Securities Act as promptly as practicable after such filing. Xxxxxxx will
use its reasonable efforts to cause the Proxy Statement/Prospectus to be mailed
to Xxxxxxx'x stockholders as promptly as practicable after the date the Form S-4
is declared effective under the Securities Act. PepsiCo, Merger Sub and Xxxxxxx
shall also take all reasonable efforts to cause any action (other than
qualifying to do business in any jurisdiction in which Xxxxxxx is not now so
qualified) required to be taken under any applicable state securities laws in
connection with the issuance of Merger Sub Common Stock in the Contribution and
the Merger.
(c) Xxxxxxx will, as soon as practicable following the date of this
Agreement, duly call, give notice of, convene and hold the Xxxxxxx Stockholders
Meeting, and will use its reasonable efforts to cause the Xxxxxxx Stockholders
Meeting to be held as promptly as practicable after the date the Proxy
Statement/Prospectus is mailed to the Xxxxxxx Stockholders. Xxxxxxx will,
through its Board of Directors, recommend to its stockholders adoption of this
Agreement and will use its reasonable efforts to cause the Xxxxxxx Stockholder
Approval to be obtained at the Xxxxxxx Stockholders Meeting; provided, however,
that
54
Xxxxxxx'x obligations to recommend such adoption and to cause such adoption to
be obtained shall be subject to the fiduciary obligations of the Board of
Directors of Xxxxxxx. Without limiting the generality of the foregoing, Xxxxxxx
agrees that its obligations pursuant to the first sentence of this Section
7.01(c) shall not be affected by the commencement, public proposal, public
disclosure or communication to Xxxxxxx of any Takeover Proposal.
SECTION 7.02. Listing Application. PepsiCo shall cause Merger Sub to
prepare and submit to the NYSE listing applications covering the shares of
Merger Sub Common Stock issuable by Merger Sub pursuant to the Contribution and
the Merger, and shall use their respective reasonable efforts to obtain, prior
to the Effective Time, approval for the listing of such stock, subject to
official notice of issuance.
SECTION 7.03. Access to Information; Confidentiality. Subject to the
Confidentiality Agreement dated as of August 24, 1998, between Xxxxxxx and
PepsiCo (the "Confidentiality Agreement"), and subject to applicable legal
restrictions, Xxxxxxx shall afford to PepsiCo, and PepsiCo shall afford to
Xxxxxxx, and, in each case, to the officers, employees, accountants, counsel,
financial advisors and other representatives of such parties, reasonable access
during normal business hours during the period prior to the Closing to (i) in
the case of Xxxxxxx, all its respective properties, books, contracts,
commitments, personnel and records and (ii) in the case of PepsiCo, all the
properties, books, contracts, commitments, personnel and records in respect of
each of the PepsiCo Subsidiaries. Each of the foregoing parties agrees to use
its reasonable efforts in good faith to obtain all waivers and consents
necessary under any confidentiality or non-disclosure agreement (other than any
such agreement with a party seeking disclosure hereunder, as to which the party
seeking disclosure shall be deemed to have waived such confidentiality or
non-disclosure with respect to itself) to afford reasonable access to the
applicable party. During such period, Xxxxxxx shall, and shall cause each of its
Subsidiaries to, furnish promptly to PepsiCo a copy of each report, schedule,
registration statement and other document filed by it during such period
pursuant to the requirements of Federal or state securities laws. During such
period, subject to applicable legal restrictions, each of Xxxxxxx and its
Subsidiaries and PepsiCo and the PepsiCo Subsidiaries shall furnish or cause to
be furnished all other information concerning its business, properties and
personnel as such other party may reasonably request. Except as required by law,
each party will hold, and will
55
cause its respective officers, employees, accountants, counsel, financial
advisors and other representatives and affiliates to hold, any nonpublic
information in confidence until such time as such information becomes publicly
available (otherwise than through the wrongful act of any such person) and shall
use its reasonable efforts to ensure that such persons do not disclose such
information to others without the prior written consent of the applicable party
from whom such information was received. In the event of the termination of this
Agreement for any reason, each party shall promptly return or destroy all
documents containing nonpublic information so obtained from any other party or
any of its Subsidiaries and any copies made of such documents.
SECTION 7.04. Reasonable Efforts. Upon the terms and subject to the
conditions set forth in this Agreement, each party agrees to use its reasonable
efforts to take, or cause to be taken, all actions, and to do, or cause to be
done, and to assist and cooperate with the other parties in doing, all things
necessary, proper or advisable to consummate and make effective, in the most
expeditious manner practicable, the Merger and the other transactions
contemplated by the Transaction Documents. In the event an Assigned Contract
relates both to a business being transferred and a business being retained by
PepsiCo or Xxxxxxx or any of their respective Subsidiaries, each party will use
its reasonable efforts to cause such Assigned Contract to be divided into
separate contracts for each of the transferred business and the retained
business, or otherwise to cause the same economic and business terms to govern
(by subcontract, sublicense or otherwise). To the extent that any Assigned
Contract to be assigned by PepsiCo or Xxxxxxx (or any of their respective
Subsidiaries) to the other party or any of its respective Subsidiaries pursuant
to this Agreement is not assignable without the consent or without novation of a
third-party, and such consent is not obtained or novation effected, as the case
may be, this Agreement shall not constitute an assignment or an attempted
assignment thereof and PepsiCo and Xxxxxxx shall enter into alternative
arrangements with respect thereto satisfactory to PepsiCo and Xxxxxxx. To the
extent any such agreements and/or related services cannot be assigned or can be
assigned but only with cost to the party assigning such agreement and/or related
services, such party shall use reasonable efforts to provide the benefits and
pass on the costs of such agreements and/or related services to the party to
which such agreements and/or services were to be assigned hereunder. In
connection with and without limiting the foregoing, each of Xxxxxxx and PepsiCo
and their respective Boards of Directors shall (i) take all reasonable
56
action necessary to ensure that no state takeover statute or similar statute or
regulation is or becomes applicable to the Merger, this Agreement, the other
Transaction Documents or the other transactions contemplated hereby or thereby
and (ii) if any state takeover statute or similar statute or regulation becomes
applicable to the Merger, this Agreement, the other Transaction Documents or the
other transactions contemplated hereby or thereby, take all reasonable action
necessary to ensure that the Merger and the other transactions contemplated by
the Transaction Documents may be consummated as promptly as practicable on the
terms contemplated by this Agreement and otherwise to minimize the effect of
such statute or regulation on the Merger and the other transactions contemplated
by the Transaction Documents.
SECTION 7.05. Affiliates. Prior to the Closing Date, Xxxxxxx shall
deliver to Merger Sub a letter identifying all persons who are, at the time this
Agreement is submitted for approval to the stockholders of Xxxxxxx, "affiliates"
of Xxxxxxx for purposes of Rule 145 under the Securities Act. Xxxxxxx shall use
its reasonable efforts to cause each such person to deliver to Merger Sub on or
prior to the Closing Date a written agreement substantially in the form attached
as Exhibit F hereto.
SECTION 7.06. Xxxxxxx Stock Options; Xxxxxxx Stock Plans; Certain
Employee Matters. (a) At the Effective Time, by virtue of the Merger, the
Xxxxxxx Stock Plans shall be assumed by Merger Sub, with the result that all
obligations of Xxxxxxx under the Xxxxxxx Stock Plans, including with respect to
awards outstanding at the Effective Time under each Xxxxxxx Stock Plan, shall be
obligations of Merger Sub following the Effective Time. Prior to the Effective
Time, Merger Sub shall take all necessary actions (including, if required to
comply with Section 162(m) of the Code (and the regulations thereunder) or
applicable law or rule of the NYSE, obtaining the approval of its stockholders)
for the assumption of the Xxxxxxx Stock Plans, including the reservation,
issuance and listing of shares of Merger Sub Common Stock issuable thereunder.
As soon as practicable after the Effective Time, Merger Sub shall prepare and
file with the SEC a registration statement on Form S-8 registering the number of
shares of Merger Sub Common Stock issuable under the Xxxxxxx Stock Plans.
(b) As soon as practicable after the Effective Time, Merger Sub shall
deliver to the holders of Xxxxxxx Stock Options appropriate notices setting
forth such holders' rights pursuant to the respective Xxxxxxx Stock
57
Plans and the agreements evidencing the grants of such Xxxxxxx Stock Options and
that such Xxxxxxx Stock Options and agreements shall be assumed by Merger Sub
and shall continue in effect on the same terms and conditions, except that all
such options issued prior to January 1, 1999, shall be fully vested in
accordance with the terms of the applicable Xxxxxxx Stock Plans.
(c) Except as otherwise contemplated by this Section 7.06 and except to
the extent required under the respective terms of the Xxxxxxx Stock Options, all
restrictions or limitations on transfer and vesting with respect to Xxxxxxx
Stock Options awarded under the Xxxxxxx Stock Plans or any other plan, program
or arrangement of Xxxxxxx or any of its Subsidiaries, to the extent that such
restrictions or limitations shall not have already lapsed, shall remain in full
force and effect with respect to such options after giving effect to the Merger
and the assumption by Merger Sub as set forth above.
(d) Following the Effective Time, Merger Sub will assume and honor all
Liabilities under change in control and employment agreements of Xxxxxxx, the
existence of which does not constitute a violation of this Agreement, in
accordance with the terms thereof.
(e) As of the Effective Time, Merger Sub will assume and honor all
Liabilities relating to the Transferred Individuals to the extent set forth in
the Employee Benefits Agreement.
SECTION 7.07. Fees and Expenses. (a) Except as provided in this Section
7.07, all fees and expenses incurred in connection with the Merger and the other
transactions contemplated by the Transaction Documents shall be paid by the
party incurring such fees or expenses, whether or not the Merger is consummated,
except that each of PepsiCo and Xxxxxxx shall bear and pay one-half of the costs
and expenses incurred in connection with (1) the filing, printing and mailing of
the Form S-4 and the Proxy Statement/Prospectus (including SEC filing fees), (2)
the filings of the premerger notification and report forms under the HSR Act
(including filing fees) and (3) if the Merger is consummated, all United States
Federal, state or local and all foreign transfer, documentary, sales, use,
registration, value-added and other similar taxes (including applicable real
estate transfer taxes and real property transfer gains taxes and similar taxes
imposed on the transfer of shares of a company holding real estate) incurred in
connection with the Contribution, the Merger, the PepsiCo Transfers, the Xxxxxxx
Transfers or a transfer by PGB (or its designee) of
58
the assets described in Section 4.02(b) to an affiliate of PGB (to the extent,
in the case of such a transfer by PGB (or its designee), that no such tax was
imposed on the transfer of such assets to PGB (or its designee)).
(b) In the event that (1) a Takeover Proposal shall have been made
known to Xxxxxxx or any of its Subsidiaries or has been made directly to its
stockholders generally or any person shall have publicly announced an intention
(whether or not conditional) to make a Takeover Proposal and thereafter this
Agreement is terminated by either PepsiCo or Xxxxxxx pursuant to Section
9.01(b)(i) or (iii) and within twelve months thereafter Xxxxxxx consummates or
enters into a definitive agreement relating to any Takeover Proposal which it
concludes is a Superior Proposal or (2) this Agreement is terminated (x) by
Xxxxxxx pursuant to Section 9.01(e) or (y) by PepsiCo pursuant to Section
9.01(f), then Xxxxxxx shall promptly, but in no event later than the date of
such termination, pay PepsiCo a fee equal to $20,000,000 (the "Termination Fee")
(less the amount of the Break-up Payment previously paid to PepsiCo by Xxxxxxx,
if any), payable by wire transfer of same day funds.
(c) In the event that this Agreement is terminated by either PepsiCo or
Xxxxxxx pursuant to Section 9.01(b)(iii), then Xxxxxxx shall promptly, but in no
event later than the date of such termination, pay PepsiCo a fee equal to
PepsiCo's documented out-of-pocket expenses incurred in connection with the
transactions contemplated by this Agreement, but in no event shall such fee be
in excess of $2,000,000 (the "Break-up Payment"), payable by wire transfer of
same day funds.
(d) Xxxxxxx acknowledges that the agreements contained in Section
7.07(b) and (c) are an integral part of the transactions contemplated by this
Agreement, and that, without these agreements, PepsiCo would not enter into this
Agreement; accordingly, if Xxxxxxx fails promptly to pay the amount(s) due
pursuant to Section 7.07(b) and (c), and, in order to obtain such payment,
PepsiCo commences a suit which results in a judgment against Xxxxxxx for the
fee(s) set forth in Section 7.07(b) and (c), Xxxxxxx shall pay to PepsiCo its
costs and expenses (including attorneys' fees and expenses) in connection with
such suit, together with interest on the amount of the fee(s) at the prime rate
of Citibank N.A. in effect on the date such payment was required to be made.
SECTION 7.08. Rights Agreement. The Board of Directors of Xxxxxxx shall
take all further action (in
59
addition to that referred to in Section 5.01(t)) reasonably requested in
writing by PepsiCo in order to render Xxxxxxx'x Rights Agreement inapplicable to
the Merger and the other transactions contemplated by the Transaction Documents.
Except as provided above with respect to the Merger and the other transactions
contemplated by the Transaction Documents, Xxxxxxx'x Board of Directors shall
not, without the prior written consent of PepsiCo, (a) amend the Xxxxxxx Rights
Agreement or (b) take any action with respect to, or make any determination
under, the Xxxxxxx Rights Agreement, including a redemption of the Xxxxxxx
Rights or any action to facilitate a Takeover Proposal.
SECTION 7.09. PGB Stockholders' Agreement. PepsiCo and Xxxxxxx agree
that, as of the Effective Time, the Stockholders' Agreement dated as of November
9, 1987, among Xxxxxxx (formerly named IC Industries, Inc.), IC Products
Company, PepsiCo and Metro Sub shall terminate and be of no further force or
effect in accordance with the provisions of Section 3.02(a)(ii) of such
agreement.
SECTION 7.10. Public Announcements. Xxxxxxx and PepsiCo will consult
with each other before issuing, and provide each other the opportunity to
review, comment upon and concur with, any press release or other public
statements with respect to the transactions contemplated by this Agreement,
including the Merger, and the other Transaction Documents, and shall not issue
any such press release or make any such public statement prior to such
consultation, except as either party may determine is required by applicable
law, court process or by obligations pursuant to any listing agreement with any
national securities exchange. The parties agree that the initial press release
to be issued with respect to the transactions contemplated by this Agreement and
the other Transaction Documents shall be in the form heretofore agreed to by the
parties.
SECTION 7.11. Further Assurances. (a) On and after the Closing Date,
each of Merger Sub and PGB shall (i) give such further assurances to PepsiCo and
shall execute, acknowledge and deliver all such acknowledgments and other
instruments, and take such further actions as may be reasonably necessary or
appropriate effectively to vest in PepsiCo (or its designee) the full legal and
equitable title to the PepsiCo Acquired Businesses and (ii) use its reasonable
efforts to assist PepsiCo (or its designee) in the orderly transition of the
operations of the PepsiCo Acquired Businesses acquired by PepsiCo (or its
designee). Nothing in this Section 7.11(a) shall be construed to require Merger
Sub or PGB to incur, without reimbursement
60
from PepsiCo, any costs or expenses in connection with any such undertakings.
(b) On and after the Closing Date, each of PepsiCo and the relevant
PepsiCo Subsidiaries shall (i) give such further assurances to Merger Sub and
PGB and shall execute, acknowledge and deliver all such acknowledgments and
other instruments, including the execution and delivery by each of the relevant
PepsiCo Subsidiaries, Merger Sub and PGB of an assignment and assumption
agreement in form and substance satisfactory to the parties hereto (the
"Assignment and Assumption Agreement") providing for the assignment of the
Merger Sub Acquired Businesses and the assets included as part of the PGB
Acquired Businesses and the assumption of the Merger Sub Assumed Liabilities and
the Liabilities included as part of the PGB Acquired Businesses, and take such
further actions as may be reasonably necessary or appropriate effectively to
vest in Merger Sub and PGB the full legal and equitable title to the Merger Sub
Acquired Businesses and the PGB Acquired Businesses, as applicable and (ii) use
its reasonable efforts to assist Merger Sub and PGB in the orderly transition of
the operations of the Merger Sub Acquired Businesses and the PGB Acquired
Businesses acquired by Merger Sub and PGB. Nothing in this Section 7.11(b) shall
be construed to require PepsiCo or the PepsiCo Subsidiaries to incur, without
reimbursement from Merger Sub and PGB, any costs or expenses in connection with
any such undertakings.
(c) On and after the Closing Date, each of Merger Sub, PGB and the
relevant Subsidiaries of Merger Sub shall give such further assurances to
PepsiCo and the relevant PepsiCo Subsidiaries and shall execute, acknowledge and
deliver all such acknowledgments and other instruments, including the Assignment
and Assumption Agreement, and take such further action as may be reasonably
necessary or appropriate to complete the assumption by each of Merger Sub, PGB
and the relevant Subsidiaries of Merger Sub of, and the release of PepsiCo and
the relevant PepsiCo Subsidiaries from, the Merger Sub Assumed Liabilities and
the Liabilities included as part of the PGB Acquired Businesses.
SECTION 7.12. Post-Closing Cooperation. (a) Each party shall cooperate
with one another in connection with the furnishing of information that is
reasonably necessary for financial reporting and accounting matters and in
respect of compliance with disclosure and reporting requirements under the
Securities Act and the Exchange Act.
61
(b) After the Closing, upon reasonable written notice, each of Merger
Sub and PepsiCo shall furnish or cause to be furnished to the other party, as
promptly as practicable, such information and assistance (to the extent within
the control of such party) relating to the Merger Sub Acquired Businesses, the
PGB Acquired Businesses and the PepsiCo Acquired Businesses (including
reasonable access to employees and books and records) as is reasonably necessary
for the preparation of the Merger Sub Statement and the PepsiCo Statement
pursuant to Section 12.01, the filing of all Tax Returns, and making of any
election related to Taxes, the preparation for any audit by any taxing
authority, and the prosecution or defense of any claim, suit or proceeding
related to any Tax Return. Merger Sub and PepsiCo shall cooperate with each
other party in the conduct of any audit or other proceeding relating to Taxes
involving the Merger Sub Acquired Businesses, the PGB Acquired Businesses or the
PepsiCo Acquired Businesses. Merger Sub and PGB shall retain the books and
records relating to the Merger Sub Acquired Businesses and the PGB Acquired
Businesses and PepsiCo shall retain the books and records relating to the
PepsiCo Acquired Businesses for a period of seven years after the Closing.
SECTION 7.13. Merger Sub Rights Agreement. Merger Sub shall adopt the
Rights Agreement set forth as Exhibit G hereto effective upon the Closing.
SECTION 7.14. Merger Sub Share Repurchase. During the period from the
Closing Date to the 12-month anniversary of the Closing Date, Merger Sub shall
repurchase the lesser of (i) 16,000,000 shares of Merger Sub Common Stock or
(ii) shares of Merger Sub Common Stock having an aggregate value of $400,000,000
(such aggregate value to be measured by the sum of the prices per share paid by
Merger Sub in respect of each such purchase) (the "Merger Sub Repurchase"), by
tender offer, open market purchase, privately negotiated transaction or
otherwise; provided, however, that in the case of any Merger Sub Repurchase
pursuant to a tender offer (i) the terms and conditions of such tender offer
shall be subject to the prior written consent of PepsiCo, which consent shall
not be unreasonably withheld and (ii) neither PepsiCo nor any of its affiliates
shall tender or otherwise sell any shares of Merger Sub Common Stock
beneficially owned by PepsiCo or any such affiliate in such tender offer;
provided, further, that Merger Sub shall be under no obligation to make any
Merger Sub Repurchase (and its obligation to make any such Repurchase shall be
suspended) during any period when (i) Merger Sub is under any legal restriction
from doing so or (ii) the Board of Directors of Merger Sub determines in
62
good faith that it is impractical or inadvisable to make such Repurchase.
SECTION 7.15. St. Petersburgco Indebtedness. PepsiCo and Xxxxxxx shall
use reasonable efforts to obtain the full and unconditional release of Xxxxxxx,
effective as of the consummation of the Xxxxxxx Transfers, from all Liabilities
with respect to indebtedness of St. Petersburgco under its existing bank
facility; provided, however, that (i) Xxxxxxx shall be under no obligation to
make any payment in connection with obtaining such release other than any
payment in accordance with the terms of such indebtedness and (ii) if PepsiCo
and Xxxxxxx shall be unable to obtain such release in the exercise of their
reasonable efforts prior to the consummation of the Xxxxxxx Transfers, PepsiCo
shall, following such consummation of the Xxxxxxx Transfers, promptly reimburse
Xxxxxxx or, following the Effective Time, Merger Sub, with respect to any
payment required to be made by Xxxxxxx or, following the Effective Time, Merger
Sub to any person in accordance with the terms of such indebtedness.
SECTION 7.16. Services Agreements. Prior to the consummation of the
Xxxxxxx Transfers, PepsiCo, Xxxxxxx, Merger Sub and one or more other bottlers
licensed by PepsiCo shall agree on the terms of definitive Services Agreements,
which shall provide, among other things, (i) for the provision of all support
services not located at the respective operating locations of the Bottling
Businesses to be transferred pursuant to this Agreement necessary to continue
the ongoing operations of such Bottling Businesses, (ii) that payment for all
services provided pursuant to such Services Agreements shall be made by the
party or parties receiving such services to the party or parties providing such
services in an amount equal to the cost (without profit) to the party or parties
providing such services and (iii) that no party providing services pursuant to
the Services Agreements shall be liable to any other party except to the extent
of such party's gross negligence or wilful misconduct in providing such
services; provided, however, that the amount recoverable from any party
providing services pursuant to the Services Agreements in respect of any such
liability shall be limited to the aggregate amount of proceeds received by, or
payable to, such party pursuant to the Services Agreements.
SECTION 7.17. Section 16b-3. Prior to the Closing Date, PepsiCo shall
cause the Board of Directors of Merger Sub to adopt a resolution approving the
acquisition in the Merger of securities of Merger Sub by officers and directors
of Xxxxxxx. Such resolution shall specify (i) the
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names of the executive officers and the directors of Xxxxxxx, (ii) the number of
securities of Merger Sub to be acquired by such individual, (iii) that approval
is being granted to exempt the transaction under Rule 16b-3 promulgated under
the Exchange Act and (iv) for acquisitions of derivative securities, the
material terms of the derivative securities.
SECTION 7.18. Insured Claims. (a) PepsiCo and Xxxxxxx mutually agree to
the following covenants with respect to Liabilities arising from incidents which
occurred prior to the Closing and for which the party transferring a Bottling
Business or other asset hereunder purchased liability insurance, including but
not limited to Workers' Compensation, General Liability and Automobile Liability
insurance ("Insured Liabilities"):
(i) With respect to PepsiCo's Insured Liabilities, Xxxxxxx agrees to
manage and oversee the following third party claims administrators:
(A) Xxxxxx Insurance Company for General Liability, Automobile
Liability and Illinois, Indiana and Missouri Workers' Compensation
claims arising prior to January 1, 1997;
(B) Travelers Insurance Company for Ohio Workers' Compensation
claims arising prior to January 1, 1997; and
(C) CNA Insurance Company for General Liability, Automobile
Liability and Workers' Compensation claims arising after January 1,
1997 through the Closing Date.
(ii) PepsiCo agrees to provide Xxxxxxx with access to such third-party
claims administrators and PepsiCo will use its reasonable efforts to modify
its contracts with its third-party claims administrators to allow for such
access, if necessary.
(iii) With respect to the Ohio Workers' Compensation claims which
arose prior to January 1, 1997, and which are administered by Travelers
Insurance Company, PepsiCo agrees to transfer on the Closing Date the
reserve balance of $3,048,500, less the aggregate amount paid in respect of
such claims between January 20, 1999 and the Closing Date, to Xxxxxxx for
the payment of all Liabilities associated with such claims.
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(iv) With respect to Xxxxxxx'x Insured Liabilities, PepsiCo agrees to
manage and oversee the following third party claims administrators:
(A) Xxxxxxxxx Xxxxxxx Services for General Liability, Automobile
Liability and Virginia Workers' Compensation claims; and
(B) Accordia for West Virginia Workers' Compensation claims.
(v) Xxxxxxx agrees to provide PepsiCo with access to such third-party
claims administrators, and Xxxxxxx will use its reasonable efforts to
modify its contracts with its third-party claims administrators to allow
for such access, if necessary.
(vi) Payments to third-party claims administrators shall be the
responsibility of the party to whom the Bottling Business or other asset
was transferred pursuant to this Agreement.
(vii) Payments for claims shall be the responsibility of the party to
whom the Bottling Business or other asset was transferred pursuant to this
Agreement.
(b) This covenant with respect to the matters contained herein
supersedes any reference to such matters elsewhere in this Agreement, in the
Employee Benefits Agreement and/or in the Xxxxxxx Transfers Employee Services
Agreement.
ARTICLE VIII
Conditions Precedent
SECTION 8.01. Conditions Precedent. The respective rights and
obligations of each party to effect the Merger and the other transactions
contemplated by the Transaction Documents to be effected at the Closing shall be
subject to the satisfaction or waiver on or prior to the Closing Date of each of
the following conditions precedent:
(a) Stockholder Approval. The Xxxxxxx Stockholder Approval shall have
been obtained.
(b) HSR Act. The waiting period (and any extension thereof) applicable
to the Merger and the other transactions contemplated by the Transaction
65
Documents under the HSR Act shall have been terminated or shall have
expired (the "HSR Approval").
(c) No Injunctions or Restraints. No judgment, order, decree, statute,
law, ordinance, rule or regulation, entered, enacted, promulgated, enforced
or issued by any court or other Governmental Entity of competent
jurisdiction or other legal restraint prohibition (collectively,
"Restraints") shall be in effect preventing the consummation of the Merger
or the other transactions contemplated by the Transaction Documents;
provided, however, that each of the parties shall have used its reasonable
efforts to prevent the entry of any such Restraints and to appeal as
promptly as practicable any such Restraints that may be entered.
(d) NYSE Listing. The shares of Merger Sub Common Stock issuable to
the PepsiCo Subsidiaries and to the stockholders of Xxxxxxx pursuant to
this Agreement shall have been approved for listing on the NYSE, subject to
official notice of issuance.
(e) Form S-4. The Form S-4 shall have become effective under the
Securities Act and shall not be the subject of any stop order or
proceedings seeking a stop order.
SECTION 8.02. Conditions to Obligations of PepsiCo and Merger Sub. The
obligations of PepsiCo and Merger Sub to effect the Merger and the other
transactions contemplated by the Transaction Documents are further subject to
the following conditions:
(a) Representations and Warranties. The representations and warranties
of Xxxxxxx set forth herein shall be true and correct both when made and at
and as of the Closing Date, as if made at and as of such time (except to
the extent expressly made as of an earlier date, in which case as of such
date), except where the failure of such representations and warranties to
be so true and correct (without giving effect to any limitation as to
"materiality" or "Material Adverse Effect" set forth therein), individually
or in the aggregate, does not have, and is not reasonably likely to have, a
Material Adverse Effect on Xxxxxxx, and PepsiCo shall have received a
certificate signed on behalf of Xxxxxxx by an executive officer of Xxxxxxx
to such effect.
(b) Performance of Obligations. Xxxxxxx shall have performed in all
material respects all obligations
66
required to be performed by it under each of the Xxxxxxx Relevant
Agreements at or prior to the Closing Date, and PepsiCo shall have received
a certificate signed on behalf of Xxxxxxx by an executive officer of
Xxxxxxx to such effect.
(c) Tax Opinion. PepsiCo shall have received an opinion of its tax
counsel, Cravath, Swaine & Xxxxx, in form and substance reasonably
satisfactory to PepsiCo, and dated as of the Closing Date, to the effect
that the Contribution, and the Contribution and Merger collectively, will
constitute an exchange described in Section 351 of the Code and the Merger
will constitute a reorganization under Section 368(a) of the Code. In
rendering such opinion, Cravath, Swaine & Xxxxx may require delivery of and
rely upon the customary representations letters delivered by PepsiCo,
Xxxxxxx and their respective Subsidiaries in form and substance reasonably
satisfactory to Cravath, Swaine & Xxxxx.
SECTION 8.03. Conditions to Obligations of Xxxxxxx. The obligations of
Xxxxxxx to effect the Merger and the other transactions contemplated by the
Transaction Documents are further subject to the following conditions:
(a) Representations and Warranties. The representations and warranties
of PepsiCo set forth herein shall be true and correct both when made and at
and as of the Closing Date, as if made at and as of such time (except to
the extent expressly made as of an earlier date, in which case as of such
date), except where the failure of such representations and warranties to
be so true and correct (without giving effect to any limitation as to
"materiality" or "Material Adverse Effect" set forth therein), individually
or in the aggregate, does not have, and is not reasonably likely to have, a
Material Adverse Effect on the PepsiCo Subsidiaries, and Xxxxxxx shall have
received a certificate signed on behalf of PepsiCo by an executive officer
of PepsiCo to such effect.
(b) Performance of Obligations. PepsiCo shall have performed in all
material respects all obligations required to be performed by it under each
of the PepsiCo Relevant Agreements at or prior to the Closing Date, and
Xxxxxxx shall have received a certificate signed on behalf of PepsiCo by an
executive officer of PepsiCo to such effect.
(c) Tax Opinion. Xxxxxxx shall have received an opinion of its tax
counsel, Wachtell, Lipton, Xxxxx &
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Xxxx, in form and substance reasonably satisfactory to Xxxxxxx, and dated
as of the Closing Date, to the effect that the Merger will constitute a
reorganization under Section 368(a) of the Code and that neither Xxxxxxx
nor its shareholders shall recognize gain or loss for U.S. Federal income
tax purposes as a result of the Merger. In rendering such opinion,
Wachtell, Lipton, Xxxxx & Xxxx may require delivery of and rely upon the
customary representations letters delivered by Xxxxxxx, PepsiCo and their
respective Subsidiaries in form and substance reasonably satisfactory to
Wachtell, Lipton, Xxxxx & Xxxx.
(d) Contribution. The Contribution shall have been consummated in
accordance with Article II hereof.
ARTICLE IX
Termination, Amendment and Waiver
SECTION 9.01. Termination. This Agreement may be terminated at any time
prior to the Closing, whether before or after the vote of the stockholders of
Xxxxxxx at the Xxxxxxx Stockholders Meeting:
(a) by mutual written consent of Xxxxxxx and PepsiCo; or
(b) by either Xxxxxxx or PepsiCo:
(i) if the Merger or the other transactions contemplated by the
Transaction Documents are not consummated on or before June 30, 1999
(the "Outside Date"), unless the failure to consummate the Merger or
such other transaction is the result of a wilful and material breach
of this Agreement by the party seeking to terminate this Agreement;
(ii) if any Governmental Entity issues an order, decree or ruling
or taken any other action permanently enjoining, restraining or
otherwise prohibiting the Merger or the other transactions
contemplated by the Transaction Documents and such order, decree,
ruling or other action shall have become final and nonappealable; or
(iii) if, upon a vote at a duly held Xxxxxxx Stockholders Meeting
to obtain the Xxxxxxx Stockholder Approval, the Xxxxxxx Stockholder
Approval is not obtained;
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(c) by PepsiCo, if Xxxxxxx breaches or fails to perform in any
material respect any of its representations, warranties or covenants
contained in this Agreement, which breach or failure to perform (i) would
give rise to the failure of a condition of PepsiCo set forth in Article
VIII and (ii) cannot be or has not been cured within 30 days after the
giving of written notice to Xxxxxxx of such breach (provided that PepsiCo
is not then in wilful and material breach of any representation, warranty
or covenant contained in this Agreement);
(d) by Xxxxxxx, if PepsiCo breaches or fails to perform in any
material respect any of its representations, warranties or covenants
contained in this Agreement, which breach or failure to perform (i) would
give rise to the failure of a condition of Xxxxxxx set forth in Article
VIII, and (ii) cannot be or has not been cured within 30 days after the
giving of written notice to PepsiCo of such breach (provided that Xxxxxxx
is not then in wilful and material breach of any representation, warranty
or covenant in this Agreement);
(e) by Xxxxxxx in accordance with Section 6.01(b); provided that, in
order for the termination of this Agreement pursuant to this paragraph (e)
to be deemed effective, Xxxxxxx shall have complied with all provisions
contained in Section 6.01(a), (b) and (c) including the notice provisions
therein, and with applicable requirements, including the payment of the
Termination Fee, of Section 7.07(b); or
(f) by PepsiCo, if Xxxxxxx or any of its directors or officers shall
participate in discussions or negotiations in breach of Section 6.01(a).
SECTION 9.02. Effect of Termination. In the event of termination of
this Agreement by any party as provided in Section 9.01, this Agreement shall
forthwith become void and have no effect, without any Liability or obligation
hereunder on the part of any party, other than Section 4.01(b)(ii) (if the
Xxxxxxx Transfers have previously been consummated) (and the Sections and
Articles referenced therein), Section 5.01(r), Section 5.02(q), the last
sentence of Section 7.03, Section 7.07, this Section 9.02, Article XIII and the
Confidentiality Agreement which provisions and agreements survive such
termination and termination of this Agreement will not relieve a breaching
party from Liability for any wilful and material breach by such party of any
of its representations, warranties,
69
covenants or agreements set forth in this Agreement giving rise to such
termination.
SECTION 9.03. Amendment. This Agreement may be amended by the parties
at any time before or after the Xxxxxxx Stockholder Approval; provided, however,
that after any such approval, there shall be made no amendment that by law
requires further approval by such stockholders without the further approval of
such stockholders. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties.
SECTION 9.04. Extension; Waiver. At any time prior to the Closing, the
parties may (a) extend the time for the performance of any of the obligations or
other acts of the other parties, (b) waive any inaccuracies in the
representations and warranties contained in this Agreement or in any document
delivered pursuant to this Agreement or (c) subject to the proviso of Section
9.03, waive compliance with any of the agreements or conditions contained in
this Agreement. Any agreement on the part of a party to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party. The failure of any party to this Agreement to assert any
of its rights under this Agreement or otherwise shall not constitute a waiver of
such rights.
ARTICLE X
Indemnification
SECTION 10.01. Indemnification. (a) Indemnification by Merger Sub and
PGB. (i) From and after the Closing, Merger Sub and PGB shall indemnify PepsiCo
and its affiliates (other than Merger Sub, PGB and their respective
Subsidiaries) and each of their respective officers, directors, employees,
stockholders, agents and representatives against, and hold them harmless from,
any loss, Liability, claim, damage or expense (including reasonable legal fees
and expenses) ("Losses"), as incurred (payable promptly upon written request),
suffered or incurred by any such indemnified party to the extent arising from or
relating to (1) any Merger Sub Assumed Liability (except for any such Liability
relating to Taxes to the extent covered by Article XI) or (2) any Third Party
Claim arising from or relating to any of the information supplied by Xxxxxxx or
any of its Subsidiaries for inclusion or incorporation by reference in (A) the
Form S-4, at the time the Form S-4 is filed with the SEC, at any time it is
amended or supplemented or at the time it becomes effective
70
under the Securities Act, containing any untrue statement of a material fact or
omitting to state any material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under
which they are made, not misleading or (B) the Proxy Statement/Prospectus, at
the date it is first mailed to Xxxxxxx'x stockholders or at the time of the
Xxxxxxx Stockholders Meeting, containing any untrue statement of a material fact
or omitting to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they are made, not misleading;
(ii) From and after the Closing, Merger Sub and PGB shall indemnify
PepsiCo and its affiliates (other than Merger Sub, PGB and their respective
Subsidiaries) and each of their respective officers, directors, employees,
stockholders, agents and representatives against, and hold them harmless from
any Loss, as incurred (payable promptly upon written request), suffered or
incurred by any such indemnified party to the extent arising from or relating to
any breach of any representation or warranty of Xxxxxxx (without giving effect
to any limitation as to "materiality" or "Material Adverse Effect" set forth
therein) contained in (x) Section 5.01(m) or Section 5.01(o) (but only, in the
case of this clause (x), to the extent such breach relates to any of the PepsiCo
Acquired Businesses) or (y) Section 5.01(v)(i); provided, however, that neither
Merger Sub nor PGB shall have any Liability under this subparagraph (ii) unless
the aggregate of all Losses relating thereto for which Merger Sub and PGB would,
but for this proviso, be liable exceeds on a cumulative basis $1,000,000, and
then only to the extent of any such excess; provided further, however, that
neither Merger Sub nor PGB shall have any Liability under this subparagraph (ii)
nor shall it count for purposes of the preceding proviso, for any individual
item or series of related items or for any series of the same or similar kinds
or types of items where the Loss relating thereto is, in the aggregate, less
than $250,000. Notwithstanding the foregoing, if the Xxxxxxx Transfers are
consummated prior to the Closing in accordance with Section 4.01, references in
this Section 10.01(a)(ii) to "Closing" shall be deemed to be references to the
date of consummation of such Xxxxxxx Transfers and references to "Merger Sub"
shall, prior to the Effective Time, be deemed to be references to Xxxxxxx.
(b) Indemnification by PepsiCo. From and after the Closing, PepsiCo
shall indemnify Merger Sub, PGB and their respective affiliates (other than
PepsiCo or the Contributing PepsiCo Subsidiaries) and each of their
71
respective officers, directors, employees, stockholders, agents and
representatives against and hold them harmless from any Loss, as incurred
(payable promptly upon written request), suffered or incurred by any such
indemnified party to the extent arising from or relating to (1)any Excluded
Liability (except for any such Liability relating to Taxes to the extent covered
by Article XI), (2) any breach of any representation or warranty of PepsiCo
(without giving effect to any limitation as to "materiality" or "Material
Adverse Effect" set forth therein) contained in (x) Section 5.02(b)(iii), (y)
Section 5.02(l) or Section 5.02(n) (but only, in the case of this clause (y), to
the extent such breach relates to any of the Merger Sub Acquired Businesses or
the PGB Acquired Businesses) or (z) Section 5.02(p)(i) or (3) any Third Party
Claim arising from or relating to any of the information supplied by PepsiCo or
any of the PepsiCo Subsidiaries for inclusion or incorporation by reference in
(A) the Form S-4, at the time the Form S-4 is filed with the SEC, at any time it
is amended or supplemented or at the time it becomes effective under the
Securities Act, containing any untrue statement of a material fact or omitting
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
are made, not misleading or (B) the Proxy Statement/Prospectus, at the date it
is first mailed to Xxxxxxx'x stockholders or at the time of the Xxxxxxx
Stockholders Meeting, containing any untrue statement of a material fact or
omitting to state any material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under
which they are made, not misleading; provided, however, that PepsiCo shall not
have any Liability under clause (2)(y) and (z) above unless the aggregate of all
Losses relating thereto for which PepsiCo would, but for this proviso, be liable
exceeds on a cumulative basis $5,000,000, and then only to the extent of any
such excess; provided further, however, that PepsiCo shall not have any
Liability under clause (2)(y) and (z) above, nor shall it count for purposes of
the preceding proviso, for any individual item or series of related items or for
any series of the same or similar kinds or types of items where the Loss
relating thereto is, in the aggregate, less than $500,000.
(c) Losses Net of Insurance, Taxes, etc. In determining whether a Loss
is hereof eligible for indemnification under this Article X and in determining
the amount of any such Loss for which indemnification is provided under this
Article X, (i) the amount of such Loss shall be net of any amounts recovered or
recoverable by the indemnified party under insurance policies, (ii) increased
72
to take account of any net Tax cost incurred by the indemnified party arising
from the receipt of indemnity payments hereunder (grossed up for such increase)
and (iii) reduced to take account of any net Tax benefit realized by the
indemnified party arising from the incurrence or payment of any such Loss. In
computing the amount of any such Tax cost or Tax benefit, the indemnified party
shall be deemed to recognize all other items of income, gain, loss, deduction or
credit before recognizing any item arising from the receipt of any indemnity
payment hereunder or the incurrence or payment of any indemnified Loss. Any
indemnification payment hereunder shall initially be made without regard to this
paragraph and shall be increased or reduced to reflect any such net Tax cost
(including gross-up) or net Tax benefit only after the indemnified party has
actually realized such cost or benefit. For purposes of this Agreement, an
indemnified party shall be deemed to have "actually realized" a net Tax cost or
a net Tax benefit to the extent that, and at such time as, the amount of Taxes
payable by such indemnified party is increased above or reduced below, as the
case may be, the amount of Taxes that such indemnified party would be required
to pay but for the receipt of the indemnity payment or the incurrence or payment
of such Loss, as the case may be. The amount of any increase or reduction
hereunder shall be adjusted to reflect any final determination (which shall
include the execution of Form 870-AD or successor form) with respect to the
indemnified party's Liability for Taxes and payments between Merger Sub,
Xxxxxxx, PGB and PepsiCo to reflect such adjustment shall be made if necessary.
(d) Procedures Relating to Indemnification. Upon receipt of a claim or
demand made by any person who is not a party hereto against a party hereto (a
"Third Party Claim") as to which such party (the "indemnified party") may be
entitled to indemnification pursuant to this Article X or pursuant to Article
XI, indemnified party shall notify the other relevant party (the "indemnifying
party") in writing, and in reasonable detail, of the Third Party Claim promptly
after receipt by such indemnified party of written notice of the Third Party
Claim; provided, however, that failure to provide 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. Thereafter, the indemnified party shall promptly deliver to the
indemnifying party 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 shall be entitled to
73
participate in the defense thereof and, if it so chooses, to assume the defense
thereof with the counsel selected by the indemnifying party. Should the
indemnifying party so elect to assume the defense of a Third Party Claim, the
indemnifying party shall 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, including the
opportunity to keep fully informed as to all matters which might affect the
amount of any claims for indemnification to be made hereunder, and to employ
counsel, at its own expense, separate from the counsel employed by the
indemnifying party, it being understood that (i) the indemnifying party shall
control such defense and (ii) the indemnifying party will bear the expenses of
separate counsel for the indemnified party to the extent a conflict of interest
is likely to exist between the indemnifying party and the indemnified party. 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
failed to assume the defense thereof (other than during the period prior to the
time the indemnified party shall have given notice of the Third Party Claim as
provided above).
If the indemnifying party so elects to assume the defense of any Third
Party Claim, the indemnified party shall cooperate with the indemnifying party
in the defense thereof. Such cooperation shall include the retention and (upon
the indemnifying party's request) the provision to the indemnifying party of
records and information that 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. The
indemnifying party shall reimburse the indemnified party for its reasonable
out-of-pocket costs of such cooperation. 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. If the indemnifying party shall have assumed the defense of a Third
Party Claim, the indemnified party shall agree to any settlement, compromise or
discharge of a Third Party Claim that the indemnifying party may recommend and
that by its terms obligates the indemnifying party to pay the full amount of the
Liability in connection with such Third Party Claim, which releases the
indemnified party completely in connection with such Third Party Claim and that
would not otherwise adversely
74
affect the indemnified party. Notwithstanding the foregoing, the indemnifying
party shall not be entitled to assume the defense of any Third Party Claim (and
shall be liable for the reasonable fees and expenses of counsel incurred by the
indemnified party in defending such Third Party Claim) if the Third Party Claim
seeks an order, injunction or other equitable relief or relief for other than
money damages against the indemnified party that the indemnified party
reasonably determines, after conferring with its outside counsel, cannot be
separated from any related claim for money damages. If such equitable relief or
other relief portion of the Third Party Claim can be so separated from that for
money damages, the indemnifying party shall be entitled to assume the defense of
the portion relating to money damages.
(e) Termination of Indemnification. Subject to the provisions of
Section 9.02, the obligations to indemnify and hold harmless any party (i)(A)
pursuant to Section 10.01(a)(ii) shall terminate on the 12-month anniversary of
the date of the Closing, or such earlier date as the Xxxxxxx Transfers are
consummated in accordance with Section 4.01 and (B) pursuant to
Sections 10.01(b)(2)(y) and 10.01(b)(2)(z) shall terminate on the 12-month
anniversary of the date of the Closing, (ii) pursuant to Sections 10.01(a)(i)(2)
and 10.01(b)(3) shall terminate on the third anniversary of the Effective Time
and (iii) pursuant to Sections 10.01(a)(i)(1), 10.01(b)(1) and 10.01(b)(2)(x)
shall not terminate.
ARTICLE XI
Tax Indemnification; Certain Other Tax Matters
SECTION 11.01. Tax Indemnification. (a) Tax Indemnification by Merger
Sub and PGB. From and after the Closing, Merger Sub and PGB shall indemnify
PepsiCo and its affiliates (other than Merger Sub, PGB, the PGB Acquired
Businesses or any of their respective Subsidiaries) against, and hold them
harmless from any Loss, as incurred (payable promptly upon written request),
suffered or incurred by any such indemnified party with respect to:
(i) Any United States Federal, state and local or foreign income or
franchise taxes of PepsiCo Acquired Businesses for all Pre-Closing Tax Periods
(but not including any such Taxes attributable to actions taken by the PepsiCo
Acquired Businesses or PepsiCo or any of their respective affiliates (other than
Merger Sub, PGB, the PGB Acquired Businesses or any of their respective
Subsidiaries)
75
outside of the ordinary course of business after the Closing on the Closing
Date);
(ii) any United States Federal, state and local or foreign income or
franchise taxes attributable to Xxxxxxx, PGB, its Subsidiaries or affiliates
(other than, solely for taxable periods beginning on or after the Closing Date,
or portions thereof, Taxes attributable to the operations of the PepsiCo
Acquired Businesses) for which PepsiCo, its Subsidiaries or affiliates (other
than Merger Sub, PGB, the PGB Acquired Businesses or any of their respective
Subsidiaries) may be held liable solely by virtue of Treasury Regulation Section
1.1502-6 or any similar provision under state or local law, as transferee or
successor, by contract or otherwise;
(iii) Taxes that are Merger Sub Assumed Liabilities; and
(iv) Taxes of the PGB Acquired Businesses to the extent PepsiCo does
not have an indemnity obligation with respect thereto pursuant to Section
11.01(b).
(b) Tax Indemnification by PepsiCo. From and after the Closing, PepsiCo
shall indemnify Merger Sub, PGB and their respective affiliates (other than
PepsiCo and its Subsidiaries) against, and hold them harmless from any Loss, as
incurred (payable promptly upon written request), suffered or incurred by any
such indemnified party with respect to:
(i) any United States Federal, state and local or foreign income or
franchise taxes of the PGB Acquired Businesses for all Pre-Closing Tax Periods
(but not including any such Taxes attributable to actions taken by the PGB
Acquired Businesses or PGB outside of the ordinary course of business after the
Closing on the Closing Date);
(ii) any United States Federal, state and local or foreign income or
franchise taxes attributable to PepsiCo, its Subsidiaries or affiliates (other
than, solely for taxable periods beginning on or after the Closing Date, or
portions thereof, Taxes attributable to the operations of the Merger Sub
Acquired Businesses or the PGB Acquired Businesses) for which PGB, Merger Sub,
their Subsidiaries or affiliates (other than PepsiCo and its Subsidiaries) may
be held liable solely by virtue of Treasury Regulation Section 1.1502-6 or any
similar provision under state or local law, as transferee or successor, by
contract or otherwise;
(iii) Taxes that are Excluded Liabilities; and
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(iv) Taxes of the PepsiCo Acquired Businesses to the extent Merger Sub
and PGB does not have an indemnity obligation with respect thereto pursuant to
Section 11.01(a).
(c) Tax Returns and Cooperations. (i) Each of Merger Sub, PGB, PepsiCo
and their respective Subsidiaries (including the PepsiCo Acquired Businesses,
the Merger Sub Acquired Businesses and the PGB Acquired Businesses) shall
provide to the other any information reasonably requested in order to enable the
requestor to prepare and file Tax Returns for Pre-Closing Tax Periods, to
respond to audits or other inquiries by any Taxing Authority, or to engage in
Tax planning.
(ii) None of Merger Sub, PGB, PepsiCo, or any of their respective
Subsidiaries of either, shall amend any Tax Return if amending such Tax Return
could increase or create any indemnification obligation under Section 11.01(a)
or (b) for another party unless (except in cases where amendments to state
income or franchise Tax Returns are required to be filed to reflect Federal
income tax audit adjustments) written permission is first obtained from such
other party.
(iii) The provisions of this Section 11.01 shall survive until 90 days
after the expiration of the statutes of limitations for the relevant Tax.
(d) Coordination with Article X. Any amount that could be described
either in Article X or in Section 11.01 shall be treated as described solely in
this Section 11.01. Notwithstanding the preceding sentence, any amount otherwise
owing by virtue of this Section 11.01 shall not be paid to an indemnified party
to the extent it would duplicate any amount previously paid to that indemnified
party by virtue of Article X.
SECTION 11.02. Certain Other Tax Matters. (a) Termination of Tax
Sharing Agreements. Any Tax sharing agreement between PepsiCo, on the one hand,
and any of Merger Sub, the PGB Acquired Businesses or Merger Sub Acquired
Businesses on the other, shall be terminated as of the Closing Date and shall
thereafter have no further effect for any taxable year (whether the current
year, a future year, or past year). Any Tax sharing agreement between Xxxxxxx or
PGB, on the one hand, and any PepsiCo Acquired Business, on the other, shall be
terminated as of the Closing Date and shall thereafter have no further effect
for any taxable year (whether the current year, a future year, or a past year).
Any payments required by any such Tax
77
sharing agreement shall be made at or prior to the termination thereof.
(b) FIRPTA Affidavit. PepsiCo shall deliver (or cause to be delivered)
to Xxxxxxx an affidavit (a "FIRPTA affidavit") in form and substance reasonably
satisfactory to the recipient, duly executed and acknowledged, certifying facts
that would exempt from any withholding requirement under Section 1445 of the
Code any payments for any United States real property interests being
transferred pursuant to this Agreement.
(c) FIRPTA Affidavit. Xxxxxxx and PGB shall deliver (or cause to be
delivered) to Pepsi an affidavit (a "FIRPTA affidavit") in form and substance
reasonably satisfactory to the recipient, duly executed and acknowledged,
certifying facts that would exempt from any withholding requirement under
Section 1445 of the Code any payments for any United States real property
interests being transferred pursuant to this Agreement.
ARTICLE XII
Working Capital Adjustments
SECTION 12.01. Working Capital Adjustments. (a) Each of the parties hereto
acknowledges and agrees that, as of the close of business on the Closing Date,
each of the Merger Sub Acquired Businesses, the PGB Acquired Businesses and the
PepsiCo Acquired Businesses should have a Working Capital Amount equal to the
Projected Working Capital Amount for such business (and each of the parties will
make adjustments as set forth herein to cause such business to have such Working
Capital Amount), and in furtherance thereof, within 60 days after the Closing
Date, (i) Merger Sub shall prepare and deliver to PepsiCo a statement (the
"Merger Sub Statement") setting forth (A) the Working Capital Amount as of the
close of business on the Closing Date (the "Closing Working Capital Amount") of
the Merger Sub Acquired Businesses, taken as a whole, and each of the PGB
Acquired Businesses and (B) the Projected Working Capital Amount of the Merger
Sub Acquired Businesses, taken as a whole, and each of the PGB Acquired
Businesses as of the close of business on the Closing Date, together with a
certificate of Merger Sub and Merger Sub's independent auditors that the Merger
Sub Statement has been prepared in compliance with the requirements of this
Section 12.01(a) and (ii) PepsiCo shall prepare and deliver a statement (the
"PepsiCo Statement") setting forth (A) the Closing Working
78
Capital Amount of the PepsiCo Acquired Businesses (with Princetonco and Marionco
taken as a whole, and Xxxx Holdings LLC and St. Petersburgco taken as a whole),
and (B) the Projected Working Capital Amount of the PepsiCo Acquired Businesses
(with Princetonco and Marionco taken as a whole, and Xxxx Holdings LLC and St.
Petersburgco taken as a whole) as of the close of business on the Closing Date,
together with a certificate of PepsiCo and PepsiCo's independent auditors that
the PepsiCo Statement has been prepared in compliance with the requirements of
this Section 12.01(a). Each of Merger Sub, Xxxxxxx and PepsiCo agrees that,
notwithstanding anything to the contrary contained in this Agreement, (i) there
shall be excluded from any calculation of the Closing Working Capital Amount of
any of the PepsiCo Acquired Businesses the portion of any current assets which
did not arise in the ordinary course of business consistent with past practice
of any of the PepsiCo Acquired Businesses and (ii) if the Xxxxxxx Transfers are
consummated prior to the Closing in accordance with Section 4.01, references in
this Section 12.01 to "Closing Date" shall be deemed to be references to the
date of consummation of such Xxxxxxx Transfers, references in this Section 12.01
to "Merger Sub" shall be deemed to be references to Xxxxxxx and the procedures
set forth in this Article XII shall commence as of such date with respect to the
PepsiCo Acquired Businesses.
During the 30-day period following the receipt by Merger Sub of the
PepsiCo Statement and the receipt by PepsiCo of the Merger Sub Statement, each
of Merger Sub and PepsiCo and their respective independent auditors shall be
permitted to review the working papers relating to the preparation of the other
party's Statement. Each of the Merger Sub Statement and the PepsiCo Statement
shall become final and binding upon PepsiCo and Merger Sub, respectively, on the
30th day following delivery thereof, unless PepsiCo or Merger Sub, respectively,
gives written notice of its disagreement with the other party's Statement (a
"Notice of Disagreement") to the other party prior to such date, in which case
the Statement or Statements subject to a Notice of Disagreement shall not then
become final and binding. Any Notice of Disagreement shall (A)specify in
reasonable detail the nature of any disagreement so asserted, (B)only include
disagreements based on mathematical errors or based on the Closing Working
Capital Amounts or the Projected Working Capital Amounts not being calculated in
accordance with this Section 12.01(a), (C) be accompanied by a certificate of
the party delivering the Notice of Disagreement that it has complied with the
covenants set forth in Section 7.12(b) and (D) be accompanied by a certificate
of such party's independent auditors that they
79
concur with each of the positions taken by such party in the Notice of
Disagreement. If a Notice of Disagreement is received by Merger Sub or PepsiCo,
as applicable, in a timely manner, then the Merger Sub Statement and/or the
PepsiCo Statement which is subject to a Notice of Disagreement, as applicable
(as revised in accordance with clause (I) or (II) below), shall become final and
binding upon PepsiCo or Merger Sub, respectively, on the earlier of (I) the date
Merger Sub and PepsiCo resolve in writing any differences they have with respect
to the matters specified in such Notice of Disagreement or (II) the date the
Accounting Firm issues a decision as described below.
During the 30-day period following the delivery of any Notice of
Disagreement, Merger Sub and PepsiCo shall seek in good faith to resolve in
writing any differences which they may have with respect to the matters
specified in such Notice of Disagreement. During such period each of Merger Sub
and PepsiCo and their respective independent auditors shall have access to the
working papers of the other party's auditors prepared in connection with their
certification of such Notice of Disagreement. If Merger Sub and PepsiCo have not
resolved such differences by the end of such 30-day period, Merger Sub and
PepsiCo shall submit to an independent accounting firm (the "Accounting Firm")
their respective calculations of the applicable Closing Working Capital Amounts
and Projected Working Capital Amounts for the Merger Sub Acquired Businesses,
the PGB Acquired Business and the PepsiCo Acquired Businesses which is subject
to a Notice of Disagreement, and the Accounting Firm shall choose in each such
case which of the two party's calculations it believes to be more correct as
reflected on the applicable Statement or Notice of Disagreement and that
calculation shall then become the Closing Working Capital Amount and/or the
Projected Working Capital Amount for the applicable business for all purposes.
The Accounting Firm shall be KPMG Peat Marwick LLP or, if such firm is unable or
unwilling to act, such other nationally recognized independent public accounting
firm as shall be agreed upon following the Closing by Merger Sub and PepsiCo in
writing. Merger Sub and PepsiCo shall use reasonable efforts to cause the
Accounting Firm to render a decision resolving the matters submitted to it
within 30 days following the submission of the matters. Merger Sub and PepsiCo
agree that judgment may be entered upon the determination of the Accounting Firm
in any court having jurisdiction over the party against which such determination
is to be enforced. The cost of any arbitration (including the fees and expenses
of the Accounting Firm and reasonable attorney fees and expenses of the parties)
pursuant to this Section 12.01(a)shall be borne equally by Merger Sub and
PepsiCo. The fees
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and disbursements of each of Merger Sub's and PepsiCo's own independent auditors
incurred in connection with their review of the Merger Sub Statement and the
PepsiCo Statement and review of any Notice of Disagreement shall be borne by
itself.
(b) In lieu of the accounts receivable and trade payables of each of
the Merger Sub Acquired Businesses, PepsiCo shall cause a good faith estimate of
the amount of the accounts receivable less the amount of trade payables (the
"Net Receivables Amount") of each of the Merger Sub Acquired Businesses as of
the Closing Date, less the amount equal to the interest for a thirty-day period
on the Net Receivables Amount (calculated at the interest rate applicable to the
Contributed Intercompany Indebtedness) (as so reduced, the "Discounted Net
Receivables Amount"), to be included in cash or cash equivalents in each such
Merger Sub Acquired Business upon the Closing Date. In the case of any Closing
Working Capital Amount which is less than the Projected Working Capital Amount
of any of the Merger Sub Acquired Businesses, the PGB Acquired Businesses or the
PepsiCo Acquired Businesses, the transferor of such business shall, and if the
Closing Working Capital Amount is more than the Projected Working Capital
Amount, the acquiror of such business shall, within 10 business days after the
applicable Statement becomes final and binding on Merger Sub and PepsiCo or the
Accounting Firm renders its final decision, make payment(s) by wire transfer in
immediately available funds of the amount of each such difference, together with
interest thereon at a rate equal to the rate of interest from time to time
announced publicly by Citibank, N.A. as its prime rate, calculated on the basis
of the actual number of days elapsed over 365, from the Closing Date to the date
of each such payment.
ARTICLE XIII
General Provisions
SECTION 13.01. Survival of Representations and Warranties. None of the
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Closing (it being understood that,
notwithstanding the foregoing, certain of such representations and warranties
shall be subject to Article X). This Section 13.01 shall not limit (a) any
covenant or agreement of the parties which by its terms contemplates performance
after the Closing or (b) the survival of Section 5.01(r), Section 5.02(p),
Section 7.07, Section 7.10, Section 7.14, Section 7.18, Section 9.02,
81
Article X, Article XI, Article XII, this Article XIII and the Confidentiality
Agreement.
SECTION 13.02. Notices. Any notice or other communication that is
required or that may be given in connection with this Agreement shall be in
writing and shall be delivered personally, telecopied or sent by certified,
registered or express mail or by Federal Express or similar courier service,
postage prepaid, and shall be deemed given when so received if delivered
personally or by telecopy or, if mailed, seven (7) calendar days after the date
of mailing (three (3) calendar days in the case of express mail, Federal Express
or similar courier service), as follows:
If to Xxxxxxx (or to Merger Sub following the Effective Time):
Xxxxxxx Corporation
0000 Xxxxxxxxx Xxxx
Xxxxxxx Xxxxxxx, XX 00000
Attention of General Counsel
Facsimile: (000) 000-0000
With a separate copy delivered to:
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention of Xxxxxx Xxxxxx, Esq.
Facsimile: (000) 000-0000
If to PepsiCo (or to Merger Sub prior to the Effective Time):
PepsiCo, Inc.
000 Xxxxxxxx Xxxx Xxxx
Xxxxxxxx, XX 00000
Attention of General Counsel
Facsimile: (000) 000-0000
With a separate copy delivered to:
Cravath, Swaine & Xxxxx
000 Xxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention of Xxxxxx X. Xxxxxxx, Esq.
Facsimile: (000) 000-0000
SECTION 13.03. Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto
82
(whether by operation of law or otherwise) without the prior written consent of
the other parties. Subject to the preceding sentence, this Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns. Notwithstanding anything contained
in this Agreement to the contrary, nothing in this agreement, expressed or
implied, is intended to confer on any person other than the parties hereto or
their respective successors and permitted assigns any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
SECTION 13.04. Severablity. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule or law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner to
the end that transactions contemplated hereby are fulfilled to the extent
possible.
SECTION 13.05. Entire Agreement; No Third-Party Beneficiaries. This
Agreement and the other Transaction Documents (a) constitute the entire
agreement, and supersede all prior agreements and understandings, both written
and oral, among the parties with respect to the Contribution, the Merger and the
other transactions contemplated by the Transaction Documents and (b) are not
intended to confer upon any person other than the parties any rights or
remedies.
SECTION 13.06. Interpretation. When a reference is made in this
Agreement to an Article, Section or Exhibit, such reference shall be to an
Article or Section of, or an Exhibit to, this Agreement unless otherwise
indicated. The table of contents and headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include", "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation". The words "hereof", "herein" and "hereunder" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement. All
terms defined in this Agreement shall have the defined
83
meanings when used in any certificate or other document made or delivered
pursuant hereto unless otherwise defined therein. The definitions contained in
this Agreement are applicable to the singular as well as the plural forms of
such terms and to the masculine as well as to the feminine and neuter genders of
such term. Any agreement, instrument or statute defined or referred to herein or
in any agreement or instrument that is referred to herein means such agreement,
instrument or statute as from time to time amended, modified or supplemented,
including (in the case of agreements or instruments) by waiver or consent and
(in the case of statutes) by succession of comparable successor statutes and
references to all attachments thereto and instruments incorporated therein.
References to a person are also to its permitted successors and assigns.
SECTION 13.07. Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Delaware, without
regard to the laws that might otherwise govern under applicable principles of
conflicts of laws thereof.
SECTION 13.08. Enforcement. The parties agree that irreparable damage
would occur and that the parties would not have any adequate remedy at law in
the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any Federal court located in the
State of Delaware or in Delaware state court, this being in addition to any
other remedy to which they are entitled at law or in equity. In addition, each
of the parties hereto (a) consents to submit itself to the personal jurisdiction
of any Federal court located in the State of Delaware or any Delaware state
court in the event any dispute arises out of this Agreement or any of the
transactions contemplated by this Agreement, (b) agrees that it will not attempt
to deny or defeat such personal jurisdiction by motion or other request for
leave from any such court, and (c) agrees that it will not bring any action
relating to this Agreement or any of the transactions contemplated by this
Agreement in any court other than a Federal court sitting in the State of
Delaware or a Delaware state court.
SECTION 13.09. Counterparts. This Agreement may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
84
constitute one and the same instrument. Each counterpart may consist of a number
of copies hereof each signed by less than all, but together signed by all of the
parties hereto.
SECTION 13.10. Headings. Headings of the Articles and Sections of this
Agreement are for the
85
convenience of the parties only, and shall be given no substantive or
interpretive effect whatsoever.
IN WITNESS WHEREOF, each party has caused this Agreement to be duly
executed as of the day first written above.
XXXXXXX CORPORATION,
by /S/ XXXXX X. XXXXXXXX
------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Chairman and Chief Executive Officer
PEPSICO, INC.,
by /S/ XXXXXXX X. XXXXXXXXX
------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: Vice President
HEARTLAND TERRITORIES HOLDINGS, INC.
by /S/ XXXXXXX X. XXXXXXXXX
------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: Vice President
ANNEX I
TO THE CONTRIBUTION AND MERGER AGREEMENT
Certain Definitions
As used in this Agreement, the following terms shall have the following
meanings (unless otherwise specified, section references refer to sections of
this Agreement):
"Accounting Firm" is defined in Section 12.01(a).
"Acquired Assets" means, with respect to any Merger Sub Acquired
Business (each, a "Transferred Business"):
(i) all Premises of the transferor primarily used in the operation of
the Transferred Business, in each case together with such transferor's
right, title and interest in all buildings, improvements and fixtures
thereon and all other appurtenances thereto;
(ii) all Inventory of the transferor that on the Closing Date is
located on the Premises of the transferor, and all raw materials,
work-in-process, finished goods, supplies, parts, spare parts and other
inventories of each of the transferor (including in transit, on consignment
or in the possession of any third party) on the Closing Date that is used
or held for use primarily in the operation or conduct of the Transferred
Business by such transferor;
(iii) all Personal Property of the transferor that is used or held for
use primarily in the operation or conduct of the Transferred Business by
such transferor;
(iv) all Permits of the transferor that are used or held for use
primarily in the operation or conduct of the Transferred Business by such
transferor (the "Assigned Permits");
(v) all Contracts to which the transferor is a party or by which such
transferor, or the Acquired Assets relating to such Transferred Business,
are bound or controlled that are used or held for use primarily in, or that
arise primarily out of, the operation or conduct of the Transferred
Business by such transferor (the "Assigned Contracts");
(vi) all rights in and to products sold or leased (including products
returned after the Closing and rights of rescission, replevin and
reclamation)
2
primarily in the operation or conduct of the Transferred Business;
(vii) originals of all books of account, ledgers, general, financial,
accounting and personnel records, files, invoices, customers' and
suppliers' lists, other distribution lists, billing records, sales and
promotional literature, manuals, customer and supplier correspondence (in
all cases, in any form or medium) (the "Records") of the transferor that
are used or held for use exclusively in, or that arise exclusively out of,
the conduct or operation of the Transferred Business and copies of all
Excluded Records; and
(viii) all goodwill generated by or associated with the Transferred
Business.
"Acquisition Proposal" means any proposal for an acquisition of all or
any part of the Merger Sub Acquired Businesses and/or the PGB Acquired
Businesses by any other person.
"affiliate" of any person means another person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such first person, where "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management policies of a person, whether through the ownership
of voting securities, by contract, as trustee or executor, or otherwise.
"Agreement" means the Contribution and Merger Agreement dated as of
January 25, 1999, among Xxxxxxx, PepsiCo and Merger Sub to which this Annex I is
attached.
"Applicable Period" is defined in Section 6.01(a).
"Assigned Contracts" is defined in clause (v) of the definition of
Acquired Assets.
"Assigned Permits" is defined in clause (iv) of the definition of
Acquired Assets.
"Assignment and Assumption Agreement" is defined in Section 7.11(b).
"beneficial ownership" has the meaning set forth in Rule 13d-3 under
the Exchange Act.
3
"Bottling Business" means the manufacture, distribution and sale of
beverage products.
"Bottling Contract" means any contract or agreement (i) granting a
license from any person to engage in a Bottling Business, (ii) providing for
marketing or other support or assistance from such person relating to such
Bottling Business or (iii) providing for the purchase of concentrate from such
person relating to such Bottling Business.
"Break-up Payment" is defined in Section 7.07(c).
"Certificate of Merger" is defined in Section 3.02.
"Closing" is defined in Section 1.01(a).
"Closing Date" is defined in Section 1.01(a).
"Closing Working Capital Amount" is defined in Section 12.01(a).
"Code" is defined in the preamble to this Agreement.
"Confidentiality Agreement" is defined in Section 7.03.
"Contracts" means contracts, leases, licenses, indentures, agreements,
commitments and all other legally binding arrangements, whether oral or written.
"Contributed Intercompany Indebtedness" is defined in Section 2.02(v).
"Contributing PepsiCo Subsidiary" means each of Ohio Sub, St. Louis
Sub, Opco Sub and Metro Sub.
"Contribution" is defined in the preamble to this Agreement.
"Czechco" means Pepsi-Cola CR SPOL s.r.o., a partnership organized
under the laws of the Czech Republic.
"Czechco Shares" means all of the issued and outstanding partnership
interests of Czechco.
"DGCL" is defined in Section 3.01.
4
"Discounted Net Receivables Amount" is defined in Section 12.01(b).
"Effective Time" is defined in Section 3.02.
"Employee Benefits Agreement" is defined in the preamble to this
Agreement.
"Environmental Law" means all applicable statutes, laws, ordinances,
rules, orders and regulations which are administered, interpreted or enforced by
the U.S. Environmental Protection Agency and state and local agencies with
jurisdiction over pollution or protection of the environment.
"ERISA" is defined in Section 5.01(j).
"Exchange Act" is defined in Section 5.01(d).
"Excluded Assets" means:
(i) all cash and cash equivalents, including checks or payments in
transit or collection, of any Contributing PepsiCo Subsidiary (other than
(A) the amount of cash and/or cash equivalents equal to the Discounted Net
Receivables Amount applicable to each of the Merger Sub Acquired Businesses
in accordance with Section 12.01(b) and (B)(1) cash in vending machines,
(2) cash with drivers and (3) xxxxx cash);
(ii) all accounts receivable of any Contributing PepsiCo Subsidiary;
(iii) all assets listed on Schedule A to this Agreement;
(iv) all rights, claims and credits of any Contributing PepsiCo
Subsidiary to the extent relating to any Excluded Asset or any Excluded
Liability, including any such items arising under insurance policies and
all guarantees, warranties, indemnities and similar rights in favor of any
Contributing PepsiCo Subsidiary in respect of any Excluded Asset or any
Excluded Liability;
(v) all rights of PepsiCo or any Contributing PepsiCo Subsidiary under
this Agreement and the other Transaction Documents; and
(vi) originals of all Records of PepsiCo, any Contributing PepsiCo
Subsidiary that are not
5
exclusively used or held for use in, or that do not arise exclusively out
of, the conduct or operation of the Merger Sub Acquired Businesses (the
"Excluded Records").
"Excluded Liabilities" means:
(i) any Liabilities to the extent and only to the extent relating to
the Excluded Assets;
(ii) any Liabilities in respect of trade payables of any Contributing
PepsiCo Subsidiary;
(iii) any Liabilities relating to the Transferred Individuals to the
extent specifically and expressly retained by PepsiCo or any of its
Subsidiaries as set forth in the Employee Benefits Agreement; and
(iv) any Liabilities referred to in Schedule B to this Agreement;
(v) any Liabilities for income or franchise Taxes of any of PepsiCo or
any of its Subsidiaries (or any of their predecessors);
(vi) any Liabilities for Taxes attributable to the ownership,
operation or disposition by any of PepsiCo or any of its Subsidiaries (or
any of their predecessors) of assets other than a Merger Sub Acquired
Business; and
(vii) any Liabilities for Taxes allocated to PepsiCo pursuant to
Section 7.07(a)(3).
"Excluded Records" is defined in clause (vi) of the definition of
Excluded Assets.
"FIRPTA affidavit" is defined in Section 11.02(b).
"Form S-4" is defined in Section 5.01(d).
"Form S-8" is defined in Section 5.02(c).
"GAAP" means United States generally accepted accounting principles.
"Governmental Entity" is defined in Section 5.01(d).
6
"Hazardous Material" means any waste or other substance regulated under
any Environmental Law including any hazardous substance within the meaning of
the Comprehensive Environmental Response, Compensation, and Liability Act, or
any similar Federal, state or local law.
"HSR Act" is defined in Section 5.01(d).
"HSR Approval" is defined in Section 8.01(b).
"Hungarianco" means FOVAUROSI ASVANYVIZ ES XXXX OIT ARI RESZVENYI
ARSASAG, a corporation organized under the laws of Hungary.
"Hungarianco Shares" means all of the issued and outstanding shares of
capital stock of Hungarianco owned, directly or indirectly, by PepsiCo, which
shares represent 99% of the issued and outstanding shares of capital stock of
Hungarianco.
"indemnified party" is defined in Section 10.01(d).
"indemnifying party" is defined in Section 10.01(d).
"Insured Liabilities" is defined in Section 7.18(a).
"International Master Bottling Agreement" is defined in the preamble to
this Agreement.
"Intercompany Trade Accounts" is defined in the definition of Working
Capital Amount.
"Inventory" means raw materials, work-in-process, finished goods,
supplies, parts, spare parts and other inventories.
"knowledge" of any person which is not an individual means the
knowledge of such person's executive officers after reasonable inquiry.
"Liabilities" is defined in Section 2.02.
"Liens" means all pledges, claims, liens, charges, encumbrances and
security interests of any kind or nature whatsoever.
"Losses" is defined in Section 10.01(a)(i).
7
"Marionco" means Pepsi-Cola General Bottlers of Virginia, Inc., a
Virginia corporation.
"Marionco Shares" means all of the issued and outstanding capital stock
of Marionco.
"Master Bottling Agreement" is defined in the preamble to this
Agreement.
"Master Fountain Syrup Agreement" is defined in the preamble to this
Agreement.
"Material Adverse Change" or "Material Adverse Effect" means (i) with
respect to Xxxxxxx, any change, effect, event, occurrence or state of facts that
(x) is, or is reasonably likely to be, materially adverse to the business,
financial condition or results of operations of Xxxxxxx and its Subsidiaries
taken as a whole, (y) materially impairs the ability of Xxxxxxx to perform its
obligations under this Agreement and the other Transaction Documents or (z)
prevents the consummation of any of the transactions contemplated by this
Agreement and the other Transaction Documents and (ii) with respect to the
PepsiCo Subsidiaries, any change, effect, event, occurrence or state of facts
that (x) is, or is reasonably likely to be, materially adverse to the business,
financial condition or results of operations of the PepsiCo Subsidiaries and
their Subsidiaries taken as a whole, (y) materially impairs the ability of the
PepsiCo Subsidiaries to perform their obligations under this Agreement and the
other Transaction Documents or (z) prevents the consummation of any of the
transactions contemplated by this Agreement and the other Transaction Documents
other than, in the case of clauses (i) and (ii), any change, effect, event,
occurrence or state of facts (I) that occurs as a result of any act or omission
of Xxxxxxx or PepsiCo (and/or the PepsiCo Subsidiaries) that has been previously
consented to in writing by the other party hereto or (II) relating to (A) the
United States economy or securities markets in general, (B) applicable
international and regional economies in general, (C) this Agreement, the other
Transaction Documents or the transactions contemplated hereby or thereby or the
announcement thereof, and (D) to the beverage bottling industry in general, and
not specifically relating to Xxxxxxx or the PepsiCo Subsidiaries or their
respective Subsidiaries.
"Merger" is defined in the preamble to this Agreement.
8
"Merger Consideration" is defined in Section 3.06(c).
"Merger Sub" is defined in the preamble to this Agreement.
"Merger Sub Acquired Businesses" means, collectively, the Ohio Sub
Bottling Business, the St. Louis Sub Bottling Business and the Opco Sub Bottling
Business to be acquired by Merger Sub from certain of the PepsiCo Subsidiaries
pursuant to the Contribution.
"Merger Sub Assumed Liabilities" is defined in Section 2.02.
"Merger Sub Benefit Plans" is defined in Section 5.02(h).
"Merger Sub Common Stock" is defined in the preamble to this Agreement.
"Merger Sub Repurchase" is defined in Section 7.14.
"Merger Sub Statement" is defined in Section 12.01(a).
"Merger Sub/PGB Acquired Businesses Financial Statements" is defined in
Section 5.02(d).
"Metro Sub" is defined in the preamble to this Agreement.
"Net Receivables Amount" is defined in Section 12.01(b).
"Xxxx Holdings LLC" means Xxxx Holdings LLC, a Delaware limited
liability company.
"Xxxx Holdings LLC Units" means all of the issued and outstanding
limited liability interests of Xxxx Holdings LLC.
"New Allied Brand Appointments" is defined in the preamble to this
Agreement.
"New Pepsi-Cola Bottling Appointments" is defined in the preamble to
this Agreement.
"Notice of Disagreement" is defined in Section 12.01(a).
9
"NYSE" is defined in Section 5.02(c).
"Ohio Sub" is defined in the preamble to this Agreement.
"Ohio Sub Bottling Business" means the manufacture, distribution and
sale at and from the plants (and other sites) listed in Schedule C hereto by
Ohio Sub of beverage products, including primarily PepsiCo brand soft drinks and
soft drink concentrates under licensed appointments from PepsiCo, within the
territory set forth in Schedule C hereto, including the Acquired Assets used or
held for use primarily in the conduct of such business (other than the Excluded
Assets).
"Old Bottling Agreements" means any Bottling Contract in effect prior
to the Closing between PepsiCo or any of its Subsidiaries or affiliates (other
than Xxxxxxx or PGB), on the one hand, and Xxxxxxx, PGB or any of their
Subsidiaries or affiliates (other than PepsiCo), on the other hand.
"Opco Sub" is defined in the preamble to this Agreement.
"Opco Sub Bottling Business" means the manufacture, distribution and
sale at and from the plants (and other sites) listed in Schedule D hereto by
Opco Sub of beverage products, including primarily PepsiCo brand soft drinks and
soft drink concentrates under licensed appointments from PepsiCo, within the
territory set forth in Schedule D hereto, including the Acquired Assets used or
held for use primarily in the conduct of such business (other than the Excluded
Assets).
"Outside Date" is defined in Section 9.01(b).
"PepsiCo" is defined in the preamble to this Agreement.
"PepsiCo Acquired Businesses" means, collectively, the businesses of
Princetonco, Marionco and Xxxx Holdings LLC (including, in the case of
Princetonco and Marionco, the vehicles and fleet assets, leasehold interests and
intangible assets to be acquired by PepsiCo (or its designee) from certain of
the Subsidiaries of Xxxxxxx pursuant to the Xxxxxxx Transfers) to be acquired by
PepsiCo (or its designee) from certain of the Subsidiaries of Xxxxxxx pursuant
to the Xxxxxxx Transfers.
10
"PepsiCo Acquired Businesses Financial Statements" is defined in
Section 5.01(e).
"PepsiCo Acquired Shares" means, collectively, the Princetonco Shares,
the Marionco Shares and the Xxxx Holdings LLC Shares.
"PepsiCo Benefit Plans" is defined in Section 5.02(h).
"PepsiCo Disclosure Schedule" is defined in Section 5.02.
"PepsiCo Filed SEC Documents" is defined in Section 5.02(f).
"PepsiCo Intercompany Agreements" means any Contract between or among
PepsiCo or its Subsidiaries or its affiliates to the extent relating to or
affecting any of the PepsiCo Subsidiaries, other than the Contributed
Intercompany Indebtedness and the Intercompany Trade Accounts between or among
PepsiCo or its Subsidiaries or its affiliates and any of the PepsiCo
Subsidiaries.
"PepsiCo Multiemployer Pension Plans" is defined in Section 5.02(i).
"PepsiCo Pension Plans" is defined in Section 5.02(i).
"PepsiCo Relevant Agreements" is defined in Section 5.02(c).
"PepsiCo Statement" is defined in Section 12.01(a).
"PepsiCo Subsidiaries" means, collectively, (i) Merger Sub, Czechco,
Slovackco, Hungarianco, Polandco and Poland Distributionco and (ii) each of the
Contributing PepsiCo Subsidiaries (in each case with respect to only the Merger
Sub Acquired Businesses).
"PepsiCo Transfers" is defined in the preamble to this Agreement.
"Permits" is defined in Section 5.01(m).
"Permitted Liens" means (i) mechanics', carriers', workmen's,
repairmen's and other like Liens arising or incurred in the ordinary course of
business, (ii) Liens for Taxes, assessments and other governmental charges that
are
11
not yet due and payable or that may thereafter be paid without penalty or that
are being contested in good faith by appropriate proceedings and (iii)
imperfections of title and other Liens that, individually or in the aggregate,
do not materially impair the continued operation of, in the case of Xxxxxxx, the
business of Xxxxxxx and its Subsidiaries as currently conducted, and in the case
of the PepsiCo Subsidiaries, the Merger Sub Acquired Businesses and the PGB
Acquired Businesses as currently conducted.
"person" means any individual, corporation, partnership, limited
liability company, joint venture, trust, business association or other entity.
"Personal Property" means tangible personal property (other than
Inventory) and all interests therein, including all machinery, equipment,
furniture and vehicles.
"PGB" is defined in the preamble to this Agreement.
"PGB Acquired Businesses" means, collectively, (i) the businesses of
each of Slovackco, Czechco, Hungarianco, Polandco and Poland Distributionco, in
each case to be acquired by PGB from certain of the PepsiCo Subsidiaries
pursuant to the PepsiCo Transfers, (ii) the vending machine assets to be
acquired by PGB (or its designee) from Xxxx Xxxx Leasing Company pursuant to the
PepsiCo Transfers and (iii) the vehicle and other fleet assets to be acquired by
Globe Transport, Inc. from New Bern Transport Company pursuant to the PepsiCo
Transfers.
"PGB Shares" means 32 shares of common stock, without par value, of PGB
owned by Metro Sub, which shares represent 20% of the issued and outstanding
shares of common stock of PGB.
"Poland Approvals" is defined in Section 5.01(d).
"Poland Distributionco" means PepsiCo Trading Sp. zo.o., a limited
liability company organized under the laws of Poland.
"Poland Distributionco Shares" means all of the issued and outstanding
limited liability interests of Poland Distributionco.
"Polandco" means Zrodlo Pniewy Sp. zo.o, a limited liability company
organized under the laws of Poland.
12
"Polandco Shares" means all of the 783,343 issued and outstanding
limited liability interests of Polandco owned, directly or indirectly, by
PepsiCo, which interests represent 46.696% of the issued and outstanding limited
liability interests of Polandco.
"Pre-Closing Tax Period" means any taxable period (or portion thereof)
that ends on or before the Closing Date.
"Premises" means real property, leaseholds and other interests in real
property.
"Princetonco" means Pepsi-Cola General Bottlers of Princeton, Inc., a
West Virginia corporation.
"Princetonco Shares" means all of the issued and outstanding capital
stock of Princetonco.
"Projected Working Capital Amount" means (i) with respect to any U.S.
Bottling Business, a Working Capital Amount equal to the product of (x) $.40 and
(y) the aggregate number of raw bottle and can cases sold by such Bottling
Business during the twelve-month period immediately preceding the Closing Date,
minus, in the case of the Merger Sub Acquired Businesses, the Receivables
Discount applicable to each such Merger Sub Acquired Business, and (ii) with
respect to (A) Slovackco and Czechco (taken as a whole), a Working Capital
Amount equal to the product of (x) $.14 and (y) the aggregate number of raw
bottle and can cases sold by Slovackco and Czechco during the twelve-month
period immediately preceding the Closing Date, (B) Hungarianco, a Working
Capital Amount equal to the product of (x) $(-).06 and (y) the aggregate number
of raw bottle and can cases sold by Hungarianco during the twelve-month period
immediately preceding the Closing Date, (C) Poland Distributionco, a Working
Capital Amount equal to the product of (x) $.40 and (y) the aggregate number of
raw bottle and can cases sold by Poland Distributionco during the twelve-month
period immediately preceding the Closing Date, (D) Polandco, a Working Capital
Amount equal to $(-)6,650,000 (provided that PepsiCo shall only be obligated
for, or entitled to, its pro rata portion (based on PepsiCo's pro rata ownership
interest of Polandco on the Closing Date) of any Working Capital Amount less
than, or greater than, the Projected Working Capital Amount for Polandco in
accordance with Article XII) and (E) St. Petersburgco, a Working Capital Amount
equal to the product of (x) the quotient of (1) the sum of the Working Capital
Amounts of St. Petersburgco at the end of each calendar month in 1998 divided by
12 and (2) the aggregate number of
13
raw bottle and can cases sold by St. Petersburgco during 1998 and (y) the
aggregate number of raw bottle and can cases sold by St. Petersburgco during the
twelve-month period immediately preceding the Closing Date.
"Proxy Statement/Prospectus" is defined in Section 5.01(d).
"Records" is defined in clause (vii) of the definition of Acquired
Assets.
"Receivables Discount" means, with respect to each of the Merger Sub
Acquired Businesses, an amount equal to the Net Receivables Amount less the
Discounted Net Receivables Amount applicable to such Merger Sub Acquired
Business.
"Registration Rights Agreement" is defined in the preamble to this
Agreement.
"Restraints" is defined in Section 8.01(c).
"SARs" is defined in Section 5.01(c).
"SEC" means the Securities and Exchange Commission.
"SEC Filings Side Letter" means the letter agreement dated as of the
date hereof between PepsiCo and Xxxxxxx relating to the Form S-4 and the Proxy
Statement/Prospectus.
"Securities Act" is defined in Section 5.01(e).
"Services Agreements" is defined in the preamble to this Agreement.
"Shareholder Agreement" is defined in the preamble to this agreement.
"Significant Subsidiary" means a Significant Subsidiary as defined in
Rule 1-02 of Regulation S-X of the SEC.
"Slovackco" means Pepsi-Cola SR, a corporation organized under the laws
of the Slovak Republic.
"Slovackco Shares" means all of the issued and outstanding shares of
capital stock of Slovackco.
14
"St. Louis Sub" is defined in the preamble to this Agreement.
"St. Louis Sub Bottling Business" means the manufacture, distribution
and sale at and from the plants (and other sites) listed in Schedule E hereto by
St. Louis Sub of beverage products, including primarily PepsiCo brand soft
drinks and soft drink concentrates under licensed appointments from PepsiCo,
within the territory set forth in Schedule E hereto, including the Acquired
Assets used or held for use primarily in the conduct of such business (other
than the Excluded Assets).
"St. Petersburgco" means O.O.O. Pepsi-Cola General Bottlers, a
corporation organized under the laws of the Russian Federation.
"St. Petersburgco Shares" means all of the issued and outstanding
shares of capital stock of St. Petersburgco.
"Subsidiary" or "Subsidiaries" when used with respect to any person
shall mean any other person, an amount of the voting securities, other voting
ownership or voting partnership interests of which is sufficient to elect at
least a majority of its Board of Directors or other governing body (or, if there
are no such voting interests, 50% or more of the equity interests of which) is
owned directly or indirectly by such first person.
"Superior Proposal" means any proposal made by a third party to
acquire, directly or indirectly, including pursuant to a tender offer, exchange
offer, merger, consolidation, business combination, recapitalization,
liquidation, dissolution or similar transaction, for consideration consisting of
cash and/or securities, more than 50% of the combined voting power of the shares
of Xxxxxxx Common Stock then outstanding or all or substantially all the assets
of Xxxxxxx and its subsidiaries taken together and otherwise on terms which the
Board of Directors of Xxxxxxx determines in its good faith judgment (based on
the advice of a financial advisor of nationally recognized reputation and such
other matters as the Board of Directors of Xxxxxxx deems relevant) to be more
favorable to Xxxxxxx'x stockholders than the Merger and for which financing, to
the extent required, is then committed or which, in the good faith judgment of
the Board of Directors of Xxxxxxx, is reasonably capable of being obtained by
such third party.
"Surviving Corporation" is defined in Section 3.01.
15
"Takeover Proposal" means any inquiry, proposal or offer from any
person relating to any direct or indirect acquisition or purchase of a business
that constitutes 15% or more of the net revenues, net income or the assets of
Xxxxxxx and its Subsidiaries, taken as a whole, or 15% or more of any class of
equity securities of Xxxxxxx or any of its Subsidiaries, any tender offer or
exchange offer that if consummated would result in any person beneficially
owning 15% or more of any class of equity securities of Xxxxxxx or any of its
Subsidiaries, or any merger, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction involving
Xxxxxxx or any of its Subsidiaries, other than the transactions contemplated by
this Agreement.
"Tax Return" means any return, declaration, report, claim for refund,
or information return or statement related to Taxes, including any schedule or
attachment thereto and including any amendment thereof.
"Taxes" means any Federal, state, local or foreign tax, fee or other
like assessment or charge of any kind whatsoever (including Federal income tax
and any net income, alternative or add-on minimum tax, gross income, gross
receipts, sales, use, ad valorem, value-added, transfer, franchise, profits,
license, withholding on amounts paid to or by the taxpayer, payroll, employment,
excise, severance, stamp, capital stock, occupation, property, environmental or
windfall tax, premium, custom, duty or other tax), together with any interest,
penalty addition to tax or additional amount due.
"Termination Fee" is defined in Section 7.07(b).
"Third Party Claim" is defined in Section 10.01(d).
"Transaction Documents" means this Agreement, the New Pepsi-Cola
Bottling Appointments, the New Allied Brand Appointments, the Shareholder
Agreement, the Services Agreements, the Registration Rights Agreement, the
Employee Benefits Agreement, the Xxxxxxx Transfers Employee Benefits Agreement,
the Assignment and Assumption Agreement and the SEC Filings Side Letter.
"Transferred Business" is defined in the definition of Acquired Assets.
"Transferred Individuals" has the meaning given to such term in the
Employee Benefits Agreement.
16
"Xxxxxxx Acquired Foreign Shares" means, collectively, the Slovackco
Shares, the Czechco Shares, the Hungarianco Shares, the Polandco Shares and the
Poland Distributionco Shares.
"Xxxxxxx Acquisition Agreement" is defined in Section 6.01(b).
"Xxxxxxx" is defined in the preamble to this Agreement.
"Xxxxxxx Benefit Plans" is defined in Section 5.01(i).
"Xxxxxxx Common Stock" is defined in the preamble to this Agreement.
"Xxxxxxx Disclosure Schedule" is defined in Section 5.01.
"Xxxxxxx Executives" is defined in Section 5.01(l).
"Xxxxxxx Filed SEC Documents" is defined in Section 5.01(g).
"Xxxxxxx Form 10-K" is defined in Section 5.01(b).
"Xxxxxxx Intercompany Agreements" means any Contract between or among
Xxxxxxx or its Subsidiaries or its affiliates to the extent relating to or
affecting any of the PepsiCo Acquired Businesses, other than the Intercompany
Trade Accounts between or among Xxxxxxx or its Subsidiaries or its affiliates
and any of the PepsiCo Acquired Businesses.
"Xxxxxxx Multiemployer Pension Plans" is defined in Section 5.01(j).
"Xxxxxxx Notice" is defined in Section 6.01(a).
"Xxxxxxx Pension Plans" is defined in Section 5.01(j).
"Xxxxxxx Pro Forma Financial Statements" is defined in Section 5.01(e).
"Xxxxxxx Relevant Agreements" is defined in Section 5.01(d).
"Xxxxxxx Rights" is defined in Section 5.01(c).
17
"Xxxxxxx Rights Agreement" is defined in Section 5.01(c).
"Xxxxxxx Rights Plan Amendment" is defined in Section 5.01(t).
"Xxxxxxx SEC Documents" is defined in Section 5.01(e).
"Xxxxxxx Stock Options" is defined in Section 5.01(c).
"Xxxxxxx Stock Plans" is defined in Section 5.01(c).
"Xxxxxxx Stockholder Approval" is defined in Section 5.01(d).
"Xxxxxxx Stockholders Meeting" is defined in Section 5.01(f).
"Xxxxxxx Transfers" is defined in the preamble to this Agreement.
"Xxxxxxx Transfers Employee Benefits Agreement" is defined in the
preamble to this Agreement.
"Working Capital Amount" means, with respect to any Bottling Business
on any date, current assets minus current liabilities of such Bottling Business
on such date, determined in accordance with GAAP applied on a basis consistent
with the policies used by such Bottling Business in the preparation of its
financial statements for fiscal 1997; provided, however, that (i)(A) the amount
of any short-term indebtedness for borrowed money or short-term capitalized
lease obligations shall be excluded from the calculation of current liabilities
of any Bottling Business to the extent (and only to the extent) the amount of
such short-term indebtedness for borrowed money or short-term capitalized lease
obligations reduced the purchase price attributable to such Bottling Business in
accordance with Section 4.03, (B) U.S. Tax benefits attributable to losses of
Polandco and Poland Distributionco and not available as a Tax benefit to
Polandco or Poland Distributionco shall be excluded from the calculation of
current assets of each of Polandco and Poland Distributionco, (C) short-term
intercompany trade accounts receivable and payable which arose in the ordinary
course of operations for the purchase or sale of goods and services (which are
normally eliminated in consolidation) ("Intercompany Trade Accounts") shall be
counted as current assets and current liabilities of each
18
such Bottling Business, (D) payables in respect of lease payments relating to
vehicle and other fleet assets for pre-closing periods shall be counted as
current liabilities and (E) the Contributed Intercompany Indebtedness shall be
excluded from the calculation of current liabilities of each of the Merger Sub
Acquired Businesses, (ii) for any inventory to be counted as part of the current
assets of any such Bottling Business, such inventory must be usable and saleable
in the ordinary course of business of such Bottling Business within applicable
guideline dates for shelf life for the particular product or package, must be
valued at acquisition cost or production floor cost, and must have a net
realizable value at least equal to the values at which such inventory is carried
on the balance sheets relating to such Bottling Business and (iii) for any
receivables to be counted as part of the current assets of any such Bottling
Business, such receivables must have arisen only from bona fide transactions in
the ordinary course of business of such Bottling Business, must not be in
dispute, must not be subject to any setoffs, discounts, rebates, credits,
reductions or counterclaims whatsoever, and, with reasonable collection efforts
consistent with good business practices, must be able to be fully paid within
ninety (90) days after the date each such receivable arose, without resort to
collection agencies or legal action.
