Exhibit 2.1
______________________________________________________
AMENDED AND RESTATED PURCHASE AGREEMENT
among
THE COCA-COLA COMPANY,
ATLANTIC INDUSTRIES
and
CADBURY SCHWEPPES PLC
______________________________________________________
___________________________
Dated as of December 11, 1998
___________________________
TABLE OF CONTENTS
ARTICLE 1 PURCHASE AND SALE . . . . . . . . . . . . . . . . . . 1
1.01 Purchase and Sale . . . . . . . . . . . . . . . . . . 1
1.02 Purchase Price . . . . . . . . . . . . . . . . . . . 6
1.03 Payments at Closings . . . . . . . . . . . . . . . . 8
1.04 Closing Date Financial Statements and
Certificate of Adjustments . . . . . . . . . . . . . 8
1.05 Post-Closing Adjustments . . . . . . . . . . . . . 10
1.06 Assumed Liabilities; Excluded Liabilities . . . . . 10
1.07 Method of Payment. . . . . . . . . . . . . . . . . . 11
1.08 Conveyance Documents . . . . . . . . . . . . . . . . 11
ARTICLE 2 CS REPRESENTATIONS AND WARRANTIES. . . . . . . . . . 11
2.01 Organization, Etc. . . . . . . . . . . . . . . . . . 12
2.02 Authorization; Enforceability. . . . . . . . . . . . 12
2.03 No Conflict. . . . . . . . . . . . . . . . . . . . . 13
2.04 Ownership of the Shares. . . . . . . . . . . . . . . 14
2.05 Authorized and Outstanding Stock . . . . . . . . . . 14
2.06 Transfer Claims. . . . . . . . . . . . . . . . . . . 15
2.07 Financial Statements . . . . . . . . . . . . . . . . 15
2.08 No Undisclosed Liabilities . . . . . . . . . . . . . 17
2.09 No Violation of Law; Licenses and Permits. . . . . . 17
2.10 Property . . . . . . . . . . . . . . . . . . . . . . 18
2.11 Leases . . . . . . . . . . . . . . . . . . . . . . . 19
2.12 Indebtedness for Borrowed Money. . . . . . . . . . . 19
2.13 Intellectual Property. . . . . . . . . . . . . . . . 19
2.14 Litigation and Claims. . . . . . . . . . . . . . . . 21
2.15 Employee Contracts, Union Agreements
and Benefit Plans . . . . . . . . . . . . . . . . . 22
2.16 Labor Relations . . . . . . . . . . . . . . . . . . 22
2.17 Environmental Protection . . . . . . . . . . . . . . 23
2.18 Insurance Policies . . . . . . . . . . . . . . . . . 24
2.19 Major Suppliers and Customers. . . . . . . . . . . . 24
2.20 Contracts and Commitments. . . . . . . . . . . . . . 24
2.21 Agreements in Full Force and Effect. . . . . . . . . 26
2.22 Absence of Certain Changes and Events. . . . . . . . 26
2.23 Tax Matters. . . . . . . . . . . . . . . . . . . . . 28
2.24 Accounts Receivable. . . . . . . . . . . . . . . . . 29
2.25 Product and Service Warranties . . . . . . . . . . . 29
2.26 Brokers' and Finders' Fees . . . . . . . . . . . . . 29
2.27 Transactions With Affiliates . . . . . . . . . . . . 29
2.28 Year 2000. . . . . . . . . . . . . . . . . . . . . . 30
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2.29 E.U. and U.S. Presence . . . . . . . . . . . . . . . 31
ARTICLE 3 KO REPRESENTATIONS AND WARRANTIES. . . . . . . . . . 31
3.01 Corporate Organization . . . . . . . . . . . . . . . 31
3.02 Authorization, Etc . . . . . . . . . . . . . . . . . 31
3.03 No Conflict. . . . . . . . . . . . . . . . . . . . . 32
3.04 Brokers and Finders. . . . . . . . . . . . . . . . . 32
3.05 Litigation . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE 4 COVENANTS OF THE CS PARTIES. . . . . . . . . . . . . 32
4.01 Pre-Closing Operations . . . . . . . . . . . . . . . 32
4.02 Access . . . . . . . . . . . . . . . . . . . . . . . 34
4.03 Financial Statements . . . . . . . . . . . . . . . . 34
4.04 Acquisition Proposals. . . . . . . . . . . . . . . . 34
4.05 Transfer Taxes . . . . . . . . . . . . . . . . . . . 35
4.06 Consultation . . . . . . . . . . . . . . . . . . . . 35
4.07 Transition Support . . . . . . . . . . . . . . . . . 36
4.08 Releases . . . . . . . . . . . . . . . . . . . . . . 36
4.09 Delivery of Updated Schedules and Other Documents. . 36
4.11 Accounts Receivable. . . . . . . . . . . . . . . . . 37
4.12 Collective Bargaining Agreements . . . . . . . . . . 37
4.13 Insurance Policies . . . . . . . . . . . . . . . . . 37
4.14 Transfer of DPBL Shares. . . . . . . . . . . . . . . 38
ARTICLE 5 COVENANTS OF THE PARTIES . . . . . . . . . . . . . . 38
5.01 Approvals of Third Parties; Satisfaction of
Conditions to Closing . . . . . . . . . . . . . . . 38
5.02 Confidentiality. . . . . . . . . . . . . . . . . . . 38
5.03 Trade Secrets, Confidential Information and
Noncompetition Covenants . . . . . . . . . . . . . . 40
5.04 Tax Matters. . . . . . . . . . . . . . . . . . . . . 43
5.05 Other Matters. . . . . . . . . . . . . . . . . . . . 45
5.06 Employee Matters . . . . . . . . . . . . . . . . . . 46
5.07 Bottling Rights. . . . . . . . . . . . . . . . . . . 47
5.08 No Sales to Certain Competitors. . . . . . . . . . . 48
5.09 Right of First Negotiation . . . . . . . . . . . . . 49
5.10 Certain Brand Acquisitions . . . . . . . . . . . . . 49
5.11 Australia. . . . . . . . . . . . . . . . . . . . . . 49
5.12 South Africa . . . . . . . . . . . . . . . . . . . . 50
5.13 Rose's Beverages . . . . . . . . . . . . . . . . . . 50
5.14 Mexican COBO-Tecate Facility . . . . . . . . . . . . 50
5.15 Germany. . . . . . . . . . . . . . . . . . . . . . . 50
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5.16 Syria. . . . . . . . . . . . . . . . . . . . . . . . 51
5.17 Zimbabwe . . . . . . . . . . . . . . . . . . . . . . 51
5.18 India. . . . . . . . . . . . . . . . . . . . . . . . 52
5.19 Chinese Joint Venture. . . . . . . . . . . . . . . . 52
5.20 Support Agreements; Concentrate Agreement. . . . . . 52
5.21 Facilitation Payments. . . . . . . . . . . . . . . . 53
5.22 Year 2000 Compliance . . . . . . . . . . . . . . . . 53
5.23 Environmental Compliance . . . . . . . . . . . . . . 54
5.24 Debt . . . . . . . . . . . . . . . . . . . . . . . . 54
5.25 Non-Assignable Contracts, Licenses, etc. . . . . . . 54
5.26 Replacement of CS Guarantees . . . . . . . . . . . . 55
5.27 Schweppes EEIG . . . . . . . . . . . . . . . . . . . 55
5.28 Invoicing of CC&SB for Certain Matters . . . . . . . 55
5.29 Certain Furniture and Equipment. . . . . . . . . . . 55
5.30 Trademark Cooperation . . . . . . . . . . . . . . . 55
5.31 Acquired Receivables . . . . . . . . . . . . . . . . 55
ARTICLE 6 CONDITIONS TO CS'S OBLIGATIONS . . . . . . . . . . . 56
6.01 Conditions to the Threshold Closing. . . . . . . . . 56
6.02 Conditions to Each Subsequent Closing. . . . . . . . 57
6.03 CS Country Conditions. . . . . . . . . . . . . . . . 58
ARTICLE 7 CONDITIONS TO KO'S OBLIGATIONS . . . . . . . . . . . 58
7.01 Conditions to the Threshold Closing. . . . . . . . . 58
7.02 Conditions to the Subsequent Closing . . . . . . . . 59
7.03 KO Country Conditions. . . . . . . . . . . . . . . . 61
7.04 Resolution of Certain Disputes . . . . . . . . . . . 62
ARTICLE 8 CLOSINGS . . . . . . . . . . . . . . . . . . . . . . 62
8.01 Threshold Closing Date . . . . . . . . . . . . . . . 62
8.02 Subsequent Closing Dates . . . . . . . . . . . . . . 62
8.03 Closing Requirements . . . . . . . . . . . . . . . . 62
ARTICLE 9 INDEMNIFICATION. . . . . . . . . . . . . . . . . . . 63
9.01 KO Remedies. . . . . . . . . . . . . . . . . . . . . 63
9.02 CS Remedies. . . . . . . . . . . . . . . . . . . . . 67
9.03 Survival of Representation and Warranties. . . . . . 68
9.04 Notice of Claim. . . . . . . . . . . . . . . . . . . 69
9.05 Defense. . . . . . . . . . . . . . . . . . . . . . . 69
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ARTICLE 10 TERMINATION PRIOR TO CLOSING. . . . . . . . . . . . 70
10.01 Termination . . . . . . . . . . . . . . . . . . . . 70
10.02 Termination of Obligations . . . . . . . . . . . . . 71
ARTICLE 11 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . 71
11.01 Entire Agreement . . . . . . . . . . . . . . . . . . 71
11.02 Parties Bound by Agreement; Successors
and Assigns . . . . . . . . . . . . . . . . . . . . 71
11.03 Counterparts . . . . . . . . . . . . . . . . . . . . 72
11.04 Amendment, Modification and Waiver . . . . . . . . . 72
11.05 Expenses . . . . . . . . . . . . . . . . . . . . . . 72
11.06 Notices . . . . . . . . . . . . . . . . . . . . . . 72
11.07 Further Cooperation . . . . . . . . . . . . . . . . 72
11.08 Governing Law; Construction . . . . . . . . . . . . 72
11.09 Arbitration . . . . . . . . . . . . . . . . . . . . 73
11.10 Public Announcements . . . . . . . . . . . . . . . . 74
11.11 No Third-Party Beneficiaries . . . . . . . . . . . . 74
11.12 Specific Performance . . . . . . . . . . . . . . . . 74
11.13 Severability . . . . . . . . . . . . . . . . . . . . 74
11.14 Definitions and Rules and Construction . . . . . . . 74
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AMENDED AND RESTATED PURCHASE AGREEMENT
THIS AMENDED AND RESTATED PURCHASE AGREEMENT (this
"Agreement"), dated as of December 11, 1998, among THE COCA-COLA
COMPANY, a corporation organized and existing under the laws of
Delaware, U.S.A. ("KO"), ATLANTIC INDUSTRIES, a company organized
and existing under the laws of the Cayman Islands ("AI"), and
CADBURY SCHWEPPES PLC, a company organized and existing under the
laws of England and Wales ("CS");
W I T N E S S E T H:
WHEREAS, CS desires to sell, and to cause the other CS
Parties (as defined in Section 1.01(a)) to sell, to KO or the KO
Buyers (as defined in Section 1.01(a)), and KO desires to buy, or
to cause the KO Buyers to buy, from the CS Parties, the Assets
(as defined in Section 1.01(a)), subject to the assumption by the
KO Parties of certain liabilities as specified herein;
WHEREAS, the parties desire to enter into certain other
transactions and agreements in connection with the foregoing
purchases and sales, all as further described in this Agreement;
WHEREAS, the parties believe that the transactions
contemplated by this Agreement will create mutual benefit by
enhancing the competitiveness and growth of KO- and CS-branded
beverages and the entire commercial beverages market worldwide;
and
WHEREAS, the respective Board of Directors of each party to
this Agreement has authorized such party to execute, deliver and
perform this Agreement;
NOW, THEREFORE, in consideration of the mutual
representations, warranties, covenants and agreements, and upon
the terms and subject to the conditions hereinafter set forth,
the parties do hereby agree as follows:
ARTICLE 1
PURCHASE AND SALE
1.01 PURCHASE AND SALE.
(a) Upon the terms and subject to the conditions of
this Agreement, CS agrees to, and agrees to cause the
subsidiaries of CS which own any of the assets set forth below,
substantially all of which subsidiaries are set forth on Schedule
1.01A (together with CS, the "CS Parties") to, sell at the
Applicable Closing (as defined in Section 1.01(e)), and KO agrees
to buy, or to cause AI or certain other wholly-owned (other than
for nominee shares, director qualifying shares and similar
shares) subsidiaries of KO to be determined by KO (collectively
with AI, the "KO Buyers," and together with KO, the "KO Parties")
to buy, from the CS Parties at the Applicable Closing:
(i) good, valid and marketable right, title and
interest, free and clear of any Security Interests (as defined
in Section 2.04(a)), in and to all of the issued and outstanding
shares of capital stock (the "Shares") of the company set forth
on Schedule 1.01(a)(i) (the "Purchased Company");
(ii) all right, title and interest of CS and its
Affiliates (as defined below) in and to all of the Owned
Trademarks (as defined in Section 2.13(a)) to the extent not
otherwise acquired pursuant to Section 1.01(a)(i) above (the
"Directly Acquired Trademarks"), including the goodwill
associated with the Directly Acquired Trademarks and all
applications and common law rights related thereto and all rights
to xxx and recover from third parties damages for past, present
and future infringements or dilution of or any other damages or
injury to the Directly Acquired Trademarks (the "Related Rights");
(iii) all right, title and interest of CS and its
Affiliates in and to all other assets not included in Sections
1.01(a)(i) and (ii) above, wherever located, used by the CS
Parties in connection with and primarily related to the beverages
business of CS and its Affiliates (outside of the United States,
South Africa, Australia and France) or otherwise used primarily
in connection with the Owned Trademarks, including, without
limitation, all tangible and intangible assets owned by the CS
Parties and currently employed for the production of concentrates
and syrups (including concentrate/juice production plants in Athy,
Ireland (to the extent not otherwise acquired pursuant to Section
1.01(a)(i) above) and Carcagente, Spain and all related assets
and equipment, including billing functions, accounting and
information management functions and other support services (the
concentrate/juice production plants in Athy, Ireland (together
with all related assets and equipment, the "Athy Plant") and
Carcagente, Spain (together with all related assets and equipment,
the "Carcagente Plant") and all such related assets and equipment,
including such billing functions, accounting and information
management functions and other support services being referred to
herein collectively as the "Plants")) in the beverages business
of CS and its Affiliates (outside of the United States, South
Africa, Australia and France) or otherwise primarily used in
connection with the Owned Trademarks; the right to use all Know-
how (as defined below); any and all other intellectual property
or proprietary rights owned by CS or any of its Affiliates
contained in advertising, promotional material, packaging
material or other material used in connection with the sale,
offer of sale or distribution of products bearing or embodying
the Owned Trademarks or Licensed Rights (as defined in Section
2.13(a)) or otherwise used primarily in, or held primarily for
the benefit of, the beverages business of CS and its Affiliates
outside the United States, South Africa, Australia and France;
any trademark(s) owned by the CS Parties, the Purchased Company
or the Subsidiaries (as defined in Section 2.01(b)) that are
identical to or confusingly similar to any Owned Trademark in
the same country and for substantially similar goods as such
Owned Trademark ("Omitted Trademarks"); all Contracts (as defined
in Section 2.20(a)), to the extent assignable, to which CS or any
Affiliate of CS is a party outside of the United States, South
Africa, Australia and France primarily relating to any of the
foregoing or any of the Owned Trademarks, including all bottling
and distribution agreements relating thereto; any other assets
which would reasonably be expected to be included in the
transactions contemplated by this Agreement and the Transaction
Documents; and including without limitation all of the assets and
rights set forth on Schedule 1.01(a)(iii) (collectively, the
"Other Assets"), but specifically excluding the Excluded Assets
(as
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defined below).
The Shares and the assets of the Purchased Company and the
Subsidiaries (as defined in Section 2.01(b)), the Directly
Acquired Trademarks, the Related Rights and the Other Assets are
referred to herein as the "Assets." "Know-how" shall include all
proprietary formulae, ingredient specifications, bottling
formulae, packaging specifications and other proprietary
technical information and knowledge owned by CS or its Affiliates
or the Purchased Company or the Subsidiaries used in connection
with the beverages business of CS and its Affiliates outside of
the United States, South Africa, Australia and France.
Notwithstanding the foregoing, it is expressly understood
that the term "Assets" shall not include the following "Excluded
Assets" except to the extent set forth on Schedules 1.01(a)(i) or
(iii) or Schedule 2.13(a)(i): (1) the technical facilities and
employees of CS located in Trumbull, Connecticut, U.S.A.; (2) all
Know-how in the Excluded Countries (as defined in Section
1.01(d)); (3) any Assets (other than Owned Trademarks) owned by
the Purchased Businesses (as defined in Section 1.06) in any
Excluded Country and not primarily related to the Purchased
Businesses acquired by the KO Buyers, until such time as an
Applicable Closing occurs with respect to such Purchased
Businesses; (4) all trademarks, trademark registrations and
trademark applications in the United States, South Africa and
France and all other assets and properties related to the
beverages business of CS and its Affiliates in the United States,
South Africa, France and Australia (and not primarily related to
the beverages business of CS and its Affiliates outside the
United States, South Africa, Australia and France) other than the
Assumed Lease (as defined in Section 1.06(a)(iii)) with respect
to certain property in Florida, U.S.A.; (5) the company owned
bottling operations of CS in Belgium, Mexico (the "Mexican COBO"),
Spain, Portugal and Zambia and CS's equity interest in a bottling
company in Zimbabwe (the "XX XXXX Operations") and the German
Joint Venture (as defined in Section 5.15); (6) all rights to the
"Concentrate Surcharge" as defined under and paid pursuant to
Clause 4.4 of each of the Licensor Agreements (as defined in the
Letter (the "Brands Letter"), dated June 3, 1996, as restated and
re-executed on February 10, 1997, between CS and Coca-Cola
Enterprises Inc.), as such Licensor Agreements may have been
amended; (7) any cash and cash equivalents of the Purchased
Businesses as of the Applicable Closing Date; (8) all trademarks,
trademark registrations and trademark applications owned by the
Purchased Company or the Subsidiaries that are not Owned
Trademarks or Omitted Trademarks and all other intellectual
property or proprietary rights owned by the Purchased Company or
the Subsidiaries contained in advertising, promotional material,
packaging material or other material of the Purchased Company or
the Subsidiaries which does not embody the Owned Trademarks or
Omitted Trademarks; and (9) any assets and properties of the
Purchased Company and the Subsidiaries that are not related to
the beverages business of CS and its Affiliates outside the
United States, South Africa, Australia and France.
KO and CS recognize that trademarks in Australia have not
been included in the Owned Trademarks. After the date of this
Agreement, KO and CS shall negotiate in good faith, in connection
with the negotiations under Section 5.11, (i) which trademarks in
Australia will be included in the Owned Trademarks and
transferred to the KO Parties at the Threshold Closing and (ii)
the representations, warranties and covenants of the parties
relating thereto. Such
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Australian trademarks which are identical or substantially
identical to those registrations and applications included in the
Owned Trademarks shall be transferred to the KO Buyers at the
Threshold Closing, whether or not such an agreement has been
reached.
(b) The parties recognize that the transactions
contemplated by this Agreement and the Transaction Documents (as
defined in Section 3.02) provide for the transfer from the CS
Parties to the KO Buyers of Assets and Assumed Liabilities (as
defined in Section 1.06(a)) in numerous countries throughout the
world and that the conditions to the closing of the transactions
contemplated by this Agreement and the Transaction Documents
specified in Articles 6 and 7 may be satisfied in certain
countries before such conditions are satisfied in other countries.
Accordingly, the parties are prepared, subject to the terms and
conditions set forth in this Section 1.01 and in the remainder of
this Agreement (including the adjustments to the Purchase Price
described in Section 1.02), to consummate the transactions
contemplated by this Agreement and the Transaction Documents with
respect to the Purchased Businesses in certain countries prior to
the consummation of the transactions contemplated by this
Agreement and the Transaction Documents with respect to the
Purchased Businesses in other countries. However, the parties
recognize and understand that the transactions contemplated by
this Agreement and the Transaction Documents in any event must
include the Purchased Businesses in certain countries in order
for KO to receive sufficient benefit from the transactions
contemplated hereby and thereby, even taking into account the
Purchase Price adjustments described in Section 1.02.
Accordingly, it is expressly agreed that none of the transactions
contemplated by this Agreement and the Transaction Documents
shall be consummated unless the conditions to closing specified
in Articles 6 and 7 have been satisfied or waived by the
appropriate parties with respect to the Purchased Businesses in
the countries set forth on Schedule 1.01(b) (the "Threshold
Condition").
(c) If the Threshold Condition is satisfied, then at
the closing of the transactions contemplated by this Agreement
and the Transaction Documents with respect to the Purchased
Businesses in the countries sufficient to satisfy the Threshold
Condition (the "Threshold Closing"), the parties shall consummate
the transactions contemplated by this Agreement and the
Transaction Documents in such countries and shall consummate the
transactions contemplated by this Agreement and the Transaction
Documents with respect to the Purchased Businesses in each other
country with respect to which the conditions to closing specified
in Articles 6 and 7 have been satisfied or waived by the
appropriate parties. The date of the Threshold Closing is
referred to herein as the "Threshold Closing Date."
Notwithstanding anything in this Agreement to the contrary, CS
shall cause the CS Parties to transfer each of the Plants to the
KO Buyers at the Threshold Closing even if the remaining
Purchased Businesses in Ireland and Spain cannot be transferred
at the Threshold Closing because the conditions to closing with
respect thereto have not been satisfied.
(d) If the Threshold Condition is satisfied but not
all of the Purchased Businesses in all countries are transferred
to the KO Buyers at the Threshold Closing, then unless otherwise
prohibited by law, at the Threshold Closing the CS Parties shall
assign, transfer and deliver to the KO Buyers all right, title
and interest of the CS Parties in and to all the Owned Trademarks
in all countries throughout the world (excluding the United
States, South Africa and
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France) (the countries in which the KO Buyers are unable to
purchase the Purchased Businesses being referred to herein as the
"Excluded Countries"), even if KO is unable to purchase the
Purchased Businesses in any such country. In such event, CS or a
subsidiary of CS and KO or a subsidiary of KO shall enter into an
exclusive royalty-free, freely transferable license agreement (an
"Excluded Country License Agreement"), with a right to sublicense,
in form and substance reasonably satisfactory to the parties
pursuant to which KO or such subsidiary will grant to CS or such
subsidiary (and any transferee of CS or such subsidiary) the
right to use in perpetuity such Owned Trademarks in the Excluded
Countries or until such time as KO purchases the Assets related
to such Owned Trademarks in any such Excluded Country. Such
Excluded Country License Agreement shall include, without
limitation, terms providing CS with brand extension and rights
to new packaging, and brands, trademark, trade name or similar
rights connected or associated with such Owned Trademarks. In
the case of Owned Trademarks owned by the Purchased Company or a
Subsidiary in the Excluded Countries, the Purchased Company or
Subsidiary shall prior to the Threshold Closing (i) if not
prohibited by law, retain such Owned Trademarks, in which case
such Purchased Company or Subsidiary shall enter into an Excluded
Country License Agreement with CS or a wholly owned subsidiary of
CS with respect to such Owned Trademarks or (ii) if the retention
of such Owned Trademarks would be prohibited by law, transfer to
CS or a wholly owned subsidiary of CS for fair market value all
of its right, title and interest in such Owned Trademarks. If
the KO Buyers shall subsequently purchase the Purchased Businesses
in any Excluded Country pursuant to this Article 1 at a Subsequent
Closing, the value of such Purchased Businesses shall be as set
forth on Schedule 1.02(b)-1 as if such businesses continued to own
the Owned Trademarks and related rights in such country.
(e) Following the Threshold Closing and for a period
ending on the last business day of the first quarterly period
(i.e., the last business day on or prior to March 31, June 30,
September 30 or December 31) ending following the fifth
anniversary of the Threshold Closing Date (the "Subsequent
Closing Expiration Date"), as the conditions to the closing of
the transactions contemplated by this Agreement and the
Transaction Documents specified in Articles 6 and 7 with respect
to the Purchased Businesses in a country become capable of being
satisfied (or are waived by the appropriate parties), the parties
shall consummate the transactions contemplated by this Agreement
and the Transaction Documents associated with such Purchased
Businesses in such country on the last business day of the first
quarterly period (i.e., the last business day on or prior to
March 31, June 30, September 30 or December 31) following the
satisfaction of such conditions and such other date as may be
agreed by the parties; provided, however, that, except for any
Applicable Closing on the Subsequent Closing Expiration Date, no
such Applicable Closing shall occur until the passage of at least
thirty days following satisfaction of such conditions. Each such
closing is referred to herein as a "Subsequent Closing," and the
Threshold Closing and each Subsequent Closing are referred to
herein individually, as the context may require, as an
"Applicable Closing." The date of a Subsequent Closing is
referred to herein as a "Subsequent Closing Date," and the date
of an Applicable Closing is referred to herein, as the context
may require, as an "Applicable Closing Date."
(f) Notwithstanding the foregoing, KO shall determine
whether the property listed in item 9 (collectively, the "Malvern
Facility") on Schedule 1.01(a)(iii) will be transferred to KO
(and whether the Assumed Lease on Schedule 1.06(a)(iii) relating
to the Malvern Facility
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will be assumed by KO) at the Threshold Closing or at a Subsequent
Closing. The parties agree that the properties listed in such
items 9(a) and 9(b) must be transferred to the KO Parties at the
same time.
1.02 PURCHASE PRICE.
(a) Subject to Section 1.02(b), the aggregate purchase
price (the "Purchase Price") for the Purchased Businesses shall
be (i) cash in an amount equal to (A) U.S.$1,720,000,000 minus
(B) the Assumed Debt (as defined in Section 5.24), excluding any
Assumed Debt included in the calculation of the Working Capital
Adjustment, plus (C) the Working Capital Adjustment (which may be
positive or negative), plus (D) cash on hand of the Purchased
Company and the Subsidiaries (collectively, the "Cash Portion"),
and (ii) an interest-free registered note substantially in the
form of Exhibit 1.02 issued by KO, AI or another KO Buyer (which
if so issued by AI or another KO Buyer shall be guaranteed by KO)
to the CS Party designated by CS on the Threshold Closing Date in
the principal amount of U.S.$180,000,000 and payable on the tenth
anniversary of the Threshold Closing Date (the "Note").
(b) If the Threshold Condition is satisfied but not
all of the Purchased Businesses are transferred to the KO Buyers
at the Threshold Closing, then the Purchase Price to be paid at
the Threshold Closing shall be reduced (first by reducing the
Cash Portion of the Purchase Price and then next by reducing the
principal amount of the Note) on a country by country basis as
provided in Schedule 1.02(b)-1 by reducing the Purchase Price by
the amount specified in Schedule 1.02(b)-1 with respect to each
country in respect of which all of the Purchased Businesses are
not transferred. If the Threshold Condition is satisfied but the
conditions to closing specified in Articles 6 and 7 shall not
have been satisfied in any of the countries set forth on Schedule
1.02(b)-2, then the Purchase Price payable at the Threshold
Closing shall be reduced by an amount equal to (i) 130% of the
amount specified in Schedule 1.02(b)-1 as the agreed upon value
of such country in the case of the countries set forth on Schedule
1.02(b)-3 and (ii) 120% of the amount specified in Schedule
1.02(b)-1 as the agreed upon value of such country in the case of
the countries set forth on Schedule 1.02(b)-4.
(c) The amount of the Purchase Price to be paid at a
Subsequent Closing in a given country shall equal (i) (A) the
amounts corresponding to the Purchased Businesses being purchased
at such Subsequent Closing as provided in Schedule 1.02(b)-1,
multiplied by (B) (I) 100%, if the Subsequent Closing occurs on
or prior to the third anniversary of the Threshold Closing, (II)
103%, if the Subsequent Closing occurs following the third
anniversary of the Threshold Closing but on or prior to the
fourth anniversary of the Threshold Closing, or (III) 106% if the
Subsequent Closing occurs following the fourth anniversary of the
Threshold Closing, minus (ii) Assumed Debt, if applicable, with
respect to such Purchased Businesses (except for any Assumed Debt
included in the calculation of the Working Capital Adjustment)
plus (iii) the Working Capital Adjustment with respect to such
Purchased Businesses (which may be either positive or negative),
plus (D) cash and cash equivalents on hand of any of the
Purchased Company or the Subsidiaries, if any, being transferred
at such Subsequent Closing, if the Purchased Company and the
Subsidiaries have not been previously transferred. If there is a
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Subsequent Closing in any of the countries listed on Schedule
1.02(c)-1 the amounts in clause (i) above with respect to such
Purchased Businesses in such country shall equal 30% of the
amount specified in Schedule 1.02(b)-1 as the agreed upon value
of such country plus the amount determined by clause (i) for
such country. Likewise, if there is a Subsequent Closing in any
of the countries listed on Schedule 1.02(c)-2, the amounts in
clause (i) above with respect to such Purchased Businesses in
such country shall equal 20% of the amount specified in Schedule
1.02(b)-1 as the agreed upon value of such country plus the
amount determined by clause (i) for such country. With respect
to any country not listed specifically on Schedule 1.02(b)-1, the
amount corresponding to such country for purposes of the Purchase
Price shall be equal to (x) the total value attributed to the
group in which such country is a member, multiplied by (y) a
fraction, the numerator of which shall be the volume of
carbonated soft drink beverages sold during fiscal year 1997 by
CS in such country, and the denominator of which shall be the
volume of carbonated soft drink beverages sold during fiscal year
1997 by CS with respect to the entire group in which such country
is a member. Schedule 1.02(c)-3 indicates to which group each
country that is not specifically identified on Schedule 1.02(b)-1
belongs.
(d) As used herein, the term "Debt" shall mean the
current and long-term portions of any liabilities or obligations
of the Purchased Businesses or related to the Assets that would
be reflected as indebtedness for borrowed money on a balance
sheet prepared in accordance with United Kingdom generally
accepted accounting principles ("UK GAAP"), including, without
limitation, (i) any obligations for borrowed money of the
Purchased Businesses or relating to any of the Assets, and (ii)
all obligations of the Purchased Businesses or relating to any
of the Assets evidenced by bonds, debentures, notes or other
similar instruments.
(e) As used herein, the phrase "Working Capital
Adjustment" shall mean an amount (converted to U.S. dollars based
on the closing exchange rate on the date of the Applicable
Closing), whether positive or negative, equal to (A) (i) the sum
of the line items "Stocks," "Trade/Other Debtors" and
"Intercompany Current Accounts" (if positive), of the Carcagente
Plant, as defined in accordance with the CS Group Hyperion
Reporting System (the "CS Hyperion Reporting System") in each
case as determined in accordance with UK GAAP on a basis
consistent with past practice, minus (ii) the sum of the line
items "Trade/Other Creditors" and the absolute value of
"Intercompany Current Accounts" (if negative) as defined in
accordance with the CS Hyperion Reporting System, in each case as
determined in accordance with UK GAAP on a basis consistent with
past practice, minus (iii) 2,800,000 British pounds; plus (B) (i) the sum
of the line items "Stocks," "Trade/Other Debtors" and "Intercompany
Current Accounts" (if positive) of the Athy Plant, as defined in
accordance with the CS Hyperion Reporting System, in each case as
determined in accordance with UK GAAP on a basis consistent with
past practice, minus (ii) the sum of "Trade/Other Creditors" and
the absolute value of "Intercompany Current Accounts" (if
negative), in each case as determined in accordance with UK GAAP
on a basis consistent with past practice, minus (iii) 2,000,000
British pounds. For purposes of the foregoing, the working
capital of the Athy Plant shall be determined based upon the
principles applied in the CS Hyperion Reporting System as
reflected in the Plant Balance Sheet relating to the Athy Plant,
and specifically shall not include any working capital of the
Purchased Company and Subsidiaries other than that of the Athy Plant.
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1.03 PAYMENTS AT CLOSINGS.
(a) Upon the terms and subject to the conditions of
this Agreement, on the Applicable Closing Date, KO shall, or
shall cause the KO Buyers to, pay to the CS Parties the
Preliminary Purchase Price (or portion thereof) as determined in
accordance with Section 1.03(b).
(b) Not later than seven business days prior to each
Applicable Closing Date, the CS Parties shall prepare and deliver
to the KO Buyers an estimate of the Assumed Debt, the Working
Capital Adjustment (itemized in reasonable detail on an
obligation by obligation and item by item basis) and cash and
cash equivalents of the Purchased Company and the Subsidiaries as
of the close of business on the Applicable Closing Date, and a
calculation of the estimated Purchase Price (or portion thereof)
(the "Preliminary Purchase Price") to be paid at the Applicable
Closing based on such Assumed Debt, Working Capital Adjustment,
cash and cash equivalents, and the Purchased Businesses being
purchased at such Applicable Closing. The calculations of the
Assumed Debt, Working Capital Adjustment, cash and cash
equivalents and the Preliminary Purchase Price shall be
accompanied by a certificate of the chief financial officer of
each of the CS Parties involved in the Applicable Closing to the
effect that such calculations represent a good faith effort
accurately to determine such items in a manner consistent with
the methods to be used in preparing the Applicable Closing Date
Financial Statements.
1.04 CLOSING DATE FINANCIAL STATEMENTS AND CERTIFICATE OF
ADJUSTMENTS.
(a) As soon as practicable after each Applicable
Closing Date, the KO Buyers will prepare balance sheets of the
Purchased Businesses acquired at such Applicable Closing, which
balance sheets shall be prepared as of the close of business on
the Applicable Closing Date and income statements of the
Purchased Businesses so acquired for the periods from January 4,
1998 through January 2, 1999 and from January 3, 1999 through the
Applicable Closing Date. Such balance sheets and income
statements shall be prepared in accordance with UK GAAP,
consistently applied by the Purchased Businesses so acquired in
relation to the Financial Statements (as defined in Section
2.07(a)), such that such balance sheets and income statements
give a true and fair view of the financial position and results
of operations of the Purchased Businesses so acquired at the date
of such balance sheets and income statements and for the period
then ended in conformity with UK GAAP, consistently applied by
the Purchased Businesses so acquired in relation to the Financial
Statements. Such balance sheets and income statements are
referred to herein respectively as the "Applicable Closing Date
Balance Sheets" and the "Applicable Closing Date Income
Statements" and are referred to herein collectively as the
"Applicable Closing Date Financial Statements."
(b) The Applicable Closing Date Financial Statements
shall be delivered by the KO Buyers and the accountants
designated by the KO Buyers (the "KO Accountants") to the CS
Parties as promptly after such Applicable Closing Date as
practicable but in no event later than 120 days following the
Applicable Closing Date. During the preparation of the
Applicable Closing Date Financial Statements (and during the
period of time contemplated by this Section
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1.04(b) and Section 1.04(c)), KO shall cause KO's Accountants to
keep CS's independent accountants ("CS's Accountants") reasonably
informed of the information being used to prepare the Applicable
Closing Date Financial Statements and shall provide CS's
Accountants with reasonable access to all relevant materials,
including without limitation all work papers of KO's Accountants
and access to the books and documents of the Purchased
Businesses. The Applicable Closing Date Financial Statements
shall be accompanied by a statement signed by the chief financial
officer of KO (the "Certificate of Adjustments") containing a
calculation of the Assumed Debt, the Working Capital Adjustment
and cash and cash equivalents of the Purchased Company and the
Subsidiaries with respect to the Purchased Businesses so acquired
as of the Applicable Closing Date and a calculation of the
Purchase Price based on such Assumed Debt and Working Capital
Adjustment (the "Final Purchase Price"). The determination of
the Assumed Debt, the Working Capital Adjustment and cash and
cash equivalents of the Purchased Company and the Subsidiaries
as of the Applicable Closing Date and the Final Purchase Price as
calculated by the KO Buyers shall be binding on the CS Parties if
CS has not delivered written notice (the "Objection Notice") of
objection to the Applicable Closing Date Financial Statements
and/or the Certificate of Adjustments to the KO Buyers within 30
business days following the receipt by the CS Parties of the
Applicable Closing Date Financial Statements and the Certificate
of Adjustments.
(c) CS shall, and shall cause the CS Parties to,
provide the KO Parties and the KO Accountants with such
management letters, certificates, representations and other
documents as in the reasonable judgment of the KO Parties and
the KO Accountants are necessary in order to make the statements
contained in the Certificate of Adjustments or to permit the KO
Accountants to render an opinion that the Applicable Closing Date
Financial Statements give a true and fair view of the financial
position and results of operations of the Purchased Businesses so
acquired at the date of such balance sheets and for the periods
then ended in conformity with UK GAAP, consistently applied by
the Purchased Businesses in relation to the Financial Statements.
Any Objection Notice shall state in reasonable detail the items
and calculations objected to, and the KO Parties, the CS Parties
and their respective accountants will seek in good faith, for a
period of 30 business days following delivery of any Objection
Notice, to resolve promptly the matters set forth in the
Objection Notice. If the parties are unable to resolve such
differences during such 30 business day period, the parties will
submit the matter for the review of Deloitte & Touche or such
other internationally recognized public accounting firm as may be
mutually agreed to by KO and CS (the "Review Accounting Firm"),
and the review by the Review Accounting Firm shall be limited
solely to such items and calculations as were addressed in the
Objection Notice and have not been resolved by the parties.
The parties shall cause the Review Accounting Firm to review as
promptly as practicable, subject to the limitations of the
previous sentence, the preparation of the Applicable Closing Date
Financial Statements and Certificate of Adjustments and the
calculation of the Final Purchase Price set forth therein and to
make, subject to the limitations of the previous sentence, such
corrections thereto as it deems appropriate consistent with the
terms of this Agreement. The Review Accounting Firm shall issue
a written report of its review, setting forth in reasonable
detail its calculation of the Final Purchase Price. The
determination of the Final Purchase Price as calculated by the
Review Accounting Firm shall be conclusive and binding on the KO
Parties, the CS Parties and the Purchased Businesses.
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(d) The fees and expenses of the accountants to the
CS Parties for the services referred to herein shall be paid for
by the CS Parties. The fees and expenses of the KO Accountants
shall be paid by the KO Parties. If differences are submitted
to the Review Accounting Firm, its fees and expenses shall be
shared equally by the CS Parties, on the one hand, and the KO
Parties, on the other.
1.05 POST-CLOSING ADJUSTMENTS. On or before the date that
is ten business days following the date of the final
determination of the Final Purchase Price in accordance with
Section 1.04:
(a) If the Preliminary Purchase Price is less than the
Final Purchase Price, the KO Buyers shall pay to the CS Parties
an amount in cash equal to the difference, together with interest
on such amount for the period from the Applicable Closing Date to
the date of such payment at a rate equal to the United States Fed
Funds Rate, as from time to time in effect and as calculated
based upon a 360-day year (the "Rate").
(b) If the Preliminary Purchase Price is greater than
the Final Purchase Price, CS shall cause the CS Parties to pay to
the KO Buyers an amount in cash equal to such difference,
together with interest on such amount for the period from the
Applicable Closing Date to the date of such payment at a rate
equal to the Rate.
1.06 ASSUMED LIABILITIES; EXCLUDED LIABILITIES
(a) The KO Buyers shall purchase the Assets (including
the Purchased Company and the Subsidiaries) free and clear of any
liabilities or obligations whatsoever, except for the following
(the "Assumed Liabilities " and, together with the Assets, the
"Purchased Businesses"):
(i) all liabilities relating to the Plants, but
only to the extent such liabilities are both (A) reflected and
adequately reserved against in the balance sheets of the Plants
as of the Threshold Closing as prepared in accordance with
Section 1.04, and (B) have been incurred in the ordinary course
of the business of the Plants and consistent with past practices
and are consistent in all material respects in nature and amount
with the liabilities reflected and adequately reserved against in
the balance sheets of the Plants included as Schedule 1.06(a)(i)
(the "Plant Balance Sheets");
(ii) all liabilities and obligations under (A) the
bottling and distribution agreements set forth on Schedule 2.20(c)
(the "Bottling and Distribution Agreements"), including any
marketing commitments with respect thereto (other than the
Supplemental Contributions (as defined in Section 9.01(a)(ix)),
and (B) any Contracts relating to the Plants, in each case of
clauses (A) and (B) in respect only of periods after the
Applicable Closing, and in addition in the case of marketing
commitments and Contracts relating to the Plants only to the
extent entered into in the ordinary course of business consistent
with past practice or disclosed on Schedule 1.06(a)(ii);
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(iii) all liabilities and obligations in respect
only of periods after the Applicable Closing under the real
property lease agreements set forth on Schedule 1.06(a)(iii)
(the "Assumed Leases");
(iv) any Assumed Debt, to the extent included in
the calculation of the Final Purchase Price;
(v) all liabilities and obligations in respect
only of periods after the Applicable Closing under any furniture
or equipment leases relating to the beverages business of CS and
its Affiliates outside the United States, but only to the extent
KO elects to assume any such liabilities or obligations under
Section 5.29; and
(vi) all liabilities and obligations to the extent
specifically provided to be assumed by KO in Sections 5.06 and
5.31(a).
(b) Except as set forth in Section 1.06(a) or Section
9.02(a)(v), the KO Buyers shall not be liable for or responsible
for any liabilities or obligations whatsoever in respect of any
events, circumstances, conditions or facts prior to the Applicable
Closing Date of any of the Purchased Businesses or relating to any
of the Assets or CS's beverages businesses or other businesses,
whether accrued, absolute, contingent, known, unknown or otherwise
(the "Excluded Liabilities"). CS shall be responsible for, shall
assume and shall retain all such Excluded Liabilities (whether or
not any such Excluded Liabilities are liabilities or obligations
of the Purchased Company or the Subsidiaries).
1.07 METHOD OF PAYMENT. All payments from one party to
another under this Agreement shall be made in U.S. dollars by
wire transfer of immediately available funds to such account as
may be reasonably designated by the party to receive such
payments.
1.08 CONVEYANCE DOCUMENTS. At each Applicable Closing, CS
shall, and shall cause the other CS Parties to, enter into
conveyance documents in such form as may be reasonably requested
by KO and the KO Buyers (the "Conveyance Documents"), which
documents will, among other things, provide for the valid and
effective transfer of title in and to the Assets to the KO Buyers
to be acquired at such Applicable Closing, and the assumption or
retention by the CS Parties of the Excluded Liabilities. In
addition, at each Applicable Closing, KO shall, or shall cause
the other KO Buyers to, enter into assumption documents in such
form as may be reasonably requested by the CS Parties (the
"Assumption Documents"), which documents will provide for the
assumption by the KO Buyers of the Assumed Liabilities.
ARTICLE 2
CS REPRESENTATIONS AND WARRANTIES
CS represents and warrants to KO as of the date hereof and
as of each Applicable Closing Date (with respect to the Purchased
Businesses being transferred as of such Applicable Closing Date)
that:
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2.01 ORGANIZATION, ETC.
(a) Each of the CS Parties and the Purchased Company
is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization. The Purchased
Company has all requisite power and authority, corporate or
otherwise, to carry on and conduct its business in all material
respects and to own or lease its properties and assets, and is
duly qualified and in good standing in each jurisdiction in which
the conduct of its business or the ownership of its properties
and assets requires it to be so qualified.
(b) Schedule 2.01(b) sets forth a correct and complete
list of each corporation, association, subsidiary, partnership,
limited liability company or other entity of which the Purchased
Company owns or controls, directly or indirectly, 20% or more of
the outstanding equity interests (such entities are hereinafter
referred to as "Subsidiaries"). Except as set forth in Schedule
2.01(b), there is no corporation, association, subsidiary,
partnership, limited liability company or other entity of which
the Purchased Company owns or controls, directly or indirectly,
any outstanding equity interests. The Purchased Company owns,
directly or indirectly, all of the equity interests of each
Subsidiary, free and clear of any Security Interests. All of
the outstanding capital stock of each Subsidiary has been duly
authorized and is validly issued, fully paid and nonassessable,
and not subject to any preemptive rights. There are no voting
trusts or other agreements or understandings with respect to the
voting of capital stock or other equity interests of any
Subsidiary. Each Subsidiary is duly organized, validly existing
and in good standing under the laws of its jurisdiction of
incorporation, and has the power and authority necessary for it
to own or lease its properties and assets and to carry on its
business in all material respects as it is now being conducted.
Each 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.
(c) CS has made available to KO complete, true and
correct copies of the charter documents and bylaws of CS, the
Purchased Company and the Subsidiaries. The minutes of directors'
and shareholders' meetings and the stock records of the Purchased
Company and the Subsidiaries that have been made available to KO
are in all material respects the complete, true and correct
records of directors' and shareholders' meetings and stock
issuances through and including the date of this Agreement and
constitute all the minutes and stock records in existence.
(d) The officers and directors of the Purchased
Company and the Subsidiaries as of the date of this Agreement
are listed in Schedule 2.01(d).
2.02 AUTHORIZATION; ENFORCEABILITY. CS has all requisite
corporate power and authority to execute and deliver this
Agreement, and CS and each of the other CS Parties shall, at the
time of execution and delivery of such documents at each
Applicable Closing, have all requisite corporate power and
authority to execute and deliver the other agreements to be
entered into by any of such parties pursuant to this Agreement
(the "Seller Transaction Documents") and to carry out their
respective obligations with respect to the transactions
contemplated hereby and thereby. The execution and delivery of
this Agreement and the Seller Transaction Documents by
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each of the CS Parties which is a party thereto and the
consummation of the transactions contemplated hereby and thereby
have been, or in the case of the CS Parties other than CS will be
at the time of execution and delivery of such documents, duly
authorized by all necessary corporate action on the part of each
such party. This Agreement has been (and the other Seller
Transaction Documents will be at the Threshold Closing or at a
Subsequent Closing, as applicable) duly and validly executed and
delivered by each of the CS Parties which is a party thereto, and
(assuming due authorization, execution and delivery by the KO
Parties of this Agreement and the Transaction Documents to which
they are a party) this Agreement constitutes (and each of the
other Seller Transaction Documents will constitute at the
Threshold Closing or at a Subsequent Closing, as applicable) a
valid and binding agreement of each such party enforceable
against it in accordance with its terms.
2.03 NO CONFLICT.
(a) Except as may be necessary as a result of any
facts or circumstances relating solely to the KO Parties, the
execution and delivery of this Agreement and the Seller
Transaction Documents by each of the CS Parties which is a party
thereto, the consummation of the transactions contemplated hereby
and thereby by each of the CS Parties which is a party thereto,
and the performance of the covenants and agreements of each of
the CS Parties contained herein and therein will not, with or
without the giving of notice or the lapse of time, or both (i)
to the knowledge of the CS Parties and the Purchased Businesses,
require any of the CS Parties or any of the Purchased Businesses
to make any material filing or material registration with, or
obtain any material permit, material authorization, material
consent or material approval of, any Governmental Authority
(as defined in Section 2.03(c)), except for the filings and
consents listed in Schedule 2.03 and except for filings,
notifications or approvals required under any antitrust or
competition laws, (ii) violate or conflict with any of the
provisions of any charter instrument, bylaw or other governing
documents of any of the CS Parties or the Purchased Company or
the Subsidiaries, (iii) except as set forth in Schedule 2.03, in
any material respect, violate, conflict with, result in a breach
or default under, or result in the termination of, or cause the
acceleration of the maturity of any material debt or material
obligation pursuant to any term or condition of, any material
mortgage, material note, material indenture, material contract,
material license, material permit, material instrument or other
material agreement or material document to which the Purchased
Company or Subsidiaries is a party or by which any of the
Purchased Businesses or its properties may be bound (or to which
any of the CS Parties is a party or by which it or its properties
may be bound in any case, if such violation, conflict, breach,
default, termination or acceleration would adversely affect in
any material respect the transactions contemplated by this
Agreement or would result in a material Loss to any KO Party or
any Purchased Business), (iv) to the knowledge of the CS Parties
and the Purchased Businesses, and except for filings,
notifications or approvals required under any antitrust or
competition laws, violate in any material respect any provision
of any material statute or material law, any material judgment,
material decree, material order, material regulation or material
rule of any Governmental Authority or any material arbitration
award to which the Purchased Company or Subsidiaries is a party
or by which any Purchased Businesses or its properties may be
bound (or to which any of the CS Parties is a party or by which
it or its properties may be bound in any case if such violation
would adversely affect in any material respect the
- 13 -
transactions contemplated by this Agreement or would result in
a material Loss to any KO Party or any Purchased Business), or
(v) result in the creation or imposition of any material Security
Interest upon any material Asset or any other material asset of
the Purchased Company or Subsidiaries.
(b) Except as set forth in Schedule 2.03 and except
for filings, notifications or approvals required under any
antitrust or competition laws, to the knowledge of the CS Parties
and the Purchased Businesses, no material consent or material
approval is required by virtue of the execution of this Agreement
or the consummation of any of the transactions contemplated
hereby to avoid the violation or breach in any material respect
of, or the default in any material respect under, or the creation
of a material lien on any of the material Assets or any of the
material assets of the Purchased Company or Subsidiaries pursuant
to the terms of, any material law, material rule, material
regulation, material order, material decree or material award of
any Governmental Authority or any material mortgage, material
note, material license to manufacture and distribute beverages,
material lease, material contract or any other material
instrument to which the Purchased Company or Subsidiaries is a
party or by which any of the Purchased Businesses or any of its
properties is bound.
(c) As used herein, the phrase "Governmental Authority"
shall mean any governmental or regulatory authority or
instrumentality, or any department or agency thereof, including,
without limitation, any court, administrative agency or
commission.
2.04 OWNERSHIP OF THE SHARES.
(a) Except as set forth on Schedule 2.04, each CS
Party owns good and marketable record title to and all beneficial
interest in all of the Shares specified on Schedule 2.04 opposite
such CS Party's name, which in the aggregate constitute 100% of
the share ownership of the Purchased Company. The Shares (i) are
validly issued, fully paid and nonassessable, and (ii) are owned
by the CS Parties free and clear of any Security Interests, with
no defects of title. As used in this Agreement, "Security
Interest" shall mean any pledge, security interest, lien, charge,
equity, claim, option, right of first refusal or other
restriction on transfer of any nature, or any other encumbrance
of any nature.
(b) Each CS Party has the exclusive right, power and
authority to vote the Shares owned by such CS Party. No CS Party
is party to or bound by any agreement affecting or relating to
such CS Party's right to transfer or vote any Shares. There are
no proxies outstanding or powers of attorney granted by any CS
Party with respect to any Shares.
2.05 AUTHORIZED AND OUTSTANDING STOCK. The authorized
capital stock of the Purchased Company and the Subsidiaries and
the number of issued and outstanding shares thereof is set forth
in Schedule 2.05. The list of the shareholders of the Purchased
Company and the Subsidiaries set forth in Schedule 2.05 is a
true, correct and complete list of the record shareholders of
such Purchased Company and the Subsidiaries and the number of
shares held of record by each such shareholder. None of the
Purchased Company or the Subsidiaries or the CS Parties has
outstanding or is bound by, any subscriptions, options, warrants,
calls, commitments
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or agreements requiring any of such Persons (as hereinafter
defined) to issue or sell or entitling any Person to acquire
any shares of capital stock or any other equity security
(including any right of conversion or exchange under any
outstanding security or other instrument) of the Purchased
Company or Subsidiaries, and none of the Purchased Company or the
Subsidiaries or the CS Parties is obligated to issue or dispose
of any shares of capital stock of the Purchased Company or
Subsidiaries for any purpose. All issuances, transfers,
purchases or redemptions of the capital stock of the Purchased
Company and the Subsidiaries have been in compliance with all
applicable agreements and all applicable laws, and all Taxes
(as defined in Section 2.23) thereon have been paid. There are
no outstanding obligations of the Purchased Company or the
Subsidiaries to repurchase, redeem or otherwise acquire any
outstanding shares of stock of the Purchased Company or the
Subsidiaries. There are no shares of capital stock held in the
treasury of the Purchased Company or the Subsidiaries. As used
in this Agreement, "Person" shall mean an individual, a
partnership, a joint venture, a corporation, a trust, an
unincorporated organization or any Governmental Authority or any
other entity.
2.06 TRANSFER CLAIMS. None of the CS Parties, the Purchased
Company or the Subsidiaries has effected any redemption, purchase
or other acquisition from any unaffiliated Person of any capital
stock or other equity interests (including any options, warrants
or debt convertible into stock, options or warrants) of the
Purchased Company or the Subsidiaries (including without
limitation by way of merger or consolidation) during the past
five years which has given or may give rise to any claim or
action by any such Person with respect to any of the foregoing
which is enforceable against any of the Purchased Businesses, the
CS Parties or the KO Parties.
2.07 FINANCIAL STATEMENTS.
(a) Attached as Schedule 2.07 are (i) the audited
balance sheets of the Purchased Company and the Subsidiaries as
at January 3, 1998, and the related audited statements of income
and retained earnings for the periods then ended, together with
the related notes thereto (the "Audited Financial Statements"),
and, (ii) for the Purchased Businesses, (A) the unaudited
management accounts (comprising profit and loss account, balance
sheet and cash flow statement) as of January 3, 1998 and for the
53 weeks then ended, and as at November 6, 1998 and for the 44
weeks then ended (the "Unaudited Management Accounts", and
together with the Audited Financial Statements, the "Financial
Statements"), and (B) unaudited Form 22Bs for the 53 weeks ended
January 3, 1998, derived from the Unaudited Management Accounts,
showing volume and profitability by brand (the "CS GCAM
Statements"). The balance sheets referred to in the Financial
Statements are referred to herein as the "1997 Balance Sheets."
(b) The Audited Financial Statements are based on the
books and records of the Purchased Company and the Subsidiaries
and have been prepared in accordance with the generally accepted
accounting principles applicable in each of the relevant
jurisdictions on a basis consistent with past practices of CS and
the CS Parties and throughout the periods involved. The Audited
Financial Statements present fairly in all material respects the
financial condition and results of operations and retained
earnings of the Purchased Company and the
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Subsidiaries as of such dates or for the periods covered thereby.
(c) The Unaudited Management Accounts (which include
the Plant Balance Sheets and other financial statements relating
to the Plants) have been extracted unadjusted from the CS
Hyperion Reporting System as used throughout the CS Group of
companies (the "CS Group") and presented to the Main Board of CS,
and prepared in accordance with CS Group management accounting
practice. For key reporting lines, the year-end Unaudited
Management Accounts have been reconciled to and are materially
consistent with the audited year-end Group statutory accounts
which are used for external reporting. The Unaudited Management
Accounts are only representative of the businesses being
purchased but are those that most closely match the Purchased
Businesses. Any material differences between the Unaudited
Management Accounts and the individual Purchased Businesses are
clearly identified in the reconciliation of GCAM (as defined in
Section 2.07(d)) following.
(d) The CS GCAM Statements represent an analysis of
volume, net sales, marketing spend and Gross Contribution after
Marketing ("GCAM") of beverage and food brands for each
management entity as identified within the CS Hyperion Reporting
System. The CS GCAM Statements taken as a whole have been
prepared with no material misstatements.
(e) The net revenues and marketing expenditures as
reported in the CS Hyperion Reporting System form the basis for
the CS GCAM Statements (beverages and foods) and on consolidation,
form the basis of CS's audited Group statutory accounts for the
year ended January 3, 1998. The Purchased Businesses do not
include foods or selected brands and countries. The "Purchased
GCAM" can be reconciled to the consolidated GCAM reflected in
CS's Unaudited Management Accounts for the year ended January 3,
1998, and the items below represent all material reconciling
items necessary to perform such a reconciliation.
Total GCAM as per "Unaudited Management Accounts"
and "CS GCAM Statement"
Less: Total foods GCAM
Less: Total non CS - owned brands GCAM
Less: Specific brands - XXXX'x
- Clamato
- Mr and Mrs T
- Energade
- Sunboost
- Brookes (Bromor)
- MIAMI (XXXX'x)
- Oasis (Italy)
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Less: Specific countries - Puerto Rico (within CSLAMB)
- Australia
- France
- South Africa
Less: General - certain restrictions to
normal concentrate cash flow
arising from minority
holdings in Zimbabwe and
Germany
- 500k British pounds adjustment
reflecting pricing and cost
differentials in GB resulting
from a separate CCE Agreement.
Equals: GCAM of the Purchased Businesses
Notes to reconciliation:
i) For XX XXXX operations, the GCAM's represented in the GCAM
statements represent full system GCAM.
ii) The GCAM Statements for Germany and Zimbabwe represent full
company GCAM's (not only CS's shareholdings).
2.08 NO UNDISCLOSED LIABILITIES. Except as set forth on
Schedule 2.08 or as and to the extent reflected and adequately
reserved against in the 1997 Balance Sheets or referred to in
the notes thereto, as of January 3, 1998, none of the Purchased
Businesses had any material liabilities or material obligations,
whether accrued, absolute, contingent, known, unknown or
otherwise. Except as set forth in Schedule 2.08, since January 3,
1998, none of the Purchased Businesses has incurred any material
liabilities or material obligations, except for liabilities and
obligations incurred by the Purchased Businesses in the ordinary
course of business consistent with past practice.
2.09 NO VIOLATION OF LAW; LICENSES AND PERMITS. Except as
set forth on Schedule 2.09, none of the Purchased Businesses is
or, to the knowledge of the CS Parties or the Purchased
Businesses in the past five years has been, in violation in any
material respect of applicable material laws, material ordinances,
material rules, material regulations, material orders or material
decrees, including, without limitation, any antitrust or
competition laws. Each of the Purchased Businesses has all
material licences, material permits or other material
authorizations of Governmental Authorities necessary for the
production and sale of its products, and has all other required
material licenses, material permits or other material
authorizations of Governmental Authorities and has made all
required material filings with any Governmental Authorities
necessary for the conduct of its business.
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2.10 PROPERTY.
(a) Schedule 2.10(a) sets forth a complete and
accurate list and description of all the real property that any
of the Purchased Businesses currently owns or has agreed (or has
an option) to purchase (the "Owned Real Property") or leases for
annual lease payments in excess of U.S.$150,000 (the "Leased Real
Property," and together with the Owned Real Property, the "Real
Property"). Except as set forth in Schedule 2.10(a), (i) none of
the Real Property is subject to any governmental decree or order,
or to the knowledge of the CS Parties or the Purchased Businesses
threatened or proposed order, to be sold or taken by any
Governmental Authority, and (ii) none of the Owned Real Property,
or to the knowledge of the CS Parties or the Purchased Businesses
the Leased Real Property, is subject to any rights of way,
building use restrictions, exceptions, variances, reservations or
limitations (other than any rights of way, building use
restrictions, exceptions, variances, reservations or limitations
which do not affect in any material respect the value of any such
Real Property or the ability to own (in the case of the Owned
Real Property), or to use, operate or conduct business, as
currently used, operated or conducted, on any such Real Property).
The plants and structures owned or leased by the Purchased
Businesses are in reasonable condition.
(b) Except as set forth in Schedule 2.10(b), the Purchased
Businesses (i) own good and marketable title to, or hold valid,
enforceable and subsisting leasehold interests in, all of the
Real Property and have good, valid and marketable title to all
material tangible properties and assets reflected, but not shown
as leased or encumbered, in the 1997 Balance Sheets (except for
inventory and assets sold in the ordinary course of business
consistent with past practice and supplies consumed in the
ordinary course of business consistent with past practice), free
and clear of any and all Security Interests other than Permitted
Liens (as defined in Section 2.10(d)), and (ii) own the Owned
Real Property free and clear of all title defects or Security
Interests other than Permitted Liens.
(c) The rights, properties and other assets presently owned,
leased or licensed by the Purchased Businesses include all
material rights, material properties and other material assets
necessary to permit the Purchased Businesses to conduct their
businesses in all material respects in the same manner as they
have been currently conducted. The Assets include all material
tangible and intangible assets associated with the Owned
Trademarks in each country included in the transactions
contemplated by this Agreement, and include, without limitation,
all material assets, wherever located, used by CS and its
subsidiaries in connection with their international beverages
business (excluding the United States, South Africa, France and
Australia), and all other ancillary activities conducted in
connection with ownership and use of the Owned Trademarks by CS
and its Affiliates.
(d) As used in this Agreement, "Permitted Liens" means the
following Security Interests: (i) Security Interests for Taxes,
assessments or other governmental charges or levies that are not
yet due or payable or that are being contested in good faith by
appropriate proceedings; (ii) statutory Security Interests of
landlords and Security Interests of carriers, warehousemen,
mechanics, materialmen, repairmen and other Security Interests
imposed by statute and on a basis consistent with past practice
for amounts not yet due; (iii) Security
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Interests incurred or deposits made in the ordinary course of the
Purchased Businesses and on a basis consistent with past practice
in connection with worker's compensation, unemployment insurance
or other types of social security; (iv) minor defects of title,
easements, rights-of-way, restrictions and other similar
encumbrances not detracting in any material respect from the
value of any of the Real Property or interfering with the
ordinary conduct of the Purchased Businesses; and (v) Security
Interests incurred in the ordinary course of the Purchased
Businesses and on a basis consistent with past practice securing
obligations or liabilities which are not individually, or in the
aggregate, material to the relevant Real Property.
2.11 LEASES. Schedule 2.11 contains a complete and accurate
list of all leases and lease-purchase arrangements pursuant to
which any of the Purchased Businesses leases real or personal
property from others involving annual payments in excess of
U.S.$150,000. Each such lease is valid, binding and enforceable
in accordance with its terms and is in full force and effect;
there are no existing material defaults with respect thereto by
any of the Purchased Businesses, or to the knowledge of the CS
Parties or the Purchased Businesses any other party thereto; and
no event has occurred which (whether with or without notice,
lapse of time or the happening or occurrence of any other event)
would constitute a material default thereunder by any of the
Purchased Businesses, or to the knowledge of the CS Parties and
the Purchased Businesses any other party thereto. None of the
Purchased Businesses is subject to any capital leases.
2.12 INDEBTEDNESS FOR BORROWED MONEY. Except as set forth
on Schedule 2.12 and except for indebtedness payable to CS or any
subsidiary of CS, there is no direct or indirect indebtedness for
borrowed money of any of the Purchased Businesses or relating to
any of the Assets in any case either (i) on terms which do not
reflect arms' length terms, or (ii) in excess of U.S. $1,000,000,
including any indebtedness by way of lease-purchase arrangements,
guarantees, undertakings on which others rely in extending credit
and conditional sales contracts, chattel mortgages and other
security arrangements with respect to personal property used or
owned by any of the Purchased Businesses or relating to any of
the Assets. No such indebtedness set forth on Schedule 2.12
provides for any prepayment penalty or premium.
2.13 INTELLECTUAL PROPERTY.
(a) "Owned Trademarks" shall mean the trademarks set
forth on Schedule 2.13(a)(i). "Major Trademarks" shall mean
those registrations included in the Owned Trademarks that
correspond to the brand names, current labels, elements of
current labels, current slogans, and current bottle designs of
the products currently being sold in the countries set forth on
Schedule 2.13(a)(ii). Without limiting the foregoing, and in
addition thereto, any trademark registrations of the Owned
Trademarks which are currently in bona fide commercial use by
the Purchased Businesses shall be considered Major Trademarks and
any trademark registrations of the Owned Trademarks for the
XX. XXXXXX trademark, which are currently in use by the Purchased
Businesses, shall be considered Major Trademarks. "Miscellaneous
Trademarks" shall mean all trademark registrations and
applications of the Owned Trademarks not included in the Major
Trademarks. Schedule 2.13(a)(iii) sets forth a complete and
accurate list of all patents and copyrights, including
registrations thereof and applications therefor, and industrial
design registrations, in each case owned by the CS Parties and
material to the
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Purchased Businesses (the "Intellectual Property Rights").
Schedule 2.13(a)(iv) sets forth a complete and accurate list of
all licenses of patents, trademarks, trade names, service marks,
copyrights and applications therefor licensed to any of the CS
Parties that are material to the Purchased Businesses (the
"Licensed Rights"). The consummation of the transactions
contemplated hereby will not result in the termination or
impairment of any of the Major Trademarks.
(b) The CS Parties, the Purchased Company, and the
Subsidiaries hold good, valid and enforceable right, title and
interest in and to the Major Trademarks free and clear of any
Security Interests and at the Applicable Closing the CS Parties
will transfer to the KO Buyers good, valid and enforceable right,
title and interest in and to the Major Trademarks, free and clear
of any Security Interests. The Major Trademarks have not been
adjudged invalid or unenforceable in whole or in part, and any
registrations thereof are in full force and effect.
(c) The CS Parties are not aware of any existing facts
or circumstances that may reasonably be expected to result in the
invalidity or unenforceability of the Major Trademarks. The
validity of the Major Trademarks, and title thereto have not been
successfully challenged in any prior litigation and except as set
forth in Schedule 2.13(b) (i) are not being challenged in any
pending litigation and (ii) to the knowledge of the CS Parties,
are not the subject(s) of any threatened litigation. None of
matters on Schedule 2.13(b) may reasonably be expected to result
in the invalidity or unenforceability of any of the Major
Trademarks.
(d) Except as set forth on Schedule 2.13(b), no Person
is currently engaging in any commercial activity that infringes
upon the Major Trademarks or has engaged in any commercial
activity infringing upon the Major Trademarks that has any
current effect.
(e) Except as set forth on Schedule 2.13(b), to the
knowledge of the CS Parties, no person is engaging in any
commercial activity that infringes upon the Miscellaneous
Trademarks or the Intellectual Property rights in any material
respect. Except as set forth on Schedule 2.13(b), to the
knowledge of the CS Parties, the CS Parties, the Purchased
Company, and/or the Subsidiaries own the Intellectual Property
Rights and the Miscellaneous Trademarks free and clear of any
Security Interests. Except as set forth on Schedule 2.13(b),
to the knowledge of the CS Parties, the Intellectual Property
Rights and the Miscellaneous Trademarks have not been adjudged
invalid or unenforceable in whole or in part, and any
registrations thereof are valid and in full force and effect.
Except as set forth on Schedule 2.13(b), to the knowledge of the
CS Parties, the validity of the Intellectual Property Rights and
the Miscellaneous Trademarks, and title thereto, and the rights
of the CS Parties in the Licensed Rights, (i) have not been
successfully challenged in any prior litigation; (ii) are not
being challenged in any pending litigation and (iii) to the
knowledge of the CS Parties, are not the subject(s) of any
threatened litigation.
(f) Except as set forth on Schedule 2.13(b), the use
of the Major Trademarks and to the knowledge of the CS Parties
the operation of the businesses of the Purchased Businesses and
the use of the Intellectual Property Rights and the Miscellaneous
Trademarks, have not been alleged to infringe upon, and do not
infringe upon, any patents, trademarks, trade
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names, service marks, or copyrights of third parties in any
material respect. Except as set forth on Schedule 2.13(b), to
the knowledge of the CS Parties, the consummation of the
transactions contemplated hereby will not result in the
termination or impairment of the Miscellaneous Trademarks and
the Intellectual Property Rights in any material respect. To
the knowledge of the CS Parties, the patents, trademarks, trade
names, service marks, or copyrights licensed to the CS Parties as
Licensed Rights have not been alleged to infringe upon and do not
infringe upon any patents, trademarks, trade names, service marks,
or copyrights of third parties in any material respect.
(g) The trademarks set forth on Schedule 2.13(a)(i)
and the licenses set forth on Schedule 2.13(a)(iv) include all of
the trademark rights owned by or licensed to the CS Parties
material to, and used in the conduct of, the Purchased Businesses
as currently conducted.
(h) Each license of the Licensed Rights is valid and
binding and is enforceable in accordance with its terms in a
manner that obtains for or imposes upon the parties the primary
material benefits and obligations of such license. As of the
date of this Agreement, to the knowledge of the CS Parties, there
is no material pending or threatened bankruptcy, insolvency, or
similar proceeding with respect to any party to such license, and
no event has occurred which (whether with or without notice,
lapse of time or the happening or occurrence of any other event)
would constitute a material default by the Purchased Businesses
thereunder or, to the knowledge of the CS Parties, by any other
party to such license. The Purchased Businesses have complied
in all material respects with the provisions of such license.
(i) Except as set forth on Schedule 2.13(b), to the
knowledge of the CS Parties, no advertising, promotional material,
packaging material or other material currently used by the
Purchased Businesses in connection with the sale, offer for sale
or distribution of products in connection with the Purchased
Businesses, has been alleged to infringe upon the patents,
trademarks, trade names, service marks or copyrights of third
parties in any material respect.
(j) KO acknowledges that the representations and
warranties contained in Section 2.10(c) and this Section 2.13 are
the only representations and warranties being made in this
Agreement with respect to the Owned Trademarks, Intellectual
Property Rights and the Licensed Rights.
2.14 LITIGATION AND CLAIMS. Schedule 2.14 sets forth all
pending or, to the knowledge of the CS Parties or the Purchased
Businesses, threatened, litigation, claims, suits, actions,
investigations, indictments, informations or proceedings (except
for Environmental Claims which are addressed in Section 2.17)
involving amounts in excess of U.S.$250,000 to which any of the
Purchased Businesses is or may become a party or is or may be
subject. Except as set forth in Schedule 2.14, there are no
material judgments, material orders, material injunctions,
material decrees, material stipulations or material awards
(whether rendered by a court, administrative agency or by
arbitration) (except for Environmental Claims which are addressed
in Section 2.17) enforceable against or relating to any of the
Purchased Businesses.
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2.15 EMPLOYEE CONTRACTS, UNION AGREEMENTS AND BENEFIT PLANS.
(a) As used in this Agreement, the term "Employee
Benefit Plans" means all material written and enforceable oral
agreements, arrangements, commitments or policies of any kind
which relate to compensation, remuneration or benefits in any way
or which constitute employment, consulting or collective
bargaining contracts, or deferred compensation, pension, multi-
employer, profit sharing, thrift, retirement, stock ownership,
stock appreciation rights, bonus, stock option, stock purchase or
other compensation commitments, benefit plans, arrangements or
plans, including all welfare plans and all union-sponsored plans,
of or pertaining to the present or former employees (including
retirees) or directors (or their dependents, spouses or
beneficiaries) of any of the Purchased Businesses or any
predecessors in interest thereto, that are currently in effect or
as to which any of the Purchased Businesses has any ongoing
liability or obligation whatsoever.
(b) Schedule 2.15(b) contains a complete and accurate
list of each collective bargaining agreement and any Employee
Benefit Plan providing for benefits which either are not
customary or which are outside of the ordinary course of business.
Each Purchased Business and its predecessors in interest have
complied in all material respects with all of their respective
obligations with respect to all Employee Benefit Plans, including
the payment of all material social security and other material
contributions required by law, and the Employee Benefit Plans
have been maintained in compliance in all material respects with
all applicable laws, rules and regulations. No Employee Benefit
Plan (other than union-sponsored plans) is currently under
investigation, audit or review by any Governmental Authority and
to the knowledge of the CS Parties and the Purchased Businesses,
no union-sponsored plan included within the definition of
Employee Benefit Plan is currently under investigation, audit or
review by any Governmental Authority. No Employee Benefit Plan
(other than union-sponsored plans) is liable for any material
amount of Taxes, except in the ordinary course and for current
periods, and to the knowledge of the CS Parties and the Purchased
Businesses, no union-sponsored plan included within the
definition of Employee Benefit Plan is liable for any material
amount of Taxes, except in the ordinary course and for current
periods. There are no material claims pending, or to the
knowledge of the CS Parties or the Purchased Businesses
threatened, by any participant in any of the Employee Benefit
Plans, except for benefits to participants or beneficiaries in
accordance with the terms of the Employee Benefit Plans. There
is no obligation on the part of any of the Purchased Businesses
to pay any bonus to retired or retiring employees or former
employees under any collective bargaining agreement.
(c) There are no material loans or other material
advances made by any of the Purchased Businesses to any present
or former employees (including retirees), directors or
independent contractors (or their dependents, spouses or
beneficiaries) of any of the Purchased Businesses, except in the
ordinary course of business consistent with past practice.
2.16 LABOR RELATIONS. Except as set forth in Schedule 2.16:
(a) Each of the Purchased Businesses is in compliance
in all material respects with all collective bargaining
agreements with respect to employment and employment practices,
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terms and conditions of employment and wages and hours and
occupational safety and health.
(b) There is no material unfair labor practice or
charge or complaint or any other similar matter against or
involving any of the Purchased Businesses pending, or to the
knowledge of the CS Parties or the Purchased Businesses
threatened, before any Governmental Authority. There is no labor
strike, dispute, slowdown or stoppage pending, or to the
knowledge of the CS Parties or the Purchased Businesses
threatened, against any of the Purchased Businesses. No material
grievance proceeding or material arbitration proceeding arising
out of or under any collective bargaining agreement is pending,
or to the knowledge of the CS Parties or the Purchased Company
threatened, against any of the Purchased Businesses. No
collective bargaining agreement in any way prevents any of the
Purchased Businesses from relocating or closing any of its
operations.
(c) There are no material charges, material
proceedings or material formal complaints of discrimination
(including discrimination based upon sex, age, marital status,
race, religion, national origin, sexual preference, handicap or
veteran status) pending, or to the knowledge of the CS Parties or
the Purchased Businesses threatened, by or before any
Governmental Authority with respect to any of the Purchased
Businesses.
2.17 ENVIRONMENTAL PROTECTION. Except as set forth in
Schedule 2.17:
(a) Each of the Purchased Businesses has obtained all
material permits, material licenses and other material
authorizations and filed all material notices which are required
to be obtained or filed by it for the operation of its business
under Environmental Laws. Each of the Purchased Businesses is in
compliance in all material respects with all terms and conditions
of such permits, licenses and authorizations.
(b) Each of the Purchased Businesses is in compliance
in all material respects with all applicable Environmental Laws.
None of the Purchased Businesses has received any communication,
whether from a Governmental Authority, citizens group, employee
or otherwise, that alleges that any of the Purchased Businesses
is not in such compliance. There are no past or present events,
conditions, circumstances, activities, practices, incidents,
actions, failures to act or plans which are reasonably likely to
interfere with or prevent continued compliance in all material
respects with Environmental Laws, or which are reasonably likely
to give rise to any material common law or statutory liability,
or otherwise form the basis of any material Environmental Claim
(as hereinafter defined) against any of the Purchased Businesses
or against any Person whose liability for any Environmental Claim
any of the Purchased Businesses has or may have retained or
assumed either contractually or by operation of law. There are
no material Environmental Claims pending, or to the knowledge of
the CS Parties or the Purchased Businesses threatened, against
any of the Purchased Businesses.
(c) As used herein, the following terms have the
following meanings:
(i) "Environmental Claim" means any notice
received by any of the CS Parties or the Purchased Businesses,
alleging liability (including, without limitation, liability
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for investigatory costs, cleanup costs, governmental response
costs, natural resource damages, property damages, personal
injuries, fines, permit or registration fees or penalties), and
any action, suit, proceeding, hearing or investigation involving
or against any of the Purchased Businesses or any of their assets
or properties (or any predecessor in interest) arising out of,
based upon or resulting from (i) the presence in, or release into,
the environment of any Material of Environmental Concern at any
location, or in connection with business operations, whether or
not owned by any of the Purchased Businesses, or (ii)
circumstances forming the basis of any violation or alleged
violation of any Environmental Law.
(ii) "Environmental Laws" means all applicable
laws, rules and regulations in effect on or prior to the
Applicable Closing Date relating to pollution or the protection
of human health and the environment (including, without
limitation, ambient air, surface water, ground water, land
surface or subsurface strata) and similar laws, rules and
regulations relating to the protection of human health,
including, without limitation, laws, rules and regulations
relating to discharge, emissions, releases or threatened releases
of Material of Environmental Concern or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Material of Environmental
Concern.
(iii) "Material of Environmental Concern" means
asbestos, polychlorinated biphenyls ("PCBs"), chemicals,
pollutants, contaminants, wastes, hazardous or toxic substances
or materials, petroleum and petroleum products or any other
materials that are subject to regulation pursuant to
Environmental Laws or are defined as "hazardous substances"
within the meaning of any Environmental Laws.
2.18 INSURANCE POLICIES. The Purchased Businesses are
covered by insurance policies or binders of insurance or programs
of self-insurance of such types and in such amounts as are
reasonable or consistent in all material respects with customary
practices and standards of the beverage industry in the relevant
geographic areas. Each such policy is valid and binding and in
full force and effect, no premiums currently due thereunder have
not been paid, and none of CS, the CS Parties, the Purchased
Company or any Subsidiary has received any notice of material
reduction, cancellation or termination in respect of any such
policy or is in material default thereunder. Except as disclosed
in Schedule 2.18 and except for any CS Policies (as defined in
Section 4.13), such policies will continue in full force and
effect following the Applicable Closing without penalty provided
the premiums are paid.
2.19 MAJOR SUPPLIERS AND CUSTOMERS. None of the Purchased
Businesses is engaged in any material dispute with any of its
material suppliers or material customers.
2.20 CONTRACTS AND COMMITMENTS.
(a) For purposes of this Agreement, "Contract" means
any contract, agreement, promissory note, debt instrument,
commitment, arrangement, undertaking or understanding to which
any of the Purchased Businesses is legally bound or to which it
or its property is subject, whether written or oral and including
without limitation each and every amendment, modification or
supplement to any of them.
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(b) Schedule 2.20(b) lists each Contract (other than
Contracts required to be included on Schedule 2.11, 2.13, 2.15
and 2.20(c)):
(i) for the purchase or rental of materials,
inventory and supplies by any of the Purchased Businesses which
individually exceeds U.S$3,000,000;
(ii) for the sale of goods or products by any of
the Purchased Businesses which individually involves an amount or
value in excess of U.S.$3,000,000;
(iii) for the purchase of services by any of the
Purchased Businesses which individually involves an amount in
excess of U.S.$3,000,000;
(iv) under which any of the Purchased Businesses
acts or has agreed to act as guarantor, surety, co-signer,
endorser, co-maker or indemnitor in respect of the contract or
commitment of any other Person, in each case involving an amount
or value in excess of U.S. $1,000,000;
(v) containing covenants limiting in any material
respect the freedom of any of the Purchased Businesses to compete
in any line of business in any geographic area covered by this
Agreement or providing benefits substantially similar to those
provided by an equity interest; and
(vi) which is material to the Purchased Businesses
taken as a whole or the absence of which would have or would be
reasonably likely to have a Material Adverse Effect.
(c) Except for arms'-length commercial arrangements
entered into by the Purchased Businesses with their respective
bottlers in the ordinary course of business pursuant thereto,
the bottling agreements and distribution agreements provided by
CS to KO and listed on Schedule 2.20(c) are true, correct and
complete and constitute all of the bottling and distribution
agreements to which any of CS or any of its Affiliates is a party.
Except as set forth on Schedule 2.20(c), there are no sublicenses
of any such bottling or distribution agreements or any rights
thereunder. It is CS's practice not to include in its bottling
and distribution agreements change of control provisions with
respect to CS or provisions which would prohibit or limit CS's
ability to assign such agreements. Accordingly, other than for a
small number of agreements, there are no bottling or distribution
agreements containing change of control provisions with respect
to CS or provisions which prohibit or limit CS's ability to assign
such agreements. With respect to each bottling or distribution
agreement which is incomplete, unsigned or in draft form, or as
to which the termination date cannot be determined from the
bottling or distribution agreement as furnished to KO prior to
the date hereof, the actual complete, signed, effective bottling
agreement with regard to such territory, and such termination
date, is not materially (x) different from what was furnished to
KO with respect to that territory (as listed on Schedule 2.20(c)),
or (y) later than the termination date specified in Schedule 2 to
the letter between the parties dated November 25, 1998,
respectively.
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2.21 AGREEMENTS IN FULL FORCE AND EFFECT. Except as set
forth in Schedule 2.21, all Contracts referred to, or required
to be referred to, in Schedules 2.20(b) and 2.20(c) are valid
and binding, and are enforceable in accordance with their terms
in a manner that obtains for or imposes upon the parties the
primary material benefits and obligations of such Contracts.
Except as set forth in Schedule 2.21, to the knowledge of the
CS Parties or the Purchased Businesses there is no material
pending or threatened bankruptcy, insolvency or similar
proceeding with respect to any party to such Contracts, and no
event has occurred which (whether with or without notice, lapse
of time or the happening or occurrence of any other event) would
constitute a material default by the Purchased Businesses
thereunder or, to the knowledge of the CS Parties or the
Purchased Businesses, by any other party to any such Contract.
The Purchased Businesses have complied in all material respects
with the provisions of such Contracts.
2.22 ABSENCE OF CERTAIN CHANGES AND EVENTS. Except as set
forth in Schedule 2.22, since January 3, 1998, the Purchased
Businesses taken as a whole have been conducted only in the
ordinary course, and the Purchased Businesses have not:
(a) suffered any event or change, which individually
or in the aggregate, has had or is reasonably likely to have a
Material Adverse Effect;
(b) made any declaration, setting aside or payment of
any dividend (other than cash dividends) or other distribution of
assets (whether in cash, stock or property) with respect to its
capital stock, or issued or sold any of its capital stock, or
made any change in its issued and outstanding capital stock, or
issued any warrant, option or other right to purchase shares of
its capital stock, or any security convertible into its capital
stock or redeemed, purchased or otherwise acquired (directly or
indirectly) any shares of its capital stock;
(c) acquired any material business or any material
interest in any material business;
(d) suffered any material adverse change in its
relationships with any material suppliers or material customers;
(e) except as required by law and except in the
ordinary course of business consistent with past practice, (i)
increased (or announced any increase of) the compensation payable
or to become payable to any employee or increased any bonus,
insurance, pension or other employee benefit plan, payment or
arrangement for such employees, (ii) entered into or amended any
employment, consulting, severance or similar agreement or (iii)
hired, committed to hire, or terminated any employee whose annual
compensation exceeds U.S.$150,000;
(f) except after the date of this Agreement in the
ordinary course of business consistent with past practice,
incurred, assumed or guaranteed any obligation or liability for
borrowed money in excess of U.S. $1,000,000, or exchanged,
refunded or renewed any outstanding indebtedness in excess of
U.S. $1,000,000;
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(g) except in the ordinary course of business
consistent with past practice, paid, discharged or satisfied any
claim, liability or obligation involving amounts in excess of
U.S. $1,000,000 in the aggregate;
(h) permitted any of its material assets to be
subjected to any Security Interest;
(i) intentionally waived any material claims or rights;
(j) sold, transferred or otherwise disposed of any
material assets, except in the ordinary course of business
consistent with past practice;
(k) made capital expenditures or investments
individually in excess of U.S.$1,000,000;
(l) made any change in any method of accounting, or
any practice or principle of accounting, except for any changes
after the date of this Agreement which are required by UK GAAP;
(m) paid, loaned or advanced any amount or asset to
or sold, transferred or leased any asset to any employee except
for normal compensation involving salary and benefits in the
ordinary course of business consistent with past practice;
(n) written down the value of any inventory in excess
of U.S. $3,000,000 in the aggregate on an annual basis, or
written off as uncollectible or forgiven any notes or accounts
receivable or other debt or increased its allowance for doubtful
accounts by a total of more than U.S. $4,000,000 in the aggregate
on an annual basis;
(o) amended the charter, bylaws or other governing
documents of the Purchased Company or the Subsidiaries;
(p) materially amended or terminated any material
Contract, including any bottling or distribution agreement or any
Employee Benefit Plan, except in the ordinary course of business,
or materially amended or entered into any new collective
bargaining agreement except in the ordinary course of business;
(q) entered into any material commitment or
transaction, other than in the ordinary course of business
consistent with past practice;
(r) knowingly done any act, omitted to do any act, or
permitted any act within its control which would cause a material
breach of any representation, warranty, covenant, agreement or
obligation contained in this Agreement; or
(s) agreed in writing, or otherwise, to take any
action described in this Section 2.22.
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2.23 TAX MATTERS.
(a) For purposes of this Agreement, "Taxes" shall mean
all income, franchise, capital stock, real property, personal
property, tangible, withholding, unemployment compensation,
disability, transfer, sales, use, excise, soft drink, gross
receipts and all other taxes, assessments, charges, duties, fees,
levies or other governmental charges (including interest,
penalties or additions associated therewith) of any kind for
which the Purchased Company or the Subsidiaries may have any
liability imposed by any Governmental Authority or to which any
of the Assets may be subject in the hands of a KO Buyer, whether
disputed or not, and any charges, interest or penalties imposed
by any Governmental Authority as the result of the failure to
file any Tax Return. "Tax Return" shall mean any report, return,
declaration or other information required to be supplied to a
Governmental Authority in connection with Taxes.
(b) Except as otherwise disclosed in Schedule 2.23 and
except in such respects as are not material: (i) all Tax Returns
(as defined in Section 2.23(a)), including estimated returns and reports
of every kind with respect to Taxes, which are due to have been
filed through the date of this Agreement in accordance with any
applicable law or any applicable extensions, have been duly filed
(and all such returns or reports due after the date of this
Agreement and on or prior to the Applicable Closing Date will be
filed prior to the Applicable Closing Date); (ii) all Taxes shown
on such Tax Returns or otherwise required to be paid by any of
the Purchased Businesses (whether or not a Tax Return is required
to be filed in respect thereof) have been paid in full or are
accrued or will be accrued as of the Applicable Closing Date as
liabilities for Taxes on the books and records of the Purchased
Businesses; (iii) the Taxes so paid on or before the date of
this Agreement, together with any amounts accrued as liabilities
for Taxes (including Taxes accrued as currently payable) on the
books of the Purchased Company and the Subsidiaries, will be
adequate based on the applicable tax rates, laws and regulations
to satisfy all liabilities for Taxes of the Purchased Company and
Subsidiaries in any jurisdiction through the Applicable Closing
Date, including Taxes payable with respect to income treated in
accordance with Section 5.04(a) hereof as earned through the
Applicable Closing Date; (iv) there are not now any extensions
of time in effect with respect to the dates on which any Tax
Returns were or are due to be filed; (v) all deficiencies
asserted as a result of any examination of any Tax Return have
been paid in full, accrued on the books of the Purchased Company
or the Subsidiaries, or finally settled, and no issue has been
raised in any such examination which, by application of the same
or similar principles, reasonably could be expected to result in
a proposed deficiency for any other period not so examined; (vi)
no Tax claims have been asserted and no proposals or deficiencies
for any Taxes are being asserted, proposed or threatened, and no
audit or investigation of any Tax Return is currently underway,
pending or threatened; (vii) within the CS Parties' knowledge the
Tax bases for all depreciable assets held by the Purchased
Businesses have been determined in good faith and in accordance
with applicable law; (viii) no Tax Returns relating to taxable
periods ending on or after December 31, 1992 have been examined
or audited by any Governmental Authorities; (ix) there are no
outstanding waivers or agreements by or with respect to any of
the Purchased Businesses for the extension of time for the
assessment of any Taxes or deficiency thereof, nor are there any
requests for rulings, outstanding subpoenas or requests for
information, notice of proposed reassessment of any property
owned or leased by any of the Purchased Businesses pending
between any of the Purchased Businesses and any
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taxing authority; (x) there are no liens for Taxes on any of the
assets of the Purchased Businesses, other than liens for Taxes
which are not yet past due, nor are there any such liens within
the CS Parties' knowledge for Taxes which are pending or
threatened; (xi) since December 31, 1997, there have not been
established on the books, records or financial statements of the
Purchased Businesses any accruals or reserves for Taxes other
than in the ordinary course of business consistent with past
practice; and (xii) none of the Purchased Businesses has any
potential liability to Taxes arising from the use of any form of
group transaction relief.
(c) The Purchased Company and the Subsidiaries have
delivered to KO true and complete copies of all income Tax
returns (together with any revenue agent's reports) relating to
its operations for the three most recent years for which Tax
returns are due to have been filed.
2.24 ACCOUNTS RECEIVABLE. Except as shown in Schedule 2.24,
all of the accounts receivable of the Purchased Businesses in
excess of U.S.$2,000,000 are valid and existing, and as of the
date of this Agreement, there is no material dispute regarding
the collectibility of any such accounts receivable. None of the
accounts receivable of the Purchased Businesses is factored, and
since January 31, 1998, none of the Purchased Businesses has
factored any of its accounts receivable.
2.25 PRODUCT AND SERVICE WARRANTIES. Except in the ordinary
course of business consistent with past practice and except as
set forth on Schedule 2.25, none of the Purchased Businesses
makes any express warranties or guaranties on its own behalf as
to goods sold or services provided by it.
2.26 BROKERS' AND FINDERS' FEES. None of the CS Parties or
the Purchased Businesses or any of their respective Affiliates or
anyone acting on behalf of any of them has done anything to cause
or incur any liability to any party for any brokers' or finders'
fees or the like in connection with this Agreement or any
transaction contemplated hereby.
2.27 TRANSACTIONS WITH AFFILIATES. Except as disclosed in
Schedule 2.27, none of the CS Parties or any Affiliate thereof
(i) is indebted to any of the Purchased Businesses with respect
to any liabilities or obligations which will survive the
Applicable Closing Date with respect to such Purchased
Businesses, (ii) is a party to any Contract with any of the
Purchased Businesses with respect to which any liabilities or
obligations thereunder will survive the Applicable Closing Date,
or (iii) has an ownership interest in any business, corporate or
otherwise, that is a party to, or in any property which is the
subject of, business arrangements or relationships of any kind
with any of the Purchased Businesses with respect to which any
liabilities or obligations thereunder will survive the
Applicable Closing Date (excluding for such purposes the
ownership of less than 5% of the outstanding equity of any
publicly traded corporation of which such Person is neither an
officer or a director). None of the CS Parties or any Affiliate
thereof or any officer or director of any of the CS Parties or
any Affiliate thereof (including any officer or director of any
of the Purchased Businesses) is a party to any Contract with any
of the Purchased Businesses which is not on arms' length terms,
or has an ownership interest in any business, corporate or
otherwise, that is a party to, or in any property which is the
subject of, business
- 29 -
arrangements or relationships of any kind with any of the
Purchased Businesses which are not on arms' length terms.
2.28 YEAR 2000.
For the purposes of this Section 2.28, the following terms
shall have the meanings set forth below:
"Facilities" means any facilities, processes, equipment or
other assets owned, or to the extent material to the Plants
leased, by any of the Plants in any location, including HVAC
systems, mechanical systems, elevators, security systems, fire
suppression systems, telecommunications systems, fax machines,
copy machines, and equipment.
"Products" means any products currently sold by any of the
Plants.
"Internal MIS Systems" means any computer software and
systems (including hardware, firmware, operating system software,
utilities and applications software) used in the ordinary course
of the business of the Plants (and in the case of such software
and systems licensed from others, which is material to the
operation of the businesses of the Plants), including, where
applicable, their payroll, accounting, billing/receivables,
purchasing/payables, inventory, asset tracking, customer service,
human resources, and E-mail systems.
"Year 2000 Compliant" means that the Facilities, Products
and Internal MIS Systems provide uninterrupted millennium
functionality in that the Facilities, Products and Internal MIS
Systems will record, store, process and present calendar dates
falling on or after January 1, 2000, in the same manner, and with
the same functionality, as the Facilities, Products and Internal
MIS Systems record, store, process and present calendar dates
falling on or before December 31, 1999.
Schedule 2.28 sets forth the plan for each Plant
(collectively, the "Y2K Plan") (i) setting forth the material
steps taken to date, and (ii) the material steps that they intend
to take following the date hereof to remediate any failure of any
of the Facilities, Products and Internal MIS Systems to be Year
2000 Compliant in all material respects (the "Year 2000 Computer
Date Problem"). None of the CS Parties or the Purchased
Businesses is aware of any facts or circumstances that would
prevent the Plants from achieving remediation of the Year 2000
Computer Date Problem in all material respects with respect to
the business of the Plants in accordance with the Y2K Plan. Upon
remediation of the Year 2000 Computer Date Problem in accordance
with the Y2K Plan, the Year 2000 Computer Date Problem will not
affect the conduct of the business of the Plants in any material
respect.
CS represents and warrants that the Plants will not have
expenses after the Threshold Closing in excess of U.S. $200,000
in order to remediate the Year 2000 Computer Date Problem.
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2.29 E.U. AND U.S. PRESENCE
(a) The concentrate turnover and royalty or other
income derived from the ordinary activities (within the meaning
of Council Regulation EEC No. 4064/89) of the Purchased
Businesses (net of V.A.T., other turnover-related taxes and sales
rebates and excluding sales turnover between undertakings within
the Purchased Businesses) but excluding turnover derived from the
Excluded Assets received by the CS Group in its 1997 financial
year and attributable to the Purchased Businesses did not exceed:
(i) Ecu 250 million in the European Union; or
(ii) Ecu 25 million in each of at least three
Member States of the European Union.
(b) Neither the Purchased Company nor the Subsidiaries
is a "United States issuer" and the Assets and the assets owned
by the Purchased Company and the Subsidiaries in each case
located in the United States (i) collectively do not have an
aggregate book value or market value of US $15 million or more
and (ii) collectively did not generate aggregate sales in or into
the United States of US $25 million or more in the most recent
fiscal year, all as defined under 16 CFR Section 801.1 et seq.
ARTICLE 3
KO REPRESENTATIONS AND WARRANTIES
KO represents and warrants to CS that as of the date hereof
and each Applicable Closing Date that:
3.01 CORPORATE ORGANIZATION. Each of the KO Parties is a
corporation duly organized, validly existing and in good standing
under the laws of its jurisdiction of organization.
3.02 AUTHORIZATION, ETC. Each of the KO Parties has, or in
the case of the KO Parties other than KO shall have at the time
of execution and delivery of such documents, all requisite
corporate power and authority to execute and deliver this
Agreement and all documents to be executed and delivered by the
KO Parties contemplated hereby (collectively, the "Buyer
Transaction Documents," and together with the Seller Transaction
Documents, the "Transaction Documents") and to carry out their
respective obligations with respect to the transactions
contemplated hereby and thereby. The execution and delivery of
this Agreement and the Buyer Transaction Documents and the
consummation of the transactions contemplated hereby and thereby
have been, or in the case of the KO Parties other than KO shall
have been at the time of execution and delivery of such documents,
duly authorized by all necessary corporate action on the part of
each of the KO Parties. This Agreement has been (and the other
Buyer Transaction Documents will be at the Threshold Closing or a
Subsequent Closing, as applicable) duly and validly executed and
delivered by each of the KO Parties (assuming due authorization,
execution and delivery by the CS Parties of this Agreement and
the Transaction Documents to
- 31 -
which it is a party) and this Agreement constitutes (and each of
the other Buyer Transaction Documents will constitute at the
Threshold Closing or a Subsequent Closing, as applicable) a valid
and binding agreement, enforceable against each of the KO Parties,
respectively, in accordance with its terms.
3.03 NO CONFLICT. Except as may be necessary as a result of
any facts or circumstances relating solely to the CS Parties, the
execution and delivery of this Agreement and the Buyer
Transaction Documents by the KO Parties, the consummation of the
transactions contemplated hereby and thereby by the KO Parties,
and the performance of the covenants and agreements of the KO
Parties contained herein and therein will not, with or without
the giving of notice or the lapse of time, or both (i) to the
knowledge of the KO Parties, require the KO Parties to make any
material filing or material registration with, or obtain any
material permit, material authorization, material consent or
material approval of, any Governmental Authority, except as set
forth in Schedule 3.03 and except for filings, notifications or
approvals required under any antitrust or competition laws, (ii)
violate or conflict with any provision of the certificate of
incorporation or bylaws (or similar governing documents) of any
of the KO Parties, (iii) in any material respect violate,
conflict with, or result in a breach or default under, or result
in the termination of, or cause the acceleration of the maturity
of any material debt or material obligation pursuant to, any term
or condition of any material mortgage, material indenture,
material contract, material license, material permit, material
instrument, material document or other material agreement,
material document or material instrument to which any of the KO
Parties is a party or by which any of the KO Parties or any of
their respective properties may be bound, or (iv) to the
knowledge of the KO Parties, except as set forth in Schedule 3.03
and except for filings, notifications or approvals required under
any antitrust or competition laws, violate any provision of any
material law, material judgment, material decree, material order,
material regulation or material rule of any Governmental
Authority or any arbitration award.
3.04 BROKERS AND FINDERS. No KO Party has employed any
broker or finder or incurred any liability for any brokerage fees,
commissions or finders' fees in connection with the transactions
contemplated by this Agreement.
3.05 LITIGATION. As of the date hereof, there are no
pending, or to the knowledge of the KO Parties threatened,
litigation, claims, suits, actions, investigations, indictments,
information or proceedings which, if adversely determined, would
be reasonably expected to prevent or materially interfere with
the performance by the KO Parties of their respective obligations
hereunder.
ARTICLE 4
COVENANTS OF THE CS PARTIES
4.01 PRE-CLOSING OPERATIONS. Except to the extent not
reasonably practicable in light of this Agreement and the
transactions contemplated by this Agreement and the Transaction
Documents, CS covenants and agrees (and shall cause the other CS
Parties to comply with this covenant), except as specifically
consented to in writing by KO (which consent shall not be
- 32 -
unreasonably withheld or delayed), that from the date of this
Agreement to each Applicable Closing Date, the Purchased
Businesses shall be operated and conducted only in the ordinary
course consistent with past practices, and shall carry on their
business in the same manner as currently conducted and not make
or institute any material new methods of manufacture, purchase,
sale, lease, management or operation. By way of illustration and
not in limitation of the foregoing, except to the extent not
reasonably practicable in light of this Agreement and the
transactions contemplated by this Agreement and the Transaction
Documents, CS agrees and shall cause the other CS Parties to
agree that from the date of this Agreement to each Applicable
Closing Date, except as set forth on Schedule 4.01 and except as
consented to in writing by KO (which consent shall not be
unreasonably withheld or delayed) as follows:
(a) Each of the Purchased Businesses shall manage its
working capital, including cash, receivables, other current
assets, trade payables and other current liabilities in a fashion
in all material respects consistent with past practice, including
without limitation by selling inventory and other property in an
orderly and prudent manner and paying outstanding obligations,
trade accounts and other indebtedness as they come due.
(b) Each of the Purchased Businesses shall maintain in
all material respects its assets, and the CS Parties shall
maintain in all material respects the Assets, in their present
state of repair, normal wear and tear excepted.
(c) Each of the Purchased Businesses shall use its
commercially reasonable efforts to keep available in all material
respects the services of its employees and to preserve in all
material respects the goodwill of its business and relationships
with its customers, licensors, suppliers, distributors and
brokers.
(d) Each of the Purchased Businesses shall continue in
all material respects advertising, promotional programs and
incentives in a manner consistent with past practices.
(e) The Purchased Businesses shall not make any
material loans or other material advances to any present or
former employees (including retirees), directors or independent
contractors (or their dependents, spouses or beneficiaries),
except in the ordinary course of business consistent with past
practice.
(f) The bottling agreements, distribution agreements
and other commercial arrangements entered into after the date of
this Agreement (including any amendments to existing agreements)
to which CS or any of its Affiliates or the Purchased
Businesses is a party and with respect to which it derives
revenues and profits from the businesses associated with the
Owned Trademarks in each country shall be on arms' length terms
and on terms which shall provide CS, its Affiliates and the
Purchased Businesses with benefits from such arrangements which
are consistent with the ordinary course of their beverages
business, recognizing that the terms of such agreements may need
to be different in launch markets, developing markets, etc. From
and after the date of this Agreement, none of CS or any of its
Affiliates or the Purchased Businesses will enter into any
agreements or arrangements or any amendments to any agreements or
arrangements pursuant to which the income stream associated
- 33 -
with any Owned Trademarks in any country is shifted to any other
less than wholly owned entity or country or brand that is not
included in the transactions contemplated by this Agreement.
(g) None of the Purchased Businesses shall take any
action referred to in Section 2.22, and none of CS and the other
CS Parties, shall take any action referred to in Section 2.22
with respect to any of the Purchased Businesses.
4.02 ACCESS. From the date of this Agreement through each
Applicable Closing Date in respect of the relevant Purchased
Businesses, CS shall (and shall cause each of the other CS
Parties and the Purchased Businesses to) (i) provide each of the
KO Parties and its designees with such information as any of the
KO Parties may from time to time reasonably request with respect
to the Purchased Businesses and the transactions contemplated by
this Agreement, (ii) provide each of the KO Parties and its
designees, officers, counsel, accountants and other authorized
representatives reasonable access, upon reasonable notice, to the
books, records, offices, personnel, counsel and accountants of
the Purchased Businesses, as any of the KO Parties or its
designees may from time to time reasonably request, and (iii)
permit each of the KO Parties and its designees to make such
reasonable inspections thereof as any of the KO Parties may
reasonably request. No such investigation shall limit or modify
in any way the obligations of the CS Parties with respect to any
breach of their representations, warranties, covenants or
agreements contained in this Agreement or any of the other
Transaction Documents.
4.03 FINANCIAL STATEMENTS.
(a) Until the Subsequent Closing Expiration Date, as
promptly as practicable after each of CS's quarterly accounting
periods subsequent to September 30, 1998 and prior to the
Applicable Closing in respect of the relevant Purchased
Businesses, CS will cause to be delivered to each of the KO
Parties periodic financial reports relating to the Purchased
Businesses and to that quarter in the form CS customarily
prepares for internal purposes, including, without limitation, a
periodic interim unaudited balance sheet and income statement,
and any audited annual financial statements prepared with respect
to the Purchased Businesses. CS covenants that such financial
statements will be prepared on a basis consistent with prior
periods except for any changes required by applicable generally
accepted accounting principles and will not contain any material
misstatement.
(b) CS shall reasonably cooperate with KO in
connection with the preparation by KO of any financial statements
to be prepared in connection with any filing to be made by KO
with the U.S. Securities and Exchange Commission relating to the
transactions contemplated by this Agreement and the Transaction
Documents.
4.04 ACQUISITION PROPOSALS. Prior to the Threshold Closing
or termination of this Agreement (and after the Threshold Closing
except with respect to a Takeover Proposal), none of the CS
Parties and the Purchased Businesses shall, and the CS Parties
and the Purchased Businesses shall not permit any of their
officers, directors, employees, agents or affiliates to, (a)
solicit, initiate, endorse, entertain, enter into any agreement
with respect to or encourage submission of proposals or offers,
or accept any offers, from any Person relating to any
- 34 -
acquisition, purchase, transfer, license or assignment of any
interest in the Owned Trademarks, any of the Other Assets or all
or any material amount of the assets of, or any equity interest
in, or any merger, consolidation, share exchange, business
combination or similar transaction with or involving, any of the
Purchased Businesses (an "Acquisition Proposal"), or (b)
participate in any discussions or negotiations regarding, or
furnish to any other Person any information with respect to, or
otherwise cooperate in any way with or assist, facilitate or
encourage any Acquisition Proposal by any other Person; provided
that nothing contained in this sentence shall prohibit the CS
Board of Directors from entering into discussions or negotiations
with any Person that makes an unsolicited bona fide written
proposal regarding (i) the acquisition of all or a majority of
the outstanding capital stock of CS, (ii) the acquisition of all
or substantially all of the assets of CS, or (iii) a merger,
consolidation, share exchange, business combination or other
similar transaction which would result in a change of control of
CS (any of the foregoing in clauses (i), (ii) or (iii), a
"Takeover Proposal") if, and only to the extent that (i) the
Board of Directors of CS determines in good faith, following the
receipt of and consistent with the advice of outside legal
counsel, that such action is required in order for the CS Board
of Directors to comply with its fiduciary duties under applicable
law, and (ii) prior to providing any information or data relating
to the Purchased Businesses to any Person in connection with a
Takeover Proposal by any such Person, such Board of Directors
receives from such Person an executed confidentiality agreement
on customary terms covering the Purchased Businesses. CS agrees
that it will immediately cease and cause to be terminated any
existing activities, discussions or negotiations with any parties
conducted theretofore with respect to any Acquisition Proposal.
CS agrees that it shall keep KO informed, on a current basis, of
the status and terms of any such proposals or offers (other than
any Takeover Proposal) and the status of any such discussions or
negotiations (other than any Takeover Proposal). Notwithstanding
this Section 4.04, CS may enter into new franchise agreements in
the ordinary course of business consistent with past practice,
subject to Section 5.09.
4.05 TRANSFER TAXES. All transfer taxes, duties and fees,
including, but not limited to, stamp duties, capital duties,
sales taxes, use taxes, stock transfer taxes, document recording
fees, notary fees, real property transfer taxes, and excise taxes,
arising out of or in connection with the consummation of the
transactions contemplated hereby and by the Transaction Documents
shall be paid one-half by the CS Parties on the one hand, and one-
half by the KO Parties on the other hand.
4.06 CONSULTATION. In connection with the continued
operation of the Purchased Businesses and the Assets between the
date of this Agreement and each Applicable Closing Date, CS shall,
and shall cause the CS Parties to, communicate in good faith on a
regular and frequent basis with one or more representatives of KO
with respect to the ongoing operations of the Purchased
Businesses and the Assets. CS acknowledges that the KO Parties
do not and will not waive any rights they may have under this
Agreement as a result of such communications. Without limiting
the generality of the foregoing, until the Applicable Closing
Date, CS shall consult with the KO Parties concerning all
material business and operating decisions affecting any of the
Purchased Businesses. Notwithstanding the foregoing, the CS
Parties shall not be required by this Section 4.06 to disclose
any information to the KO Parties in violation of any applicable
law or regulation.
- 35 -
4.07 TRANSITION SUPPORT. In order to ensure a smooth
transition of information systems and services and other
functions which are critical to the conduct of the business
operations of the Purchased Businesses for a period of six
months after the Threshold Closing Date, CS agrees to, and shall
cause the other CS Parties to, at KO's expense cooperate with and
provide the KO Parties with all such reasonable assistance as the
KO Parties determine in good faith is necessary to permit them to
receive the full benefit of the Purchased Businesses being
acquired pursuant to this Agreement.
4.08 RELEASES. If an Applicable Closing occurs, then CS
hereby (and CS shall cause the other CS Parties to)
unconditionally, absolutely and irrevocably releases each of the
Purchased Businesses acquired in connection with such Applicable
Closing from any and all claims, rights and causes of action
which such Person may have or may have had against any of such
Purchased Businesses or any predecessor in interest, prior to, or
arising with respect to any acts or omissions occurring or facts
or circumstances existing prior to, the Applicable Closing;
provided, however, that nothing in this Section 4.08 shall
release any rights which the CS Parties may have under this
Agreement or the Transaction Documents other than ordinary course
accounts receivable taken into account in the Working Capital
Adjustment relating to the purchase of concentrate by the XX XXXX
Operations.
4.09 DELIVERY OF UPDATED SCHEDULES AND OTHER DOCUMENTS.
(a) Within three to six days prior to the Threshold
Closing and each other Applicable Closing involving a Threshold
Country or otherwise occurring within one year of the Threshold
Closing, CS shall deliver to KO revisions to the Disclosure
Schedules delivered in connection with the execution of this
Agreement to the extent necessary to make such Disclosure
Schedules accurate and complete as of each Applicable Closing.
Delivery of the revisions of the Disclosure Schedules shall be
for informational purposes only and shall not enlarge, limit the
rights or affect the obligations of any party hereunder. Such
revisions to the Disclosure Schedules shall not constitute the
Disclosure Schedules for purposes of this Agreement.
(b) Within thirty days after the date hereof, CS shall
provide KO with the following:
(i) a true, correct and complete list of all
material permits, material licenses and other material
governmental authorizations held by the Purchased Businesses or
relating to the Assets, including all material permits, material
licenses and other material governmental authorizations held by
or relating to the Purchased Businesses pursuant to the
Environmental Laws;
(ii) a true, correct and complete list of all
insurance policies currently in force naming any of the Purchased
Businesses or any employees thereof as an insured or beneficiary
or as a loss payable payee or for which any of the Purchased
Businesses has paid or is obligated to pay all or part of the
premiums;
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(iii) a true, correct and complete list of the ten
largest suppliers of goods or services to the Purchased
Businesses (in terms of amounts billed) and the ten largest
customers of the Purchased Businesses (in terms of liters sold)
during the 12-month period ended December 31, 1998;
(iv) a true, correct and complete list of all
Employee Benefits Plans;
(v) a true, correct and complete list and
description of all the property other than real property with a
book value in excess of U.S. $100,000 per item that the Purchased
Businesses currently own or lease or have agreed (or have an
option) to purchase, sell or lease; and
(vi) true, correct and complete lists of (A) all
on-site and off-site locations where any of the Purchased
Businesses has stored, disposed of or arranged for the disposal
of Material of Environmental Concerns, and (B) all underground
storage tanks, and the capacity and contents of such tanks,
located on property owned or leased by any of the Purchased
Businesses.
(c) At least thirty days prior to each Applicable
Closing, CS shall deliver to KO a list of the officers and
directors of the Purchased Company and Subsidiaries to be
acquired at such Applicable Closing.
(d) Upon the request of KO after the sixtieth day
following the date hereof, CS shall deliver to KO a list setting
forth the names and annual salary and compensation of all
employees of the Purchased Businesses.
4.11 ACCOUNTS RECEIVABLE. CS shall cause all accounts
receivable of the Purchased Businesses owing by CS or any
Affiliate of CS (including those accounts receivable reflected
on the 1997 Balance Sheets and those incurred since the date of
the 1997 Balance Sheets) to be paid in full prior to the
Applicable Closing Date other than ordinary course accounts
receivable taken into account in the Working Capital Adjustment
relating to the purchase of concentrate by the XX XXXX Operations.
4.12 COLLECTIVE BARGAINING AGREEMENTS. CS shall, and shall
cause the other CS Parties to, keep KO fully and promptly
informed of any negotiations relating to any collective
bargaining agreement to which any of the Purchased Businesses is
or may become a party, and shall, if KO so requests, consult with
KO regarding such negotiations.
4.13 INSURANCE POLICIES. Subject to the following sentence,
as of each Applicable Closing Date, the Purchased Businesses
transferred on such Applicable Closing Date shall no longer be
covered by any policies of insurance of CS or its Affiliates
(other than policies held expressly in the name of such Purchased
Businesses) (the "CS Policies") and KO shall be required to
arrange any appropriate insurance coverage. Notwithstanding the
foregoing, if KO in its reasonable judgment determines that the
failure to continue any of the CS Policies in respect of such
Purchased Businesses could result in potential Losses to KO which
would not be covered
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by insurance policies which could be put in place by KO after
the Applicable Closing Date, then CS shall, to the extent
possible, cause such CS Policies to be continued at KO's expense
in respect of such Purchased Businesses (including, without
limitation, any future increase (or loss of any future decrease)
to CS in its premiums to the extent related to any losses
incurred in connection with such continuation).
4.14 TRANSFER OF DPBL SHARES. Prior to the Applicable
Closing Date with respect to the Purchased Company, Cadbury
Schweppes Ireland Ltd. ("CSIL") shall transfer to the Purchased
Company good, valid and marketable title to the 20% interest that
CSIL owns in DP Beverages Ltd. ("DPBL"). In addition, prior to
the Applicable Closing Date, CS shall (i) cause Cadbury Beverages
Canada Inc. and the Purchased Company to transfer to the
Purchased Company all legal and beneficial ownership in and to
good, valid and marketable title to all of the outstanding
capital stock of Canada Dry Corporation Limited and (ii) cause
each owner of shares of the Purchased Company and the
Subsidiaries (other than a Purchased Company) to transfer to the
KO Buyers (or one of their nominees) all of such shares.
ARTICLE 5
COVENANTS OF THE PARTIES
KO and CS hereby covenant to and agree with one another as
follows:
5.01 APPROVALS OF THIRD PARTIES; SATISFACTION OF CONDITIONS
TO CLOSING. Subject in the case of KO to KO's existing
commitments as described in Schedule 5.01, KO and CS will use
their respective reasonable best efforts, and will cooperate with
one another, to secure all necessary consents, approvals,
authorizations and exemptions from Governmental Authorities and
other third parties in connection with the transactions
contemplated by this Agreement and the Transaction Documents.
Subject in the case of KO to KO's existing commitments as
described in Schedule 5.01, KO and CS will use their reasonable
best efforts, and the parties shall cooperate in good faith, to
obtain the satisfaction of the conditions specified in Articles
6 and 7, as shall be required in order to enable the parties to
cause the Threshold Closing and each Subsequent Closing to occur
as promptly as practicable after the date of this Agreement. It
is specifically agreed that the obligations set forth in this
Section 5.01 shall include the obligation of the parties to
vigorously seek to avoid the imposition of any prohibition,
injunction, temporary restraining order or other order or
decision ("Negative Decision") in any suit or administrative
proceedings which would otherwise result in the failure of
closing conditions to be satisfied with respect to any country
and to vigorously pursue any available non-frivolous appeals
against any such Negative Decisions (including, without
limitation, to the governmental bodies listed on Exhibit 5.01)
with a view of removing any such impediment to closing.
5.02 CONFIDENTIALITY.
(a) From and after the date of this Agreement, each of
KO and CS shall hold, keep, treat and deal with all Confidential
Information (as defined in Section 5.02(b)) in accordance with
the terms of this Section 5.02.
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(b) For purposes of this Section 5.02, the following
terms shall have the following meanings:
"Business" means the global beverage business of each
of KO and CS.
"Confidential Information" means:
(i) all Information relating directly or
indirectly to the Business of a party that is disclosed by or
obtained directly or indirectly (whether by the receipt of
documents, orally or through observation), separately or
collectively, from KO or CS or any of their respective Affiliates
or agents (collectively, with KO or CS, referred to as the "KO
Group" or "CS Group" or "Groups", as indicated by the context);
(ii) all Information relating to either party
and/or any member of its Group including, without limitation,
Information relating to the assets, business, trading practices,
plans, proposals and/or trading prospects of such party and/or
any member of its Group that is disclosed by or obtained directly
or indirectly (whether by the receipt of documents, orally or
through observation) from that party or any member of its Group;
and
(iii) all Information obtained in any way (whether
directly or indirectly) from any director, officer, employee,
agent, professional advisor or contractor of either party or any
member of such party's Group;
BUT EXCLUDING:
(i) all Information that a party can show by
written records is at the time of receipt by it or comes to be
generally available to the public otherwise than as a consequence
of a breach by such party, its directors, officers, employees,
agents, professional advisers or contractors or any other person
referred to in paragraph (c) below; and
(ii) all Information that is shown by written
records to be properly and lawfully in a party's possession or
available to such party prior to the time that it is disclosed to
or obtained by such party and which was not obtained directly or
indirectly from the other party or any member of its Group nor
from another source bound by a duty of confidentiality to the
party or any member of its Group.
All references to Confidential Information in this Section
5.02 shall be to the whole or any parts thereof as the context
permits.
"Information" means all financial, trading, business,
organizational or legal information of any nature whatsoever in
whatever form, including, without limitation, all data, know-how,
analyses, compilations, studies, collections of data, proposals
and plans whether in writing, conveyed orally or by any telex,
recording, diagram, financial statements, computer program or
other machine-readable medium and shall also include all data,
know-how, analyses, compilations, studies, summaries, collection
of data, proposals and plans containing or otherwise
- 39 -
reflecting or generated from such information.
(c) Each party shall and shall cause its advisers to:
(i) treat and keep all Confidential Information
as secret and confidential and not (directly or indirectly)
divulge, reveal, publish, communicate or disclose any
Confidential Information to any other Person, except:
(A) with the prior written consent of the
other party; or
(B) as may be required by law (but only
after reasonable consultation with the other party);
(ii) not use any Confidential Information in any
way or for any purpose (including, but not limited to, any
competitive or commercial purpose) other than the implementation
of the transactions contemplated by this Agreement and the
Transaction Documents;
(iii) (A) take all such action as may be
necessary to maintain the secrecy and confidentiality of the
Confidential Information and to ensure that the Confidential
Information is not disclosed by any Person in whole or in part
contrary to any of the terms of this Section 5.02; and
(B) under all circumstances, be responsible
for, and indemnify and keep the other party indemnified from and
held harmless against, any breach of this Section 5.02 by itself,
its directors, officers, employees, agents, professional advisers
or contractor or any Person referred to in paragraph (b)(i) above
or any of its Affiliates.
(d) In the event that this Agreement is terminated in
accordance with its terms, any party may request in writing the
return to such party of all documents (including, without
limitation, diagrams, tapes, computer programs or other machine-
readable materials) which contain, refer to or reflect any
Confidential Information which has been supplied or made
available to the other party or any of its directors, officers,
employees, agents, professional advisers or contractors or any
Person referred to in paragraph (c) above or any Affiliate of the
other party. Promptly after receiving such request, the other
party shall return all requested materials and will certify to
the other party that it has complied in full with the provisions
of this paragraph. Analyses, compilations, studies or other
documents prepared by such party's directors, officers, employees,
agents, professional advisers or contractors in a good faith
effort to evaluate commercial opportunities will be held by such
party or destroyed. Notwithstanding the return or retention of
such documents, the obligations of confidentiality and all other
obligations set out in this Section 5.02 shall remain in full
force and effect.
5.03 TRADE SECRETS, CONFIDENTIAL INFORMATION AND
NONCOMPETITION COVENANTS.
(a) For the purposes of this Section 5.03, the
following definitions shall apply:
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(i) "Competitive Activities" shall mean the manufacture,
distribution and sale of concentrates, essences, beverage bases
and syrups for the production of carbonated soft drinks and the
manufacture, distribution and sale of mineral water, bottled
water and similar water products.
(ii) "Confidential Information" shall mean any confidential
data or confidential information, other than Trade Secrets, which
is valuable to and used by any of the Purchased Businesses and
not generally known to competitors of the Purchased Businesses or
otherwise publicly available.
(iii) "Noncompete Period" shall mean the period beginning on
the Applicable Closing Date and ending on the fourth anniversary
of the Applicable Closing Date.
(iv) "Territory" shall mean any country with respect to
which the Purchased Businesses are transferred by the CS Parties
to the KO Buyers pursuant to this Agreement.
(v) "Trade Secret" shall mean information of or pertaining
to any of the Purchased Businesses, including, but not limited to,
technical or nontechnical data, a formula, pattern, compilation,
program, device, method, technique, drawing, process, financial
data, financial plan, product plan, list of actual or potential
agents or customers, or other information similar to any of the
foregoing, which (i) derives economic value, actual or potential,
from not being generally known to, and not being readily
ascertainable by proper means by, other persons who can derive
economic value from its disclosure or use, and (ii) is the
subject of reasonable efforts by any of the Purchased Businesses
to maintain its secrecy.
(b) From and after the Applicable Closing Date in
respect of a Purchased Business, the CS Parties shall hold in
confidence all Trade Secrets and all Confidential Information in
each Territory, and shall not disclose, publish or make use of
Trade Secrets or Confidential Information in each Territory
without the prior written consent of KO.
(c) The CS Parties agree as follows:
(i) The CS Parties acknowledge that to protect adequately
the interest of the KO Parties it is essential that any
noncompete covenant with respect thereto cover all Competitive
Activities and the entire Territory.
(ii) The CS Parties hereby agree that the CS Parties shall
not, during the Noncompete Period, in any manner, directly or by
assisting others, engage in, have any equity, or profit interest
in, or render services of any executive, administrative,
supervisory, marketing, production or consulting nature to any
Person that conducts any of the Competitive Activities in any
Territory (excluding for such purposes the ownership of less than
5% of the outstanding equity of any publicly traded company with
respect to which none of the CS Parties has any representation on
the board of directors or similar governing body).
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(iii) The CS Parties hereby agree that the CS Parties shall
not, during the Noncompete Period, in any manner, directly or by
assisting others, solicit or accept, or attempt to solicit or
accept, any business from any agent, customer or franchisee of
any of the Purchased Businesses, including actively sought
prospective agents, customers or franchisees, for purposes of
providing products or services that are competitive with those
provided by the Purchased Businesses in any Territory.
(iv) Notwithstanding the foregoing provisions of Section
5.03(c)(i), (ii) and (iii), nothing in this Section 5.03 shall
(A) prevent CS or any of its Affiliates from engaging in any
Competitive Activities outside of any Territory so long as such
activities do not involve in any material respect any Competitive
Activities within the Territory, (B) prevent CS from supplying
products or services to bottlers or distributors located outside
any Territory which are not affiliates of CS which may sell or
distribute products or services in any Territory so long as CS
does not encourage such sale or distribution, provided that CS
shall not be required to prevent or hinder passive parallel trade
or (C) restrict the activities of the Joint Venture in France
with Acqua Minerale San Xxxxxxxxx spa, the German Joint Venture
or the continuation of the bottled water line and related
distribution arrangements for San Xxxxxxxxx in CS's Belgian COBO
operations.
(d) Except as set forth in Section 5.06, the CS Parties
hereby agree that the CS Parties shall not in any manner,
directly or by assisting others, (A) on the Applicable Closing
Date in respect of a Purchased Business and during the two years
immediately thereafter, hire or actively solicit for employment
any officer or director of any of the Purchased Businesses or
(B) on the Applicable Closing Date in respect of a Purchased
Business and during the three years immediately thereafter,
actively solicit for employment any other present or former
employee of any of the Purchased Businesses; provided that
nothing in clause (B) shall restrict any general advertisement
by CS which is not directed at any such employees individually or
as a group.
(e) KO hereby agrees that the KO Buyers shall not, in any
manner, directly or by assisting others on the Threshold Closing
Date and during the three years immediately thereafter actively
solicit for employment any officer or director or any other
present or former employee of (i) any of the Purchased Businesses
retained by the CS Parties, or (ii) any of the CS Parties'
carbonated soft drink business in any Excluded Countries;
provided that nothing in this clause (e) shall restrict any
general advertisement by KO which is not directed at any such
employee individually or as a group.
(f) If a judicial or arbitral determination is made that
any of the provisions of this Section 5.03 constitutes an
unreasonable or otherwise unenforceable restriction against the
CS Parties, the provisions of this Section 5.03 shall be rendered
void only to the extent that such judicial or arbitral
determination finds such provisions to be unreasonable or
otherwise unenforceable. In that regard, the parties to this
Agreement hereby agree that any judicial or arbitral authority
construing this Agreement shall be empowered to sever any
prohibited business activity, time period or geographical area
from the coverage of this Section 5.03 and to apply the
provisions of this Section 5.03 to the remaining business
activities and the remaining time period
- 42 -
not so severed by such judicial or arbitrate authority.
Moreover, notwithstanding the fact that any provision of this
Section 5.03 is determined not to be specifically enforceable,
the KO Parties shall nevertheless be entitled to recover monetary
damages as a result of the breach of such provision by the CS
Parties. The time period during which the prohibitions set forth
in this Section 5.03 shall apply shall be tolled and suspended
for a period equal to the aggregate quantity of time during which
any CS Party violates such prohibitions in any respect.
5.04 TAX MATTERS.
(a) Except as otherwise provided in this Section
5.04, it is expressly understood and agreed that the CS Parties
shall be liable for all Taxes (as defined in Section 2.23) for
any taxable period or portion thereof ending on or before the
Applicable Closing Date. For any period for which the applicable
law does not permit the Purchased Businesses to treat the
Applicable Closing Date as the last day of a taxable period (a
"Straddle Period"), then, for purposes of this Agreement, any
Taxes that are attributable to any of the Purchased Businesses
through the Applicable Closing Date shall be the Tax that would
otherwise be due as if the Applicable Closing Date was the last
day of a taxable period, except that in the case of Taxes such as
property taxes that are imposed on a periodic basis (which, for
the avoidance of doubt, shall in no event include income taxes),
and measured by the level of any item (other than an item that is
required to be determined as of the Applicable Closing Date or
which is clearly determinable as of the Applicable Closing Date),
the Taxes attributable to the Purchased Businesses through the
Applicable Closing Date shall be the amount of such Taxes for the
entire period multiplied by a fraction the numerator of which is
the number of calendar days in the period ending with the
Applicable Closing Date and the denominator of which is the
number of calendar days in the entire period. The KO Buyers
shall be responsible for Taxes solely attributable to any
transactions occurring on the Applicable Closing Date but after
the Applicable Closing that are not in the ordinary course of
business consistent with past practice. Notwithstanding the
foregoing sentence, for purposes of this Section 5.04, any Tax
that arises after the Applicable Closing (whether or not on the
Applicable Closing Date) and that would not have been incurred
but for the existence of a potential liability for Tax arising
from the use of any form of group transaction relief as described
in Section 2.23(b)(xii) that existed on or before the Applicable
Closing Date (whether or not disclosed on Schedule 2.23) shall be
deemed to be Tax for a taxable period or portion thereof ending
on or before the Applicable Closing Date.
(b) The CS Parties shall be responsible for causing
the Purchased Businesses to file all Tax Returns for the taxable
periods of the Purchased Businesses ending on or before the
Applicable Closing Date and which are due (excluding extensions)
before the Applicable Closing Date and for making any required
payments with respect to such returns. In preparing and filing
such Tax Returns of the Purchased Businesses the CS Parties shall
not materially deviate from the manner in which any item of
income or expense of any of the Purchased Businesses was reported
in prior years, except as required by law.
(c) The KO Buyers shall be responsible for filing or
causing the Purchased Businesses to file all Tax Returns not
required to be filed by the CS Parties pursuant to Section
5.04(b), and for making or causing the Purchased Businesses to
make any required payments
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with respect to such returns. In preparing and filing income
Tax Returns of the Purchased Businesses for any Straddle Period,
the KO Buyers shall not materially deviate from the manner in
which any item of income or expense of any of the Purchased
Businesses was reported in prior years, except as required by law.
The KO Buyers shall provide the CS Parties with a draft of the
Tax Return for any Straddle Periods of the Purchased Businesses
together with a statement (with which the KO Buyers will make
available supporting schedules and information) certifying the
amount of Tax shown on such Tax Return that is allocable to the
CS Parties pursuant to Section 5.04(a) hereof at least ten
business days prior to the due date (including any extension
thereof) for the filing of such Tax Return, and the CS Parties
shall have the right to review such Tax Return and statement
prior to the filing of such Tax Return. The CS Parties and the
KO Buyers agree to consult and to attempt in good faith to
resolve any issues arising as a result of the review of any such
Tax Return and statement by the CS Parties. Payment by the CS
Parties of any amounts due under this Section 5.04 in respect of
Taxes shall be made (i) with respect to Straddle Period Taxes, at
least three calendar days before the due date of the applicable
estimated or final Tax Return required to be filed by the
Purchased Business on which is required to be reported income or
other amounts for a Straddle Period, or (ii) with respect to all
other Taxes, within five business days following either an
agreement between the CS Parties and the KO Buyers that an amount
is payable pursuant to this Section 5.04 or the assessment of
such Tax by an applicable taxing authority.
(d) After the Applicable Closing Date, the KO Buyers
shall have the right, subject to the other provisions of this
Section 5.04, to direct the handling of all matters relating to
the Tax liabilities of the Purchased Businesses for periods
ending after the Applicable Closing Date, including, without
limitation, the preparation of all returns, the payment of all
liabilities, the prosecution of all administrative and judicial
remedies, the execution of any closing agreement or any consent
or waiver extending the statute of limitations and the filing of
any claim for refund.
(e) The KO Buyers on the one hand, and the CS Parties
and the Purchased Businesses on the other hand, each shall use
their reasonable best efforts to provide each other with such
assistance as may reasonably be requested by any of them in
connection with Tax matters, including but not limited to,
information with respect to the preparation of any Tax Return,
any judicial or administrative proceeding relating to liability
for Taxes, or any claim arising under this Section 5.04 and each
will retain and provide the other with any records or information
which may be relevant to such Tax Return, audit, examination,
proceedings or determination. Such assistance shall include
making employees available on a mutually convenient basis to
provide additional information or explanation of material
provided hereunder and shall include providing copies of any
relevant Tax Returns and supporting work schedules. The party
requesting assistance hereunder shall reimburse the other for
reasonable out-of-pocket expenses incurred in providing such
assistance. In addition, the KO Buyers and the CS Parties shall
notify the others reasonably in advance of entering into a
closing agreement with any taxing authority that by its terms
would bar the other party from realizing a net Tax benefit.
(f) All transfer tax costs pertaining to the
implementation of the transactions contemplated by this Agreement
shall be paid by the parties as provided in Section 4.05.
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(g) (A) After the Threshold Closing, the Purchased
Businesses shall promptly notify the CS Parties in writing of the
commencement of any Tax audit or administrative or judicial
proceeding or of any demand or claim on a Purchased Business
which, if determined adversely to the taxpayer or after the
lapse of time, would be grounds for indemnification hereunder.
Such notice shall include copies of any notice or other document
received from any taxing authority in respect of any such
asserted Tax liability. If the Purchased Businesses fail to give
the CS Parties prompt notice of an asserted Tax liability as
required by this Section 5.04(g), and if such failure to give
prompt notice results in a material detriment to the CS Parties,
then any amount which the CS Parties are otherwise required to
pay to any Purchased Business or the KO Buyers with respect to
such liability shall be reduced by the amount of such detriment.
(B) The CS Parties may elect to direct, through
counsel of their own choosing and at their own expense, any audit,
claim for refund and administrative or judicial proceeding
involving any asserted liability with respect to which indemnity
for Taxes may be sought under Section 5.04 (any such audits,
claims for refund or proceedings relating to any asserted Tax
liability are referred to herein collectively as a "Contest").
If the CS Parties elect to direct the Contest of an asserted Tax
liability, they shall within ten calendar days of receipt of the
notice of asserted Tax liability notify the affected Purchased
Business of their intent to do so, and the KO Buyers shall
cooperate and shall cause each of the Purchased Businesses or
their successors to cooperate, at the CS Parties' expense, in
each phase of such Contest. If the CS Parties elect not to
direct the Contest, fail to notify the Purchased Business of
their election as herein provided or contest their obligation to
indemnify under Section 5.04, the Purchased Business may pay,
compromise or contest, at its own expense, such asserted
liability. If the CS Parties elect to direct the Contest, the
KO Buyers shall cause the appropriate Purchased Business or its
successor promptly to empower (by power of attorney and such
other documentation as may be appropriate) such representatives
of the CS Parties as they may designate to represent the
Purchased Business in the Contest insofar as the Contest involves
an asserted Tax liability for which the CS Parties would be
liable under this Section 5.04.
(h) The parties agree to treat all payments made under
this Section 5.04, under other indemnity provisions of this
Agreement and for any misrepresentations or breach of warranties
or covenants as adjustments to the purchase price for Tax
purposes.
(i) The provisions of Sections 2.05, 2.15(b), 2.23,
4.05 and 5.04 hereof shall be determinative of the respective
liabilities of the parties hereto with respect to Taxes in the
event that any other provision of this Agreement could otherwise
be interpreted in a manner inconsistent with Sections 2.05,
2.15(b), 2.23, 4.05 or Section 5.04 hereof.
(j) Prior to the Threshold Closing, the parties will
agree in writing upon an allocation of the Purchase Price among
the Purchased Businesses and shall report such allocation for all
tax purposes and in all tax filings.
5.05 OTHER MATTERS. The parties agree to comply with their
obligations set forth in Exhibit 5.05.
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5.06 EMPLOYEE MATTERS.
(a) As of the Applicable Closing Date, the KO Buyers
shall offer employment to (in the case of Persons who are not
employees of the Plants), or continue to employ (in the case of
Persons who are employees of the Plants), each full and part-time
regular employee who is employed by the relevant Purchased
Business immediately prior to such Applicable Closing Date. For
a twelve month period following the Applicable Closing Date those
individuals who are on an authorized leave of absence, short- or
long-term disability leave, workers' compensation leave or
vacation leave and any employee of the Purchased Businesses who
is on secondment to another entity as of the Applicable Closing
Date will be offered employment when they are available and ready
to perform the duties of a regular employee so long as such
employee(s) are ready to perform such duties within said twelve
month period. The foregoing sentences expressly exclude those
individuals that have been agreed upon in good faith by the
parties hereto on or prior to the thirtieth day following the
date hereof in a manner consistent with the discussions between
the parties on this matter through the date hereof and such
employees shall be retained by CS. Notwithstanding the
foregoing, it is expressly acknowledged by the parties hereto
that CS or its Affiliates shall be permitted to retain the
employment of any individual who, pursuant to CS's then existing
internal job filling procedures, on his own and without
solicitation by CS or any of its Affiliates successfully applies
for another position within the CS affiliated group outside of
the Purchased Businesses. If pursuant to the preceding sentence,
in the reasonable judgement of the KO Buyers, key employees of
that portion of the Purchased Businesses would remain employed by
CS or its Affiliates or if in the reasonable judgement of KO
there have been employee departures that exceed customary levels
and that are not consistent with past practice, KO and CS hereby
expressly agree to discuss in good faith how best to address the
implications of the foregoing and its impact on KO. Any employee
who is employed by any of the KO Buyers after the Applicable
Closing Date shall be hereinafter referred to as a "Transferred
Employee." Nothing contained in this Section 5.06 shall be
construed to prevent, limit or restrict in any way KO's right to
terminate any Transferred Employee at any time following the
Applicable Closing Date.
(b) On and after the Applicable Closing Date, KO
agrees to honor those severance obligations (i) with respect to
the Transferred Employees as set forth on Schedule 5.06(b), and
(ii) CS employees in Purchased Businesses who refuse an offer of
employment by KO for a "good reason" as defined in Schedule
5.06(b), in each case subject to the limitations set forth
therein. KO shall have no obligations with respect to severance
or otherwise in the instance in which CS employees refuse an
offer of employment for other than a "good reason."
(c) The CS Parties and the KO Buyers acknowledge that
certain of the Transferred Employees are currently participating
in one or more retirement plans that are sponsored or contributed
to by the CS Parties (the "Pension Plans"). In instances where
the Transferred Employees will become participants in a funded
plan maintained or established prior to the Applicable Closing
Date by the KO Buyers, the KO Buyers will give credit to the
Transferred Employees under such plan for all service with CS and
any of its affiliates and predecessors for all purposes,
including without limitation, for eligibility, vesting and
benefit accrual purposes, to the extent that such credit was
credited under the comparable pension
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programs of CS and its affiliates immediately prior to the
Applicable Closing Date, and to the extent that such crediting is
permissible under applicable local law. In such a case, the CS
Parties agree to transfer sufficient assets to the KO Buyers to
fund such past service obligations so assumed by the KO Buyers,
determined on the basis of reasonable actuarial principles,
provided such transfer is in compliance with appropriate local
law requirements. However, no such credit shall be given for
benefit accrual purposes in cases where a Transferred Employee
has elected to cash out his pension benefit from any of the
Pension Plans of the CS Parties.
(d) KO agrees to use its reasonable best efforts to
provide as of the Applicable Closing Date medical, pension, life
and disability benefits, and cash, incentives and other
remuneration to Transferred Employees that are, in the aggregate,
no less favorable to the Transferred Employees than were the
aggregate benefits, cash and other remuneration provided to such
Transferred Employees by the CS Parties immediately prior to the
Applicable Closing Date.
(e) On and after the Applicable Closing Date, the KO
Buyers shall assume all obligations attendant to any company
automobiles exclusively used in the Purchased Businesses,
including, without limitation, all lease payments, insurance
premiums and maintenance expenses, on terms that are
substantially comparable to the automobile expense reimbursement
policies that apply to such Transferred Employees immediately
prior to the Applicable Closing Date. The obligations herein,
assumed by the KO Buyers, shall continue, as regards to
individual Transferred Employees, for the duration of the
individual lease agreements applicable to automobiles currently
made available to such Transferred Employees. Thereafter, such
Transferred Employees shall be eligible for use of KO automobiles,
to the extent consistent with local KO practice.
(f) CS and KO shall take all reasonable actions to
effect the provisions of this Section 5.06 and to provide one
another and their respective agents with all reasonable and
practicable assistance relating to the matters addressed herein
regarding the establishment, administration and maintenance of
employee benefit plans and programs that apply to the Transferred
Employees. In addition, the parties agree to use their
reasonable best efforts to take all actions necessary to comply
with all applicable local laws regarding notification to and
consultation with the employees of the Purchased Businesses that
may be required by the transactions contemplated by this
Agreement and shall use their reasonable best efforts to take the
results of any such consultation into account in their actions
hereunder.
5.07 BOTTLING RIGHTS. In order to allow KO to realize its
anticipated growth projections for the Owned Trademarks, prior to
the Threshold Closing and to the extent relevant after the
Threshold Closing, CS and KO will discuss in good faith and seek
to agree upon the best manner in which to take advantage of
opportunities as they may arise that will enable CS to transfer
bottling rights and all rights associated with bottling which are
currently held by any party, provided that it is understood that
the parties are not contemplating any transfers from KO bottlers
or the XX XXXX Operations.
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5.08 NO SALES TO CERTAIN COMPETITORS.
(a) From and after the Subsequent Closing Expiration
Date (or in the case of a license, from and after the date of
this Agreement), CS agrees (and shall cause the Affiliates of CS
to agree) not to sell, dispose of, license (except as set forth
in Section 5.08(b)), assign or otherwise transfer (whether
through the sale of stock or assets or through any merger,
consolidation, share exchange, business combination or other
transaction involving any CS subsidiary or otherwise), except
pursuant to an agreement in respect of a Takeover Proposal, to
any competitor of KO with a significant global presence and with
annual revenues derived from beverage concentrate sales in excess
of U.S.$1,750,000,000 (a "Major Competitor") any direct or
indirect right, title or interest in (i) any Owned Trademark
which is not included in the Threshold Closing or a Subsequent
Closing and any similar trademark in Australia, South Africa or
France (a "Held Brand"), (ii) any brand, trademark, trade name or
similar right which is a variant of any of the Owned Trademarks
outside the United States, or (iii) any Excluded Country License
Agreement.
(b) If, after completing the process described in
Section 5.07, CS determines that it is not commercially
practicable for it to enter into alternative licensing
arrangements with another bottler and that it should enter into a
bottling agreement in a particular territory with a bottler that
is more than 30% owned by a Major Competitor, CS may enter into
such agreement but only if such agreement is on terms which are
in the ordinary course of business, consistent with past practice
and such agreement has a term no longer than ten years.
(c) From and after the Subsequent Closing Expiration
Date, if the Board of CS recommends a Takeover Proposal involving
a Major Competitor, CS enters into a definitive agreement
providing for a Takeover Proposal involving a Major Competitor or
a Takeover Proposal involving a Major Competitor is consummated,
CS hereby grants to KO a freely assignable option, exercisable
for a period of 120 days after the completion of such transaction
by written notice from KO to CS, to acquire one or more of the
Held Brands and the businesses associated therewith at the fair
market value of such Held Brands and businesses. If the option
is exercised, KO or its assignee will have one year following the
date of exercise to consummate such transaction. Any dispute
regarding such fair market value shall be resolved as follows:
If the parties are unable to reach agreement on the fair
market value within thirty days after the option is exercised,
then the parties shall mutually appoint an independent investment
banking firm of international reputation experienced in valuing
businesses of the kind conducted by the Purchased Businesses;
provided, that if the parties are unable to agree upon such an
independent investment banking firm within 10 business days, then
each party shall promptly retain its own investment banking firm
and the two investment banking firms retained by each party shall
select such independent investment banking firm within 10
business days after expiration of the initial 10 business day
period referred to above (the independent investment banking firm
appointed pursuant to the provisions of this sentence being the
"Independent Appraiser"). The Independent Appraiser shall,
within 30 business days after its appointment, determine the
disputed fair market value. The determination of the Independent
Appraiser shall be final and binding on both parties. The fees
and expenses of the Independent Appraiser shall
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be shared equally by CS and KO.
5.09 RIGHT OF FIRST NEGOTIATION. CS agrees that, if CS
determines to engage in a transaction or if CS receives a bona
fide offer in either case which could result in the direct or
indirect sale, assignment, transfer, disposition or license
(but specifically excluding licensing of Held Brands, subject
to Sections 5.07 and 5.08, if such licensing is on terms which
are in the ordinary course consistent with past practice and for
a duration of no more than ten years) of ownership or control (a
"Disposition") of all or some of the Held Brands, CS will provide
KO with written notice of its intent to engage in a Disposition
of Held Brands (setting forth in such notice the Held Brands
which CS intends to dispose of). KO shall have 20 business days
after delivery by CS to KO of such notice to notify CS that KO
desires to negotiate with CS for the acquisition of the Held
Brands specified in CS's notice to KO. If KO shall fail to
deliver such notice to CS by the expiration of such 20 business
day period, CS's obligations under this Section 5.09 shall expire
with respect to such Held Brands if there is a Disposition of
such Held Brands within 180 days thereafter (provided that if
such Disposition does not occur within such 180-day period, the
provisions of this Section 5.09 shall again apply to such Held
Brands). If KO shall timely provide such notice to CS, KO and CS
shall negotiate diligently and in good faith for a period of up
to 180 days in order to attempt to agree upon a transaction
pursuant to which KO would acquire such Held Brands. If such
negotiations shall fail to result in an agreement between KO and
CS with respect to such Held Brands, upon expiration of such
180-day period, CS's obligations under this Section 5.09 shall
expire with respect to such Held Brands if there is a Disposition
of such Held Brands within 180 days thereafter (provided that if
such Disposition does not occur within such 180-day period, the
provisions of this Section 5.09 shall again apply to such Held
Brands).
5.10 CERTAIN BRAND ACQUISITIONS. Except as set forth on
Schedule 5.10(a), prior to the Threshold Closing Date, KO agrees
not to directly or indirectly acquire any trademarks in any of
the countries set forth on Schedule 5.10(b) if such acquisition
would significantly and adversely affect the ability of KO to
obtain necessary regulatory approvals to achieve the Threshold
Condition.
5.11 AUSTRALIA. Subject to due diligence on the part of KO,
the negotiation of a definitive agreement mutually satisfactory
to KO and CS, Board approval on the part of KO and CS and
regulatory approval, KO and CS intend to enter into a transaction
pursuant to which KO would purchase for a purchase price of
U.S.$250,000,000 all of the tangible and intangible assets
primarily relating to the beverage trademarks of CS and its
Affiliates in Australia (including the Cottees Cordials business),
including all bottling assets, and would assume the ordinary
course working capital liabilities relating thereto. This
intended price reflects the assumption by KO and CS that all
carbonated soft drink brands and all non-carbonated beverage
brands owned by CS and Affiliates in Australia (including the
Cottees Cordials business) would be transferred to KO, and that
CS would make representations and warranties with respect to all
such brands, consistent with the representations and warranties
set forth in Section 2.13 of this Agreement and provide
indemnification with respect to such brands to KO consistent with
Section 9.01 of this Agreement. The parties also intend more
generally that the definitive agreement with respect to such
transaction would be generally consistent with the terms and
conditions of this Agreement,
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taking into account the size and nature of such transaction.
5.12 SOUTH AFRICA. The parties intend to negotiate and
cooperate in good faith in a timely manner to seek to develop a
transaction structure that would permit KO to enter into a
mutually acceptable commercial arrangement with each of Cadbury
Schweppes (South Africa) Ltd. and the owner of the Lemon Twist
trademark in South Africa that would enable KO to acquire for
fair value all tangible and intangible assets relating to the
trademarks used in CS's beverages business in South Africa
(including Lemon Twist) and the entire associated value stream.
5.13 ROSE'S BEVERAGES. At the Threshold Closing, CS or the
relevant Affiliate of CS and KO or the relevant Affiliate of KO
shall enter into an exclusive royalty-free, freely transferable
license agreement (the "Rose's License Agreement"), with a right
to sublicense in form and substance reasonably satisfactory to
the parties and in substantially the same form as the Excluded
Country License Agreement pursuant to which CS will grant to KO
the right to use in perpetuity the trademark "Rose's" for
beverages and any brand, trademark, trade name or similar right
connected or associated therewith for beverages (including any
variants thereof which are developed or created after the date
hereof for beverages) with respect to all countries other than
the Xxxxxx Xxxxxx, Xxxxx Xxxxxx, Xxxxxx and France (and other
than Australia, unless the Cottees Cordials are acquired
pursuant to Section 5.11). The Rose's License Agreement shall
include, without limitation, terms providing KO or the relevant
KO Affiliate with brand extensions and rights to new packaging.
If the entering into of the Rose's License Agreement would not be
permitted at the Threshold Closing, the Purchase Price will be
adjusted by the amount attributed to Rose's beverages on Schedule
1.02(b)-1.
5.14 MEXICAN COBO-TECATE FACILITY. If XX xxxxx the Mexican
XXXX, XX shall transfer, assign and deliver to the purchaser of
the Mexican COBO at no cost to such purchaser all of CS's right,
title and interest in and to the mineral water rights presently
used with respect to its Tecate, Mexico facility (the "Tecate
Facility"). CS shall also provide to such purchaser the
opportunity to elect to cause CS to fill carbonated soft drink
and mineral water products produced by the Tecate Facility at
CS's cost as determined below. Such purchaser shall have the
right to cancel such filling agreement, subject to reasonable
notice, without cost to such purchaser. In addition, such
purchaser shall not assume any liabilities or obligations
relating to the employees of the Tecate Facility. As used in
this Section 5.14, CS's "cost" means all direct costs and
reasonable overhead and other indirect costs associated with
producing such products.
5.15 GERMANY.
(a) The parties recognize that CS owns 28% of the
equity interests of a German joint venture (the "German Joint
Venture") which licenses the Schweppes Brand and certain other
brands, including XX XXXXXX Brand, from CS, which license CS
represents and warrants has a termination date of December 31,
2001 (assuming proper notice of termination is provided, which
notice CS agrees to give at the earliest possible date).
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(b) Following the Applicable Closing Date relating to
Germany, CS shall, or shall cause its appropriate Affiliate to,
make the following payments to KO, subject to the provisions of
this paragraph set forth below, at the times specified below:
September 30, 1999 US$2,400,000
March 31, 2000 US$2,625,000
September 30, 2000 US$2,850,000
March 31, 2001 US$3,075,000
September 30, 2001 US$3,300,000
If the Applicable Closing in Germany shall occur after
a scheduled payment date, CS shall not be required to make the
specified payment for such date. If the German Joint Venture
shall be terminated and the license agreement is terminated
without any objection from either of the joint venture parties
prior to any scheduled payment date, then (i) within 10 business
days after such terminations, CS shall make a payment to KO in an
amount equal to the product of (A) the amount of the next
scheduled payment and (B) a fraction, the numerator of which
shall be the number of days that shall have elapsed from the
scheduled payment date immediately prior to the termination of
the German Joint Venture to, and including, the date of such
terminations and the denominator of which shall be 182.5 and
(ii) no further payments under this paragraph (b) shall be
required.
(c) CS agrees that if KO reaches an agreement to
acquire the license rights to the XX XXXXXX Brand (and any
variants thereof) from the German Joint Venture on or prior to
December 31, 2001, then CS will waive and surrender to KO any
rights CS may have to receive, directly or indirectly, any
payment in respect of the price paid by KO to acquire such rights.
(d) CS agrees that at all times prior to January 1,
2002, it will use its commercially reasonable efforts to support,
promote, maintain and enhance the brand value associated with the
XX XXXXXX Brand (and any variants thereof) in Germany.
5.16 SYRIA. CS will cooperate with KO in an effort to
permit KO to be able to conduct the Purchased Businesses in Syria
following the Threshold Closing. If prior to the Threshold
Closing, KO in its discretion determines that it will not be able
to conduct the Purchased Businesses in Syria, then (i) the Owned
Trademarks in Syria shall be transferred to the KO Buyers, (ii)
none of the other Assets in Syria shall be transferred to the KO
Buyers (with a corresponding reduction in the Purchase Price as
described in Schedule 1.02(b)-1), (iii) the KO Buyers shall enter
into an Excluded Country License Agreement with respect to Syria,
and (iv) the other Assets shall be transferred by the CS Parties
to the KO Buyers at a Subsequent Closing at such time as the CS
Parties may determine, with the price determined based on the
value as described in Schedule 1.02(b)-1.
5.17 ZIMBABWE.
(a) The parties recognize that CS owns 44.9% of the
equity interests of a company in Zimbabwe (the "Zimbabwe Company")
which licenses certain brands, including
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Schweppes and Mazoe, from CS (the "Zimbabwe License"), which
license CS represents and warrants has a termination date of
December 31, 2001, except with respect to Whisky black, which has
a termination date of December 31, 2004.
(b) Unless otherwise agreed by the parties, on and
after the Applicable Closing in respect of Zimbabwe, CS agrees to
pay to KO promptly all dividends and other distributions or
economic benefits (on an after-tax basis based on CS's applicable
tax rate) which CS may from time to time receive from the
Zimbabwe Company prior to December 31, 2001. In addition, CS
shall indemnify KO for all losses which KO may incur arising out
of, relating to, or in connection with, any action brought by the
other shareholders of the Zimbabwe Company arising out of the
termination by KO of the Zimbabwe License at any time on or after
December 31, 2001.
5.18 INDIA. At KO's option, at the Threshold Closing or, if
KO elects, at any Subsequent Closing specified by KO, the CS
Parties shall assign, transfer and deliver to KO, AI or another
KO Buyer at no cost or expense to the KO Buyers, all of the right,
title and interest of the CS Parties in and to Cadbury Schweppes
Beverages India Private Ltd. (other than any cash or cash
equivalents held by such company, except to the extent that the
exclusion of such cash would reduce the fair market value of such
company below zero).
5.19 CHINESE JOINT VENTURE.
(a) The parties recognize that CS owns 35% of a
company in China (the "Chinese Company") which licenses the Oasis
brand in China.
(b) Prior to the Threshold Closing, CS shall cause the
Chinese Company to be liquidated so that CS (and KO following the
Threshold Closing) will have the unfettered right and title to
the "Oasis" brand in China and the unfettered right to license
such brand.
5.20 SUPPORT AGREEMENTS; CONCENTRATE AGREEMENT.
(a) With respect to any country (other than the United
States) the Purchased Businesses with respect to which are not
purchased by KO pursuant to this Agreement at the Threshold
Closing or a Subsequent Closing, the parties will enter into an
agreement for the provision by KO to CS of specific support
services in such form as the parties may mutually agree. Such
services will include, without limitation, the supply of
concentrates, as well as services related to new products,
packaging and advertising, to the extent necessary to permit CS
to continue its operations in such countries in a manner
comparable to currently conducted operations. The supply of
concentrates shall be at KO's cost as determined below. CS and
KO will negotiate in good faith on an arms-length basis the
amounts of payments to be made by CS to KO in return for such
services to be provided by KO. For purposes of this Section 5.20,
"KO's cost" means all direct costs and reasonable overhead and
other indirect costs associated with the provision of such
supplies and services.
(b) Since KO will not be purchasing the "Oasis"
trademark in all countries at
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the Threshold Closing, the parties will negotiate in good faith
regarding the terms of a supply agreement to be mutually
satisfactory to the parties relating to the supply of fruit-based
concentrate to CS for products bearing the "Oasis" trademark.
5.21 FACILITATION PAYMENTS. In consideration for the
assistance to be provided by CS in connection with closing the
transactions contemplated by this Agreement and the Transaction
Documents, KO or AI shall pay to CS in cash (i) a transition
facilitation payment in the amount of U.S.$30,000,000 on the
later of the Threshold Closing Date and July 1, 1999 (the "First
Payment Date"), and (ii) a transition facilitation payment in the
amount of U.S.$20,000,000 on the date which is seven months after
the First Payment Date. Such payment shall not be subject to
reduction or set-off for any reason.
5.22 YEAR 2000 COMPLIANCE.
(a) Following the date of this Agreement, CS shall
provide KO with such access and information as KO may reasonably
request relating to any issues regarding whether the Plants are
Year 2000 Compliant, and shall permit, at KO's sole cost and
expense, any consultant engaged by KO to have such access and
receive such information as KO may reasonably request in order
to permit such consultant to assess the issues regarding whether
the Plants are Year 2000 Compliant.
(b) If any of KO, the KO Buyers or the Plants:
(i) is required to expend funds in excess of
U.S. $200,000 in order to execute the Y2K Plan; or
(ii) reasonably determines in good faith, prior to
January 1, 2000, that steps additional to those set forth in the
Y2K Plan are required to ensure the Year 2000 Computer Date
Problem will not affect the conduct of the business of the Plants
in any material respect, and that expenditures in excess of
U.S. $200,000 are required to take such additional steps;
then KO shall notify CS, and CS agrees that it shall either:
(A) provide the funds to KO so that KO can execute the Y2K
Plan or take the additional steps required, in which case CS
shall be relieved from any indemnification obligations under
Sections 9.01(a)(vii) in respect of such additional steps
undertaken by KO and the matters addressed by such additional
steps;
(B) implement the additional steps required by KO at CS's
expense, in which case CS shall not be subject to the
indemnification obligations under Section 9.01(a)(vii) with
respect to such additional steps and the matters addressed by
such additional steps, unless CS fails to implement or
negligently implements the required steps identified by KO;
(C) in lieu of the additional steps required by KO, suggest
an alternate plan or steps to be implemented at CS's expense in
which case CS shall be required to indemnify KO in
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accordance with Section 9.01(a)(vii) with respect to such matter
only to the extent that CS's alternate plan or steps fail to
correct the problem identified by KO or cause a Loss; or
(D) take no action, in which case CS shall indemnify KO for
any Loss caused by the identified problem in accordance with
Section 9.01(a)(vii), subject to the limitations set forth in
Section 9.01(c).
5.23 ENVIRONMENTAL COMPLIANCE. If any of KO, the KO Buyers
or the Purchased Businesses reasonably determines in good faith
after any Applicable Closing Date that steps are necessary to
avoid or mitigate a potential Environmental Claim arising from
any conditions, facts, circumstances, events or practices
relating to the Plants, the properties covered by the Assumed
Leases or the Malvern Facility (but specifically excluding
practices to the extent of any continuation of such practices by
KO after the Applicable Closing Date) on or prior to the
Applicable Closing Date, then KO shall notify CS and CS agrees
that it shall either:
(a) provide the funds to KO so that KO can avoid or
mitigate the Losses associated with such Environmental Claim; or
(b) take no action, in which case CS shall indemnify
KO for any Loss associated with any such Environmental Claim
which may arise under Section 9.01(a)(v)(B) or 9.01(a)(vi), in
accordance with and subject to any applicable limitations set
forth in Section 9.01(c), provided that in such event, CS shall
not be entitled to assert mitigation or any similar defense as a
defense to CS's indemnity obligation to any Protected Party (as
defined in Section 9.01(a)) for any such Environmental Claim.
5.24 DEBT. CS shall repay, prior to the Applicable Closing
Date, all Debt of the Purchased Company and the Subsidiaries. If
such Debt cannot be repaid due to restrictions on financial
assistance or similar laws in the relevant jurisdictions, the KO
Buyers shall assume such Debt (such Debt so assumed by the KO
Buyers being the "Assumed Debt") at the Applicable Closing,
subject to an adjustment in the Purchase Price as described in
Section 1.02.
5.25 NON-ASSIGNABLE CONTRACTS, LICENSES, ETC. To the extent
that any Contract for which assignment to the KO Parties is
provided for in this Agreement is not assignable without the
consent of another party, this Agreement shall not constitute an
assignment or an attempted assignment thereof if such assignment
or attempted assignment would constitute a breach thereof. CS
shall, and shall cause the other CS Parties to, use their
reasonable best efforts to obtain the consent of such other party
to the assignment of any such contract to the KO Parties in all
such cases in which such consent is or may be required for such
assignment. If such consent shall not be obtained within a
reasonable period of time prior to the Applicable Closing, CS
shall, and shall cause the CS Parties to, cooperate with the KO
Parties in any reasonable arrangement designed to provide for the
KO Parties the benefits under any such contract. If such consent
is not obtained under the license agreements from Sunkist Growers
to CS, the amount of the Purchase Price shall be reduced at the
Threshold Closing by the amounts assigned to such items on
Schedule 1.02(b)-1. Receipt of such consents from the Sunkist
Growers shall not be a condition to any closing hereunder.
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5.26 REPLACEMENT OF CS GUARANTEES. To the extent any CS
Party is liable or responsible (whether by guarantee, letter of
credit or otherwise) for any Assumed Liability (each, a "CS
Guarantee"), KO shall use its commercially reasonable efforts to
cause such CS Party to be removed from such CS Guarantee and
shall indemnify and hold harmless the CS Parties from against any
and all Losses relating to or arising out of any such CS
Guarantee.
5.27 SCHWEPPES EEIG. As of the Threshold Closing, CS shall
cause the Purchased Company and the Subsidiaries to be removed
from the Schweppes Europe EEIG and, upon such removal, no further
services will be provided thereunder to the Purchased Company and
the Subsidiaries except as otherwise provided by this Agreement.
5.28 INVOICING OF CC&SB FOR CERTAIN MATTERS. KO shall
invoice Coca-Cola & Schweppes Beverages Limited, and shall
promptly provide CS with copies of such invoices, for "Extracts"
supplied to Coca-Cola & Schweppes Beverages Limited pursuant to
the Licensor Agreements. CS shall invoice Coca-Cola & Schweppes
Beverages for the Concentrate Surcharge. If Coca-Cola &
Schweppes Beverages Limited shall remit any portion of the
Concentrate Surcharge to KO or a KO Affiliate, KO shall cause
such amount to be promptly paid over to CS.
5.29 CERTAIN FURNITURE AND EQUIPMENT. Following the date of
this Agreement, KO shall have the opportunity to review and
consider whether it desires to receive the rights under, and
assume the liabilities and obligations under, all or some of the
furniture and equipment leases relating to offices used to
conduct the beverages business of CS and its Affiliates outside
the United States (the "Furniture and Equipment Leases"). KO
shall be entitled to receive the rights under, and assume the
liabilities and obligations under, such Furniture and Equipment
Leases as KO so designates at an Applicable Closing.
5.30 TRADEMARK COOPERATION. From and after the date of this
Agreement, CS shall (i) without limiting KO's rights under
Section 4.02, provide reasonable access, upon reasonable notice,
to KO and KO's representatives to the files in CS's possession or
control relating to the Owned Trademarks as KO or KO's
representatives may reasonably request and (ii) cooperate with KO
and KO's representatives in implementing such steps as KO shall
reasonably request in order to preserve and protect any Owned
Trademarks, including the making of certain filings and the
taking of certain action as previously discussed between KO and
CS. To the extent that such steps would not otherwise be taken
by CS in the ordinary course of its business consistent with past
practices (it being acknowledged that certain filings and actions
as previously discussed by the parties are in the ordinary course
of its business consistent with past practices), such steps shall
be taken at KO's cost and expense using such of KO's personnel
and/or counsel as may reasonably be requested by CS, with such
personnel and/or counsel acting under the direction and control
of CS.
5.31 ACQUIRED RECEIVABLES.
(a) Except with respect to the Carcagente Plant and
the Athy Plant, at each Applicable Closing, the KO Buyers will
acquire from the CS Parties all of the accounts
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receivable of the Purchased Businesses transferred at such
Applicable Closing (as represented on the CS Hyperion Reporting
System as "Debtors") but only to the extent such accounts
receivable were generated in respect of concentrate sales (the
"Acquired Receivables"). The purchase price to be paid by the KO
Buyers to the CS Parties for such accounts receivable shall equal
the face amount of such accounts receivable less reductions for
bad debt reserves, which would be based upon CS's historical
percentage experience with respect to bad debts (the "Bad Debt
Reserve"). It is anticipated that the KO Buyers would also agree
with the CS Parties to assume certain agreed upon accounts
payable under marketing commitments in respect of periods prior
to each such Applicable Closing (as represented on the CS
Hyperion Reporting System as "Customer Rebates"), in which case
the purchase price for the Acquired Receivables shall be reduced
dollar-for-dollar by the amount of any such payables which the KO
Buyers agree to assume.
(b) The KO Buyers shall use their commercially
reasonable efforts to collect the relevant Acquired Receivables
after the date of each Applicable Closing. To the extent any
such Acquired Receivables are not collected within twelve months
of any such Applicable Closing, the CS Parties shall pay to the
KO Buyers on or prior to the thirtieth day after the one year
anniversary of such Applicable Closing an amount equal to the
total face value of any Acquired Receivables not so collected,
minus the total Bad Debt Reserve. If the amount of the Acquired
Receivables so collected exceeds the total face value of the
Acquired Receivables, less the total Bad Debt Reserve, the KO
Buyers shall similarly pay the amount of such excess to the CS
Parties.
(c) Except as set forth in paragraphs (a) and (b)
above, or as specifically set forth in Section 1.06, the CS
Parties shall retain at each Applicable Closing and be
responsible for all payables and other liabilities and
obligations with respect to the Purchased Businesses transferred
at such Applicable Closing.
(d) After each Applicable Closing, any payments made
to CS or any of its Affiliates in respect of Acquired Receivables
or with respect to receivables generated by the Purchased
Businesses transferred at such Applicable Closing in respect of
periods after such Applicable Closing shall be paid forthwith
(and in any event in not less than 30 days after receipt) to the
KO Buyers.
(e) Any disputes with respect to the matters described
in this Section 5.31 shall be referred to and resolved and
determined by the Review Accounting Firm, which determination
shall be binding on the CS Parties and the KO Buyers.
ARTICLE 6
CONDITIONS TO CS'S OBLIGATIONS
6.01 CONDITIONS TO THE THRESHOLD CLOSING. The obligations
of CS to be performed under this Agreement at the Threshold
Closing shall be subject to the satisfaction (or waiver by
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CS) at or prior to the Threshold Closing Date of the following
conditions:
(a) CS Country Conditions (as defined below)
sufficient to satisfy the Threshold Condition shall be satisfied.
(b) The representations and warranties of KO contained
in this Agreement shall be true and correct in all material
respects on and as of the Threshold Closing Date with the same
force and effect as though made on and as of such date; KO shall
have complied in all material respects with its covenants and
agreements set forth in this Agreement to be performed by it on
or before the Threshold Closing Date; and KO shall have delivered
to CS a certificate dated the Threshold Closing Date and signed
on behalf of KO by its duly authorized officer attesting to all
such effects described in this paragraph, which certificate shall
state that such representations and warranties are made as of the
Threshold Closing Date with the same force and effect as if made
in this Agreement as of the date hereof.
(c) Subject to Section 7.04, no suit, governmental
investigation, action or other proceeding shall be pending and
no suit, investigation, action or other proceeding by any
Governmental Authority shall be overtly threatened as a result
of, or in connection with, the transactions contemplated by this
Agreement and the Transaction Documents which, in the reasonable
opinion of counsel for CS, would be reasonably likely to result
in the restraint or prohibition of any of the CS Parties from
consummating the transactions contemplated hereby or by the
Transaction Documents, or the obtaining of damages or other
relief from the CS Parties which are material in the context
of the transactions contemplated by this Agreement and the
Transaction Documents.
6.02 CONDITIONS TO EACH SUBSEQUENT CLOSING. The obligations
of CS to be performed under this Agreement at each Subsequent
Closing shall be subject to the satisfaction (or waiver by CS) at
or prior to such Subsequent Closing Date of the following
conditions:
(a) The Threshold Closing shall have occurred.
(b) The representations and warranties of KO contained
in this Agreement shall be true and correct in all material
respects on and as of the Subsequent Closing Date with the same
force and effect as though made on and as of such date; KO shall
have complied in all material respects with its covenants and
agreements set forth in this Agreement to be performed by it on
or before the Subsequent Closing Date; and KO shall have
delivered to CS a certificate dated the Subsequent Closing Date
and signed on behalf of KO by its duly authorized officer
attesting to all such effects described in this paragraph, which
certificate shall state that such representations and warranties
are made as of the Subsequent Closing Date with the same force
and effect as if made in this Agreement as of the date hereof.
(c) Subject to Section 7.04, no suit, governmental
investigation, action or other proceeding shall be pending and
no suit, investigation, action or other proceeding by any
Governmental Authority shall be overtly threatened as a result
of, or in connection with, the transactions contemplated by this
Agreement and the Transaction Documents which, in the
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reasonable opinion of counsel for CS, would be reasonably likely
to result in the restraint or prohibition of any of the CS
Parties from consummating the transactions contemplated hereby or
by the Transaction Documents, or the obtaining of damages or
other relief from the CS Parties which are material in the
context of the transactions contemplated by this Agreement and
the Transaction Documents.
6.03 CS COUNTRY CONDITIONS. The obligations of CS to be
performed hereunder with respect to the Assets in a particular
country shall be subject to the satisfaction (or waiver by CS)
of each of the following conditions (the "CS Country Conditions"):
(a) No order, injunction or decree issued by any court
or agency of competent jurisdiction or other legal restraint or
prohibition preventing the consummation of the transactions
contemplated hereby or by the Transaction Documents with respect
to such country shall be in effect. No statute, rule,
regulation, order, injunction or decree shall have been enacted,
entered, promulgated or enforced by any Governmental Authority
which prohibits or makes illegal the consummation of the
transactions contemplated hereby or by the Transaction Documents
with respect to such country.
(b) Subject to Section 7.04, no suit, governmental
investigation, action or other proceeding shall be pending and no
suit, investigation, action or other proceeding by any
Governmental Authority shall be overtly threatened which in the
reasonable opinion of counsel for CS would be reasonably likely
to restrain or prohibit the consummation of the transactions
contemplated hereby and by the Transaction Documents with respect
to such country.
(c) All necessary governmental approvals in connection
with the transactions contemplated by this Agreement and the
Transaction Documents with respect to such country shall have
been obtained. All material consents and approvals of third
parties required in connection with the transactions contemplated
by this Agreement and the Transaction Documents with respect to
such country shall have been obtained.
ARTICLE 7
CONDITIONS TO KO'S OBLIGATIONS
7.01 CONDITIONS TO THE THRESHOLD CLOSING. The obligations
of KO to be performed hereunder at the Threshold Closing shall be
subject to the satisfaction (or waiver by KO) on or before the
Threshold Closing Date of each of the following conditions:
(a) KO Country Conditions (as defined below)
sufficient to satisfy the Threshold Condition shall be satisfied.
(b) Each of the representations and warranties of CS
contained in Sections 2.01, 2.02, 2.03, 2.04, 2.05 and 2.06 shall
be true and correct in all material respects as of the date
hereof and as of the Threshold Closing Date with the same effect
as though such representations and warranties had been made as of
the Threshold Closing Date.
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(c) Each of the representations and warranties of the
CS Parties contained in Article 2 (other than the representations
and warranties referred to in Section 7.01(b)) shall be true and
correct in all respects as of the date hereof and as of the
Threshold Closing Date with the same force and effect as though
such representations and warranties had been made as of the
Threshold Closing Date, except (i) representations and warranties
that speak as of a specified date or time other than the
Threshold Closing Date (which need only be true and correct in
all respects as of such date or time), and (ii) where the failure
or failures of such representations and warranties to be true and
correct do not and are not reasonably likely to, either
individually or in the aggregate, have or result in a Material
Adverse Effect (provided, however, that for purposes of this
paragraph, if any such representation or warranty is qualified in
any respect by materiality, by the word "material" or by words of
similar impact, such materiality, material or similar
qualifications or exceptions will in all respects be ignored
solely for purposes of the paragraph).
(d) Each of the CS Parties shall have performed and
complied in all material respects with the obligations,
agreements and conditions contained herein and in the Conveyance
Documents required to be performed or complied with by them prior
to or at the time of the Threshold Closing.
(e) The Purchased Businesses taken as a whole shall
not have suffered any Material Adverse Effect since the date of
this Agreement.
(f) Each of the CS Parties shall have delivered to KO
a certificate dated as of the Threshold Closing Date signed by a
senior officer on its behalf attesting to all of the effects
described in Sections 7.01(b), (c), (d) and (e).
(g) No statute, rule, regulation, order, injunction or
decree shall have been enacted, entered, promulgated or enforced
by any Governmental Authority which prohibits or makes illegal
consummation of the transactions contemplated hereby or by the
Transaction Documents to occur at the Threshold Closing, or,
subject to Section 7.04, would be reasonably likely to result in
damages or other relief having or reasonably likely to have a
Material Adverse Effect or damages or other relief from or with
respect to KO which are material in the context of the
transactions contemplated by this Agreement and the Transaction
Documents taken as a whole.
(h) Subject to Section 7.04, no suit, governmental
investigation, action or other proceeding shall be pending and no
suit, investigation, action or other proceeding by any
Governmental Authority shall be overtly threatened as a result of,
or in connection with, the transactions contemplated by this
Agreement and the Transaction Documents which in the reasonable
opinion of counsel for KO would be reasonably likely to result in
damages or other relief having or reasonably likely to have a
Material Adverse Effect or damages or other relief from or with
respect to KO which are material in the context of the
transactions contemplated by this Agreement and the Transaction
Documents taken as a whole.
7.02 CONDITIONS TO THE SUBSEQUENT CLOSING. The obligations
of KO to be performed hereunder at the Subsequent Closing shall
be subject to the satisfaction (or waiver by KO) on or
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before the Subsequent Closing Date of each of the following
conditions:
(a) The Threshold Closing shall have occurred.
(b) Each of the representations and warranties of CS
contained in Sections 2.01, 2.02, 2.03, 2.04, 2.05 and 2.06 shall
be true and correct in all material respects as of the date
hereof and as of the Subsequent Closing Date with the same effect
as though such representations and warranties had been made as of
the Subsequent Closing Date.
(c) Each of the representations and warranties of the
CS Parties contained in Article 2 (other than the representations
and warranties referred to in Section 7.02(b)) shall be true and
correct in all respects as of the date hereof and as of the
Subsequent Closing Date with the same force and effect as though
such representations and warranties had been made as of the
Subsequent Closing Date, except (i) representations and
warranties that speak as of a specified date or time other than
the Subsequent Closing Date (which need only be true and correct
in all respects as of such date or time), and (ii) where the
failure or failures of such representations and warranties to be
true and correct do not and are not reasonably likely to, either
individually or in the aggregate, have or result in a Material
Adverse Effect (provided, however, that for purposes of this
paragraph, if any such representation or warranty is qualified in
any respect by materiality, by the word "material" or by words of
similar impact, such materiality, material or similar
qualifications or exceptions will in all respects be ignored
solely for purposes of the paragraph).
(d) Each of the CS Parties shall have performed and
complied in all material respects with all obligations,
agreements and conditions contained herein and in the Conveyance
Documents required to be performed or complied with by them prior
to or at the time of the Subsequent Closing.
(e) No Material Adverse Effect shall have occurred
since the date of this Agreement.
(f) Each of the CS Parties shall have delivered to KO
a certificate dated as of the Subsequent Closing Date signed by a
senior officer on its behalf attesting to all of the effects
described in Sections 7.02(b), (c), (d) and (e).
(g) No statute, rule, regulation, order, injunction or
decree shall have been enacted, entered, promulgated or enforced
by any Governmental Authority which prohibits or makes illegal
consummation of the transactions contemplated hereby or by the
Transaction Documents to occur at the Threshold Closing or,
subject to Section 7.04, would be reasonably likely to result in
damages or other relief having or reasonably likely to have a
Material Adverse Effect or damages or other relief from or with
respect to KO which are material in the context of the
transactions contemplated by this Agreement and the Transaction
Documents taken as whole.
(h) Subject to Section 7.04, no suit, governmental
investigation, action or other proceeding shall be pending and no
suit, investigation, action or other proceeding by any
Governmental Authority shall be overtly threatened as a result of,
or in connection with, the
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transactions contemplated by this Agreement and the Transaction
Documents which in the reasonable opinion of counsel for KO would
be reasonably likely to result in damages or other relief having
or reasonably likely to have a Material Adverse Effect or damages
or other relief from or with respect to KO which are material in
the context of the transactions contemplated by this Agreement
and the Transaction Documents taken as whole.
7.03 KO COUNTRY CONDITIONS. The obligations of KO to be
performed hereunder with respect to the Purchased Businesses in
a particular country shall be subject to the satisfaction (or
waiver by KO) of each of the following conditions (the "KO
Country Conditions"):
(a) No order, injunction or decree issued by any court
or agency of competent jurisdiction or other legal restraint or
prohibition preventing the consummation of the transactions
contemplated hereby or by the Transaction Documents with respect
to such country (including the purchase and sale of the Purchased
Company or any Subsidiary, in each case which owns the Owned
Trademarks with respect to such country) shall be in effect. No
statute, rule, regulation, order, injunction or decree shall have
been enacted, entered, promulgated or enforced by any
Governmental Authority which prohibits or makes illegal the
consummation of the transactions contemplated hereby or by the
Transaction Documents with respect to such country (including the
purchase and sale of the Purchased Company or any Subsidiary, in
each case which owns the Owned Trademarks with respect to such
country), or, subject to Section 7.04, which restricts in any
significant respect the ability of KO to conduct its businesses
as now conducted in such country.
(b) Subject to Section 7.04, no suit, governmental
investigation, action or other proceeding shall be pending and no
suit, investigation, action or other proceeding by any
Governmental Authority shall be overtly threatened which in the
reasonable opinion of counsel for KO would be reasonably likely
to:
(i) restrain or prohibit the consummation of the
transactions contemplated hereby and by the Transaction Documents
with respect to such country (including the purchase and sale of
the Purchased Company or any Subsidiary, in each case which owns
the Owned Trademarks with respect to such country);
(ii) result in an order or other relief which
restricts in any significant respect the ability of KO to conduct
its businesses as now conducted in such country.
(c) KO shall have received from counsel to CS
reasonably satisfactory to KO, an opinion with respect to such
countries (provided such country is specifically identified by
name on Schedule 1.02(b)-1), dated the Applicable Closing Date,
in the form of Exhibit 7.03(c).
(d) The CS Parties shall have delivered to the KO
Parties the Conveyance Documents with respect to such country.
(e) To the extent requested by KO, all directors of
the Purchased Businesses to be acquired with respect to such
country shall have delivered to the KO Parties their
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resignations as directors.
(f) All necessary governmental approvals in connection
with the transactions contemplated by this Agreement and the
Transaction Documents with respect to such country (including the
purchase and sale of the Purchased Company or any Subsidiary, in
each case which owns the Owned Trademarks with respect to such
country) shall have been obtained. All material consents and
approvals of third parties required in connection with the
transactions contemplated by this Agreement and the Transaction
Documents with respect to such country (including the purchase
and sale of the Purchased Company or any Subsidiary, in each case
which owns the Owned Trademarks with respect to such country)
shall have been obtained, except as would not have a material
adverse effect on the Purchased Businesses being acquired in such
country.
7.04 RESOLUTION OF CERTAIN DISPUTES. If the parties cannot
agree as to whether the condition specified in Sections 6.01(c),
6.02(c), 6.03(b), 7.01(g), 7.01(h), 7.02(g), 7.02(h) or 7.03(b)
is satisfied, then distinguished and reputable competition-law
counsel for each party will jointly agree on the retention of an
independent, distinguished and reputable competition-law expert
not previously retained by either party. Such independent
counsel will be instructed to produce an opinion as to whether or
not such condition is satisfied; and the parties agree to be
bound by such opinion.
ARTICLE 8
CLOSINGS
8.01 THRESHOLD CLOSING DATE. Subject to the satisfaction or
waiver of the conditions set forth in this Agreement, the
Threshold Closing shall take place at 10:00 a.m., local time, on
the third business day following the date on which all of the
conditions to such Threshold Closing have been satisfied or
waived (or are capable of being satisfied concurrently with the
Threshold Closing) at the offices of King & Spalding, counsel to
KO, at 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx, X.X.X. or
at such other time or place as may be mutually agreed by KO and
CS.
8.02 SUBSEQUENT CLOSING DATES. Subject to the satisfaction
or waiver of the conditions set forth in this Agreement, a
Subsequent Closing shall take place at 10:00 a.m., local time, on
such date and at such place at the offices of King & Spalding,
counsel to KO, at 1185 Avenue of the Americas, New York, New York,
U.S.A., or at such other time or place as may be mutually agreed
by KO and CS.
8.03 CLOSING REQUIREMENTS. At each Applicable Closing, the
following shall occur:
(a) The parties hereto shall exchange and deliver the
certificates and other evidence as to the accuracy of the
representations and warranties contained herein, and the
compliance with the covenants and agreements contained herein,
which are required to be delivered by such party as herein
provided.
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(b) The CS Parties shall deliver and the KO Buyers
shall receive at the Closing certificates evidencing the Shares
at the Applicable Closing, duly endorsed in blank for transfer
or accompanied by duly executed blank stock powers attached and
otherwise in good form for transfer.
(c) The CS Parties shall deliver appropriate transfer
documents, including bills of sale, trademark assignments,
intellectual property assignments and other assignment documents,
as may be necessary in the reasonable judgment of KO to convey to
the KO Buyers in accordance with this Agreement title to all of
the Assets to be acquired by the KO Buyers at the Applicable
Closing.
(d) The KO Buyers shall deliver to the CS Parties all
funds payable at the Applicable Closing as provided in Article 1.
(e) All other opinions, documents, instruments and
writings required to be delivered by a party at or prior to the
Applicable Closing Date pursuant to this Agreement or the
Transaction Documents will be delivered to the party entitled
thereto to the extent not previously delivered.
ARTICLE 9
INDEMNIFICATION
9.01 KO REMEDIES.
(a) CS shall, and shall cause the CS Parties to,
indemnify, defend and hold harmless the KO Parties from and
against any and all Losses (as hereinafter defined) suffered or
incurred by any of the KO Parties or the Purchased Businesses or
any successors or assigns thereof (the "Protected Parties'") as a
result of, or with respect to:
(i) any breach or inaccuracy of any
representation or warranty of CS set forth in this Agreement,
whether such breach or inaccuracy exists or is made on the date
of this Agreement or as of the Applicable Closing Date;
(ii) any breach of or noncompliance by CS with
any covenant or agreement of CS contained in this Agreement;
(iii) except as specifically assumed by the KO
Parties pursuant to Section 5.06, all liabilities and obligations
relating to the Employee Benefit Plans of or relating to the
Purchased Businesses incurred or accrued on or prior to the
Applicable Closing or relating to periods prior to the Applicable
Closing, including but not limited to (A) social security
obligations, (B) pension obligations, (C) severance (statutory or
contractual) obligations, and (D) liabilities for any acts of any
of the Purchased Businesses as an employer, including
discrimination, unlawful termination, terminations for cause, or
violations of any statute or contract or other obligation;
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(iv) any litigation, claims, suits, actions,
investigations, indictments, informations or proceedings
involving claims individually or together with any reasonably
closely related matters in excess of U.S.$250,000 which (A) are
or have been pending on or prior to the date of this Agreement,
(B) are commenced after the date of this Agreement and on or
before the Applicable Closing Date, or (C) are, to the knowledge
of the CS Parties or the Purchased Businesses, threatened on or
before the Applicable Closing Date, in each case to which any of
the Purchased Businesses or any of their properties is or may
become a party or is or may be subject;
(v) (A) any noncompliance with or violation of
any applicable Environmental Law (to the extent such
noncompliance or violation exists on or prior to the Applicable
Closing Date) relating to the Plants, the properties covered by
the Assumed Leases or the Malvern Facility or any Person whose
liability for any such matters any of the Purchased Businesses
has or may have retained or assumed either contractually or by
operation of law (including (i) any failure with respect to any
such Plant or leased property or the Malvern Facility to obtain
and possess all permits, licenses and other authorizations which
are required to be obtained and possessed under Environmental
Laws, (ii) any failure with respect to any such Plant or leased
property or the Malvern Facility to comply with all terms and
conditions of such permits, licenses and authorizations, and
(iii) any failure with respect to any such Plant or leased
property or the Malvern Facility to file all notices which are
required to be filed under Environmental Laws), and (B) any
Environmental Claim alleging noncompliance with or violation of
any applicable Environmental Law (to the extent such
noncompliance or violation exists on or prior to the Applicable
Closing Date) relating to the Plants, the properties covered by
the Assumed Leases or the Malvern Facility or any Person whose
liability for any such Environmental Claim any of the Purchased
Businesses has or may have retained or assumed either
contractually or by operation of law (including (i) any failure
with respect to any such Plant or leased property or the Malvern
Facility to obtain and possess all permits, licenses and other
authorizations which are required to be obtained and possessed
under Environmental Laws, (ii) any failure with respect to any
such Plant or leased property or the Malvern Facility to comply
with all terms and conditions of such permits, licenses and
authorizations, and (iii) any failure with respect to any such
Plant or leased property or the Malvern Facility to file all
notices which are required to be filed under Environmental Laws);
(vi) any Environmental Claim (other than as
specified in clause (v)(B) of this Section 9.01(a)) to the extent
relating to the ownership or operations on or prior to the
Applicable Closing Date of the Plants, the properties covered by
the Assumed Leases or the Malvern Facility or any Person whose
liability for any such Environmental Claim any of the Purchased
Businesses has or may have retained or assumed either
contractually or by operation of law;
(vii) except as specified in Section 5.22, any
Year 2000 Computer Date Problem (provided that for the purposes
of this clause (vii), any reference to "material" in the
definition of Year 2000 Computer Date Problem shall be ignored),
less U.S. $200,000;
(viii) all Excluded Liabilities;
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(ix) any payment of "Supplemental Contributions"
as defined under and required to be paid pursuant to Clause 8.3.5
of the Schweppes Licensor Agreement, dated February 10, 1997,
among Schweppes Limited, Schweppes International Limited, X. Xxxx
& Co. Limited and Coca-Cola & Schweppes Beverages Limited; and
(x) the inability on the part of the KO Parties
or the Purchased Businesses to terminate any bottling or
distribution agreements relating to any territory in Chile on or
before December 31, 2004 based on contractual arrangements
existing on the Applicable Closing Date.
(b) "Loss" shall mean any loss, damage, liability,
cost or expense including, without limitation, any interest, fine,
penalty, criminal or civil judgment or settlement, court costs,
reasonable attorneys' and expert witnesses' fees, reasonable
accountants' fees, disbursements and expenses, and any
indemnification or similar payments required to be made to
officers, directors, employees or agents under duly enacted
charter provisions or bylaws, board resolutions or undertakings,
commitments or other understandings or under applicable corporate
law, together with interest thereon from the later of the
Applicable Closing Date and the date suffered or incurred at the
Rate; provided that the term "Loss" shall not include any
punitive damages which may be sought by an indemnified party in
an action, suit or proceeding against any indemnifying party. A
Loss suffered or incurred by any of the Purchased Businesses
shall be deemed a Loss suffered or incurred by the KO Parties for
purposes of this Article 9.
(c) Except as provided below, the KO Parties may
assert a claim for indemnification against the CS Parties under
Section 9.01(a) only with respect to individual facts, conditions,
practices, events, circumstances, items or matters (or any
absences thereof) which, together with any other facts,
conditions, practices, events, circumstances, items or matters
(or any absences thereof) which are reasonably closely related,
involve an amount in excess of U.S.$25,000; provided, however,
that the limitations of this sentence shall not be applicable to
any representation or warranty which is qualified by materiality,
the word "material" or words of similar import. Except as
provided below, no amounts of indemnity shall be payable as a
result of any claim made pursuant to Section 9.01(a) unless and
until the Persons making claims thereunder shall have suffered,
incurred, sustained or become subject to indemnifiable Losses in
the aggregate in excess of 1.75% of the Purchase Price (prior to
any adjustment for Assumed Debt and prior to the Working Capital
Adjustment, but taking into account any reduction in the Purchase
Price resulting from the failure to satisfy the conditions to the
Applicable Closing in certain countries subject to an increase
once such originally excluded Purchased Businesses are
transferred), in which case the Indemnified Parties shall be
entitled to recover only such Losses in excess of such amount.
The limitations of the preceding sentences in this Section
9.01(c) shall not apply to any action or claim pursuant to
clauses (ii), (iii), (iv), (v) (except in the case of clause
(v) for matters within the scope of clause (v) which KO has not
identified prior to the Applicable Closing, as to which matters
such limitations shall apply), (viii), (ix) or (x) of Section
9.01(a) or which is based on a breach of the representations and
warranties contained in Sections 2.01(a), 2.01(b), 2.02, 2.04,
2.05, 2.06, 2.13(b), 2.13(c), 2.13(d), 2.26, 2.27 or 2.29 or the
last sentence of Section 2.20(c) or based upon fraud or
intentional misrepresentation; provided, however, that
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(A) in the case of Section 2.13(d) (which representation
and warranty shall be interpreted for purposes of this Section
9.01 as if the Disclosure Schedule to such representation and
warranty does not exist) to the extent an incident relating to a
breach of such representation and warranty is identified by KO
prior to the Threshold Closing, no amounts shall be payable as a
result of any claim with respect thereto unless both:
(I) the incident giving rise to such claim,
involves an amount in excess of U.S. $25,000, in which case,
subject to the following clause (II), CS shall indemnify the
Protected Parties for the sum of (i) two-thirds of the Losses
resulting from such incident between U.S. $25,000 and U.S.
$100,000 and (ii) all Losses resulting from such incident in
excess of U.S. $100,000; and
(II) the Protected Parties shall have suffered,
incurred, sustained or become subject to Losses indemnifiable
under the immediately preceding clause (i) in excess of
U.S. $3,000,000 in the aggregate as a result of a breach or
inaccuracy of the representation and warranty in Section 2.13(d),
in which case the Protected Parties shall be entitled to recover
only such Losses in excess of U.S. $3,000,000;
(B) in the case of Section 2.13(d) (which representation
and warranty shall be interpreted for purposes of this Section
9.01 as if the Disclosure Schedule to such representation and
warranty does not exist) to the extent an incident relating to a
breach of such representation and warranty is not identified by
KO prior to the Threshold Closing, no amounts shall be payable
as a result of any claim with respect thereto unless:
(I) the incident giving rise to such claim
involves an amount in excess of U.S. $25,000, in which case,
subject to the following clause (II), CS shall indemnify the
Protected Parties for the sum of (i) two-thirds of the Losses
resulting from such incident between U.S. $25,000 and
U.S. $100,000 and (ii) all Losses resulting from such incident in
excess of U.S. $100,000; provided that
(II) any such amounts indemnifiable under the
immediately preceding clause (I) shall be subject to the
limitations of the second sentence of Section 9.01(c);
(C) in the case of Sections 2.13(b) and (c) no amounts of
indemnity shall be payable as a result of any claim made with
respect thereto unless and until the Protected Parties making
claims thereunder shall have suffered, incurred, sustained or
become subject to indemnifiable Losses in excess of
U.S. $1,000,000 in the aggregate, in which case the Indemnified
Parties shall be entitled to recover only such Losses in excess
of such amount.
(D) in the case of clause (v) of Section 9.01(a) (to the
extent in the case of clause (v) that KO has identified such
matter prior to the Applicable Closing), no amounts of indemnity
shall be payable as a result of any claim made with respect
thereto unless and until the Persons making claims thereunder
shall have suffered, incurred, sustained or become subject to
indemnifiable Losses in excess of U.S. $1,000,000 under such
clause (v) in the case of clause (v) of Section 9.01(a) (to the
extent in the case of clause (v) that KO has identified such
matter prior to the
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Applicable Closing), in the aggregate, in which case the
Indemnified Parties shall be entitled to recover only such Losses
in excess of such amount.
(E) in the case of the last sentence of Section 2.20(c) no
amounts of indemnity shall be payable as a result of any claim
made with respect thereto unless and until the Protected Parties
making claims thereunder shall have suffered, incurred, sustained
or become subject to indemnifiable Losses in excess of
U.S. $5,000,000 in the aggregate, in which case the Indemnified
Parties shall be entitled to recover only such Losses in excess
of such amount.
(d) In no event shall the amount of indemnification
payable by the CS Parties to the Protected Parties for asserted
claims under Section 9.01(a) exceed 100% of the Purchase Price
(prior to any adjustment for Assumed Debt and prior to the
Working Capital Adjustment, but taking into account any reduction
in the Purchase Price resulting from the failure to satisfy the
conditions to the Applicable Closing in certain countries,
subject to an increase once such originally excluded Purchased
Businesses are transferred).
(e) No Protected Party shall be entitled to recovery
for a particular Loss pursuant to any provision of this Section
9.01 if the specific issue that is the subject of such Loss has
been considered and resolved pursuant to Sections 1.04 and 1.05
or pursuant to another provision of this Section 9.01.
9.02 CS REMEDIES
(a) KO shall, and shall cause the KO Buyers to,
indemnify, defend and hold harmless the CS Parties from and
against any and all Losses suffered or incurred by any of the
CS Parties or any successors or assigns thereof as a result of,
or with respect of:
(i) any breach or inaccuracy of any
representation or warranty of KO set forth in this Agreement,
whether such breach or inaccuracy exists or is made on the date
of this Agreement or as of the Applicable Closing Date;
(ii) any breach of or noncompliance by KO with
any covenant or agreement of KO contained in this Agreement;
(iii) the Assumed Liabilities, except for any
claim or cause of action with respect to which the CS Parties
are obligated to indemnify the Protected Parties under this
Article 9;
(iv) liabilities and obligations in respect of
claims by Transferred Employees after the Applicable Closing
relating to facts, circumstances or events arising after the
Applicable Closing; provided, however, that any payments made in
respect of such claims relating to severance as provided as in
Section 5.06 shall be applied toward the U.S. $50,000,000 cap set
forth therein, and to the extent such cap has been reached, KO
shall have no obligation to indemnify CS in respect of such
claims relating to severance; and
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(v) all liabilities and obligations within the
scope of Sections 9.01(a)(iv), (v) and (vi) to the extent CS or
the CS Parties are not required to indemnify the Protected
Parties due to the limitations of Section 9.01(c); it being
agreed, however, that the amount of all such liabilities and
obligations shall be counted as Losses to KO for purposes of
determining whether the deductibles or thresholds set forth in
Section 9.01(c) have been exceeded.
(b) No CS Party shall be entitled to recovery for a
particular Loss pursuant to any provision of this Section 9.02 if
the specific issue that is the subject of such Loss has been
considered and resolved pursuant to another provision of this
Section 9.02 or pursuant to Sections 1.04 and 1.05.
9.03 SURVIVAL OF REPRESENTATION AND WARRANTIES
(a) The representations and warranties contained in
this Agreement shall not be extinguished by the Applicable
Closing but shall survive for a period of two years following the
Applicable Closing Date in respect of the Purchased Businesses
with respect to such Applicable Closing; provided that:
(i) The representations and warranties contained
in Sections 2.01(a), 2.01(b), 2.02, 2.04, 2.05, 2.06, 2.13(b),
2.26, 2.27, 3.01, 3.02 and 3.03 and the last sentence of Section
2.20(c) shall survive the Applicable Closing Date relating to
such Purchased Businesses without limitation;
(ii) The representations and warranties contained
in Sections 2.17 and the first sentence of Section 2.14 (but not
the second sentence of Section 2.14, which shall survive for a
period of two years relating to such Purchased Businesses after
the Applicable Closing Date relating to such Purchased Businesses)
shall terminate as of the Applicable Closing Date;
(iii) The representations and warranties contained
in Section 2.23 shall terminate ninety days following the
expiration of the applicable statute of limitations with respect
to the assertion of any claim in respect thereof by any
Governmental Authority or other Person in respect of the
Purchased Businesses with respect to such Applicable Closing; and
(iv) The covenants and agreements contained herein
shall survive the Applicable Closing Date relating to such
Purchased Businesses without limitation except for the covenants
in Sections 4.01, 4.02, 4.03, 4.04, 4.06, 4.09, 5.22 and clause
(vii) of Section 9.01(a) which shall survive for a period of two
years following the Applicable Closing Date relating to such
Purchased Businesses.
(b) Any indemnification obligation of any party under
any representation, warranty, covenant or agreement set forth
herein will terminate as of the date set forth in Section 9.03(a)
for the termination of the applicable representation, warranty,
covenant or agreed except for matters as to which notice is given
prior to the end of such period, in which event
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indemnification shall survive as long as necessary to permit the
final resolution of such matter. No investigation or other
examination by any of the CS Parties or the KO Parties or their
designees or representatives shall affect the term of survival of
the representations and warranties set forth above.
9.04 NOTICE OF CLAIM. An indemnified party shall promptly
notify the indemnifying party, in writing, of any claim for
recovery, specifying in reasonable detail the nature of the Loss,
the facts which form the basis of the Loss and, if known, the
amount, or an estimate of the amount, of the liability arising
therefrom. The indemnified party shall provide to the
indemnifying party as promptly as practicable thereafter
information and documentation reasonably requested by the
indemnifying party to support and verify the claim asserted,
unless the indemnified party has been advised by counsel that
there are no reasonable grounds to assert the joint defense
privilege with respect to such information and documentation. A
notice of claim furnished by the indemnified party under this
Section 9.04 shall also be deemed to constitute timely notice by
the indemnified party of any claim that may at any time
thereafter be made by any Person claiming entitlement to
indemnity under any charter, bylaws or other governing documents
or any board resolutions, undertakings, commitments, or other
understandings, with respect to the state of facts or
circumstances which gave rise to the claim by the indemnified
party which is the subject of such notice.
9.05 DEFENSE.
(a) If the facts pertaining to a Loss arise out of the
claim of any third party, or if there is any claim against a
third party available by virtue of the circumstances of the Loss,
the indemnifying party may assume the defense or the prosecution
thereof by written notice to the indemnified party agreeing to
indemnify and defend the indemnified party from and against all
indemnifiable Losses under this Article 9 arising from such claim.
(b) If the indemnifying party agrees to assume the
defense and prosecution of such claim, then the indemnified party
shall have no further obligation with respect to such claim. In
any such case, the indemnified party shall have the right to
employ counsel separate from counsel employed by the indemnifying
in any such action and to participate therein, but the fees and
expenses of such counsel employed by the indemnified party shall
be at the indemnified party's expense. No indemnifying party
shall agree to a settlement of any claim without the indemnified
party's prior written consent, which consent shall not be
unreasonably withheld in light of the indemnified party's
circumstances.
(c) If the indemnifying party shall not assume the
defense and prosecution of any such claim, the indemnified party
shall keep the indemnifying party reasonably informed of the
progress of any proceedings relating to such claim and shall
consult regularly with the indemnifying party with respect
thereto and shall not agree to a settlement of such claim
without the indemnifying party's written consent, which consent
shall not be unreasonably withheld in light of the indemnifying
party's circumstances.
(d) All parties hereto shall cooperate in the defense
or prosecution thereof and
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shall furnish all witnesses and testimony, records, materials
and other information, and attend such conferences, discovery
proceedings, hearings, trials and appeals, as may be reasonably
requested in connection therewith.
(e) Subject to Section 11.12, the indemnification
provisions of this Article 9 shall be the sole remedy with
respect to any Losses incurred by the Protected Parties or the CS
Parties, except in the case of fraud or intentional
misrepresentation.
ARTICLE 10
TERMINATION PRIOR TO CLOSING
10.01 TERMINATION. This Agreement may be terminated at any
time before the Threshold Closing:
(a) By the mutual written consent of KO and CS;
(b) By CS in writing, without liability, if KO shall
(i) fail to perform in any material respect its agreements
contained in this Agreement required to be performed by it on or
prior to the Threshold Closing Date, or (ii) materially breach
any of its representations, warranties or covenants contained in
this Agreement, in each such case such that the conditions to the
Threshold Closing shall be incapable of being satisfied by
December 31, 1999;
(c) By KO in writing, without liability, if CS shall
(i) fail to perform in any material respect its agreements
contained in this Agreement required to be performed by it on or
prior to the Threshold Closing Date, or (ii) materially breach
any of its representations, warranties or covenants contained in
this Agreement, in each such case such that the conditions to the
Threshold Closing shall be incapable of being satisfied by
December 31, 1999;
(d) By either KO or CS in writing, without liability,
if there shall be any order, writ, injunction or decree of any
Governmental Authority binding on the parties prohibiting the
consummation of the transactions contemplated by this Agreement;
(e) By KO, if the Board of Directors of CS recommends
a Takeover Proposal, CS enters into a definitive agreement
providing for a Takeover Proposal or a Takeover Proposal
involving CS is consummated;
(f) By CS, if the Board of Directors of CS determines
in good faith following the receipt of and consistent with the
advice of outside counsel that their fiduciary obligations under
applicable law require that both (i) the Board of Directors of CS
recommend a Takeover Proposal or CS enter into a definitive
agreement providing for a Takeover Proposal and (ii) the Board of
Directors of CS terminate this Agreement; and concurrently with
and as a condition to such termination, CS pays the termination
fee described in Section 10.02; and
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(g) By either KO or CS in writing, if for any reason
the Threshold Closing has not occurred by December 31, 1999.
10.02 TERMINATION OF OBLIGATIONS. Termination of this
Agreement pursuant to this Article 10 shall terminate all
obligations of the parties hereunder, except for the obligations
under Sections 5.02 and Article 11 and this Section 10.02;
provided, however, that termination pursuant to subparagraphs
(b) or (c) of Section 10.01 shall not relieve a defaulting or
breaching party from any liability to any party hereto. If KO
terminates this Agreement pursuant to subparagraph (e) or if CS
terminates this Agreement pursuant to subparagraph (f) of Section
10.01, CS shall pay to KO in cash U.S.$220,000,000. Such payment
shall be made by CS (i) if KO terminates this Agreement, on the
seventh business day thereafter, and (ii) if CS terminates this
Agreement, concurrently with and as a condition to such
termination and if such payment is not made on such applicable
date as provided in clause (i) or (ii), in addition to the
U.S. $220,000,000 CS shall pay to KO interest on such amount from
the date required to be paid at the Rate, and shall pay KO's
costs (including reasonable attorneys' fees) associated with
collecting such amount.
ARTICLE 11
MISCELLANEOUS
11.01 ENTIRE AGREEMENT. This Agreement (including the
Schedules and Exhibits) and the Confidentiality Agreement
constitute the sole understanding of the parties with respect to
the subject matter hereof, except that this provision is not
intended to abrogate any other written agreement between the
parties executed contemporaneously with or after this Agreement.
11.02 PARTIES BOUND BY AGREEMENT; SUCCESSORS AND ASSIGNS.
This Agreement shall inure to the benefit of and be binding upon
the parties to this Agreement and their respective successors and
assigns. Without the prior written consent of KO, none of the CS
Parties may assign its rights, duties or obligations hereunder or
any part thereof to any Person. KO may assign its rights and
duties hereunder in whole or in part (before or after the
Threshold Closing) to one or more Persons so long as (i) such
Person is a direct or indirect wholly owned subsidiary of KO
(except for nominee shares, director qualifying shares or
similar shares) and KO guarantees such Person's obligations
hereunder, or (ii) CS consents to such assignment (which consent,
in the case of assignments to any Person other than Persons which
are not KO bottlers or with respect to which KO has less than a
30% equity interest, shall not be unreasonably withheld or
delayed) and KO guarantees such Person's obligations hereunder;
provided, however, that if the Board of CS recommends a Takeover
Proposal, CS enters into a definitive agreement providing for a
Takeover Proposal or a Takeover Proposal involving CS is
consummated, then thereafter KO's rights under this Agreement
shall be freely assignable. Notwithstanding any assignment by KO
of its rights hereunder, if any CS Party or any Affiliate thereof
is required to make any indemnification payment or otherwise make
whole any assignee of KO (or subsequent assignee) as a result of
any act or omission of any of the CS Parties or the Purchased
Businesses for which KO would be entitled to indemnification from
any CS Party but for the assignment of
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its rights hereunder, KO shall be fully subrogated to such
assignee and shall be restored to all rights under this Agreement
to obtain indemnification from the CS Parties.
11.03 COUNTERPARTS. This Agreement may be executed in one
or more counterparts, each of which shall constitute an original
and all of which shall constitute one and the same agreement.
11.04 AMENDMENT, MODIFICATION AND WAIVER. No amendment,
modification or alteration of the terms or provisions of this
Agreement shall be binding unless the same shall be in writing
and duly executed by the parties hereto. Any of the terms or
conditions of this Agreement may be waived in writing at any
time by the party which is entitled to the benefits thereof. No
waiver of any of the provisions of this Agreement shall be deemed
to or shall constitute a waiver of any other provisions hereof
(whether or not similar).
11.05 EXPENSES. Except as otherwise provided in this
Agreement, each of KO and the CS Parties shall pay all costs and
expenses incurred by it or on its behalf in connection with this
Agreement and the transactions contemplated hereby, including
fees and expenses of its own financial consultants, accountants
and counsel. All expenses incurred by the Purchased Businesses
in connection with this Agreement and the transactions
contemplated hereby in respect of periods prior to the Applicable
Closing shall be paid by the CS Parties, and not by any of the KO
Parties.
11.06 NOTICES. Any notice, request, instruction or other
document to be given hereunder by any party hereto to any other
party hereto shall be in writing and delivered personally or by
telecopy transmission or sent by registered or certified mail or
by any express mail service, postage and fees prepaid to the
respective address set forth below such party's signature to this
Agreement or at such other address or number for a party as shall
be specified by like notice. Any notice which is delivered
personally or by telecopy transmission or by mail in the manner
provided herein shall be deemed to have been duly given to the
party to whom it is directed upon actual receipt by such party.
11.07 FURTHER COOPERATION. From and after each Applicable
Closing Date, the parties will each take all such action and
deliver all such documents as shall be reasonably necessary or
appropriate to confirm and vest in the KO Buyers title in and to
the Assets in accordance with this Agreement and the Transaction
Documents.
11.08 GOVERNING LAW; CONSTRUCTION. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF NEW YORK, UNITED STATES OF AMERICA, WITHOUT GIVING
EFFECT TO THE CONFLICTS OF LAW PRINCIPLES THEREOF. NO PROVISION
OF THIS AGREEMENT OR ANY RELATED DOCUMENT SHALL BE CONSTRUED
AGAINST OR INTERPRETED TO THE DISADVANTAGE OF ANY PARTY HERETO BY
ANY GOVERNMENTAL AUTHORITY BY REASON OF SUCH PARTY'S HAVING OR
BEING DEEMED TO HAVE STRUCTURED OR DRAFTED SUCH PROVISION.
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11.09 ARBITRATION
(a) Any dispute, controversy or claim among the
parties hereto arising out of, relating to or in connection with
this Agreement, the Transaction Documents and the transactions
contemplated hereby and thereby, including any question regarding
the existence, validity or termination thereof, shall be
exclusively referred to and finally resolved by arbitration in
accordance with the Rules (the "Rules") of the London Court of
International Arbitration (the "LCIA"), which Rules are deemed to
be incorporated by reference into this Section 11.09. Any such
arbitration shall be (i) brought in New York, New York, (ii)
conducted in English, and (iii) to the maximum extent permitted
by applicable law, final, binding and conclusive upon the parties
thereto. The arbitration and this Section 11.09 shall be subject
to the United States Federal Arbitration Act, 9 U.S.C. Sections 1
et seq.
(b) The arbitration shall be conducted by an arbitral
tribunal consisting of three arbitrators. The party initiating
arbitration ("Claimant") shall nominate an arbitrator in its
request for arbitration ("Request"). The other party
("Respondent") shall nominate an arbitrator within 30 days of
receipt of the Request and shall notify the Claimant of such
nomination in writing. If within 30 days of receipt of the
Request by the Respondent either party has not nominated an
arbitrator, then that arbitrator shall be appointed by the LCIA
Arbitration Court ("Court"). The first two arbitrators nominated
or appointed in accordance with this provision shall nominate a
third arbitrator within 30 days after the Respondent has notified
the Claimant of the nomination of the Respondent's arbitrator or,
in the event of a failure by a party to nominate, within 30 days
after the Court has notified the parties and any arbitrator
already nominated or appointed of the Court's appointment of an
arbitrator on behalf of the party failing to nominate. When the
third arbitrator has accepted the nomination, the two arbitrators
making the nomination shall promptly notify the parties of the
nomination. If the first two arbitrators nominated or appointed
fail to nominate a third arbitrator or so to notify the parties
within the time period described above, then the Court shall
appoint the third arbitrator and shall promptly notify the
parties of the appointment. The third arbitrator shall act as
Chair of the arbitral tribunal.
(c) In addition to the authority conferred on the
arbitral tribunal by the LCIA Rules, the arbitral tribunal shall
have the authority to:
(i) order reasonable discovery, including the
production of documents and depositions; and
(ii) make such orders for interim relief, including
injunctive relief, as it may deem just and
equitable.
(d) The arbitral award shall be in writing, state the
reason for the award and be final and binding on the parties.
The award may grant any remedy which is permissible under the
laws of New York, U.S.A., including without limitation specific
performance and injunctive relief, and may include an award of
costs, including reasonable attorneys' fees and disbursements.
All amounts payable under the award shall be in U.S. dollars and
shall bear interest from the date of the award until the date of
payment at a rate to be fixed by the arbitral
- 73 -
tribunal. Judgment upon the award may be entered by any court
having jurisdiction thereof or having jurisdiction over the
parties or their assets.
(e) The parties agree that any arbitration shall be
kept confidential and any element of same (including but not
limited to any pleadings, briefs or other documents submitted or
exchanged, any testimony or other oral submissions, and any
awards) shall not be disclosed beyond the arbitral tribunal, the
Court, the parties, their counsel and any person necessary to the
conduct of the arbitration, except as may be required in order to
satisfy disclosure obligations imposed by law or regulation or by
any regulatory authority in the United Kingdom or the United
States, including the London Stock Exchange, the United States
Securities and Exchange Commission and the New York Stock
Exchange.
11.10 PUBLIC ANNOUNCEMENTS. No party nor any of its agents
or representatives will make any disclosure or public
announcement concerning the transactions contemplated by this
Agreement without the prior approval of the other parties;
provided, however, that a party may make such disclosure or
public announcement if it is advised by counsel that such
disclosure or public announcement is required by law, regulation
or the rules of any national securities exchange, so long as
reasonable prior written notice of such disclosure is given to
the other party and such party attempts in good faith to reach
agreement regarding the content of such disclosure or public
announcement.
11.11 NO THIRD-PARTY BENEFICIARIES. With the exception of
the parties to this Agreement, there shall exist no right of any
Person to claim a beneficial interest in this Agreement or any
rights occurring by virtue of this Agreement.
11.12 SPECIFIC PERFORMANCE. The parties agree that
irreparable damage would occur if 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 equitable relief, including in
the form of injunctions, in order to enforce specifically the
provisions of this Agreement, in addition to any other remedy to
which they are entitled at law or in equity.
11.13 SEVERABILITY. The invalidity or unenforceability of
any provision hereof in any jurisdiction will not affect the
validity or enforceability of the remainder hereof in that
jurisdiction or the validity or enforceability of this Agreement,
including that provision, in any other jurisdiction. To the
extent permitted by applicable law, each party waives any
provision of law that renders any provision hereof prohibited or
unenforceable in any respect. If any provision of this Agreement
is held to be unenforceable for any reason, it shall be adjusted
rather than voided, if possible, in order to achieve the original
intent of the parties to the extent possible.
11.14 DEFINITIONS AND RULES AND CONSTRUCTION.
(a) "United States" means the United States of America
and all of its territories, possessions and commonwealths.
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(b) "South Africa" means the Republic of South Africa
and the countries of Botswana, Lesotho, Namibia and Swaziland.
(c) "France" means the Republic of France and the
Principality of Monaco.
(d) "Material Adverse Effect " means any event, change,
occurrence, circumstance or effect, that has had or is reasonably
expected to have a material adverse effect on the business,
assets, liabilities, operations, results of operation or the
financial condition of the Purchased Businesses, taken as a whole;
provided, however, that any adverse effect directly resulting
from (i) (A) any changes affecting the carbonated soft drink
industry generally in any country in which the Purchased
Businesses operate, or (B) any changes affecting the economy
generally of any country in which the Purchased Businesses
operate or the global economy generally (in each case other than
any dramatic changes in worldwide economic conditions which
fundamentally impair the benefits to KO associated with the
transactions contemplated by this Agreement) or (ii) the entering
into of this Agreement or the consummation of the transactions
contemplated hereby or the announcement thereof, shall not, in
and of itself, constitute a Material Adverse Effect.
(e) "Affiliate" means, with respect to any specified
Person, any Person controlling, controlled by or under common
control with, such specified Person.
(f) References made to an "Exhibit" or a "Schedule",
unless otherwise specified, refer to one of the Exhibits or
Schedules attached to this Agreement, and references made to an
"Article" or a "Section", unless otherwise specified, refer to
one of the Articles or Sections of this Agreement.
(g) As used herein, the plural form of any noun shall
include the singular and the singular shall include the plural,
unless the context requires otherwise. Each of the masculine,
neuter and feminine forms of any pronoun shall include all such
forms unless the context requires otherwise. Words of inclusion
shall not be construed as terms of limitation herein, so that
references to included matters shall be regarded as non-exclusive,
non-characterizing illustrations.
(h) The Article and Section headings contained in this
Agreement are solely for the purpose of reference and shall not
in any way affect the meaning or interpretation of this Agreement.
(i) To the extent any payment hereunder or under any
Transaction Document is required to be made in the future, any
interest or price appreciation factor shall be compounded on a
daily basis. To the extent that any amount specified herein in a
particular currency is paid in another country in the currency of
that country, the amount paid shall be converted into the
specified currency at the average of the conversion rates for
such currencies as announced by Citicorp, N.A., New York, New
York. For purposes hereof, the "conversion rate" shall be the
average of the buy and sell conversion rates for commercial
transactions at the end of the business day prior to the business
day on which such amount is paid.
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(j) Whenever the phrase "ordinary course of business
consistent with past practice" is used in this Agreement, it
shall be qualified solely after the date of this Agreement by the
phrase "except to the extent not reasonably practicable in light
of the transactions contemplated by this Agreement."
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IN WITNESS WHEREOF, each of the parties hereto has caused
this Agreement to be executed on its behalf as of the date first
above written.
THE COCA-COLA COMPANY
By: /s/ Xxxxx Xxxxxx
----------------
Name: Xxxxx Xxxxxx
Title: Vice President and General
Tax Counsel
Address: Xxx Xxxx-Xxxx Xxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Chief Financial Officer
Telefax: (000) 000-0000
with a copy to:
Xxx Xxxx-Xxxx Xxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: General Counsel
Telefax: (000) 000-0000
and a copy to:
King & Spalding
000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000
Attention: C. Xxxxxxx Xxxxxx
Telefax: (000) 000-0000
CADBURY SCHWEPPES PLC
By: /s/ Xxxxx X. Xxxx
------------------
Name: Xxxxx X. Xxxx
Title: Legal Director -
Global Beverages
Address: 00 Xxxxxxxx Xxxxxx
Xxxxxx XXX 0XX
Xxxxxx Xxxxxxx
Attention: The Company Secretary and
Chief Legal Officer
Telefax: 011-44-171-830-5015
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with a copy to:
00 Xxxxxxxx Xxxxxx
Xxxxxx XXX 0XX
Xxxxxx Xxxxxxx
Attention: Xxxxx X. Xxxx
Telefax: 011-44-171-830-5037
and a copy to:
Shearman & Sterling
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxxx O'X. Xxxxxx
Telefax: (000) 000-0000
ATLANTIC INDUSTRIES
By: /s/ Xxxxx Xxxxxx
----------------
Name: Xxxxx Xxxxxx
Title: Vice President and
General Tax Counsel
Xxx Xxxx-Xxxx Xxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Chief Financial Officer
Telefax: (000) 000-0000
with a copy to:
Xxx Xxxx-Xxxx Xxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: General Counsel
Telefax: (000) 000-0000
and a copy to:
King & Spalding
000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000
Attention: C. Xxxxxxx Xxxxxx
Telefax: (000) 000-0000
- 78 -
LIST OF EXHIBITS
Exhibit 1.02 Form of Registered Note
Exhibit 5.01 Certain Governmental Bodies
Exhibit 5.05 Other Matters
Exhibit 7.03(c) Legal Opinion Matters
-i-
LIST OF SCHEDULES
Schedule 1.01A List of XX Xxxxxxx
Schedule 1.01(a)(i) Purchased Company and Subsidiaries
Schedule 1.01(a)(iii) Non-Exclusive List of Other Assets
Schedule 1.01(b) List of Countries
Schedule 1.02 (b)-1 Adjustments to Purchase Price
Schedule 1.02(b)-2 Certain Countries
Schedule 1.02(b)-3 130% Countries
Schedule 1.02(b)-4 120% Countries
Schedule 1.02(c)-1 30% Countries
Schedule 1.02(c)-2 20% Countries
Schedule 1.02(c)-3 Other Countries Schedule
Schedule 1.06(a)(i) Plant Balance Sheets
Schedule 1.06(a)(ii) Assumed Marketing Commitments
Schedule 1.06 (a)(iii) Assumed Leases
Schedule 2.01(b) Organization, Etc.
Schedule 2.01(d) Officers and Directors of the
Purchased Company and the
Subsidiaries
Schedule 2.03 Certain Conflicts
Schedule 2.04 Ownership of the Shares of the
Purchased Company and the
Subsidiaries
Schedule 2.05 Authorized and Outstanding Capital
Stock of the Purchased Company and
the Subsidiaries
-ii-
Schedule 2.07 Financial Statements of the
Purchased Company and the
Subsidiaries
Schedule 2.08 Undisclosed Liabilities
Schedule 2.09 No Violation of Law; Licenses and
Permits
Schedule 2.10(a) Real Property
Schedule 2.10(b) Certain Disclosures Concerning Real
Property
Schedule 2.11 Leases
Schedule 2.12 Indebtedness for Borrowed Money
Schedule 2.13(a)(i) Owned Trademarks
Schedule 2.13(a)(ii) Brands in Commercial Use
Schedule 2.13(a)(iii) Intellectual Property Rights
Schedule 2.13(a)(iv) Licensed Rights
Schedule 2.13(b) Certain Disclosures Concerning
Trademarks and Intellectual Property
Schedule 2.14 Litigation and Claims
Schedule 2.15(b) Employee Benefit Plans
Schedule 2.16 Labor Relations
Schedule 2.17 Environmental Protection
Schedule 2.18 Insurance Policies
Schedule 2.20(b) Contracts and Commitments
Schedule 2.20(c) Bottling Agreements
Schedule 2.21 Agreements in Full Force and Effect
Schedule 2.22 Absence of Certain Changes and Events
-iii-
Schedule 2.23 Tax Matters
Schedule 2.24 Accounts Receivable
Schedule 2.25 Product and Service Warranties
Schedule 2.27 Transactions With Affiliates
Schedule 2.28 Y2K Plan
Schedule 3.03 Certain Conflicts
Schedule 4.01 Pre-Closing Operations
Schedule 5.01 Certain Commitments
Schedule 5.06(b) Severance Obligations
Schedule 5.10(a) KO Brand Acquisitions
Schedule 5.10(b) List of Countries
-iv-
The Coca-Cola Company agrees to furnish supplementally to the Securities
and Exchange Commission a copy of any omitted schedule or similar
attachment upon request.
